Global insurance poised to take off


BOSTON/NEW YORK | Mon Jun 11, 2012 7:18am EDT

(Reuters) – Last week’s deal by Prudential Financial to take on $26 billion of the retirement liabilities of General Motors has reignited a part of the American insurance market that had been bouncing along the bottom in recent years.
But experts in the sector say GM’s splash was so big, there may be somewhat limited capacity for more mega-sized deals in the market for pension-risk transfers. Still, the market could be in the tens of billions over the next few years, they said.
A Reuters analysis of the pension obligations of the S&P 500 found that almost half of the companies with underfunded pensions have enough cash to spare to do a risk-transfer deal, including Rupert Murdoch’s News Corp and agriculture giant Archer Daniels Midland Co, suggesting there could be a scramble ahead for that limited capacity.
Known as pension terminal funding, the concept is simple: an employer pays an upfront premium to an insurance company for an annuity that covers all the members of a pension plan.
The insurer becomes responsible, via the annuity, for all of the retirees’ pensions and the sponsor gets to wash its hands of the obligation.
“Starting about a year ago it was the chatter, the chatter picked up … in the last six months, even in the low interest rate environment, transactions are starting to happen,” said Mike Devlin, the head of the Boston office for BCG Terminal Funding, which matches plan sponsors with insurers.
For years, plan sponsors have held off on buying single-premium group annuities to transfer risk, hoping that interest rates would rise from historically low levels, boosting the value of their assets and potentially filling pension gaps without extra cash.
Hewitt Ennisknupp, an Aon unit, estimated there were about 200 single premium group annuity deals done last year, worth about $900 million — just one-third of what had been done even four years previously.
MARKET CATCHING UP
But with rates showing no signs of rising – and even declining further because of the euro zone crisis – the need to get the plans off corporate balance sheets has come to the fore.
These deals are quite similar to what Warren Buffett has successfully done with the asbestos market – insurers pay him a large upfront lump sum and he takes their asbestos liabilities off their hands, betting his ability to earn money on that upfront payment will outstrip the ultimate costs.
Up to now, the pension annuity market had been much more active in the UK, with estimates of just $3 billion in total transfer deals in the United States in the last three years, perhaps one-fifth the size of the British market. One of the executives responsible for the GM deal said that has now changed.
“With the GM transaction, in one fell swoop the (U.S.) pension de-risking market has caught up with where the UK is,” said Dylan Tyson, the Prudential senior vice president who runs the company’s pension risk transfer business. “We’re seeing more activity in this market now than we’ve seen in the last three to five years combined.”
Tyson said Prudential did its first pension transfer deal in 1928, with the public library system in Cleveland, and 84 years later it is still paying “six or seven” pensions as a result.
110 PCT OF LIABILITIES
All of that activity has a cost, though. Given the low interest rate environment, insurers have to charge more upfront (GM paid 110 percent of its liabilities) and then put the money into the highest-returning instruments available.
“Clearly when insurers are looking at entering these types of transactions they’re taking today’s rate environment into account when they’re pricing them,” said Ramy Tadros, head of the Americas insurance practice at Oliver Wyman, which consulted on the GM deal.
Tadros said the capacity for these kinds of deals will have to come from traditional participants, as regulators are unlikely to bless the private equity-backed, special-purpose insurers formed in Britain to take on these liabilities.
Such special purpose companies do not provide nearly the same degree of financial strength and stability U.S. regulators have sought.
“I think capacity in this particular area of terminal funding certainly is not limitless,” said Elaine Sarsynski, executive vice president of retirement services and chief executive of international business at MassMutual.
“There is definitely going to be risk-adjusted capital applied to this business,” she said. “It’s a question of making sure you underwrite with an appropriate return.”
Beyond the availability of capital, there are also questions about compliance with government standards for annuities and retirement plans. BCG’s Devlin said at most a half-dozen insurers comply fully with U.S. Department of Labor guidelines, which are intended to ensure plans are financially sound and safe for consumers.
U.S. regulators have good reason to be careful. The Labor Department’s rules were crafted following the demise of California insurer Executive Life in 1991. The company imploded after heavy investment in junk bonds that were ultimately too risky for such a large pension guarantor.
BEST CANDIDATES
Sponsors of underfunded pension plans may have few alternatives to topping up their plans and then paying those higher transfer fees, given an environment in which 10-year U.S. Treasuries are yielding about 1.6 percent.
Accounting rules require companies to value estimated future liabilities based on the amount of money they would have to set aside now, minus the yield they could collect from investing in high quality bonds. Lower yields mean more money has to be set aside. And as this discount rate has pushed continually lower, the chance that rising rates will save underfunded pension plans has declined.
“I think you see less certainty that pension liabilities will be reduced by interest rates rising any time in the near future,” said Sean Brennan, a principal in the financial strategy group at Mercer. “Plan sponsors are exhausted at waiting for rates to rise.”
Some 94 percent of the biggest corporate pension plans in the U.S. are underfunded, according to the Reuters analysis. At the close of their 2011 financial years, 322 of 343 S&P companies that report their pension status indicated their plans didn’t have enough assets to meet future pension obligations, to the tune of $363 billion.
GM, with a huge cash pile after its government bailout, was in the unusual situation of having the ability to make up for the underfunding in its salaried workers plan plus pay for an annuity. The company said it was using $3.5 billion to $4.5 billion of cash in the deal.
But even GM might be hard pressed to annuitize its remaining U.S. obligations, which are underfunded by an estimated $12 billion to 13 billion, according to Stephen Brown, senior director at credit agency Fitch Ratings. “It’s a hefty up-front cost,” he said. “And many other companies with
underfunded pensions wouldn’t have this much cash lying around.”
The best candidates for future termination deals would be plans closer to full funding that are run by companies with cash available to cover the premiums, Brown said.
The Reuters analysis looked for companies with at least twice the cash needed to do a deal similar to GM’s. The analysis turned up 150 companies with the flexibility to potentially conduct a pension transfer.
Software giant Oracle, semiconductor maker KLA-Tencor and gas producer EQT had among the highest ratios of available cash to the amount needed for a pension deal but all three have relatively tiny pension obligations. Companies with larger plans, like News Corp and Archer Daniels Midland, also made the cut.
“Almost any company could do what GM did,” said John Ehrhardt, principal at actuarial consulting firm Milliman in New York, who reviewed Reuters’ analysis. But because interest rates are at historic lows, pension liabilities are at historic highs, making a potential deal more costly. “That’s the balance the CFO has to make: even if you have the cash on hand, is it worth the hit to de-risk your portfolio?” he said.
KLA, News Corp, Oracle and ADM declined to comment, and EQT did not respond to request for comment.
To be sure, companies that did not make the list could terminate a portion of their pensions, as GM did. And not every company with enough cash to do a termination will do so. GM competitors Chrysler and Ford have both said in recent days that they prefer to use cash for other purposes.
(Additional reporting by Cezary Podkul in New York; Editing by Steve Orlofsky)

