April 2004

I was mentioning yesterday about Loic covering the European Economic Summit from Warsaw. Do go and read his posts, he is doing a great job --- some that I find very interesting: future of business in Europe (entreprenurship and education get mentioned several times); do we need a president of Europe? or new Europe vs. old Europe.

You can read from here (pdf) the official report comparing the performance of EU and soon-to-be-part-of EU countries as a progress assessment against what EU decided in Lisbon. ("intention to make the EU the most competitive and dynamic knowledge based economy in the world capable of sustaining economic growth with more and better jobs and greater social cohesion") It was widely covered in the media (BBC, FT, Bloomberg) so I won't get into more details.

As you may expect Romania is among the poorer performers, next to Turkey and Bulgaria. I actually had the chance to read the Romanian report about it (thanks to Doug) which among others mentions that Romania's competitive advantage is still the cheap labor costs and that we've made a significant improvement on the information society (hence the e-readiness ranking). One of the conclusions goes in line with what I claimed a couple of days ago:

Long-term unemployment among recent graduates indicates a mismatch between the skills the education system provides and the labour market demand. An important challenge remains the assistance of displaced workers in order to acquire new qualifications demanded by the structural shifts of the labour market.

Finally, another one -- "While the social attitude towards entrepreneurs is often negative and governmental efforts in encouraging entrepreneurship are weak, important progress was achieved in terms of facilitating market entry."

Julian Bond has some very good ones about interoperability issues and the pressures from the Telcos biz model.

RAEF and Romanian Investment Fund just announced their exit from the Tec Holding by selling their part to a local business person. Tec is one of the first movers as being an integrator in the poultry industry and last year it had EUR 43 mil. in sales. Presently, with more than EUR 20 mil in debt they have some financial problems. The Achile heel -- high scores of working capital needs in the industry. Apparently they need about 8 mil. to put the business afloat. Tough times for Marius.

It is a four-tier delivery model designed for application support and maintenance outsourcing market. The concept was created for providing clients with the knowledge, expertise and local client relationships of engagement and project managers, backed by global delivery capabilities.

It sounds as a clever approach combining competencies for deploying resources on-site, near-site, near-shore and off-shore (hence the four-tier model). Apparently RIS - a Canadian outsourcing company - chose to open a Solutions Centre in Romania to fill out its model.

It started today in Warsaw and will discuss the impact of EU enlargement. There will be 700 representatives from 45 countries as well as some 15000 anti-globalist protesters. Loic is covering it live from there by summarizing and commenting on the sessions in an experimental blog.

What is it like in the Czech Republic - read an insider's perspective. 

TJ points to Joe Ollivier's thoughts about it.

I am terribly busy these days -- just wanted to make sure you don't miss Google vs. VCs (reg. rqed.) or why a great company has to shift focus from its core strategy to putting alot of pressure and energy in a stupid IPO that would make rich their investors. Or to put it more simple value creation vs. value destruction.

Here is the experience of Scott, an American living in Tallinn, when filling out his tax forms in Estonia as opposed to his American experience. I still cannot believe that it is possible to have it all done online within less than 10 minutes.

Here is what some of them charge for speaking at seminars or conferences:

Clayton Christensen: $40,000
Jim Collins: $45,000
Stephen Covey: $65,000
Gary Hamel: $50,000
Tom Peters: $65,000
Michael Porter: $70,000

I was lucky enough to get to see Michael Porter and Philip Kotler speaking live at conferences - I think it is a remarkable event, they're well worth their fees.

This is Citibank's Stephen Cone claim adding that the industry picture is filled up with "homogenized Kodak moments". His approach though for promoting and differentiating Citibank's asset management business is presenting their mutual fund managers and their investment strategies, instead of playing on the brand name. It is certainly one way to do it, my take is that the brand name also weighs considerably in the decision making process.

I think it is worth to remember his mentioning of three elements to consider when building a brand:

1. Create excitement in the marketplace. How do you get people excited, both employees and customers?
2. How do you continually create news about the products and services you're offering?
3. How do you create a really compelling emotional connection with customers?

Adrian Nastase, the Romanian PM: "the only chance of development is encouraging the young people and their efforts and energies of a young generation of business people".

I like the word encouraging, sounds so "promising". Nastase is a politician and has a good point here but there seems to be a big discrepancy in what he says and what it's actually happening around. Young universities graduates still find it difficult to get a job, even though it is not entirely their fault. Moreover, the educational system is becoming obsolete in spite of the (still) good results in the international education contests. (informathics, math, physycs, etc). And this is because of both the older generation of educators and the system per se.

On the other hand this reflects on the demand side, last week at the outsourcing conference I was actually chatting with another CEO from the industry who agreed that it is increasingly difficult to find good candidates for hiring. Creating a good business environment is useless if there's no skilled people taking advantage of it. And I truly believe that the more quality business people perform in Romania the better the business environment will become. And a good education system is one of the main engines for getting at this. 

Softwin's Florin Talpes with some industry estimates: this year's local industry growth will be of about 13% getting to EUR 230 mil. while software exports will increase to EUR 220 mil. from 170 mil in 2003. 95% of the exports will come from outsourcing or, more specific, near-shoring.

The entire local IT industry is expected to reach EUR 782 mil. in 2004. You can read more about Romanian software industry and the governmental approach on cyber-crime from this BBC story.

Consolidation signs in the Romanian insurance industry -- Omniasig acquires Asirag in competing for more market share.

Also, Galenica North East made an exit from Venoma Holdings to investment funds Black Sea Fund and RPPF. The aim of the latter is control of Romanian drug producer Sicomed ($46 mil. in sales or 25% market share). Black Sea Fund is a $100 mil. fund part of Global Finance while RPPF is a $54 mil. fund administered by GED Capital Development and with investments in PCNET (internet service provider) or Continental (hotel chain).

