Additionally, it said it is partnering with four software providers to gain access to 50,000 small- to medium-sized merchants.

Meanwhile, tomorrow will be exactly a year since Google launched its mobile wallet.

So, you ask, which large technology company is winning the race to gain the hearts and wallets of consumers and retailers?

Pretty clearly, it’s neither.

Google may have gotten off the blocks first, but ever since, it has been plagued by execution issues and management departures. In contrast, PayPal has a lot of institutional advantages, but it still has a long way to go before it is synonymous with Visa or MasterCard.

Here’s just a snapshot of the two companies’ advantages and disadvantages:

Google:

Pros: It has relationships with 25 national retailers, totaling 140,000 locations.

Cons: It bet too early on using near field communication technology. Sprint, the third-largest U.S. wireless carrier, is the only provider so far that is backing it and it’s deployed on only six Android devices.

PayPal:

Pros: There are 110 million people using PayPal worldwide, who are on track to spend a record $7 billion in mobile payments this year using PayPal on the phone.

Cons: The company is expecting to deploy with 20 retailers by year’s end, but based on the 16 retailers announced yesterday, I calculated that it has access to about 16,000 U.S. locations (far fewer than Google Wallet). That does not include the thousands of locations that those 50,000 small- to medium-sized retailers would contribute if they signed up for it.

Clearly, it is still early days.

And when you look at the broader market opportunity, the race is not just between Google and PayPal. All of the incumbents, including American Express, MasterCard and Visa, have announced digital wallet strategies. And then there are the start-ups, such as Square, which is seeking a $4 billion valuation in its next funding round.

There are two points to be made on the debate between PayPal vs. Google Wallet that can’t be stressed enough: PayPal has the user base, and it has the technology with the lowest barriers to entry.

In theory, if a consumer has signed up for the service from their PayPal account, they will be able to conduct a transaction using their mobile phone number and PIN – without changing carriers or phones. Likewise, merchants won’t have to upgrade their point-of-sale hardware.

In an interview, PayPal President David Marcus acknowledged there’s a chicken and egg problem: Without a lot of locations, there won’t be a lot of consumers using it. But this year is about learning and testing, he said, and next year, “it will be about iterating and full-on execution.”

If you asked the folks at Google, I’m sure they would agree. A Google spokesperson declined to comment for this story, but already, there are signs that Google has learned a lot and has started to pivot.

Rick Oglesby, a senior analyst with Aite Group, believes that Google is distancing itself from NFC and from being the merchant of record.

“I think they will follow the path of least resistance, because for them, it’s not about payments — it’s about advertising,” he said. “It’s about pay-for-performance marketing. Just like how they get paid for a click-through on the Web, they want to get paid when you walk through the door — but no one is monitoring that.”

Last month, Google purchased TxVia, a little-known payments technology company, another sign that it’s changing directions.

Tony Felice, a senior strategist for Red Door Interactive who has worked with TxVia in the past, said TxVia and Google Wallet together can be very powerful. He said TxVia has all the banking relationships, which will help enable payments, gift cards and other services, and also has the ability to produce analytics about what consumers are doing and spending money on.

“Together, they will be able to get a 360-degree picture from the moment of truth to purchase,” he said. “In order to do that, you have to pull in disparate sources and synthesize it in a single place. The transactional data from TxVia is just one piece of a puzzle.”

Oglesby said despite Google’s hiccups, it’s not yet out of the race.

“It’s been a slow-growing situation, and there’s been big turnover on the executive team, but they are reassessing the situation and have made an acquisition,” he said. “I wouldn’t say they’ve screwed up because no one has run way ahead of them. They were leading the market, and tried an approach, and now there’s other approaches for them to try.”

In an interview with Bloomberg, CEO Mark Pincus said he’s looking for both great teams and companies that have break-out hits.

It’s not a big surprise that the social games company would go on a buying spree.

