ImaginativePRO Blog

SECOND LIFE HITS THE SKIDS, SO WHAT HAPPENED TO SECOND LIFE?

Once upon a time Second Life had a Twitter level of hype. Even those without a cartoon version of themselves couldn't plead ignorance due to blanket coverage in newspapers and magazines.

Second Life is a virtual world started by the US firm Linden Lab in 2003, in which users design an avatar to live their "second life" online.

And everything about this world can be customised for a price - new outfits, drinks in a bar, even a luxury mansion can be bought with Linden dollars.

Mentions of Second Life first crept into the UK media mainstream in early 2006.

The Maldives were the first to open a virtual embassy in 2007

A year later, newspapers fell over themselves to cover it, devoting many column inches in their business, technology and lifestyle sections to profiles and trend pieces. By the end of 2007 Second Life had secured more than 600 mentions in UK newspapers and magazines, according to the media database Lexis Nexis.

IBM bought property in 2006, American Apparel opened a shop the same summer, Reuters installed avatar journalist Adam Pasick - also known as Adam Reuters - to report on virtual happenings, and countries established virtual embassies.

The number of people joining the site jumped from 450,000 to four million in 2007.

But just as quickly as it had flared, media interest ebbed away. References plummeted by 40% in 2008 and dropped further this year. And businesses diverted their resources back to real life.

American Apparel closed its shop just one year after opening. Reuters pulled its correspondent in October 2008. When asked about his virtual experience, Pasick says: "It isn't a subject we like to revisit."

So, what happened?

SECOND LIFE'S PRECURSOR In Snow Crash by Neil Stephenson, a seminal sci-fi work of the 90s, one of the plots is that there was this whole metaverse exactly like Second Life, only cooler. You had a whole generation of people who read Snow Crash and were talking about this idea of the internet as a 3D world you could immerse yourself in Ben Hammersley

Not much, says Wired UK editor-at-large Ben Hammersley, and that was the problem.

"You could go and open these stores and no-one would turn up," he says.

"They would have 20 to 30 people there when it opened, and after that no-one would bother going in there again. It just wasn't worth the spend."

The "spend" varied from business to business. A retailer like American Apparel might spend £10,000 on designers, as well as storage space from Linden Lab, to build a virtual store.

But at the peak of the hype, the cost of purchasing or building property was worth it.

"The first to go online would make the front page of the Guardian," Mr Hammersley says. "But when you're the 15th country who goes on Second Life, no magazine, no newspaper touches it."

Some businesses and users found it wasn't quite for them. The technology wasn't easily grasped and some computers couldn't handle it.

Second Life has had to temper its ambitions for the quality of graphics to extend its accessibility across varying speeds of broadband around the world, leading to complaints about the cartoony look and feel of the site.

And there is a fundamental question about whether Second Life is a game or a social networking site.

"It's not a really good social space," Mr Hammersley says. "Not as good as Facebook or any general online forum.

Avatars can walk, fly and teleport

Simon Gardner, a 23-year-old freelance social media marketer, believed the hype in 2007.

He signed on, created an avatar with a shock of red hair that vaguely resembled him, and jumped into what he found to be a lacklustre experience.

"It was a real pain. You have to learn how to control things and read manuals on how to get to islands and get off. Half the time you're just wandering around talking to weirdos."

After three months Mr Gardner became bored and left.

Mobile dilemma

And the online social network scene is a crowded one. "The key to anything online is to get a broader reach of people," says Jim Clark of market researchers Mintel. The learning curve required for Second Life prevents many general users from returning regularly.

As more people turn to smart phones, sites need a mobile presence to stay relevant.

"Mobile is the future of any activity online. This is something that Second Life will struggle to penetrate," says Mr Clark.

This is because the graphics require more memory than current smart phones can handle.

But Linden Labs isn't worried, because the number of users continues to rise.

"Monthly repeat login - a metric we use to gauge the number of users engaged with Second Life - grew 23% from September 2008 to September 2009," says Mark Kingdon, chief executive of Linden Lab.

In IBM's Virtual Green Data Center, avatars can seek IT advice

On average, a million people log in each month, he says. In October 2009, 75,000 of those were in the UK.

And the site continues to evolve, Mr Kingdon says. It launched a new product earlier this month geared towards businesses, and will soon be launching more user-friendly and intuitive software.

And many companies and organisations are still holding on to their virtual selves - 1,400 of them says Mr Kingdon. IBM continues to be an avid supporter of Second Life.

But for many others, the jury is out.

 

 

COMMENTARY:  I haven't used Second Life for over a year now, and had lost track of how Second Life was doing.  Frankly, I got burned out using Second Life.  To get the full experience, you need a lot of video ram and a fast processor and a SL-compatible video graphics interface.

So what happened to Second Life?  Easy.  Second life became a victim of the recession.  The retail was one of the hardest hit sectors in the real world and this spilled over into SL, with many virtual stores going out of business, just like they did in the real world.  There were too damn many virtual stores, and so virtual industry consolidation hit SL.  This became very apparent in 2008 when a virtual store would be open one day, then closed down the next day. This happened to night clubs, nude beaches, amusement parks, you name it.    

You could never use Second Life on an iPhone or any other smartphone that I am aware of. SL would never fit in very well with today's mobile devices.  SL would run like molasses with 3G wireless.  Second Life also had a lot of technical issues, constantly "freezing up" due to too much traffic, which meant you were automatically logged out, then had to wait some time in order to log back in.  It was really frustrating that way.

I did enjoy my online experiences on Second Life, because you could pick your avator look, and be able to change it on the fly, meet people from throughout the world, and it was a lot of fun trying to interact with foreigners, because of the language barrier, but it was a lot of fun. One day I would be a "furry" (animal avatar), and the next moment I could wear a different "skin" and look like Brad Pitt or GQ male model. 

Second Life is a virtual world where you can play out your innermost fantasies, and do somethngs, you would never imagine doing in the real world, and in real-time too. You could "transport" yourself from one point on the Second Life grid to another location, and invite others along.  And, you could fly like Superman, and just explore.  It was funny though, because you could be going through the air, a bit too fast, and slam into the side of a virtual building.  

Commerce on Second Life was done using virtual dollars or SL dollars.  You could buy like SL$250 for each actual dollar.  I hate shopping, so Second Life was perfect.  No sales clerks to worry about.  No credit card theft. And the virtual stores never ran out of merchandise. One of the first things you had to do is purchase a digital wardrobe, buy a penis (males) or vagina (females), or buy a whole new skin that included everything.

You could be in Japan in one moment, and materialize in Rio de Janeiro with the click of a mouse.  It was a gas.  Sometimes you were the only avatar at the particular location on the SL grid.  My favorite places was Ilha da Brasil, which duplicated a Brazilian neighborhood, but without the crime and a lot of "chicas". The other place was Dogglounge (http://www.youtube.com/watch?v=aRfYdjOHEpU), a place where you could dance to soul and jazz music. I miss negligee nites and those beach and rooftop parties.  

The ladies dressed very provocatively like they do in Rio and Las Vegas. Many were just college students, and some didn't have enough SL dollars to buy a wardrobe, especially students from places like Brazil, so they walked around mostly naked.  Being the "Rich Americano", I would buy them a wardrobe or charge their SL account and they would blow me a kiss or say, "muito obrigado".  At Ilha do Brasil, I used to get a kick out of practicing my Portuguese or lying on a nude beach or participating in an orgy. Yes, they have them there too.