Seasonal slowdown until August 2012, nothing to fear

Monday, Jun 11, 2012
AFP

BEIJING – China’s commerce minister said in comments published Monday that the country faces a “severe” trade situation this year, as the Asian powerhouse continues to feel the pinch of global economic woes.
“Foreign trade still faces quite a severe situation going forward,” Chen Deming said in a brief statement carried by the official Xinhua news agency and posted on the central government’s website.
But he said that “with luck”, China would still achieve 10 per cent growth in foreign trade – which combines imports and exports – as per predictions made earlier this year.
The forecast growth for the year ahead is far slower than the 22.5 per cent growth achieved in 2011, as the debt crisis in Europe – China’s biggest export market – rages on.Official data released on Sunday showed exports rose 15.3 per cent on-year in May to US$181.1 billion (S$231.7 billion) and imports grew 12.7 per cent to US$162.4 billion, slightly widening the trade surplus for the third consecutive month to US$18.7 billion.
However, the better-than-expected trade figures failed to downplay concerns that the world’s second largest economy is slowing, after China put in a poor economic performance in May.
Chinese Premier Wen Jiabao last month said greater priority should be given to growth, which slowed to 8.1 per cent in the first quarter of 2012 year-on-year – its slowest pace in nearly three years.
Authorities have been easing monetary policy for some time in an effort to stimulate growth, cutting the amount of money banks are required to keep in reserve three times since December last year.
On Friday, the central bank also cut interest rates for the first time in more than three years and allowed banks more flexibility to set rates, introducing greater competition in the market.

