DLA Piper Technology Summit Blog

Tech Summit Wrap-Up: Thanks to an industry

2008-10-27T18:21:00.002-04:00

DLA Piper’s Global Technology Leaders Summit was held at the Four Seasons Hotel in Palo Alto but lives on in cyberspace. The website provides access to videos of keynote by Jonathan Schwartz, CEO of Sun Microsystems, Inc. as well as the panels on Financing and Mobile.

The Technology Leaders Forecast was a valuable snapshot of the technology world at one of its most difficult times. The Forecast was the focus of comments by many publications with coverage by the San Jose Mercury News, Wired and Valleywag to the Washington Post, USA Today and San Francisco Chronicle. A complete list of these comments on the Survey can be found here.

Beyond hosting a technology conference, our goal was to convene the global leaders of the technology industry for thoughtful debate and analysis when the future of the industry is so unclear. Green technology, open source, user behavior, regulation, mobility, and other important issues received attention. The se discussions were framed by decline in the domestic economy and potential for global recession. The robust dialogue about the future by some of the most experienced leaders in the global technology business was particularly valuable for the CEOs and other attendees.

We greatly appreciate your thoughts, comments and feedback to our inaugural Technology Summit, either in the comments section or via e-mail. And a very special thanks to all who spoke, participated in and helped organize what we hope to become one of the premier technology industry events in the years to come.

Live from the Summit: Battery life, carriers key to development of mobile-device applications

2008-10-21T21:48:00.002-04:00

Most panelists addressed high technology and rampant innovation during the DLA Piper Global Technology Leaders Summit. Among the notable revelations, however, were the bearish attitudes toward battery life on mobile devices.

Power efficiency is among the key challenges in producing mobile applications, but panelists were not confident that mobile users will see dramatic increases in power capacity anytime soon. Some of the strongest selling points of mobile devices – screen size, picture clarity, and access to wireless networks – also play a role in shortening battery life.

Panelists noted innovators can make progress by improving chip performance and developing new display technologies, but reinforced that the upside might be minimal.

The panel also noted conflicting incentives between carriers and advertisers, with retailers supporting a push toward geo-tagging consumers in order to better target potential customers. The cooperation of wireless carriers would be instrumental in this movement.

Carriers also profit heavily from the SMS technology that is being replaced by the messaging capabilities of social networks. Although many of these networks offer SMS capabilities themselves, developers are creating small applications on open mobile platforms, eliminating the need for users to direct social-network messages to their mobile via SMS. This might represent a threat to carriers’ SMS profits.

Ideally, connectedness will be a non-issue in the future, noted one panelist: “Pretty soon, we will just expect the Internet to be around us,” so security and interoperability will become increasingly important.

Live from the Summit: Green technology akin to very cheap energy supply

2008-10-21T20:25:00.000-04:00

During the final session at the DLA Piper Global Technology Leaders Conference, panelists were excited to talk green, even in a blue economy.

The panel agreed that businesses are developing and using green technology for one reason -- their bottom line.

The panel agreed that environmentalism today has the potential to generate tremendous cost savings as well as complement brands that are already thought of as socially responsible. The movement of environmentalism from college campuses to boardrooms, of course, has the fortunate byproduct of being beneficial to everyone on the planet.

The real estate financing and development industry has enormous potential to use green technology to lower costs and reduce carbon emission. One panelist noted that owners and investors should retrofit outdated technology where possible and sensible from a financing perspective, but also consider where its energy supply originates and whether it can hedge against volatility.

Panelists did not expect the likely domestic recession to slow the sprint toward green technology, noting that efficiency is the cheapest source of “new energy” available. “There are five sources of energy: oil, gas, coal, nuclear, and conservation,” one panelist said.

The panel also noted that the successful push toward green technology will require government action. The increasing politicizing of energy efficiency will lead to new regulations, and lawmakers need to continue to reward the adoption and implementation of these technologies with tax credits and other incentives.

Live from the Summit: Tech can change government -- and vice-versa

2008-10-21T20:23:00.001-04:00

A wide-ranging discussion on the impact of technology on government -- and on government's impact on technology -- just concluded at the DLA Piper Global Technology Summit. Setting the tone, it was noted that the United States government invests billions of dollars annually in basic technological research and development, and government demand has driven such innovations as GPS, the Internet and supercomputing. This discussion centered on the government's role as a catalyst for technology and emerging areas of research, including intelligent transportation systems and health information technology.

Paul Brubaker, the head of Research and Innovative Technology at the US Department of Transportation summarized, "the infrastructure in the U.S. will be radically altered, radically changed over the next decade [through the influence of technology.]"