Come to link of it, I miss Second Life, but it would never work very well with my wireless setup.

Courtesy of November 20, 2009 appearing in BBC News

   

HOLIDAY RETAIL SALES GIVE HOPE FOR A RECOVERY, ALBEIT A SLIGHT RECOVERY

Whether you work in the retail industry or not, many marketers follow reports about US consumer spending and view them as an indicator as to whether or not the economy is turning around.  Retail industry terms such as “Black Friday” and “Cyber Monday” are now commonly used to refer to the busiest shopping days of the year, and are synonymous with the deep discounts and free shipping offers designed to incentivize consumers to purchase in the days immediately following Thanksgiving. 

Today is Cyber Monday, so what is the consumer spending outlook for the 2009 holiday season? According to initial estimates, the prognosis isn’t great… but it’s not bad either. ShopperTrak, which measures traffic and sales in 500,000 brick and mortar retail locations across the country, estimates that Black Friday in-store sales hit $10.66 billion this year, an increase of 0.5 percent over 2008.  The National Retail Federation is forecasting a 7.9% drop in combined offline and online sales versus Black Friday 2008 based on a poll of 4,985 consumers; however, it also reported a traffic increase of 23 million visitors to online retail websites on Black Friday over 2008. According to the LA Times, it appears that consumers are still spending, but they are opting for reasonably priced sale items and not choosing full-priced or luxury items. Fortunately for everyone involved, 87.1% of retailers are holding Cyber Monday sales, according to the NRF.

The most positive projection issued to date comes from comScore, estimating that US consumers spent $595 million online this past Friday, up 11% from 2008.  Could it be that online commerce is seeing double-digit growth while brick and mortar stores continue to lose ground?  It’s still too early to tell for certain, but it’s clear that consumers are becoming more and more comfortable transacting online.

This shift is important to note for marketers in every industry.  As business moves increasingly online, it’s more important than ever to think holistically about your email communication strategy and integrate it with customer touch-points in other channels. Email is the conduit for business online and is a mission-critical component of any online sales or communication strategy.  If you’re still sending “email blasts” each time you need to promote a specific item, it’s time to re-evaluate your approach. Invest in the technology, tools, and resources that you need to build a comprehensive customer communications program leveraging all of the digital marketing channels that make sense for your business – because its future is online.

COMMENTARY:  comScore has forecasted flat to slightly negative online sales for 2008, so I don't know where the 11% comes from.  As far as I know those making under $50K will be down, those making $100K or more will increase their purchases, and this may be part of the confusion.  Just for the record.

I hate to say bah humbug, but Christmas has become just to commercialized. The U.S. has become a "Christmas Economy", that is far too dependent on Christmas sales.  Who ever heard of such a thing?  When you have to depend at the end of the year to gauge whether retail sales were good for the year.

The U.S. is also addicted to plastic or credit cards.  We have far too much credit card debt, and one of the biggest reasons the banks are having trouble making any money, besides writing off sub-prime and consumer loans, are write-offs from credit cards.  The last time I looked consumer credit in the U.S. was well in excess of $1 trillion and the over 90 was in double digits.  It is really quite a pathetic indictment of what our economy has become.

I hate shopping and Christmas is one of the most stressful periods of the year for me. All of my shopping will be online, where I do not have to interact with irritating salespeople and white in line for what seems an eternity.  

Courtesy of an article dated November 30, 2009 appearing in Strongmail   

C0NSUMERS FLOCK TO BING FOR THEIR HOLIDAY SHOPPING SEARCH

SearchIgnite, leading search optimization solutions provider and 360i sister company, recently released a whitepaper outlining key trends in retail ad spend in Q4. The company, which manages more than $400 million in paid search annually, drew data from its large pool of sophisticated retail advertisers.

Research showed that multi-channel retailers are increasing their U.S. paid search initiatives despite economic uncertainty, with spend up 7 percent in Q4 ahead of Black Friday. Each of the Big Three engines showed year-over-year spend increases from retailers, but Bing’s 47 percent boost represented the greatest gain. This was likely due to higher average order values (“AOV”) from shoppers converting on Microsoft’s engine.

Here are some of SearchIgnite’s key findings:

• Strong U.S. Retail Spend in First Half of Q4: U.S. search spend from existing retail marketers is up 7% YoY in the first half of Q4 across all major search engines (Google, Yahoo! and Bing).
• Conversion Rates on the Rise: In the first half of Q4, conversion rates were up 17%, a strong increase over this time last year and a hopeful sign that consumer confidence is on the rise.
• Retailers Increase Spend on Bing: U.S. retail marketers dramatically increased their search spend on Bing, up 47% YoY, seeing higher AOV from shoppers on Microsoft’s engine.

The full report is available for download at http://www.searchignite.com/about_research.aspx.

COMMENTARY:  Here comes Santa Claus, here comes Santa Claus, pull my credit card out, give Black Friday or that Cipher Friday, and charge away.

Courtesy of an article dated November 30, 2009 appearing in Searchignite

THE TOP HIGHEST PAID CEO'S OF THE HEALTH INSURANCE INDUSTRY

In early 2009, Health Reform Watch, a consumer watchdog for the health insurance industry, posted the Total Compensation for a number of Health Insurance Company CEOs for 2007 and 2008. The source for this information was pulled from each insurance company's SEC filings (Schedule 14A). 

Below are the top paid health insurance executives for 2008, courtesy of FierceHealthcare.com.

Insurance industry executive are among the highest paid of ANY industry. The compensation figures below pretty much speak for themselves. 

Aetna’s Ronald Williams received $24,300,112 last year. That’s $467,309.85 per week. That’s a house for you and me. 

Angela Braly, CEO, WellPoint, which made the list of the Top Ten Worst U.S. Insurance Companies (See previous post below), and sells health insurance under the names Blue Cross and Blue Shield, was paid $9,844,212. That's $189,311.76 per week

Stephen J. Hemsley, CEO, United Health Group, which sells health insurance under the name PacificCare, ranked as the absolute worst healthcare insurance company, and made the Top Ten Worst Insurance Company list, made $3,241,042 in 2008  This was down from the $13,164,529 he received in 2007.  

Below is a list of the highest paid health insurance industry CEO's for the years 2007 and 2008. 

Top Health Insurance Industry CEO Pay for 2007

• Aetna Ronald A. Williams: $23,045,834
• Cigna H. Edward Hanway: $25,839,777
• Coventry Dale B. Wolf : $14,869,823
• Health Net Jay M. Gellert: $3,686,230
• Humana Michael McCallister: $10,312,557
• United Health Group Stephen J. Hemsley: $13,164,529
• WellPoint Angela Braly (2007): $9,094,271
  L. Glasscock (2006): $23,886,169

Top Health Insurance Industry CEO Pay for 2008

• Aetna, Ronald A. Williams: $24,300,112
• Cigna, H. Edward Hanway: $12,236,740
• Coventry, Dale Wolf: $9,047,469
• Health Net, Jay Gellert: $4,425,355
• Humana, Michael McCallister: $4,764,309
• United Health Group, Stephen J. Hemsley: $3,241,042
• Wellpoint, Angela Braly: $9,844,212

COMMENTARY:   With all the controversy surrounding health care reform, including outright lies and distortions, divisions based on political parties and many misinformed Americans who tow the party line, keep one point in mind --It is YOU, the policyholders, who are paying these CEO's their salaries.  These CEO's in return thank you by cancelling your insurance coverage, delaying or denying insurance coverages, discriminating against senior citizens and minorities, and commiting fraud and other criminal activities. 

