China’s Internet users cross 500 million

China’s Internet population passed the half billion mark at the end of 2011 after the country added 28 million new users during the second half of the year.

At the end of December, the country had 513 million Internet users, according to a report issued Monday by the China Internet Network Information Center (CNNIC), a non-profit group with ties to the government. This puts the country’s total Internet penetration at 38.3 percent, up 4 percent from a year ago. In contrast, the U.S. has a total Internet penetration of 78.2 percent, according to Internet World Stats.

The number of users accessing the Internet from their mobile phones has also grown, reaching 355 million, or more than the entire population of the U.S. Now 69.3 percent of China’s Internet users connect to the Internet via their handsets, up from 66.2 percent a year ago.

Users typically use one or more devices to access the Internet, but the percentage of users relying on desktop PCs to link to the Internet has decreased to 73.4 percent, while the percentage of Internet users that access from their notebooks has remained steady at 46.8 percent.

The growth in China’s Internet users has slowed in recent years, down to single digit percentage increases every six months. CNNIC’s latest report noted that most Chinese people within the 10 to 29 year old age range already use the Internet, but that more work needs to be done in getting older population groups and people less educated to use the Internet.

Instant messaging, search engines, and online music are the most popular Internet applications among Chinese users. But the number of users of China’s microblogs, which operate like Twitter, saw the most growth in 2011. Their numbers reached to almost 250 million users, up from 63 million a year ago.

Analysts, however, have said the statistics provided by the CNNIC are inflated. The CNNIC defines users as people, ages 6 and above, who have connected to the Internet in the past six months.

RSA chief: Last year’s breach has silver lining

Last year’s industry-shaking RSA Security breach has resulted in customers’ CEOs and CIOs engaging much more closely with the vendor to improve their organizations’ security, according to the head of RSA.

Discussing the details of the attack that compromised its SecurID tokens has made RSA sought after by companies that want to prevent something similar from happening to them, Executive Chairman Art Coviello said in an interview with Network World.

COVIELLO TRANSCRIPT: In his words

BY THE NUMBERS: The impact of data breaches (slideshow)

“If there’s a silver lining to the cloud that was over us from April through over the summer it is the fact that we’ve been engaged with customers at a strategic level as never before,” Coviello says, “and they want to know in detail what happened to us, how we responded, what tools we used, what was effective and what was not.”

While the company was roundly criticized for not doing enough right away to reassure customers once it made the breach public, Coviello characterizes RSA’s response as rapid and effective.”When we go into detail about the attack I think people are actually impressed with the speed with which we were able to see the attack in progress,” Coviello says.

“We were still unable to keep [hackers] from getting away with at least something,” he says. “But we were able to minimize the damage, and more importantly, get to our customers timely enough so they could protect themselves to mitigate risk associated with the damage.”

SECURING THE CLOUD

On another topic, Coviello says businesses are rushing and therefore missing an opportunity to build security into virtual and cloud environments as they adopt them.

“[A]s much as I’ve preached for three or four years that we have an opportunity to get it right this time as we virtualize our environments and we go to cloud [by building] security in, it just isn’t happening,” he says. “We’re making the same mistakes all over again.”

The problem is that businesses crave the functionality and savings of virtualization and cloud at the expense of security. “[I]t’s just unfortunately the way the world works sometimes, that people want to get the benefits of a new technology wave and don’t always think through all the security ramifications,” Coviello says.

Despite those shortcomings, Coviello says businesses are accelerating the overhaul of their traditional security to adopt defensive models that are advocated by RSA, particularly automating security analysis and response.

“You would like to think that people would come to these conclusions and act on them more quickly,” he says, “but there’s such competition –whether it’s budget, whether it’s business initiative, whether it’s overhauling their own infrastructure, whether it’s this crazy economy we’re working with — it never goes as fast as you think it should or could.”

China’s Baidu constructing office for international operations

China’s largest search engine Baidu broke ground Monday on a new office for its international operations, reflecting its ambitions to expand quickly in global markets.

Baidu’s new International Building will be located in the Chinese city of Shenzhen and be completed in 2015. The 220,000 square meter facility occupies more than twice the space of the company’s current headquarters in Beijing, and has enough room to accommodate 10,000 employees.

