Facebook captures largest IT deal of quarter

The IT industry raised almost $2 billion in venture capital in the third quarter, regaining its position as the top money-grabber, Dow Jones VentureSource says in a new report. Facebook captured the IT industry's biggest investment in the quarter, with a $100 million round from undisclosed investors in mid-July. But overall, IT investment has hit its lowest point in 12 years. http://www.networkworld.com/supp/2009/outlook/hottech/010509-nine-hot-te... ">Web 2.0 companies are on the upswing, but software investments are dramatically lower than they were last year. "The slow recovery we've seen for venture capital has faltered," Jessica Canning, director of global research for Dow Jones VentureSource, said in a news release. "As liquidity and fundraising lag after the economic meltdown in 2008, investors have no choice but to keep a tight rein on investments until the industry is on more solid ground." IT companies raised $1.87 billion across 270 deals in the third quarter, compared to $1.94 billion across 248 deals in the second quarter for the IT sector.

IT emerged as the top market for venture capital in the third quarter because the healthcare industry suffered a drop from $2.2 billion to $1.7 billion. Despite receiving more venture money than the healthcare industry, investments in the IT industry are still at a 12-year-low and significantly below 2008 levels. While the IT sector is typically the leading recipient of venture capital, healthcare companies had briefly overtaken IT with their second quarter total, according to Dow Jones. Last year, IT companies took in $12.2 billion in venture investments across 1,328 deals. A bright spot for IT comes from the Web 2.0 sector, where investments surpassed the software market for the first time. With data from three out of four quarters in 2009, the industry is at just $5.4 billion across 747 deals.

The information services sector - which includes most Web 2.0 companies - pulled in $627 million in new investments in the third quarter, up 11% over the same period last year. For all industries, venture capitalists invested $5.1 billion in 616 deals in the third quarter, down 6% since last quarter and down 38% since the third quarter of 2008. If current trends persist, 2009 will be the worst investment year in U.S. venture-backed companies since 2003, according to Dow Jones. Software companies, meanwhile, raised just $581 million in the quarter, a 55% decline from the $1.3 billion invested in the same timeframe last year. "This is the [software] sector's lowest quarterly investment total since 1996," Dow Jones reports. Follow Jon Brodkin on Twitter: http://www.twitter.com/jbrodkin

Obama bars fed workers from texting and driving

A two-day Distracted Driving Summit in Washington concluded Thursday after experts raised multiple thorny questions on how to reduce cell phone and texting while driving, with a big emphasis placed on driver and employer responsibility. LaHood also announced that his department would ban text messaging altogether and restrict cell phone use by truck and interstate bus drivers, and disqualify school bus drivers from receiving commercial driver's licenses if they have been convicted of texting while driving. After mentioning that President Obama had just signed an executive order that tells all federal employees not to engage in texting while driving government vehicles, Transportation Secretary Ray LaHood urged private sector employers to avoid calling workers on their cell phones as they drive home from work.

His department also plans to make permanent some restrictions placed on the use of cell phones in rail operations, he added without offering further details. "Employers need to change their mindset, too, and if you know your staff has left for the day, do not expect them to instantly return a phone call or IM when they'e driving home," LaHood said in a concluding address. The executive order "shows the federal government is leading by example" and "sends a signal that distracted driving dangerous," he added. Obama's executive order, signed Wednesday night, also bars federal workers from texting with any government-owned electronic equipment while they are driving, and bars any texting while driving their own privately owned vehicles while on official government business, LaHood said. But LaHood was noncommittal about proposed laws, including a U.S. Senate bill that would require states to ban texting while driving or face partial loss of federal highway funding. But LaHood seemed to focus on drivers' personal responsibility as his key message. "Driving while distracted should feel wrong, just like driving without a seat belt or drinking," LaHood said. "We are not going to break all bad habits, but will raise awareness." LaHood said driving while distracted from using a cell phone or texting is "personally irresponsible and socially unacceptable behavior, but in the end we won't make the problem go away by just passing laws ... We cannot legislate behavior to get results to improve road safety." "People need to use common sense and show common decency to other drivers," he said. LaHood showed a willingness to work on legislation, saying, "We will worth with Congress and state and local governments to ensure than the issue of distracted driving is appropriately addressed." He also said "high visibility enforcement" of drunk driving and seat belt laws had been effective and could work with distracted driving and related laws.