SINGAPORE – The Monetary Authority of Singapore has cautioned that the global economy is set to see slower growth in the near term, amid rising uncertainty from the euro zone crisis and a cloudy outlook for the US economy.
“Renewed uncertainty stemming from the euro-zone debt crisis, a flagging recovery in the US, and deepening slowdowns in China and India pose significant headwinds to near-term global economic growth,” the central bank said in a report on recent economic developments.
“The trade-oriented Asian economies are likely to see activity moderating for the rest of the year, although resilient domestic demand will provide some support.”
Barring a major dislocation in the global economy, the Singapore economy is set to grow by between 1 per cent and 3 per cent this year, MAS said.
The local construction sector is expected to be supported by a strong pipeline of building projects. And this will help provide a boost to construction-related lending activities.
At the same time, tourism-related industries are expected to continue their growth path – thanks to firm visitor arrivals from the region.
The central bank also cautioned that inflation is likely to remain elevated and volatile, and kept its forecast at between 3.5 per cent and 4.5 per cent for this year.

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It is Eurocup 2012 season now and there will be a seasonal slowdown where most economies are having June school holidays so there is nothing to fear, things will definitely return to normal after end July so you must be prepared for it to ride the global wave of recovery, where factory orders for the year end will double in many sectors due to festive seasons and once there is a certain clearity after November US elections, things will take off. Therefore, this season is bad timing for IPOs and other investment decisions like a major launch of products unless you want to capture the school holiday crowd. The only risks is a major God caused event like an earthquake, tsunami or typhoon where the results are devastating, which has less than 1% of happening.
– Contributed by Oogle.

Central Bank can monitor inflows and outflows of funds daily and clean up NPLs, merge banks

By Cat Barton | AFP News
Vietnam’s drive to restructure its troubled banking sector is being derailed by powerful interest groups as the political will needed to force through painful reforms falters, experts say.

After a decade of rapid, chaotic bank liberalisation, Vietnam has ended up with too many domestic banks (42) — many of which are overloaded with toxic debt — and poor governance across the system, economists warn.
Last year, faced with persistently high inflation and critical liquidity conditions at many of the weaker banks, the government announced aggressive restructuring plans.
But as inflation has fallen — from a high of 23 percent last August to 8.3 percent in May, allowing the central bank to increase monetary supply and easing banks’ liquidity problems — so too have appetites for reform.
“Things have calmed down a bit because of falling inflation. So now they’re thinking ‘OK we don’t have to be so aggressive’,” said economist Nguyen Xuan Thanh, director of the public policy programme at the Fulbright School in Ho Chi Minh City.
“The second factor (slowing reform) is the resistance from the banks, from the owners of the banks… the political economy doesn’t allow the government to act decisively by taking over a bank and cleaning it up to sell.”
Aside from five fully-foreign owned banks, such as ANZ and HSBC, the sector is dominated by large state-owned banks and dozens of smaller joint stock banks owned by public or private investors.
After years of rapid credit growth, the balance sheets of many of these banks are weighed down with toxic loans — the majority of which went to badly-run state-owned enterprises and speculative property investments.
While the larger state banks benefit from an implicit government guarantee and continued investor confidence, many of the joint stock banks have serious liquidity problems and can barely stay afloat, experts say.
This has hit the broader economy — credit lines have all but dried up which has affected small and medium businesses particularly badly with some 18,000 going bankrupt this year alone.
Unless there is decisive restructuring, the system will remain unhealthy “and the economy as a whole will suffer”, said Thanh.
What the government needs to do is “take over the weakest banks, merge them, sell off the bad debt and then resell the merged bank”, said Jonathan Pincus, a HCMC-based economist from the Harvard Kennedy School’s Vietnam programme.
“It would be quicker and less risky for the system as a whole. But bank owners would resist this,” he said.
To have a banking licence in Vietnam, one Hanoi-based diplomat said, you have to be “very well connected”. Bank ownership brings benefits — the possibility of kickbacks, access to cheap credit.
Many small joint stock banks are owned by subsidiaries of state-owned enterprises or well-connected groups of investors who own multiple banks, evading regulations with accounting tricks.
The sector is riddled with complex cross ownership patterns which are proving “politically difficult to unwind”, Pincus said.
The government’s reform plan relies on private sector voluntary mergers to improve systemic liquidity by having those with healthy balance sheets absorb those in trouble.
But many banks are hiding the true state of their balance sheets and finding ways to hide their non-performing loans (NPLs), Pincus told AFP.
“They loan money to customers of other banks, who use the money to close out their loans with others. Customers of other banks do that with them. It keeps everyone’s NPL rate down,” he said.
The government has divided the banks into four categories with different credit growth ceilings for 2012 — in effect, identifying the weaker institutions and banning them from lending.
Five to eight of them will be merged this year, the government has said, although it now appears “embarrassed” and is backing off from this pledge, said Le Tham Duong from the Ho Chi Minh City Banking University.
With the first merger of three weak banks in December, rather than the government taking over the institutions, writing off bad debts, and seriously restructuring, the banks were simply rolled together, experts say.
Vietnam’s central bank chief Nguyen Van Binh has said that “in the near future there will be more voluntary mergers and acquisitions under the State Bank’s strict supervision”.
But what is needed is serious state-led restructuring not private sector mergers, said Fulbright’s Thanh, adding that this would require huge resources and a clear admission of the scale of the bad debt problem.
“Politically and legally if you do that it is very risky,” he said. “First there needs to be political will which is still lacking.”

