Humdinger's Wind Power Alternative

As an MIT engineering undergraduate visiting the rural fishing village of Petite Anse, Haiti, in 2004, Shawn Frayne hoped to devise a way to convert abundant agricultural waste into cheap fuel. But the budding engineer soon found that the community's mainly poor residents faced an altogether more immediate need. Unconnected to the local power grid, they relied heavily on dirty kerosene lamps, which are not only costly to operate but also unhealthy and dangerous. He decided to devise an alternative—a small, safe, and renewable power generator that could be used to power LED lights and small household electronics, such as radios.

The result is the Windbelt, a miniaturized wind-harvesting power generator that has absolutely nothing in common with the traditional, towering wind turbines that dot the fields and shorelines of developed countries. The simple device was awarded $10,000 in late September as a finalist for the Curry Stone Design Award, a charitable prize that aims to boost design and innovation projects for developing countries. Frayne, now 27, also won a Popular Mechanics Breakthrough Award last fall, earning him a coveted spot on that magazine's annual list of up-and-coming scientists and engineers. Now Frayne and his five-man startup, Humdinger Wind Energy in Honolulu, Hawaii, are working on turning a promising prototype into reality.

Exploiting Vibrations

"Wind power has pretty much looked the same for the past 80 years," says Frayne over the crackle of a Skype phone call from Xela, Guatemala, where Humdinger is working in rural locations to develop production-ready versions of the Windbelt. After his initial prototypes proved too expensive or inefficient (or both), Frayne took a different tack, eschewing a propeller-type design for an entirely different idea. About the size of a cell phone, the final Windbelt prototype employs a taut membrane that, when air passes over it, vibrates between metal coils to generate electricity. Frayne claims it is the first wind device of any size not to employ turbines.

Indeed, the roots of his innovation are unexpected: Frayne says he was inspired by studying the Tacoma Narrows Bridge in Washington State, which dramatically collapsed in 1940 due to powerful vibrations caused by the wind (see here.) The Windbelt harnesses those same dynamics to generate power.

Adaptable to Developed Economies

Frayne's device joins a growing array of simple, inexpensive technologies created for developing countries that have also garnered considerable attention in the U.S. and Europe. "Innovations arising from problems in developing economies should meet the challenges of developed economies, too," says Frayne emphatically. With that in mind, Humdinger is taking "a market-oriented approach," he says. That means pitching Windbelt technology as a green way to power air-quality sensors or WiFi transmitters in new buildings in the developed world, for instance. "People are realizing that smartly designed micro-installations can have a big impact," says James Brew, a principal architect with the Rocky Mountain Institute, a green think tank in Aspen, Colo. The Windbelt's small size and negligible cost, adds Brew, make it potentially applicable in developed settings—such as new skyscrapers—as well as the more rugged conditions of the world's rural villages.

Though he won't reveal how much funding the group has received to date, Frayne says it would cost upwards of $30 million in venture capital to expand the company so it could manufacture Windbelts itself. More likely, Humdinger will end up licensing the technology to other manufacturers, which would assume development costs.

Undeterred by the obvious challenges of marketing an entirely new type of wind power generator, and even though wide distribution is still some years off, Humdinger is forging ahead. In the past year, the group has established pilot programs in Guatemala and Haiti as well as rapid-prototyping facilities in Hong Kong. They are also working on larger versions that could generate significantly more power. The Windbelt may have started with personal curiosity, but Frayne's mission has changed dramatically. "We're really trying to develop the new building blocks of wind energy," he says.

Wind: The Power. The Promise. The Business

Career Advancement in Tough Times

The recession we are heading into promises to be brutal and long-lasting. Once the pink slips start piling up—as they surely will—the workplace will become increasingly Darwinian. In times like these, the default setting for many people goes something like this: I'm going to keep my head down, avoid drawing attention, and hope to be standing when the destruction passes.

