Taxing times for tech companies
Very few of us like paying tax, but there’s a fine line between legitimately reducing your tax bill and actively avoiding paying the tax that is due. And at a time of austerity where everyone is tightening their belts, there’s obviously a push by governments to close loopholes and maximise the revenues they receive.
Given their high profile and obvious success Starbucks and Amazon have both been the subject of widespread condemnation of their tax avoidance methods, and I’ve covered Starbucks inept PR response in a previous blog. Google was up before a House of Commons Select Committee last week (for the second time), backing up its claims that, despite revenue of £3 billion in the UK, all its advertising sales actually take place in the lower tax environment of Ireland. Google boss Eric Schmidt has countered that the company invests heavily in the UK with its profits, including spending £1 billion on a new HQ that he estimates will raise £80m per year in employment taxes and £50m in stamp duty.
Apple is the next company caught in the public spotlight, with CEO Tim Cook appearing before a US Senate committee that had accused it of ‘being among America’s largest tax avoiders’. Meanwhile, the loophole that sees Amazon and other big US ecommerce companies avoid paying local sales taxes is being challenged by a new law passing through Congress, with estimates of between $12 and $23 billion extra being collected.
Given the close links between Google and UK politicians (Ed Miliband is appearing at a Google event this week and Schmidt is expected to meet David Cameron on his current UK trip), the cynical view is that this is a lot of sound and fury, signifying nothing. But it does create an image problem for the companies involved, particularly at a time when we’re all meant to be in it together.
Obviously the most popular thing for companies to do would be to re-organise their tax affairs so that they meet the spirit as well as the letter of the law. But that’s not likely to happen given the enormous sums at stake. Instead expect increased calls for global tax reform (so that the organisations involved don’t have to operate the way they are currently ‘forced’ to) and a slew of feel good announcements that demonstrate the level of investment and support for the UK economy by the companies concerned. Being ultra cynical perhaps the whole tax situation explains the huge support by big tech companies for Tech City – it is simply an elaborate way of diverting attention from their financial affairs…………..
Watch out!
Like a lot of people I’ve given up on wearing a watch during the working day, replacing it with glancing at my phone, tablet or computer. So all the current noise about mooted smart watches from Apple (immediately dubbed the iWatch), Google, Samsung and now Microsoft puzzled me. Why would anyone try and replicate the features of a smart phone on a tiny screen on their wrist – particularly when they were probably carrying their phone in their pocket?
Take the Pebble watch. It essentially syncs with your smartphone and reminds you about your latest tweets, emails and phone calls – a cute accessory but hardly game changing for most people.
But a bit more thinking unlocks why the tech titans think there’s a market out there. The only time I actually wear a watch (except on the few occasions I want to appear smart) is when I go for a run and I use GPS to measure where I’ve gone and exactly how slowly. Essentially I’ve got a wearable sensor around my wrist, rather than a time keeping device.
That’s where the interest will be, not as a smaller second screen for your iPhone, but providing a way of measuring where you are, what you are doing and your vital signs. After all a watch has the benefit of being intimately connected to your person – few people are going to hold their phone to their wrist to measure their pulse. With an aging population, and increasing desire to manage our health, this is where the mass market will be. Add in the Internet of Things and you can see a connected web of wearable sensors managing our lives.
Thinking of the smart watch I’ve come up with five applications where it could be used – from the basic to the far fetched.
- Patient monitoring – both in hospitals and more importantly at home, the watch can send back vital statistics to doctors and monitoring services, raising the alarm if issues occur
- A smart wallet – why get your wallet or Oyster card out when you need to buy something? The watch automatically debits your account as you pass through ticket barriers or pick up that latte.
- Obesity control – measuring calories burned is standard on sports watches, so combine this with a camera and an electric shock buzzer. Not burnt enough calories and reaching for a doughnut? Cue a mild electric shock to remind the wearer of their diet
- Getting your dinner on the table. The watch senses when you’re half an hour from home and sends a signal to your oven to switch it on. Get stuck in traffic and it changes the heat so your dinner isn’t burnt to a crisp
- Surveillance. Very 1984 but just imagine if every smart watch could be tracked by governments – not only allowing them to see where you are but your state of health and everyday activities. Obviously the most far fetched application of all (we all hope)…..
