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Global Glitch


"It is not the grand finale of Beethoven's Ninth, but for me, it hit the right chord." — Alan Greenspan, former Fed chairman, on the final chapter of his upcoming book, The Age of Turbulence, which concludes with his forecast of how the world will work in the year 2030, as reported by the Associated Press

Step inside one of the 90 Internet caf??s run by Tokyo's Aprecio and you'll find far more than rows of PCs and baristas pouring tea. Clients who tire of checking their e-mail or playing video games can watch DVDs in rooms with flat-screen TVs, browse a library of some 30,000 comic books, get a massage, or stretch out in a room with tatami mats. Some of Aprecio's PCs are enclosed in private booths with an intercom and a safe for valuables.

Aprecio is riding a wave of growth in Japan's Net caf?? business. You might think that with broadband available in over half of homes and almost every adult owning a mobile phone that can surf the Web, Net caf??s would be dying fast. But the Japan Complex Caf?? Assn., an industry group, projects that revenues for the caf??s will reach $2.6 billion by 2010, up 50% from 2005.

Much of the credit for the surge lies in innovative thinking by caf?? operators. Since few customers need to leave home for, say, sending e-mail or searching the Web, caf?? owners have created one-stop entertainment and relaxation shops. Customers at Kaikatsu Clubs are welcomed by warm lighting and decor designed to mimic beach resorts. If they're hungry, food offerings include more than 40 dishes such as chili-shrimp stir-fried rice. The company, which has 100 such clubs, plans to add around 20 more annually. "Before, a small space with a computer was good enough, but now our customers' needs have changed," says Momoko Sugiura, an investor relations official at Valic, which owns the Kaikatsu outfits.

In fact, some customers are using the caf??s for far more than entertainment or dining. On Aug. 28, Japan's Health, Labor & Welfare Ministry said more than 5,000 homeless "Net caf?? refugees" were living in cybercaf??s, sleeping in comfy armchairs at night before heading out to low-wage jobs. That has spurred fears among owners that the phenomenon might scare off other customers.

Internet caf??s have other image problems: Some critics complain that they provide havens for illegal copying of DVDs and for online fraud. A few caf??s have tried to project a more respectable image by requiring customers to register. While this may turn off some users, caf?? owners are hoping it will attract more women and older people, especially in suburban areas where they're now expanding.

Mariko Yumita, an office worker in her 30s, is one convert. In July, she joined Reche Rcher, a 115-booth caf?? that's part of a small chain. Although she has a PC at the home she shares with her parents, her room is small and gets unbearably hot in the summer. Now, Yumita stops by the caf?? almost every weekend to watch DVDs, flip through magazines, and check astrology Web sites. She gets up to six hours of computer time for $17, soft drinks are free, and there are showers (toiletries and towels provided) if she tires of surfing the Net. "At first I was a bit nervous because I didn't know what sort of people would be there," she says. "But the caf?? is nice."

Forget the conventional wisdom on attention deficit hyperactivity disorder. U.S. children are underdiagnosed and undertreated for ADHD, not the other way around, according to a new study of kids ages 8 to 15. It estimates that 8.7% suffer from ADHD. But the study, by doctors from Cincinnati Children's Hospital Medical Center, found that only 47.9% of children with ADHD have been diagnosed. A mere 32% receive consistent treatment, though some $3 billion worth of ADHD drugs were sold last year.

Those untreated children probably won't be a boon for drugmakers. The study found that the poorest one-fifth of children were the most likely to have ADHD. They were three to five times less likely to receive treatment than other income groups, due to limited or no access to mental health services. That starts a vicious cycle: Lack of treatment predisposes them to school failure and drug abuse, making upward mobility unlikely.

Bangalore's traffic is among India's worst. About 700 new vehicles hit the IT hub's roads daily, turning a normal 25-minute drive into two hours at rush hour, so executives often work on cell phones and laptops in their cars. In June, software outfit Mapunity Information Services roped in India telecom giant Bharti Airtel, and Bangalore's traffic cops, to track traffic via cellular signals. These are used to create Web maps like the one above, of a recent evening rush, and Bharti sends customers text messages about which roads to avoid.