He concluded with unprepared remarks, calling distracted driving "an epidemic" and referring to the summit as a "tremendous start ... that will lead all of us to save lives and save injuries." At the start of the conference, LaHood released new information that said nearly 6,000 people died in the U.S. in 2008 in crashes involving a distracted or inattentive driver, about one-sixth of the total number of deaths, or about 37,000. LaHood and several of the panelists who spoke urged parents to restrict their teenage children from using cell phones while driving. Adrian Lund, president of the Insurance Institute for Highway Safety, cast a blunt criticism of such efforts, citing years of research. "It would be wonderful to have training programs for teens to recognize the risks they take [by texting while driving], and change their driving dramatically.," he said. "But our experience with education programs for teens or even ticketed drivers who take remedial training ... is that essentially the programs have no effect," Lund said. "What they learn is to avoid tickets, but not typically to avoid crashes." Lund mimicked calls by several experts at the summit to find new methods that can reduce crashes from distracted driving. "We need to find out what works ... All this education doesn't do much good," he said. But the value of specialized training programs to teach the dangers of distracted driving came under question by some of the assembled experts.

Citrix desktop virtualization push: any device, any location

Citrix on Monday said its latest desktop virtualization software will give users access to high-definition desktops from any location and from just about any device, including PCs, Macs, thin clients, laptops, netbooks and smartphones. The latest version offers a range of server-and client-side virtualization options, including offline desktops hosted in local virtual machines; desktops hosted on blade PCs; hosted desktops based in virtualized servers; and hosted shared desktops. "Traditional PCs were designed for a very different world," Raj Dhingra, XenDesktop general manager, said during a press conference Monday. "Today, the world is flat and small. Citrix is betting that Windows 7 will drive a new wave of desktop virtualization adoption, and is releasing XenDesktop version 4 to take advantage of these expected new users.

We need to work in entirely different ways than before. Now it says XenDesktop with its accompanying FlexCast delivery technology is Citrix's first product "to support every major desktop virtualization model in a single, integrated solution." Citrix said XenDesktop will support high-definition graphics for all users with its HDX technology, which has been improved with support for flash multimedia, 3D graphics, webcams and VoIP, with optimized delivery to branch offices over WANs. Citrix claims that HDX requires 90% less bandwidth than competing technologies. A traditional PC that is locked to an office or a laptop is too confining." 13 desktop virtualization tools Citrix hinted at its all-devices strategy earlier this year when it brought virtual desktops and applications to the iPhone. XenDesktop 4 will be generally available Nov. 16 for prices ranging from $75 to $350 per user. The desktop virtualization market has lots of room for growth.

Customers using XenApp, Citrix's application virtualization technology, will be able to trade up to XenDesktop with discounts of up to 80%. Citrix is also enabling centralized management of virtual desktops and applications by integrating XenApp with XenDesktop, the company said. Fewer than 10% of data centers worldwide have virtualized desktops, according to ITIC lead analyst Laura DiDio. Citrix, Microsoft and VMware are all going after the virtual desktop markets, although surveys show mixed results when comparing the vendors. Thirty-one percent of customers plan to virtualize in 2010, according to an ITIC poll of 400 corporations. According to ITIC, 41% of companies using desktop virtualization went with Citrix, compared to 28% for Microsoft and 16% for VMware.

Citrix said XenDesktop 4 contains 70 new features to enhance performance and security. But when measuring by deployed seats, VMware has about a two-to-one lead over Citrix, according to Burton Group analyst Chris Wolf. But the key is delivering the right type of desktop based on users' varying needs, the company said. As many as 500 users can be accommodated by a single server in this model, according to Citrix. For example, task workers who share a similar set of applications may be best served by a shared, server-based virtual desktop, Citrix said. "This model gives each user a standardized, locked-down desktop ideally suited for jobs where user customization is not needed or desired," Citrix said.

By contrast, office workers who need more personalized desktops may be best served by a virtual desktop infrastructure model in which each desktop is a dedicated virtual machine. Blade PCs in the data center are ideal for delivering high-end applications to "power users," Citrix said. This model supports about 60 to 70 desktops per server, according to Citrix. Another option lets companies stream desktops to each user's device, which lets the user device run the desktop locally while letting administrators centrally manage the operating system, applications and data. The virtual applications can run offline, making them popular with mobile users, the company said. "By centralizing apps and delivering them as an on-demand service to existing desktops, this option offers many of the ROI and management benefits of a fully virtualized desktop with minimal setup costs, making it an ideal starting point for customers new to desktop virtualization," Citrix said in its XenDesktop announcement.