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Mapping the world
Since time immemorial accurate maps have been crucial to attaining and keeping power. Navigational maps helped first the Portuguese and Spanish, then the English to reach (and annex) new territories across the globe. Later colonialism literally redrew the map of Africa, creating countries where there were none before. Maps are critical in battle and to take stock of your resources and population.
So control of maps brings control over your subjects. As we move into a mobile device dominated future this explains the enormous battle to command mapping in your pocket, using the power of GPS and network connections to find out where you are. Nokia spent $7.7 billion on NAVTEQ, while Google StreetView has seen the search giant survey the world at a granular level. It explains why Apple ditched Google and launched its own ill-fated Maps app on the latest iPhone – the company simply didn’t want to give up control of such vital data to a third party.
Essentially knowing where you are enables companies to better understand your behaviour and target offers that fit your location and background. And that’s the positive news – it now only takes four location data points to identify a mobile user according to new research. Something that law enforcement agencies (and criminals) are no doubt very interested in.
But for all its benefits GPS isn’t as accurate as mapping companies (and advertisers) would like. Particularly in large buildings, such as shopping centres, it doesn’t give pinpoint positioning. Which is why Apple has just paid a reputed $20m for indoor mapping specialist Wifislam, which uses ambient wifi signals to offer maps accurate to 2.5m. With this level of data clever marketers could target you with an offer for Costa as you walk into Starbucks while the police could place you (or at least your phone) at the scene of a crime in a crowded city.
Apple isn’t alone in looking at indoor mapping – Google now features 10,000 floor plans submitted by businesses while Nokia’s Destination Maps product has more than 4,000 locations in 38 countries.
I often bang on about privacy and how marketers need to tread a fine line between providing targeted offers and respecting personal space. And the move to indoor mapping, combined with ways of interacting such as QR codes, augmented reality apps such as Aurasma and Near Field Communications (NFC) mean that the possibilities of tracking, understanding user behaviour and tailoring marketing could become ubiquitous. Except in the countryside, where poor mobile coverage means that if you are lucky it tells you what village you’re actually in.
The future is hyperlocal and mobile – marketers need to embrace this, but make sure that they’re getting buy-in from customers or they risk a privacy backlash from both individuals and regulators.
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Bringing Silicon Valley to the UK
Silicon Valley comes to the UK (Photo credit: Cabinet Office)
Looking out at an another chill autumnal morning, the lure of Silicon Valley’s sunshine is increasingly powerful. But there’s a lot more to the success of tech companies in the US than simply climate. The question is what is it and can we in the UK learn how to replicate that success here?
That’s one of the key missions of Silicon Valley Comes to the UK (SVC2UK), a programme of events across the UK that brings across leaders from US companies such as Google, LinkedIn and Facebook to help, nurture and assist local entrepreneurs and their companies. Originally a Cambridge event it has now spread across the UK, covering London and Oxford as well. The theme of this year’s programme is scale – addressing the fact that while the UK and US are pretty evenly matched when it comes to starting up businesses on a per capita basis, the UK’s scale up rate is less than half that of the US.
Another strand of the programme is looking to uncover the next generation of startups through intense bootcamp events. The most interesting one of these is the Future Business weekend being held in Oxford and running in collaboration with SVC2UK.
It is looking to build on the research strength of the UK by providing access to existing patented technologies and essentially allowing teams to generate new ideas and innovative businesses around them. It’s often said that not enough research makes it out of the lab, and the event aims to change this by taking scientific intellectual property and making it available, along with support and mentoring.
Held between 9-11 November the weekend will be run by the Oxford Centre for Entrepreneurship and Innovation (OxCEI) together with the Future Business Pre-Incubator (FBPI) and Silicon Valley Comes to UK (SVCUK). The aim is bring together entrepreneurs, scientists, technologists and mentors to generate ideas and new companies to take existing patented technology to market.