Honeywell is shifting from manufacturing to thinking in Romania by opening a 25-people center for designing industrial software for all Honeywell's CEE divisions. They already have a $220 mil. manufacturing branch operating locally.

Also, the national railroad operator CFR finally decided to revamp its train fleet with Siemens help. The Germans will import some 57 trains from Germany and will have 63 manufactured by Astra Arad under Siemens brand.

On a broader context, Romania seems to be perceived by investors and analysts as the #3 FDI spot after Poland and Russia.

If you have the chance don't miss Ibrahim Ferrer and his Buena Vista Social Club dream band. Last night I saw them performing live and I was amazed by the respect those guys have both for the sounds world they are creating and for their audience. More admirable is that their art seems to stem from their way of living - life simply means music and letting others be part of their joy. If every each of us put the same passion and respect in everything we do on daily basis we're on the way for creating a better world.

Jeff points to this gem about Google's numbers and about one of its potential competitors - Akamai. 

Jan Haugland is signaling that at the 2006 World Cup there will only be Budweiser or other American beers served in the stadiums. And yes, the event happens in Germany, the country with a culture for beer. And to make things worse, McDonalds got the exclusivity on food in the stadiums meaning no bratwursts for the Deutsch. That's a tough one, I agree with Jan - money rules over taste. The German officials say they're looking for a compromise, my take is that it will be an expensive one.

Is the 1 Giga email service becoming a viral strategy? It looks like companies increasingly started to use the offer - this time an Israelian one and it claims to be the world's first. And it is not the one Tina mentioned she uses.

Again Romania seems to be very resourceful on this chapter. Apparently the owner of a soccer club threatened the players that they would be sent to listen to classical music concerts if they don't win the next game. I don't think he planned a scenario for players falling asleep on the concert though.

If you think you have what it takes, here is an idea for making money that seems to have worked elsewhere: icecream for dogs. The value proposition: "a low-fat, low-carbohydrate, all-natural product sold at a premium price to indulgent, health-conscious pet owners." Witty, eh? Just let me know how it's working out. :)

55% of the people recently interviewed claimed that the Romanian Government cannot function without corruption. Whaaa! On the other hand 70% of the people who would notice a bribery act would do nothing about it. So you're complaining about it but still remain uninvolved. The sad truth is that there's too few options for a quite a powerful system. Silviu Dochia has a very interesting suggestion about what to do in these cases - pay the corrupted more!

The CDMA Romanian player announced that they're in line with their financial forecasts even though they're still in red. They broke-even EBITDA in 2003 with sales of $50 mil and expect 80-90 mil this year from about 300k subscribers. I know that some of the industry observers predicted the company will go under by the end of 2004 - I doubt it though.

An interesting story (in Romanian) from Diana about viral marketing strategy "applied by the book" by Ogilvy when campaigning for Ford. The story is somewhat funny or cynical depending on the mood of the reader - in short there is this orange cat which looks curiously into the window roof of a Ka and gets decapitated by the automatic mechanism. Tough luck - curiosity killed the cat they say. Anyway, you can see the video by yourself, and even though I don't see it as viral marketing example (see Google's definition) here is my ranking:

Coolness factor: 3/5 (depending on the mood, I still think it would get a smile after a rough day such as the one I am about to end)

Pass it on ease: 4/5 (via email)

Marketing tie in: 1/5 (People will not really start rushing for buying Ka's)

I am off to soft21 seminars. Yesterday I attended 2 - one about export facilities and another one about the Romanian labor legislation. Today I will go to the outsourcing software development one. Will update later.

Janos from Kitsched signals that the BCR's website doesn't support any browser than IE meaning that basically anybody with something else than that cannot use it. And we are talking about the largest Romanian bank due to be privatized this year and which allocated a considerable IT budget - they actually run mySAP-Portals, one of the most expensive solutions used in Romania. 

Up to date 26% of @rgumente's readers use browsers other than Internet Explorer.

It is amazing what you can do with technology. This is the case of bluetooth-enabled devices (mobile phones or PDAs) that permit short distance communication with each other. Well nothing so amazing here, but apparently over in UK people use these devices for getting casual sex. The method is simple - use a toothing message as a greeting and if you found an interested partner the rest is just a matter of deciding where. Ah, and in case you're interested there's a beginners guide too. :)

Some of you may know that 2004 is the year with elections happening in several countries. Spain held elections in March, and others are countries such as India, USA or Romania. You can see the entire calendar for yourself, what I find it really interesting though is that Indians - who just started the Parliament election process today - are doing all the voting electronically. And we are talking about 650 million voters for 543 candidates!

The voting process will last until May 13 and requires electronic voting machines carried all over the country (800,000 polling stations) The Indians claim that the system is quick and that makes cheating virtually impossible. I am not so sure about that, however I am quite impressed by the Indian openess of embracing a technological solution that it is so obvious and yet not really used in Europe or even in US. In spite of a different situation when speaking of e-readiness.

Of course the story did get slashdot-ed and apart from the jokes there are some interesting related-arguments you can spare 5 minutes with.

NBA Dallas Maverick's owner Mark Cuban writes a very good piece about what stock market is and what exactly drives the demand and supply for a stock. It should be taken with a grain of salt but I tend to agree that it is all about making noise and marketing it accordingly, at times you may even call the stocks value proposition empty words very nicely wrapped up. I particularly liked this:

"Volume creates demand. Stocks don't go up because companies do well or do poorly. Stocks go up and down depending on supply and demand. If a stock is marketed well enough to create more demand from buyers than there are sellers, the stock will go up. What about fundamentals? Fundamentals is a word invented by sellers to find buyers. Price-earnings ratios, price-sales, the present value of future cash flows, pick one. Fundamentals are merely metrics created to help stockbrokers sell stocks, and to give buyers reassurance when buying stocks.  Even how profits are calculated is manipulated to give confidence to buyers."