But for companies just starting out with virtualization, the simplest option may be to deliver virtual applications to traditional PCs, Citrix said. Follow Jon Brodkin on Twitter: www.twitter.com/jbrodkin

US company burned by China Web filter plans rival product

A U.S. company whose software code was allegedly stolen in China by a controversial, government-backed Internet filtering program will hit back by launching a rival product for a low price in China, the company said late Sunday. The Solid Oak program, called CyberSitter and targeted at parents, will be offered in languages including Chinese in a version due out next month. Solid Oak Software, which has said its code was copied in a program that China ordered be bundled with all new PCs, is exploring ways to offer its own Web filter for free or at a very low price in China, company President Brian Milburn, said in an e-mail.

A Chinese version of the product would compete with Green Dam Youth Escort, the program that Solid Oak says copied its code and that China originally ordered PC makers to include with all new computers sold in the country from July this year. But under heavy pressure from foreign PC makers and the U.S. government, China indefinitely postponed the mandate just hours before it was set to take effect. The Chinese government had paid the program's developers to allow all PC buyers to use the software for free for one year. Major PC makers including Lenovo and Acer began bundling Green Dam with new PCs until this month. The program also used blacklists apparently lifted from Solid Oak's software, according to the company and a group of U.S. researchers.

The program, which China said was meant to protect children from online pornography, was also found to block politically sensitive material such as negative references to a former Chinese president. One file found in the Chinese program contained an encrypted version of a years-old Solid Oak news bulletin, according to the researchers. Green Dam came under fire for concerns about system stability in addition to user privacy and freedom of speech. Solid Oak, which is based in Santa Barbara, California, is preparing legal action against PC makers that shipped Green Dam, though an update to the program in June removed some of the allegedly infringing elements. One Beijing high school recently removed the program from its computers after finding that it conflicted with software used for grading and attendance tracking.

Bryan Zhang, general manager of Jinhui Computer System Engineering, one of the designers of the Chinese software, declined to comment on the allegations of code theft. Green Dam "is a conglomeration of whatever components [the developers] managed to steal ... or otherwise appropriate from various sources, and duct tape together in the form of an alleged piece of software," Milburn wrote in his e-mail. "They should be utterly humiliated, not just because they stole much of the core functionality, but even more so because they intentionally inflicted such a miserable product on a population of innocent computer users," Milburn wrote. The new Solid Oak product will have a Chinese user interface available and a filtering function that the company reworked after much of its old proprietary code appeared online. That is the ultimate goal," company spokeswoman Jenna DiPasquale said in an e-mail. The filtering will be entirely URL-based, avoiding the need to translate keywords into Chinese. "We are working on a way to release it for free.

EU chides Oracle over probe of Sun deal

Europe's head of competition has criticized Oracle for what she characterized as a lack of cooperation over the investigation of Oracle's planned acquisition of Sun Microsystems, a spokesman for the European Commission said. Kroes said the Commission was willing to move quickly toward a final decision but "underlined that a solution lies in the hands of Oracle," according to the spokesman. In a meeting with Oracle President Safra Catz in Brussels on Wednesday, Competition Commissioner Neelie Kroes "expressed her disappointment that Oracle had failed to produce, despite repeated requests, either hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the Commission," a Commission spokesman said.

An Oracle spokeswoman said the company declined to comment. The Commission said it was concerned about Oracle, the world's top seller of database software, taking ownership of MySQL, the leading open-source database, which Sun acquired last year. Oracle's proposed US$7.4 billion Sun acquisition was approved by U.S. regulators in August, but two weeks later the Commission announced it would launch an investigation of the deal, citing "serious concerns" about its effects on competition in the database market. Oracle had hoped to complete its acquisition of Sun by now, but the Commission's probe, which could last up to 90 days, has held up the deal and may not be completed until January. Oracle CEO Larry Ellison said last month that Sun is losing $100 million a month while it waits for the deal to close. Meanwhile Sun's sales have been declining as rivals IBM and Hewlett-Packard take advantage of the uncertainty around Sun's business with aggressive migration plans.

He has also asserted that Oracle's database competes with Microsoft's SQL Server and IBM's DB2 products, and not with MySQL. Sun announced a big round of layoffs yesterday, citing the additional time it is taking to close the deal with Oracle. Oracle is widely expected to make deeper job cuts if the deal closes. The company said it will lay off 3,000 workers around the world over the next 12 months.