The Tech Specialists
By Mark Halper; Aravind Adiga/Bangalore; Jim Frederick/Tokyo.
THE BLACKBERRY BOY RESEARCH IN MOTION | CANADA
It's a classic new-economy fable: a university student starts a tech firm in Silicon Valley, never bothers to graduate and goes on to make billions. The only difference between that legend and the true story of Mike Lazaridis, founder of Research in Motion (RIM), is that it took Lazaridis about a decade to come up with his killer idea, and when his epiphany did come, it happened in Canada, not California.
RIM was a little-known company until five years ago, when it launched its BlackBerry, a handheld gadget for writing and receiving secure e-mail. Before that Lazaridis tinkered with industrial displays and developed a fast way to read time codes on film. "We've always been innovative," he says. "Whatever we get involved in, we sink our teeth into." Today the very term BlackBerry is synonymous with wireless e-mail. More than 1 million people use the gizmo, led by a long list of the rich and famous that RIM says includes George W. Bush, Sarah Jessica Parker, George Clooney and the Beckhams. "We got into a market where there was really nothing there," says Lazaridis, 43, who founded RIM in 1984 as a student at the University of Waterloo, near Toronto. Last year the number of people using a BlackBerry doubled, and in the three months through June alone, RIM shipped more than 500,000 devices, almost three times as many as a year earlier, according to research firm Gartner Inc.
That may not be anywhere near the hundreds of millions of mobile phones sold every year, but the growth has made a huge impression on cell-phone and PDA vendors. Nokia, Siemens, Samsung, Sony, Ericsson, Microsoft and PalmSource have licensed RIM's e-mail software, helping the company ring up $594.6 million in revenues in 2003, making it almost double its size of a year earlier. Why did the device catch on so fast? Unlike earlier handhelds, the BlackBerry pushed e-mail right to the device, rather than merely alerting users that they had e-mail the device could fetch. It also let employees send and receive using their corporate addresses, just as if they were in the office. RIM's curved layout of button-like keys has also made thumb operation a breeze. "It's very difficult to get someone to use another device," says Gartner vice president Ken Dulaney.
RIM is facing new challenges. If the U.S. Court of Appeals in Washington does not overturn a lower-court ruling that RIM violated patents held by a rival, the company could be barred from selling in the U.S. And Lazaridis has to worry that his licensees might kill his hardware business--although, even if they do, RIM still has a healthy software and services business, which brings in close to one-third of its revenues. BlackBerry's success has made Lazaridis wealthy enough to donate more than $100 million to his other passion--quantum computing research--at the University of Waterloo, where the former dropout is now chancellor. One more reason for techies to give him the thumbs-up. --By Mark Halper
THE SOFTWARE GLOBALIST INFOSYS | INDIA
N.R. NARAYANA MURTHY USED TO THINK OF HIMSELF as a committed socialist, but three days in a Yugoslav lockup changed his mind. Back in the early 1970s, while traveling through Europe by train, Murthy was seized by police in a town near the Yugoslav-Bulgarian border. He had been chatting up a fellow passenger in French, and he believes that her boyfriend complained to a cop. Murthy was kept in a room in the train station for 72 hours and shipped out on a freight car. "There was no going back to communism after that," he says.
Today, as Murthy sits in the chairman's office of Infosys, a Bangalore-based software and services company, his capitalist transformation is complete. Murthy has helped turn outsourcing into a multibillion-dollar business that has rejuvenated U.S. and European companies by slashing their tech spending. But his success has also contributed to fears that American software-engineers' jobs could migrate to India, making outsourcing a hot political topic.
Murthy and six friends founded Infosys in 1981 with $250 in start-up capital. The company's early years were arduous. In the 1980s, Murthy recalls, it took a year to get a telephone line, and a dozen trips to New Delhi to get permission to import a single computer. But the firm quickly established a reputation as a reliable partner for American and European businesses looking to contract out software-programming work. That first-mover advantage has paid off. Infosys had $1.06 billion in revenues last year and expects that figure to rise as much as 40% this year.
Murthy, 57, is quietly fighting the backlash against outsourcing. "We can't get angry and shout slogans," he says. "If we focus on delivering value to our clients, ultimately we will win." After building Infosys into an outsourcing behemoth, Murthy is now trying to protect the company from its own success. By Aravind Adiga/Bangalore
DIGITAL-CAMERA DYNAMO SONY | JAPAN
No one likes to have his boss looking over his shoulder. But Shigeki Ishizuka, head of Sony's digital-camera division, says he is unfazed whenever Shizuo Takashino--Sony's executive deputy president and one of the legendary team that created the Walkman--drops by. "I look forward to seeing him," Ishizuka says with a laugh, adding that he is always prepared for Takashino's frequent suggestion to "make it smaller."