The event uses the proven Idea Transform methodology, which underpinned the extremely successful Idea Transform weekend in Cambridge back in April 2012, providing structure and support to teams through mentoring, team creation, inspiring speakers and networking. And the good news is that selected projects from the event will then be supported through the Future Business Pre-Incubator with access to facilities, resources and ongoing mentoring.
Silicon Valley Comes to the UK starts on 15th November with an event at the Houses of Parliament – to find out more visit the website at http://www.svc2uk.com/
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Hurricane force social media
The current US devastation from Superstorm Sandy is showing the positive – and negative – sides of social media and our reliance on technology. Already there have been over 4 million mentions of #Sandy on Twitter and Hurricane Sandy was the top phrase in the US on Facebook. People are using it to check on friends and relatives and update them on their own safety. And there have been some incredible pictures and videos of the storm and its aftermath posted on social media, which have then been picked up by online and broadcast media. Google has launched a map of affected areas, linking to power outages.
But we’re also seeing the downside of our technology addiction, and in particular the electricity needed to make it work. The over 5 million people without power obviously can’t communicate. And this hasn’t been helped by the datacentres hosting sites such as Gawker and the Huffington Post being knocked out by storm damage. As Jeff John Roberts of GigaOM points out drily, there’s no app for disaster survival. Many people have replaced battery powered FM radios with internet versions and most of us either don’t have landline telephones or have swapped to DECT phones that need electricity.
The emergency services are also affected – people have been asked to use text messages to communicate rather than mobile phones to avoid overloading networks, leaving capacity free for official traffic.
It could potentially get even worse if the crisis precautions at major East Coast data centres and network exchanges fail and they go offline. Yes, it’s the end of the internet for all of us, wherever we are located. Press exaggeration obviously, but there is potential for disruption as some sites go down. While this level of inconvenience is nothing compared to that being suffered on the ground it does show our reliance on the world wide web.
The good news is that most data centres are designed to withstand a disaster of this scale – and Cloud computing means that processing should be switched automatically to other locations across the globe. But it does show everyone that you can’t rely solely on technology – time to make sure that you’ve got a basic phone, lots of batteries and a torch just in case.
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Is there such a thing as an independent blogger?
The current Oracle vs Google patent case could turn out to have far-reaching implications – not for whether Google’s Android operating system breaches Oracle’s Java patents but on the independence (or otherwise) of bloggers and other commentators.
Essentially the judge in the case has ordered both sides to reveal the names of reporters, bloggers and other industry experts they may have paid as he was concerned that supposedly impartial commentary was biased by links to the two industry giants. Oracle has named a blogger and a professor it has financial ties to but so far Google hasn’t provided details of any paid relationships.
First off, a quick public service announcement – I’m not paid by either Google or Oracle (nor the judge in the case for that matter), so my opinions in this blog are very much my own.
When blogs began they promised to give a voice to a much wider group of people, outside traditional media, enabling them to share their thoughts and opinions with the world. Generally they didn’t have any formal journalistic training and were unpaid/doing it as part of a wider role. It wasn’t their main livelihood. But almost immediately lines began to blur – leading journalists launched their own blogs (either officially or unofficially) to talk about stories that didn’t make it into their mainstream output and the influence of successful bloggers/blog sites (think Huffington Post, Guido Fawkes) spread to rival existing news sources.
The combination of this with a 24 hour news media desperate for interesting comment means that more and more bloggers are quoted as experts without any real check on their credentials. This hasn’t gone unnoticed by the more advanced amongst the PR industry who realised that it opens up a whole new channel to influence – whether through providing early sight of news or, as is alleged in this case, financial inducements to write positive stories.
So it isn’t surprising that the possibility is there for bloggers to be biased in what they cover – particularly as they need to earn a crust through consultancy and other activities. While it is clunky, the only way to get round this is to publish a list of any links (financial or otherwise) to companies they talk about – and equally journalists, analysts and other influencers should declare their relationships to anyone they are writing about. As an ex-history student I know that everything we write or think is biased in some way, whether due to our background, education or the fact that Google Docs went offline at a crucial moment. At least by displaying relationships and potential bias readers can make an informed decision on how much credibility they give a blog, article or statement.
