(BN) Xbox Challenged as Cable Plots to Make Consoles Obsolete

AT&T Inc. (T), Verizon Communications Inc. (VZ) and Time Warner Cable Inc. (TWC) are gearing up for a push to deliver video games directly to televisions, said people with knowledge of the matter, a strategy shift that poses a threat to traditional consoles such as the PlayStation, Wii and Xbox.

Trials of cloud-gaming services are likely to start later this year so carriers can test and tweak the technology before wider deployments that may begin as early as 2013, said the people, who asked not to be named because the discussions are private. Other carriers are aiming for 2014, the people said.

If successful, Web-based games could accelerate a shift away from consoles, the industry's main money maker for the past three decades. Sony Corp. (6758), Microsoft Corp. (MSFT) and Nintendo Co. have helped to build a market worth $24.1 billion in the U.S. in 2011, according to NPD Group Inc. Consumers are already dumping consoles in favor of games on smartphones and tablets, leading to a 39 percent decline in video-game hardware sales last month from a year earlier.

"Everybody has a TV," said Atul Bagga, a video-games analyst at Lazard Capital Markets in San Francisco. Cable and phone companies are "looking for new ways to monetize their users and gaming can be pretty compelling," he said.

By adding popular games to their TV, Internet and phone packages, carriers can offer another service to their almost 50 million digital TV subscribers.

Real Time

In addition to AT&T, Verizon and Time Warner Cable, Comcast Corp. (CMCSA) and Cox Communications Inc. are also in talks to offer video-gaming services, the people said. They're all looking to go beyond social games from Zynga Inc. (ZNGA) and casual games such as "Tetris" and "Solitaire," with technology that can deliver the most advanced action games from top publishers such as Electronic Arts Inc. (EA)

For technology, the carriers are turning to startups such as Playcast Media Systems, CiiNOW Inc. and Agawi Inc., which provide software to speed delivery of real-time gaming. Executives at each of those companies acknowledged that they're in talks with U.S. carriers, declining to say which ones.

Alex Dudley, a spokesman for Time Warner Cable, which had 12.3 million subscribers as of mid-2012, and Jennifer Khoury, a spokeswoman for Comcast, which had 22.1 million subscribers, declined to comment.

Jan Rasmussen, a spokeswoman for AT&T, said in a statement the company is "exploring unique ways to offer cloud gaming services to our TV and broadband customers." AT&T had 4.15 million subscribers for its U-verse TV services as of June.

Console Model

Deidre Hart, a spokeswoman for Verizon, said that while the company has the capability, it doesn't currently "offer anything regarding HD cloud gaming." Shana Keith, a spokeswoman for Cox, said the company is exploring a number of cloud-based broadband services, declining to provide specifics.

Verizon had 4.47 million TV subscribers, while Cox had 4.66 million, according to the National Cable & Telecommunications Association.

With cloud gaming, consumers will be able to avoid buying Sony's PlayStation 3, Microsoft's Xbox 360 or Nintendo's Wii, and play using generic controllers connected to their set-top box or TV. Some carriers are looking at software that turns smartphones into controllers, the people said.

Wider cloud-gaming adoption would be a significant shift from the console business model pioneered by Atari Inc. in the '70s and advanced by Nintendo in the '80s -- selling machines at a slim profit or loss and making money on royalties from game cartridges or discs.

Jigsaw Puzzle

Manufacturers have built online accounts and data centers for current console subscribers in order to offer games, interactive environments and prepare for networked gaming. Xbox Live, Microsoft's online service, lets gamers play together, buy games and use other devices.

Carriers still have to get the technology in place. To stream games from remote servers to multiple devices simultaneously, they need to license virtualization technology. And to make the experience comparable to that of a console, they also must incorporate powerful graphics processors into their data centers, replacing chips used in consoles.

Putting all those pieces together proved too difficult for OnLive Inc., a startup backed by units of AT&T and Time Warner Inc., which went through a restructuring last month after failing to attract enough $9.99-a-month subscribers to its cloud-gaming system. Gaikai Inc., a competitor in the market, agreed to be bought earlier this year by Sony for $380 million.

Execution Challenge

Large service providers have an advantage because they have deeper pockets, big data centers and an existing subscriber base. Still, delivering a cloud service with the same quality as game consoles and creating a profitable business will be a challenge, said Mitch Lasky, a partner at venture firm Benchmark Capital in Menlo Park, California, and an early investor in Gaikai.

"It makes perfect sense why they would want to go after this market," said Lasky, who was previously an executive at Electronic Arts. "Streaming games use a ton of bandwidth and really benefit from good networks. But it's a gnarly execution problem they're trying to solve."

Nvidia Corp., a maker of graphics processors, has been building technology for data-centers and said earlier this year that it's working on implementing it in a way that game service providers can use. The company is making a big bet on cloud gaming, said Tony Tamasi, a senior vice president.

"It's a substantial investment of both hardware and software," said Tamasi, though he declined to name the company's partners. "We've put stuff into our chips specifically to enable this kind of functionality."

Stream Games

For game publishers, cloud gaming makes sense because they can develop for a single platform rather than for each of the various consoles, which costs more money. Frank Gibeau, president of Electronic Arts Labels, said games via Web-based TV will eventually be a "big opportunity," without giving a time frame.

While networks in the U.S. are preparing for cloud gaming, services have already emerged in other countries, including Portugal, France, Singapore and South Korea. Playcast, based in Israel, has partnered with carriers in each of those countries to stream games to set-top boxes and televisions.

In July, Playcast announced a deal with South Korea's CJ Hellovision to make a gaming service available to the cable operator's 3.51 million subscribers. Last year, Playcast partnered with Singapore Telecommunications Ltd. (ST) for a S$9.99 ($8) a month subscription service that included titles from Activision Blizzard Inc. (ATVI) and Atari.

CiiNOW, based in Mountain View, California, is about to begin its fourth European trial, though Chief Executive Officer Ron Haberman declined to name the carriers. U.S. cable and phone companies need to catch up, he said.

"If there was ever a service that fit network providers, it's this one," Haberman said. "2013 is going to be when we see big commercial offerings."

(BN) Google’s Driverless Cars Permitted by New California Law

Self-driving cars will soon motor around the most populous U.S. state, at least on a test basis, after a law written with the help of Google Inc. (GOOG) was signed by California Governor Jerry Brown.

The law signed yesterday allows trials of autonomous vehicles on the state's roadways as long as there's a licensed human in the driver's seat to take over if needed.

"Today we are looking at science fiction become tomorrow's reality," Brown said at a signing ceremony at Google's headquarters in Mountain View, California.

Google, the operator of the world's largest Internet search engine, has modified a Toyota Prius that drives itself using video cameras, radar sensors, a laser rangefinder and detailed maps. The vehicle includes a failsafe mechanism that lets the driver take control by grabbing the steering wheel or hitting the brakes, much like the override on a cruise control.

While major carmakers are working on self-driving prototypes and rolling out semi-autonomous features such as parking assistance, lane-departure warning systems and adaptive cruise control, it's Google's car that inspired the push for regulatory clearance first in Nevada last year and now in California.

"Anybody who gets into a car and finds the car driving itself is going to be skittish at first," said Brown, who took a test ride. "But they will get over it."

The law directs the Department of Motor Vehicles to develop regulations governing the licensing, bonding, testing and operation of autonomous vehicles.

A new application for your old light bulbs.

As energy efficient lighting devices take over, some people invent new ways to use the traditional Edison's (or, if you are British, Swan's) light bulb.

Source: New ideas for old tech (Russian).

tags: innovation, mousetrap, invention, art

(BN) Google YouTube and Other Sites Will Sell Fox Movies

>> content source << 

Google Inc. (GOOG)'s YouTube and Google Play video services will get more than 600 programs from News Corp.'s Twentieth Century Fox studio, adding TV shows and movies such as "Family Guy," "Glee" and "X-Men."

The titles will be available for purchase or rent in the U.S., Jonathan Zepp, Google's manager of TV and film content partnerships, said on the Mountain View, California-based company's blog. The content will come to other countries later.

The Fox studio is seeking ways to generate more online revenue from its films and TV shows, which often are pirated and viewed for free. Google, meanwhile, wants to expand YouTube beyond its amateur-video roots to become a bigger source of Hollywood entertainment. The company also is trying to bolster Google Play, a service that lets users get movies, shows and books on their Android smartphones and tablets.

Google's announcement coincided with News Corp. (NWSA)'s introduction today of Digital HD, a service that lets viewers buy and watch high-definition movies on Amazon.com Inc.'s website, Apple Inc.'s iTunes and other platforms, as well as YouTube and Google Play.

Fox, which announced plans to introduce the service on Sept. 7, is offering the sci-fi movie "Prometheus" for less than $15, three weeks before it will be available on DVD.

(BN) Weight-Loss Surgery’s Health Benefits Found to Have Costs

>> trade-off <<

Obese people who have weight-loss surgery gain at least six years of health benefits that include fewer diabetes cases and lower cholesterol and blood pressure. Even so, their medical costs didn't drop.

While the advantages linked to diminished fat were found to be durable over six years in a study published today, a second report tied the surgery to complications such as gallstones and anemia that raised how much patients spent over the same time. The research was included in an obesity theme issue of the Journal of the American Medical Association.

More than 500 million people worldwide are obese, according to the World Health Organization. Other research in the journal found that children with high levels of bisphenol A, a chemical in consumer products, were twice as likely to be obese and that some types of body fat are more dangerous than others. The surgery findings suggest the procedures are underused, said Philip Schauer, at the Cleveland Clinic in Ohio.

"Despite the somewhat overwhelmingly positive study results, surgery rates haven't changed," with about 1 percent of those who qualify getting an operation, said Schauer, director of the clinic's Bariatric and Metabolic Institute. "We're not anywhere close to coming up with effective prevention strategies."

Schauer, interviewed by telephone, wasn't involved in either of the surgery studies.

$66 Billion Cost

The journal's theme issue coincides with a report today by two public-health foundations that said obesity will continue to rise in the U.S., potentially adding $66 billion in expenses to the nation's health-care bill. The Obesity Society, based in Silver Spring, Maryland, is also set to hold its annual meeting starting Sept. 20 in San Antonio.

