Is there a windfall profits tax in Google’s future?

Will it hurt tech investment in R&D?

From US News and world report…..

… Why not confiscate a portion of Google’s fat annual profits–the company’s 2006 earnings were some $3 billion on revenue of $10.6 billion–and use it for some relevant national goal? The search-engine company is, after all, profiting from technological infrastructure it didn’t even build, an “information superhighway” (to use a quaint term) that came out of a government defense project. It’s time to pay Uncle Sam back. When Sen. Barack Obama officially announced his own presidential bid last weekend, he called for a new Internet initiative. “Let’s lay down broadband lines through the heart of inner cities and rural towns all across America,” Obama said.

So there you go. A portion of Google’s profits, as well as those perhaps from Amazon, Yahoo!, and eBay could be funneled into a government-managed fund to pay for laying down fatter pipe. Heck, it’s too bad that some candidate missed an opportunity back in 2004 to advocate the confiscation of home builders’ profits to help low-income renters buy their own McMansions. Of course, profits at Lennar, Centex, and Toll Brothers aren’t what they used to be, thanks to the housing bust. And if oil prices drop, neither will those at ExxonMobil or Chevron. And if the economy sinks, Google’s bottom line won’t look so healthy, either.

The thing, though, is that these targeted taxes don’t have a great track record. Look at what happened when oil companies were hit with the windfall profit tax that President Carter signed into law in 1980. According to a report by the Congressional Research Service, as recently unearthed by the Tax Foundation, the windfall profits tax–a real bear to administer–had two nasty side effects: 1) It didn’t raise as much money as forecast. Instead of raising $320 billion between 1980 and 1989, it raised only about $40 billion; 2) the CRS determined that the windfall profits tax had the effect of decreasing domestic production by 3 to 6 percent. So the United States had to import more oil than it otherwise would have.

And that’s the big worry. Today’s earnings are tomorrow’s investments, both in exploiting hard-to-reach oil reserves and in alternative fuels. And in some cases, today’s earnings are what allow companies to make it through the lean times. Confiscating profits is hardly a pain-free way to finance new government spending.

Congress may already be undercutting Clinton’s plan. She views that “strategic energy fund” as payback from companies that have been benefiting from government subsidies. But the Democrats in Congress are already stripping out those subsidies as a way of paying for promotion of renewable fuels under new pay-as-you-go budget rules.

Adam Smith’s “Invisible Hand” works in mysterious ways….

Entertainment and Storage meet in Beverly Hills!

It looks like CNN’s Larry King and his wife are purchasing the President of Network Appliance Tom Mendoza’s House.

By Ben Casselman
From The Wall Street Journal Online

Talk-show host Larry King and his wife, Shawn Southwick, have agreed to buy a Beverly Hills home listed for just under $12 million.

The five-bedroom, Tuscan-style home was on the market less than two weeks before the couple agreed to buy it. The almost 10,000-square-foot house, built in 1989, has a skylit foyer and a master suite with a sitting room and twin bathrooms. There is also a two-bedroom guest house and a pool. Local agents identified Mr. King as the buyer. Listing agent Stephen Resnick of Westside Estate Agency confirmed that a contract has been signed, with the deal set to close later this month.

Mr. Resnick wouldn’t name the sellers but said they spent two years renovating the house. Records show the sellers are Thomas and Kathy Mendoza, who bought the home three years ago. Thomas Mendoza is president of Network Appliance, a Sunnyvale, Calif., data-storage company.

The King and Mendoza families declined to comment. Mr. King, 73 years old, is the longtime host of the CNN talk show “Larry King Live.” Ms. Southwick, 47, is a former host of the television show “Hollywood Insider.”

It would make an interesting interview on the Larry King show for Tom Mendoza to spend an hour answering questions on his company’s technology, future vision, and commitment to long term relationships for resellers, partners and customers.

Inquiring minds are wondering if Larry King will get transferable licenses with the purchase?

Andrew Carnegie
Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.

Is NetApp going to stand by its reseller partners for the long term?

Network Appliance chief executive officer Dan Warmenhoven warned partners they need to sell more of the company’s software and services or risk “being left behind” as the company grows.

“You have to lead with NetApp,” Warmenhoven said. “If you walk into an account with a NetApp relationship and are not leading with NetApp, then maybe that relationship will not be there in the future.”

Whatever happened to the Hard Deck mentioned in CRN for resellers that got so much press about two years ago?

Network Appliance is defining which customers can and cannot be approached by its direct-sales reps, CRN has learned.

