Former Third Pipe affiliate and popular online retailer Newegg has just announced and IPO during one of the worst recessions in history. Much of the money expected to be raised will fund an expansion in Asia, but it will also convert founder Fred Chang’s majority stake in the company to cash. Is the company seizing the opportunity to take market share while competition is pulling back? Is the founder cashing out in uncertain times? I think it’s a little of both.

According to the prospectus, Newegg plans to use $25.0 million from the IPO to expand its international operations, including building an Asian headquarters and a regional warehouse. It will also pay back $8.6 million in loans, and pocket the rest for working capital and general corporate purposes.

Insight Venture Partners owns a 12.7 percent stake in the firm, thanks to a $20 million investment it made in the company in 2005. (Internet news)

There’s a small sign of hope for the IT business coming from Tata in India. The company plans to begin hiring again.

Tata Consulting Services (TCS) has said it plans to hire 25,000 people, marking the end of a slowdown for Indian outsourcers that began with the collapse of Lehman Brothers last September.

TCS vice-president Tanmoy Chakrabarty said that the outfit employs 145,000 people and wants to add 25,000 by the end of the year

According to the Times of India, analysts in the ancient land said that the TCS hiring plans come after a long dull period and the announcement will boost the Indian IT recruitment scene. (The Inquirer)

This could be a sign of eventual rebound for IT jobs here in the US.  After the last recession, jobs with offshore outsourcers led the recovery ahead of US hiring.  Unfortunately, since the last recession, the growth offshore has consistently outpaced hiring here.   I have high hopes that this is  a good sign. With the depth current recession and government policy that is largely hostile to business,  I fear US hiring will remain soft. Politicians who propose new taxes and regulations should consider the unintended results of their actions as well as the intended ones.

BT is bringing call centre jobs back to Blighty from India.

The move was revealed in an answer to a shareholder at BT’s annual general meeting yesterday.

Ian Livingstone, chief executive at the telco, was asked, to huge applause, when he would close the firm’s Indian call centres.

In response he said he would move about 2,000 jobs back to Blighty. The telco employs about 5,500 customer service staff in India and could eventually shift as many as 2,750, back to the UK.

Looks like as the global economy teeters the outsourcing price shift is occurring too. Outsourcing to India was very favorable when MBA’s could be had for $4/hr. Well those days are over. Couple that with changing tax rules, concerns about IP security and cultural differences, if you can’t work out a 33% disparity then it is probably not worth the move.

So what is to happen long term? Call center and mid management functions will probably come back to the host countries. Specialized skills will probably remain where they are. Engineers familiar with FPGA has almost become an Indian specialty not many in the US know how to program them.

The wheel turns again.

Linky.

You never knew that a $1 bill could be the death of an entire industry did you? Well that is how LA Times is playing out this article. Being the home town paper of Hollywierd I can understand their underlying concern. So goes Hollywierd so go a good chunk of the LA economy, which for the LAT is bad enough already. —

Redbox movie kiosks are popping up by the thousands in supermarkets, drugstores, restaurants and convenience stores around the country. The kiosks stock DVDs that rent for $1 a day, a remainder-bin price that is less than a cup of coffee at Starbucks.

For all the talk about the Internet, Wi-Fi and cellphones becoming the new gateways to watch movies and wiping out the corner Blockbuster, a ubiquitous vending machine the size of a refrigerator is becoming a growing concern to Hollywood.

Consumers are pulling DVDs out of the Redbox kiosks in record numbers, undermining longtime economics that have propped up the movie business — and in the process triggered a backlash from a major studio that sought to cut off Redbox’s supply of hot new DVDs.

“We have grown at a phenomenal pace over the last six years, and that growth is continuing, even in the midst of the recession,” said Gregg Kaplan, chief executive of Oakbrook Terrace, Ill.-based Redbox Automated Retail. “We’re not seeing anything that’s slowing it down.”

