JimPinto.com - Connections for Growth & Success™
No. 91 : July 15, 2002


Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

Contents:
  • Greed is not good
  • Automation Update
    • Siemens & Honeywell swap-deal - on or off?
    • JimPinto.com weblogs
  • Gordon Moore of Intel - on a variety of topics
  • Digital hub for the home
  • Go Global - think local
  • eFeedback:
    • Honeywell: similarity between Terry Sutter & John Weber denials
    • A Canadian Siemens ex-employee provides his perspective
    • 1 billion PCs shipped

Greed is not good

In the wake of steadily increasing exposure of greed among crony capitalists, President Bush tried hard to talk tough to Wall Street. He avoided mentioning the corporate favors that he himself had accepted in the past. VP Dick Cheney had himself received some $35m in the very type of kickback that is now being questioned. Most members of congress, while protesting loudly about the financial skullduggery, also admit to being recipients of significant corporate contributions from the very culprits they seek to indict. Last week, Wall Street didn't believe anyone's phony protestations - stocks continued their free-fall.

It is disingenuous to assume that corporate greed is limited to just a few exceptions. Corporate leaders have long been considered super smart when they finagle continuous growth and profit, with the media extolling their amazing talents. Major business magazines regularly list compensation (including salary and stock options) as a badge of merit, including pointing the finger at those who do not seem to deserve the ungodly amounts they rake off. Indeed, this information is freely available from the corporations' own annual reports.

The handouts to corporate elite are not illegal - indeed they are often built-in to corporate articles and by-laws, and blessed by board members who share the bounty. The loan of $483m (yes, almost $0.5b!) to Bernie Ebbers of Worldcomm was approved by their corporate Board and compensation committee. And similar loans, options, bonuses, company expense accounts, corporate jets, are simply part and parcel of regular corporate perquisites.

Big business means big money, which attracts ambitious people like flies to honey. No matter what new steps are taken, it will be very difficult to eradicate the greedy element that operates at the limits of the law. Reform for corporate America cannot come from the politicians who depend on corporate contributions. Whatever new laws are put in place, you can bet that many so-called 'smart' people will find ways to skirt them. The broadening scandals will bring cleanups - but beyond that, there is the growing realization that fundamental, philosophical changes are needed.

As presently defined, the job of the corporate CEO is un-doable. The illusion that paying individual leaders more and more to attain better and better performance is naive and antiquated. Indeed, it simply feeds ego and greed in a destructive cycle.

Peter Drucker forecasts that corporate business structures will change in the new century. Like the President of the US, the CEO will emerge simply as a figurehead and cheerleader, providing only mission and vision.

The fathers of the new world described capitalism as "enlightened self-interest". The vital, soft element is "enlightened". Unbridled, self-interested capitalism simply makes the rich richer; in the closely interconnected global village of a new century we must recognize that it is becoming increasingly important to make the poor less poor. We need to find ways and means to cure Capitalism of its greedy ingredients. And we must find ways to develop its amazing inclusionary abilities for all the stakeholders - investors, employees and society at large.

Employee-ownership has already broadened participation in the fruits of success. Let us find ways to encourage longer-term perspectives on a broader front. We must encourage entrepreneurship at smaller and smaller levels. Cheap communications with free movement of information are key things here. The easier it is to find out who is doing what, the easier it will be to make this happen.

I continue to pursue a theme of soft solutions for these hard problems of the new century. You might wish to read some of the several articles I have written on these topics.

Please e-speak to me!

Click Soft Solutions for Hard problems

Click Crony Capitalism

Click Creeping Criminality

Siemens & Honeywell swap-deal - on or off?

Many people - employees, competitors, analysts, observers - are awaiting news about the deal that I had predicted (in the last couple of issues of eNews) that Siemens and Honeywell will trade the Siemens fire protection and building management businesses for the Honeywell process automation business (Industry Solutions - originally IAC), plus some cash.

Our inside sources within Siemens do not deny that there are talks going on with Honeywell. But, they are constrained by non-disclosure agreements while negotiations are still in progress. After all, they admit, the deal may fall though because of price. Indeed, they suggest, the only factor now is price.

What attracts Siemens is Honeywell's installed base of process control systems which is more than any other supplier - DCS estimated at $15b, plus another $5b for Measurex and other solutions segments.