More on the economics of Skype. I think that the value of it will prove if they work closely with hardware OEMs - a similar strategy to what Microsoft did back in the early days when working with IBM and then with Intel. They have the user base, the technology is good, it all depends on how they make use of them. And time is a factor here so they'll have to move fast.

Even though I think that anything internet related (or e-business, e-commerce, e-governemnt, etc) in Romania is still in an incipient phase due to the poor connection between strategy creation and strategy execution of the government, it seems that an EIU study places Romania on the 50th place in terms of being ready for performing e-related activities. Actually the quote is "a place where proactive government and smart businesses can use the Internet to improve services and create new opportunities".

I think the quote is somewhat right, Romanians are prepared for taking part of it as there is a strong generation in the 20-35 age range which is ready to get involved or is already involved to some level in an Internet related activity. The main problems are that such an activity (i)requires mass market and large adoption - and this needs education on the demand side from other levels of the society and (ii)needs a proper business environment - laws, security systems, bank cooperation, etc. Once the latter is set up, the former can spread via viral marketing boosting also the already increasing demand for broadband and other related industries. And this makes it clear where the ball is now.

Ant btw, am not sure you know about it, a big thing is coming and is being prepared since last year, aparently they are in the last phase and will launch soon. It will be very important, I think it will shake a bit the retail market in Romania. It is SoftPedia Mall.

UPDATE: Even though I got carried away by the Romanian e-readiness the entire report (pdf) is worth reading. The Nordics are leading the pack but this is nothing new, they are very open to everything new, be it in a technology context or not. (also Swedes are the most open Europeans in testing out new gadgets and Greeks are the least inclined to do so - excluding the non EUs) Surprising though is seeing that apparently people from UK are e-readier than the ones from US.

There's been several voices putting a lot of efforts in commenting the Gmail launch. The pros and cons are best summarized by Jeremy Zawodny and Tim O'Reilly with the first claiming that Gmail is just providing some incremental changes to the industry while the latter providing nine reasons for which all the fuss about its "issues" is bogus. I agree with Tim, obviously the 1 giga is a marketing gimmick and they seem to take the privacy issues very seriously. Plus that Google's history indicates a tradition of respecting its customers and I doubt that their strong culture will permit doing otherwise. And I also liked their product launching approach: releasing a beta version for a limited number of experts then heavily using their feedback.

It is the real estate in Romania. The market continues to develop and reached a stable stage, with demand exceeding the supply and rents remaining constant. On the demand side Romanian business is fluorishing and so is the need for office space. The supply is simple insufficient in spite of this year's forecast of several projects to be completed. You can read more about it from this 2004 market report (pdf) released by Colliers International and from this one released in 2003 about the industrial real estate from around Bucharest and industrial parks situated within 100km Bucharest.

That is the title of my last article published on the paper version of Computer World Magazine. You can find the PDF (in Romanian) over at Krogos Research and very soon the English version will be available. Next three articles will cover insights about medical software applications and market trends.

CFR is the Romanian railroad company and apparently this deal is a partnership with HP. While the value proposition is evident I am a bit circumspect having in mind how e-guvernare initiative is working out.

SAR just announced (pdf in Romanian) that according to their calculations from tomorrow on Romanians will finally start working for themselves or their families. That means that the yearly working 110 days which supposedly account for income directed to taxes will end today. Apparently a regular Romanian works for 18 days for paying yearly social taxes and only 4 for the property tax account. Last year the period ended on April 22 and in 2002 on April 18.

In spite of the below mentioned problems we confront with on the national level it seems that the international investors continue to put their foot in the door. TechTeam Global just opened a customer center in Bucharest. The gig is the standard PR in this cases: a low-cost, multilingual support integrated with the companie's offices for offering dynamic call routing, and which further extends capabilities for global customers. Other notable investments are in retail with three shopping malls due to be opened in Bucharest by the end of the year.

While in Romania we have all those EU-related and national problems here is a headline from the daily Norwegian Aftenposten sent by Diana:

Christian Demo mayors bash their own anti-alcohol tactics
"Mayors from the Christian Democrats' party were to meet in Oslo on Monday and send a clear message to party leaders: They're tired of anti-alcohol policies that leave the party looking like strict parents wagging their fingers at minors."

It looks like the idea of Romania joining EU later than 2007 is something that gets more and more contour internationally as I already said it. This Economist article (sorry, it's not for free) is basically building on the similar arguments of the EIU 2004 report but it bluntly acknowledges that the time is too tight for a rather broad set of measures and infrastructure settings so that Romania would aim to fit with the EU requirements. Some of the blunt things touched upon:

"Even the completion of negotiations would not mean that Romania was "ready" to join the EU in any strict sense. Nobody thinks this poor, sprawling country, whose income per person is 10% of the EU average, will have an efficient government, decent judges, a sophisticated market economy and mastery of EU law by 2005, nor even by 2007."

"Modernising Romania's legal system will mean recruiting and training about 1,500 judges, and the principles of judicial independence must be drummed into both judges and politicians-the work of five or ten years at best, not of one or two. The government needs to make its own workings more open and accountable, a tall order for politicians who mostly learnt their trade during the tyranny of Nicolae Ceausescu. It will mean, especially, more transparency in public spending, which is still used to buy loyalties and line pockets."

"One answer may be that, after struggling to digest so many ill-equipped countries this year, the EU will be in no hurry to repeat the experience. Early clashes with Poland have brought home the risks of letting a big but very needy country into the EU: it becomes aggressive and defensive, fearing that others will take advantage of its weakness. Romania might follow suit. If the admission of Romania in 2007 comes to look too daunting, the EU can slow the negotiations, raising questions and doubts until the moment for signing the accession treaty passes. (It would have to decide then whether to set back the admission of Bulgaria also.) Romania and the EU should think more more about this possible outcome. Delaying the next enlargement until, say, 2009, would give Romania more time to complete badly needed reforms. Fears that this might backfire, by demoralising Romania so much that its reforms unravelled, are probably misplaced-especially if a later date were offered as a firm promise."