By 2030, more than 60 percent of adults in 13 states may be obese, with all states having obesity rates of more than 44 percent under current trends, according to the report from the Trust for America's Health and Robert Wood Johnson Foundation.

A person with a body mass index of at least 30 is considered obese, according to the National Institutes of Health in Bethesda, Maryland. The BMI is calculated using height and weight. A man who is six-foot tall who weighed more than 220 pounds would be considered obese using the formula.

Growing Faster

The number of severely obese people in the U.S. is growing faster than those with moderate obesity, according to Ted Adams from the University of Utah School of Medicine in Salt Lake City, who led the study on weight-loss surgery's long-term health benefits.

Drug therapy and lifestyle changes have been largely ineffective, so the weight-loss surgery investigators examined the results of the procedure in 1,156 volunteers. The patients who underwent gastric bypass surgery lost an average of 28 percent of their body weight, while those who didn't get surgery stayed the same or even gained a few pounds, the study found.

Almost two-thirds of the surgery patients saw their blood sugar return to normal levels, while hypertension, cholesterol and triglyceride all declined.

Researchers were surprised by the results of a separate study that weighed cost benefits from the surgery, said Martin Neovius from the Karolinska Institute in Sweden, the lead author. The study tracked 2,010 adults who underwent weight loss surgery between 1987 and 2001, and compared their results to similar people who didn't get surgery.

54 Days

The researchers found that surgery patients spent 54 days in the hospital in the two decades after their operations, compared with 40 days for those in the comparison group. For the first six years, they were hospitalized an average of 1.7 days each year, compared with 1.1 days for their overweight peers who didn't have surgery, and had more doctor visits for things other than routine care.

The operation did reduce the amount of money patients spent on drug costs after the first six years. Surgery patients spent $930 annually, compared with $1,123 for the comparison group, in years seven to 20, the study found. The biggest difference was in lower spending for diabetes and heart disease drugs.

"Based on our findings, bariatric surgery appears to result in greater health benefits than conventional obesity treatment, but at a higher cost over the time of the study," the researchers concluded. "A formal cost-effectiveness analysis is needed to quantify" the exact costs associated with surgery, they said.

Underlying Conditions

Scientists are also trying to understand obesity's underlying conditions and how people's conditions may differ. For example, not all body fat is equally dangerous, according to another study reported in the journal. Obese adults with belly fat may have a higher risk of developing diabetes than those with fat in other places, the research showed.

Those with higher levels of abdominal visceral fat, which surrounds internal organs, had a higher risk of developing diabetes and pre-diabetes than those with excess belly fat underneath the skin, the study showed. The researchers used magnetic resonance imaging (MRIs), and x-rays to determine where the fat was stored in the body.

Those who gained weight during the study, who were resistant to insulin and had a family history of diabetes were also more likely to develop the disease, the authors said.

"It's very interesting that two people with the same body weight, both obese, may have different distribution of fats and may be at very different risks for development of diabetes," said James de Lemos, a professor of internal medicine at the University of Texas Southwestern Medical Center in Dallas, in a Sept. 14 telephone interview. "There's a lot of variability."

De Lemos said they will next look at whether fat distribution raises risk of heart attacks and strokes. Future trials should also study whether specific weight loss programs might change the distribution of the body's fat, he said.

Environmental Causes

Scientists are also searching for environmental causes behind the epidemic, which affects 17 percent of American children and adolescents, according to the Atlanta-based CDC.

In a study by researchers from New York University, children with high levels of bisphenol A, a chemical found in consumer products, were more than twice as likely to be obese than those with low levels. The findings suggest that the chemical, which is found in soda bottles and cans, may increase the risk of obesity in children.

The U.S. Food and Drug Administration in July ruled that baby bottles and other cups intended to be used by children can no longer contain BPA.

The ban was issued primarily because the use by companies of plastic containing the chemical had already been abandoned. BPA is used to harden plastic and make canned food watertight. For decades it was used in the manufacture of plastic food containers, baby bottles and sippy cups.

"This study raises further concern about the need for regulatory action," said Leonardo Trasande, lead researcher on the BPA study and an associate professor of pediatrics and environmental medicine at New York University.

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(BN) Harvard Losing Out to South Dakota in Graduate Pay: Commodities

Harvard University's graduates are earning less than those from the South Dakota School of Mines & Technology after a decade-long commodity bull market created shortages of workers as well as minerals.

Those leaving the college of 2,300 students this year got paid a median salary of $56,700, according to PayScale Inc., which tracks employee compensation data from surveys. At Harvard, where tuition fees are almost four times higher, they got $54,100. Those scheduled to leave the campus in Rapid City, South Dakota, in May are already getting offers, at a time when about one in 10 recent U.S. college graduates is out of work.

"It doesn't seem to be too hard to get a job in mining," said Jaymie Trask, a 22-year-old chemical-engineering major who was offered a post paying more than $60,000 a year at Freeport- McMoRan (FCX) Copper & Gold Inc. "If you work hard in school for four or five years, you're pretty much set."

A fourfold gain in commodities in the past decade reflects both surging demand and the industry's failure to keep up. While new mineral deposits are getting harder to find, companies also are struggling to add enough skilled workers. That's partly a legacy of U.S. colleges cutting back on mining programs. There were fewer than 28,000 people employed in U.S. metals mining in 2004, from 58,000 in 1993, the National Mining Association estimates. By 2011, it had rebounded to 40,000.

Labor Shortage

As many as 78,000 additional U.S. workers will be needed by 2019 to replace retirees, the Society of Mining, Metallurgy & Exploration said in a report in January. In Australia, the largest shipper of coal and iron ore, there will be a shortfall of 1,700 mine engineers, 3,000 geoscientists and 36,000 other workers in the five years ending in 2015, the report said.

Demand for mining-school graduates is exceptional in the U.S., where the unemployment rate for 20-to-24 year olds with Bachelor's degrees was 11.8 percent in July. The jobless rate across the economy held above 8 percent for a 43rd month in August, government data show.

Universities trimmed courses in earth sciences, mineral geology and mine engineering when the industry contracted in the 1980s and 1990s, said Diana Stewart, the marketing director at Hampshire, U.K.-based jobs4mining.com, a message board that links recruiters and prospective workers worldwide. Shortages in mine engineering and project management are acute, she said.

"There are simply not enough to go around, so companies are trying to tempt people to their own projects, which is driving tremendous salary inflation," Stewart said. "When investment finance is tight, skilled labor availability and labor costs are one of the factors that are having an impact on the viability of a project."

Mining Engineering

Fourteen U.S. schools offer mining-engineering degrees, compared with 30 in 1982, according to Dave Kanagy, the executive director of the Society for Mining, Metallurgy & Exploration in Englewood, Colorado. There were 178 mine- engineering graduates in 2011, from 700 in 1982, he said. The average age in the mining industry is 47.3, compared with 40.7 across the combined U.S. workforce.

The South Dakota School of Mines & Technology, which charged out-of-state tuition of $10,530 last year, graduated 259 students with Bachelor of Science degrees in 2012. Seventeen of those were in mining engineering.

No Miners

Harvard, in Cambridge, Massachusetts, has more than 27,000 students who paid about $40,000 in tuition last year. The number of engineering graduates who go into mining is "virtually zero, if not zero," said Michael Rutter, the communications director for Harvard's School of Engineering and Applied Sciences. They tend to go to industries including finance, biomedical engineering, software and government, he said.

The median salary for all Harvard graduates at mid-career was $116,000 last year, compared with $96,300 at South Dakota School of Mines, according to PayScale's survey. Princeton University's mid-career salary was highest, at $130,000, followed by California Institute of Technology at $123,000, according to Seattle-based PayScale. The company says the data is based on surveys of more than 35 million users.

The South Dakota college, founded in 1885, is a partner in the development of the Sanford Underground Laboratory, which will carry out experiments as deep as 4,850 feet (1,478 meters) down in an abandoned gold mine. Its campus includes the Museum of Geology, which houses a century-old collection of minerals, many of them taken from now-defunct mines. Its football team, known as the Hardrockers, has had one winning season since 1985.

Boosting Costs

The labor squeeze is boosting the cost of new projects and may contribute to delays limiting production growth, especially in copper, said Frank Holmes, the chief executive officer of San Antonio-based U.S. Global Investors Inc., which oversees $1.72 billion of assets. Morgan Stanley is forecasting a fourth consecutive year of global copper supply shortages in 2013.

"It's hard to get mining managers and engineers, and trying to bring projects on line has gotten very expensive," Holmes said. "Ore grades are lower, fuel costs are higher, and labor costs are higher, and that will continue to put a floor under copper prices."

Copper futures rose 10 percent this year, beating the 5.2 percent gain across the 24 commodities tracked by the Standard & Poor's GSCI Spot Index. The MSCI All-Country World Index of equities advanced 13 percent, while Treasuries returned 1.3 percent, a Bank of America Corp. index shows. Goldman Sachs Group Inc. expects the metal to rise another 12 percent to $9,000 a metric ton by the end of this year.

Delaying Developments

Mining companies are delaying developments because of rising costs and concern that prices may tumble as economic growth weakens. China, the biggest consumer of everything from copper to coal, has slowed for six consecutive quarters. The 17- nation euro area will keep contracting for at least through the first quarter, according to the median of as many as 24 economist estimates compiled by Bloomberg.

BHP Billiton Ltd., the world's biggest mining company, said Aug. 22 that it put approvals for about $68 billion of projects on hold after second-half profit at the Melbourne-based company plunged 58 percent. Rio Tinto Group, the third largest, said last month it may spend less on expansions next year. The S&P GSCI tumbled into a bear market in June, falling more than 20 percent from its peak in February, before entering a bull market once more in August.

Capital spending by the industry will likely contract from next year after average growth of about 30 percent from 2005 to 2011, excluding a decline in 2009, Citigroup Inc. said in a report last week. Expenditure will probably grow 16 percent this year, down from a March estimate of 34 percent, London-based analyst Natalia Mamaeva wrote. It will drop 7.5 percent in 2013 and about 12 percent in 2014, she said.