The Honeywell people have a realistic, yet harsh, understanding of the mess that Siemens has made of other acquisitions, such as Moore, Milltronics, Applied Automation. A senior Honeywell insider shrugged, "What would happen to IS (IAC) under Siemens would be even worse than what happened to Measurex after being acquired by Honeywell." His attempt at gallows humor was: "Wed have to learn to do the goose-step and salute with a stiff right arm!"

After the GE-deal fell apart last year, Honeywell made a lot of noise about how they were not going to sell-off IAC (now IS). Terry Sutter, President of IS has continued to tell the troops that they will remain as a Strategic Business Unit within Honeywell. And he reiterated this in his recent memo. Interestingly, the wording of that Sutter memo eerily reflects that of the similar one by now departed John Weber during the United Technologies and GE flap (see eFeedback item below).

A rumor has been floating around within Honeywell that Siemens may buy ALL of Honeywell. Siemens could clearly afford it - the only question is whether or not a deal that big could be approved by the SEC. Honeywell recognizes clearly that Siemens is indeed very interested, and is working hard at doing something.

Pinto Prognostications:

The Siemens-Honeywell deal is brewing at the very top. Siemens wants Honeywell's Industry Solutions, and many at the top of Honeywell do not. Negotiations are on going, and the deal may fall through on price. In the current unstable business environment, everything is negotiable.

Stay tuned....

Click http://www.jimpinto.com/commentary/honeywellsale.html

Click Siemens - American Managers' view

JimPinto.com weblogs

Use the JimPinto.com weblogs to read the latest 'chat' and review the breaking news on these important moves by Honeywell and Siemens. Plus news and views about Rockwell, Invensys and other major automation majors.

If you have any comments, updates, news or views about Honeywell or Siemens, or others, from your own perspective, please 'blog'.

Click JimPinto.com weblog index

Click Honeywell weblog

Click Siemens weblog

Gordon Moore of Intel

I have always admired and respected Gordon Moore, one of the founders of the silicon revolution and CEO of INTEL during the latter part of the past century. He is best known for what is known as "Moore's Law" - the number of transistors per square inch on integrated circuits doubles every two years.

Gordon Moore's contributions to technology pale in comparison to his philanthropic efforts. A champion of both technology and civilization, he has poured billions of dollars of his own money into preserving the world environment, improving education, advancing science and bettering California's Bay Area.

This past week, Gordon Moore received the Presidential Medal of Freedom, the U.S.'s highest civilian award. He took some time out after the White House ceremony to talk about everything from Moore's Law, to the economy, to future transforming technologies.

Here are some of the topics:

  • Nano technology and whether Moore's Law applies
  • The changing timetable of Moore's Law
  • The thirst for more processing power
  • The next big transforming technology: speech recognition
  • Closing the gap between the haves and the have-nots
  • The future of silicon foundries
  • Bush and his corporate responsibility initiative
  • The Moore philanthropy
  • The economy in Silicon Valley
  • The HP/Compaq merger
You might enjoy reading the views of this significant man on these topics.

Click Moore: Comments on a variety of topics

Digital hub for the home

Set-top box, home server, digital hub, souped-up cable box, hard-disk recorder with wings - several companies are scrambling to develop the right combination of ingredients for a single box that will handle ALL your home entertainment needs.

Most companies agree on what the machine should do; what they are squabbling over is what they'd like YOU to think it is. To Apple and Microsoft, it's a computer with built-in peripherals; to the cable and satellite companies it's a set-top cable-box with frills; to consumer electronics companies it's a stereo with computing power and a hard-drive.

Samsung for example, expects that people who buy high-end DVD players will pay a few extra dollars for a hard disk that turns their player into a personal video recorder, while acting as a storage bin for digital photos and audio files. At the other end, Microsoft is dreaming up components for an elaborate home controlled by wireless touch screens with computers serving video and audio to any TV or PC screen in the house. It turns out that Bill Gates' giant home on the lakeside in Redmond, WA has a similar utopian scheme.

The functions that all these digital hubs provide are similar. All will record video and audio and store still photos from various sources, including your personal CD library, TV, and the Internet, plus store and play video games. And they'll organize all your media files in an easy-to-browse fashion and play them back on demand with all the features you'll need - pause, rewind, and several varieties of skip and fast-forward.