WellPoint and United Health Group, the No 1 and No 2 health insurance companies in the U.S., both made the Top Ten Worst Insurance Company list.  Their policyholders spoke out loud, and this is just the Top 10.  If your health insurance company did not make the Top Ten Worst Insurance Company List, this does not necessarily mean that your insurance company is squeaky clean or socially responsible.  

I bet you a pint of Dos Equis that if there were a Top 50 list, the same pattern of excessive CEO compensation and treatment of policyholders would surface.  You can challenge me on this if you wish, I love the controversy, just provide the facts and figures.  

I conclude from my research, that the entire insurance industry -- health, casualty and automotive -- are in it strictly for the money and need to be reformed.  That is quite obvious.  They could really care less about you, the policyholder.

Courtesy of an article dated May 20, 2009 appearing in Health Reform Watch        

TOP TEN WORST INSURANCE COMPANIES IN AMERICA NAMED

AAJ Names Ten Worst Insurance Companies in America

The American Association of Justice (AAJ) has named the ten worst insurance companies in America based on claim denials, premium increases and refusing insurance to those who need it most. So, who’s on the list? Some of the names – and what they did to make the list – might surprise you.

How the report was conducted

According to the AAJ’s recent report entitled, The Ten Worst Insurance Companies in America – How They Raise Premiums, Deny Claims and Refuse Insurance to Those Who Need It Most, researchers investigated thousands of court documents, as well as records from the Securities & Exchange Commission (SEC), the Federal Bureau of Investigation (FBI) and state insurance departments. They also looked at news reports and testimony from the insurers’ former agents and adjusters. The report provides conclusions about the insurance industry as a whole, lists the ten worst insurers and explains why they made the list. To view the report, go to: http://www.justice.org/docs/TenWorstInsuranceCompanies.pdf.

Conclusions about the industry

The AAJ came to the following conclusions about the insurance industry as a whole:

• Companies consistently put profits over policyholders. The report concludes that many insurance companies may “talk the talk”, but don’t “walk the walk.” They may advertise that your “in good hands”, are “like a good neighbor” or “provide the strength to be there”, but fall short when it comes to actually serving their customers.
• Companies continually deny, delay and defend. Insurance companies make more money when they pay out fewer claims. Obvious? Yes. Ethical? No. The industry as a whole routinely denies, delays and defends claims – all in the name of the “bottom line.”
• Profits and salaries are skyrocketing. The property/casualty and life insurance industries average $30B in profits every year. In fact, the U.S. insurance industry as a whole receives premiums of over $1 trillion (with a “T”) every year and has assets of $3.8 trillion. The Chief Executive Officers (CEOs) of the ten insurers in the report averaged an annual salary of nearly $9 million in 2007.

Who made the list?

These ten companies were named the worst insurers in America for denying claims, raising premiums, refusing insurance to those who need it most and many other reasons:

1. Allstate - The "Your in good hands with Allstate" insurance company - Big in auto and homeowners insurance. History of delaying and denying insurance claims. Ranked the absolutely worst insurance company in America.   48% of Allstate's policy holders were very unsatisified and 12% unsatisifed.  Reported gross revenues of $29.4 billion in 2008 and a net loss of $1.2 billion.  Never fall for a company with a slick motto. Good hands, my ass. 
2. Unum - Leader in disability insurance. History of delaying and denying insurance claims. If you are an employer, you will love these people. 36% of Unum's policyholders were very unsatisifed, 9% unsatisifed - Reported gross revenues of just under $10 billion in 2008. Company profits $553 million or down 19% so their CEO took a salary cut.   
3. American International Group or AIG - AIG is the world's largest insurance company. History of delaying and denying insurance claims.  Known for denying automobile warranty claims (supposedly big in this segment) and practicing some very scrupulous business schemes. AIG insures some of the highest risk investments imaginable including hedge funds and Wall Street investment portfolios like sub-prime loan mortgages. Get the picture?  When Wall Street crashed in Sep 2008, AIG suffered critical liquidity problem and could not cover insurance claims. A worst case doomsday scenario. To date, AIG has received a combined total of $180 billion in TARP bailout loans, credit lines and buybacks of mortgage-based assets (i.e. subprime loans a.k.a. toxic assets) to keep the company afloat, all thanks to U.S. taxpayers. In spite of this, AIG executives had their annual meeting at an exclusive resort retreat and paid huge bonuses to its executives. They later paid most of those back.  This is the company that the FED said was "just too big to fail" and sent shivers throughtout banking and investment community.  They had to be saved or the U.S. economy could go into a depression.  51% of AIG's policyholders were very unsatisified, 10% Unsatisfied. Reported gross revenues of $11.1 billion in 2008 and a whopping net loss of $91.7 billion. This is as much as we paid for the Iraq War. Good work, AIG.  Sarcasm included for effect.   
4. State Farm - State Farm is the largest property casualty insurer in the U.S.- State Farm was notorious for its handling of homeowners’ claims related to Hurricane Katrina in 2005. Claims were routinely denied without basis and private home inspectors hired by the insurer have testified that State Farm told them to alter damage reports in order to avoid paying claims or pay less than the claims were worth. There's more.  State Farm hired McKinsey & Co, a Fortune 500 consulting firm, that recommended that they delay, deny and defend against insurance claims. Naturally, they followed McK's advice..34% of State Farm policyholders were very unsatisifed, 12% unsatisfied.  Reported gross revenues of $61.4 billion and a net loss of $1.7 billion in 2008. 
5. Conseco - Conseco is one of the nation's largest long-term care insurers. They basically insure senior citizens - The insurer has been accused of taking advantage of elderly policyholders who can’t care for themselves or fight back to receive their valid long term care benefits by delaying and denying claims. Have been repeatedly fined by insurance regulators for their illegal insurance claim activities. Imagine seniors who are near death, and the insurance company, says "NO". In my opinion, Conseco is the lowest of the low..57% of Conseco policholders were very unsatisfied, 21% unsatisfied. Reported gross revenues of $4.2 billion and a net loss of $1.1 billion in 2008.  
6. WellPoint - WellPoint is the nation's largest healthcare insurer. Provides healthcare insurance under the names Blue Cross and Blue Shield.  Sound familiar now?  Known for illegally cancelling health insurance policies, overcharging policyholders, engaging in fraudelent activity, and refusing to pay doctors. So if you are still happy with your health care insurance company, you are either very stupid, in denial or just don't get it. Health care insurance companies will screw you the very first chance they get. A very strong argument to reform the entire health care insurance industry.  55% of WellPoint policyholders were very unsatisfied, 31% unsatisfied. So basically 86% are not very happy with WellPoint. Reported gross revenues of $61.2 billion and a net profit of $2.5 billion.   
7. Farmers - Farmers is one of the nation's largest property, homeowners and auto insurers.  Known for engaging in unfair business practices (paying employee bonuses to decline or reduce amount of insurance claims), refusing to pay insurance claims in full and jacking up premiums after a claim is filed. I must confess they were my auto and homeowners insurance company. Known for cancelling or denying coverage to Katrina and Florida hurricane homeowners. They no longer provide homeowners insurance in Florida.  I really don't have anything nice to say about them, except stay away. These people are crooks.  41% of policyholders were very unsatisfied, 13% unsatisfied. Reported gross revenues of $61.6 billion and a net profit of $5.5 billion in 2008.     
8. United Health - United Health is one of the nation's largest healthcare insurance companies. Insures under the name PacificCare. They are big in California. Has been accused of misrepresenting insurance products (medicare extended coverage policies), denying and delaying insurance claims to policyholders and doctors, and have been continually accused of putting profits above the needs of the policyholders. United Health hoodwinked the American Association of Retired People (AARP) into a licensing deal for three of the most popular drugs used by seniors at lower prices. Turned out they lied. Those drugs cost more.  Another example of taking advantage of seniors. Another reason to reform our healthcare system. You can add them to my super slimo list. 65% of United Health policyholders were very unsatisfied, 13% unsatisfied. Reported gross revenues of $75.4 billion and a net profit of $4.7 billion in 2008.  
9. Torchmark - Torchmark is a holding company for subsidiary companies that sell low cost burial, cancer and life insurance policies. Underwrites policies under the names Globe Life and Accident Insurance Company, United American Insurance Company and Liberty National Insurance.  Any of those insurance companies sound familiar? Have been accused of discriminating against minorities (illegal race-based underwriting practices), lying to elderly policy holders by telling them their policy would be discontinued when they reached age 65, and engaging in fraudelent activities (mailing out phoney insurance offerings to seniors then selling them different insurance products).  If you are a senior or minority, Torchmark is looking for you. Avoid them like the plague. 50% of Torchmark policyholders were very unsatisfied. Reported gross revenues of $3.5 billion and a net profit of $527.5 billion in 2008.        
10. Liberty Mutual - Liberty Mutual, one of the nation’s largest insurers for home, auto and life insurance. Have been accused of delaying, denying and defending against paying claims, abandoning policyholders (hurricane damages suffered from Katrina and Florida hurricanes), and engaging in fraudelent activities (rigging insurance rates).  50% of Liberty Mutual policyholders were very unsatisfied, 12% unsatisfied. Reported gross revenues of $26 billion and a net profit of $1.5 billion in 2008. 

