The Morning Download: Tech Startups Struggle for Deals with CIOs

The Morning Download: Tech Startups Struggle for Deals with CIOs

By Kim S. Nash

Good morning. Emerging technology, all shiny and new, appeals to chief information officers. But the risk of doing major business with young companies often does not. Worries about the stability of startups, the security of their technology and their ability to support a large project stop some CIOs from buying, reports CIO Journal's Angus Loten. "Startup products and services for enterprises, while more accepted than a few years ago, still face significant resistance on the path toward revenue," he writes.

Deanna Johnston, Haier America's CIO, evaluates startup technology but usually doesn't commit. She uses the low price quotes she sometimes gets from eager new companies as a bargaining chip with the established vendors she knows. "I won't take a risk on something that isn't from a proven enterprise technology company," said Ms. Johnston. "Some startups are just so cheap or free, you're nervous to go with it. What if they go out of business?"

Perhaps the fanciful "unicorn" moniker for IT startups that are fetching billion-dollar valuations doesn't do the new companies any favors. CIOs are looking for serious enterprise-class technology. Who wants to be responsible for trusting infrastructure to a fantasy? What do you do to mitigate the risks of doing business with startups? Let us know.

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TECH EARNINGS

Email and file sharing eat into HP's earnings. Nearly a year after breaking away from the former Hewlett-Packard Co., HP Inc. reported lower revenue and earnings in its most recent quarter, though its declining personal-computer business showed signs of stabilizing, The Wall Street Journal reports. Revenue in the company's biggest profit generator, its printing business, fell 14%, reflecting an ongoing shift away from printing documents. On the upside, the company said unit PC sales rose 4%, lifting personal-systems revenue growth to flat, after five quarters of declines. Despite weak earnings, steady cash flow has propped up HP's stock this year, boosting it by 21%.

TECHNOLOGY NEWS

J.P. Morgan Chase appointed a former IBM executive as CIO of cloud services. The bank is evaluating cloud offerings from Amazon.com Inc., Alphabet Inc.'s Google and others. Above, people walk past the JP Morgan Chase Building on Park Avenue in this May 15, 2012 file photo in New York. Agence France-Presse/Getty Images

J.P. Morgan appoints cloud leader. The largest U.S. bank by assets has named former IBM software developer Harish Grama to a new executive position tasked with running the bank's cloud services, The Wall Street Journal's Emily Glazer reports. According to an internal memo reviewed by WSJ, J.P. Morgan Chase & Co. CIO Dana Deasy writes that the "successful adoption of cloud technology is essential" to the bank and that its "evolving hybrid cloud model" will help boost innovation, standardization and productivity. J.P. Morgan began evaluating uses of the public cloud last year, the bank's chief operating officer, Matt Zames, told WSJ in February.

U.S. warns Europe over Apple tax plans. The White House on Wednesday issued a stern warning to European officials that moving ahead with plans to demand billions of dollars in alleged unpaid taxes from Apple Inc., among other U.S. firms, could "create an unfortunate international tax policy precedent," The Guardian reports. European authorities are investigating Apple's tax deals with Ireland, which they say allowed the company to pay very low taxes on income earned throughout Europe. The EU is expected to rule in the case next month.

No easy fix for Twitter harassment problem. Despite a new "quality filter" and an improved abuse reporting system, among other efforts, Twitter Inc.'s reputation as a haven for online harassment is proving hard to shed, The Wall Street Journal's Nathan Olivarez-Giles reports. Twitter says it has "invested heavily in improving our tools and enforcement systems" to respond to and prevent incidents of abuse, a spokeswoman told WSJ. But experts say the social network continues to publicize and magnify instances of harassment, while its rules and response tactics remain vague and inconsistent.

Chinese firms ramp up artificial intelligence. Venture capitalists in China have been pouring money into AI-focused startups, while local tech firms such as search giant Baidu are investing heavily in smart technology and snapping up talent from foreign rivals, Li Yuan reports in The Wall Street Journal. Experts say AI is an area where China can excel, given the volume of data generated by its enormous population of internet users, experts say. This week, Baidu said in a recent joint experiment with Stanford University, its speech-recognition software performed three times faster than 32 people typing text on smartphones, and with a lower error rate.

New bitcoin platform seeks bank appeal. R3 CEV, a startup launched in September 2015, this week filed a patent revealing plans to build new Wall Street infrastructure using bitcoin technology, writes The Journal's Paul Vigna. Its product, dubbed Concord, aims to foster harmony among a consortium of more than 60 banks, including Barclays PLC, Goldman Sachs Group Inc., and J.P. Morgan Chase & Co. By leveraging blockchain, the open-ledger system used to trade bitcoin, Concord would offer a universal software platform connecting bank operations, both within firms and across markets, aimed at digitizing trade clearing and settling, asset registry, and reconciliation, while recording cash balances. Early tests are expected by 2017.

EVERYTHING ELSE YOU NEED TO KNOW

Warren Buffett's Berkshire Hathaway Inc. could lose an $8-per-second windfall on his Dow Chemical Co. stock as the market rallies. (WSJ)

Cyberthieves are hacking into bank accounts via mobile phones using malicious software such as Acecard and GM Bot to steal account credentials. (WSJ)

The Federal Bureau of Investigation's new DNA analysis technology is producing thousands more matches in its database of criminal suspects, yielding fresh leads on current and cold cases. (WSJ)

China's Zika rules raise fears for U.S. exporters worried that fumigation requirements will delay containers and increase costs. (WSJ)

LATEST TECHNOLOGY NEWS

Angus Loten contributed to this article. The Morning Download comes from the editors of CIO Journal and cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints. You can get The Morning Download emailed to you each weekday morning by clicking http://on.wsj.com/TheMorningDownloadSignup.