Ishizuka can get away with a jest; he has cred all his own. Although many divisions in the Sony juggernaut have stumbled in recent years, Ishizuka has kept his department at the forefront of the exploding digital-camera industry by introducing innovative products.
Virtually nonexistent even a decade ago, the market for digital cameras grew to $17 billion in 2003, and sales are expected to soar 39% this year, according to research firm IDC. And since introducing in 1996 the DSC-F1, one of the first affordable digital cameras, Sony has gone on to capture an industry-leading 18%. Canon is close behind with 16%, and Olympus and Kodak have 13% and 12%, respectively.
Intriguingly, Sony is the only major digital-camera maker without a traditional film background. Ishizuka, 45, considers that the company's greatest advantage. With no stake in the 35-mm-camera market to protect, Sony was able to apply a fresh approach as consumers began switching to digital.
"When you control every aspect of the parts design and don't have to buy other companies' off-the-shelf components," Ishizuka says, "you can integrate the whole package much more tightly and elegantly and often at lower cost." The camera features an impressive 5.1megapixel resolution and a 2.5in. LCD screen packed into an amazingly small body.
Ishizuka calls the DSC-T1 camera his Project X, referring to the popular TV show that celebrates Japan's industrial and business triumphs of the past five decades. But he realizes that in this fiercely competitive business, the only thing that matters now is Project Y. "Our competitors can introduce similar products almost immediately," he says. Which means he is already planning Project Z too. --By Jim Frederick/Tokyo. With reporting by Yuki Oda/Tokyo
THE CYBERSPACE GAMBLER BETFAIR | BRITAIN
In 1999, Briton Andrew Black was making a decent enough living as a professional gambler, concentrating mainly on playing bridge and betting on horses. But he was dissatisfied with traditional bookmakers. By the time they build in their margins, says Black, 41, "you've got to be 20% smarter to make money. And if [you] make a mistake, [you] can't trade out of it. I thought, 'There's got to be a better way.'"
He forged it by co-founding, with Ed Wray, London-based Betfair, the peer-to-peer cybercasino that has done for gambling what eBay did for garage sales. On Betfair there's no house; the site's 250,000 registered customers simply post their bets and wait for someone to take them on. Betfair charges a commission on each winning bet; the more you bet, the lower the commission. When the site was launched in 2000, with $1.8 million raised from Black's and Wray's network of contacts, it was taking less than $90,000 in weekly bets. Now it has in excess of $90 million a week in matched bets, about 13% of the estimated annual $35 billion global online sports-betting industry. From April 2002 to April 2003, Betfair's pretax profits rose from $1.9 million to $15.5 million. The site has registered users in 85 countries, with 70% of the bets placed on horse races.
Some traditional bookmakers charge that Betfair's practice of allowing bets on losers as well as winners might facilitate corruption by encouraging competitors to throw events for financial gain. Says Graham Sharpe, spokesman for old-style bookie William Hill: "If you have a bet on an exchange, you don't know who it's with. If [the person] is offering extravagant odds, you don't know why." Black counters that his site makes strange betting patterns easier to identify. He points out that Betfair has signed agreements with, among others, the Jockey Club in Britain and the English Football Association, promising to inform them of any suspicious wagers. And in June the British government said it wasn't necessary to license or regulate those who lay bets--to the chagrin of traditional bookmakers, which had been pushing for such a move.
A big man, Black ambles around Betfair's offices in shorts and a fleece. In his spare time, he still likes to gamble. The next wager he'll need to make is when to take Betfair public, something he insists won't happen for at least 18 months. "We've got to knock the company into shape," Black says. "We want to get the timing right." It's the biggest bet of all, and not something even a seasoned gambler would take lightly. --By Jennie James/London
THE VIDEO-CLUB KING NETFLIX | U.S.A.
The idea for Netflix, like many other great eureka moments in business, came from a mundane experience. It was 1997, and Reed Hastings was six weeks late in returning a copy of Apollo 13 to his local Blockbuster in San Jose, Calif. The late fee was $40, and the former computer scientist thought to himself, 'Never again.' He came up with a simple solution--so simple that Silicon Valley entrepreneurs are still kicking themselves for not having thought of it first. Netflix customers keep a wish list of DVDs they want to see, in order of preference, on www.netflix.com Netflix then mails out the selected discs. The service costs $22 a month, for which customers get to keep three titles at a time. When they're done with a DVD, they send it back and receive another one.