Increased security to deny access to cyberattack

“Ubuntu 11.10 Desktop(32bit) installation CD has been compromised where the folder contains ram0-15 and tty0-62 where they sent screenshots to a maximum of 62 terminals with total control of your keyboard and mouse although it does not contain a key logger which will give it away. Windows desktops seem to be hit with an unknown virus which is even higher than flame virus capabilities and I am still trying to track it down. It seems the creators are targeting me and my research, accessing even my contact lists in my mobile.  The flame virus needs to hop from pc to pc, so it will leave a trail behind even if it deletes all traces from the attack pc, so with network monitoring tools, I can capture and isolate it. The problem I found is attack from suspicious websites which uses code to activate your browser plug-in, sending all activities to a specific website. – Contributed by Oogle.”

IMRWorldwide.com is suspected of possibly being a scam or site engaged in fraudulent activity. Although this has not been verified, below are some community projects watching fraud that may have further information about IMRWorldwide.com.

– Contributed by Oogle.”

Posted: 08 June 2012 1350 hrs
TALLINN: Quick advances in cyber war technologies could soon lead to a new generation of so-called “intelligent cyber weapons” which top global IT defence experts warn could be virtually unstoppable.
“Rapid developments in cyber (technology) might lead to intelligent cyber weapons that are hard to control and it’s practically impossible to use formal methods of verifying the safety of intelligent cyber weapons by their users,” Enn Tyugu, IT expert at Tallinn’s NATO Cyber Defence Centre said at its fourth annual conference on Thursday.
He also warned that programmes developed to counter attacks by malwares like Stuxnet can act independently and could possibly themselves spark conflicts.
“They are quite autonomous, and can operate independently in an unfriendly environment and might at some point become very difficult to control… that can lead to cyber conflict initiated by these agents themselves,” Tyugu said.
“Stuxnet and Flame have shown the side of cyber of which the average user does not think of but which will bring a lot of challenges to all experts who deal with critical infrastructure protection issues – IT experts, lawyers, policy makers,” Ilmar Tamm, Head of the NATO Cyber Defence Centre told AFP on Thursday.
“The number of cyber conflicts keeps rising and it is important to understand who the actors in these events are, how to classify these events and participants, and how to interpret all that,” Tamm said, noting Western leaders have been slow to become aware of even existing cyber threats.
Experts at the conference noted that both China and Russia have significantly upgraded their cyber-defence capabilities in recent years by creating new IT units.
“But the most powerful weapon today in cyber space is still the propaganda, the chance to use the Internet to spread your message,” Kenneth Geers, US cyber defence expert told some 400 top IT gurus attending the meeting Thursday.
Keir Giles, head of Oxford University’s Conflict Studies Research Centre, noted that some Russian leaders seemed to “sincerely believe that the recent opposition rallies after the presidential elections in Russia were initiated by the US in cyberspace.”