Mine Production

World copper-mine production was 16.03 million tons in 2011, little changed from a year earlier, according to the Lisbon-based International Copper Study Group. The industry's production estimates may need to be cut because of worsening technical glitches and lower-quality ores, Barclays Plc said in a report Aug. 16. Mining companies on average are processing about 15 percent more ore than they were in 2000 to extract the same amount of metal, according to Macquarie Group Ltd.

"A lot of the cost blow-outs come down to haste, inexperience, lack of properly done mining studies, and that reflects the fact that mining is missing a generation," said Robin Adams, a managing consultant at London-based research company CRU. "They are learning though, so that problem is going to go away in a few years."

Takeover Bid

Labor costs in copper mining rose 16 percent last year, after an average annual increase of 11 percent from 2006 to 2010, according to Barclays. Xstrata Plc (XTA), the Zug, Switzerland- based target of a $35 billion takeover bid by Baar, Switzerland- based Glencore International Plc (GLEN), has 197 job openings posted on its website, ranging from a mining production engineer in Australia to a logistics officer in the Philippines.

"There are shortages everywhere in mining, so it's an employees' market right now," said Kevin Loughrey, the chairman and chief executive officer of Thompson Creek Metals Co., which is developing a copper and gold mine in British Columbia. "Basic economics tells me that as the cost of these projects increase, the cost of what these projects would produce has to increase as well."

(BN) London’s Candy Seeks NYC Real Estate as U.K. Taxes Sting

Nick Candy, the London property developer who helped conceive the most expensive apartment complex in Europe, is in the hunt for New York prime real estate after the U.K. raised taxes on luxury homes.

"New York is definitely catching up," Candy, 39, said in an interview. "Could it overtake? Yes, if our government continues to make absolutely disgraceful decisions on the real estate market in this country."

London may lose its appeal for luxury developers because of tax increases and the prospect of further levies, said Candy, who helped create One Hyde Park with his brother, Christian. Prime Minister David Cameron targeted the wealthy to pare a record budget deficit by increasing a transaction tax to 7 percent from 5 percent on homes sold for more than 2 million pounds ($3.2 million).

Luxury properties in both the U.K. capital and New York are selling for record prices. A furnished home in One Hyde Park sold for 7,500 pounds a square foot last year and a penthouse across the street in the Bulgari Hotel and Residences sold for 7,000 pounds a square foot, or about 100 million pounds.

A duplex penthouse under construction on Manhattan's West 57th Street went under contract for as much as $9,000 a square foot, or more than $90 million, earlier this year. The building, One57, will be the borough's tallest residential tower.

"There's a lot of parallels with London," said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. "The big thing over the last year and a half is the proliferation of trophy purchases."

Plaza Penthouse

Christian Candy, Nick's younger brother, bought a penthouse in the Plaza Hotel on New York's Fifth Avenue for $25.9 million in March. The 6,500-square-foot (604-square-meter) triplex apartment overlooking Central Park was acquired at a 31 percent discount from what its owners initially sought.

The apartment is being remodeled by Nick's interior-design company and probably will be finished by the end of this month, Nick Candy said in a Sept. 13 interview at the Celtic Manor golf resort in Wales. While he didn't say whether his brother intends to keep the apartment or sell it, Candy said the property's near completion has prompted the pair to seek projects in New York.

"We're about to look at some other deals" in New York, Candy said. "It's an international city. It's more entrepreneurial than London."

Manhattan's luxury-home market is being buoyed by overseas buyers, particularly those from Europe and Asia, Miller said in a telephone interview. "Luxury housing is the new global currency," he said.

Overseas Purchasers

"New York was pretty undervalued and is catching up," Candy said.

New York real estate purchases are taxed at 0.4 percent, according to the state Department of Taxation and Finance's website. An additional levy, sometimes referred to as the "mansion tax," of 1 percent of the sales price applies to residences sold for $1 million or more.

New York City imposes an additional 1 percent tax for residential sales of less than $500,000 and 1.425 percent for pricier transactions, said Owen Stone, spokesman for the Department of Finance. There also are levies tied to mortgages.

The U.K. stamp-duty increase hasn't yet deterred luxury buyers. Sales of homes valued at 2 million pounds more than doubled in May from a year earlier, according to the most recent data available from the Land Registry. Homes valued at 10 million pounds or more rose 2.9 percent in price in the three months after the stamp duty rose in March, Knight Frank LLP estimates.

High-End Scarcity

U.K. luxury homes are gaining in value because of a scarcity of prime real estate for sale, particularly in London. That's led to record prices paid for homes in the city's Mayfair, Kensington and Knightsbridge neighborhoods. Home prices in London's most expensive areas have increased 49 percent since a March 2009 low point, according to London-based Knight Frank.

Inventory in New York's luxury market also is falling, according to Miller.

"The properties that purchasers are going for at the high- end are scarce, he said.

On top of increasing the stamp duty, the U.K. government introduced a 15 percent tax on homes brought by companies based in offshore tax havens like the Cayman Islands where affluent purchasers can also gain the benefit of anonymity.

''Now they have to hide their identity at a cost of 15 percent, so maybe it's better for them to invest in New York where they can easily hide their costs or their identity,'' Candy said.

Offshore Companies

The U.K. government also is considering an annual charge of 140,000 pounds on properties owned by offshore companies and valued at more than 20 million pounds, according to the Treasury. It may also extend capital gains tax on the sale of luxury homes by nonresidents who aren't naturalized.

Luxury-home buyers in New York ''haven't got that 15 percent upfront," Candy said. "They may have a tax later, but not 15 percent on day one."

A One Hyde Park apartment is for sale with an asking price of 65 million pounds. The building was developed by a venture between Christian Candy's CPC Group and Qatar Prime Minister Sheikh Hamad Bin Jasim Bin Jaber al Thani's closely held Waterknights. More than 1.5 billion pounds of home sales have been completed there, according to developer Project Grande (Guernsey) Ltd.

Before in the global financial crisis, luxury real estate developers in London saw "10 percent a year guaranteed growth," Candy said.

"They were allowing for that in their business models to get where they needed to be on a return-on-investment basis and to rationalize why they would pay that price in the first place," he said. "That doesn't exist today."

(BN) Google’s Motorola Case Against Apple at ITC to Be Probed (1)

Sept. 18 (Bloomberg) -- Google Inc.'s patent-infringement complaint targeting Apple Inc. devices, including ones that have the Siri voice-recognition program, will be investigated by a U.S. trade agency.

The U.S. International Trade Commission today said it has begun a formal probe of the complaint filed Aug. 17 by Google's Motorola Mobility unit. Notice of the investigation was posted on the agency's website.

Motorola Mobility has said it hopes the complaint puts pressure on Apple to negotiate a cross-licensing deal. The companies have been fighting since at least 2010 after licensing talks failed. Google bought Motorola Mobility to get access to its trove of patents as a bulwark against Apple claims that devices running on Google's Android operating system are copying unique features of the iPhone.

The handset maker, which Google bought in May for $12.5 billion, claims Apple infringed seven of its patents on features including interactive voice commands, location reminders, e-mail notification and phone/video players. The case seeks a ban on U.S. imports of devices including the iPhone, iPad and Mac computers. Apple's products are made in Asia.

The complaint filed last month didn't name the iPhone 5 because it won't be in retail stores until Sept. 21. ITC rules could let Motorola Mobility add the iPhone5 to the list of devices accused of infringing the patents.

Patent Licensing

Apple has said Motorola Mobility is making unreasonable demands for royalties of 2.25 percent of the retail price of every device. The Cupertino, California-based company is appealing an ITC case it lost that claimed Motorola Mobility's Android phones infringed Apple patents.

Motorola Mobility has a second case against Apple at the agency. It lost on the issue of whether Apple devices infringed Motorola Mobility patents that cover wireless technologies used throughout the industry. The commission last month ordered a judge to review whether there was infringement of a patent related to a sensor that prevents accidental hang-ups or dialing.

The new case is In the Matter of Wireless Communication Devices, Portable Music and Data Processing devices, Computers, and Components Thereof, 337-856, and the earlier case is In the Matter of Certain Wireless Communication Devices, Portable Music Data, Processing Data Devices, Computers and Components Thereof, 337-745. Both are in the U.S. International Trade Commission (Washington)..

(BN) Samsung Fails to Defeat Galaxy Tab Sale Ban in Apple Case

Samsung Electronics Co. (005930) lost its bid to persuade a federal judge in California to lift a preliminary ban on U.S. sales of its Galaxy Tab 10.1 tablet computer imposed as part of a patent dispute with Apple Inc.

U.S. District Judge Lucy Koh in San Jose, California, issued the order temporarily blocking sales of the Tab 10.1 computer before a jury found Aug. 24 that Samsung infringed six of seven Apple patents and awarded Apple $1.05 billion in damages.

Apple and Samsung agree that a pending appeal temporarily "deprives the court of jurisdiction to dissolve the injunction," Koh wrote in an order yesterday.

Lifting the ban during the appeal only to re-impose it later "would cause confusion in the market and is not necessary to prevent irreparable harm," Cupertino, California-based Apple argued in a filing.

Koh has scheduled a hearing Dec. 6 to consider Apple's request for a permanent U.S. sales ban on eight of Suwon, South Korea-based Samsung's smartphone models and the tablet.

The case is Apple Inc. (AAPL) v. Samsung Electronics Co. Ltd., 11- cv-01846, U.S. District Court, Northern District of California (San Jose).

(BN) Dow Corning Offers Workers Cold Showers With Bugs to Build Sales

Sept. 18 (Bloomberg) -- When Brad Fogg did volunteer work in India, the adventure came with unwelcome insects and other discomforts, as well as a chance to benefit the country and find opportunities for his employer, Dow Corning Corp.

"It was not easy putting up with cold-water showers, bugs, unreliable electricity and stomach problems from the different foods," said Fogg, a commercial manager in Michigan who went to Ujire in southern India to design a peeling machine for a nut important to the local economy. "But that was all part of the adventure of getting to know India's society and culture and the opportunities bottom-of-the-pyramid markets offer."

Dow Corning, a silicone supplier whose materials are used in products from cars to parachutes, is among a wave of companies, including SAP AG and International Business Machines Corp., sending employees on volunteer assignments to developing countries. In return, the businesses anticipate greater loyalty from workers, improved skills, insight into growth markets and more sales.