Baidu, which dominates the search business in China, has made moves in the past to enter Internet markets abroad. In 2007, the company launched a search engine in Japan. Last year, it launched web directory and question-and-answer services for users in Egypt, Thailand and Vietnam.

The Chinese search giant said in May it was developing a multi-language platform for foreign markets, without elaborating.

Baidu’s new building will also serve its southern China operations, and have a research center focused on developing the company’s mobile Internet products. Baidu and Dell are selling a new smartphone in China that uses the “Baidu Yi” platform, a Linux-based OS loaded with the search giant’s products.

Baidu’s employee count has grown quickly in the last few years. The company currently has 15,000 employees, up from just under 7,000 in 2009, according to Baidu spokesman Kaiser Kuo.

BYOD movement is forcing IT to adapt

IT departments in the age of mobile computing must adapt to newly empowered users who select not only their own devices but their applications as well. This adapation — as difficult as it may seem — has a strong benefit: Enabling a modern workforce, said Maribel Lopez, president of Lopez Research at the AppNation conference last week in San Francisco.

“You can look at it [from the perspective that] BYOD is taking control away from IT, or you can look at it as it’s an opportunity to mobilize your entire business that you would have never been able to afford before because you wouldn’t have bought the devices and you wouldn’t have wanted to manage them,” Lopez said. Her advice to IT: “Accept that BYOD is happening and build a plan around it — how to manage it, how to secure it, how to get apps to devices.”

[ InfoWorld columnist Galen Gruman illustrates how to screw up a BYOD rollout. | Subscribe to InfoWorld's Consumerization of IT newsletter for the latest insights and trends on this major change in IT. ]

Users are bringing in their own devices and choosing applications such as Box.net for file sharing and DocuSign for electronic document signatures, without waiting for IT signoff, noted Ken Singer, CEO of MDM (mobile device management) provider AppCentral. “CMOs and CEOs were coming in with their own iPads and demanding that the IT departments support these devices.”

Such pressures mean a new reality for IT, a reality many will not like, Singer said. He likened IT’s crumbling power vis à vis mobile adoption to last year’s “Arab spring,” in which people in Middle Eastern countries rose up against entrenched, autocratic leaders. “IT is struggling with how to address this, how to look at this, and what they should do to respond because they can’t simply say yes to everything,” he said. “They can’t manage it all.”

IT must understand that businesspeople are going to build applications, with mobile applications serving as a catalyst for changes, said Ojas Rege, vice president of products and marketing at MDM provider MobileIron. “In the past, the business wanted apps, but they just didn’t have the mechanism to build them.” Instead, they had to rely on line-of-business applications, such as SAP or Siebel. “Now, it’s really easy for them to go and build them or buy them,” Rege said.

IT is concerned that such “foreign” apps create security risks, but Lopez said that MDM and mobile application management tools can let IT departments be more flexible about such apps. However, she argued that flexibility did not mean a free-for-all: “Some apps today are not appropriate.”This article, “BYOD movement is forcing IT to adapt,” was originally published at InfoWorld.com. Follow the latest developments in business technology news and get a digest of the key stories each day in the InfoWorld Daily newsletter. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

Intel enters smartphone market after uphill battle

Intel on Tuesday announced its first smartphone customers, signaling the arrival of Intel Inside smartphones after years of uphill struggle by the chip maker.

Lenovo and Motorola will release smartphones based on Intel’s upcoming Atom chips code-named Medfield, said Paul Otellini, Intel’s CEO, during a keynote address at the Consumer Electronics Show in Las Vegas.

“The best of Intel computing is now coming to smartphones,” Otellini said.

A Lenovo K800 smartphone demonstrated on stage during the keynote will be the first with Intel’s x86 chip. The K800 has a 4.5-inch screen that can display video at 720p resolution, and the smartphone is powered by an Atom Z2460 chip, which runs at 1.6GHz. It will first come to the China market via China Unicom in the second quarter this year. It will be based on the Lenovo LeOS user interface.

Intel also announced a multi-year, multi-product announcement with Motorola which will cover smartphones and tablets. The Motorola phone will be released in the second half of this year, though the company didn’t announce whether it would ship worldwide.

“We will have devices and carrier validation this summer,” said Sanjay Jha, CEO of Motorola Mobility, during an appearance at the keynote. The product launches will be shortly after that.