Hormel Foods (HRL), the Austin (Minn.)-based maker of Spam, is, like many meat processors, no stranger to fines for water pollution and other environmental sins. In a recent legal dispute, though, it's Hormel that is calling an environmental foul.

Hormel contends the ethanol plant that Coulee Area Renewable Energy (CARE) wants to put up near its Century Foods International facility in Sparta, Wis., will alter the taste of its products. The yeasty-smelling emissions typical of ethanol plants, Hormel claims, will affect the dairy-based protein products used in protein supplements and other foods. "If the air we bring in is contaminated, it's going to be an issue," says Century Foods President Tom Miskowski. "We cannot manufacture tainted food products." David Rundahl, CARE'spresident, says the allegations are "totally false."

The irony of a meatpacker criticizing another company's environmental impact is "as thick as a Spam sandwich," says Virginia environmental attorney Lee Bushnell, who sometimes advises citizen groups. But local homeowners share Hormel's "not-in-my-backyard" stance, fearing potential air pollution and falling real estate values.

Although it may not appear to have much love for ethanol, Hormel can't be totally opposed to alternative energy sources. On its Web site, the company has a contest to give away a Toyota (TM) Prius hybrid.

http://blog.delta.com

Few topics prompt more vitriol on blogs than airline travel. So it's a bit gutsy that on Aug. 23, Delta Air Lines, (DAL) which bumped more passengers in the first half of 2007 than any other major carrier, became the first U.S. legacy airline to launch a blog. It's meant to promote new services and solicit customer feedback. Like Southwest Airlines, (LUV) which launched a blog last April, Delta moderates user comments. Thus far, the responses are mostly chirpy ("I'm proud to be part of the Delta family!") or constructive ("Please consider eliminating the Saturday night stay requirement"). Still, a small dose of sarcasm has made it online. "I'm sure glad you're focused on doing cool stuff like this," wrote one reader with the screen name "freud," "and not on little stuff like customer service."

The tech world is abuzz with rumors that Google (GOOG), whose wireless ambitions are no secret, will enter the mobile phone business. So far, the search engine giant has kept details under wraps. But BusinessWeek has learned Google may be developing new software that would compete with Nokia (NOK)-sponsored Symbian, Microsoft's (MSFT) Windows Mobile, mobile Linux, PalmOS, and other operating systems, according to a source familiar with the situation.

Essentially, Google has developed its own operating system, partly based on knowledge it acquired with startup Android back in 2005. The software would be easy to use and designed for smartphones, which can browse the Web and deliver a host of services. The system would work with Google's other mobile programs and will allow Google to bring new ones to market faster. Google would not confirm or deny these plans.

Meanwhile, a number of cell phone manufacturers have already created prototypes of lower-cost smartphones based on the Google system, according to the source, and are shopping them to carriers worldwide, including those in the U.S. The phones are expected to sell for around $100 and are expected to come with cheaper service than a typical contract. But users will have to agree to receive mobile phone ads.

The operating system is another indication of the magnitude of Google's plans for the mobile market, where it lags Yahoo! (YHOO) and Microsoft in search and other cell phone services. Google is expected to bid for wireless spectrum in the U.S. and either build its own cellular network or partner up with an outfit that will. On Aug. 30, the U.S. Patent & Trademark Office published a patent application filed by a Google inventor for a system allowing people to pay for goods and services via text messages. That has prompted speculation that Google will unveil a mobile payments service, possibly with the phone platform. Add to that the fact that Google currently has 67 openings on its Web site for mobile-related positions, mostly in wireless software development, and it becomes clear that something big is afoot.

In the runup to this month's Frankfurt Auto Show, two Chinese models are already stealing the spotlight. They bear a resemblance to the BMW X5 and the Mercedes (DAI) Smart minicar and are both from Chinese carmaker Shuanghuan. German importer Karl Schl??ssl confirmed he would show a selection of Chinese cars he is preparing to import to Europe, despite consternation rippling through the German auto industry.