Brubaker illustrated the potential impact of technology, saying the 6 million auto accidents and resulting 2.3 miilion injuries and billion dollar price tag for property damage and personal injury could be "significantly reduced" with advances in Intelligent Vehicle Transportation Systems -- and "mobile ad-hoc peer-to-peer networks" that will become more ubiquitous in vehicles and transporation systems over the next decade.

Dr. Robert Kolodner, National Coordinator for Health Information Technology for the US Department of Health and Human Services, said private entities, specifically small physician practices, will be key to driving tech advances and adoption. He noted that 50% of doctors in the U.S. are in small practices with 4 or less physicians and that he expects electronic health records to be adopted by a majority of providers by 2014.

Teri Takai, CIO of the State of California, which will spend about $12 billion on information technology and services in the next decade, focused on the impact that technology can have in making government more responsive and customer service-oriented.

Live from the Summit: Jonathan Schwartz eyes maturation of open-source movement

2008-10-21T19:10:00.002-04:00

Jonathan Schwartz, CEO of Sun Microsystems, emphasized the silver lining surrounding the current financial crisis at DLA Piper’s Global Technology Leaders Summit on Tuesday -- that innovation loves a crisis. Consequently the technology sector is uniquely positioned to take advantage of new opportunities created by the current economic crisis in the near-term when compared to other industries.

He also gave the pragmatic perspective of today’s innovators and entrepreneurs who frequently have little or no fund and turn to open source software because it’s free. He gave the example of Facebook which started by using MySQL for the site which embedded MySQL in the architecture of company's infrastructure. Open source products also are popular in universities because there’s no expense to license the software they’re teaching. For example, MySQL is the most widely taught database in university.

Trying to fight the movement to open-source software, Schwartz said, is like trying to fight gravity.

This reality will create opportunities for open source software companies. For example, most high-performance computing centers use only open source software.

Live from the Summit: Be nimble and quick -- a discussion of the latest developments in business models

2008-10-21T16:51:00.002-04:00

A diverse and seasoned group of panelists assembled to discuss the core attributes necessary for companies, large and small, to stay competitive and grow their business, and interestingly concluded that business models are frequently not the central issue in achieving success.

One participant, who noted that he had seen hundreds of business plans over the course of his career, commented that “everyone’s PowerPoint presentations are the same … all business plans say they will make it faster, cheaper, or better, but it all really comes down to execution. Execution is just as important as the plan.”

Alireza Mahmoodshahi, CTO with COLT, built upon this idea, cautioning that “most companies that transition to new business models are not focused enough on the customer. Companies need to focus on the things they do really well and that their customers really need.”

A key attribute discussed across topics was the need for companies to stay “nimble and quick.” Zach Nelson, CEO of NetSuite noted that the pattern tends to be that “the big guys need to and want to act small, to be more nimble, and the small guys are looking to get big” – with a key competitive advantage for small companies being their nimbleness as compared to larger competitors.

Corey Goodman, who runs Pfizer’s “alternative research” group noted that smaller organizations within larger global companies can retain the ability to innovate and influence the larger organization; however he cautioned that this “doesn’t happen suddenly or necessarily easily.” He further stressed the importance of protecting the culture of your organization.

The panel focused in a greater level of detail on the new opportunities to collect and “mine” data that can significantly impact the success of a business. Nelson noted that “many businesses really have little intelligence today … when you begin to simplify [and focus] how you manage your data you can do much more powerful things.”

Adam Selipsky of Amazon Web Services noted, “don’t be terrified of your competitors -- be terrified of your customers … make sure you are meeting their needs.”

Live from the Summit: VCs going global as US regulatory environment limits global effectiveness

2008-10-21T16:42:00.000-04:00

No one would argue that successful financial services companies need to take a global approach to their business. But a panel at the DLA Piper Global Technology Leaders Summit on financing the world’s emerging technologies contended that the need for U.S. companies to have a global perspective stems largely from an increasingly cumbersome and expensive regulatory environment in the US. And as the global financial crisis plays out in the near term, the panelists don’t see the situation turning any time soon.

One panelist equated the US regulatory environment to “cement” that forces emerging companies, or “seedlings,” to struggle to find room to grow within the cracks. The group discussed the notion that Sarbanes-Oxley has threatened one of the great traditions of the US – liquidity created via IPOs. Increasingly, companies will not launch an IPO in the US when it can be done without the constraints of Sarbanes-Oxley in much more pro-business environments in other jurisdictions.