So much for calling things on their name.

Petrom is the biggest Romanian state-owned oil company which is expected to be privatized this year. Here are some key facts about it. (via RomaniaEconomics Group)

The privatization and what it means
- The government owns around 93 percent of Petrom and plans to sell 33.34 percent to an investor, who would at the same time buy newly issued shares to raise its stake to 51 percent.
- Analysts have estimated the deal to be worth about $1.0 billion.
- Oil companies in central and eastern Europe are keen to consolidate their fragmented industry. Analysts say Petrom would offer strategic access to the Black Sea and could become a gateway for Middle Eastern crude into Western Europe.

Petrom Profile
- Petrom accounts for around 50 percent of Romania's car fuel market share and about 45 percent of the gas market.
- Upstream: It drills around 6.0 million tonnes of crude and 6.5 billion cubic metres of gas per year from oil and gas fields mainly in Romania. It also has operations in oil and gas fields in Kazakhstan.
- Downstream: It has two refineries -- Arpechim in Pitesti and Petrobrazi in Ploiesti in southern Romania, with a combined refining capacity of 8.0 million tonnes per year -- and over 600 petrol stations across the country.
- Petrom also has distribution networks in Hungary, Moldova and Serbia and Montenegro. The winning bidder will have to maintain Petrom as an integrated company for five years.
- Number of employees: 57,000 in 2003, according to data from the Petrom trade union. Data published by the company in 2002 showed that 56 percent of employees were in the drilling and production sector and 20 percent in the refining sector. The winning bidder would not be forced to keep a certain number of employees after privatisation.
- Overall assets in 2002 were around 98 trillion lei. Petrom sees its pre-tax profit rising by around nine percent to 3.29 trillion lei ($99 million) this year from 2003. It expects its turnover to rise to 80.4 trillion lei from last year's 72.5 trillion lei.

Bidders
- Austria's OMV said it made a binding offer for 51 percent of Petrom but details remained confidential. OMV also owns 25.1 percent of Romania's second-largest oil company, privately owned Rompetrol. The government has said OMV should avoid becoming a monopoly on the Romanian oil market.
- U.S. oil company Occidental Oil and Gas said it submitted what it called "a non-conforming bid" -- one that did not fully meet the government's requirements -- and that it was only interested in Petrom's exploration and production assets.
- Hungary's MOL said it did not submit a binding bid but instead offered Romania what it called a "strategic partnership". MOL already has a network of around 50 distribution stations in Romania. It offered to establish a mutual ownership between MOL and Petrom, with an up-front capital increase to finance an extended investment programme for Petrom, and to pay Romania for the "real value" of the 33.34 percent Petrom stake on offer. But MOL added that if Romania were to reject this proposal, it would consider submitting a binding bid for the Petrom stake.
- Non-binding bids were initially submitted also by Switzerland's Glencore International AG, Greece's Hellenic Petroleum, Russia's Gazprom and Poland's PKN Orlen.

I usually save reading Cringely's weekly article for the weekend as I have more time to digest his always interesting perspectives. This week he writes that firms can compete with Microsoft by simply ignoring it and gives as examples Adobe, Google or IBM on Java's strategy. Some food for thought.

I added some more links on the reading section and this includes more than the Romanian blogs I just mentioned. Also, I think it'd be interesting to have latest headlines of some of my daily info sources. Finally, I put some links to comments (blogs postings or web articles) that I find thought provoking.

If you have any suggestions for making @rgumente better just drop me a line. Next on the agenda is the trackback. Enjoy the rest of the weekend!

A must read presentation (pdf) from the Wall Street analyst Mary Meeker or the "queen of the internet". It's about 12 trends driving change on the internet, mentioning that the search-find-obtain (SFO) will provide the basis for the next killer application for the web. Also, online gains share from the offline, residential broadband became a standard as it hit the critical mass and thus prices started to decrease so that the internet became the growth distribution medium of the century. It is interesting to see that some of the things predicted by Mary are already happening -- see Google and Amazon case.

The Romanian blogging community is bigger than I initially thought, that is great!

Gabriela has one in Romanian and one in English. Mircea has a blog under Zope and which is written in Romanian, though in its infancy - that's cool, you may have noticed that @rgumente is under Zope as well.

Then you can also check Gabriel Radic's who is a Romanian designer living in Paris - this one is bilingual Romanian and English. Finally, another weblog written in Romanian only is Marius Buculei's fluturele de crivat.

In the first two months of the year we had about EUR480 mil. and that's not too bad, if the pace is maintained we get to some 2.8bn, and this is much more than the governmental forecast of EUR 2bn. As I already mentioned it, it is pretty obvious that this money has less to do with the governmental strategy and more with the tremendous investment potential from the country. I would go that far and say that this investment comes in spite of the actual national strategy for ensuring a healthy biz environment. But I digress.

In addition, something really worth noting is that Romanians working abroad had sent out in Romania via bank transfer about EUR 1.5bn, or some 3% of GDP. That is a number to consider and according to officials this year it is estimated at about EUR 1.8bn. Moreover, there is some unaccounted money (or undeclared) coming from the same source which officials estimate at about EUR 1.35bn this year. So all in all 2004 means about EUR 3.2bn coming from some 700,000 individuals working abroad.