That's one strategy, for sure. But the hard times can also be an opportunity to advance one's career—or at least show the boss that you are worth hanging onto. Because if there is one thing you can be certain of in this treacherous season, it's that team leaders will be watching everyone a lot more closely than before. Career guru Marcus Buckingham, whose latest book is called The Truth About You, puts it bluntly: "Now bosses get a chance to see who is really good and who isn't."

First, a few don'ts. This is not a moment for sudden moves spurred by panic. "When people feel a lot of anxiety, they either shut down or do things impulsively to reassure themselves that they are doing something," says Ben Dattner, an executive coach who consults to such companies as Credit Suisse (CS), Pfizer (PFE), and Goodyear (GT). "But that can backfire." Under this category: rushing to the boss to tell her that one of her favorites is an incompetent lout.

Another no-no: unseemly ambition. Sure, self-promotion can grate at the best of times. But when the boss is cutting people—and feeling horrible about it—making demands can seem almost sociopathic. A few weeks ago, having just laid off two people from her high-end Manhattan public-relations shop, Jennifer Hawkins gave one of her associates a raise. This person proceeded to ask for even more money. Bad move. "I was like, 'Are you watching TMZ and not CNN? Do you not understand?' " says Hawkins. "Next time, she could be on the block."

TAKE THE INITIATIVE

So what is considered appropriately ambitious behavior in a time of savage retrenchment? Making yourself indispensable. Ashley Howard is a 22-year-old manager at Denver-based FoodServiceWarehouse.com, an online outfit that supplies kitchen equipment to restaurants nationwide. Months ago, the crumbling economy spooked her. Howard wanted to make herself bulletproof. The world was going green; so would she. Howard got her company to pay her tuition to become accredited in sustainable business practices. Guess what her employer's next big initiative is—and who became the go-to employee? Since reinventing herself, Howard has received a big raise and two bonuses.

At a time when it's easy to assume that everyone else is putting his own needs first, candor and self-effacement can be tactical weapons. One executive at a Midwestern industrial products business actually argued a few weeks ago that his job made no sense. That honesty so impressed his boss that the executive was rewarded with a different position—at a higher salary.

While many people lose themselves in the calamity unfolding around them, survivors pull themselves back and calmly survey the landscape for ideas that can help their employer. Sam Brace works for Caliber Group, a Tucson marketing firm. Since the economy started faltering, says his boss, Linda Cohen, Brace has been tireless in his efforts to help his clients get new business in a tough environment. The clients are happy and so is the boss. "When employees can help our clients in these economic times," says Cohen, "their job security increases."

In the coming months, the hard times will afflict a growing number of companies and industries. And a telling tableau of what is to come can already be glimpsed inside the battered citadels of finance. Look no further than the newly merged Bank of America (BAC) and Merrill Lynch (MER).

Since BofA is acquiring Merrill, you might expect the latter's employees to be the most forlorn and passive. Not so, says an executive coach working for the company. The coach says some Merrill staffers are coming up with solutions and getting projects done despite constricting resources. By contrast, this person says, some BofA employees are "the ones who are giving in to despair, sadness, and bitterness, and always grousing." And, the coach adds, the sad sacks could be most likely to get the ax. "People never forget how you come across in extremis. If you can shine at this moment, you'll shine forever."

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Will Demand for Solar Homes Pick Up?

As global financial markets melted down in October, Congress handed a gift to America's green energy industry: It renewed and broadened a set of tax credits for wind and solar power, geothermal, tidal energy, and more. The move did little to prop up eco-energy stocks, which have followed oil prices down. But the news did send a positive jolt to one of the economy's darkest sectors: homebuilding. Or, more specifically, solar-powered homes. Consumers recognize that green homes "save money month in, month out," says Rick Andreen, president of Shea Homes Active Lifestyles Communities in Scottsdale, Ariz.

Most of the sweeteners Congress conjured up will go to big projects such as wind farms. But aspiring buyers of green homes will benefit, too. The revised 30% one-time investment credit for solar means that a buyer who installs a typical $25,000 solar panel system on his roof will get $7,500 in income tax credits, up from $2,000 under the old standard. How long that investment takes to pay off will depend on local rules and utility rates. In markets with the most costly power, such as California, Connecticut, and New Jersey, the pretax compound rate of return on a typical home solar system will be better than 15% per year, says Andy Black, chief executive of OnGrid Solar, an industry research firm.

