JimPinto.com - Connections for Growth & Success™
No. 75 : January 27, 2002

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

Contents:
  • Automation Majors - 2002 Update
  • 2002 - Personal tech-trends
  • Internet growth still tripling per year
  • Movie: The Perfect Mind
  • JimPinto.com survey - summary of YOUR feedback
  • eFeedback:
    • Lots of feedback on 'Earth Lights' & 'Interview with God'
    • 150 million people downloading free music & software - OK or not?
    • New EURO directive regarding British "spending a penny"

Automation majors - 2002 Update

Here is a quick summary of my view of the large Automation companies as they start 2002:
Emerson
Leads the pack. In a poor economy, good management at Emerson (Fisher-Rosemount - systems, sensors, valves and instrumentation) continues to rack up respectable growth and profits - a clear leader in recent CONTROL magazine rankings. Bowing to the realities of decline, Emerson is restructuring - salaried headcount is being cut by 10% and 50 facilities will be closed by the end of this year (2002). Much of the rationalization and restructuring will take place in the Network Power and Motor & Appliance Controls businesses. No, Emerson won't buy Foxboro or Rockwell, but perhaps some of their key pieces.
General Electric
The Honeywell debacle is history. GE won't make that same mistake by buying Rockwell or Invensys. However, they are indeed on the acquisition trail and are looking for smaller, sweeter fish to fry.
Honeywell
Bossidy is cleaning house after the Bonsignore bust. Expect IAC and other pieces to be sold to Siemens or Schneider or someone similar. Avionics is still the key segment that is being eyed by United Technologies (could they make an Avionics-only bid?)

Click Background: Honeywell for sale - GE buys - then abandons

Rockwell Automation
Struggling to stay on an even keel, while top management looks for a graceful exit. Will be sold this year. Rockwell won't be bought by Emerson or GE, who have no interest in pruning. Siemens or Schneider probably cannot because of anti-trust problems. But, Tyco, Eaton and Danaher are possibilities. Tyco can consolidate; Eaton can integrate with Cutler-Hammer; Danaher will take the manufacturing expertise and PLC-product base and divest the remainder. Omron is too small and Yokogawa cannot buy - the Japanese don't know how to play the merger game.

Click Background: Whither Rockwell Automation?

Invensys
On hold, awaiting mid-February results of the "strategic review" to determine what "core" businesses will be held and what will be sold off. Since all the majors are reviewing the pieces right now, my pragmatic guess is that the companies that can be sold at a good price will be sold soon; the remainder will be declared "core" and sold with the balance of the group. It is unlikely that Haythornthwaite will stick around for the long term to lead resurgence. In the meantime, ISS missed the $ 50m "profit and cash" challenge by about $15m, causing more layoffs to bridge the gap. Leo Quinn declared that all expenses above $5 must be reviewed by him personally - when last sighted, he was buried in a ton of requisitions.....

Click Background: The decline of Invensys

Tyco International
After having gobbled up a lot of different businesses, conglomerate Tyco will erase about $11b of debt by breaking up into four companies in different sectors. The move to regroup makes sense for Tyco. Concurrently, Tyco is reported to have bought Invensys Flow Controls - 7-8 companies for about $400m. With a track record of good implementation after acquisition, Tyco is probably still in play to buy Rockwell, Honeywell, or what's left of Invensys.
Siemens
The largest industrial automation company in the world, but lots of activities in other markets (Telecomm, chips etc.) which have caused major losses in the US. Siemens acquired Moore Products, as a way to get into process systems, but flunked the follow-on. Still looking for pieces to increase US market-share. Key candidate to buy Invensys, Rockwell or Honeywell.
Groupe Schneider
Have in-digested Square D and Modicon, along with French Telemechanique, April, Merlin-Gerin and other PLC properties. Following the failure of the Legrand merger, they are looking for other possibilities. Schneider has made bold "entrepreneurial" moves in the past couple of years with acquisitions of Steeplechase, Crouzet Automation, Quantronics and Berger-Lahr Motion, and has developed partnerships with other industry notables such as Control.com and Entivity. It will be interesting to see if they make a BIG move with Honeywell IAC, or a major Invensys piece like Foxboro.
ABB
Still working their way out of trouble: (recently reviewed - JimPinto.com eNews 15 Dec. 2001). Chairman Percy Barnevik was replaced, and CEO Jurgen Centermann is working hard to improve results. I give at least minimal credibility to reports that ABB is interested in Rockwell, Foxboro or Honeywell IAC; a good business strategy is to buy an additional mess (two messes are as good as one) and consolidate your way out of it. However, Yurko tried that with Invensys (Siebe + BTR + Baan) and ended up with a boot.
Others
Many people have asked why we don't discuss other majors - GE-FANUC, YOKOGAWA, etc. - in these columns. Quick answer - because we don't know too much that is beyond what you and I can read in the press. GE-Fanuc is jointly owned by GE and Fanuc (Japan) and does not report separate results. I have tried repeatedly to get segmented results for Yokogawa, but all I get is the bland ballyhoo of the website and consolidated annual report.

If you have any corrections, disagree with my commentary, or if you have any information that you'd like to share, please get in e-touch. Your confidentiality will be respected.

2002 - Personal tech trends

The hot economy has cooled down and the dotcoms have collapsed. But technology continues to accelerate and digital tools are getting smaller, faster and cheaper, and getting into every corner of life, your pocket as well as your desk. Inspite of the preoccupations with a weak economy and terrorism conflicts, personal technology will still take some steps forward this year.

