THE FUTURE OF SHOPPING

Antoine Hazelaar has a chip on his shoulder--or rather just beneath the skin of his left arm. It's a piece of silicon the size of a grain of rice, and it emits wireless signals that are picked up by scanners nearby. Ever since the 34-year-old Web-site producer had the chip implanted in his arm, he's enjoyed VIP status at Barcelona's Baja Beach Club. Instead of queuing up behind velvet ropes, Hazelaar allows the bouncer to scan his arm, and strolls right in. If he wants a drink, the bartender waves an electronic wand that deducts from the 100 Euro tab on Hazelaar's chip.Such sci-fi clubbing is made possible by Radio Frequency Identification, or RFID, technology--tiny digital chips that broadcast wireless signals. RFID tags are cheap and small enough to be disposable, and they're getting cheaper and smaller by the day. Retail stores are beginning to use them as glorified bar codes, putting them on cases of bananas or crates of Coke so they can keep track of their inventory. The...

The Royal Treatment

Business-class travel used to mean some nice extras--a bigger seat, more entertainment choices and maybe a better meal. But these days, corporate travelers can increasingly expect five-star service in the skies. In Virgin Atlantic's Upper Class Suites, which debuted last year, passengers get to sit in leather armchairs, sleep in full-length beds with mattresses, sip champagne all night and order up gourmet dinners whenever they feel like it. They can also enjoy complimentary massages and manicures, designer PJs and limo service to and from the airport. In short, full-on, first-class service--for the price of a business-class seat, with fares typically ranging from about $3,500 to just over $7,000 from New York to London. The suites, which are being added at a rate of about one Virgin plane a week, took $80 million and two years to develop. But they're paying off: the company has announced a major expansion thanks to strong demand and a rebound in business travel.It's the first good...

A Bridge To Nowhere

It's a breathtaking sight, vaulting the sparkling waters of the Gulf of Corinth. When the 2.8-kilometer Corinth Bridge officially opens in September, it will fulfill a century-old dream, linking comparatively wealthy northern Greece to the far poorer southern Peloponnesus. Constructed with 370 million euro worth of European Union funds, the project was supposed to jump-start growth, carrying people and goods into a region that has remained stubbornly underdeveloped. Well, carrying goods anyway. In typical fashion, Greek planners forgot to add a rail line to the blueprints. Thus while the Corinth bridge remains a symbol of Greece's aspirations for the future, it's also eloquent testimony to its bungling efforts to get there.Greece joined the EU in 1981. But the story of its accession holds many lessons for the new countries joining last week. Though Ireland is often hailed as a role model, Greece is in many ways a more instructive case study. It illustrates not only how membership...

The New Dot-Coms

Four years ago, dinner parties in fashionable corners of London and Manhattan were filled with former investment bankers who thought they could be the next big dot-com billionaire. These days the excited chatter is back, only this time everyone wants to be the next George Soros, who was the original hedge-fund billionaire before he set out to save the world. "Just do the math," says Anita Rosenberg, a partner at Harris Alternatives, a Chicago-based hedge-fund company with $5 billion under management. "One good year at a $200 million hedge fund can earn you as much as several years' work at Goldman Sachs."Hedge funds have become more popular and more democratic. The best made strong returns despite the stock-market shocks since 2000 by doing what they are designed to do: hedge bets on stocks and other assets using a variety of strategies, like short selling and arbitrage. As a result, big institutions like pension funds have begun putting money in hedge funds, which previously...

ROYAL TREATMENT

Business-class travel used to mean some nice extras--a bigger chair, more entertainment choices and maybe a better meal. But these days, corporate travelers can increasingly expect five-star service in the skies. In Virgin Atlantic's Upper Class Suites, which debuted last year, passengers get to sit in leather armchairs, sleep in full-length beds with mattresses, sip champagne all night and order up gourmet dinners whenever they feel like it. They can also enjoy complimentary massages and manicures, designer pajamas and limo service to and from the airport. In short, full-on, first-class service--for the price of a typical business-class seat. The suites, which are currently being added at a rate of about one Virgin plane every week, took $80 million and two years to develop. But already they're paying off: last month the company announced a major expansion thanks to a rebound in business travel and a strong demand for the new high-end product.The fact that business travelers are...