The fresh credits may mark a turning point for solar-powered homes. During the housing boom, when mortgages and energy were both cheap, green power was not a hot option; typical home buyers preferred granite countertops to solar panels. But even before the subprime crash, builders began to see rising interest in sun-powered dwellings. Ryness Co., which compiles sales data for homebuilders, found in a recent survey that homes with solar systems were outselling others by as much as 2:1 in 13 California communities.

Today there are about 40,000 solar homes in the U.S., but that number is set to spike. Shea is adding solar to communities planned for Arizona, California, Florida, and Washington State. And, responding to a shift in buyers' attitudes, big builders such as Centex (CTX), Lennar (LEN), Pulte Homes (PHM), and Woodside Homes are following suit. Consider Whitney Ranch, a development south of Sacramento. Sales there softened in the housing downturn, says Kathryn Boyce, an executive at Hanley Wood Market Intelligence. But when Standard Pacific Homes (SPF) put solar systems on a group of new models in the development, they sold out. The builder then decided to install panels on all 304 of the homes.

The appeal of solar homes could grow as the economic outlook worsens. The more utility bills cut into household reserves, "the more consumers recognize the value of efficiency," says Robert W. Hammon, principal of ConSol, a green building consulting firm. And there's growing consumer awareness that solar homes appreciate faster than ordinary dwellings. They also resell for a premium of up to 5%.

According to Ben Hoen, a researcher at Lawrence Berkeley National Laboratory who studies the effects of eco-features on real estate values, more homeowners now see solar panels as a long-term asset. Mortgage lenders, however, have been slow to make that link. The loan processes at Fannie Mae (FNM) and Freddie Mac (FRE) don't give special treatment to buyers who make improvements to lower utility bills, says Shea's Andreen. Builders wish lenders would start to take stock of eco-features. "Solar panels free up household cash flow," Andreen says. "Lenders should recognize that."

Samsung: Good News Despite Bad Earnings

Samsung Electronics executives are putting on a brave face after the company posted disappointing quarterly results. On Oct. 24 the Korean giant announced net profit for the third quarter was down 44% from a year earlier, to $1.15 billion. But, they say, they have reason to stay optimistic about their future.

And they have a point. For starters, Samsung is outdoing its rivals. The world's second largest semiconductor producer after Intel (INTC), Samsung is the only company in the black among makers of chips used for PC memory and for storing data in portable gadgets such as digital cameras and music players. (Intel is not in the memory chip business.) Chipmakers from Korea, Taiwan, and Japan, in contrast, have all reported big losses. Samsung, the No. 2 mobile-phone maker after Nokia, is also the only major handset company that increased shipments in the three months that ended in September.

Perhaps more important, Samsung has a big war chest. After it dropped a $5.85 billion bid (BusinessWeek.com, 10/22/08) to acquire SanDisk (SNDK) this week, it is sitting on a cash reserve of some $7.6 billion that will allow it to keep investing in research and development, marketing, and factories—a luxury its cash-strapped rivals in the chip industry can't afford. Samsung will keep "widening the existing gap with competitors," says Samsung Executive Vice-President Chu Woo Sik. "We will have enhanced our leadership [for] when the market recovers."

Another advantage for Samsung is a weak Korean currency. The won, which has fallen by more than 40% this year against the dollar to become the world's worst-performing currency, is making Samsung much more competitive in export markets (BusinessWeek.com, 9/19/08). This is particularly so as rivals from Japan such as Sony (SNE) and Toshiba (6502.T) are suffering from a strengthening yen (BusinessWeek.com, 10/23/08).

Memory Chip Glut

To be sure, the headline numbers are grim. Samsung's third-quarter profit was its worst in more than three years. Its net profit margin in the three months leading up to September was just 6%, down from 13% from a year earlier, although sales grew 15%, to $18.1 billion. That's largely because the memory chip business, traditionally Samsung's cash cow, is suffering from a supply glut. Prices for a typical DRAM chip used for PC memory dropped 17% from the beginning of July to the end of September; prices for NAND flash chips used widely for digital cameras plunged 35%.

