Nokia’s new phones: Not drowning, but waving


Hey, I’ve sold two phones!

EIGHT months ago Stephen Elop, Nokia’s newish chief executive, told the Finnish phonemaker’s staff that they were “standing on a burning platform” and had no choice but to jump into the “icy waters” below. His plan for fishing the company out of the freezing briny rests largely on making smartphones that use Microsoft’s Windows operating system—and getting them to market quickly. On October 26th Mr Elop unveiled the first of these devices. On a live feed from Salo, in Finland, a proud employee packed a Lumia 800 into its box. It is due to go on sale in six European countries next month. It will have a cheaper sibling, the Lumia 710.By recent standards, this is fast work. Nokia had been slow to cotton on to the popularity of touch screens. Its own operating system, Symbian, which was not designed for touch, looked clunky. While Nokia dithered, consumers lapped up Apple’s iPhone and the many smartphones based on Google’s Android operating system. All this cost Mr Elop’s predecessor, Olli-Pekka Kallasvuo, his job in September 2010.Having plumped for…

Original post by The Economist: Business

IBM’s new boss: Steady as she goes


Is Ginni the tonic for IBM?

“IT’S a normal transition,” says Virginia “Ginni” Rometty. Her promotion to chief executive of IBM, announced on October 25th, was carefully planned and smoothly executed—unlike recent changes at the top of Yahoo!, HP and Nokia.Yet the transition is also exceptional. In January, when she takes over from Sam Palmisano, the blonde, straight-talking Ms Rometty will become one of the corporate world’s most powerful women. IBM boasts annual revenues of $100 billion and a market capitalisation exceeding $210 billion—second only to Apple among tech firms.“Change at the top does not mean a change of strategy,” insists Ms Rometty. She worked with Mr Palmisano (who will remain as chairman) to develop the firm’s “roadmap to 2015”, which states that IBM wants to double its earnings per share by that year and ramp up growth in China and India.Ms Rometty has played a key part in two moves that have made such an ambitious growth strategy seem possible: the acquisition of the consulting arm of PricewaterhouseCoopers, which she helped integrate, and the development…

Original post by The Economist: Business

China’s environment: Taxing times ahead

GIVEN that China is the world’s biggest carbon emitter, it is fair to be sceptical of its claims to greenery. Yet the emerging giant is already the world’s biggest manufacturer of such green technologies as compact-fluorescent bulbs and solar panels. And it aspires to become an environmental-policy leader too.The most recent five-year plan emphasised improvements in energy efficiency and laid out a vision for cleaning the air. Now the powerful State Council has formally announced that it will use tools favoured by market-minded economists: emissions-trading systems, perhaps including one for carbon dioxide, and green taxes. The details are not yet public, but this sounds important. It follows various regional experiments with emissions-trading and a resources tax (which affects petroleum but not solar power). If enforced with vigour—a big “if” in such a decentralised and corrupt place—these new policies could signal a shift towards a more efficient, lower-carbon economy.Why might China’s leaders impose green rules that many rich countries have balked at? There are several theories. It may be because they feel…

Original post by The Economist: Business

Olympus: Three questions

THE Olympus scandal claimed its second victim on October 26th, not counting the Japanese camera-maker’s shareholders. Its boss, Tsuyoshi Kikukawa, resigned (but refused to step down from the board). His departure follows that of Michael Woodford, the former president, on October 14th. Mr Woodford, a Briton, was sacked by the board after he kicked up a fuss about unusual payments totalling $1.3 billion. Since then Olympus’s share price has collapsed. Mr Kikukawa’s symbolic seppuku was not, therefore, much of a surprise.In 2008 Olympus bought Gyrus, a maker of medical devices, for $2.2 billion. In connection, it paid an advisory fee of $687m to a firm incorporated in the Cayman Islands and another in New York. The owners of these firms are unknown. Olympus also paid $773m to acquire three small, loss-making firms in businesses unrelated to its own. Japanese, British and American authorities are investigating.Mr Kikukawa was replaced by Shuichi Takayama, another Olympus veteran. At a press conference, Mr Takayama defended the company’s payments in the Gyrus deal as well as the other three acquisitions. However, when pressed for specifics, he said he could not comment until Olympus concludes a third-party investigation on the matter, which has yet to begin. Mr Takayama was asked whether any of Olympus’s financial advisers had ties to “anti-social forces…

Original post by The Economist: Business

The oil business: Big Oil’s bigger brothers

BUSINESS could scarcely be better for the supermajors, as the world’s biggest listed international oil companies are known. A barrel of Brent crude has changed hands for $100 or more for most of the year and cash is gushing in. On October 25th BP announced quarterly profits of $5.1 billion. Two days later Shell reported profits of $7 billion and Exxon Mobil of $10.3 billion. But the tide of the oil business is turning.Half a century ago life was simple for the world’s oil giants. Countries with lots of oil often lacked the technology, capital and management skills to find and extract it. Western oil firms supplied all of the above, and did rather well out of it. But then OPEC was born, and petrostates started their own state-backed national oil companies to take charge of their reserves.