"Our volunteering program is an incredibly rich source of business ideas and an inexpensive source of market research," said Laura Asiala, director of corporate citizenship at Dow Corning. Two volunteer teams sent to India in the last two years have come up with almost 30 business ideas in renewable energy and affordable housing, Asiala said.

Market Research

Dow Corning, based in Midland, Michigan, is a joint venture of Dow Chemical Co. and Corning Inc., and pushes volunteers to research markets and identify business opportunities during their missions.

"Products that have reached the end of their life cycle in developed markets may still have some great potential when selling them at a lower price" in other countries, Fogg said. Dow Corning's business-development unit identifies the most promising ideas from volunteers and helps to realize them, Fogg said.

Dow Corning declined to provide more information on individual projects as they concern proprietary information.

Companies may also find it easier to attract and retain talented workers by offering volunteer programs.

"The benefits of our international volunteer program for the company are undeniable," said Stanley Litow, president of the IBM International Foundation in New York. "The program improves employee retention, helps people decide to come work for IBM and allows the next generation of IBM leaders to build capabilities and understanding about the growth markets."

Worker Loyalty

IBM, the largest computer-services provider, has sent 2,000 employees on one-month missions since beginning its program in 2008. Projects range from helping a Romanian furniture manufacturer become as paperless as possible to conducting a study of the Sri Lankan government's IT infrastructure needs. If IBM charged for the work of its 500 volunteers each year, the bill would be about $15 million.

A Deloitte survey of 350 employees at large companies worldwide in 2011 found that about one-third of workers younger than 31 were considering other career options. It also found that corporate sustainability and volunteering were nearly three times as important for this age group than for baby boomers in their job choices.

"Providing unique benefits to star-type talents, such as international volunteering, has huge financial benefits," said Chris Marquis, an associate professor at Harvard Business School who has analyzed IBM's program. "It makes a company attractive in the job market and helps improve employees' company loyalty."

Leadership Skills

Workers participating in IBM's program are less likely to leave, according to a study commissioned by the Armonk, New York-based company. It found former volunteers have a higher commitment to IBM and "an improved perspective" of their employer.

This explains why companies have an increasing interest in the volunteering model pioneered by IBM and drugmaker Pfizer Inc., according to Deirdre White, chief executive officer of CDC Development Solutions, a nonprofit organization that plans volunteering missions for 12 Fortune 500 companies. "Many companies have piloted projects with us in 2011 and 2012, and all of them say that they want to expand," White said.

Such programs may also provide another payoff.

"Improving the volunteers' leadership skills" was cited as the most common reason for creating the missions, in a 2012 survey of 22 companies.

Valuable Contacts

Volunteers dealing with non-governmental organizations and governments in developing countries may gain a better understanding of future business opportunities.

"Many companies believe that the international corporate volunteering experience can stimulate new insights and learning for their top employees in a way that traditional leadership development programs cannot," according to a 2012 George Washington University study.

A 28-day volunteering mission costs about $12,100, while universities may charge $14,000 for a traditional 5-day executive leadership program, according to the study.

Volunteering missions may also yield business deals as employees get to know potential clients while staying in developing countries.

Policy Makers

Such missions in Cambodia, Nigeria and other nations led to the expansion of IBM's business operations and the permanent transfer of employees initially sent as volunteers, Litow said. After last year's mission to Cambodia, IBM opened an office in the capital Phnom Penh. IBM has increased its headcount in Nigeria from 17 to more than 100 since the first mission in 2009.

In Nigeria, IBM has collaborated on volunteer projects with departments of the Cross River State government, including the Finance Ministry and the Information, Communication and Technology Development Department.

"Some companies have found such volunteering programs extremely helpful in getting access to top policy makers," said Marquis of Harvard Business School. "This is important from a business perspective, considering that governments are the potential clients of multinationals selling large services in developing countries."

SAP, the world's biggest maker of business-management software, set up its first international volunteering program this year, with missions in Brazil, India and South Africa. The German company is betting on emerging markets to drive future growth and hired 698 people in Brazil, Latin America's biggest economy, from the start of 2011 through March 2012, bringing its headcount in the country to 1,533.

"Getting out of my comfort zone was a tremendously valuable opportunity for me," said Jan Seger, a training program developer at SAP in Vancouver who volunteered for a month in Brazil, working with a non-governmental organization for waste collection. "The whole project says to me: SAP is providing an opportunity to help people grow, including me."

(BN) Why Is It So Hard to Become a Cosmetologist in America?

The average cosmetologist in the U.S. trains for 372 days before earning a license. The average emergency medical technician spends 33 days in training. From this, one might conclude that Americans are obsessed with primping but tragically unprepared for emergencies.

Actually, the disparity merely confirms what a muddle the process of occupational licensing is. In 1952, fewer than 5 percent of U.S. workers required a state license. By 2006, according to a survey that year by the Gallup Organization, 29 percent of workers said they needed a government-issued license to do their job.

A study released in May by the libertarian Institute for Justice makes a compelling case that occupational licensing requirements in many states have run amok. Some licensees, including EMTs, have life-or-death responsibility. Others handle hazardous chemicals. Too many, however, are in occupations for which a natural inclination and a short apprenticeship should provide more than sufficient preparation. Why, for example, do florists, funeral attendants or shampooers need a license to work?

There is no consensus among states about which trades require licensing: Only 15 of 102 occupations evaluated by the researchers required licensing in 40 states or more. Nor does the regulatory overreach conform to red state/blue state stereotypes. Louisiana, Arizona and California subject the most occupations to licensing; Wyoming, Vermont and Kentucky the fewest. Nevada requires more than two years of training for barbers along with $140 in fees. Alabama requires nothing but a pair of scissors. One state or the other is deeply mistaken about the nature of the job.

In the Middle Ages, guilds emerged to establish quality standards for crafts, and to protect the craftsmen from competition. A similar phenomenon -- regulatory capture -- is at work in some state capitals, with occupational guilds lobbying pliant legislatures to restrict access to their fields. According to a 2009 study by the economists Morris Kleiner and Alan Krueger, an occupational license provides a wage boost of about 14 percent, roughly similar to the increase attributable to union membership.

Given the need for higher wages, especially among non- college-educated workers, such a boost may seem welcome. However, much of the work that genuinely warrants a license -- nurses are among the most commonly licensed professionals -- requires a college or associate's degree. By imposing similarly onerous licensing restrictions on trades that are neither dangerous nor complex, state governments erect additional barriers to the prosperity of their poorest and least-educated citizens, who also end up paying higher costs as consumers of licensed services.

A dynamic economy requires regulations to keep commerce flowing smoothly. It also requires sufficient leeway to encourage small-business formation and entrepreneurship. That balance between regulation and free enterprise must be recalibrated from time to time. If it takes two years to get a barber's license in your state, it's time.

(BN) China Planning More Infrastructure Projects, NDRC Says

China is building more subways, highways and sewage plants to counter a growth slowdown, a senior Chinese economic planning official said today.

Xu Lin, head of the planning department at the National Development and Reform Commission, told reporters in Beijing newly approved projects, including roads and subways in 18 Chinese cities, were only a part of a pipeline of infrastructure projects being developed in the nation.

"In an economic slowdown, the government has to take some counter-cyclical measures -- it's absolutely normal, and it's part of macro-economic control," Xu told reporters at an academic forum in the Peking University. "China still has large demand for infrastructure projects."

Premier Wen Jiabao, who pledged last week to employ monetary and fiscal policies to spur growth, has increased infrastructure spending and refrained from introducing another stimulus package, with fiscal support limited to tax cuts and accelerated project approval. The economy grew 7.6 percent in the second quarter from a year earlier, the smallest increase since March 2009.

Xu's comments come after the NDRC this month published approvals for building as much as 2,018 kilometers (1,254 miles) of roads and subway projects across the country. Nomura Holdings Inc. estimated the total value of projects approved at about 1 trillion yuan ($158 billion). The NDRC has also green-lighted a slew of railroads, sewage-treatment plants, ports and warehouses.

China's stocks today fell the most in 10 weeks on speculation the government won't ease monetary policy as quickly as anticipated. At least 12 banks and brokerages have cut their gross domestic product forecasts so far this month, with UBS AG, Morgan Stanley and Barclays Plc. now predicting the nation's growth will sink to a 22-year low of 7.5 percent this year.

Xu said the accelerated project approval did not mean the government is rolling out more stimulus. A 4-trillion yuan package of state spending and tax cuts announced in 2008 stoked inflation and sparked concern local governments took on more debt than they can afford.

"These projects are already in our plan," Xu said. "Infrastructure is the backbone system for national economy and a society. In the long-term, if infrastructure is good, it's helpful for overall efficiency."

(BN) Blackouts Spur $18 Billion Power Grid Upgrade: Corporate India

Power Grid Corp. of India Ltd., the nation's largest electricity transmission company, may exceed a 1 trillion rupee ($18 billion) spending plan to upgrade its network and avoid a repeat of the world's biggest blackout.

Revenue of the state-owned company, which is doubling expenditure in the five years through March, 2017, may rise fourfold in the period following completion of transmission projects, R.P. Sasmal, director of operations said in an interview. The grid aims to boost its market share to 70 percent from 50 percent as the company increases spending at a rate that will dwarf its competition, he said.

The utility, based in Gurgaon near New Delhi, is taking steps to prevent another grid failure like those on July 30 and 31 that left a region home to more than half of the country's 1.2 billion without electricity, halting transport services and forcing businesses to rely on generators. Power Grid reported record sales and earnings in the financial year through March 31, while shares have climbed 20 percent in 2012, almost matching gains in the benchmark Sensitive Index. (SENSEX)

"Making sure a collapse doesn't happen again is our top priority," Power Grid Chairman R.N. Nayak said in an interview separately on Sept. 14. "We may end up crossing that 1 trillion-rupee spending mark to strengthen and stabilize the gaps exposed by the blackouts."

Farmer Dependence

The company's network failed because of a mismanagement of power sales and its emergency backup system, according to a government inquiry. At the time of the blackout, India was enduring its driest monsoon season since 2009, forcing farmers in northern India to increase their dependence on electrified irrigation pumps.