Insurance companies play by their own rules

It’s no secret that insurance companies often play by their own rules – especially when those rules specifically save the company money. A video has been posted on YouTube entitled “Insurance Company Rules.” It takes a satirical look at what would happen if the general public also used those rules. The video was a collaborative effort between Health Care for America Now (HCAN) and the Public Service Administration (PSA).

COMMENTARY:  Keep in mind that I am not the one trashing the insurance industry. It is the very policyholders who are trashing their own insurance companies. I am just the messenger. I have nothing to gain from this. I really put a lot of work into providing additioinal information not provided in the report.

With all the debate, point and counterpoint, about reforming the healthcare industry, it simply amazes me that something like 60% of Americans claim they are happy with their healthcare insurance and don't want anything changed. Just where the hell are those figures coming from?  Are Americans just that stupid?  Something is just not making sense.

The above healthcare insurance companies are among the biggest in the country, so chances are pretty good that your company made the list.  So you would think, that most Americans would be very unsatisified with their healthcare insurance company.

I don't want to turn this into a political podium.  But, let's at least admit one thing, that not only the healthcare industry, but the entire insurance industry needs to be reformed for denying, delaying, droppiing insurance coverage, discriminating by race, taking advantage of seniors and in some cases committing outright fraud. This is really disburbing and we all need to rise up and take strong action. 

There is just too much political posturing and favoritism going on here. A lot of hypocricy by both political parties, but the truth is all laid out for you. You be the judge.  If your insurance company made the Top 10 Worst Insurance Companies, but you are still happy with your insurance company, that's great.  Just realize that you are in the minority.

I leave with just one final thought.  There are probably some very good, socially responsible insurance companies that put their policyholders above corporate profits out there, but they are probably in the minority.  My next insurance article will include a list of the Top 10 insurance companies. 

Courtesy of the results of survey by the American Association of Justice (AAJ) appearing in Free Advice

BANK OF AMERICA CLAIMS PROBLEMS HIRING NEW CEO, FEDS COMPENSATION LIMITS BLAMED

 

Bank of America, marriage of Nations Bank and Bank of America, is having such a hard time finding a new CEO that some analysts are wondering if Ken Lewis might have to stay past his planned December 31 departure.

The nation's largest bank had said Lewis' replacement could be announced by Thanksgiving, but with no obvious right candidate emerging, analysts don't see that happening.

And that may not be a surprise -- this has been no ordinary CEO search.  Like other struggling banks that have received federal bailout money, Bank of America is operating under government restrictions, among them having to get approval from federal pay Czar Kenneth Feinberg for how much it can pay its new leader.

"The situation now is far more complex and for more challenging than it was a few months ago," said Anil Shivdasani, a finance professor at the University of North Carolina at Chapel Hill.  "Given the extent of the involvement of the U.S. government, the pay czar, a new board, it has been hard to find a capable CEO that would want to take this job."

Lewis' decision to retire, announced in September, capped a year of shareholder fury and regulatory scrutiny over the acquisition of Merrill Lynch & Co.  Lewis was stripped of his chairman post in April.

Shareholders who campaigned for Lewis' removal aren't happy with the search.

"The process has been a debacle and has exposed the fact that the board was completely unprepared to address Lewis' succession," said Michael Garland, director of value strategies for CtW Investment Group, which works with union-affiliated pension funds that hold about 33 millin BofA shares, or about less than one half of 1 percent.

Charlotte, N.C.-based Bank of America is under pressure to choose a new CEO who can restore the company's relationship with regulators and members of Congress who have criticized Lewis and the bank since the Merrill Lynch deal closed in January 2009

The New CEO will have to contend with rising losses from failed loans that are expected to continue into 2010 as consumers struggle to keep up with their bills.  In the third quarter, Bank of America lost more than $2.2 billion.

The new CEO will also have to come up with a plan to repay $45 billion in bailout funds.

Those challenges, "aren't easy tasks," said Alois Pirker, wealth management research director with Alite Group.

"Unless there's a solid long-term replacement in place, I do think (Lewis) should remain there," Pirker said.  "There is no one who knows the day-to-day workings of the bank as well as he does."

The board may be reluctant to ask Lewis to remain as CEO into the new year, "but will agree if backed into a corner," said senior research analyst Jason O'Donnell of Boenning & Scattergood Inc.

It wasnit' immediately clear if the bank's board which meets on Fridays, is meeting this week due to Thanksgiving.

"The selection process is continuing, internal and external candidates are being considered and a decision will be made in the near future." BofA spokesman Scott Silvestri said.

The bank has said it is considering insiders including Chief Risk Officer Gregory Curl and Brian Moynihan, head of consumer banking.  Moynihan is considered by analysts to be a top candidate, although House Oversight Committee Chairman Edophus Towns said last week he may lack the needed leadership.

The selection of Moynihan or Curl is unlikely to pass regulatory muster and may anger larger shareholders, O'Donnell said.

"I still think an external candidae with big bank experience represents the best option," he said.

While BofA has not identified any outside candidates, media reports have said some snubbed the bank's advances, including Bank of New York Mellon Corp. CEO Bob Kelly.