– AFP/al
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You can protect against the risks of cyberattack by securing these access;
1) No mobile access for places where security is vital, even using jaming devices to create a field where no mobile devices can be used.
2) Secure powerlines using encryption where even the power supply to computers is restricted and also internet access by encryption of all access. Do not use wireless.
3) A gateway monitoring software eg the latest firewall technologies
4) Point-to-point encryption software
If you cover all of the above, there is virtually zero chance of a cyberattack, if someone is trying to access thru the internet to your pc, then just cutoff your internet access temporary by employing monitoring software.
The greatest security breech is that using powerlines via your computer power supply, someone can access your computer even if you do not have internet access. It is using an unknown technology via an unknown protocol. That is the reason you can run but you cannot hide, only this way you can erase every evidence of breech, if you attack by the internet, you will leave your trail, because you need to hop from pc to pc, even if you erase everything on your compromised pc. The easiest attack is to overheat your computer, cause a blue screen, and insert malicious code into your computer. Therefore there will be a great demand for an IT firm to produce encryption software to tunnel your communications from point to point.

Homeplugs (Only the link between Homeplug devices is encrypted) Manufacturers should redesign the Homeplug to even protect the power supply to the PC

Since signals may travel outside the user’s residence or business and be eavesdropped on, HomePlug includes the ability to set an encryption password. The HomePlug specification requires that all devices are set to a default out-of-box password — although a common one. Users should change this password. On many new powerline adapters that come as a boxed pair, a unique security key has already been established and the user does not need to change the password, unless using these with existing powerline adapters, or adding new adapters. Some manufacturers supply adapters with security key buttons on them, allowing users to easily set unique security keys by plugging each unit in one at a time and pressing the button on the front (see more detailed instructions that come with the units).
To simplify the process of configuring passwords on a HomePlug network, each device has a built-in master password, chosen at random by the manufacturer and hard-wired into the device, which is used only for setting the encryption passwords. A printed label on the device lists its master password.
The data at either end (Ethernet side) of the HomePlug link is not encrypted (unless an
encrypted higher-layer protocol such as TLS or IPsec is being used), only the link between HomePlug devices is encrypted. The HomePlug AV standard uses 128-bit AES, while the older versions use the less secure DES.

Since HomePlug devices typically function as transparent network bridges, computers running any operating system can use them for network access. However, some manufacturers only supply the password-setup software in a Microsoft Windows version; in other words, enabling encryption requires a computer running Windows [1]. Once the encryption password has been configured, Windows will no longer be needed, so in the case of a network where all computers run other systems a borrowed laptop could be used for initial setup purposes.
MPPE (Microsoft Point-to-Point Encryption) Shouldn’t it be free bundled with your Windows 8?
Microsoft Point-to-Point Encryption (MPPE) is a protocol for encrypting data across Point-to-Point Protocol (PPP) and virtual private network (VPN) links. It uses the RSA RC4 encryption algorithm. MPPE supports 40-bit, 56-bit and 128-bit session keys, which are changed frequently to improve security. The exact frequency that the keys are changed is negotiated, but may be as frequent as every packet.
MPPE alone does not compress or expand data, but the protocol is often used in conjunction with Microsoft Point-to-Point Compression which compresses data across PPP or VPN links.
Negotiation of MPPE happens within the Compression Control Protocol (CCP), a subprotocol of PPP. This can lead to incorrect belief that it is a compression protocol.

– Contributed by Oogle. 
 

The future of Internet TV will include Interactive Ads

Facebook On Apple TV

Cook didn’t say “there’s some things in the works” or “we’re excited about partnerships with Facebook”, he repeatedly said “stay tuned”. That’s the phrase old TV shows used to convince you to keep watching through a commercial or until the next episode. That, and reports that Apple may introduce an SDK for its Apple TV app platform at WWDC this week by BGR and John Gruber, lead me to believe Facebook and Apple are working together to turn you social network into a social TV show.
Facebook’s got the world’s biggest archive of photos, with 250 million posted each day, and allows for high-resolution uploads that’d look great blown up on a big screen. Imagine the photos from your news feed turned into a slideshow on your Apple television. Or the videos shared by friends streamed back-to-back. Even simple text status updates and their comments shown full-screen could be a pleasant laid-back experience. It could update reverse chronologically in real-time so you could leave it on to always see the latest content.
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The future of Internet TV will be interactive Ads, where the present Internet TV is not able to support, it’s base is not big enough to entice Ad revenue, in order for advertisements to take off for Facebook and others, Interactive Ads must be developed to give Advertisers the audience to get feedback and target their segment of clients which will directly affect their bottom line. I could easily create an Ad on TV to get customers to reply via mobile to get a discount coupon sent via SMS, other than creating a database of my customers, I could directly know the feedback of the response of my Ad, the future of all advertisements will be Interactive Ads, across diverse platforms. I can easily conduct polls and surveys on any topics I want.
– Contributed by Oogle.