And the worst may not be over. "We foresee the coming months to be an even more challenging period," Chu admits. Many semiconductor analysts say memory chip prices are expected to stay weak until the first half of next year, with a rebound expected in the second half. Samsung's semiconductor division posted an operating profit of $226 million in the third quarter, down 74% from a year ago, but even that small profit is widely seen being wiped out in the fourth quarter.

Still, as bad as things are for Samsung, things are much worse for its rivals. Among Samsung competitors swimming in the red are crosstown rival Hynix Semiconductor, Japan's Elpida Memory (6665.T) and Toshiba, and Taiwan's Powerchip Semiconductor and Nanya Technology. "Samsung certainly has enough cash to weather the industry meltdown and will be poised to reap benefits from an increased market share in an upturn," predicts Song Myung Sup, chip analyst at brokerage HI Investment Securities in Seoul. Song figures Samsung's DRAM market share will rise to 32% by next June from 21% at the beginning of last year.

Another good piece of news for Samsung during this time of economic woes comes from its handset business. It sold 51.8 million phones in the quarter, a quarterly record and up 13% from the previous three months—nearly triple the pace of growth for the global handset market, which grew 5%. Senior Vice-President Chi Young Cho at Samsung's telecom unit predicts the company will exceed its target of selling 200 million handsets this year, up from 161 million last year.

That means Samsung's market share is rising again. The 200 million phones represent a global market share of more than 16%, up from 14.3% last year and 11.5% in 2006. "Samsung is cementing its position as the world No. 2," after overtaking Motorola (MOT) last year, says technology specialist Michael Min at fund manager Tempis Capital Management. Song at HI recommends a "buy" for Samsung shares. "The stock will fluctuate in the short term, but I see it rising by more than 50% in six months," Song says.

China's Great Railway Expansion

Beijing - Two or three times a year, Cargill's joint-venture fertilizer plant in China's remote Yunnan province has to shut down, usually for weeks at a stretch. That's when there aren't any railcars available for shipping its fertilizer to customers across China. Without railcars, the factory's warehouse fills to overflowing, and production has to halt. "There's a huge demand for shipping, but the railroads can only meet 30% of the demand," says Zhang Hong, sales manager of the plant, which shut down yet again in October.

For decades, China has neglected investment in railroads in favor of building highways. With less than 49,000 miles of rails, China has roughly a third of America's track for an area of similar size. The nation's rails carry a quarter of global train cargo and passenger traffic on only 6% of the world's track, making its system the busiest on the planet. "China's strained railroads have already become a bottleneck for the economy," says Yu Tengqun, secretary of the board of state-owned China Railway Group, which has built two-thirds of China's railroad network since 1949.

CRISSCROSSING THE MAP

China is now undertaking the world's biggest railway expansion since the U.S. laid its transcontinental line in the 1860s. Beijing plans to spend $248 billion through 2020 on 75,000 miles of new track, for both freight and high-speed passenger lines. At that point, China's high-speed passenger network will likely be the biggest on earth.

Despite these colossal ambitions, a nagging question remains: Can anyone make money from all this? Equipment suppliers, such as China South Locomotive & Rolling Stock Corp. and multinationals like Siemens, certainly can. But it's hard to profit from running a railroad on the mainland. Analysts at UBS (UBS) estimate China's Ministry of Railways, which operates the railroads, has a net profit margin of less than one percent on revenues of about $35 billion. The Ministry maintains majority control over all rail lines and sets freight rates for farm products and ticket prices for migrant workers at artificially low levels. It wouldn't comment for this article.

That pricing policy is politically smart but commercially ruinous. Only 16 of China's 26 joint-venture railway companies—each of which involve the Ministry and often local governments as well—are marginally profitable, according to UBS. The rest chug along in the red. In June, China's first private enterprise to invest in a railway project, Guangyu Group, decided to reduce its stake in the Quchang Railway to 19%, from 34%. The company was unwilling to comment.