"I don't think it really matters if they are from inside or outside of the bank," said Jamie Cox, managing partner of Harris Financial Group in Colonial Heights, Va.  "I do think, however, that Ken Lewis needs to go."

COMMENTARY:  I have been very critical of the banking industry, from their lack of self-governance, selffishness, greed and the obscene pay of their top executives.  These are the scumbags that got us into the financial meltdown at the end of 2008.  I am glad that the Feds are putting a stop to these obscene compensation packages, especially those bonuses.   

When you need a loan, the banks won't give you one.  And when you don't need one, they come calling.  At the very high-end, it's not who you are, but who you know.  Yet, too many of these banks over-reached, took far too much risk, and placed their banks in jeopardy.  Case in point, offering subprime loan mortgages and brokering over-the-counter derivatives.  They are the same ones who charge $35 for an overdraft fee, and service charge consumers $2.00 to make a withdrawl at an ATM machine.

The attitude of these banks is, "The FDIC will rescue us", or my favorite one, "We're too big to fail, the Feds would never let that happen."  I made these up, but pretty close.

Lewis is a graduate of Georgia State University and graduate of the Stanford Executive Program.  Lewis was named "Banker of the Year in 2001" and in the same year was honored as the "Top Chief Executive Officer" by U.S. Banker. In 2008, Lewis was again named "Banker of the Year" for the second time. 

In September 2008, Lewis engineered the acquisition of Merrill Lynch for $50 billion.  The Merrill Lynch deal was done over a weekend with no due diligence.  Merrill Lynch was hemorraging from stock and investment losses, including OTC derivatives based on subprime loans secured by real estate that was plummeting in value as far back as 2007.

Another BofA acquisition engineered by Lewis was the $35 billion acquisition of Wilmington, Del.-based MBNA, the country's largest credit-card issuer. "Yes", he replied to a question, he had to cut 6,000 jobs. (NOTE: 35,000 employees were let go as a result of BofA and NationsBank merger)  "But it makes us the largest credit-card company in the world, and if the bank's size and aggressiveness worry many in the industry, so be it. I hope so. I don't necessarily want any of them to like me. I don't mind a little fear when they hear Bank of America."  Gee, what values. I am really starting to dislike this guy.  By the way, a lot of BofA's current losses are due to consumer credit card losses from you guessed it--MBNA.  

Oh, I forgot to mention, Lewis also engineered the acquisition of Countrywide Savings & Loan, the "King" of sub-prime loans.  Countrywide went belly-up with the real estate bubble that started in 2007, and Lewis was only too happy to pickup the pieces, including all those "toxic assets" that haunt BofA to this day. 

I looked into Lewis' compensation package and here's what I found:

• 2008 - Total Compensation - $99.8 million - Broken down as follows:  Salary: $1.5 million, Bonus: $6.5 million, Other: $14.76 million and Stock Gains: $77.04 million. Total BofA stock owned: $145 million.  (Source: Forbes)
• 2007 - Total Compensation - $20.;4 million - Broken down as follows: Salary: $1.5 million, Bonus: $4.250 million, Stock Options: $11.06 million.   

Lewis took a compensation cut in 2008. I really feel sorry for this snake in the grass.

I don't have any pity for BofA's board either. Where were these scumbags when they approved his compensation package for 2007 and 2008, or those Merrill Lynch, MBNA and Countrywide acquisitions?  These are the same idiots who called for his resignation in 2009.

Here's a '60 Minutes' video that you might find very interesting: http://celebgalz.com/ken-lewis-60-minutes-bank-of-america-60-minutes-video/   Lewis quote: "We need to cutback compensation in this (banking) industry."  Does this include Lewis? 

As a young MBA grad student taking a class in strategic planning, our instructor, the former Sr. V.P. Strategic Planning for BofA, held classes in BofA's board room.  Everybody was awe struck.  I thought to myself, "Man, it would be so cool, to work for BofA and plot strategy."  If you were in that class, give me a ring.   

I doubt very few of you reading this, will disagree with me that there is something really wrong with how top U.S. corporate executives are being compensated.  Compensation should be performance-based, there should be a reasonable celing, and the boards need to take their share of the blame.  Stockholders need to scream at the top of their lungs.  If you held BofA stock before its collapse, you know what I am talking about.

Looking forward to your comments, especially from bankers.  

Courtesy of an article dated November 28, 2009 by the Associated Press

DUBAI DEFAULTS ON DEBT, ANOTHER SIGN OF EXTREME CAPITALISM

 

Not long ago, Dubai emerged as a symbol of crazed civic ambition, a once-quiet desert burg suddenly superheated by cheap capital. That's over.

Deserts have a way of reclaiming whatever is built upon them. In the case of Dubai, on the Persian Gulf, the global financial implosion has sent that process into overdrive. After six years of frenzied expansion, during which the emirate's population grew at 7% annually and nearly $600 billion went into construction (the world's tallest building! the world's largest shopping mall! the biggest man-made island! an indoor ski resort!), reality has come rushing into view.

"They have no oil, no culture, no history," says Peter Harradine, a prominent landscape architect in Dubai and manager of Harradine Golf. "So what they have been able to produce is a miracle." Or was it a mirage? Today, an estimated 50% of the slated developments are frozen or canceled. Banks have stopped lending. Housing prices fell 41% in the first quarter of 2009 and are expected to drop to preboom levels. The stock market has plunged 70% from its peak. And people across the socioeconomic spectrum are being laid off -- and fleeing -- in droves. But even fleeing is harder than it sounds: When foreigners, who once made up perhaps 80% of Dubai's 1.7 million residents, lose their jobs, their work visas are rescinded and they generally have 30 days to pay their debts and leave. Those who fail to pay risk debtor's prison. And debt here is now as deep and ubiquitous as the sand itself.

The wealthy, like the Emiratis, remain well cared for. Designer Roberto Cavalli, asked why he spent $30 million on his new Cavalli Club during a financial crisis, replied, "What financial crisis?" These pages may remind him.

Road to Nowhere

DUBAI OUTSKIRTS

Dubai's expansion was as ambitious as it was improbable. Dubailand, a $64 billion mixed-use development initially planned at 107 square miles, was to be the world's largest collection of theme parks, shops, residences, and hotels. For now, though, its roller coasters, life-size dinosaurs, snowy mountainscape, and polar bears will remain a fantasy, one of the gaudier casualties of the economic downturn. While formal cancellations are rare in Dubai, a number of other projects have been delayed or scuttled, including an underwater hotel; a Tiger Woods golf course; a residential community set among full-scale replicas of the Seven Wonders of the World; a rotating skyscraper; and a beach designed by Versace, complete with chilled sand.

Last Gasp

PLASTIK BEACH CLUB, 30 MILES OUTSIDE OF DUBAI

With requisite hookah and a jeroboam of Champagne, a group of German businessmen celebrate their purchase of an Alaskan oil field at Plastik Beach Club, a playground touting itself as "exclusively for the filthy rich and aesthetically perfect." Public intoxication and displays of affection are jailable offenses in Dubai, but private clubs are quietly ignored by the authorities, often rendering them happy havens of vice. Plastik offers a helipad and a dock for its wealthy guests, many of them Russian; as the economy crumbles, they party on. One American expat says that while Dubai's promise has faded in the economic downturn, "people who dream of a better life dream of coming to Dubai. You can call it the American dream."