Redbox operates nearly 12,900 kiosks throughout the U.S. — four times as many locations as Blockbuster Inc. — and plans to introduce 7,100 more by the end of the year. Each machine holds as many as 700 DVDs and 200 movie titles.

How does this playout? Well like it does every time when a downshift happens in an industry that supply chain interruptions occur — disaster for legacy providers. As the LAT times article elaborates the concern for the production houses is that a big chunk of their after theatre revenues are at risk. DVD sales are increasingly what defines a profit for any particular cinematic endeavor.

But I want to point out two other players who maybe at risk. One certainly, the other mildly. The ISPs are the first. By some counts up to 50% of a given national ISPs revenues are pay-per-view movies. On average the ISP garnering $3-5 per movie play from the customer base. So along comes the RedBox folks and offers that very same movie for a $1. That’s a double whammy. One for the reduced cost if the ISP wants to compete. The other is that the consumer takes even that $1 away from them and can play that DVD as many times as they want in the given 24hrs.

The second player at risk is NetFlix but to a lesser extent. NetFlix for those who have a higher appetite will still be a price competitive offering with at the door convenience. Coupled with their online IPTV offering they have a fair means to compete on price an service. NetFlix other advantage is that their base of movie selection is magnitudes larger than the Kiosks guys. But they too will lose the bottom segment of their customer base.

The fact is many consumers just don’t have the time to watch enough movies to make many services cost competitive. So why pay the high subscription rates in some cases or have the delay in delivery in another for what for many maybe a simple impulse buy for a lazy Friday evening? Pop a dollar and watch a flick. It may very well change the face of an industry.

Linky.

The tech world has undergone extreme bloodletting over the last few months as it’s giants have shed hundreds of thousands of employees, and business has shrunk. Some of this may have been in anticipation of very bad quarterly numbers to be reported on the morning of February 2nd.

Wall Street is bracing for yet more reminders this week that the economy is in rotten shape. Companies from networking-gear maker Cisco Systems Inc. to media giant Time Warner Inc. are set to report quarterly results, while a steady stream of economic readings is also due. The most recent numbers from companies and the government haven’t been roundly awful, but most have. That is stirring fears the economy’s slide isn’t slowing.

On Friday, Wall Street learned that the economy posted its steepest slowdown in a quarter-century during the final three months of 2008. The 3.8 percent decline in the nation’s gross domestic product wasn’t as bad as Wall Street had forecast but investors grew worried that the numbers will only worsen. (Yahoo)

Congress and President Obama are presently hell bent of massive spending, and the creation of new programs instead of the massive tax cuts and investment credits needed to get things moving. With the government pouring gasoline on the recessionary fires,  there is little that will pump the market (and the overall economy) back up - except impressive earnings from the tech sector. If earnings are as bad as many predict, the bloodletting may have just begun.

We’re hoping for at least a few pleasant surprises Monday. Tech and ecommerce have always found a way to win, even with poor economic stewardship and oversight in Washington.

A slow economy still accelerates some things - like the decline of mature businesses. Personally, I think there is still growth potential in wireless, but not a luxury prices like the big dark V charges. The over compressed voice call on the cell phone needs to be cheaper than fixed line to keep growing short term, and needs to be a pure VoIP device to be viable long term. You read it here first. V will probably figure this out after it’s lost a ton of business.

Verizon Communications reported fewer-than-expected wireless subscribers for the fourth quarter and warned that pension and other post-retirement expenses would hurt earnings in 2009, dragging its shares down more than 5 percent. (Internet News)

Time was when Google had money to burn. Things have changed. The news has been aflood with news of Google cutting masses of contractors. The largely Luddite media has overlooked the fact that more relatively permanent hires come in the form of  contractors these days. Naturally, since there is little liability in letting them go, they are the first.

Also largely overlooked are the paring down of services:

In November, Google shut down SearchMash, an experimental search engine, followed a month later by Lively, a virtual world that allowed users to create 3-D characters. This week’s announcements significantly expanded the list of product cutbacks.