Competition is very tight, only carefully crafted Demand to Supply will survive

“Advised partners to determine Demand before Supply for hardware manufacturers, give incentives to those who can buy licensing in volume, where the perfection of Windows 8 will automatically drive Demand if security issues can be resolved via MPPE, targeting sales of 500 million copies, you need enough marketing budget to give impact, where traditional data will show the imbalance between PC, tablets and mobile devices, so Demand needs to be carefully calibrated between each segment eg different pricing where the software can be individually tweaked for competition ie your profits will be high for no competition, but low against a free product. Past data of previous sales of your OS could give you an idea how to allocate your budget between different segments, differentiating between OEM and original vendors, where if Demand=Supply you would have maximised your profits. – Contributed by Oogle.”  

(Reuters) – The world of Wintel – Microsoft, Intel and the Taiwan-based companies that build the computers their products power and run on – is taking a huge collective bet on Windows 8.
And while this week’s Computex trade show in Taiwan has largely presented a united front, it has also highlighted some of the tensions that big gamble has created in a once tight relationship between the U.S. firms and their Asian partners.
At stake is the future of the world’s largest software developer, whose new operating system is expected to be launched in the fourth quarter, and it largest chip maker, as well as an island-wide industry of computer makers and parts suppliers.
In one corner you have Microsoft Corp, which is porting its tiled Metro interface used in Windows Phone to tablets, laptops and the desktop.
Although the old point and click interface is still available, the focus is on a touch screen that pits Windows against Google Inc’s Android and Apple Inc’s iOS.
In another corner you have chip maker Intel Corp, long Microsoft’s partner in personal computers.
Intel has not only seen its position slip as the world shifts to mobile devices, it has also had to make room beside Microsoft for Britain’s ARM Holdings Plc, whose mobile-friendly chips may be better suited for tablets running Windows 8.
And then there are the computer manufacturers themselves, most of whom are based in Taiwan and who are struggling to combine Microsoft’s new operating system and Intel’s chip-based designs into products that sell – and turn them a profit.
The Computex show that ended at the weekend has illustrated just how delicate this arrangement is – with differences over pricing, promotion and the ecosystem that will be needed to support this new chapter in Windows’ history.
“Is this going to be a major resurrection? Well, at least it’ll help stop tablets from cannibalizing the PC laptop sector,” said Jonah Cheng, an analyst with UBS.
INNOVATION SHIFT
Microsoft, though still strong on conventional PCs, has watched the energy and innovation shift to mobile devices – led by Apple’s iPhone and iPad.
While PC shipments fell 1.4 percent last year, and are expected to grow by only 4.4 percent this year, according to research firm Gartner, tablet shipments have grown from 19.4 million units in 2010 to 68.4 million last year, with that figure expected to rise by 85 percent this year, according to rival IHS.
Of those tablets expected to sold this year, Gartner estimates more than 60 percent will be iPads – and only 4 percent of them will be running Microsoft’s operating system.
Microsoft, therefore, has little choice but to overhaul Windows to straddle both its traditional computer market and the world of tablets. The result is a potentially jarring shift for users long comfortable with the familiar Windows interface.
Intel, for its part, is having to rethink its chip business, which has focused on processing data rather than more mobile-centric issues such as power consumption. In the meantime, however, it is pushing its vision of a slimmed down laptop called the Ultrabook.
The first round of such devices – which owe a lot in look and feel to Apple’s successful MacBook Air – were not a huge success, but Intel has come up with better chips, materials and designs featuring sliding, folding or detachable keyboards that it hopes will blur the lines between laptop and tablet.
All of this, however, depends on the computer manufacturers and suppliers themselves. It’s they who have to build the devices and figure out how to turn a profit.
This creates its own internal tensions because Microsoft wants each Windows machine to leverage all its features as much as possible, while the original equipment manufacturers, or OEMs, as Taiwan’s gearmakers are known in the industry, have traditionally cut corners to keep prices low.
“Microsoft will live and die on how well the OEMs implement the features of Windows 8,” says Forrester principal analyst Frank Gillett.
INTEL INSIDE
Intel, too, is trying to push the OEMs to add touch screens and other whizz-bang features to help to push the Ultrabook up-market and differentiate it from the MacBook Air.
Intel has even gone so far as to sign agreements with touchscreen suppliers undertaking to buy up excess capacity to ensure there are adequate supplies for the OEMs, who make much of the world’s computer hardware for global vendors and, increasingly, their own brands.