Frozen Desert

THE VIEW NORTH, NEAR BURJ DUBAI

Dubai was a modest trading settlement until the 1980s. Fueled by cheap credit, tax-free living, and limitless ambition, the city-state pushed into the desert and up to the sky, culminating in the frenetic growth of the past six years. Now, with cash scarce and many of Dubai's expats moving away, the cranes (a quarter of the world's supply) have quieted and the streets are all but empty. A resident from Ireland reflects that living in Dubai during the rush was "like being on a drug. Every six months, the city would morph into something completely new." Kayla, a South African, recalls, "Everyone was talking about how it couldn't go on like this. Then, all of a sudden, everything changed."

Ghost Workers

SONAPUR LABOR CAMP, OUTSIDE OF DUBAI

Once Dubai's most valuable import, foreign laborers have become a liability to their former employers. Hundreds of thousands of them, mostly from South Asia, were drawn by the promise of plentiful work and money to send home to their families. Now that much of Dubai's construction has ground to a halt, many are being sent home; the number of migrant workers here has reportedly fallen by a third. Of those who remain, many are locked in labor disputes: They can't work, but can't leave. These jobless Bangladeshi men can't return home because, as frequently happens, their employers confiscated their visas, effectively leaving them shackled. Living four to a room in a labor camp, they haven't been paid in seven months. They say they live as "ghosts" in a "prison," unacknowledged and unknown.

NOTE: TO READ THE REMAINDER OF THIS ARTICLE CLICK ON THE LINK BELOW

COMMENTARY:  This is another great example of extreme capitalism, or "Gucci Capitalism", as Paul Allen refers to it.  I just call it stupid capitalism mismanagement. This is the sort of thing that the U.S. began and everybody copied. Everybody never thought this ride would ever end.  Cheap money, very little regulation, investors foolishly believing that real estate values would increase year-after-year. 

When you combined this crazy optimism with subprime borrowers, sneaky financing schemes, very little or zero down, and banks that could sell those mortgages (now known as "toxic assets") to Fannie Mae or other financial institutions, you had all the makings of a financial meltdown.  I have no pity for Dubai or any country that did not see this financial collapse and deep recession coming. 

Today Dubai announced that it would default on its over $60 billion in debt to various banks, and would need another six months to "work things out" so they could figure out how to pay that debt.  I wonder just who are all the banks or Wall Street firms they owe money to.  I understand the the UAE's Abu Dabai bankrolled Dubai during the last seven years, and Dubai spent that money faster than an alcholic can down a fifth. Apprently Abu Dabai is not coming to the rescue this time, and the response by the financial markets was predicable.  In the U.S. stock prices on the DOW dropped by 154 points.

I just have to wonder how many other countries are on the financial brink. You can add the US to this list of  countries, with a total of over $12 trillion in federal debt outstanding.  Good job, US, this insures that the recession will last another five to ten years, is what I keep hearing.  A lot of experts are saying that the recession "is over", but ask those 20 million in unemployed or under-employed Americans, and they will tell you something different.

The DOW has dropped to 6,600 in early 2008, and is now at 10,300, a 60% gain. Applause!!  I wonder how much of that is from borrowed money, secured by stocks or derivatives (see my previous post on this).  Wall Street has never created a single job, only made the rich, richer and the poor, poorer.  

I watched PBS' Financial News that Dubai is the excuse we need for a market adjustment. The Obama administration better get cracking and start regulating banks, insurance companies and brokerage firms, or we will have a second bubble.  I have actually predicted one in the middle of 2010 (see my previous post, sorry I don't have the link), and some very knowledgeable economists are saying the same thing or predicting a W-shaped recession.  The Fed even said to expect unemployment to remain high 8-10% for the next five years.

If you are buying bank REO's like a madman, think again. One out of four homes are now under water.  I could just get worse, before it gets better.  Xmas sales figures will probably bear this out.  The National Retail Federation has forecasted negative or flat growth and comScore is forecasting similarly online sales. When 2009 is compared to 2008's decline of 3% in retail sales, and about 7% during Xmas, that's not a very good sign.

I wish that I could find a silver lining in all of this, but this has a lot to do with my upbringing and training as a former CFO and controller for a number of companies, whose owners used their companies like their private banks. Multiply that a million times, and you get a very clear picture.  Extreme capitalism at its best. 

Just think about it, a lot of former CEO's of big Fortune 500 companies, banks and Wall Street Firms are now running our country's finances.  I hate to turn this blog into a political podium, but it is so difficult to ignore the signs that we have a lot of fixing up to do.  Dubai is nothing, but a symptom of global problems. Like a small mole, that can be safely removed before cancer sets in.  So what if Dubai goes out of existence.  They got what they deserved.

Courtesy of an article appearing in the August 2009 issue of Fast Company

LLOYD'S OF LONDON CEO: "BASICALLY, WHAT WE DO IS INSURE THINGS OTHERS CAN'T OR WON'T"

As CEO of the venerable insurer Lloyd's of London, Richard Ward oversees $33 billion in premiums each year, underwriting such valuables as actress Ugly Betty's smile, soccer star David Beckham's knees and singer Celine Dion's vocal cords.

It's all part of the tradition at the 321-year-old Lloyd's, which is described as a British insurance market rather than an insurance company, because it serves as a meeting place for a variety of agents to pool and spread risk. Over its long history, Lloyd's has written policies covering everything from the legs of 1940s movie star Betty Grable to the potential paternity liabilities of 1980s rock star David Lee Roth to the tongue of Gennaro Pelliccia, chief taster for the U.K.'s Costa Coffee coffee chain. Not to mention the first commercial air flight, the first commercial space flight, and all manner of bridges, oil rigs, fleets, real estate holdings in climactically dangerous regions and corporate investments in politically unstable countries.

�

As Ward noted during a recent Wharton Leadership Lecture, "It's a very large and varied range of activities we get involved in. Basically, what we do is insure things other people can't or won't."

But for all the unusual policies written by Lloyd's 50 component franchises, Ward said, the key to success is a simple lesson that ought to be followed by individual investors, multinational banks and anyone else in business: Understand your risks. Lloyd's employs an army of researchers to study such data as the ages of the jets in the Sultan of Oman's private fleet and the threats that might have disrupted the 2008 Olympic Games in Beijing.

If this collection of brains can't understand something, Ward figures, that's reason enough to stay away from it. "When we don't like a risk, we don't write it." It's a lesson Lloyd's learned the hard way in the years before Ward took the helm at the world's most famous insurer three years ago. "In the past at Lloyd's, we used to write a lot of financial institution risk," Ward noted. "We provided a lot of cover to two great names, Enron and WorldCom. As a result of that, we paid out some really large claims."

But also as a result of that, Lloyd's made "a conscious decision to scale back our exposure to financial institutions because we were uncomfortable with that type of risk," Ward said. "We didn't really understand it that well. And if you don't understand it that well, don't do it. We scaled it right back to the extent that now, with the subprime problem, the [Bernie] Madoff problem, the [R. Allen] Stanford problem, we find very little exposure to those institutions, to those organizations and to those subprime claims. So, [regarding] all the problems arising out of the financial crisis, we will be able to [conduct] business as usual."

The 'Names'

The venerable insurer had weathered two major storms over the decade before Ward took the helm, including one in the mid-1990s, as claims for years of asbestos exposure in U.S. buildings began to come due. "We found ourselves having to pay out claims totaling over $15 billion," Ward said. "In the 1990s, $15 billion was an enormous sum of money."