Now this is the raw data, let's do some simple math. In 2003 the GDP stood at $57bn or EUR 49bn., and it is forecasted to grow with some 4.9% in 2004. That means EUR 51bn. Keeping in mind the above-mentioned figures of 700,000 individuals bringing in 3.2bn a simple calculation shows that the 2004 GDP could be covered by approx. 11.1 million people working abroad and that one person would bring in approx. 4,500 EUR per year. On the local level the working force is of about 9.3 million people standing for the same 51bn. with an average salary of yearly EUR 3000 (ok, those are some grossier calculations with several assumptions taken).

Now, the difference between the abroad workers and the local ones is their qualification. Most of the former are non-qualified while the opposite is available for the latter. However, even without all the above calculations it is clear that the according productivity is exactly the reverse.

This is one of the most important aspects which should be on the national agenda. How do we become more productive? It is not about the EU or NATO it is rather about how we create value more efficiently on the national level. And the low level of labor costs will change as a direct consequence.

This is something I have never seen in any of the problems posed by the officials. And IMHO together with creating a sound business and living environment IT IS the #1 item on the national agenda. Being part of EU, NATO or whatever will just be a consequence of solving this combination. 

Lots of buzz yesterday and this morning about the newly launched Amazon's search engine. I think people tend to overreact - it is just a venture where each party does what knows best. Google does the search while Amazon's purpose is consolidating its position in the online retail industry. And I disagree with John Battelle's claiming that you can't really be in the commerce business without having at least a strategy for owning search. Amazon's IS operating one of the best search engines, it doesn't need to own it, especially now, when the search engine space became crowded. Keep in mind that Amazon is in retail not in the search engine (or contextual advertising) industry. As such A9 is a clear example of consolidating position in the market and keeping core competency in focus. If interested in more info see the stories from CNET or Yahoo. 

UPDATE: The more I think about it the more I tend to believe that this is a deliberate strategy of Google to explore some lower end markets so that it would distract top competitors from attacking their search engine supremacy. Something similar to what Intel did by launching Celeron so that it would compete against AMD on lower ends at the cost of cannibalizing the Pentium sales. I know it doesn't have all the similar evidence hence I am not sure it makes sense yet, I still have to chew on it. If you have any insights, just let me know.

Tonight is the quiz night - I just laughed so much by taking this one, it made my night. Apparently I am just a casual blogger as I scored 36/100 which is below the average of 42.9%. (Via Rebecca)

Test your knowledge about Latvia. I did fairly well, but boy, Art and Teras would have been angry to find out otherwise. I don't watch "Sex and the City" and am not following Eurovision contests anyway :)

I had an argument with a friend of mine about the number of blogs/bloggers in the world. Apparently there are about 4 million blogs being published worldwide. According to a survey made in USA, approximately 2% of the US population is blogging, meaning 2.5 million adults.

Here is an analysis of OO vs. MSFT Office. The conclusion:

"Evaluation of OpenOffice shows that it provides better operational efficiency through its lower cost, interoperability, feature set and flexibility. Users with Windows, Unix or Mac OS X systems can interoperate seamlessly.[...] OpenOffice isn't a direct replacement for Microsoft Office, however. An organization with a heavy investment in Microsoft office and back-office products might be better off deploying or keeping Microsoft Office as its standard office suite. Enterprises with heterogeneous desktop systems and standards-compliant back ends may gain significant cost and productivity advantages by adopting OpenOffice.org while maintaining document compatibility with their customers and suppliers."

It's been tested for a while now and it appears that it finally got the green light. The players behind this are Connexion, Boeing and Lufthansa and starting from the end of this month anybody with a wifi laptop will be able to get hooked up on the internet for about 8 pounds for a less than 3-hour flights. I think this is both good and bad news. The good news is that it will open up the opportunities for the emergence of new business models given that "always-on" will increase the better spare time usage while flying. The bad news is that this new revenue source will somewhat postpone the shrinkage of the outdated airlines business model. It will also be interesting to notice if and how the budget carriers will make use of this as jumping in a me-too strategy will add considerably on their fixed costs. One thing is for sure: flying will not be as boring.

The company just entered the Hungarian market by acquiring a wholly owned business consisting of three retail stores, a distribution center and an internet sales facility. The deal is valued at $10 mil for a company with estimated revenues of $25 mil. in 2004. Not bad at all for Office Depot which had sales of $12 bn. in 2003.

I will be attending two conferences next week. First one is a 3-day event held by ANIS and soft21.ro consisting of conferences held by software vendors on three verticals (banking, utilities and transportation) and of seminars on IT export and financing. Second one is a joint event held by the Government and OECD experts on successful services exporting. If you're around just give me a sign. 

This is the title of my last column from ComputerWorld magazine which you can read from here. (in Romanian)

I was just reading the results of a poll about some of the greatest problems Romanians seem to be thinking of. Well, apparently corruption is the greatest evil of them all with some 85% of the interviewed people claiming that there is corruption within the government. This is a HUGE figure and any way you would look at it it signals that there is something rotten in Romania (not Denmark). If it is true it is a clear problem supposedly open to be tackled should the parties that need to do it are willing to get involved. If it isn't, then they clearly have a marketing problem. Either way, the authorities must take a stand, my guess is that the truth is somewhere in between, there are obviously corruption problems but also the Government is incapable of communicating a good image about the job it's supposed to do. If and when it's doing it. And I mean it both on the national and international level.

You may know also that on the international level one of the last "marketing" attempts was an article written by the Prime Minister himself and published in the Wall Street Journal. And even though I agree with some of the comments of people considering it yet another piece of B/S, we should all be aware that it is a marketing thing for Romania. Unfortunately it is only a drop in the rain, it certainly takes more than a flower for spring to come.

Getting back to the above mentioned poll, I also notice the Romanian optimism about joining EU - 71% of the respondents said that Romania will have more to win than to lose by its accession, and 50% think that their standard of living will improve. While I am not arguing the benefits (or lack thereof) of joining the EU - others already seem to acknowledge some - this clearly shows the lack of awareness about what the real problems from Romania are. The governemnt put EU as a main goal on the national agenda inferring that this would ultimately solve all the problems. But by doing so it's just avoiding naming and tackling the multitude of challenges for creating a healthy environment for living and/or doing business on daily basis.