Under the forthcoming Hard Deck program, the Sunnyvale, Calif.-based vendor of SAN and NAS products will work with its channel managers and district sales managers to determine which customers throughout North America will be named accounts targeted mainly by direct sales and which will be channel-exclusive, said Leonard Iventosch, NetApp’s vice president of Americas channel sales.

Or this article…

Leonard began by telling me that he has been at NetApp for about five years. That means he came in at just about the same time that many channel partners were getting screwed by the company by having their primo accounts reassigned to direct-sales androids at the mother company. It is unclear whether Leonard had anything to do with this.

Is NetApp outsourcing more jobs to India? From an economics point of view I can understand the need to outsource technical requirements to a low cost provider. What will be the long term effect of this move on NetApp US based technical support? Does Netapp view their US technical staff as too costly? This will be an interesting story to watch over the next few years.

According to Tom Georgens, NetApp’s executive vice president and general manager of enterprise storage, India represents significant potential for the company and is one of the key markets marked for top investment this year.
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“NetApp has identified India as a strategic operation, and since NetApp has had a facility in India for some time, we have decided to grow this operation with additional investments and to leverage the vast pool of technical talent that exists in Bangalore to drive product innovation,” he said.

I wonder how it will impact their government contracts that require US content.

Genius is 1% inspiration & 99% perspiration– Edison

The other night I was reading about the Wright brothers and I came upon this statement:
Wilbur and Orville were sons of a church Bishop and a mother who viewed her fulltime duty as raising her children into healthy, strong adults with moral fiber and model Christian citizens. The brothers didn’t smoke, drink liquor or use swear words and never worked or flew their airplane on Sundays. Moral ambiguity was not a characteristic of their behavior.

Times have certainly changed since the early 1900’s . NetApp’s software is a play on words and called “OnTap” and in a recent patent they use the term “swizzling“ in reference to writing blocks and pointers in Patent # 7,130,873. I understand that great men like General U.S. Grant & Winston Churchill enjoyed a cocktail now and then, so why not the folks at NetApp? just for fun , count how many swizzles are in the next paragraphs.

FIG. 5 illustrates an on-the-fly swizzling process, indicated by general reference numeral 500, that implements “on-the-fly swizzling“. In on-the-fly swizzling, the BN pointers are swizzled while the image stream is being written to the destination file system. This type of swizzling updates the BN pointers as the storage blocks are written to the destination file system instead of performing the BN pointer update after all the storage blocks have been written. Thus, each block is only written once and often storage blocks can be arranged to be written in full RAID stripes. The on-the-fly swizzling process 500 initiates at a `start` terminal 501 and continues to an `iterate each block` procedure 503. The `iterate each block` procedure 503 initially reads and stores any provided information that can be used to map the storage blocks between file systems (such as the first block-list portion 405 and the second block-list portion 407) and then reads each block from the image stream. When all storage blocks are read from the image stream, the on-the-fly swizzling process 500 completes through an `end` terminal 505. A `BN block` decision procedure 507 checks each storage block against the block information in the first block-list (or equivalent) to determine whether the storage block contains a BN pointer. If the storage block does not contain a BN pointer, the on-the-fly swizzling process 500 continues to a `write block` procedure 509 that writes the block to the destination file system and the process continues to the `iterate each block` procedure 503 to process additional storage blocks or to complete.

I guess all this talk of swizzling means they like their drinks stirred at NetApp, and not shaken? Sometimes it takes me a few beers or cocktails to work my way through NetApp’s USPTO documents, how about you? On the other hand, the Wright brothers documents are easy to understand.

Check out the Wright brother’s patent of 1906
To all whom it may concern:
Be it known that we, ORVILLE WRIGHT
and WILBUR WRIGHT, citizens of the United
States, residing in the city of Dayton, county
of Montgomery, and State of Ohio, have in-
vented certain new and useful Improvements
in Flying-Machines, of which the following is
a specification.
Our invention relates to that class of fly-
ing machines in which the weight is sustained
by the reactions resulting when one or more
aeroplanes are moved through the air edge-
wise at a small angle of incidence, either by
the application of mechanical power or by
the utilization of the force of gravity.

The Wright brothers certainly were clear, concise and easy to understand.

Packaging is one of the most important parts of our business and we take pride in the quality of our packaging. Developing techniques and procedures to make certain that our equipment arrives at our customer sites in perfect condition takes a lot of effort. Developing the combination of packing materials is also quite an effort . It is worth it though, as we ship equipment all over the world and we have very rarely encountered damage to our equipment .