VIVE LA REVOLUTION!

White-coated scientists don't usually take to the streets, but they did earlier this month at Paris city hall. More than 2,000 French lab directors resigned in protest over a research funding shortage, and 74,000 signed a related petition. They want the government to reinstate funding that was cut two years ago during an economic downturn. The cuts, they say, have forced scientists to flee to Japan and North America, threatened France's scientific enterprise and, in general, made it impossible to conduct research.The French scientists aren't the only ones worried about Europe's leadership in science and technology. Four years ago European politicians signed onto the Lisbon agenda--a pledge to become "the most innovative, knowledge-based" society in the world by 2010 by supporting research, encouraging high-tech start-ups and attracting top entrepreneurs and scientists. Since then, Europe has only moved farther from that goal. The Continent has fallen 130 billion euro behind the...

GETTING BURNED ABROAD

Claudio Pugelli has one of the toughest jobs in Italy these days. As head of Committee Argentina, it is the Roman lawyer's duty to tell thousands of aging Italian pensioners that they may have lost their life savings. Pugelli, like 450,000 other individual investors in Italy, poured money into Argentine bonds a few years back, hoping to ride a wave of good news about the country, which the IMF was heralding as a model of free-market reform. Two years ago the dream ended when a fiscal crisis forced Argentina to stop payment on $88 billion worth of bonds, the largest such default in history. Now Pugelli and the pensioners he represents are fighting to get their money back, without much luck. The Argentine government is offering only 25 cents on the dollar, and lenders like the IMF aren't pressuring them to do much more for private investors. "A lot of our members don't know how they'll get through their retirement years," says Pugelli. "Many are having to work longer, and start over....

INTERNET SECURITY: THE TWO-MINUTE VIRUS

When the next killer computer virus strikes, who are you going to call? Most probably ponytailed Mikko Hypponen, a Finnish virus hunter with the Helsinki-based firm F-Secure. He and his team, who track and crack several new hacker codes each day, were instrumental in diffusing last summer's omnipresent So Big virus. He spoke last week with NEWSWEEK's Rana Foroohar about the tech dangers that lie ahead.What new threats do you see in 2004?I think we'll see even faster viruses--ones that can infect every known computer address in two or three minutes instead of 15. Also, we haven't seen a really destructive virus in a while--the ones being created a few years ago used to do things like overwrite your entire hard drive. If Blaster or So Big had done that, it would have been a disaster. We're also seeing some changes in where viruses come from. The U.S. is declining as a point of origin. After 9/11, I think some American virus writers either stopped or went underground, fearful of what...

Making Shopping An Experience

Retail trends tend to emanate outward from America, but the man who's shaking up the trade these days is a London-based Italian. Vittorio Radice is best known for taking over the British department store Selfridges in the late 1990s and turning the stodgy Oxford Street shop into ground zero for hip. American retailers like Federated and May have copied parts of Radice's approach, which is to bring entertainment to shopping to give the customer a little something more than a commodity--a jazzier layout, a cafe, a special event, whatever.A few blocks down from Selfridges sits his next turnaround target: the staid British retail institution Marks & Spencer. It already pulls in more than 8 billion a year selling everything from underwear to sandwiches. Now M&S wants to own the country's 20 billion home-furnishings market. Radice was given a golden hello of more than 1 million to go onboard as executive director of the new Marks & Spencer Home business last March, and the...

We Can See You

The next big thing in cell phones may be on its way. "Location awareness"--a technology that allows your phone to find the nearest restaurant, police station, friend or relative--was pioneered in Japan and hyped as a killer app in the late 1990s. Only now is it coming to fruition, driven by new laws in the States and Europe that require operators to provide location data to police and emergency services. In Europe, where companies like Vodafone began rolling out such services in 1999, the new European Union directive took effect in September. The U.S. law goes into effect in 2005.Challenges remain. Some services figure location based on the caller's position relative to the nearest network antenna, and are accurate to within 1,000 feet at best. Handsets that use the Global Positioning System are accurate to within 33 feet, but the software can cause overheating. And privacy concerns are paramount. These services would allow you to find anyone with a cell phone almost instantly, but...

