A Weekly Digest of The World's Financial Press
Wednesday 12 May 1999
On Vision 2, Steven Ballmer and Bill Gates' plan to reinvent Microsoft for the Internet age
GATES WANTS to urge his troops on to new heights developing Windows software - the core business. But he also wants his programmers to be on the Internet cutting edge. The trick will be pressing on both fronts without going to war on itself.
Ballmer's plan is supposed to ward that off. A crucial piece of Vision 2 is a massive makeover of Microsoft into eight new groups that will no longer dance just to the tune of the company's technologists but to customers. "Follow the customer," bellows Ballmer. "That's the No 1 thing you do if you are lost.
And lost is what Microsoft was becoming. It had begun to look sluggish. Will Vision 2 work? Ballmer says bumps are inevitable. But if Microsoft stays focused on customers, it may end up running as fast as the Net whippersnappers.
- Michael Moeller, Steve Hamm and Timothy J Mullaney
On why a consortium of securities players rescued the electronic stock exchange Tradepoint last week
IN AN age when no one is certain what an exchange is, the only sensible approach is to concentrate on what customers consider important. The consortium believes customers' needs are best served by the Tradepoint model: a transparent, low-cost trading environment, run as a commercial business.
The Tradepoint deal can be seen as the latest skirmish in the battle in the securities industry to capture pockets of liquidity - the key to being able to deal cheaply for big institutional clients. Brokers, fund managers and alternative trading systems are all competing with exchanges to capture liquidity. It makes sense for players to pursue a two-pronged strategy: compete to capture order flow, while making sure they are connected to many pools of liquidity as a protection against fragmentation.
Far Eastern Review
On why investment in the real world as well as the virtual one is needed to boost Asian economies
HIGHER-TECHNOLOGY adoption is crucial to Asia's growth - through greater service efficiency over the Internet or more productive manufacturing. But goods still must get loaded on ships and airplanes quickly (and people must feel that efficiency matters). While there are now plans to spend on conventional infrastructure - such as part of a $3.5bn (pounds 2.2bn) package in Thailand - we detect Keynesian motives.
We'd be happier if new construction was predicated on the necessary, rather than to jump start economies. Also a concern is that when economic normality returns, it will be flashy infrastructure that'll hook the pocket book at the expense of basic projects. The challenge is to strike a medium. After all, focusing excessively on the virtual world, for example, may be to ignore the other very real necessities of doing business.
On why crude oil can hold on to its dramatic price rise - from $10 a barrel in January to $19 last week
IS IT for real? We think it is and, more to the point, so does Tom Petrie. Tom insisted OPEC was dead serious about slashing supply, when the professional energy watchers dismissed it as just a charade. Tom, of course, was right. He reckons that crude might move up briefly to $20- $21 (pounds 12.50-pounds 13) a barrel, but the powers-that-be at OPEC figure anything higher would tempt the bad boys to revert to their cheating ways.
While demand should get a lift from Asia, even more bullish is declining shipments from Iraq. The amount of oil Saddam is allowed to produce is measured in dollars, not barrels. So the drop in prices last year enabled Iraq to produce a lot more than anticipated. To squeeze as many barrels out as possible, Saddam did terrible damage to his wells. Now he's paying the price with a steep decline in production.
- Up & Down Wall Street
On how Latin America's economies could have avoided following Asia into financial crisis
A BETTER approach than dollarisation would be the following. First, countries would limit short-term borrowing from abroad, especially from international banks. Second, they would maintain enough currency flexibility to absorb international and internal shocks. Third, countries in the region would make a continuing policy push to diversify exports away from commodities and towards a wider range of manufacturing and services. This would afford some important stability in the face of fluctuating commodities prices.
One longer-term approach might be a regional currency that is flexible vis-a-vis the US dollar. If Argentina and Brazil had been pegged to each other, and flexible to the US dollar, they would most likely be enjoying a year of significant economic growth.
- Jeffrey Sachs
On how the new Star Wars film is an important caveat to business gurus' emphasis on clusters
THE PHANTOM Menace is a triumph for Hollywood, the world's premier entertainment cluster. Other countries have wasted millions trying to build film industries; but only Tinseltown could orchestrate something like this. But George Lucas, Hollywood's richest film maker, does not work there and seems to visit it as little as possible. Moreover, America's ubernerd, Bill Gates, is based in Washington state, not Silicon Valley; and its wealthiest investor, Warren Buffet, lives in Omaha, Nebraska, as far from Wall Street as you can get.
The moral is clear. If you want to become rich, move to a cluster - but to become the richest, move on. But the advantages of distance will come only if your hunches are as good as Mr Buffett's, your software as dominant as Mr Gates' or your films as popular as Mr Lucas's.
- Leader Comment
The Nikkei Weekly
On what Japan's Prime Minister has to do to fix the economy on his returns from visiting Washington
JAPAN'S ECONOMIC woes pose serious problems for the US as well. Deepening deflation could re-ignite Asian financial and economic crises and cast a pall over buoyant US markets. The Japanese government must not continue with lavish public-works spending that could badly damage the nation's fiscal and economic health. So structural reform must be urgently implemented, along with steps to stimulate domestic demand.
Despite the differences in diagnosis about Japan's economic health, Tokyo and Washington share the goals of recovery and reform. It is now Prime Minister Keizo Obuchi's job to avoid deepening deflation while pushing through the necessary structural reforms. If he fails, his Liberal Democratic Party will find itself facing another bitter setback in the next election.
- 1 Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
- 2 Expert urges cat lovers to own just one animal each
- 3 Sainsbury's '50p challenge' poster telling staff to encourage customers to spend more placed in shop window instead of staff room
- 4 Yes, the iPhone 6 is a miracle, but it's Apple's tax affairs that deserve a double take
- 5 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
Sainsbury's '50p challenge' poster telling staff to encourage customers to spend more placed in shop window instead of staff room
Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
Isis an hour away from Baghdad - with no sign of Iraq army being able to make a successful counter-attack
British man raped while urinating in bushes at Oktoberfest beer festival in Germany
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
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