When a link in north India failed while transferring about 4,000 megawatts from India's western grid to its northern network to meet demand, Power Grid (PWGR) was in the midst of scheduled maintenance of its backup lines, triggering the region-wide blackout, according to the government report.

The company's most urgent project aims to connect two portions of India's network: the northern grid which accounts for 75 percent of the country's power capacity, to its system in southern India. Linking the two will allow the south to transfer surplus power to supply deficient states in the north, where the grid collapse occurred.

"We have stepped up our efforts to increase connectivity," Sasmal said. "What some companies plan to spend in five years, we are spending that in one month."

Bond Sale

The company has already approved projects worth 800 billion rupees and plans to raise at least 700 billion rupees in debt over the next five years, Sasmal said. Of that, about a third has already come from local and foreign lenders and another 40 billion rupees will be raised through a bond sale later this month, he said.

While Power Grid hopes to shed the lingering effects of the grid failure, it will continue to be dependent on India's generators for business. Prime Minister Manmohan Singh is seeking investment in the power industry as he targets an additional 76,000 megawatts by 2017.

Should producers fail to meet the goal, as has been the case for the last 61 years, Power Grid could fall short of its investment target, said analyst Abhishek Patel, with Mumbai- based ITI Securities Ltd.

Facing Headwind

"Power generators are facing a lot of headwinds, from lack of coal supply both locally and from abroad, financing challenges and land clearance delays," Patel said in an interview. "Assuming generators fall short of their capacity target by about 20 gigawatts, we're estimating that Power Grid will fail to reach its spending target."

India has missed every annual target to add electricity production capacity since 1951, resulting in a peak demand deficit of nearly 10 percent. Power cuts are common across swathes of India as the country battles outages that the government says shave about 1.2 percentage points off annual economic growth.

India plans to spend 13.73 trillion rupees to expand and upgrade its power systems in the next five years, most of which will be led by generators including state-owned NTPC Ltd. (NTPC), India's largest producer, Tata Power Ltd., Reliance Power Ltd. (RPWR), Adani Power Ltd. (ADANI) and Lanco Infratech Ltd. (LANCI)

The nation will depend almost entirely on Power Grid to run power lines from their plants to local distributors. The transmission industry needs to spend 1.25 trillion rupees to match the increase in generation, said Subhranshu Patnaik, a Gurgaon-based senior director at Deloitte Touche Tohmatsu India Pvt.

'Not Rocket Science'

"It's not rocket science," Patnaik said. "Power Grid's ability to deliver has never been in doubt; they are far more efficient and face much less competition than generators like NTPC. Some states are giving up on adding their own power lines, leaving almost the entire business to Power Grid."

Power Grid fell 2 percent to 117.6 rupees at the close in Mumbai. The BSE India Power Index (BSEPOWR) rose 0.4 percent.

Sales at the company have more than doubled from four years ago to 100.4 billion rupees in the 12 months ended March 31, with an annual average growth rate of about 23 percent, according to data compiled by Bloomberg. Net income more than doubled as well to 32.5 billion rupees during the same period.

Forty of the 46 analysts covering the company recommend buying the stock, with four rating it a hold and two a sell, data compiled by Bloomberg show.

The company has undertaken development of 11 high capacity transmission corridors to connect power from various projects developed by India's electricity producers to the network. Should those utilities succeed in adding capacity, Sasmal estimates the company's annual revenue will rise to 460 billion rupees in the 12 months ending March 31, 2017.

"We expect all our projects to be implemented on schedule, first of which will be up and running next year," said Sasmal. "The government is backing all of them as it's critical for achieving self-sufficiency in power."

(BN) BMW Bets All-Wheel 3 Series Will Help Top Mercedes in U.S.: Cars

Bayerische Motoren Werke AG (BMW) is betting a new all-wheel-drive version of its 3 series sedan will help catch a resurgent Mercedes that has outsold BMW all year long in the U.S. market.

The perennial race among BMW, Daimler AG (DAI)'s Mercedes-Benz and Toyota Motor Corp. (7203)'s Lexus in the U.S. has become more important than ever. A slowing economy in China and a five-year slump in Europe have raised the stakes in the U.S., where premium cars continue to sell briskly.

"North America is the only bright spot, and in the luxury race that's shaping up to be really important," saidMichelle Krebs, an analyst with researcher Edmunds.com. "It's vital for the German automakers because their home market of Europe is a mess."

While Mercedes and BMW are thriving in the U.S, BMW is determined to do better after trailing Mercedes this year even though it introduced a redesign of its popular 3 Series in February. The early-year stumble may have been the result of offering the Munich-based brand's top-selling model without a four-wheel drive version, popular in cold-winter markets such as New York and Boston that are chock-full of luxury-car buyers.

"We were lacking cars for three or four months, now we are fueling up," Ludwig Willisch, head of BMW's U.S. operations, said last week in an interview from the automaker's offices in Woodcliff Lake, New Jersey.

Tight Race

Mercedes's introduction last year of an updated C-Class compact sedan and new coupe version has helped U.S. sales rise 14 percent to 168,462 this year through August from a year earlier. That puts Mercedes more than 3,800 deliveries ahead of BMW, which boosted sales 5.6 percent to 164,636 for the same period. Industrywide deliveries increased 15 percent through August, according to researcher Autodata Corp.

The luxury-vehicle fight in 2012 looks to be close like last year when BMW beat Mercedes by 2,715 deliveries, excluding Daimler's cargo vans and Smart cars and BMW's Mini brand, which aren't luxury vehicles.

"It will go right down to the wire again," Tom Libby, an analyst at R.L. Polk & Co., said in a telephone interview.

Lexus is probably too far behind to catch up in the year's remaining months, analysts have said.

That leaves the race mainly to the German luxury-car makers. In February, Willisch said he expected sales of the new 3 Series, last redesigned in 2005, to expand more than 10 percent. So far this year, total U.S. sales of the 3 Series line, including old versions of the coupe and wagon models, slipped 1.1 percent to 60,621 while deliveries of the new sedan rose 3.8 percent to 43,053, according to Autodata. BMW has continued to sell the all-wheel-drive version of the old 3 Series while waiting on the redesigned model.

Mercedes Fight

Sales of Mercedes's C-Class, meanwhile, rose 27 percent to 49,868, boosted by 5,969 deliveries of the sportier two-door version.

"We're taking the fight to them," Steve Cannon, head of Mercedes' U.S. operations, said last week in an interview in New York. "We've got a nice, strong plan for the rest of the year."

Mercedes should also see a boost in sales during the final months of the year as a redesigned seven-seat GL-Class SUV and an updated GLK, its smallest sport-utility, reach dealer lots.

"It's going to be full-court to the end of the year," Cannon said. He said he doesn't know if Mercedes will top BMW this year, citing the fluctuations in his competitor's sales and introduction of the X1.

Safety Features

Now that BMW has ramped up 3 Series production and is bringing out the all-wheel drive version, sales should surge and make BMW the top-seller for the year, Willisch said.

"What counts is that we are in the No. 1 position New Year's Day and we plan to do that by a healthy margin," he said.

The 3 Series, which was first introduced in 1975, is one of the most profitable vehicle lines of all time, Max Warburton, a London-based analyst at Sanford C. Bernstein, has said. It has generated $290 billion in revenue and $17 billion in earnings before interest and taxes since 1995, he estimated.

The importance of all-wheel-drive as an option for luxury cars began as consumers moved out of four-wheel-drive sport- utility vehicles and into sedans and coupes and as they put greater emphasis on safety features, Libby said.

"The move of customers in the direction of safety has propelled the manufacturers to offer it more," he said. "A manufacturer that does not offer it is in trouble."

About half of the 3 Series sedans sold in the U.S. are all- wheel drive, BMW said. In the northeast, for example, it's 80 percent.

AWD Required

For many customers, the all-wheel-drive option has become as much a requirement as an automatic transmission, Willisch said.

"It really is something that they definitely want to have and they don't want to compromise on," he said.

BMW's sales will also be lifted in the U.S. by the addition of the X1, which is classified as a car while looking like a sport-utility vehicle. It's based on the same frame as the previous generation 3 Series. The X1, a step below BMW's X3 midsize sport-utility vehicle, is the brand's lowest-priced model in the U.S., starting at $30,650.

BMW expects to sell more than 20,000 X1s in the U.S. next year, Willisch said. Others aren't as optimistic. IHS Automotive estimates BMW will sell 3,000 this year and 13,000 to 14,000 next year, according to Rebecca Lindland, an analyst for the researcher.

BMW faces pressure from Mercedes in the U.S. as it also sees increased competition from Volkswagen AG (VOW)'s Audi brand in other markets. BMW, the world's best-selling luxury brand, saw its global lead narrow to 2,110 over Audi after August sales, the companies' reported numbers show.

(BN) Apple, Kodak, Home Shopping Network:Intellectual Property

Apple Inc. (AAPL) won a round of a U.S. International Trade Commission case brought by Samsung Electronics Co. (005930) over patented technology in the iPhone and iPad tablet computer, its second U.S. legal victory in a month over its largest smartphone competitor.

Apple didn't violate Samsung's patent rights, ITC Judge James Gildea said in a notice posted on the agency's website. The judge's findings are subject to review by the full commission, which has the power to block imports of products that infringe U.S. patents.

The judge's findings follow a federal jury's ruling in San Jose, California, on Aug. 24 awarding Apple more than $1 billion in damages, after finding that Samsung copies the look and some features of the iPhone. The California jury rejected claims that Apple infringed other Samsung patents.

Gildea said there was no infringement of any of the four patents in the ITC case, and also determined that Samsung had not proven it had a domestic industry that used the patents, a requirement that is unique to the trade agency. The judge didn't provide the reasons behind his findings. The opinion will be public after both sides get a chance to redact confidential information.

Kristin Huguet, a spokeswoman for Apple, said the company had no comment.

Apple, based in Cupertino, California, has its own ITC complaint pending against Samsung, and the judge in that case is scheduled to release his findings Oct. 19. The two companies, which together make about half the smartphones sold in the world, are embroiled in more than 30 lawsuits spanning four continents.