The All-Seeing Eyes

No wireless internet offering has gotten more recent hype than one that allows your cell phone to pinpoint the nearest restaurant, police station, friend or relative. "Location awareness" has been labeled the next killer app by industry watchers, and it's here now. Japan pioneered the technology in the mid-1990s, European operators including Vodafone introduced it in 1999 and Americans followed in the last two years. No nation is farther along than South Korea, where SK Telecom uses the technology to call customers strolling by its Seoul airport lounge, inviting them inside. This beckoning from out of the blue evokes the intimate "awareness" of the wireless networks depicted in "The Matrix."That future is almost upon us, or so we're told. The buzz over location awareness rose a few years ago as well, then died. It's back, due in part to new legislation in the United States, the European Union and South Korea, which will require operators to beef up the technology as a tool for...

Not As Free As You Think

Headlines tell us that world trade is threatened by the struggle between rich and poor nations that erupted at the last big summit in Cancun. The leaders of the two camps, Washington and Beijing, are now trading tariff threats and counterthreats. After Cancun, follow-up talks in Geneva folded early as well. Last week EU Trade Commissioner Pascal Lamy called on Europe and the United States to design trade deals so that poor countries could sign on later. "After the failure in Cancun," said Lamy, "it's clear that business as usual is not an option."But look more closely. The specter of North-South trade wars tends to obscure the fact that commerce is a rich nation's game. The flow of exports and imports between developed nations accounts for 80 percent of world trade. Last week both the United States and the European Union sent out peace signals in their own steel trade dispute before Lamy made his gesture of welcome to the developing world. What that message amounts to is this: if we...

Godfather's Crystal Ball

If Europe had a godfather of technology, it would be Hermann Hauser. The entrepreneur and venture capitalist started Amadeus Capital Partners; Acorn Computers, Britain's answer to Apple; and ARM Holdings, which dominates in chips for mobile phones. NEWSWEEK's Rana Foroohar asked him what's coming next:NEWSWEEK: What big breakthroughs do you anticipate in the next few years?HAUSER: They won't be in computing; they'll be in the mobile arena. It's all about what kind of phone or handheld device you have. Does it have RIM [Research in Motion] for e-mail? Can you send photos? Is the photo quality good? There's so much growth from a consumer angle.When will mobiles replace PCs as the devices of choice?My kids would say it happened five years ago. But they're European, and they're sending SMS. (American kids are still rushing home to get onto chat groups via their PC.) There are also these new flexible plastic displays coming out that are something like e-paper. Slightly hard, but still...

Dial W For War

Recent headlines seem to indicate that Europe poses a threat to Microsoft's ravenous appetites. Pushing a fight abandoned in the United States, European Union trustbusters are reviewing Microsoft's move into the market for digital media, and are due to rule early next year. Meanwhile Linux, the free Finnish operating system, has been gaining customers at the expense of Microsoft's profit center, Windows. The most recent large customer to begin testing the free software: the British government.None of this is good news in Redmond, Washington. But less noticed is the fact that the battle may be turning in Microsoft's favor on perhaps the most important technology front of all--the war for the future of the mobile phone. Dominated by Finnish giant Nokia, the mobile market is the one technology sector in which Europe has enjoyed a sizable lead over American and Asian competition. In recent weeks, however, Microsoft deals with the No. 2 and 3 mobile-phone makers, Motorola and Samsung,...

Empty Title

If a spate of recent headlines is any indication, there's never been a better time to be a businesswoman in Britain. In the past few months Barbara Cassani, the former CEO of Go Airlines, was appointed to head London's 2012 Olympics bid and sit on the board of Britain's largest retailer of food and clothing, Marks & Spencer. Shell CFO Judith Boynton was promoted to the board of her company, and Laura Tyson made waves as head of the London Business School. Pearson CEO Marjorie Scardino led a prominent magazine's list of the most powerful women executives outside the United States, and others, like Morgan Stanley Europe vice chair Amelia Fawcett and Burberry CEO Rose Marie Bravo, also made the cut.There's just one problem with all these British achievers--they're all Americans. According to a recent study by Britain's Cranfield School of Management, 32 percent of women who sit on the boards of companies on the FTSE 100, an index of the largest British companies, are from overseas....