Panelists argued the NASDAQ has been “asleep at the switch” while the NYSE has been much more attuned to the unique needs of small-cap companies.

Rocky Lee, a partner of DLA Piper based in Beijing, said China will continue to be a hotbed of potential for consumer and government spending on technology and infrastructure.

As many investors handle their money conservatively in light of the current economic crisis, one panelist said, enormous opportunity might lie in doing the exact opposite and investing aggressively.

Live From The Summit: Device options, cloud computing open many doors for developers

2008-10-21T13:46:00.000-04:00

Ray Ozzie, chief software architect at Microsoft, emphasized the impact of device multiplicity and cloud computing during his question-and-answer segment with Fortune magazine’s David Kirkpatrick at the DLA Piper Global Technology Leaders Summit Tuesday morning.

Devices, he said, will be “appliance-like” in the near future. “You'll buy one, log in, and the data you need will be there.”

This outlook drives Microsoft's development philosophy, he said, because technology needs to become ever-more usable and focus on solving business problems instead of just doing neat things. “Business buys technology if it solves a problem,” he said. “What is the direct path between the software I'm buying and the problem I'm solving?”

Ozzie said that cloud computing has enormous potential to speed up data exchange, software development, collaboration, and ultimately, software usability. “The Internet was created during an era of 56k modems and dial-up connections. As a software [developer] you balance what's on the back end with what's on the front end.” Whether bandwith is large or small is a challenge of perspective and application.

Software developers need to look at the specific applications customers find value in and “re-cast” them to fit the device – desktop computer, smartphone, camera, television – best equipped to allow users to maximize the value that application offers. Focus on where the application resides as much as what it does should be a directives, and a focus on making devices connected is critical today.

Social networks, Ozzie said, have the capabilities to complement organizational dynamics as long as companies use them efficiently and users behave responsibly.

Regarding today's economic climate, Ozzie said that software companies should make short-term, “pragmatic” decisions that won't hurt their long-term business plans. Buyers will remain solutions-focused, he said, and this should reassure technology companies that add real value to users.

Opportunities in green technology space not lost on many, according to DLA Piper survey

2008-10-20T19:17:00.001-04:00

Responses to the Technology Leaders Forecast Survey indicated the technology industry recognizes the vast potential of green technologies and also supports government regulation to nudge energy-efficient technology into consumers’ lives.

Green technology is one of few bright areas amid the financial crisis and economic turmoil as respondents widely recognized its potential.

“There’s a convergence going on where technologies from different parts of the economy are finding opportunities and ways to add value in the clean tech space,” said Brad Rock, a partner at DLA Piper. “In real estate, for example, you found that a few years ago people were only focused on cost, and now there is a drive toward LEED certification and recognition that doing things more efficiently and with a long-term view adds value and is the right way to go.”

A strong majority of respondents (77%) said they supported increased mileage standards for vehicles. Seeing executives support these measures is reassuring. An increase in efficiency from 15 MPG to 35 MPG results in a savings of four gallons of gas per 100 miles whereas the jump from 35 MPG to 100 MPG saves two gallons per 100 miles. The technology for 35 MPG efficiency, of course, exists today.

Increased efficiency standards for appliances and changes to building codes also found respondents’ support at 67% in favor and 53% in favor.

Respondents see opportunities in emerging markets; Vietnam may lead way

2008-10-20T15:31:00.001-04:00

Emerging economies are labeled so for a reason, and their popularity among technology companies and investors is not weakening. Our Technology Leaders Forecast Survey found that 43 percent of respondents are looking to expand operations into emerging markets, with China, India, and Southeast Asia leading the way.

Interestingly, the responses skewed toward heavy investments by large companies into Southeast Asia, and DLA Piper Partner Khoa Do has high praise for Vietnam’s potential to be a hotbed of activity for the tech industry.

Compared to its neighbors, Vietnam has the fastest-growing economy, he said, and in terms of GDP growth, it is on the heels of India. This year, Vietnam has attracted a record $15.3 billion in foreign direct investment.

“I think this phenomenon has been fueled by Vietnam’s fast-growing $70 billion economy that has been absolutely blessed with a population of 86 million industrious people, a low median age of 27, and rock-bottom unit-labor costs,” he said.

Another noteworthy finding is the confidence respondents have in tech firms based in the United States to originate “leapfrog” technologies, with China and India named frequently as runners-up. Given the current financial crisis, however, some firms may miss out in the short term if risk aversion becomes a greater focus.