The challenge will be, not what the digital hub does, but how the everyday consumer will learn to use all the functions available. It is common knowledge that most people don't yet know how to use all the features of a common VCR. So, how will they use all the multifarious functions of their new digital hub? The winner will be the box with the best human interface.

Click IEEE Spectrum July 2002 - Digital Hubbub

Click Under the hood - block diagram of the digital hub

Go global - think local

In the US, industrial automation companies typically recognize four major market areas: North America (including USA, Canada and Mexico), Europe (European Community countries), Far East (the 5 tigers: Japan, Korea, Singapore, Malaysia, Indonesia) and ROW - rest-of-world (Russia, China, India, Latin America). The Middle East is typically handled from Europe, while English-speaking Australia and New Zealand are handled either from the US or Europe. The burgeoning markets of China and India are starting to demand direct focus with local presence.

In the global village of the new economy, automation companies have little choice - they must find more ways and means to expand globally. To do this they need to minimize domination of the central corporate culture, and maximize responsiveness to local customer needs.

As we have discussed in recent eNews, the Europeans and Japanese players find it hard to overcome their relatively narrow and restricting corporate culture. The strength of the US players is American culture, itself an eclectic mix of a global spectrum. Americans find it easier to absorb and maximize the impact of local cultures; therein lays their strength!

My latest article on this topic was just published by AutomationTechies.com - July 2002. Go take a look.

Click Automation Techies.com

Click Go Global - think local

eFeedback

A Honeywell employee (name expressly withheld) researched an article on the JimPinto.com website to compare the recent denial from Terry Sutter (current IS President) with the one made previously by John Weber (former President of IAC) when it was suggested (two years ago) that IAC was being sold to Siemens:
    > Tuesday 17 Oct. 2000
    > Message from John Weber (President, IAC)
    > To : Industrial Control employees worldwide
    >
    > Some of you may have heard a recent rumor that Siemens
    > and Honeywell are contemplating a possible transaction
    > involving IAC. While it is Honeywell's general policy
    > not to comment on rumors, I can tell you unequivocally
    > that IAC is not for sale. We continue to be part of the core
    > business that Honeywell is counting on for future growth.
Compare this with the message from Terry Sutter:
    > 27 June 2002
    > To: Industry Solutions Employees Worldwide
    > From: Terry Sutter, President, Industry Solutions
    >
    > It is Honeywell's policy not to respond to rumors of acquisitions
    > or mergers. However, I can tell you unequivocally that Honeywell
    > is not in discussions with Siemens about the Industry Solutions
    > business. Industry Solutions remains an important ACS business
    > and Honeywell is counting on us for future growth.
He comments: "One wonders if Terry Sutter simply used a standard denial form...."

After reading the JimPinto.com weblogs and the article Siemens: American Managers' View, Gerry Shand [gshand@hoodgroup.ca] sent us this Canadian perspective:

    "I worked for Siemens as a field service/applications engineer for about 2 1/2 years. I found the company very frustrating to work for and it is an experience I would not want to repeat.

    "I joined as one of the first employees at "Siemens-Relcon" after they had acquired Canadian-based Relcon Drives. Relcon had a lot going for them, which made them look attractive to Siemens. But they immediately fell victim to the process of "Siemenizing" - resistance was futile.

    "Some of the sales people were good on application issues. But mostly it was based on: "Ve are Siemens! Ve know everything, you know nothing! You vill put in our equipment and you vill like it!"

    "A few years later, Siemens closed their Edmonton plant down and moved part of it to Portland, Oregon and the remainder to Batavia, Illinois. The Canadian management in Toronto seemed to have little or no power to do anything; the ones that had the power to make any changes simply chose to ignore the situation and let the local management carry on with their own personal agendas unchecked - so long as they made quota or could come up with some plausible excuse.

    "Siemens appears to hand pick managers years in advance and lives with the results. This means that if you did not work for Siemens right out of school, and if you don't understand the culture, you simply go nowhere.

    "My final comment: if Siemens had a slogan contest running, my entry would be, "Taking the 'fun' out of functional".

Martin Greenwood, [Martin.Greenwood@iesystems.com.au] from Australia was surprised at the "billion PCs" story:
    "I am surprised this number is so small! Surely at least half those PCs shipped since the 70's are either scrap or museum pieces. I have a 1983 Osborne Executive - state of the art at the time. It is now purely a novelty - completely useless for any real task.

    "1 Billion shipped says nothing - how many are in working order and being used?"

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