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Study: Most Consumers Share Whereabouts Via Mobiles

Mobile phone use is surging among U.S. adults, and most handset owners are using the devices to share information about their whereabouts, according to a new study from Pew Research Center.

The percentage of adults who own mobile phones now matches the percentage who own computers, says Pew in a study released today. And more than 80 percent of them say they use voice calls to share their location. That may be good news for startups such as Foursquare, which is a mobile application that lets users display their location to friends, because it shows people want convenient ways to coordinate meet-ups.

Some 45 percent of mobile phone users call to check in, or to check someone's location daily, according to the survey of 2,252 U.S. adults conducted in April and May. The activity is only second to calling to just say hello and chat, done by 48 percent of the respondents daily.

The study also discovered that U.S. mobile phone users like to keep their handsets close by at night. Two-thirds of American adults sleep with their phone right on or next to their bed. Heavy texters are more likely to sleep next to their phone, and the numbers of those users are on the rise. An average user sends and receives 10 texts a day, up from five text messages just eight months ago, the study found. Some 72 percent of adults 18 and over with cell phones send and receive text messages, up from 58 percent surveyed in December of 2007.

Dell Adds Fusion-IO As An Option On Servers

Last year I wrote this profile of Fusion-io, a startup whose data storage technology so impressed our readers, that they voted it the top up-and-coming innovative company in an online poll that's also known for having Apple co-founder Steve Wozniak on board as its chief scientist. Its been interesting to check in on the company's progress since then.

Its latest news came, from Dell Inc., which said it will offer Fusion-io's so-called ioDrives as a build-to-order option on three lines of its servers. This would mark the third company to offer Fusion-io's technology on its servers, the other two being Hewlett-Packard CO. and IBM Corp.

Fusion-io's technology uses flash memory, essentially the same chips used to store music in an MP3 player, to replace the power-hogging hard drives in high performance storage gear. These Storage Area Networks, or SANS, are widely used by large businesses for financial databases. The key problem with hard-drive based SANS is that you have to buy storage for a lot more data than you actually have, which pushes up not only the cost, but the amount of power required to operate it, which adds an extra layer of cost.

I talked with Rick White, Fusion-io's chief marketing officer yesterday and he said it's not uncommon for Fusion-io customers to replace between seven to 10 hard-drive based servers with one one server with an ioDrive added in. That can mean a lot savings.

Dell's relationship with Fusion-io goes back a few years. It was an early investor in the company, and had been offering ioDrive-enabled servers only occasionally when customers requested them. "In terms of numbers it was a niche product for us," said Paul Prince, CTO of Dell's Enterprise Product Goup. Steadily demand for ioDrives grew, so much so that Dell decided to re-cast its relationship with Fusion-io, and make the ioDrive an official build-to-order option on its R710, R810 and m610x servers. "We view this as a natural evolution of the partnership, Prince said.

Aside from investments from Dell, New Enterprise Ventures and Sumitomo Ventures, Fusino-io was also notable last year for a $48 million round of funding announced in April of 2009 from LightSpeed Venture Partners. I said it once and I'll say it again: It's a company worth watching.

INQ Handsets Come to North America

The North American handset market has just gotten more crowded. On July 28, INQ Mobile, owned by Hong Kong-based carrier Hutchison Whampoa Ltd., said it will start selling its INQ Chat 3G phone through Telus and Koodo Mobile, both based in Canada.

The device will boast a Qwerty keyboard, pile all messages into one inbox, and feature a fast browser and social apps such as Facebook. Telus hasn't disclosed pricing. Koodo expects to sell the phone for about $50, according to INQ.

At this price, INQ should compete with low-end handsets from Research In Motion and Samsung, said INQ CEO Frank Meehan. "We are going into RIM's heartland," he said in an interview. "We are coming in with a device that's really aggressively priced, and with bells and whistles."

For INQ, the U.S might be next. The company is in discussions with U.S. wireless carriers, and hopes to introduce a smartphone in this market in 2011, Meehan said. He didn't disclose which carriers he is talking to. INQ is within months of unveiling a smartphone based on Android operating system developed by a consortium of companies lead by Google.

With Canada under its belt, INQ will be selling its phones in 12 countries, including the U.K. and India.

Live Gamer Powers Electronic Arts Microtransactions

One of the biggest trends in the world of video games is microtransactions, which give content providers the ability to sell virtual goods such as clothing and car modifications for anything from a few cents to a few dollars.
New York-based Live Gamer appears to be gaining more traction in this market by handling many of the technical aspects of such transactions. The company announced today a deal to power Electronic Arts' virtual goods platform. Live Gamer announced earlier this month that it also had signed up game publishers THQ and RealNetworks. Through its partners, it now supports over 83 million users in 23 countries. FInancial terms of the deals were not disclosed.
Traditional game companies have largely sat on the sidelines while watching the rapid rise of social gaming companies such as Zynga, which lets people play for free and then buy virtual goods in a game with real money. EA in November purchased social gaming company Playfish for $275 million in cash and $25 million in equity. EA will pay another $100 million if Playfish meets targets at the end of 2011.
Researcher DFC Intelligence projects the U.S. and European market for virtual items in free-to-play games will grow to more than $3 billion by 2015 from $800 million in 2009. Companies are moving to quickly get into this market by outsourcing the technical aspects of adopting a virtual economy, such as the ability to create and sell the merchandise and track the trading of the virtual goods. Live Gamer lets game companies integrate their service into an in-house e-commerce platform, or work through its own system.