It is Coren Group involved in meat industry and running a yearly $3 mil. sale business. They don't comment why they're looking for an exit though some insiders claim it is the black market unfair competition. I think they got a bit frustrated with the local business practices but I doubt that in a growing industry you get discouraged by that. My guess is that they just didn't have the right people understanding how to deal with the Romanian market fundamentals and thus taking the company to the next level. Especially now when the competition is getting tougher with US Smithfield making a presence in Romania.

Tina and Claudia were ranting about their experience while driving in Bucharest. It is true there is some sort of a challenge for educating your patience as well as an adrenaline source (depending on wheteher you see the glass half empty or half full) but this should last until you try biking the streets of the beloved Bucharest. Of course that keeping in mind urban bikers' tricks & tips may be useful but experiencing it in Bucharest is unique.

Great interview with Shirky talking about New York - the same brilliant guy who wrote about software that works because it's not intended to scale or situated software.

I have played with it for a while, and even wanted to mention it when I ran into it, but for some reason I just didn't -- I gave it as an example of situated software though. Anyway, check out webjay - a website with playlists made by anybody wants to share the music he/she listens to. For free. If you're after testing new musical stuff or listening to cool tunes, give it a try.

It works like a radio station with customized playlists - a collection of links where the tunes are located. If you like anything, you can download it. The downside is that you need a good connection for the audio stream - a problem in Romania, my RDS home cable connection just sucks. A question though: is it legal to download the mp3s for free? Please let me know if you have more info about it.

If you're interested in learning more about the fundamentals of 3G and Wi-Fi you should read this white paper released by Tropos Networks. (pdf) You should keep in mind the purpose of the paper though, but the technologies facts and figures are clearly explained. (via Philippe)

I found them over at the Heritage Foundation:

Myth #1: America is losing jobs.
Fact: More Americans are employed than ever before.

Myth #2: The low unemployment rate excludes many discouraged workers.
Fact: Unemployment is dropping, despite a surging labor force.

Myth #3: Outsourcing will cause a net loss of 3.3 million jobs.
Fact: Outsourcing has little net impact, and represents less than 1 percent of gross job turnover.

Myth #4: Free trade, free labor, and free capital harm the U.S. economy.
Fact: Economic freedom is necessary for economic growth, new jobs, and higher living standards.

Myth #5: A job outsourced is a job lost.
Fact: Outsourcing means efficiency.

Myth #6: Outsourcing is a one-way street.
Fact: Outsourcing works both ways.

Myth #7: American manufacturing jobs are moving to poor nations, especially China.
Fact: Nations are losing manufacturing jobs worldwide, even China.

Myth #8: Only greedy corporations benefit from outsourcing.
Fact: Everyone benefits from outsourcing.

Myth #9: The government can protect American workers from outsourcing.
Fact: Protectionism is isolationism and has a history of failure.

Myth #10: Unemployment benefits should be extended beyond 26 weeks.
Fact: Jobless benefits are already working.

Their conclusion: America's workers deserve a more informative, less partisan debate on outsourcing. The negative impact of outsourcing on the economy and American employment has been greatly exaggerated, and the benefits of outsourcing almost entirely ignored.

My take is that this outsourcing debate looks like purely election propaganda. It is just a matter of market forces - you always look for the best opportunity for your firm. As an example you can also read a boring story about how an American from Cleveland discovered through Elance that a Romanian can provide a qualified web design job at a rate half than the minimum he could have gotten in the States. 

A friend of mine asked me yesterday about a case of a successful change management. By reading this interview with Bruce Chizen, Adobe's CEO I think I just found yet another classical example of a great company which succeeded in shifting from a troubled situation to a successful position.

In short, in 1998 Adobe was in the position of not having the ability to understand how well the business was doing, having also to deal with a hostile takeover from Quark. As such, Chizen made a major organizational shift by focusing the company on doing just a few things well, then getting the organization aligned to this strategy and proper executing. While doing it two elements were very important: (i)leveraging their competency in as many constituents as possible for both focusing on new platforms and reaching new markets and customer bases and (ii)delivering on the promise and demostrating success so that employees felt they were part of an organization that was making an impact. Chizen summarized the challenges best:

"It was the potential that we had as an organization, the richness of technology and innovation, and our ability to direct that against real customer solution".

I found over at the Antreprenor Yahoo Group a story about the experience of using the e-government services. It just confirms what I was mentioning several times (here and here): it is a sublime initiative without any practical use. Some of the excuses mentioned while dealing with authorities when trying to use the online services:

"You need to sign the papers anyway, so you'd better come down here"

"You need a photo and you cannot send it online" (sic)

"Perhaps this service is available in other part of the country, certainly not in Bucharest"

"Your company is not eligible for this service (not a big account) so my advice is to come here in person and deal with it"

Now, this is the context, what is the solution for making it work out? On a small scale, as an entrepreneur I feel helpless - if I complain nobody is going to bother for hearing me out. However, lobby from the industry organizations may be helpful. Pressure from the mass media would be also useful, people tend to be ashamed when and if they're responsible for something that sucks and it makes the headlines everyday. But the Romanian media seems to be more preoccupied with violence, rapes or Big Brother than with civic initiatives or things that may improve our everyday live.

Smart move of BBC Prime when entering the Hungarian market. Apart from the classic partnership with the cable operators, they positioned themeselves as an educator - teaching English by airing subtitled programs which is rather difficult in country used with watching dubbed TV programs. In addition they started a collaboration with the Hungarian Minister of Education for providing educational programs in schools - and this is what Michael Porter calls reinforcing strategic moves.