Empty Title

If a spate of recent headlines is any indication, there's never been a better time to be a businesswoman in Britain. In the past few months Barbara Cassani, the former CEO of Go Airlines, was appointed to head London's 2012 Olympics bid and sit on the board of Britain's largest retailer of food and clothing, Marks & Spencer. Shell CFO Judith Boynton was promoted to the board of her company, and Laura Tyson made waves as head of the London Business School. Pearson CEO Marjorie Scardino led a prominent magazine's list of the most powerful women executives outside the United States, and others, like Morgan Stanley Europe vice chair Amelia Fawcett and Burberry CEO Rose Marie Bravo, also made the cut.There's just one problem with all these British achievers--they're all Americans. According to a recent study by Britain's Cranfield School of Management, 32 percent of women who sit on the boards of companies on the FTSE 100, an index of the largest British companies, are from overseas....

Finding A Safe Bet

Mobile-phone companies are always trying to sell you the next big thing. Phones that can stream football games, send you movie clips, download a new song or snap pictures are what beleaguered telecom operators hope will bring in the big bucks over the next few years. European carriers are counting on such whiz-bang data services to rack up an extra $90.2 billion in revenue in the next six years, according to a recent survey from Forrester, the technology re-search firm. But analysts say they may be overestimating those figures by at least half. They also say that telecom companies in both Europe and the United States need to start looking east for inspiration, and a better business model.The future of the mobile Internet is already on display in Asia. European and American carriers continue to lag behind on developing mobile payment systems, easy-to-use content and common standards for new services, while Asians are coming up with simple, cost-effective offerings. One example can be...

Outsiders In

If a spate of recent headlines is any indication, there's never been a better time to be a British businesswoman. In the past few months Barbara Cassani, the former CEO of Go Airlines, was appointed to head London's bid for the 2012 Olympics and sit on the board of Britain's largest retailer of food and clothing, Marks & Spencer. Shell CFO Judith Boynton was promoted to the board of her company, and Laura Tyson continued to make waves as head of the London Business School. Pearson CEO Marjorie Scardino led a list of the most powerful women executives outside America, and others, like Morgan Stanley Europe vice chair Amelia Fawcett, and Burberry CEO Rose Marie Bravo, also made the cut.There's just one problem with this list of British achievers--they're all Americans. According to a recent study by Britain's Cranfield School of Management, 32 percent of women who sit on the boards of companies on the FTSE 100, an index of the largest British companies, are from overseas. (Though...

Road Warrior

With the rise of manufacturing in China and the exodus of back-office jobs to India, more and more executives are finding themselves in more and more places in Asia. The barriers to doing business aren't only cultural: technological hurdles continue to plague even the most modern cities. While Hong Kong and Singapore are teeming with Wi-Fi hot spots, many hotels and airports in more remote locales have yet to be outfitted with reliable connections. Not to fear: these innovations should make doing business in even the most far-flung places easier than ever before.

An Experimental Mind

On the Hewlett-Packard campus in the heart of Silicon Valley, scientists in the Decision Technology lab are using experimental economics to predict the future of the company. In one experiment they create minimarkets, with real cash rewards, that allow employees to bet on future sales and revenue. So far these internal futures markets have done a better job of forecasting than polls of top executives. The disruptive implications for the corporate pecking order, and not only at Hewlett-Packard, aren't lost on anyone. In another experiment, students from nearby Stanford University act out the roles of HP executives, retailers and suppliers, testing new marketing plans or sales strategies before millions are spent to roll them out in the real world. The laboratory subjects sit at terminals, playing their parts in a virtual corporate world that can grow as elaborate as the urbanscapes of SimCity, the computer game. HP calls the program SimBusiness. HP senior scientist Kay-Yut Chen calls...