Open source software used, say respondents, but might not be adequately policed

2008-10-20T15:27:00.000-04:00

The DLA Piper Technology Leaders Forecast Survey indicates that although a majority of software companies are using open source applications in their products, many do not have an open-source policy to control the use of that software. This result is consistent with the findings of Gartner Group and other analysts.

Because open source licenses impose obligations on the licensee just as licenses of proprietary software, companies need to manage the use of open source software like any third party software. Companies who haven’t developed policy to manage their open source use might be unknowingly exposed to risk that could derail a merger or affect their financing.

“Many people believe that open-source software comes with no strings attached and no obligations. That’s simply wrong – it’s like any other software in that it’s provided under a license. And some of those licenses can be quite unusual,” said Mark Radcliffe, partner at DLA Piper.

Most open source applications, Radcliffe said, are granted under a General Public License, which mandates that upon distribution of the software the source code be available for free use, distribution, and modification.

Smaller companies are more apt to use open-source software because of its potential to cut costs, the survey states. But Radcliffe cautions that companies with proprietary business models – whether large or small – need to use open source software with care so that their proprietary licensed software does not become subject to the terms of the General Public License. He provided the example of a global Fortune 100 company that made a $500 million acquisition only to find out the acquired company might have to make their fundamental software available under the General Public License which would have reduced the value of the acquisition dramatically because the acquired company had used software under the General Public License in its product.

Though the acquiring company determined that the General Public License did not apply to its proprietary software, the incident caused the company to establish a separate due diligence process that addresses the use of open source for all of its M&A.

“Open source is ubiquitous, it’s inexpensive and it’s central to the cost structure of most businesses,” said Radcliffe. “But you need to use it sensibly. You need to understand what your obligations are and you need to make sure that you comply with those obligations. The only way to do that is through an open source use policy.”

Stagnant IPO market not likely to turn until second half of 2009, according to DLA Piper study

2008-10-20T10:00:00.001-04:00

The DLA Piper study found that over 90% of respondents indicated that they did not expect the market for IPOs to rebound until the second half of 2009 at the earliest. More than 55% said it would be in 2010 or later.

“To some extent, this represents the impact of the continuing pessimism about IPOs which has never fully recovered from the shut down in the market that resulted from the 2000 bubble burst,” said Peter Astiz, Global Co-head of DLA Piper’s Technology Sector Practice. “It also obviously reflects a strong sense of concern regarding how long it will take capital markets to recover from the current crisis.”

Given that there has been much speculation about the causes of the IPO slowdown even before the current crisis, the survey asked technology leaders what they thought was behind the slowdown. Responses to the questions varied widely:

Approximately 22% responded that it is merely a cyclical phenomenon.

24% responded that it reflects structural changes, such as the impact of Sarbanes-Oxley and the restrictions on investment bank analysts.

The greatest number of respondents, 34%, however, stated that it reflects a more general trend towards companies accepting strong private company M&A exists rather than undertaking the risks of an IPO and growing a public company.

“To some extent, there can be a self-fulfilling prophecy in these dynamics. If a high percentage of the companies with the best IPO prospects sell rather than pursue an IPO, it can have the impact of dampening the average performance of the companies that do complete IPOs which, in turn, can impact on how future companies view the IPO opportunity,” said Astiz.

Please let us know what you think about the IPO market and when it is likely to rebound.

DLA Piper Survey: 70 Percent of Tech Executives do not see current financial crisis as serious as Tech crash of 2000 — VCs disagree.

2008-10-20T09:00:00.001-04:00

One of the most interesting findings of the DLA Piper Technology Leaders Survey was that nearly 70% of executives do not see the current crisis as being as serious as the Technology Bubble Burst of 2000.

However, 50% of the venture capital executives who completed the survey view the current crisis as worse, which is understandable given their focus on exit strategies for companies in their portfolios and the expectation that the greatest impact of the current crises will be on financings and exit opportunities.

According to Peter Astiz, Global Co-head of DLA Piper’s Technology Sector Practice, “the likely rationale among tech leaders is that although the economic slowdown resulting from the current crisis will have a negative impact on the sector, it’s more of a ‘collateral impact.’ In contrast, the 2000 bubble burst was centered in the technology sector.”

In terms of short-term operating implications, two-thirds of respondents reported that they have seen a decrease in revenue. However, the number of respondents that were reducing R&D expenses and sales and marketing expenses was 27% and 16%, respectively.

We believe this reflected confidence that the impact of the financial crisis was expected to be more temporary and that, notwithstanding lower expected revenues, most companies were still planning to invest for the future. As the crises have deepened and there has been substantial publicity about the need for venture funded companies to reduce expenses, we expect that the response to this question would be different if asked today.