The issue of how to handle patents related to industry standards has arisen in other cases before the trade agency, with no clear resolution. Companies that help establish standards that let various devices work with each other pledge to license their relevant patents on fair and reasonable terms.

The U.S. Federal Trade Commission, in a filing with the ITC on other cases, argued that such patents should be treated differently than other patents, and any dispute over licensing fees should be resolved in district court.

Most of the patents asserted in the legal battles over smartphones and tablet computers don't involve standard- essential patents.

Samsung's case against Apple is In the Matter of Electronic Devices, Including Wireless Communication Devices, 337-794, and Apple's case against Samsung is In the Matter of Electronic Digital Media Devices, 337-796, both U.S. International Trade Commission (Washington).

Kodak Considering Retaining Patents Put Up for Sale

Eastman Kodak Co. (EKDKQ), which put patents up for sale at a bankruptcy auction, is consulting with creditors about retaining the patents and forming a licensing company.

Kodak has been engaged in "extensive ongoing negotiations" for a potential sale and licensing transaction, the company said in a filing Sept. 14 in U.S. Bankruptcy Court in Manhattan.

"The debtors are continuing to explore other alternatives with respect to the digital imaging patent assets, and their intellectual property more broadly, and may not reach acceptable terms with parties via the auction process," Kodak said.

Kodak, based in Rochester, New York, is selling the patents to finance a turnaround after filing for bankruptcy in January. A court hearing scheduled for this week to consider a sale of the assets was adjourned "until further notice," Kodak said.

The case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

For more patent news, click here.

Trademark

Home Shopping Network Sued Over Fake Solingen Lagasse Knives

IAC/InterActiveCorp (IACI)'s Home Shopping Network was sued for trademark infringement by the chamber of commerce from Germany's Wuppertal-Solingen-Remscheid.

The suit, filed Sept. 11 in federal court in Miami, relates to the sale of knives through the company's Home Shopping Network. The chamber says the knives, which are sold on the Home Shopping Network under the Emeril Lagasse brand now owned by Martha Stewart Living Omnimedia Inc., falsely are marked as "Solingen" knives, despite also being marked with the word "China."

Only knives made in Solingen are entitled to use that name, the chamber said in its pleadings. The name is so valued that Germany has special legislation covering its use, according to the complaint, and in the past, U.S. Customs has seized falsely marked fakes at the border.

The chamber says the counterfeit Soligen knives sold through the television program harm the manufacturers of legitimate products, and the unauthorized use of the mark weakened the distinctive quality of the brand.

In the court filing, the chamber quoted a consumer complaint made after a knife promoted by celebrity chef Emeril Lagasse on the Home Shopping Network television program as a Soligen product showed up as a Chinese fake. The consumer complained that Lagasse was "a famous chef who cannot be trusted with what he advertises."

The chamber seeks a court order barring further infringement, together with awards of money damages in excess of $2 million, profits derived from the alleged infringement, attorney fees and litigation costs.

The Home Shopping Network didn't respond immediately to an e-mailed request for comment. Co-defendants with the network are the company's supplier, Martha Stewart Living Omnimedia Inc. (MSO), and both Stewart and Lagasse as individuals.

The case is Chamber of Industry and Commerce Wuppertal- Soligen-Remscheld v. Stewart, 0:12-cv-61778-KMW, U.S. District Court, Southern District of Florida (Fort Lauderdale).

Tiger Woods Seeks to Halt Indian Metals Trader's Use of His Name

Tiger Woods is opposing the attempt of a Mumbai-based metals trader and manufacturer to register his name as a trademark in India, the Times of India reported.

Om Agro Chemical filed an application in February 2010 to register the golfer's name as a trademark, claiming it came up with the idea one month earlier, according to the newspaper.

ETW Corp., which handles licensing deals for Woods, hired Delhi-based Amand & Amand to file the opposition with India's Registrar of Trademarks, the Times reported.

Woods set up ETW, based on his given name of Eldrick Tont Woods, as a licensing entity in 1996, according to the Times.

'Frank's Anatra' Rejected as U.S. Trademark for Hot-Dog Truck

A Michigan hot-dog vendor's application to register "Frank's Anatra" as a trademark for his business was denied by the U.S. Patent and Trademark Office's Trademark Trial and Appeals Board.

In its Sept. 12 ruling, the board said that the name falsely suggests a connection with Frank Sinatra, the singer who died in 1998.

Sinatra has sufficient fame and reputation that the public would presume a connection to the performer exists if the hot dog vendor were permitted to use the name, according to the ruling. The fact that the proposed trademark was sounded similar to Sinatra name was another reason the board gave for the rejection.

The applicant Bill Loizon of Birmingham, Michigan, had argued that "Anatra," which means "duck" in Italian, wasn't chosen as a way of piggybacking onto the singer's name. The board wasn't persuaded, saying that there was "nothing inherent in the applicant's mark or his marketing to lead consumers to translate 'Anatra' to duck."

The board said it couldn't understand how the name was chosen for any other reason than to make a "play on the Frank Sinatra name."

Loizon also claimed that "antara" was the name of the "People's Republic of Antara," and displayed what he said was the badge of the nation on the door of his hot dog truck. The board rejected this, saying Loizon's explanation for choosing this name was obscure and that it was "unlikely" that consumers would understand."

Loizon was represented by Jay Schloff of Aidenbaum Schloff & Bloom PLLC of West Bloomfield, Michigan. Frank Sinatra Enterprises LLC was represented by James D. Weinberger of New York's Fross Zelnick Lehrman & Zissu PC.

The case is Frank Sinatra Enterprises v. Loizon, Opposition No. 91198282 to Application 77947013, U.S. Patent and Trademark Office Trademark Trial and Appeal Board.

For more trademark news, click here.

Copyright

First French Illegal Downloading Defendant Fined 150 Euros

A French court has ordered a defendant accused of illegal downloading to pay a fine ordered in that country in Internet music copyright enforcement efforts, the TorrentFreak website reported.

The defendant, who claimed the actual downloading was done by someone else, was convicted of failing to secure his Internet connections, according to TorrentFreak, an anti-copyright website.

Under French law, the owner of the Internet connection is responsible for unauthorized downloading, regardless of who actually performed the act, TorrentFreak reported.

Although prosecutors had sought a 300 euro ($394) fine, the Tribunal de Police de Belfort suspended all but 150 euros, according to TorrentFreak.

(BN) Google’s YouTube Expands Anti-Islam Film Restriction in Asia

Google Inc. (GOOG)'s online video service YouTube said it's restricting access to an anti-Islam film in India and Indonesia in order to comply with local laws.

The video about the Prophet Muhammad, which Google earlier restricted in Libya and Egypt, triggered demonstrations against the film across several Islamic countries.

"This video -- which is widely available on the Web -- is clearly within our guidelines and so will stay on YouTube," YouTube said in an e-mailed statement today. "However, we've restricted access to it in countries where it is illegal, such as India and Indonesia, as well as in Libya and Egypt, given the very sensitive situations in these two countries."

Related Stories:

• Figure Tied to Anti-Islam Film Has Criminal Fraud Record
• Day of Rage in Arab World Tests Leaders

Mountain View, California-based Google decided to temporarily block access to the video earlier this week in Egypt and Libya. The 14-minute trailer depicts Muhammad as a womanizer and shows a fictional attack by Muslims on a Christian family.

YouTube lets users easily upload videos to its servers around the world. A valid court order or official government notification is required to remove illegal content, Google said. The operator of the world's largest search engine said the decision to restrict access was consistent with its principles.

The YouTube announcement follows comments by Tommy Vietor, a spokesman for the U.S. National Security Council, who said the government "reached out to YouTube to call the video to their attention and ask them to review whether it violates their terms of use."

Google said that it didn't block access because of requests from the White House, and said it won't be reviewing the video again.

(BN) Business Costs Quadruple on Patent-Owner Claims: BGOV Barometer

Business costs have risen more than fourfold since 2005 over royalty demands filed by patent owners seeking quick profits, a study by Boston University School of Law researchers shows.

The BGOV Barometer shows companies face $29 billion in expenses from 5,842 infringement claims filed in 2011 by so- called non-practicing entities, patent owners using their rights to collect license fees instead of producing products. That's up from 1,401 claims and $6.6 billion in costs in 2005, according to the study published today.

Companies with $1 billion or less in annual revenue were named in 59 percent of the claims filed last year. While large companies end up paying more in settlement and legal costs, the smaller companies' expenses eat up a larger share of their revenue, according to the study by James Bessen, a lecturer of law at BU, and Michael Meurer, an economist and law professor at the university.

"I was surprised at the magnitude and how much of it is really hitting small companies," said Bessen. "It's having a bigger effect on innovation than we had thought."

Bessen and Meurer said the study illustrates systemic problems in the U.S. patent system. They said recent court rulings and legislation that scaled back some patent rights only go so far in curbing what they consider a costly nuisance for businesses.

Hedge Funds

The study reviewed lawsuits or royalty demands filed by non-practicing entities, sometimes referred to as "patent trolls." They include hedge funds that buy patents, some university licensing programs and individual inventors, as well as operating companies that assert patents in areas in which they don't make products.

The study is based on the results of a survey conducted by RPX Corp., (RPXC) a San Francisco-based firm that buys patents for a syndicate whose members include Google Inc. (GOOG) and Cisco Systems Inc. (CSCO) so they can't be used in litigation against the companies.

In most instances, the study said, the NPEs make demands to large numbers of companies and settle for smaller amounts rather than targeting an individual company in hopes of a big payoff. The targeted companies often aren't even aware of the patents before being notified they might be using the invention.

"These are owners that are simply licensing freedom from suit rather than licensing technology" for use in a product, Bessen said. "To handle $100 million litigation, you have to have a rare set of skills and make some big investments."

Technology Companies

San Francisco-based RPX, which developed a lawsuit database, submitted questions to companies that it works with. That limited results to mostly technology companies, which are sued more than firms in other industries.

The survey asked companies how much they spent in legal costs and to settle the infringement claims. It didn't take into account any delays in production or diversion of resources. It costs on average $1.75 million for a small or medium-sized company to cover legal and settlement costs, and $8.79 million for companies with more than $1 billion in annual revenue, Bessen said.