A New 'Wind Tunnel' For Companies

Companies are always trying to predict the future. These days, the field of experimental economics--which replicates market and business scenarios in the lab--is giving the crystal ball an upgrade. Hewlett-Packard scientists, for example, have created mini-markets that allow its executives to bet on, among other things, future sales and revenue. The internal futures markets do a better job of predicting than simply polling the executives because anonymous bids bypass office politics, and cash rewards (up to $250 for the best bets) provide extra incentive. Another of its fortune-telling exercises uses Stanford students acting as HP execs, retailers and suppliers in a kind of Simbusiness test of new strategies.Remember the Defense Department's ill-fated proposal to create a terror futures market this year? The tone-deaf idea was quickly shot down, but the underlying science is being explored by a handful of large companies like IBM, Microsoft and Ford. Experimental economics is "a...

Listening To The Kids

The term "fieldwork" generally brings to mind biologists, baboons and binoculars. For executives at Microsoft, it involves the study of another kind of unpredictable animal: the teenager. About three years ago the company began employing anthropologists, as well as teams of young engineers and recent college graduates, to observe teens around the world in their natural habitats, from Seattle shopping malls to London schools to Seoul street corners. The goal: to see how they used technology in their daily lives, and then to turn that information into new products--not just for kids but for the rest of us, too. What they found has not only influenced the development of existing products, it has also led to the creation of new software: the forthcoming threedegrees, which facilitates everything from online practical jokes to virtual sales meetings. "Kids drive technology today," says Microsoft anthropologist Anne Cohen Kiel. "By meeting their needs, we meet everyone's needs."Does that...

Fashion: Virtual Vintage Style

Vintage couture has never been hotter. Actresses like Nicole Kidman, Renee Zellweger and Julia Roberts regularly sport vintage evening dresses on the red carpet, and modern designers are reaching back in time for inspiration. For the rest of the us, secondhand shops all over the world have been enjoying a renaissance as fashionistas pour through racks of high-end castoffs in search of the perfect Ossie Clark blouse or Pucci jumper. More and more Web sites are hawking vintage over the Internet, too. Megasites like eBay, which has long done a brisk business in apparel, have launched special sections for vintage couture. Companies like Yoox (yoox.com) have special sections devoted to themed vintage sales. At Enokiworld (enokiworld.com), browsers can find everything from 1970s tapestry coats to retro Mexican jewelry to black lace corsets from the '50s. Auction houses are even allowing buyers to bid for top pieces online. (For example, Doyle, the famed New York auction house, posts its...

Inventing Hippie Chic

At a time when fashion designers routinely stage shows in railway stations or hire actresses and musicians to moonlight as models, couture as theater is something of a cliche. Not so back in the 1960s, when the presentation of a new collection still involved mainly prim models walking up and down a runway holding ID numbers to mark their outfits. It was the late British designer Ossie Clark who changed it all, sending It girls like Patti Boyd and Bianca Jagger onto the catwalk, encouraging scantily clad models to dance among the audience and filling the front row not with press but with glitterati clients who epitomized the swinging '60s--people like John Lennon and Yoko Ono, Twiggy, Talitha Getty, Penelope Tree, Mick Jagger and Marianne Faithfull.Despite the number of famous people he dressed, Clark himself is little known--mainly because he was a mercurial and self-destructive talent with a heyday that lasted about 10 years. But as a new retrospective at London's Victoria and...

What New Europe?

It's surprising that a man so widely despised there could have done so much to frame the way the world thinks about Europe. In Germany last week, U.S. Secretary of Defense Donald Rumsfeld repeated his now famous juxtaposition of the "Old Europe," which balked at war in Iraq, versus the "New Europe," which backed the good fight against Saddam, terror and all that. Since Rumsfeld first drew this distinction back in January, the terms Old and New have been widely adopted to distinguish the founding Western states of the European Union, particularly Germany and France, from the 10 members now entering from the East, led by Poland, Hungary and the Czech Republic. More than a label, the "Old" and "New" symbolize a widespread sense that the newcomers are post-communist converts to American ideals, and will establish a 51st state in the heart of the Continent. One German wag warned, on the eve of Poland's vote last week to join the EU, that it would enter as America's "Trojan donkey."The...