As the largest social games developer on Facebook, it has created a hits-driven business, and since it is virtually impossible to sustain a near-perfect record of hits, it must also buy them.

The San Francisco company also has the resources to pull it off. Thanks to its IPO last year, it has $1.81 million billion in cash and no debt, and in January, it hired Barry Cottle from EA to head-up acquisitions and corporate development.

OMGPOP is a case in point: It developed a game called Draw Something, which was an instant sensation on iPhones and Android devices. Zynga paid more for the 40-employee company than it did for the past 22 acquisitions combined. Over the past year, it also tried aggressively to purchase both Rovio and PopCap, which ended up selling to Electronic Arts.

And now it’s telling the world that its purse strings are loosening.

“We’re sitting in a very advantageous position,” Cottle told Bloomberg. “We have a significant amount of cash, we have no debt, and we have access to debt to be as aggressive as we need to be.”

We’re being mean. The $1 billion Mark Zuckerberg spent on Instagram is pocket change and the deal’s purpose wasn’t handwaving to convince investors he was finding a solution to Facebook’s profits challenge. He’s still trying to please users, God bless him, especially mobile users, who love Instagram to customize the look of photos they snap with their smartphones.

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Wyse used to pop up on my radar screen back in the late 1990s when there was a sudden craze in what was then called “thin clients.” The basic idea behind a thin client is to put a keyboard and a display on an employee’s desk, and have all the computing horsepower for that individual workstation — all the data and software that it uses — reside on a remote server. The advantage is that thin clients are cheaper to operate, easier to maintain and upgrade, and also easier to secure and control.

With cloud computing being very fashionable right now, it’s no surprise to me that Wyse has adapted how it describes its mainline specialty. Another phrase that gets passed around quite a bit is “virtual desktops.”

For its part, Dell is on a long-term campaign to diversify its business away from the personal computer business it revolutionized in the 1990s, and to move into more profitable areas of enterprise IT sales and services. It’s also embracing cloud computing in a big way.

Since Wyse is private and apparently not huge, Dell isn’t disclosing how much it is paying. Wyse is big enough to have sold more than 20 million thin-client systems worldwide; it claims that 200 million people touch its products every day. It sold a million units last year, and has a strong presence in the health care and financial services sectors, both of which have a lot of appeal for Dell generally.

Update: So here’s an informed estimate concerning how much Dell paid. Brian Marshall of ISI just issued a note to clients pegging the price at between $350 million and $400 million. He reckons that’s about level with Wyse’s sales of about $375 million over the prior year. Hewlett-Packard paid about $220 million for Wyse rival Neoware in 2007 at a time when its annual sales were in the $75 million range, he says.

Here’s Dell’s announcement:

Dell Announces Intent to Acquire Wyse Technology
-Extends Dell’s desktop virtualization capabilities and drives attachment of enterprise solutions, including servers, networking, storage and services
-Strengthens Dell’s strategy to offer customers innovative, end-to-end IT solutions from the edge to the core to the cloud

Dell today announced it has signed a definitive agreement to acquire Wyse Technology, the global leader in cloud client computing, to significantly extend its desktop virtualization offerings. The addition of Wyse will expand Dell’s desktop virtualization capabilities and provide new solutions and services opportunities for the full range of Dell’s enterprise offerings.

In some environments, a virtual desktop allows enterprises to more efficiently and securely manage their users and end point devices. With this acquisition, Dell expands its enterprise solutions portfolio and offers customers an ever broadening array of tailored solutions to meet their needs.

“The total market for desktop virtualization solutions should continue to see strong growth globally, with the larger revenue and margin opportunities coming from the datacenter infrastructure, cloud and services offerings that are tied to thin client and desktop virtualization technology sales,” said Matt Eastwood, Group Vice President, Enterprise Platform Research, IDC. “Thin client and desktop virtualization solutions typically drive high attach rates to data center solutions, including servers, networking, storage and services. The end-to-end datacenter infrastructure stack for these solutions is expected to exceed $15 billion by 2015.”