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Farcebook and internet bubbles
Mark Zuckerberg, founder and CEO of Facebook (Photo credit: Wikipedia)
I’ve found it difficult to watch the recent Facebook flotation, subsequent drop in share price and clamour of litigation without shouting “I TOLD YOU SO” at the top of my voice. Way before the flotation many analysts queried Facebook’s $100bn+ valuation given its relative lack of revenues but their voices were drowned in the hype. Just look at the number – with 1 billion users that’s a hefty premium per subscriber.
Obviously the growth statistics behind Facebook are impressive and there is still potential for it to grow in different areas around the world and by offering new services. But this is all potential rather than actual. A good comparison is Google – when it IPO’d in 2004 it had a valuation of $23 billion. Most of the services we now know Google for simply hadn’t been introduced, and the stock was priced according. Google has since increased its share value six-fold, giving it a market value of $196 billion, helped by annual revenue of $39 billion.
There’s a decent chance that Facebook can ‘do a Google’ and monetise its users, probably through services that Mark Zuckerberg hasn’t even thought of yet. But equally it could languish in limbo in the same way as LinkedIn post-IPO without really demonstrating a vision for charging customers without losing them.
The bigger worry for me is that Facebook is continually held up by the likes of David Cameron as a posterboy for what British tech businesses should aspire to. And consequently we have a move to create frothy, social media driven businesses without clear business models, inevitably HQ’d in Tech City. It reminds me a lot of first generation dotcoms and the bandwagon that became. While some of these businesses may succeed, we need to look at what will create real value in the UK tech scene (the likes of ARM, CSR and Sage all spring to mind) and focus the best minds on solving real business problems rather than simply another cute network without any revenues.
So if the Farcebook float can change people’s perceptions that user numbers are good, revenues are not essential, then I think that’s a price that the gullible should have to pay. As the old saying goes, if it looks too good to be true, then it probably is.
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- Farcebook (washingtonsblog.com)
The internet – too much choice?
Bangor Pier, Bangor, North Wales (Photo credit: timdifford)
I’ve just been booking my Summer holiday and like most people nowadays turned to the internet to sort everything out. And some of it was fun – such as using my iPad and Google Maps to zoom in on unsuspecting French villages to check exactly how far a potential holiday home was from the beach and how close to major autoroutes. But after trawling through what felt like hundreds of properties on multiple websites to read reviews and get the best possible house at the best possible price I eventually wondered if it was really worth it.
Instead of spending extra hours surfing and comparing could I have just saved the time by walking into my local travel agent, giving some basic details and letting them do the rest? If it all went pear-shaped I had someone to blame (compared to which I’m on the hook if the villa of our dreams is next to a sewage works) and while I’d have paid over the odds I’d not have to experience some of the truly unhelpful travel/tourism sites that seem to litter the web.
I appreciate I’m coming over all Luddite here, but it made me think of a broader point. The internet has revolutionised our lives and made it as easy to book a weekend in Bangkok as one in Bangor but overall it hasn’t really saved us any time or removed stress. Think about car insurance – 15 years ago it was a question of going to a broker or renewing with your existing insurer. Now you can spend days tracking down the best deal and then playing off two companies against each other as you haggle to save an extra £5 or so.
Essentially we’re stuck in the middle – we want the benefits of the depth and scale the internet gives us, but even with search engines finding what you want is akin to locating a needle in the proverbial haystack. You’re more likely to find a cute kitten instead. What we actually need is a way of making the internet smart so it understands about us, learns what we like/dislike and uses this to run our lives – like an enormously powerful Amazon recommendation engine. Or alternatively I should find someone I can just outsource my holiday planning to……………
The eyes have it – do we need super glasses?
There’s been a slew of recent announcements trumpeting augmented reality (AR) glasses. First Google released a video about Google Glasses, which will pop up alerts concerning the weather, location and diary appointments, and now Oakley has got in on the act, talking about AR glasses for athletes. Not to be left out, the Pentagon has apparently ordered dual focus contact lenses, which allow wearers to look at a heads up display as well as what is around them.