A Country That Works

The computer programmers drink mint tea with pine nuts. The offices are decorated with delicate tiles of azure blue and canary yellow. But aside from the Arabic details, you might mistake the Tunis Technology Park for any high-tech enclave in Silicon Valley. Walls are plastered with posters advertising multimedia fairs and Linux training sessions. Firms like Alcatel and Ericsson are here, as is one of the country's top technical colleges, where twentysomethings in T shirts hover over laptops, talking code. Two of them, Mohamed Sadok Mouha and Mohamed Ramzi Abdelhak, recently launched a software firm, Progress Engineering. "We want to be as big as Microsoft," says Mouha.That may take a while, since Tunisia's GDP is a fraction of Microsoft's market cap. Yet lofty ambition doesn't seem totally out of place in a country of 10 million people that is defying the tragic decline of the Arab world, where vast oil wealth and billions in foreign aid have been squandered by corrupt and...

The Road Less Traveled

Desperate times call for desperate measures. In France this summer, that means being downright friendly to tourists-- something that doesn't come naturally to every cafe waiter and concierge in Paris. So, in an effort to bolster tourism, the French have launched the "Bonjour!" campaign. Nearly 6,000 billboards emblazoned with the greeting are now scattered around the country, reminding locals to extend a warm welcome to visitors. Meanwhile, the French Tourist Office is offering 60,000 tourism professionals lessons on how to smile brighter and provide better service. "We want people to be nicer, especially to Americans," says the office's director-general, Jean-Philippe Perol.No wonder. Americans are the big spenders of global tourism, a $3.5 trillion industry that represents 10 percent of world GDP and employs more than 200 million people. But, like many others around the world, Americans are becoming more and more skittish about traveling beyond their own borders. Already reeling...

The Alarmist Of Omaha

Do you know what feline pride means to a money manager? (Flexible equity-linked exchangeable security.) A Synthetic CDO? If the acronyms sound exotic, the truth is that these are garden-variety derivatives, a fast-growing form of investment now used by nearly every major bank and corporation in the world. If you've got a retirement fund, your future is probably tied up one way or another in derivatives, which is why this story may alarm you. For derivatives have been making news lately both for dramatic growth--and for widening concern that they are the tangled tripwire for the next major global financial meltdown. As Berkshire Hathaway chair Warren Buffett put it recently, derivatives threaten to become "financial weapons of mass destruction."This is not how it was supposed to work out. Derivatives are as old as civilization: Aristotle referred to an option on the use of olive-oil presses in his "Politics" some 2,500 years ago. The idea behind derivatives is to reduce risk by...

Cry For Me, Baghdad

Back in the late 1970s, Iraq was on a short list of the world's most successful developing countries. Baghdad cafes were bustling with a well-educated professional class that presided over a thriving economy, which has since shrunk from $100 billion to (best guess) perhaps $25 billion. Now Iraq emerges from the war at the top of another list--that of the biggest emerging-market meltdowns ever. It has a debt-to-GDP ratio of 15 to 1, or several times that of Argentina or Brazil at the height of their troubles last year. Like Russia after the Soviet Union, Iraq faces the challenge of turning a corrupt dictatorship into a free-market economy. "Iraq's situation is very, very complicated," says Ian Bannon, head of conflict prevention and reconstruction at the World Bank. "We haven't seen anything quite like it."In every recent emerging-market crisis, from Thailand to Argentina, the rescue has been hampered by issues of "transparency," which is banker jargon for the tendency of debtors to...

Buying American

Is America monopolizing the business of rebuilding Iraq? In recent weeks Washington has handed out initial contracts for fighting oil fires and reconstructing roads, bridges and waterways--all to American firms, which could end up earning millions or even billions for their efforts. The Bush administration has justified the "Buy American" approach by saying U.S. firms have the necessary experience in war zones--and the security clearances to work alongside U.S. troops. So the contracts have gone to U.S. firms that include Bechtel and Halliburton, which was once headed by Vice President Dick Cheney. The Texas oil firefighters of Boots & Coots are already at work in their orange suits in the southern Iraqi oilfields of Rumailah, all of which alarms American allies, who are suffering an acute case of deja vu. "The concern is that the U.S. has all the contracts sewn up," says Colin Adams, head of the British Consultants and Construction Bureau, a trade body...

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