In addition to closing catalog search and Dodgeball, Google said it will stop allowing users to post new clips to Google Video. Development of Google Notebook, for note taking; and microblogging service Jaiku will end.

“Occasionally we have to re-evaluate our efforts and make difficult decisions to be sure we focus on products that make the most sense for our users,” said Matt Furman, a Google spokesman.

Relatively little money will be saved from the product housecleaning. But the effort will free up some engineers and other resources. (SFgate)

A fair number of the services that are gone or will go either never had a future or were poorly executed. While the outcome is dreadful for those who were working on them, it clears space in the ecosystem for upstarts. Lots of innovation is born out of recession, and the new guy gets a much better shot when Searchzilla moves out of the way.

Economic conditions have sidelined most Venture Capitalists, and start ups are on the rise. There are several reasons for this. Since the passage of Sarbanes Oxley, there has been and chill on IPO’s leaving VC’s fewer options for cashing out of their successes. The crash high risk derivatives has removed mountains of available capital while further eroding confidence in government oversight.

As we enter the Third Pipe era, many middle managers and senior technologists are finding few opportunities after being laid off. At the same time, more young people are finding self employment more attractive than enduring the hiring process for a job that may not be that secure. Enabling this are the are new, better, cheap or free tools of the Third Pipe world.

The reason startups no longer depend so much on VCs is one that everyone in the startup business knows by now: it has gotten much cheaper to start a startup. There are four main reasons: Moore’s law has made hardware cheap; open source has made software free; the web has made marketing and distribution free; and more powerful programming languages mean development teams can be smaller. These changes have pushed the cost of starting a startup down into the noise. In a lot of startups—probaby most startups funded by Y Combinator—the biggest expense is simply the founders’ living expenses. We’ve had startups that were profitable on revenues of $3000 a month. (Paul Graham)

Beyonf the startup, Self employment will grow exponentially in the coming months. Tasks typically completed by employess if the corporate world will be more frequently done by contractors. As technology changes work functions rapidly, more requlations and requirements for permanent hires will mwke them increasingly rare in the coprorate world.

For those if us who embrace change, the future is bright if less certain. For most of us, the era of exchanging freedom for the security of a position with a big company is gone. The shift is as simple as taking the task that you may have done for the corpzilla, and performing it for a variety of clients on your own. He (or she) who embraces this change gets the gold.

While the prevailing theories are that it took a catastrophe to end the reign of the dinosaurs, it could also be that it only accelerated the inevitable. When the ecosystem has changed so that size is no longer an advantage, then a catastrophe only hastens the inevitable end of the species. I think we are in such times, where size has become a disadvantage for most tasks. This fact is being ignored by the federal government, who has developed a fondness for feeding the lumbering beasts with a too big to fail mantra.  That government itself is showing signs of being too big to be effective.

How big is too big? A look at channel insiders top 10 who are on the edge list is telling. While none of the companies listed  are tiny, they are far from being the largest. This could be a sign that a mass extinction is upon us. The new era for business is horizontal, and predominantly small. Some giants will survive, but only if they adapt. Lining up for bail outs at the government trough won’t save any company that does not adapt.

Slow sales have plagued brick and mortar merchants this year, and even with the help of unusually bad weather, online merchants have had a slow holiday selling season. Bucking the trend, Amazon set record sales. I have no doubt that the company’s efforts to amass the longest tail of merchandise, and opening it’s marketplace to offer goods from reliable third party sellers were the formula for success. For many Amazon has supplanted other online marketplaces like Ebay and even search engines like Google as the spot to search for stuff. Look for other retail behemoths like Wal Mart to try to emulate some parts of the Amazon success formula.

Amazon’s upbeat take on the holiday season bucked the drumbeat of generally dismal news from retailers. Holiday sales typically account for 30 percent to 50 percent of a retailer’s annual total, but rising unemployment, home foreclosures, the stock market decline and other economic worries led many shoppers to slash their shopping budgets this year. (Yahoo)