Intel executives on the sidelines assured that the smartphones with Intel chips will surely ship this year. Intel in 2010 showed an LG smartphone based on the earlier Atom chip code-named Moorestown, but the device never reached customers.

The customer announcements are a big breakthrough for Intel, which so far had fallen flat in its attempts to enter the smartphone market. Intel’s earlier Moorestown chips were considered power hungry, which led LG to scrap the first planned Intel-based smartphone. Intel also partnered two years ago with Nokia to develop the Linux-based MeeGo OS for smartphones, but Nokia abandoned the effort and adopted Microsoft’s Windows Phone OS for smartphones. Intel is now backing Google’s Android OS after merging MeeGo into the Tizen OS.

The Intel smartphone chip will be competitive on power and excel in performance, said Mike Bell, vice president and general manager of Intel’s mobile wireless group, during an interview. Smartphones with the current Z2460 chip will provide battery life of up to eight hours on a 3G voice call, six hours of high-definition video decode, five hours of 3G browsing, and a standby time of 14 hours.

The Atom chip Z2460 chip has dense power management to deliver high performance while consuming less power, Bell said. The chip’s operation will depend on the performance needed; the chip can deliver a burst in performance which could burn more power and hurt battery, but also reduce power consumption when the performance isn’t needed, Bell said. The capability is particularly useful for tablets, which will also include Medfield chips, Bell said.

During the keynote Bell showed a reference design of an Atom Z2460 smartphone with a 4-inch screen and an 8-megapixel camera. The phone can play back high-definition video and could include NFC (near-field communications) capabilities. The Intel reference design smartphones outperform current phones on the market in applications like browsing, Javascript and graphics, Otellini said during the keynote.The handset establishes Intel as a legitimate competitor to ARM, whose chips go into most smartphones. But while a door has opened for Intel, it faces many challenges, including software and adoption issues.

There are some applications in Android Market with native code to run on ARM, but Intel is trying to tackle that challenge, Bell said.

“We will be shipping to our OEMs… some Intel technology that will let the majority of those applications to run without modification on our platform as well,” Bell said.

Analysts have said Intel’s chips will get more power efficient as it advances its manufacturing technology, which is when it could pose a serious threat to ARM’s dominance. The Z2460 chip is made using the 32-nanometer process. Intel could bring big power savings to smartphone chips with the 22-nm process, when 3D transistors could reach smartphones. Intel’s initial chips made using the 22-nm process are already being shown at CES in laptops.

While Intel is throwing a lot of financial muscle behind the development of smartphones, the company has seen failures. Intel has tried to enter the TV industry multiple times, and its most recent attempt over the last two years was marred by a lack of interest in its products.

China is a good market, and having a relationship with Lenovo there provides a good entry point for Intel in the smartphone space, said Nathan Brookwood, principal analyst at Insight 64.

Having Motorola as a customer also helps, considering its large market presence.

But the big story is the chip itself, which is a good entry point for Intel into the smartphone market, Brookwood said.

“If that was an accurate representation of the performance it delivers, it’s a compelling story,” he said, adding that the Intel smartphone looked faster than his dual-core ARM phone.

Intel has a long road ahead to gaining acceptance, but the company can afford some stumbles. Intel has a lot of perseverance and the company will continue to slog in the market, Brookwood said.

After Microsoft, what next for CES?

Steve Ballmer gave Microsoft’s last keynote at the Consumer Electronics Show Monday night, a damp squib that confirmed for some that the software maker has outstayed its welcome on CES’s opening night. But whether Microsoft’s departure is the beginning of the end for the world’s biggest consumer electronics show depends on whom you ask.

There’s been much hand-wringing this year about whether CES is on the decline. Skeptics point to the fact that Apple, the new trend setter in consumer electronics, doesn’t take part in the event. And the show has produced few game-changing products in recent years.

Microsoft’s departure is a big setback, according to Nathan Brookwood, principal analyst at Insight64 and a longtime CES-goer. He expects 2012 to be a high-water mark for the show, and for it to decline in importance from here on.

Even if Microsoft isn’t a big innovator, Bill Gates and Ballmer are household names that draw attention to the show each year, Brookwood said. Microsoft’s departure may also hit CES in the pocket, he noted, as the company rents a huge space on the show floor.

CES has also become less focused, with TVs and sound systems competing for attention with laptops, smart phones, and now cloud services. And many of the events, including keynotes and big press conferences, are broadcast on the web or covered in real-time through Twitter, blogs and news outlets, giving less people a reason to attend.