Steep tax increases on goods and services, social benefits checks trimmings, hundreds of food companies and thousands of small businesses shutting their door, protests and marches. Are those signs of recession, or bad government policies? Naah, the magic is gone in the Czech Republic and Slovakia as they join the EU officially in less than a month.   

If in Romania the mergers and aquisition (M&A) activity totalled some $400 mil in 2001 and is being forecasted at around $1bn in the following years, Russia and Poland seem to be the countries facing the most dynamic growth in this respect. According to a PWC survey (pdf) made in 9 countries last year (Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Russia, Slovakia and Slovenia) the total M&A volume in 2002 was about $17.7bn. Out of this Hungary had a piece of $1.9bn, the Czech Republic $2.3 bn and Poland some $3.1 bn. Russia had a market estimated at $7.5 bn. If you take a ratio of the first three aforementioned countries' figures to the GDP Romania obviously doesn't shine - on the contrary.

Moreover, there were 1070 deals for the year - 30 in Romania, leaders Russia 289 and Poland 259 - with Czech Rep., Hungary and Poland leading the pack with an increase of 8.9% yoy. The market value went down from the previous year though, due to the 9/11 events which affected the entire world economy.

Some of the largest deals:

- Swiss Novartis in Slovenia ($853 mil in pharma and chemical industry)

- Austrian Erste Bank through Ceska Sporitelna in Czech Republic ($690 mil in financial industry)

- Rennaissance Capital Group in Russia ($670 mil in manufacturing industry)

- Tesco in Russia ($652 mil in retail and wholesale)

- Heineken in Russia ($400 mil in food and beverages)

When this guy bought a laptop case made by a Seattle manufacturer and checked the washing instructions from the inside label written in English and French he found out that the last lines of the French version were saying: "We are sorry that our President is an idiot. We didn't vote for him." (via boing boing)

A link to good articles connecting VCs with innovation and prepared by the people from Signal Lake. (via Pito)

5 guys from Microsoft just a launched Channel 9 which seems to be an interesting communication tool. It has streaming videos, a blog, a wiki, forums and a moblog. Very cool and powerful way of marketing - a social computing paradigm as Scoble puts it. People who still don't believe in this way of communication, especially in blogs (and I have good friends very skeptical about the usefullness of "online complaining" as they put it) should have a look and give it more thought. With patience. :)

It is a survey consisting in a sample of 56 Israeli based and Israeli related technology companies that reported raising at least $500k in the second half of 2003. The results are then compared to the ones taken from a sample of 192 similar firms located in Sillicon Valley. (via The Weekly Read)

Remember the times before mobile phones became part of our life? Do you think there's any difference in your lifestyle now as compared to that time? I certainly do, the mobile phones are an important gadget in our daily habits. DoCoMo which is the leader in the Japanese mobile market has created a research institute for studying the impact of the mobile phone on culture and business.

You have the chance to have an idea about yourself and the whole entrepreneurship stuff by taking this test.

Interesting move made by Skype by launching a new service - PocketSkype - which allows using the PDA as a phone via WiFi. I think this is very important strategic move as it opens new opportunities and constitutes a real threat to the classic mobile telephony. It is still in an incipient phase and the service is designed only for handheld computers running Microsoft's PocketPC operating system - but hey, there's plenty of room for innovative choices.

Quick reminder - Skype is a VoIP company providing free peer-to-peer phone calls via desktops. Apparently there are about 10 mill. people worldwide using it.

Business Week is covering the Russian version of outsourcing software development. In 2003 Russia had exports worth $475 mil. ($170 in Romania) with a forecast of $3-5 bn in 5 years. It is once again mentioned that the marketing is made on the informal levels (aka networking) - I think one of the main characteristics of Eastern European companies in the business. Apart from the fact that software is a referral and reputation industry.

This is one among the numerous stories from 2004 mentioning companies not coming from Asia becoming competitive in the outsourcing industry. Sadly enough Romania is not mentioned too often, we're still in the phase of acknowledging that we need a Marketing 101 on the country level.

UPDATE: In the meantime if you have 5 good minutes you can read why Matthew Maly doesn't think Russia is a normal country. (via Kevin from T&B)

Very good read on a NYU professor experience when teaching about social software and getting his students to create software for particular groups of communities. He is commenting that:

"Situated software isn't a technological strategy so much as an attitude about closeness of fit between software and its group of users, and a refusal to embrace scale, generality or completeness as unqualified virtues. Seen in this light, the obsession with personalization of Web School software is an apology for the obvious truth -- most web applications are impersonal by design, as they are built for a generic user. Allowing the user to customize the interface of a Web site might make it more useful, but it doesn't make it any more personal than the ATM putting your name on the screen while it spits out your money. Situated software, by contrast, doesn't need to be personalized -- it is personal from its inception."

He points it out exactly what is happening right now with the rise of small fit-forms applications ("software for mom"). Examples: wikis, digital lifestyle aggregators or WebJay. Another interesting observation is that there are many technologies for developing situated software (i.e. Perl, PHP, DHTML, ActionScript) all of them using MySQL database. (via Mike)

Mellon sent me a link to an article about technologies to watch in 2004. It is worth having a look but you may want also to check the source, I think I read a more extensive similar report somewhere in Business Week last year. The paper version of the linked magazine even acknowledges that the report is adapted from BW.

Official statistics say that the laundered money accounts for about 20% of the GDP. Rumours say that the figure is at the 35-37% level, confirmed somehow by other objective sources calculations (including the Romanian Security Service - SRI) of a figure higher than 30%. I tend to believe the latter one since for the last 14 years or so the official stats have proved to be unreliable.