That's it--no late fees, no standing in line, no walking out of the store with a movie you didn't really want to see. It's working for Netflix's 2 million U.S. subscribers, almost 1 million of whom signed up in the past year alone. In Northern California's Bay Area, Netflix's largest market, the company accounts for an astonishing 10% of all movie rentals. Launched in 1999, the company, based in Los Gatos, Calif., posted its first profit last year ($6.5 million) as revenues grew 78%. It has inspired copycats abroad--Zip in Canada (www.zip.ca) and Lovefilm in Britain www.lovefilm.com) Netflix skillfully exploits two defining consumer trends of the past decade: the ubiquity of the Internet, and the rocket-fueled growth of DVD players. The first commercially available DVD players hit the market only in 1997; by the end of this year, two-thirds of U.S. homes will have one.
Hastings, 43, is modest about his firm. "I'm a funny kind of guy to be running a consumer company," he says, admitting that he would just as soon discuss artificial intelligence. He thinks he can win the battle with WalMart, which launched a copycat service in 2002, and Blockbuster, which plans to try a similar rental program in the U.S. soon. Hastings has an advantage: like Amazon, Netflix relies on ratings--up to five stars--by its members, who are asked to weigh in on what they rent. These ratings go into the system's algorithm, and out come recommendations for movies you never knew you wanted to see. Hastings intends to start a trial download service next year. But downloading is still too daunting for most users, and who wants to watch movies on a PC anyway? "DVDs have got a good decade left in them," he says. For Netflix, chances are it will be a very good decade indeed. --Chris Taylor/Los Gatos
THE GODFATHER OF SECURITY SYMANTEC | U.S.A.
When most people hire a security guard, they don't expect him to be a computer programmer and a secretary as well. But that, or its electronic equivalent, is the range of services Symantec provided at the end of the millennium. The Cupertino, Calif., firm was best known for its Norton AntiVirus software for consumers and small businesses. But during the dotcom boom, it was also hawking software for creating Java applications and managing business and personal contacts. Confused investors and big corporate clients gave Symantec a wide berth.
Enter John Thompson, an IBM veteran of 28 years, who became Symantec CEO in 1999, the first African American to head a major U.S. software company. Thompson sold off the extraneous software divisions and replaced his entire sales team and nearly all his vice presidents. (Thompson's favorite movie: The Godfather.) Then he started buying stuff--like ON Technology, a $100 million infrastructure-management company--and he massively expanded the Live Update service, which for an annual subscription automatically downloads the latest antivirus software to your computer. "Security is a process, not a product," he says. Thompson, an avid amateur chef, is constantly tweaking Symantec's recipe.
As the corporate world faced a plague of computer viruses, Symantec thrived. The Love Bug and Sobig spread faster than any other viruses in computer history, becoming household names. Since then, virus writers have become terrifyingly shrewd. One report put the cost of bugs to global business last year at $55 billion. Symantec's sales rose, from $634 million when Thompson took over, to $1.9 billion in fiscal 2004, and more than half the firm's revenue comes from corporate sales. The company's stock has also soared more than 470% since Thompson took control. "Never in my wildest dreams could I have forecast what unfolded," he says, "but we were well positioned for it." Thompson wasn't adverse to cashing in; he made $14 million selling his options in May. Now, Symantec is buying Brightmail, an e-mail security firm. Purveyors of spam are even more cunning than virus writers, and Brightmail sends updated antispam defenses to its client computers at least once an hour. "It's a very natural marriage," Thompson says. Sifting your mail for unwanted stuff while protecting your front door--now that's something you would expect from a security guard. --By Chris Taylor/San Francisco
THE REBEL WITH FREE CALLS SKYPE | LUXEMBOURG
Watching Niklas Zennstrom's young company, Skype, grow is like driving past a McDonald's back in the '70s--every time you look, another million have been served. Skype's appeal is even more obvious than a Big Mac's: the firm provides software that lets people make free phone calls over the Internet. Since Skype was launched a year ago, the company has recorded almost 18 million downloads; it says more than 8 million people use the product. "We don't think you should pay for making phone calls anymore," says Zennstrom, a softspoken Swede. What's remarkable is that until recently, he hasn't charged customers for using Skype either.