Among the imports may be a model called the CEO, which mimics the Bimmer and has been on sale in China for about two years. Schl??ssl is now selling it in Italy and Romania for $36,000 (a true-blue BMW X5 starts at $46,000). The Smart lookalike, dubbed the Nobel, was unveiled at last year's Shanghai Auto Show but hasn't yet passed European safety tests.

In Germany, the heartland of auto luxury, such imitation is hardly considered flattery. "The Chinese do not understand that the car business is different from textiles," says Ferdinand Dudenh??ffer, director of the Center for Automotive Research in Gelsenkirchen. "They believe copying is a sign of respect."

For his part, Schl??ssl says consumers won't be confused. "You can't fake a BMW," he says. As for the Nobel, he says it has four seats and is much larger than the two-seater Smart, which hits the U.S. market next year. "There's no similarity," he says.

Schl??ssl's company, Munich-based China Automobile, has been importing cars for three years to Russia and other neighboring non-European Union countries. Schl??ssl claims to have met EU safety and emission standards for six cars, including the CEO and an SUV that resembles a Toyota Rav-4. "They will be on the market shortly," he promises.

A couple purchases the house for $230,000, borrowing $218,000 at 6.75% from Jon Douglas Financial.

MARCH, 2003

They refinance, borrowing $313,000 from Downey Savings & Loan at an adjustable rate starting at 3.5%.

JULY, 2005

They sell to a flipper for $815,000. He borrows $570,000 from Loan Center of California at 6.75% and an additional $244,000 from the same lender. He spends $115,000 on remodeling.

MARCH, 2006

The house is sold for $1.29 million. The buyer borrows just over $1 million from First Franklin, now a unit of Merrill Lynch, at 7.5% and an additional $259,000 from the same source.

AUGUST, 2007

On behalf of mortgage investors, the house is foreclosed on. It's listed by Re/Max at $900,000. Broker Kenneth Davis says an offer has been accepted at "close to asking." In the past couple of years, IBM (IBM), Hewlett-Packard (HPQ), and Johnson & Johnson (JNJ) have all appointed vice-presidents for design. Yet as designers reach the executive suite, they're confronting a knowledge gap: Design schools rightly focus on core skills such as drawing and three-dimensional fabrication, so most grads lack basic management, finance, and strategy knowhow.

Schools such as the Hasso Plattner Institute of Design at Stanford University and the Illinois Institute of Technology's Institute of Design are integrating business training into their curriculums. Companies and individual designers alike also are taking their own steps. John McGuire, director of product design at hip San Francisco bagmaker Timbuk2 Designs, spends two hours every Tuesday with a tutor, Erin Lowenberg, a retail veteran at Gap (GPS) under Mickey Drexler. In the sessions, arranged for by McGuire's boss, Lowenberg helps the 28-year-old review product lines, prepare for presentations, and plan for revenue goals--among other obligations of the corporate world.

Of course, designers wouldn't be designers if they had MBAs. "If design gets too focused on the numbers...the product gets too safe, maybe even boring," says Lowenberg. But incumbents in the executive suite see a clear benefit: designs that are not just interesting, but relevant, as well.

Is it possible to make a truly global phone? Perhaps not, based on the frustrations of some who bought the new BlackBerry (RIMM) 8830 "World Edition" phone. Sprint Nextel (S) and Verizon Wireless (VZ) promote it as perfect for globe trotting because of features allowing it to negotiate conflicting cellular standards. "Get ready to take on the world," proclaims Verizon's ad. The catch? The phone actually works only in limited fashion??r not at all??n several major business hubs, including Japan, India, and South Korea. Verizon and Sprint say customers should check for coverage areas on their Web sites. But that hasn't kept some, like Neil Kozarsky, who took his 8830 to Tokyo, from griping they were misled.

By Elizabeth Woyke


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