What is even more interesting, officials claim that there are 1806 people suspected of washing the money out of which 711 are Romanian citizens. Conclusion: "foreigners are more zealous in such illegal activities." It is just ridiculous. My guess is that this is just the tip of the iceberg, giving the false impressions that authorities are on top of the situation. One tip: check out the football industry where the players are paid right after the game with cash from the bags. Or in the cases of players transfers the big difference between the declared figures and the real ones.

Read the whole thing from here if you don't have something better to do.

A couple of weeks ago Doug and I were mentioning about the Czech Republic and Slovakia becoming a regional cluster for the auto industry with big names involved in putting a foot in the area. In this context there is a very interesting piece of news wondering if the Czech workers will be up to the Japanese well-known efficiency standards. This is related to a joint partnership between Czechs, Japanese and French (TPCA - Toyota Peugeot Citroen Automobile) agreed in 2001 for the development and production of small cars positioned below current entry-level models.

It seems that absenteeism is the main problem with Czechs determining even some official protests on the Japanese side. It is an interesting cultural clash among three different traditions. Back in grad school I was taught that more than 50% of the joint ventures fail especially because the cultural aspects (both on the organizational or national level) are not carefully handled. 

Additional investments announced by Michelin in a $25 mil. factory in Zalau and a Romanian group of private investors in a $20 mil. tourist complex in Azuga (on the Prahova Valley - the hottest tourism area in Romania due to its 2-hour drive proximity to Bucharest).

That is the latest piece of software Reuters will launch these days which will allow to monitor the web for re-publication and copyright infringement of its news content. This is especially important for bloggers which just copy and paste articles in full instead of commenting on them. I usually quote a paragraph or two, mentioning the source and I think that this is the rule of thumb to follow from now on either.

A related piece of news says that actually Reuters is not doing great by losing some market share on the global financial information segment - it stood at 37% at the end of 2003. The management blamed it on the "weak performance in markets where it was strongest" and added that it wasnot as bad as their main competitor - Bloomberg - had to deal with. My take is that the business model they're operating under faces lots of pressure due to the decreased information assymetries as well as to the increased pace of new technologies emergence - blogs among others.

@rgumente's got lots of referrals lately via search engines. A cool one was "research on passive and aggresive behaviors" from Yahoo. I must say that the internet is weird sometimes.

Other referrals from the last days were "rss news financiar", "myBanking" or "romania nato april 2004 .ro" all of them on Google.

British firms seem to find the companies from Eastern Europe more interesting in terms of outsourcing some of their activities. As such Czech Republic, Poland or Romania have become the better alternatives to India, China and Malaysia. Yeah, big surprise - skilled people, cultural similarities and close proximity are key differentiators. It was just a matter of time until the big boys got the picture. Because the Eastern companies' marketing didn't really rock.

No postings these days, I took advantage of the beautiful weather and got a break. Will update tonight or tomorrow morning the latest. Enjoy the rest of the weekend!

Norway - 4.4% in January, down from 4.5% in October. (!)

Sweden - 6%

Denmark - 6.1%

Finland - 9%

The EU countries' overall unemployment rate remained stable at 8 percent, while in the US it stood at 5.6 percent, down from 6 percent in October.

According to an EIU study I quoted here a while ago Romania's 2003 unemployment figure was 7.6%.

Very cool initiative starting this Sunday from Bled (Slovenia). What is it? It is a train tour through the newly EU admited countries in order to stimulate thinking and conversation on European identity. There will be ten discussion areas with topics will covering leadership, entrepreneurship, innovation, learning or social responsibility.

People making the tour are Western and Central Europeans who will have to invite 20 friends to participate in the caravan. The concept is "educational holiday" - getting insights from opinion makers or leading thinkers in their area. For getting in participants have to prepare an essay about the topic they want to cover.

The trip will start from Slovenia and go through Hungary, Latvia, Poland and Slovakia.

7 steps for making it easy to understand the way blogs work. You even have a cool diagram and interesting comments and guides for the (un)initiated. Worth a minute-or-so scan!

Plenty of news about Google for the last days. This time it's about their launching a free email service - Gmail. So here is the deal: you get free email storage up to 1,000 MB and the service is supported by placing relevant text ads within emails. The standard industry practice (Hotmail, Yahoo, etc) is to offer tiered mail services, providing only limited storage for free and charging higher fees to users who want to preserve larger numbers of e-mail messages.

Now, Google's value proposition is simple: you can search it very easily (finding emails seems to be #1 problem when searching for something), you don't have to worry about you email quota, and emails are kept in context. (sorted by replies/conversation) At the cost of being placed ads in the email.

I would be willing to give it a try IF the "context placed ads" are not unpleasant - similar to sponsored links they display now next to the search results. I would be probably using it only for some sorts of emails most likely just migrating the Hotmail and Yahoo to it. H and Y are accounts I am using only for purposes different than business or personal ones.

What is the industry context? Google is looking to counter its competitors moves. It seems that they lost their search provider position to Yahoo. Yahoo leverages big time last year's acquired Overture growing amounts of advertising revenue available on search pages. Besides Yahoo search results seem to be at least as relevant. (also see here some good comments on it) Microsoft is also coming strong from behind.

By launching the email service Google streamlines the competition with two of its traditional allies: Yahoo and AOL - which are portals and internet service providers respectively. At the same time, the advertising-based email model they suggest raises several privacy issues on how extensively to exploit the content of e-mail.

UPDATE 1: Even though it's been a lot of buzz about the personalized search service Google launched recently, I didn't mention it since I don't see it as a big deal. Yet. It is more like an incipient phase of getting at something, and am not sure at what. You can read from here a good comparison between Google and Eurekster (a personalized search engine) and make your own idea.

UPDATE 2: There are some rumours around the blogosphere that Gmail is just an April Fool's joke. Must be a very good one since BBC News, Yahoo, Business Wire and NYTimes bought it. And so did most of the bloggers (myself included :))