Pressure on the Ministry of Railways to find the billions needed for all this expansion may eventually force it to loosen its grip on pricing and cede control of at least some of the railroads. "There is a lot of capital now that is very interested in building railroads," says Zhao Jian, a professor at Beijing Jiaotong University who researches railway reforms. Until that happens, China's rail industry will continue to attract more business than it can handle and fewer investors than it needs.

GM Cuts Costs to the Bone

Cash is getting so tight at General Motors (GM) that management has launched another wave of cost-cutting. The company is even scrutinizing the electricity bills.

Auto sales are in their worst slump in decades, resulting in a cash burn rate of about $1 billion a month at GM. The company is selling assets to raise money, but as the economic slump appears to be gaining traction, GM is now delaying new models, cutting benefits, laying off salaried workers, and looking at even small items like utility bills.

The latest round of cuts show just how quickly the world has changed around GM and how much pressure the company is under. In July, Chairman and CEO G. Richard Wagoner announced a plan to boost cash by $15 billion through cost-cutting, asset sales, and some borrowing. He said that the $15 billion would be enough even if sales fell to 14 million vehicles in the U.S. Last year, Americans bought 16.2 million vehicles.

Cruze May Be Delayed

But things have gotten worse, including overseas. So GM needs to get leaner for tough times. The company is beginning to delay even some new-vehicle programs that will be pivotal to its turnaround effort. Sources in the company say the Chevrolet Cruze compact will be delayed until 2011, almost a year after it was originally set to launch. The next-generation Chevy Malibu may also be delayed by six months, into 2013, sources say.

GM spokesman Dee Allen would not confirm specific product delays. He said only that GM will "continue to review the portfolio and concentrate on what's most important." He added that some new-car programs "are going to shift around a bit."

Delaying the Cruze and Malibu would conserve cash at a crucial time. Suspending projects now would save cash in 2009, which promises to be at least as difficult for carmakers as 2008 has been. This year the car business is on pace to sell just under 14 million vehicles in the U.S. Next year, Waltham, (Mass.) research firm IHS Global Insight says industry sales will be around 13.4 million vehicles.

Bankruptcy a Possibility

The delays will save precious cash at a time when analysts say bankruptcy is a real possibility. Yet the delays represent yet another year that GM will have to wait for a car the company hopes would make it a serious player in the compact-car market. GM has bragged that the Cruze would not only be the biggest and roomiest compact car on the market, but it would get at least 40 miles per gallon. "GM doesn't have a choice," says IHS Global Insight analyst John Wolkonowicz. "They have to do whatever it takes to get through until the car market recovers. That won't happen until 2010."

The Cruze is planned as a replacement for the Chevy Cobalt, which has performed well, with sales rising 6.3%, to 162,000, in this year's woeful market. But the Honda Civic and Toyota Corolla have sold more than 280,000 each through September.

Elsewhere, GM said it will cut 401(k) contributions for white-collar workers and more salaried jobs. As many as 5,000 workers could go, Dow Jones Newswires (NWS) reported on Oct. 23.

Staying Alive Till 2010

These are tough decisions, but the company has to save cash to stay out of bankruptcy in hopes of making it until 2010. By then, concessions in a new labor contract with the United Auto Workers will kick in, saving several billion dollars annually. And hopefully, the car market will rebound. "GM has to save cash until 2010," says James Hall, principal of Detroit-area consulting firm 2953 Analytics. "The trouble is that they're starting to delay some essential car programs to do it."

GM is also looking at more miserly ways to save money. The company has told engineers and product development staff at its sprawling technical center north of Detroit to turn the thermostats down to 66 degrees and turn lights off after hours. There was also an e-mail circulated saying GM will remove refrigerators from some offices to save on utility bills. Allen, the GM spokesman, said he didn't know about specific plans to save on power bills, but said the company has done things like that in the past when cash got tight.

Can GM and Ford Scrape By?

Can GM and Ford Scrape By?