The result is that Intel is emphasising quality and features that may push the price of such devices above the sensitive $1,000 mark. A touch screen, for example, adds roughly $100 to the cost of an Ultrabook, Forrester’s Gillett says.
Intel defends the creeping rise in cost, arguing that while it could easily offer designs for much cheaper models it believes the market is looking for more sophisticated devices.
“We can specify the Ultrabook to get the price point all the way down to $399, but we don’t think that’s what the consumers want,” said Intel senior vice president Tom Kilroy.
The Computex show-floor reflected this diversity and ambition. Asustek’s Taichi dual screen Ultrabook – where both sides of the lid sport a screen – was a particular draw.
And although most manufacturers appeared to have embraced the full range of Intel’s suggested designs and Windows 8’s features, the quality remained uneven.
The plastic slider on one device, for example, failed to unhinge the tablet from the keyboard. Some models remained encased in glass boxes, suggesting they were some way from completion.
While Computex was show time for Windows 8 and the devices running the system, there is still some way to go until the software’s launch. And there are plenty of issues still to hammer out.
PRICING RIGHT?
First is who pays whom for what, and how much. The manufacturers must pay Microsoft for each copy of Windows and Intel for each chip. While these account for about a third of an Ultrabook’s bill of materials, Forrester’s Gillett says that’s where the greatest margins are.
Analyst Serene Chan of Frost and Sullivan said that Microsoft plans to charge $100 for each Windows 8 licence – a significant increase over what it charged for Windows 7 running on mobile devices, especially when compared with Google’s Android operating system, which manufacturers can use for free.
“The cost of the l
icence that OEMs have to pay Microsoft will be a major drawback,” she said.
Microsoft did not respond to a request for comment on pricing.
Manufacturers said they still hoped to persuade Microsoft to reduce licence fees. Said one executive from a PC vendor: “We are a major player in the market and hopefully that gives us more negotiating power on the royalty fees and cross payments.”
Intel said that while its price list was public, its arrangements with individual clients were confidential.
But Intel’s Kilroy was defiant, saying that the company invests tens of billions of dollars in chip manufacturing, and a similar amount in research and development.
“So we don’t apologise for the fact that we are the leading edge technology, and that we expect to get paid for it,” he said. “The business model works very well.”
REMAKING THE WINTEL WORLD
Still, as the ground has shifted towards a tighter ecosystem that embraces developers, cloud services, content and – at least in the case of Apple – a combined maker of hardware, operating system developer and retailer, Taiwan’s manufacturers must pray that Microsoft and Intel help to fill in the gaps in the Windows world, which now looks a little out of date.
Can, for example, Microsoft build an ecosystem of application developers and payments as attractive as those of Google, Amazon and Apple? Microsoft has launched its own version of Apple’s app store, but it’s not yet clear how it will work for those programmes that don’t use the Metro interface.
“They have to make it very easy for people to develop, test and then market Metro-style applications,” says Richard Edwards, London-based analyst for IT consultants Ovum.
Whether these products do well once they are launched is going to be largely down to how well they are promoted.
As the devices, whether tablets, Ultrabooks or hybrids of the two, are likely to be aimed at more well-heeled customers than these manufacturers are used to, promotion is going to be key.
And that, in turn, mostly falls to Microsoft and Intel. Having built the devices, the manufacturers will rely on the U.S. giants’ marketing clout to convince users to buy them.
Outspoken Acer chairman J.T. Wang, for example, told reporters at Computex how he had recently made his concerns about this clear to Microsoft’s CEO.
“When I was in Seattle last month I told Steve Ballmer that they’ll have to come up with a strong marketing campaign.” Ballmer’s response, Wang said, was to point out that he’d just been named worst CEO of 2011 by Forbes. “Although you are the worst CEO of 2011,” Wang says he told him, “you have to stand up and fight.” Ballmer, Wang recalled, said Microsoft would fight.
It’s likely they will. But another fly in the ointment is a shift in the old alliance between Intel and Microsoft.
Computex 2012 marked a divergence of interests as Microsoft is now also working closely with ARM, offering a version of Windows 8 called Windows RT that will work on its less power-hungry processors in tablet devices.
There were few of these devices to be found at Computex.
These will come later, but there are already concerns that Taiwan-based manufacturers, who do not have a long or particularly successful track record building tablets, are likely to face increasing price pressure.
Highlighting the challenge, British-based research company IMS Research said on Friday that Apple’s competitive pricing has helped push the average price of tablets down by 21 percent in a single year.
(Writing and additional reporting by Jeremy Wagstaff, Asia Chief Technology Correspondent, in Singapore; Editing by Alex Richardson)