Are these conclusions consistent with what you’re seeing and hearing in the marketplace? Please respond and let us know.

Firefox Mobile: A Litmus Test For Open-Source And The Next Generation Of Mobile Browsing

2008-10-18T01:00:00.001-04:00

Handhelds are widely viewed as less than ideal for Web browsing, but millions of professionals across most industries are using their ubiquitous BlackBerrys, iPhones, Treos and other mobile devices to access the web. Browser support is increasingly becoming a selling point for these devices – just ask any smartphone user if they like the device's browser.

Mozilla has entered the fray with a mobile version of its Firefox browser, representing big news for mobile computing as well as the ever-growing open-source movement.

Mozilla posted a video walk-through of the release, an “alpha” version meant for developers to tweak into a usable beta version, and a “wish list” for mobile browsing on its blog. Additional screen shots that show some initial problems that need to be solved are on Mozilla's blog as well.

Next Tuesday, the DLA Piper Global Technology Leaders Summit will enlist experts to examine two issues related to these developments: the viability of open source as a business model and the future of mobile computing.

If Mozilla can achieve true functionality with the items on its mobile browsing wish list, it will reinforce the potential for open source business models. And given that these devices create constant connectivity, what more can a browser do to empower their users and drive efficiency?

We will share the findings of these panels as they occur on Tuesday and will provide more perspective on open source and mobile browsers. In the meantime, feel free to post your thoughts in the comments section.

Analyst Firms Say Tech Sector To Bend But Not Break Amid Market Turbulence

2008-10-17T15:46:00.008-04:00

The San Francisco Chronicle reported on timely news yesterday that connects the weakening global economy to the technology sector.

As we prepare to broadly release our Technology Leaders Forecast Survey on Monday, we were most intrigued by the following excerpt which captures the essence of Tom Abate’s story:

“In recent days, the firms that track corporate and government tech spending have lowered their growth forecasts in light of the global financial crisis. But they still generally expect the sector to grow a bit - and are pretty certain that tech will suffer far less from the current meltdown than from the dot-com bust.”

Coincidentally, we asked this very question in our survey: “Do you believe the current financial crisis will have a more adverse impact on the technology industry than the tech crash of 2000?” However, we received different responses to this question from technology company executives and venture capital executives which we will release in greater detail on Monday.

Industry observers quoted in the SF Chronicle story contend that tech is insulated from substantial damage because today’s turbulence is guided by the weakening housing sector, not business in the tech sector specifically, and also because a good portion of technology spending goes toward necessities, not discretionary purchases.

Relatively speaking, this is positive news for the technology industry. Analysts cited in the article gave specific forecasts for what the sector should brace for in worst-case scenarios for 2009:

Gartner: 2.3 percent growth

IDC: drops of 1 percent domestically and 0.5 percent globally

Forrester: drop of between 2 and 4 percent

Our survey of leading technology and venture capital executives examines tech’s exposure to the financial and economic uncertainties that confront the industry. Be sure to visit the blog throughout the day on Monday for a series of posts on our survey.

In the meantime, we encourage you to weigh in on how you think the economy will affect the tech sector in the coming year.

DLA Piper Global Technology Summit to Assemble Industry Elite at Pivotal Moment for Tech

2008-10-15T19:24:00.003-04:00

As the technology industry navigates an unprecedented financial crisis and awaits the outcome of a historic presidential election, The DLA Piper Global Technology Leaders Summit will assemble a distinguished cast of technology executives and venture capitalists who will gather to vet the most-pressing challenges, issues and opportunities confronting the industry in the current market.

Where will the next round of financing for innovative businesses come from? How will tighter controls on expenses affect growth opportunities? How will Sequoia Capital’s recent meeting with its portfolio companies affect VC investment? Can green technology innovation actually be positively affected by the current economic environment? When will the capital markets begin to stabilize and the IPO market rebound?

There couldn’t be a better time to tackle these issues. The turbulent financial markets and the unfolding policy responses by Washington and governments throughout the world directly affect the technology industry. The leaders who are open to understanding, adapting and working through these challenges will be able to maximize their market position in the months ahead. While today’s market uncertainty poses challenges, it also provides opportunities for savvy companies to gain market share and enhance organizational value.

We are very excited to be hosting the Global Technology Leaders Summit, which we will cover in real time on this blog. Add the RSS feed or e-mail us with questions. In addition, we will be unveiling the results of our Technology Leaders Forecast survey, developed in conjunction with the Summit, on Monday, October 20.