U.S. Cloud Vendors Hurt By NSA

Edward Snowden’s public unveiling of the National Security Agency’s Prism surveillance program could cause U.S. providers of cloud-based services to lose 10% to 20% of the foreign market — a slice of business valued at up to $35 billion.

A new report from the Information Technology & Innovation Foundation (ITIF) concludes that European cloud computing companies, in particular, might successfully exploit users’ fears about the secret data collection program to challenge U.S. leadership in the hosted services business.

Daniel Castro, author of the report, acknowledges that the conclusions are based, so far, on thin data, but nonetheless argues that the risks to U.S. cloud vendors are real.

Indeed, a month prior, the Cloud Security Alliance reported that in a survey of 207 officials of non-U.S. companies, 10% of the respondents said that they had canceled contracts with U.S. service providers after Snowden’s leak of NSA Prism documents earlier this year.

“If U.S. companies lose market share in the short term, it will have long-term implications on their competitive advantage in this new industry,” said Castro in the ITIF report. “Rival countries have noted this opportunity and will try to exploit it.”

To counter such efforts, the U.S. must challenge overstated claims about the program by foreign companies and governments, said Jason Weinstein, a partner in the Washington office of law firm Steptoe & Johnson and a former federal prosecutor and deputy assistant attorney general specializing in computer crime.

“There are a lot of reasons to be concerned about just how significant those consequences will be,” Weinstein said. “The effort by European governments and European cloud providers to cloud the truth about data protection in the U.S. was going on well before anyone knew who Edward Snowden was. It just picked up new momentum once the Prism disclosures came out.”

Weinstein contends that European countries have fewer data protection rules than the U.S.

For example, he said that in the U.K. and France, a wiretap to get content can be issued by a government official without court authority, but that can’t happen in the U.S.

“U.S. providers have done nothing other than comply with their legal obligations,” he said. But because of Snowden’s leaks, “they are facing potentially significant economic consequences.”

Gartner analyst Ed Anderson said his firm has yet to see any revenue impact on cloud providers since the Prism disclosures, but added, “I don’t think Prism does U.S. providers any favors, that’s for sure.”

Nonetheless, Anderson added, “I think the reality is [the controversy] is likely to die down over time, and we expect adoption to probably continue on the path that it has been on.”

One reason why U.S. providers may not suffer is because “the alternatives aren’t great if you are a European company looking for a cloud service,” he said.

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Is NFC Taking Off?

Analyst working for Berg Insight have noted a growth in global sales of handsets featuring Near Field Communication (NFC) increased ten-fold in 2011.

More than 30 million units were sold in 2011 and the market was growing at a compound annual growth rate of 87.8 percent. It predicts that shipments will reach 700 million units in 2016. The global rise in smartphone adoption is also driving higher attach rates for other wireless connectivity technologies in handsets including GPS, Bluetooth and WLAN, the report said.

Some of the reason for the growth is the reduction in the cost of the technology. It is now a staple feature on high-end smartphones and most medium- and low-end models. Declining costs will also enable broader integration in the featurephone segment that is rapidly gaining smartphone-like functionality.

Shipments of WLAN-enabled handsets have more or less doubled annually in the past four years and the attach rate increased to 33 percent in 2011.

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Kindle Fire Raises Privacy Concerns

Amazon told a Massachusetts congressman that the Silk browser in its Kindle Fire tablet doesn’t pose a privacy threat to customers, but the lawmaker wasn’t satisfied with that statement.

U.S. Rep. Ed Markey (D-Mass.), the co-chairman of a congressional caucus on consumer privacy, on Tuesday released the results of questions he had put to Amazon CEO Jeff Bezos in October about Silk and the data it collected.

Markey wasn’t happy with Amazon’s answers.

“Amazon’s responses to my inquiries do not provide enough detail about how the company intends to use customer information, beyond acknowledging that the company uses this valuable information,” said Markey in a statement.

“Amazon states ‘Customer information is an important part of our business,’ but it is also important for customers to know how the company uses their personal information,” Markey continued. “Amazon is collecting a massive amount of information about Kindle Fire users, and it has a responsibility to be transparent with its customers. I plan to follow-up with the company for additional answers on this issue.”

Silk, which is based on the open-source WebKit engine, connects to Amazon’s cloud service and servers by default. The service will handle much of the work of composing Web pages, pre-rendering and pre-fetching content, and squeezing the size of page components, a way, claimed Amazon, to speed up browsing on low-powered devices like the Kindle Fire.

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Google Facing DOJ Probe

Google is under investigation by the U.S. Department of Justice concerning practices within its advertising program, and has set aside $500 million for a potential resolution fund, the company said in a regulatory filing on Tuesday.

In its quarterly report filed with the U.S. Securities and Exchange Commission, Google said that in May it accrued $500 million for the three-month period ended March 31, 2011 in connection “with a potential resolution of an investigation by the United States Department of Justice into the use of Google advertising by certain advertisers”.

Although it cannot predict the ultimate outcome of the matter, Google said that it believes that it will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows.

The company did not explain why the charge had been taken retrospectively on its first quarter earnings. It is also not clear to whom Google would have to make the payment in the event of settlement.

Google declined to comment, stating that it was a legal matter. The company has updated its first-quarter results press release on its web site, to reflect the new charge.

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Apple Outs Patch For Tracking Issue

As Apple promised last week in several discussions regarding its location tracking issues, iOS 4.3.3 addresses three bugs related to the database of location information on iOS devices. Firstly, it reduces the amount of the cached location information to a week’s worth, rather than relying on a size limit, as it previously did.

Secondly, it no longer backs up the cache to your Mac or PC via iTunes upon syncing, so the information isn’t available to anyone with access to your computer. And finally, the cache is now deleted from the device when Location Services are disabled in iOS’s Settings app.

Apple has also announced plans to encrypt the location information on iOS devices itself in the next major update to the operating system, which presumably means it will be incoporated into iOS 5.

The iOS 4.3.3 update applies to the iPhone 4, iPhone 3GS, iPad, iPad 2, third-generation iPod touch, and the fourth-generation iPod touch. Exceptions to this fix though, are the iPhone 3G and the second-generation iPod touch, both of which were supported by the original release of iOS 4 when the location database is believed to have been created but have since been dropped from compatibility. Also missing in action is the CDMA iPhone 4, although some reports have suggested that it didn’t log data in the same way as the GSM model.

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Support Calls To Help Desks Are On The Rise

At a time when technology is supposed to be getting simpler, less complex and easier to manage, more people are calling help desks for assistance than ever before, according to a new report. That’s one of the findings that HDI, formerly known as the Help Desk Institute, revealed in its recently released 2010 study of help desk trends.

What HDI found is that the number of incidents reported to help desks via chat, e-mail, telephone, self-help systems, social media, the Web and walk-ins is rising, with 67% of all help desk operations experiencing increases in 2010. That’s roughly the same percentage who reported an increase in 2009.

In recent years, many organizations have moved to centralize their help desk operations and establish a single point of contact for workers, said Roy Atkinson, an analyst at HDI, whose members represent a help desk community of about 50,000 people.

Those centralization efforts have improved incident data collection, which helps to explain the spike in reports. Moreover, creating a single point of contact, and offering multiple ways for people to reach the help desk, encourages users to seek assistance, Atkinson said.

While centralization and better record-keeping may explain much of the increase in reported calls, it doesn’t completely explain it. Atkinson said another part of the explanation could be the fact that IT complexity is actually increasing, especially as users seek to connect multiple devices, including mobile phones, tablets and laptops to corporate networks. Read More…….

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