State-backed firms now dominate the business. Exxon may be…

Original post by The Economist: Business

Business clusters: The Bay Area, with banjos


A cutting-edge business model in Missouri

SHRINK Las Vegas by 85% and move it from the desert to Missouri. Swap the showgirls for modestly clad matrons, the raunchy comics for bluegrass bands and the casinos for churches. There you have Branson, Missouri: No-Sin City.It calls itself the live-music capital of the world. To match its theatre-to-resident ratio, New York would need 41,000 theatres. Avant-gardists will find little to applaud, but if you have ever wanted to board a 700-seat showboat to see a violinist in a sequined leotard hang upside down to play “Stairway to Heaven” and then right herself to thank America’s troops while belting out “My Country ’Tis of Thee”, then Branson is for you.Live music in Branson began around 1959 with the Baldknobbers Hillbilly Jamboree (named for the local 19th-century masked vigilantes). Nostalgia and religion have proved a winning formula ever since: in 2010 roughly 8m tourists paid a visit. Numbers are down this year, because petrol is pricey (most visitors arrive by car). Still, Branson has weathered the downturn better than many rivals. Its…

Original post by The Economist: Business

Chevrolet’s centenary: From 0 to 100

DO YOU remember back in old LA, when everybody drove a Chevrolet? The opening line of “Beach Baby”, a 1974 hit, is one of hundreds of gratuitous plugs that writers of pop songs have given to General Motors’ mass-market brand down the decades. Snoop Dogg’s “Ridin’ in my Chevy” is a recent, less family-friendly example. Chevrolet, which celebrates its centenary on November 3rd, is as woven into the fabric of American culture as Coca-Cola. Not all of its birthdays have been happy, but as it reaches its 100th its prospects are on the up. In the July to September quarter, a record 1.2m cars and pickups with the Chevy “bow-tie” badge on their bonnets were sold worldwide.In 1911, when William Durant, GM’s founder, was turfed out by the company’s bankers, he joined forces with Louis Chevrolet, a Swiss-born racing driver, to set up a new carmaker (later folded into GM, when Durant briefly regained control). At $2,150, their first car, the Classic Six, looked pricey next to Henry Ford’s $490 Model T. So in 1915 Durant met his rival head on with a model called the 490 and costing the same. Then Chevrolet really…

Original post by The Economist: Business

Health insurance in America: The doctor octopus

THE future of Barack Obama’s health law is uncertain. Its main provisions will not come into effect until 2014; the Supreme Court may strike it down before then. But America’s insurers are already transforming. They were big before; now they are growing bigger. On October 24th Cigna, an insurer based in Connecticut, said it would pay $3.8 billion for HealthSpring, which offers services and insurance to the elderly. It is the latest deal to extend insurers’ tentacles into new areas of health care. The question is whether they might actually improve it.Good, cheap health care has long eluded America. Doctors are paid for each service, so they deliver as many as possible, necessary or not. Insurers protect margins by micromanaging claims and hiking premiums. These perverse incentives are addressed, faintly, by Obamacare. For example, there are pilots to reward hospitals for the quality rather than the quantity of their care. Mostly, however, the reform deals with the symptoms of muddled incentives: high premiums and poor access.For insurers, reform holds opportunity and peril. From 2014 the law will require everyone to buy health insurance and offer subsidies to those who cannot afford it. As more people buy insurance, firms’ revenues will more than double to $1.2 trillion by 2019, predicts the Boston Consulting Group. However, profits will be squeezed, thanks to a new tax, a…

Original post by The Economist: Business

Climate bonds: A dull shade of green

REDUCING the risks of climate change is not a technological problem. There are many ways to generate electricity, drive cars or grow crops without emitting much carbon dioxide—but they are expensive. According to the International Energy Agency, $13.5 trillion must be invested in low-carbon energy by 2035 to reduce emissions. That sort of money can be found only on capital markets. Yet investors’ appetite for green schemes is unproven.Hence growing interest in one of the more promising efforts to encourage it: “green bonds”. These instruments look like any other fixed-income offering except that the proceeds are invested in environmentally friendly projects. Estimating the size of the market is hard: according to Climate Bonds Initiative (CBI), an NGO, between $10 billion and $30 billion of bonds related to renewable-energy projects have been issued. Bonds that are explicitly advertised as green, mostly issued by the World Bank and other multilateral lenders, are easier to count. Around $5 billion-worth have been issued; by one estimate, they could amount to $30 billion by 2015.Some see an opportunity in…

Original post by The Economist: Business

Japanese investors: Mrs Watanopportunity

OTHER than Mrs Watanabe, the mythical Osaka housewife who places big bets on foreign currencies, Japanese investors have a reputation as a cautious lot. Nearly half said that preservation of principal was their top priority in a 2007 poll by CLSA, a broker. Half of all Japan’s household assets of ¥1,500 trillion (around $20 trillion) are parked in the safety of cash and bank deposits. Only 6% of assets are in equities, compared with 32% in America.There are good reasons to be prudent. The stockmarket remains three-quarters off its 1989 peak; property prices have fallen for almost 20 consecutive years. The best investment over that time has been Japanese government bonds, admits Atsushi Saito, the boss of the Tokyo Stock Exchange. A decade of deflation has meant that the value of cash in the bank has soared in real terms.Yet the image of timorous investors resisting risk is not quite right. It takes about ten years for the public to become comfortable with investing, says Tim McCarthy, the boss of Nikko Asset Management. America’s deregulation in the 1970s ushered in the 1980s surge in mutual funds. Britain’s financial reforms 25 years ago set the stage for a late-1990s investment boom. Japan’s “big bang”, which included measures to liberalise trading commissions, encourage independent financial advisers and foster defined-contribution pension plans, happened only in 1998….

Original post by The Economist: Business