The losses did in fact wipe out many of the wealthy individual members -- known as the "Names" -- who, under Lloyd's unusual structure, pledge all of their personal wealth to underwrite the policies of its syndicates. Some of the Names, in turn, accused the insurer of perpetrating a massive fraud by recruiting new members without revealing the huge claims that were looming. The ongoing proceedings, Ward said, represent the longest court case in British history.

Lloyd's eventually revamped its organizational structure, ending the recruitment of new "unlimited liability" Names and spinning off pre-1993 business, at great expense, into a new vehicle called Equitas. To pay for this, Lloyd's unloaded assets, including its landmark London building. "We sold absolutely everything except the silver," Ward said. "It's a very important lesson for us: As a result of being able to take those toxic liabilities and the good liability and create that new vehicle, we were able to trade forward."

Then, in 2001, the terrorist attacks on the United States and the subsequent calamities in the travel and transportation industries threatened Lloyd's again. As the largest insurer of the World Trade Center, Lloyd's was stuck with $11 billion out of the $40 billion in total claims. "One day after the World Trade Center, we had the same people sitting there saying, 'We're about to go bankrupt. We can't pay this $11 billion,'" Ward said. "It's quite extraordinary that so soon after the problems of the 1990s, we were faced with a similar problem."

The immediate issue was liquidity: American regulators worried that Lloyd's didn't have enough cash to stay in the market. After hectic meetings in Washington, the crisis was averted. But, said Ward, "that was truly the defining moment for us where the management of Lloyd's at the time said, 'Hold on, we are going to have to do things very, very differently going forward if we want to survive as a business.'"

One example of the style that would have to end: Although Lloyd's was insuring the World Trade Center, no actual policy had been written beyond the term sheet -- a problem that was common across the industry. "When you end up as a business leader and you're told by your chief risk officer that you've got a policy, ask to see the policy," Ward advised his audience.

Lloyd's eventually put in a new management structure that Ward calls "the McDonald's of Lloyd's." Like the fast-food chain, it's a franchise structure. "Ronald McDonald is able to put in standards across the whole of the McDonald's franchise and get everyone to do the same thing," Ward said. What's good for Big Macs and fries is good for risk standards, too. "Anybody who wants to write business inside the Lloyd's market does it according to the standards we set."

In the new world of Lloyd's, Ward noted, "if you're Company A and you're writing risks inside Lloyd's, we look at the risks that you're writing, and then we look at how your risks plus everyone else's risks add up together to what the aggregate exposure is [in order to make sure] that first, the capital you have is sufficient to support your business, and second, the capital the market has is sufficient to support the risks across the whole market."

In 2005, when losses from hurricanes Katrina, Rita and Wilma added up to $60 billion, Lloyd's share was $16 billion -- even higher than the $11 billion in claims it faced after 9/11. But whereas the 2001 attacks ultimately cost the Lloyd's market $5 billion in losses, the risks were now sufficiently diversified that the market's overall losses were just $160 million. Ward called the new discipline "life changing."

NOTE: TO READ THE REMAINDER OF THIS ARTICLE CLICK ON THE LINK BELOW

COMMENTARY:� This is the first time that I have covered the mysterious, and often misunderstood English insurer, that insures things other�insurer's won't touch.�

What I found interesting about LLoyd's is that they are not an insurance company in the traditional sense, but an "insurance market."� The Lloyd's market is described as follows:

Lloyd's is the world's leading specialist insurance market, home to over 50 managing agents and�over�80 syndicates*, which offer an unrivalled concentration of specialist underwriting expertise and talent.

Lloyd's is the world's best known - but probably least understood - insurance brand. This is because Lloyd's is not an insurance company but a society of members, both corporate and individual, who underwrite in syndicates on whose behalf professional underwriters accept risk. Supporting capital is provided by investment institutions, specialist investors, international insurance companies and individuals.

Lloyd's brokers bring business to the market. The risks placed with underwriters originate from clients and other brokers and intermediaries all over the world. Together, the syndicates underwriting at Lloyd's form one of the world's largest commercial insurers and a leading reinsurer.�The market structure encourages innovation, speed and better value, making it attractive to policyholders and participants alike. Immediate access to decision-makers means that answers on whether a risk can be placed are made quickly, enabling the broker to provide fast, good value solutions.�

This diagram is a basic representation of the structure of the market and�its participants. A detailed�description�of the participants can be found below.

�

I wonder�what kind of handicap or risk factor Lloyd's would've given the U.S. economy, the�Top 16 U.S. banks, and Wall Street.� Would Lloyd's insure the U.S. economy now given the current recession?�

It is hard to believe that�Lloyd's has been around for 321 years, especially an insurance company that takes a gamble everytime it underwrites insurance for something.��The U.S., as we know it today, did not exist 321 years ago. We are a bunch of British colonies, and most�of the country east of the Mississippi was unexplored.

If there is anything that we can learn from those conservative Brits is reflected in Lloyd's approach to risk management--if you don't understand the business or degree of risk associated with that business or thing, walk away or just don't do it.��I like this common sense approach.� Corporate bigwigs and VC firms can learn something from this.�

Courtesy of an article dated November 24, 2009 appearing in http://knowledge.wharton.upenn.edu/article/2388.cfm��

�

�

NEW JERSEY TECHNOLOGY COUNCIL LAUNCHES JUMPSTART NJ, AN ANGEL INVESTOR NETWORK

Founder’s vision and drive boost New Jersey Tech Council’s status as one of the nation’s top trade organizations

She is credited as one of the early pioneers initiating special programs for the technology community in Pennsylvania, and is now effective in advocating for New Jersey’s technology community in both Trenton and Washington. But as the founder and president of the New Jersey Technology Council (NJTC), Maxine Ballen defines her most pressing role as that of mentor.

“I get no greater joy than when I am able to provide support by way of direction, networking or education to our members,” she says.

That joy was born from a vision in 1996, when Ballen founded the NJTC. “Back then, nothing served the New Jersey technology sector, and I knew it was important to have a solid infrastructure of support to keep and grow that industry,” she said.

The NJTC is now considered one of the top trade organizations in the nation, Ballen says. Maintaining that reputation requires exceptional organization and time management skills; the NJTC has over 1,000 members and delivers over 120 programs each year. With the help of 15 staff members, Ballen delivers networking and educational events, produces print and electronic communications, is highly involved in governmental affairs in both Trenton and Washington, and works tirelessly on grassroots efforts to grow the state’s technology industry.

One of the goals of the organization is to connect NJ technology companies with capital. “We are the only trade association with an $80 million venture fund, which has invested in 37 companies,” she says. Early-stage funding is delivered to technology-based enterprises like EKR Therapeutics and Petra Solar, both of which were honored at the organization’s recent Awards Gala. Another of those early-stage investments was Dendrite International, a software technology company that was purchased in 2007 by Cegedim SA for $751 million.

The New Jersey Technology Council (NJTC) has launched Jumpstart NJ, an angel investor network. Comprised of a collaborating group of high net worth individuals, that network has invested over $11 million in promising New Jersey entities.

“Our goal has always been to make sure New Jersey maintains its presence as a top destination for the technology sector,” she says. “But capital is only one of the tools necessary to do that. Education is also imperative.” To that end, the NJTC Educational Foundation brings business and academia together to attract and retain a highly-educated technology workforce.