Hulu Plus Comes Early to Sony's Playstation 3

Just a couple of weeks ago, on June 29, it looked like Sony would have to wait a few months to offer the Hulu Plus subscription service through some of its products. Sony announced today that certain PlayStation 3 owners will get access to the $9.99-a-month video-subscription plan immediately.
Here's the catch: Only people in the U.S. who already subscribe to Sony's new $49.99-a-year PlayStation Plus network subscription service will be invited to sign up for Hulu Plus. The PlayStation Network has 50 million registered users but Sony has been trying to increase revenue with a subscription service, which offers select downloads and game trials. A wider rollout to all U.S. PlayStation 3 users will come later.
The service also is available on Apple iPhones, iPads and iPod touch devices, and certain Samsung televisions and Blu-ray players.
Hulu Plus offers viewers more content than they get from a free Web version, which is being limited to only a few recent episodes of shows. Some early testers of Hulu Plus have complained they are still being forced to watch the commercials that subsidize the paid site.

My Next Blog

You can find my next blog at

www.southmountaineconomics.com

I'm taking a hiatus from blogging for about a month. But I will be focusing on innovation and growth.

(If there's any problem with getting to the blog, let me know)

My whereabouts

To confirm the rumors: I was not offered a position by Bloomberg.

To my friends at BusinessWeek, both old and new: We had a fantastic run, and I loved working with you all. Sometimes we were good, sometimes we were great, but we always had integrity and soul (yes, that's the word I mean).

To Norm, Josh, and all my BusinessWeek friends who are going over to Bloomberg: Good luck! I know that you are going to build an exciting new magazine. It won't be the same as the old BusinessWeek, but times have changed, and it's time for BusinessWeek to change with them.

As for me? I've got definite plans that I'm not ready to post about yet. I will, however, put up a new email address before closing down shop here. I will continue blogging at a new location, with a hiatus of a month or two.

Service Sector Inflation Ticks Up

The headline number for this morning's PPI report was an 0.6% decline in the price of finished goods less food and energy ("core PPI"). In fact, core finished goods PPI has fallen for 4 out of the past 6 months. So if we just look at this number, inflation seems like it isn't a problem,

However, I prefer to look at a different statistic in the PPI report--the PPI for traditional service industries. Never heard of it? You are not alone. Starting a few years ago, the BLS aggressively broadened its coverage of the service sector. In particular, the "traditional service sector" includes everything from telecommunications and web search portals to health care to banking to management consulting to fitness centers.

So now the BLS publishes a PPI for these service sector industries (it's at the back of the report, pp 20-21). I wrote about the service sector PPI on my blog in February, in a post entitled "The PPI says: Service Sector Deflation is Almost Here."

Now, we have a really big divergence in the path of the core finished goods PPI and the service sector PPI. Core goods inflation is collapsing. But services PPI is slowly ticking up.

I think the service sector PPI is a better measure of the underlying inflation rate, because it covers a broader swathe of the economy. So this chart tells us that inflation is slowly starting to recover.

Innovation, Jobs, and Corporate Performance

Next week I'm looking forward to speaking at two important innovation-related conferences. On Thursday I will be in Chicago at "Innovating Our Way to Prosperity" put on by The Institute for Work and the Economy. It's obviously a critical topic these days, given the weak state of the job market, and I will be giving a talk on "Moving Beyond America's Innovation Shortfall."

Then on Friday I will be in Philadelpha at the Wharton School, at "Borderless Innovation: Management Practices, Promises and Pitfalls" presented by the Mack Center for Technological Innovation. This trend towards borderless innovation is central for today's global economy, and understanding how it works may be crucial for our future global growth, and our future standard of living. My talk is entitled "Global Innovation: The Big Experiment."

And yes, these two conferences are closely related to each other. In the first conference I will look at the innovation shortfall and its aftermath from the viewpoint of job creation in the U.S., and in the second conference I will focus on global innovation and corporate performance. It's my contention that these two perspectives, while very different, actually come down to the same issue: How can we assure that we get more genuine innovation in the years going forward?

I will likely post my presentations afterwards.

Advanced Technology Deficit Widens in 3rd Quarter

Here's more bad news for jobs.

According to this morning's trade report, the advanced technology trade deficit widened to $18.2 billion in the third quarter, up from $12.9 billion in the second quarter of 2009 (advanced technology products include 10 categories, such as information and communications, biotechnology, and aerospace).

The third quarter ATP deficit, at $18.2 billion, was just below the $18.9 billion of a year ago. I believe that was the record, though, I'm not 100% sure.

Nevertheless, the widening of the ATP trade deficit is not good news for U.S. production jobs, since it means that even as demand for innovative products recovers, the production benefits are primarily being felt overseas. Employment in the computer and electronic products industry, for example, fell at a 10% annual rate in the third quarter.

What about royalties and license fees to produce the new technology--doesn't the U.S. benefit from that? The total trade surplus in royalties and license fees was $14.4 billion in the third quarter, smaller in magnitude than the advanced trade deficit. Given that royalties and license fees include movies and tv shows as well, it's likely that the amount of revenue from licensing the overseas production of advanced technology products was actually substantially less.