Here is what SiloconValley.com predicts will be some of the 2002 developments:
  • Online music
  • DVD recording
  • Wireless data
  • E-bills
  • Interactive TV
  • Smartphones
  • Telecom package deals
  • Online Video games
  • Connected Schools
  • Wireless home networks

Click 10 Personal Tech-trends to watch

So, two years from now (2004) what will your PC look like? For us computer geeks and nerds, PCWorld.com has these predictions :

  • CPU and RAM: 4-5-GHz processor, 512MB memory, 600-MHz bus
  • Hard disk: From 300GB to 400GB on a Serial ATA bus
  • Removable storage: Rewritable DVD, and still the 1.44MB floppy
  • Internet connection: Cable or DSL broadband
  • (Still a 56K modem if you're not lucky)
  • Video: 3D graphics card with 128MB of video RAM
  • 18-21-inch flat-panel LCD monitor, 1600 x 1200 resolution
  • Ports: USB 2.0 and IEEE 1394
  • Input devices: Wireless (Bluetooth) mouse and keyboard
  • Operating system: Some version of Windows
  • Other: Wireless network for users with more than one PC
  • Price: $1,500 to $2,000
Other PCWorld.com tech-predictions for 2004:
  • 1-GHz palmtop PDAs
  • Next-generation instant messaging
  • Markup languages for everything
  • Peer-to-peer networking
  • The see-through PC: TFT computers
  • Data magnet: Magnetic RAM
  • Presence technology A way to find people on the Net.
  • Fuel cell power
  • Distributed computing
  • Voice portals
  • The electronic wallet
  • New cell-phone high-bandwidth networks
  • Digital cameras: More and more megapixels

Click CNN-SciTech: 20 factors that will change PCs in 2002

Click 2002 - the new Apple iMac

Internet growth still tripling

The weak world economy, the horrific events of 9/11 and the subsequent war on terrorism - all this has not done anything to stunt the growth of traffic crossing the Internet. In fact, traffic continues to triple each year.

A networking pioneer, now chief technology officer for San Jose, CA based Caspian Networks, says that this growth rate will finally slow down by the end of the decade.

Click Annual Internet Traffic Growth Still Tripling

Click Traffic Analysis powerpoint presentation, with facts & figures

New movie: A Beautiful Mind

A fascinating exploration of the genius and madness of Dr. John Nash - eminent mathematician and winner of the Nobel Prize in economics. The best movie I've seen this year (hey, but it's still only January). Intellectually engaging plot, humor, great acting by Russell Crowe - how different is the ultimate nerd from the macho Gladiator?

Nash, who transformed von Neumann's game theory with his PhD dissertation in 1950, was obsessed with finding obscure patterns and ends up cracking enemy codes in newspaper and magazine ads. His escapades were imagined: "The ideas I had came to me the same way my mathematical ideas did, so I took them seriously."

Best part: an explanation of "Nash equilibrium" - a key concept in modern game theory - in a bar pickup scene. Nash expands Adam Smith's self-interest to include group benefit. Not just self-interest, but "enlightened self-interest", as embodied in the American Constitution.

Click A Beautiful Mind (website)

Click Beautiful Mind - Dreamworks website

JimPinto.com eNews survey - summary

Aaahh! The power of email!
Within a few hours my inbox was loaded with several hundreds of replies! The total has exceeded 60%, with some still trickling in a week later. One wag suggested that I should hire an executive assistant (retired) to tabulate the results. It was very rewarding to receive so much honest feedback! Thank you!

Lots of excellent comments, including pressure to keep up my automation company commentary, because "other industry news is just the bland BS of company press releases" and "management never tells us anything". There were literally hundred of "pleas" to continue.

Summary - Preferred content:
  1. Tech trends and futures will continue as my primary interest.
  2. Occasional social commentary, especially in the "soft solutions" arena.
  3. Since there seems to be a high-demand niche market, I promise to continue the "new attitudes, no platitudes" automation commentary.
Timing: Whenever (weekly and monthly are the outside limits).

Length: People read what they like and skip the rest.

Website: Most people liked it - some admitted to never having visited (shame, shame - go take a look, lots of content-content-content!) Detailed Comments: Will ALL be digested and acted upon, where appropriate. Thank you!

eFeedback

Several people were delighted with Earth Lights at Night and provided lots of interesting observations and commentary, too detailed to publish here. It's interesting too how a lot of people connected that beautiful view with the Interview with God. My old friend, Bob Meijer [rmeijer@sprynet.com] came up with this meditative observation:
    "An omniscient God, of course, cannot be surprised - or puzzled or curious or amazed or disappointed. Perhaps God created man for no other reason than to be able to experience discovery, through man's eyes..."
The new Napster peer-to-peer alternatives like Morpheus allow free downloads of music and software; I quoted George Gilder's comment that 150 million people downloading software was "a marketing problem". Henry Swanson had this personal opinion:
    "I disagree with George Gilder and strongly believe that stealing is stealing regardless of whether one person does it or 150 million people do it, and regardless of what technology is used to do the stealing. I realize that the record companies and Bill Gates are rich, but many struggling artists and struggling software developers deserve to be paid for their work regardless of how many people want to steal from them."
When the English need to go to the toilet, they comment politely that they are going to "spend a penny". Well, now that the Euro is the coin of the realm and the penny is defunct, Englishman Steve Yates [syates@asi.fr] (now living in France) reports on EU Directive 456179:
    "In order to meet the conditions for joining the Single European currency, all citizens of the United Kingdom of Great Britain and Northern Ireland must be made aware that the phrase "spending a penny" is not to be used after 31st Dec. 2001. After that date, the correct terminology will be: 'Euronating'."

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