Ballen is also a member of the National Association of Seed and Venture Funds. “The SVF is a huge advantage to our members, offering critical support and networking across the nation,” she says. “It’s one more advantage I get to recommend to our members.”

For more information about the NJTC, go to http://www.njtc.org/join/join.asp

LENGTHY REVIEW OF APPLE IPHONE, SLOW PAY, STIRS UP IPHONE DEVELOPER REBELLION

Programmers at Ubermind are diversifying their app store loyalties. Once the company's mobile-phone software developers trained all their attention on making applications for the Apple iPhone. No longer.

The 34-person team at Ubermind, maker of the popular iLightr app that creates a virtual flame on the iPhone screen, recently began building apps for a rival mobile-phone operating system. They're now releasing two apps a month for devices based on Android, the software backed by Google, in addition to the five monthly apps they release for the iPhone. "We have no plans to abandon" the iPhone, says Ubermind CEO Shehryar Khan, who says his company's sales have doubled in the past year thanks to iPhone apps. "But we are not going to put all our eggs in one basket."

Of the more than 125,000 programmers registered to create apps for the iPhone, a growing number are branching out to build apps for Android and other operating systems. The Apple App Store is still growing, with an inventory that recently surpassed 100,000 games, e-books, calendars, and other apps. It remains the largest downloadable mobile app store by a wide margin. But the larger the App Store gets, the harder it is for developers to make money from it. That, combined with sometimes long approval times and dismay over Apple's gatekeeping decisions, has led some developers to branch out or switch allegiances altogether.

When the App Store made its debut in July 2008, it was the first. Now developers can choose among plenty of operating systems. Apart from Android, there's BlackBerry App World for Research In Motion devices. Carriers are opening their own stores, too. The App Store's share of mobile app downloads may slip to 20% in 2014, from 70% this year, according to consultant Ovum.

"We Are in This to Make Money"

Android is garnering much developer attention. In October, the number of apps in development for Android jumped 94%, from September, while iPhone app volume rose by a mere 4%, according to mobile analytics firm Flurry. The number of devices running Android is surging, too. By 2012, Android is expected to become the second most popular smartphone operating system after Symbian, leapfrogging BlackBerry, Microsoft Windows Mobile, and the iPhone, according to Gartner.

With Android Market, developers can publish apps in a matter of minutes, without going through a review. And developers say it's a lot easier for users to find an app among 12,000 on Android Market than by rooting through more than 100,000 on the App Store. "We love the iPhone, but we are in this to make money," says Craig Hockenberry, principal at Iconfactory, creator of the hit iPhone Twitter application Twitterific. "It's hard to make money [in the App Store]." Hockenberry recently began investigating making apps for Android, though he hasn't turned his back on the App Store.

At the outset, developers stuck with Apple in part because it's a hassle learning to write code for a new system. But technologies such as Ideaworks Labs' Airplay software make it easier for developers to create apps for multiple systems at the same time. That kind of software "will definitely change the game," says Will Stofega, program manager at consultant IDC.

Ideaworks recently did away with fees for independent iPhone app developers. "We want to send a message to iPhone developers: There's lots of other hardware worth looking at" besides the iPhone, says Ideaworks CEO Alex Caccia.

As other operating systems gain traction, Apple could lose part of its competitive advantage, says Charlie Wolf, senior analyst at Needham & Co. "Their whole advertising pitch is the apps," Wolf says. "The real issue is: Are developers making enough to stay loyal to the platform?"

Apple App Store: Rejection and Delay

For many, the answer is no. To start with, application prices are falling. Iconfactory's Twitterific app now costs $4.99, compared with $9.99 a year ago. Large game makers such as Electronic Arts (ERTS) can spend more on marketing than can smaller design shops. Moreover, developers are making fewer sales, with products lost among the more than 100,000 apps. Larva Labs makes iPhone apps such as PhotoTwist, which lets people warp and twist photographs, but the company can no longer break even on new apps. "Every other app we wrote after [PhotoTwist] got less interest than the previous one," says Matt Hall, co-owner of Larva. "We've spent more time on unique features for these apps." Larva Labs now focuses on Android, he says.

Frustrations over the App Store's lengthy and often arbitrary approval process are also turning developers off. In March, Ubermind received three app rejections in one week alone. Developer SMobile Systems waited a year to win approval for its iPhone app, designed to make iPhone content more secure. Recently hundreds of consumers signed a petition asking Apple to publish two DJ apps that have been held up in the review process. "We are really starting to rethink our options," says Russell Haglof, whose Pajamahouse Studios created a DJ app that's been in review for more than two months. "If you are starting to make a business with a partner that can take two months with no response, it's not a healthy relationship," he says. Unsure of when their apps would hit the store, developers can't market them in advance of release, or even advertise release dates.

Developers say Apple is trying to improve its review process and make it easier for consumers to discover new apps. The company now maintains an online system that lets developers track the status of software making its way through the review process. (No mobile app store is without problems: Developers on Android Market try to game the system by updating their apps daily, thereby boosting their rankings on the site, for example.)

As the leader, Apple has cause to keep as many developers as possible on board. If the App Store loses its allure, so does the iPhone. "It's Apple's game to lose," Wolf says.

COMMENTARY:  I have been very critical of Apple's iPhone review process, which often takes months.  Apple has also treated their iPhone developers rudely by dragging out payments months as well.  This has been another gripe by iPhone developers which this article forget about.

I am finally pleased to hear that iPhone developers plan on developing apps for other smartphone platforms like Android, Symbian and RIM.  And it is about time, too.  I could use some for my Verizon phone.  

Apple iPhone app developers almost have this lemming-like loyalty for Apple. Remember those early Apple "Big Brother" commercials?  Hmmm.  Sure looks like Apple is the real "Bro" and has been taking advantage, and finally there is a rebellion of sorts brewing in Cupertino. 

I have warned Apple iPhone app developers that Apple was quickly morphing into this corporate master, with little respect for their developers.  The problem is the iPhone app developers themselves.  There are just too damn many of them.  Too damn many apps.   No wonder nobody is making any money anymore. 

In a previous post I did the math, and the average Apple iPhone app makes about $11,000.  That's average, across the board, but I will bet you that 20% of those developers, if you believe in the 80/20 rule, are the only ones actually making money off their apps. 

No wonder Apple is taking advantage. They don't give a damn. Apple has more iPhone app developers that they will ever need.  And the majority, the other 80%, are not making money.  When you have 100,000 apps in the Apple App Store, you can get lost. Just how many GPS, casino games, Facebook and Twitter feed apps do you need?

You cannot overlook Apple's huge success. It has been absolutely phenomenal--one success after the other, the iMac, the iPod, the iPhone, and those apps. It fires me up when I hear the:"little people" are being taken advantage of.by their corporate master, the very company that they have helped to build. 

People, it is decision time. Should you stay with Apple and put up with all those hassles, inconveniences and lost profits, or move to greener pastures. I think the answer is obvious. However, I wish to caution you. Google is not that much better.

Talk about a corporate master. Google is as bad or worse than Apple.  Right now Google offers developers a free ride, of sorts. No lengthy review process, and an opportunity to make more money.  BUT, at some point, Google will lay down the law and will become Apple-like.  So developer's be weary. .     

Courtesy of an article dated November 22, 2009 appearing in BusinessWeek