US Economy was "not doing fine"? It will be if it does not controls it's defence budget drastically

President Barack Obama stressed on Friday the US economy was “not doing fine,” seeking to clarify his earlier comments about the health of the private sector that Republicans pounced on to try to paint him as out of touch.
Speaking to reporters in the Oval Office, Obama said that while corporate profits were strong and companies had been adding jobs, small businesses were having a tough time getting financing and other pockets of the economy needed more attention.
Earlier in the day, Obama had told a news conference that the private sector was “doing fine,” but that budget-pinched states needed help. Republicans seized on Obama’s comments on the state of the private sector, with House of Representatives Speaker John Boehner saying, “Mr. President, take it from me, the private sector is not doing well.”
Presumptive Republican presidential nominee Mitt Romney, who is seeking to unseat Obama in the November 6 election, called his statement “an extraordinary miscalculation.”
In his later comments, Obama repeated his view that state and local governments needed help to avoid teacher and police layoffs, and that Congress should help buoy struggling homeowners and construction workers who remain out of work several years after the financial crisis.
“It is absolutely clear that the economy is not doing fine, that’s the reason I had a press conference,” the Democratic president said, seated next to Philippines President Benigno Aquino.
Asked about Romney’s response to his earlier comments, Obama accused Republicans of lacking ideas about how to help the US economy fully recover.
“What steps are they willing to take right now that are going to make an actual difference? So far, all we have heard are additional tax cuts for the folks who are doing well,” he said.
In a campaign stop in Iowa, Romney, who has stressed his private-sector experience, said, “For the president of the United States to stand up and say the private sector is doing fine is going to go down in history. “It’s an extraordinary miscalculation and misunderstanding by a president who is out of touch, and we’re going to take back this country and get America working again, Romney added. At a news conference, Boehner, the top congressional Republican, slammed the Obama healthcare law for making it harder for small businesses to hire. “Listen, the American people are still asking the question, ‘Where are the jobs?’ Boehner said. Other Republicans criticized Obama’s argument that cuts to state and local government staff were dragging down growth.
Obama is “the one who saddled us with all these federal rules and regulations that don’t allow governors to have the freedom to do what we really want,” New Jersey Republican Governor Chris Christie told a Conservative Political Action Conference in Chicago.
“And then he has the audacity to stand up this morning and say that it’s the nation’s governors and the nation’s mayors who are driving our economy down by not hiring enough people for government work.”
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“US Economy upon global recovery could clear it’s debts by 10 years if it controls it’s defence spending drastically by pushing the responsibilities to the UN. Past wars caused by US interests because of oil has drained every single cent from the economy, or they can afford to have bullet trains, modern airports and great infrastructure. – Contributed by Oogle.”

About 60% of the global currency reserves have been invested in the United States dollar, while 24% have been invested in the euro. The country is one of the world’s largest and most influential financial markets. Foreign investments made in the United States total almost $2.4 trillion, which is more than twice that of any other country.[17] American investments in foreign countries total over $3.3 trillion, which is almost twice that of any other country.[18] Total public and private debt was $50.2 trillion at the end of the first quarter of 2010, or 3.5 times GDP.[19] The proportion of public debt was about 0.9 times the GDP.[20][21] Domestic financial assets totaled $131 trillion and domestic financial liabilities totaled $106 trillion.[22] As of 2010, the European Union as a whole was the largest trading partner of the U.S., whereas Canada, China, and Mexico were the largest individual trading nations.
The labor market in the United States has attracted immigrants from all over the world and its net migration rate is among the highest in the world. The United States is one of the top-performing economies in studies such as the Ease of Doing Business Index, the Global Competitiveness Report,[23] and others.