NetApp’s Rich Clifton leaves me with more questions than answers from this interview. But it is worth reading and remembering that NetApp has a record of leaving its partners in the cold. So keep that in mind when you read about the IBM relationship and the Kazeon relationship. As previous posts on this blog have suggested NetApp views long term relationships much as Paris Hilton does. But Paris is much more interesting.

We had the opportunity to talk with Rich Clifton, NetApp’s VP and GM networked storage business units. The topics ranged from the IBM relationship to tiered storage, maximising IOPS, storage intelligence in the network and de-duplication. What became apparent is that there are several strong lights underneath the NetApp bushels.

TechWorld: How is the IBM relationship working?
Rich Clifton: It’s meeting our expectations in terms of what’s happening in the overall market. It seems to be going along fine.

Comment: NetApp and IBM are learning how to work effectively together. This is taking time to accomplish and it’s too early to say if the IBM channel is selling lots of NetApp product. IBM is not like a reseller needing a standard channel program set of carrots and sticks to perform. Nor is it a Dell with a single direct sales channel to market, a highly effective but one trick pony. IBM is far more than this and tuning the relationship on both sides is necessary before performance happens. It’s a little like a SAP implementation in that lots of groundwork is necessary before the results flow through. That is the impression I derived from Rich Clifton’s comments.

MORE…

You can’t make this up…. it seems that NetApp and another partner are not getting along. Is there a pattern here?

When things were good
Lowell, Mass. – November 21, 2005 — Acopia Networks, the innovator of Adaptive Resource Networking, today announced that it has joined the NetApp Partner Program to provide tighter integration of Acopia’s award winning ARX products with NetApp enterprise storage systems. Acopia’s products simplify the management and increase the utilization of today’s file storage systems, thereby reducing total cost of ownership (TCO).

Now things are bad
The EMC NAS group views the world the same way that Network Appliance does. They view Acopia as the Antichrist because for them we’re creating a heterogeneous abstraction. They’re not used to that in the storage world. Cisco may have a dominant position in networking but there are hundreds of companies that exist in that ecosystem.

I wonder what happened to the beautiful relationship to cause such strife? They seemed so happy together.

“The NetApp Partner Program is dedicated to providing customers with partner solutions that are tested to work with NetApp storage, simplifying both deployment and management,” said Patrick Rogers, Vice President of Products and Partners at Network Appliance. “As a member of the NetApp Partner Program, Acopia is providing easy and affordable transparent data migration across storage systems for improved utilization and tiering of storage.”

“As the pioneer and leader in the NAS virtualization space, Acopia is excited to work more closely with the leader in unified storage solutions,” said Christopher P. Lynch, CEO of Acopia. “We believe that as a member of the NetApp Partner Program, we will be able to provide customers with products and solutions that improve the scalability of their existing infrastructure, while enabling them to simplify the management of their storage resources.”

What ever happened to those Long Term Strategic relationships?

“We’ve always focused on building long-term partner relationships based on trust and integrity,” says Leonard Iventosch, vice president of Americas channel sales at NetApp. “This recognition validates the VIP Program and the resellers that have chosen NetApp as their strategic partner.”

Acopia’s CEO should not be upset – NetApp has a problem with long term commitments, move on Acopia, you will find someone new and so will NetApp .
I did not get a Christmas card this year from [Network Appliance President] Tom Mendoza or [CEO] Dan Warmenhoven, or [EMC CEO and President] Joe Tucci for that matter.

Dave, Dan and Tom did not send Zerowait a card either, but that is okay – A lot of customers did!

Will NetApp continue to be an American company in the future?

A couple of months ago we learned that Ontap ,the NetApp software, is actually owned in the Netherlands for tax reasons. And now we are learning that NetApp’s global operations for engineering and product management are being based in Bangalore India.
NetApp Bangalore’s engineering operations were established in May 2003. The facility also houses one of the company’s four global customer support centers. In addition, it houses other global operations such as partner and product engineering, product management, partner certification, and global IT infrastructure support.

What is left in the USA? Sales and distribution? How well will the Engineers in India listen to customers in the USA?

Another project begins!

A couple of my engineers are Jeep nuts like me, and have been looking for a project Willys Jeep. I have had my eyes on this CJ3B since 1989. My friends took the engine and transmission out years ago and it has been sitting in their barn. So when the property was recently sold I was able to finally get the Jeep. It is in amazingly good shape and has only a little over 26,000 miles on the odometer.