“I think the show has lost its identity,” Brookwood said. “It’s gotten so that no one knows what it’s good for any more.”

Tim Bajarin, president of Creative Strategies, is more optimistic. People have been predicting the demise of CES for years, he noted. He agreed that CES may have lost some of its edge. “It’s become a place where people are trying to catch up with Apple,” Bajarin said. But the show’s importance has always ebbed and flowed with the technology trends of the day.

While Apple and Microsoft stage their own events to launch products, the big electronics manufacturers need a North American show where they can lay out their wares for buyers, he said. CES is expected to draw 140,000 attendees this year, he noted, and the general public is no longer admitted, meaning a higher proportion of visitors are qualified buyers.

The Consumer Electronics Association, which puts on CES, will have to find a new act to replace Ballmer next year. It’s hard to think of an industry figure as well known, with the possible exception of Sony’s Howard Stringer, who is expected to retire soon anyway.

In any case, Sony is struggling financially and may be unwilling to pay for the opening keynote spot, which goes to the highest bidder, Bajarin said. He sees a Samsung executive as a likely candidate for next year’s opening night.

Microsoft said last month it was pulling out of the show because the timing of CES doesn’t fit with its product release schedule.

Varun Arora, founder and CEO of GoToCamera, which offers a service for online video monitoring, was unfazed. “Who cares?” he said on the CES show floor. “There’s so much going on here, it’s so big, Microsoft’s role doesn’t mean that much any more.”Its departure was inevitable, said Bajarin. “This is no longer a PC show. Microsoft held out for so long because its software extends to so many other devices. But it was only a matter of time.”

Still, its departure is a turning point. Gates gave his first keynote at CES in 1995, and Microsoft has opened the show every year since 2000. Gates handed over to Ballmer in 2009 when he stopped work at the company.

In introducing Ballmer on Monday night, Gary Shapiro, president of the Consumer Electronics Association, said he once compared Microsoft to the U.S.’s founding fathers. “Both were revolutionary changers of human history,” he said.

That could be a hard act to follow.

Polaroid to launch Android-powered Smart Camera with phone

Polaroid finds the whole concept of a “camera-phone” a bit insulting. So it is launching a phone-camera, an Android-driven Smart Camera that is mainly for taking pictures, but can also make the occasional phone call.

The SC1630 Smart Camera looks like a miniature Polaroid camera from the front, with the traditional black exterior and a 3x optical lens that extends out beneath a standard camera flash to take 16-megapixel photos. On its flip side is the ubiquitous Android home screen, with lines of apps and home buttons across the bottom.

“We start off with a camera frame and then we’re trying to make this device smarter,” said executive vice president Emanuel Vorona.

The device is due to launch around April in the U.S. for a price of US$299, but Vorona said Polaroid is still finalizing technical and financial details. Demo models at the Consumer Electronics Show in Las Vegas worked but showed an operating system version of “X.X,” which the company hopes to bring up to the latest Android 4.0 when sales begin.

Polaroid has negotiated to have the Android Market app pre-installed on the device, and hopes the developer community will come up with customized apps that embrace it as a camera first.

As with many Android devices, users can easily share the pictures they take online. It also has Bluetooth connectivity for connecting to external devices, including Polaroid’s own line of instant mobile printers.

The company is still in negotiations with carriers, but may also sell a version without a contract, which will have an empty, usable SIM (subscriber identity module) slot as well as Wi-Fi for Internet connectivity.

Vorona said the company hopes to develop the product to a point where users will consider it as their main choice for both photos and phone calls.

Foxconn workers stage protest in Chinese city

Workers at a Foxconn Technology Group campus in China staged a protest last week, threatening to jump off a building if the company did not meet their compensation demands, according to local Chinese news reports.

Foxconn, a manufacturer of electronics for companies including Apple, Hewlett-Packard and Dell, confirmed on Wednesday in a statement that the protest had taken place. About 150 employees at the company’s Wuhan campus staged the incident on January 4, it said.

Pictures of the protest have been circulated by Chinese media and on social networking sites, showing a large crowd of workers gathered on top of the roof of a building, with fire trucks parked below. More pictures can be found here.

