The Morning Download: Energy Companies Face More Cyberattacks
July 1, 2013
 
Good morning. U.S. energy companies are being subjected to a huge increase in the number of attempted cyberattacks, according to a new report from the Department of Homeland Security. There were 111 cyber incidents reported by the energy sector during the six months ending in May 2013, compared to about 81 incidents reported in the preceding 12 months. “Even networks that were well monitored before are getting attacked with increasing frequency,” Ed Skoudis, an instructor with cybersecurity research and education organization SANS Institute, tells CIO Journal.
 
HADOOP: FROM CULT FAVORITE TO QUENTIN TARANTINO MOVIE SOUNDTRACK
 
Hadoop, the open-source analytic framework named after a stuffed elephant, is quickly becoming mainstream. The annual Hadoop Summit held in San Jose, Calif. last week attracted over 2,500 people; while that doesn’t sound impressive compared to the 10,000-plus who regularly attend shows sponsored by large commercial vendors, it’s a significant jump from the 100 or so who attended the Hadoop Summit six years ago, according to John Kreisa, vice president of marketing at Hortonworks Inc., a consulting firm that specializes in helping customers implement Hadoop software, and which co-sponsors the conference.
 
There remain a number of significant stumbling blocks, however, before Hadoop can deliver benefits that companies expect. The software was designed for efficiently distributing computing tasks based on queries, but not with corporate systems in mind. That makes IT staff hesitant to run Hadoop on live environments, and that in turn makes it hard to demonstrate its value. “It’s hard to explain how innovative something is when it’s not running,” David Stone, enterprise architect who specializes in analytics at Home Depot Inc., said during a panel discussion.
 
Hadoop developers are trying to provide one solution to this problem: a 2.0 version released last week, which should make the software more adapted to business IT environments. And a raft of traditional vendors introduced partnerships or new products that will help their customers make better use of Hadoop. Just as importantly, however, businesses have to change their own approach to the analytic framework. Ron Bodkin, the founder and CEO of Think Big and an adviser to Facebook Inc. and other companies, tells CIO Journal that IT has to think about queries that address bigger problems, as opposed to the smaller-bore type queries and problems associated with traditional business intelligence software. “The move to Big Data is not a small, incremental step. It’s a major transition, like the adoption of the Internet in the 1990s,” said Mr Bodkin.
 
Evolving with our machines. Data-driven computing has given rise to cognitive systems such as IBM Corp.’s Watson, which have the human-like ability to extract meaning from unstructured knowledge, but on a far grander scale. Still, “the objective of cognitive machines is not to think like a human,” writes guest columnist Irving Wladawsky-Berger, but to work with the human brain to produce better results. Cognitive computing will be able to analyze and extract insights from data sources previously untapped, changing our conception of the universe as well as ourselves.  ”These cognitive systems are truly beginning to augment our human cognitive capabilities much as earlier machines have augmented our physical ones,” he writes.
 
TECHNOLOGY NEWS
 
Apple just can’t quit Samsung. Despite efforts to divorce itself from its mobile rival, Apple Inc. remains critically dependent on Samsung Electronics Co., reports the WSJ. The microprocessor brains that control iPods, iPhones and iPads are Samsung-built. This month, after years of technical delays, Apple finally signed a deal with Taiwan Semiconductor Manufacturing Co. to make some of the chips starting in 2014, according to a TSMC executive. Apple’s conundrum: Samsung, which has found huge mobile success with Android smartphones, is also the world’s biggest maker of some of the most sophisticated parts that Apple needs, such as processors, memory and high-resolution screens. The component choices for Apple “aren’t good, which is why they keep buying from Samsung,” says Michael Marks, who teaches a course on supply chains at Stanford University’s Graduate School of Business. Plus, the maturing tech business has left few potential partners. “That’s forced more of these strange bedfellows, because the choices are limited,” Mr. Marks says.
 
Hewlett-Packard beats CSC for $3.5 billion Navy contract. Hewlett-Packard Co. beat out a group of vendors led by Computer Sciences Corp. for a $3.5 billion contract to run the U.S. Navy’s communications network, reports Bloomberg. The contract is the largest single federal government IT project and calls for managing the Navy’s 800,000-user intranet through 2018. H-P has run the Navy’s network since 2008.
 
Nokia buys Siemens stake in joint unit. Nokia Corp. agreed to buy Siemens AG’s stake in the companies’ telecommunications-equipment venture for €1.7 billion ($2.2 billion), putting an end to their six-year partnership, Bloomberg’s Adam Ewing, Jacqueline Simmons and Beth Jinks report. For Nokia, which is seeking to gain traction in a comeback in the smartphone industry, the transaction gives the company full control of a business whose earnings have been improving since returning to profit last year. Siemens has been seeking to exit the wireless-gear business for several years to focus on energy equipment, health care and rail.
 
Detroit seeks app builders. The old-line car makers are suddenly hungry for information technology specialists who can create apps for the next generation of connected vehicles, writes the NYT’s Jaclyn Trop. General Motors, newly flush with cash after emerging from bankruptcy, is on a hiring binge, quadrupling its information technology staff and recruiting software developers to create a spate of apps for its 2014 model-year vehicles. The demand for in-vehicle applications is a “substantial job generator with high-end pay,” said Donald R. Grimes, an economic researcher at the University of Michigan.
 