It's not the first time that Zennstrom has pursued a counterintuitive business model. In 2000 he and Skype co-founder Janus Friis launched Kazaa, a peer-to-peer exchange that allowed users to swap music and videos online. Now Zennstrom is at the vanguard of voice over Internet protocol (VOIP), a technology that lets voice traffic travel over the Internet. Gartner Inc. analyst Katja Ruud estimates that about 100 million people worldwide will use VOIP by 2008. Even telecom giants like AT&T, BT Group and Verizon realize they have to offer VOIP. Zennstrom practices extreme VOIP: free calls and free software. He admits that "we have almost no revenue" and that eventually that will be a problem. Until recently, Skype users could call only other Skype users. So in July Zennstrom started allowing Skype users to connect to non-Skype customers for a fee. He has plans to license the software, especially to cell-phone makers. If the technology works well in cell phones, Skype could start serving billions. --Mark Halper
MR. CLEAN SAMSUNG | SOUTH KOREA
To find Kim Hyung Gyoon's office in Samsung's R.-and-D. complex, just follow the baskets of dirty clothes. No, Kim is not running the company Laundromat. As chief of Samsung's washing and cleaning technology group, he is the man behind a new washing machine that deposits tiny silver particles--about 11/410,000 the thickness of a human hair--onto clothes to make them bacteria-and odor-free without the use of hot water. The device represents the first mass-produced application of this type of nanotechnology--the science of very small structures--to home appliances. "In the summer of 2002, I asked everyone in the office to take off their socks," says Kim, 48. "I took one sock from each person and placed it in a regular washing machine; the others were washed in a machine with the Ag+ Nano System. The next day I asked everyone to check the odor of their socks after a day's wear. One began to stink, and the other was odorless."
Here's how it works: a grapefruit-size device near the tub uses electric currents to nano-shave two silver plates the size of chewing-gum sticks. The resulting silver particles are sprayed into the tub during the wash cycle. The silver ion inhibits bacterial growth. According to the Korea Testing & Research Institute for the Chemical Industry, Samsung's device kills 99.9% of bacteria and fungi. Kim says garments stay germ-free for up to a month after being laundered. The Ag+ Nano device went on sale in March 2003 (just ahead of other silver-nanotech appliances from competitors LG and Daewoo) and costs around $1,150. The revolutionary technology is also being used in Samsung's refrigerators and air conditioners.
No wonder: consumers seem to like a little silver in their spin cycles. Since Samsung's nano-armed products were first launched, they have brought in an estimated $779 million in revenue. Overall, nanotechnology has been one of science's fastest-growing fields in recent years, with potential applications in fields as diverse as energy production and toothpaste manufacture. The nanotech market is projected to be worth $1 trillion by 2015.
Because this is such a hotly competitive field--Daewoo has introduced air conditioners that spray vitamin C into the environment--Kim isn't about to divulge what other nanotech projects he's working on. But one thing is for sure--from now on, even his dirtiest clothes will have a silver lining. --By Mingi Hyun/Seoul
THE CLONING CRUSADER UNIVERSITY OF NEWCASTLE | BRITAIN
Miodrag Stojkovic's biggest fear is that "people think we're crazy scientists creating the latest Frankenstein." That's because the Serb, 40, a researcher with the Institute of Human Genetics at the University of Newcastle-upon-Tyne, could become the first person to use cells from a cloned human embryo to treat disease. Last week he got approval from the British government to conduct such an experiment.
Stojkovic, who fled Yugoslavia in 1991 just before the Balkan wars broke out, is on the front lines of the cloning wars. He helped clone mammals at the University of Munich before going to Britain. Now, using a technique similar to one recently demonstrated in South Korea, he plans to create embryos by injecting a patient's DNA into an egg from which the genetic material has been removed. He then hopes to harvest the embryonic stem cells--which can develop into almost any organ--and coax them to produce insulin in diabetics. Stem cells may also hold promise for victims of Parkinson's and heart disease. Controversy has arisen from the fact that he is creating and discarding embryos. For many people, that is morally unacceptable. In the U.S., the Bush Administration has limited funding for stem-cell research for that reason--a decision that is now a campaign issue. "I have a clear conscience," says Stojkovic, who holds that life begins after 14 days, when the nervous system starts to form. London-based Human Genetics Alert warns that the techniques could be used to clone babies, something Stojkovic opposes. "I believe in embryonic stem cells," he says. If he can come up with a cure for diabetes, many people will believe along with him. --M.H.
With reporting by Yuki Oda/Tokyo; Jennie James/London; Chris Taylor/Los Gatos; Chris Taylor/San Francisco; Mark Halper; Mingi Hyun/Seoul