The researchers were critical of some companies that say they help inventors get compensation for work that's being used by big firms. At most, about 21 percent of the money goes to the inventors, Bessen said.

Meurer said more should be done to curb software and business method patents in particular, and to let more patents lapse into the public domain if they're not being used in products, because much of the NPE litigation involves patents at the end of their 20-year lifespan.

"The cost of keeping and obtaining patents should be increased significantly," Meurer said. "We have too many patents. It's creating a pollution problem."

Lunchtalk: (@UC Berkeley) Edison vs Westinghouse

Lecture 2, UC Berkeley History 124A. At 30:15 Professor R.C. Smith compares two great American inventors George Westinghouse and Thomas Edison.




tags: lunchtalk, distribution, invention, innovation

Snack Talk: iPhone 5 - first look.

tags: lunchtalk, apple, psychology, media

(BN) Zynga Hires Gambling Executive in Real-Money Gaming Push

Zynga Inc. (ZNGA) hired Maytal Olsha, a former online-gambling executive, as its chief operating officer of new markets, ahead of the game maker's plans to offer real- money wagering next year.

Olsha, who was previously a senior vice president at 888 Holdings Plc (888), will help oversee gambling strategy and development at Zynga, the company said yesterday in an e-mailed statement. She will report to Executive Vice President Barry Cottle.

Zynga is optimistic that the easing of regulations in the U.S. and abroad will let it expand into real-money online gambling, a market that researcher H2 Gambling Capital estimates may be worth $30 billion next year. The company plans to offer a gambling product in international markets in the first half of 2013, Chief Executive Officer Mark Pincus said on a call with analysts earlier this year.

Olsha "joins our team with a deep understanding and direct experience in getting online gaming product offerings off the ground and directly into the hands of players," Cottle said in a statement.

The hire follows the departures of at least eight managers since early August, as Zynga's stock decline erodes the value of equity used to compensate employees. Earlier this week, the company disclosed the resignation of Jeff Karp, who was chief marketing officer, in a filing.

Zynga rose 6.6 percent to $3.16 at 10:20 a.m. in New York. Earlier the shares gained 7.8 percent for the biggest intraday jump since Sept. 12, when they received a boost in the wake of comments Facebook Inc. (FB) CEO Mark Zuckerberg made about the game maker during a public appearance.

"I think that they're fundamentally a strong company," Zuckerberg said on Sept. 11.

(BN) India Eases Rules for Foreign Retailers, Wal-Mart to Benefit

India's government approved plans to allow foreign retailers to open outlets that sell more than one brand, opening up a $505 billion market to such companies as Wal-Mart Stores Inc. (WMT) and Carrefour SA. (CA)

The government said yesterday that overseas companies must put half of their investment in infrastructure such as processing, manufacturing, storage, warehouses and packaging.

"India is a big opportunity, of that there is no doubt," Arun Kejriwal, director of advisory firm Kejriwal Research & Investment Services Pvt. said by phone. "We have the world's second-largest population, we have a fairly large middle class, so we become an attractive destination for any sort of organized retailing."

Yesterday's announcement came after political opposition led the government in December to reverse a decision to allow overseas companies to own 51 percent of Indian retail stores. Global retailers have sought to enter the world's second-most populous country to tap a market that's estimated to grow to $725 billion by 2017, from $505 billion in 2012, according to Technopak Advisors Pvt.

Calling it an "important first step" for India to further liberalize the retail industry, Wal-Mart said it is willing to invest in infrastructure that will help lower product prices, reduce wastage of farm produce and ease supply-side inflation.

Infrastructure Investment

"We are grateful that the government has realized and appreciated the value that we will bring to strengthen the Indian economy," Raj Jain, president of Wal-Mart India, said in an e-mailed statement yesterday.

Foreign-funded outlets are only allowed to set up in states permitted by the local governments and can only be opened in cities with a population of more than one million people, according to yesterday's statement. In states that do not have cities of more than 1 million people, the state government can choose where to allow stores.

Indian retailers including Pantaloon Retail Ltd. (PF), the country's largest operator of supermarkets, surged in Mumbai yesterday after a report that the government may decide to allow foreign investment in multibrand retail. Pantaloon rose 7.1 percent to 157.90 rupees, the most since June 6, while Shopper's Stop Ltd. (SHOP) added 1.2 percent and Trent Ltd. (TRENT), which has a franchise agreement with Tesco Plc (TSCO), climbed 3 percent.

Local Benefit

Indian companies may benefit from looser rules because the action could encourage partnerships with international businesses. Foreign investment will help ease fundraising concerns for Indian companies that have been "bleeding money," said Arvind Singhal, chairman of Technopak Advisors.

Shoppers' Stop will consider teaming up with a foreign partner to expand its hypermarkets as it needs global technology, sourcing and a large amount of funding, Govind Shrikhande, managing director at Shoppers Stop, said by phone.

Foreign companies are currently permitted to invest in supply chains and wholesale stores, which sell to local retailers and businesses. In January, India allowed overseas companies full ownership of stores selling a single brand, letting the likes of Starbucks Corp. (SBUX) and Ikea operate without a local partner. Ownership had been limited to 51 percent.

The government's last attempt to open the industry to overseas investment was met with protests from the opposition and its allies, which forced repeated adjournments of parliamentary proceedings. Prime Minister Manmohan Singh pledged in December that he would urge the easing of restrictions in an effort to boost the country's economic growth.

Singh has a target to narrow the budget deficit to 5.1 percent of gross domestic product in the 12 months ending March 2013 from 5.8 percent a year earlier. Asia's third-largest economy grew 5.5 percent in the three months ended June 30 after expanding 5.3 percent in the previous quarter, the least in three years.

(BN) Intel Betting Machines Will Need Its Chips Rather Than Web

Intel Corp. (INTC), the world's largest semiconductor maker, is betting that the growth of Internet connections in everything from passenger jets to vending machines will help reduce its reliance on chips for personal computers and data centers.

More than a third of the 15 billion devices connected to the Web by 2015 will be non-standard computing machines, according to Ton Steenman, Intel's vice president for embedded devices. They will generate a flood of data that can't be processed in remote computing centers, and will need powerful semiconductors to analyze the information.

"If you look at the growth of the network and the growth of storage, the amount of data is far outpacing that," Steenman said at a company conference in San Francisco.

Intel's fastest-growing business is selling server chips to cloud services providers, yet computing over the Internet won't be the answer in every situation, Steenman said. That opens up an opportunity as demand shifts away from personal computers toward smartphones and tablets, areas where Intel has struggled to win orders, he said.

Intel, which trimmed its third-quarter sales prediction last week amid a slump in PC demand, will get $2 billion of its estimated $53 billion in revenue this year from chips used in so-called embedded systems, he said.

The embedded division is one of Chief Executive Officer Paul Otellini's attempts to reduce Intel's reliance on chips for personal computers and data centers, which provided 84 percent of revenue last year.

Local Analytics

Intel, which uses the annual three-day Developer Forum to show off technology it wants computer makers to adopt, demonstrated an Web-connected Coca-Cola Co. (KO) vending machine based on one of its i7 series processors. Sporting a large touch screen display, the machine shows products and offers to take and e-mail digital photographs. While it could have worked with a less powerful chip to track inventory remotely, the more powerful chip enables the vending machine to do sales work, said Steenman.

Other examples included an intelligent traffic light that crunches sensor data and diverts traffic when an emergency services vehicle is approaching and greenhouse watering systems. Jet engines generate a vast amount of data that can't be carried over any Internet connection, Steenman said.

"We have to find a different answer than moving it up to the cloud and trying to analyze it there," he said. "If you need real-time response, you can't just send the data to the cloud and hope -- you need a lot of local analytics."

(BN) IPhone 5 Shift to LTE Tests What Users Will Pay for Speed: Tech

For all the hype, the most revolutionary thing about Apple Inc. (AAPL)'s iPhone 5 is probably its compatibility with a wonky technology standard called LTE, or long-term evolution, used in the high-speed 4G wireless networks being rolled out around the world.

Carriers have spent billions so they can offer faster Internet connections and boost their capacity -- and they need to win over consumers to recoup their investment, Bloomberg Businessweek reports in its Sept. 17 issue.

"The iPhone is going to be the first big catalyst for adoption of LTE," said Murali Nemani, a director of marketing at Cisco Systems Inc. (CSCO)

LTE promises to enable smartphones to stream high- definition movies, handle video chats, and store files and photos on cloud services without a hitch. Getting consumers to pay the freight for all those bytes is another story. While LTE networks can handle twice the traffic of most 3G networks, the proliferation of smartphones, tablets and video-streaming and cloud-computing services will drive up demand for mobile data 18-fold through 2016, according to Cisco.

So far, carriers are dealing with the increase by moving away from unlimited plans in favor of usage caps. If they charge too much, customers may stick with cheaper 3G networks or piggyback on free Wi-Fi at work or the local coffee shop. If they price 4G plans too low, there could be traffic overload that would slow or disrupt service.

Data Deluge

Thanks to the iPhone 5, it won't take long to discover how things shake out. Sales of the device are expected to approach 50 million by year-end. There are now only 2 million LTE devices connected to AT&T Inc. (T)'s network, said Walter Piecyk, an analyst at BTIG LLC. Carriers say they're prepared to manage the data deluge, but they still risk a backlash if too many customers blow past their data caps and incur extra fees.

"In a world where data usage is rising and disposable incomes aren't, there's a question as to whether this is all sustainable," said Craig Moffett, an analyst at Sanford C. Bernstein & Co.

The telecom companies are betting the new iPhone will get consumers more fired up about 4G networks. In an August survey by Piper Jaffray Cos., 47 percent of people polled said they don't have any interest in 4G. The version of the iPad that Apple unveiled in March is LTE-compatible, but less than 20 percent of consumers choose that model, said Moffett, and about half of those who do don't turn the service on.

"It's unclear how much LTE is driving user services right now," said Piecyk.

Overage Charges

To get customers to move off unlimited plans, AT&T and Verizon Wireless (VZ) are both pushing shared data options that offer convenience and some protection against accidental overage charges. AT&T offers 1 gigabyte of data starting at $40 a month, plus $45 per smartphone and $10 per tablet. Exceed the data limit and a user incurs a $15 penalty for each extra gigabyte used. Only struggling Sprint Nextel Corp. and T-Mobile USA Inc. still offer unlimited plans.