Cisco’s Internet of Things is about services and gear. Gigaom’s Stacey Higginbotham sat with Cisco Systems Inc.’s marketing chief to talk about the company’s recent study touting that the Internet of Things would generate $613 billion in savings and sales in 2013. The networking-equipment giant naturally has a pony in the race to bring every device online, but as Ms. Higginbotham discovers, the company’s interest goes beyond hardware.” While GE is trying to corral data flowing from sensors and turn that into insights and eventual action (and releasing products to do just that), Cisco seems focused on the action,” she writes. “Maybe it’s better training for a Walgreens checker to upsell a customer based on her buying patterns, or helping old-line industries adapt to moving to an IP-based world, but Cisco sees an opportunity in consulting and helping companies develop business processes.” And selling a lot of gear.
 
NSA slides explain PRISM program. The Washington Post published additional slides believed to be acquired by NSA whistleblower Edward Snowden revealing more details about how the government’s top-secret PRISM Internet surveillance program operates, include the levels of review and supervision among U.S. intelligence agencies. The slides also detail how PRISM works with Internet companies, including Microsoft Corp. and Google Inc. “On April 5,” the Post notes, “there were 117,675 active surveillance targets in PRISM’s counterterrorism database. The slide does not show how many other Internet users, and among them how many Americans, have their communications collected ‘incidentally’ during surveillance of those targets.”
 
Report: NSA spied on EU too. The German publication Der Spiegel says it has seen NSA documents shared by Mr. Snowden indicating that the U.S. bugged the offices of the EU in Washington, D.C. and New York and made an attempt to tap into phone and Internet networks at EU headquarters in Brussels. The Guardian reports European ministers are not at all happy about these revelations, which may hamper upcoming negotiations on a Transatlantic trade agreement.
 
BlackBerry disappoints (again). Research in Motion Ltd. shares tumbled 28% on Friday after RIM reported it shipped far fewer new BlackBerry phones than analysts had expected in its fiscal first quarter, reports the WSJ’s Will Connors. On Friday, RIM said it shipped 2.7 million new smartphones in its latest quarter, a fraction of what Apple  sold in its latest period and about half the number sold by struggling rival Nokia. On Friday CEO Thorsten Heins defended the launch as “still in its early stages,” promising to increase spending over the next three quarters in rolling out new phones and services.
 
U.S. tries to curb corporate espionage by Chinese companies. The U.S. could be signaling stepped-up prosecution of Chinese firms accused of stealing trade secrets, after filing charges against one of China’s largest wind-turbine manufacturers, the Journal’s Wayne Ma reports. U.S. prosecutors accused Sinovel Wind Group of stealing source code for software used to control wind turbines from American Superconductor, and then shipping four turbines equipped with the code to customers in the U.S. “This case is indicative that American companies and the U.S. government are fed up, and can and should pursue all available legal remedies, including criminal sanctions, to put an end to trade-secret theft,” said James Zimmerman, managing partner of law firm Sheppard Mullin Richter & Hampton in Beijing. The issue has risen in prominence in recent months as companies reported that they had been hacked by groups that appeared to have connections with the Chinese government.
 
Dell faces dilemma with overseas cash. Advisers working on Dell Inc.‘s $24.4 billion buyout are trying to solve a problem: how to use the company’s foreign cash without paying a $2.6 billion U.S. tax bill, write the WSJ’s Kate Linebaugh and Sharon Terlep. That could be the cost levied to use the money held in foreign subsidiaries. With a July 18 shareholder vote looming, Dell’s cash balances are shrinking as the company’s core business falters. The computer maker’s cash holdings fell to $13.2 billion, down by $2.1 billion, in the three months to May 3. Accountants are working on a plan to use the company’s foreign earnings tax-free to fund their deal now, as well as help repay the substantial debt that is being taken on as part of the transaction. The efforts highlight a current bind of corporate America, Linebaugh and Terlep write: “While U.S. companies are holding more cash than ever, the tangle of U.S. tax policies and corporate cash-preservation strategies means much of it isn’t readily available for some of the most important corporate decisions, such as returning cash to shareholders or mergers and acquisitions.”
 
Images displacing text. Google Inc.’s Sergey Brin describes taking a picture with his Google Glasses to respond to a text message, the NYT’s Nick Bilton reports. His epiphany reflects the growing importance of images in communications, and will surely inform the many organizations looking to glean information from consumer communications and machine-to-machine data.
 
EVERYTHING ELSE YOU NEED TO KNOW
 
China manufacturing surveys highlight slowdown. Two gauges of China’s manufacturing fell in June, underscoring a sustained slowdown in the economy as policy makers try to rein in financial speculation and real-estate prices, Bloomberg reports. An official Purchasing Managers’ Index dropped to 50.1 in June—the lowest level in four months—from 50.8 the previous month. And a private PMI from HSBC and Markit Economics came in at 48.2, the weakest reading since September. Readings above 50 signal expansion.
 
Optimism returns to Japan’s manufacturers. The BOJ’s closely watched tankan survey showed that big Japanese manufacturers turned optimistic for the first time since September 2011, the WSJ reports. After six straight quarters of negative readings, the headline index measuring sentiment among large manufacturers came to plus 4 in the latest tankan, up from minus 8 in the March survey. The survey for the three months to June is the first since the central bank stepped up its easing measures in April, and the optimistic corporate outlook bodes well for Prime Minister Shinzo Abe ahead of an election for the upper house parliament later this month.
 
Euro-zone jobless rate rises to record high. The euro-zone jobless rate rose to a record in May, and will likely go even higher despite signs that the currency area’s long contraction may be coming to an end. The unemployment rate rose to 12.1% in May from 12.0% in April to reach its highest level since records began in 1995, the WSJ reports. As of May, 19.2 million people were without jobs in the euro zone, up 67,000 from April and 1.344 million from May 2012. The unemployment rate among people aged 24 or under was much higher, although it fell to 23.8% from 23.9% in April.

Michael Hickins
Editor