Amidst all the hype, it strikes me that quite a lot of the mooted benefits of these glasses could be accessed through the eyes we already have. Why flash up alerts to tell you it is raining, when you can see for yourself? And if you think getting stuck behind people staring at their smartphone apps is bad, imagine what it’ll be like if we all suddenly slow to a halt to read what’s projected on our smart glasses. It’ll only be a matter of months before someone creates a virus to hack the operating system and change what you ‘see’.
But the idea of smart glasses isn’t totally bad – here’s five tongue in cheek applications that I can see taking off:
1 Eyes in the back of your head
As a parent I’ve often warned my kids that I can see what they’re up to through the eyes in the back of my head. Installing a sys
Augmented reality - heads up display concept (Photo credit: Wikipedia)
tem of mirrors in smart glasses (or a camera on the back of my skull) could make this threat a reality.
2 Anti-beer goggles
Apparently, the reason that members of the opposite sex look more attractive when drunk is that alcohol makes faces look more symmetrical. So some sort of reality filter could save those embarrassing morning after moments for both sexes……….
3 Instant sporting replays
Amidst all the furore about goal line technology and poor refereeing decisions in football, what about equipping officials with glasses with instant video playback? They can then make quick decisions with the facts at their fingertips/eyeballs.
4 TV on the move
We’ve all been in situations like presentations, lectures and speeches where we’re a bit bored but it would be a bit rude to pull out a phone/book and start doing something different. With smart glasses you can just catch up on TV without anyone noticing – though probably best not to watch laugh out loud comedy at funerals.
5 Remembering names
Ever met someone for the second time and can’t remember who they are or how you know them? Or get the names of your children mixed up? All it takes is your smart glasses to use facial recognition technology to pop up a handy reminder and you can chat away happily with confidence.
Given the weight of hype it looks like smart glasses are on their way – what would you use yours for?
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- Move aside, Google: Oakley has been testing augmented reality glasses for 15 years (digitaltrends.com)
California Dreaming
Silicon Valley (Photo credit: Wikipedia)
There have been innumerable attempts to understand and replicate how Silicon Valley has become the centre of the tech industry – with Tech City being the latest one in the UK. What is the secret sauce that makes California in particular and the US in general such a fertile breeding ground for innovation?
It’s something I’ve often wondered about, so it was great to hear a first hand account of a learning journey to Silicon Valley. Speaking last week at CamCreative, Liz Weston of Weston Marketing talked about what she’d learnt on an organised trip that saw her visit the likes of Google, LinkedIn, Salesforce.com and Stanford University. She shared four big lessons from the tour:
1 The difference between an opportunity and an idea
Everyone has a different take on what makes an idea viable, from an addressable market to a strong founding team, but the big difference between the UK and US is the willingness to have a go, fail and come back stronger. If we can change attitudes in the UK to say it is better to try and then fail rather than fail to try at all, it will radically shift how companies operate for the better.
2 Four key opportunities for business development
Execs in Silicon Valley outlined the environment, security, human health and digital/infrastructure as key markets for growth. Anything that reduces complexity in these areas and makes people’s lives easier has potential. Probably not a surprise to most people but worth bearing in mind when pitching any business ideas to investors.
3 Look at the relationship between the customer and your product/services
It isn’t about the technology per se, but finding an emotional trigger with your customers. Serve a purpose and do it in a way that delights your customers and turns them into your advocates. So, in the same way that when Orange launched in the UK it positioned itself as the cool brand you wanted to be part of, LinkedIn offers the chance to be part of a cloud of intelligence, rather than simply positioning itself as a jobs site.
4 The importance of innovation
Next year’s revenue won’t come from this year’s cash cow. So everyone in the business needs to be innovating – which can involve changing people’s mindsets. Encourage ideas and capture them – while they may not be immediately useful, they could be in the future.
I’m sure most people have either heard or tried to put into action some of the lessons above. For me, the main takeaway (and potentially the big difference between the US and UK) is always be open, always be learning and don’t be afraid to take risks. This may not be Silicon Valley’s secret sauce but it is a better way to run a business.
Chris Measures
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