“The incident was successfully and peacefully resolved later that morning after discussions between the workers, local Foxconn officials and representatives from the local government,” the company said.

Foxconn did not state what it manufactures at its Wuhan campus.

The dispute occurred after workers were told they would be transferred to another business unit due to a shift in production lines, according to Foxconn. 45 employees decided to voluntarily resign, while the remaining workers chose to stay with the company.

Working conditions at Foxconn’s factories in China have been under the spotlight since 2010, when a string of suicides occurred at the factories, that involved employees jumping off buildings. During that year, there were a total of 18 suicide attempts, with 14 deaths, according to watchdog group Students & Scholars Against Corporate Misbehavior.

Wall Street Beat: Tech may be a bright spot in tough economy

Tech stocks ended the first trading week of 2012 on an upbeat note even though both Forrester and Gartner this week forecast slowing growth in IT spending, due mainly to concerns about the global economy.

The Nasdaq Computer Index closed Friday at 1,425.65, up 5.03 points. The increase was not big, but nonetheless a bright spot on a day in which the Dow Jones Industrial Average closed down by 55.78, at 12,359.92, and the S&P 500 closed down by 23.25, at 1,277.81.

Analysts expect software sales to be strong this year, and in general agree that while spending on hardware will remain under pressure, it will nonetheless rise. But the global economy is giving mixed signals.

There are increasing signs that the U.S. economy is getting stronger. Friday, for example, the Department of Labor reported that the U.S. added 200,000 jobs in December, reducing the unemployment rate to 8.5 percent. The news followed other reports of increased hiring.

However, fears about European debt still weigh on investor confidence. Italy’s largest bank, Unicredit, this week offered to sell €7.5 billion (US$9.8 billion) in shares at a sharp discount, in yet another sign of financial sector weakness. The big concern for Europe now is that Italy may default on its sovereign debt, breaking up the eurozone and leading to severe recession.

Forrester Friday released its latest IT spending forecast for 2012, projecting a slowdown in the global IT market from 9.6 percent in 2011 to 5.4 percent in 2012 when measured in U.S. dollars. In local currencies, the slowdown will be from 6.7 percent in 2011 to 5.3 percent in 2012.

The main cause is the recession which, most likely, has already taken hold in Europe, with modest growth in the U.S. and a potential easing of growth in Asia Pacific also contributing, according to Forrester analyst Andrew Bartels .

On a global basis, IT purchases will be US$2.1 trillion in 2012. Software, at $529 billion, or 25 percent of the total, maintains its position as the largest category of spending, according to Forrester. Computer equipment, at $438 billion, or 21 percent of the total, is second, followed by IT consulting and systems integration, IT outsourcing, and communications equipment (excluding telecom services).

“If companies see slower growth in revenues they look for ways to cut costs, and CIOs say what can we cut in IT,” noted Bartels.

Lawsuits, competition weigh on Motorola

The cost of patent lawsuits and a more competitive market weighed down Motorola Mobility’s fourth-quarter financial results, the company reported Friday in releasing preliminary numbers.

Motorola expects to report US$3.4 billion in sales for the quarter ended Dec. 11, less than the $3.88 billion that analysts polled by Thomson Reuters were expecting. Motorola hadn’t previously disclosed a forecast for the quarter. It plans to release its full financial report on Jan. 26.

Despite reporting losses for the first three quarters of the year, Motorola said as recently as October that it expected to be profitable in the fourth quarter and for the full year. On Friday, it said it had achieved “modest profitability” in the quarter, excluding certain one-time items.

The company shipped 10.5 million mobile devices in the quarter, including 5.3 million smartphones. That’s more smartphones, but fewer phones in total, than it shipped in the third quarter. It didn’t say how many tablets it had shipped.

It’s unclear if providing a release date for its full results is an indication the company doesn’t expect its acquisition by Google to be completed by then. Motorola initially hoped for the deal to close by the end of 2011 but has also said it might not close until early this year. On Friday, it said it continues to expect the acquisition to close in early 2012.

Motorola has chosen to battle some of its adversaries in court rather than agree to pay a license fees for patents. Many of its competitors, including HTC and Samsung, decided to pay Microsoft for patented technologies it says are used in their Android phones. Motorola is also fighting Apple in court.

Some experts suspect that Google agreed to purchase Motorola to be able to leverage Motorola’s significant patent portfolio against Android attackers.