These shared plans may help carriers lock in customers to their services, but they may not generate the additional revenue required to pay the bill for building out LTE, said Hans Vestberg, chief executive officer of Ericsson AB (ERIC), the world's biggest maker of mobile-phone networks.

The industry has spent a combined $6.75 billion to secure spectrum rights and buy equipment and will need to invest an additional $62 billion by 2016 to roll out 4G coverage globally, said market-research firm Infonetics Research.

Consumer Needs

Carriers will have to get a lot more creative with the packages they sell. Rather than just sell data capacity, they'll need to offer deals attractive to consumers -- for example, an extra $10 a month for unlimited movie streaming.

"We're going to see operators try to reach different types of consumers with different needs," Vestberg said.

It's already happening outside the U.S. Turkey's Turkcell Iletisim Hizmetleri AS (TCELL) offers access to Facebook Inc. (FB)'s social network on a "zero-rated" basis, meaning time spent on that site doesn't count against the consumer's monthly data limit. In Tunisia, wireless carrier Orange, a unit of France Telecom SA (FTE), has run Happy Hour promotions that offer lower rates for off- peak hours.

Diverting Traffic

Fortunately for carriers, LTE networks work in a way that makes such innovation easier to implement. Certain types of traffic -- say, a high-definition Dodgers baseball game -- can be more easily diverted to an available Wi-Fi network. Cisco's Nemani said large carriers are testing technology that will let them send a warning that offers three options when a consumer is approaching a data limit: accept a lower resolution to use fewer bits, agree to watch a 10-second ad, or pay to finish what they're doing.

"The struggling student may go for the lower resolution, while the businessman will pay the 99 cents to watch the rest of the game," Nemani said.

Ultimately, carriers will try to pressure content owners and distributors -- including Apple -- to pay some of the cost for the millions of movies, songs and other data they put on networks. Amazon.com Inc. (AMZN) already bakes the cost of bandwidth to download books into the price of its basic Kindle devices. Books, though, can be compressed into mere megabytes of data. A single high-definition movie along with a few video chats could easily blow through a 5-gigabyte monthly limit.

Executives at Netflix Inc. (NFLX) and online game companies may know that they'll need to subsidize premium offers to guarantee glitch-free delivery as LTE networks get more congested. So far, they're not saying much about it publicly, said Marcus Weldon, Alcatel-Lucent SA's chief technology officer.

"It's been a bit of a staring contest between operators and content owners to see who's willing to come to the table first to have a realistic conversation about the future."

(BN) Google to Start on Kansas City Fiber Network in Weeks

Sept. 14 (Bloomberg) -- Google Inc., moving forward on a project to outfit Kansas City neighborhoods with an ultrafast broadband network, announced plans to begin installing fiber lines in the next few weeks, starting with the city's Hanover Heights area.

Of 202 eligible neighborhoods targeted by Google, 89 percent will be wired to the fiber-optic network, the company said in a blog posting yesterday. Google spent six weeks signing up residents for the project, which requires neighborhoods to express interest in the service if they want to be connected. The coverage area straddles the state border -- a region that includes Kansas City, Kansas, and Kansas City, Missouri.

Google Fiber offers three plans. Residents can pay $70 a month for an Internet connection alone or $120 for a package that includes TV service, a digital video recorder and a set-top box with a tablet-computer remote control. With the third option, customers pay a $300 installation fee and get at least seven years of free Internet access, though at slower speeds.

The network will provide online speeds of 1 gigabit per second, about a hundred times faster than the average U.S. connection, along with television programming. Google, based in Mountain View, California, will run the program as a for-profit business and hasn't said if it will expand beyond the Kansas City area.

(BN) Apple-Led Tech Race May Buoy Air Rates Amid Weak Shipping

A surge in the introduction of new technology products, including Apple Inc.'s (AAPL) iPhone 5, is poised to drive up rates for shipping by plane, benefiting companies from FedEx Corp. (FDX) to Atlas Air Worldwide Holdings Inc.

Apple, Google Inc. (GOOG), Microsoft Corp. and Amazon.com (AMZN) Inc. are offering new smartphones and tablets as they compete for customers in the fast-growing mobile-computing market. So many devices shipping at once may spur a larger price increase than the 20 percent jump after Apple's new iPad in March, said Kevin Sterling, a transportation analyst at BB&T Capital Markets.

"This is a new dynamic for the air-freight industry," Sterling said in a telephone interview from Richmond, Virginia. "There's been tech launches periodically, but there's so much hype around so many products at one time."

The gadget convergence is a bright spot for air-freight companies in a pre-holiday shipping season clouded by weak U.S. job growth. Potential beneficiaries include companies such as FedEx, which runs the world's largest cargo airline, and Atlas, the biggest operator of Boeing Co. (BA) 747 freighters.

Shipments of iPhones and tablet computers may reach as much as 20 million pounds (9.1 million kilograms), said Satish Jindel, president of SJ Consulting Group in Sewickley, Pennsylvania. Strict pre-release security and short timetables for delivery to retailers make air transport the shipping method of choice, Sterling and other analysts said.

"The tech companies, they tightly control these product launches," Sterling said. "Apple doesn't want someone getting ahold of the iPhone5 a few days before, taking away from the hype."

Expedited Delivery

The resulting crunch may push the average air freight rate as high as $5 a kilogram this month, he said. The average in March, when the iPad was released, was $4.44 per kilogram, according to Drewry Shipping Consultants Ltd. July's rate, the latest available, was $3.82.

"We have kind of a perfect storm of new product launches," said Jim Corridore, a Standard & Poor's equity analyst in New York who covers transportation companies and estimates that a rate increase may last through October. "They're all going to want to be expedited."

Atlas, buoyed by iPad cargo earlier this year, applied those lessons to get ready for the latest rush.

"We anticipated there would be a number of these new product launches that would support the overall demand for air freight moving into what is traditionally peak shipping season," said Dan Loh, a spokesman for the Purchase, New York- based company. Atlas expects "an environment that would be akin to what we saw back in March."

More Flexibility

In advance of events such as product releases, UPS Airlines can add flights, increase the capacity of its facilities, or farm volume out to 12 regional hubs, Mike Mangeot, a spokesman, said in a telephone interview.

"It's something that we know is coming, and we work with the shippers to flex our operations and make it happen," said Mangeot, who declined to discuss specific customers.

A FedEx spokesman, Jess Bunn, declined to comment before the Memphis-based company's quarterly earnings report slated for Sept. 18.

Deutsche Post AG (DPW)'s DHL Express, which is one of Atlas's long-term contract clients, also declined to comment on individual customers.

"A number of these companies, when they launch a new product, we are heavily involved; all the big brands," Rob Siegers, DHL's president of global technology, said in a June interview.

Smaller iPad

Analysts say DHL may be a primary carrier for Apple, which plans to deliver its iPhone 5 on Sept. 21. The Cupertino, California-based computer and mobile-device maker is expected to debut a smaller, cheaper iPad tablet by the end of the year, two people with knowledge of the plans said in July.

Google started shipping its Nexus 7 tablet in July, and Microsoft's (MSFT) tablet computer, the Surface, goes on sale Oct. 26.

Amazon.com has four different sets of Kindle reader and tablet devices on sale this year, with a high-definition and regular 7-inch (17.8 cm) Kindle Fire tablet available today. Larger models of the Fire are available starting Nov. 20, while the Kindle Paperwhite e-book reader goes on sale on Oct. 1.

"Everyone sees an opportunity," said Will Stofega, program director at researcher IDC in Framingham, Massachusetts. "It's a brand-new form factor. If you can compete with Apple, you have a good chance to up your revenue. A lot of people feel that the first implementations were not that great. The operating systems and the hardware have matured, and this is now or never."

Strong Rates

The release dates coincide with the traditional shipping surge between Thanksgiving in the U.S. and Christmas, when holiday deliveries boost sales.

"With capacity down and demand appearing like it's going to be fairly strong, rates will be very strong," Helane Becker, a transportation analyst with Dahlman Rose & Co. in New York, said in a telephone interview.

Benefits to air-cargo shippers may be heightened by capacity cuts made as global demand slackened this year. Atlanta-based UPS reduced its Asian air network by 10 percent, shrinking it to the size it was in 2009, and would face a lag bringing capacity back online. FedEx said in June that it retired 24 jet freighters to reduce capacity in its U.S. domestic express segment and cope with sagging volumes.

The softening air-cargo market reflects a weaker European economy and slower growth in China. The tech product surge won't be strong enough to counter that, Jindel said.

Not Enough

Another complication is that air freight companies have already secured contracts with high-profile shippers, preventing them from taking full advantage of any rate increases, Jindel said in a telephone interview. .

"The increase that would come from these items will have some positive impact," he said. "But it's not going to be material enough to change the fortune and earnings projections of the companies that are going to handle it."

Atlas (AAWW) Air, which provides crews and equipment for customers, has more flexibility to raise prices than either UPS or FedEx because it offers services on a charter basis as well as long-term contracts, said BB&T's Sterling.

UPS and FedEx won't see "the material upside that we expect with Atlas," he said. Atlas Air's first-quarter profit of 51 cents a share beat analysts' average estimate of 15 cents, a boost that was "all March," when Apple released the new iPad, Sterling said.

Charter Customers

Atlas is likely to benefit in the months ahead by adding capacity-seeking customers through both long-term contracts and charter customers, said Loh, the spokesman. "We provide a way to participate in some of these new product rollouts," he said.

The company is outperforming broader U.S. stock indexes this year, while UPS and FedEx are lagging behind. Gains of 8.2 percent for FedEx and 2.1 percent for UPS through yesterday compare with 16 percent for the Standard & Poor's 500 Index. Atlas Air surged 48 percent in the same period.

The stocks of all three companies may get a boost, even if earnings don't benefit equally, as investors in air-freight companies react favorably to the crunch, said Becker, the Dahlman Rose analyst.

"The goods will start to fly, and everybody always wants the latest phone," she said. "People are just waiting to see what the new ones look like. They have to have one."