Chevrolet Pins Europe Hopes on Cruze

Baltimore's New WiMAX Service Flies Where Wi-Fi Flops

Can something called WiMAX succeed where other technologies have failed and bring us ultrafast anytime-anywhere wireless data? A couple of years ago promoters said municipal Wi-Fi would do the job, but projects from San Francisco to Philadelphia have been abandoned or scaled back after smashing into economic and technical realities.

The fast 3G networks currently offered by the likes of Verizon Wireless and AT&T (T) are a step up from EDGE and other second-generation networks. But they still offer only limited coverage. And while 3G is fast enough to pump Web pages to iPhones and other smartphones, it can be painfully slow feeding the bigger data appetites of laptops, whose users expect to stream music and watch video. And it is pricey, typically $60 a month for a computer connection.

WiMAX is the latest wireless ­technology to come on the scene, using very smart physics to achieve extra-high speeds. XOHM, a joint venture of Sprint Nextel (S) and Clearwire (CLWR), has just switched on the first U.S. commercial WiMAX net-work in Baltimore. I took a trip there with a new WiMAX-ready Lenovo (LNVGY) ThinkPad X301 to try it. The experience left me encouraged by the promise of this fourth-generation wireless technology.

XOHM claims average download rates of 2 to 4 megabits per second. When I ran some commercial speed tests, I consistently got downloads at about 3 mb and uploads at 500 kb and 1 mb. That's a bit slower than typical cable service, especially on the download side, but significantly faster than most DSL lines and about three times faster than what I have usually seen on 3G data networks. Perhaps most important, it's fast enough for good-quality video. While someone else drove me around Baltimore's Fells Point neighborhood, I was able to watch Hulu.com's broadcast-quality video with no freezes or pauses to wait for data.

If you happen to live in Baltimore—in the two-thirds of the city that currently has WiMAX coverage—you can get XOHM on-the-go service for $30 a month for six months, rising to $45 after that. At-home service, which requires the purchase of an $80 modem, costs $25 a month, going to $35 after six months. You can combine both services for $50 a month, guaranteed for as long as you maintain the service. XOHM is also available on a month-to-month basis with no contract required, or you can purchase daily service for $10.

XOHM behaves like a 3G network in important ways. Once you've signed up, your computer will automatically connect to XOHM without the need for any sort of login. And since WiMAX is a cellular technology, your Internet connection moves from one cell tower to the next as you drive. In my test, these handoffs were seamless.

WiMAX, like Wi-Fi before it, will require coordination among computermakers. Intel (INTC), which has invested a couple billion dollars in XOHM, is trying to follow its Centrino strategy, which made Wi-Fi a standard, easy-to-use feature in notebooks. The latest Intel laptop chips have WiMAX support baked in, making it cheap and simple for computer companies to add the capability. Lenovo is offering it as a $40 option in four models and plans several more before yearend. Toshiba is building WiMAX into its Satellite U405 laptops.

This doesn't assure success for WiMAX. Verizon and AT&T, as well as wireless carriers throughout Europe, are betting on a related but rival approach called Long Term Evolution (LTE). And XOHM must raise a lot of capital in a difficult environment to build out its network. On the plus side, XOHM has a two-year head start over LTE, since Verizon and AT&T don't plan to roll out 4G before 2010. XOHM has plenty of spectrum in hand to provide national coverage—far more, in fact, than the 4G bandwidth that AT&T and Verizon bought for nearly $20 billion at a government auction earlier this year.

However it plays out, consumers are likely to win. At launch, XOHM is providing faster service at lower cost than 3G networks, and it provides both mobile service and a rival to cable and phone companies for home Internet. That's enough of a reason for all of us to cheer for WiMAX.

Business Exchange: Read, save, and add content on BW's new Web 2.0 topic networkWiMAX's Hefty Price Tag

While Sprint says its roll-out of WiMAX isn't affected by the global slump, InformationWeek reported on Oct. 8 that the company must come up with $1.8 billion, on top of the $3.2 billion it has already raised from investors.

For InformationWeek's analysis, go to http://bx.businessweek.com/wireless-broadband.

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