Wyse Technology Leadership
Wyse, ranked No.1 in thin client unit shipment volume on 4Q 2011[1], has shipped more than 20 million units worldwide and has over 200 million people interacting with its products each day. The company has more than 180 patents, both issued and pending, covering its solutions, software and differentiated intellectual property.

The Wyse solutions portfolio includes industry-leading thin client solutions with advanced management, desktop virtualization and cloud software.

Cloud clients: Wyse offers a wide selection of secure, reliable, cost-effective thin and zero clients designed to easily integrate into any virtualized or web-based infrastructure, while meeting the budget and performance requirements for any application.
Cloud software: Technology powering a new world of cloud connected smart devices.
Management software – Secure, easy and scalable remote device management for the extended enterprise.
Virtualization software – The best user experience with Microsoft, Citrix and VMware virtual desktop infrastructures.
Mobility software – Secure mobile connectivity to your personal, private or public cloud for mobile devices.
Services: Wyse offers a wide range of cloud computing services to complement its cloud clients and software solutions. Services are available for specific or on-going engagements.

Wyse Technology, founded in 1981, is headquartered in San Jose, Calif. and serves customers in more than 50 countries around the world. Wyse has more than 3,000 resellers and shipped more than 1 million units in 2011.

The transaction was approved by the board of directors of each company and is expected to be accretive to Dell non-GAAP earnings in the second half of its Fiscal Year 2013. Additional terms of the transaction were not disclosed. The transaction remains subject to customary conditions and is expected to close in the second quarter of Dell’s FY13.

Quotes
“Desktop virtualization can help organizations streamline IT management, improve productivity and security, and increase cost efficiency for discrete workloads or usage scenarios,” said Jeff Clarke, president, End User Computing Solutions at Dell. “The Wyse Technology desktop virtualization capability complements Dell’s strongest-ever device and computing solutions portfolio, and strengthens our position in offering customers among the broadest set of computing choices from the edge to the core to the cloud.”

“The combination of Wyse and Dell provides us with tremendous growth opportunities for our core desktop virtualization business, helps us expand into new and fast-growing market segments including mobility and cloud computing, and provides us with reach and scale we did not previously have,” said Tarkan Maner, president and CEO, Wyse Technology. “We believe that taking this step with Dell is a very natural progression for our business and offers our customers many great advantages not available to them today.”

An analyst call with Jeff Clarke, president, Dell End User Computing; Dave Johnson, senior vice president, Dell Corporate Strategy; and Tarkan Maner, president and CEO, Wyse Technology; will be webcast live today at 8:45 a.m. Central Time and archived at www.dell.com/investor.

About Wyse Technology
Wyse Technology is the global leader in Cloud Client Computing. The Wyse portfolio includes industry-leading thin, zero and cloud PC client solutions with advanced management, desktop virtualization and cloud software supporting desktops, laptops and next generation mobile devices. Wyse has shipped more than 20 million units and has over 200 million people interacting with their products each day, enabling the leading private, public, hybrid and government cloud implementations worldwide. Wyse works with industry-leading IT vendors, including Cisco®, Citrix®, IBM®, Microsoft, and VMware® as well as globally-recognized distribution and service providers. Wyse is headquartered in San Jose, California, U.S.A., with offices worldwide.

About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers worldwide innovative technology, business solutions and services they trust and value. For more information, visit www.dell.com.

Cisco announced the appeal in a post to Cisco’s corporate blog by Cisco’s senior VP for video and collaboration, Marthin De Beer. In it, Cisco argues that the EU should reexamine the deal because Skype doesn’t work with other video and audio calling systems that use industry standard technologies, such as Cisco’s.

“Imagine how difficult it would be if you were limited to calling people who only use the same carrier or if your phone could only call certain brands and not others,” De Beer wrote. “Cisco wants to avoid this future for video communications,” and so has filed the appeal. Messagenet, a European IP calling service, joined Cisco in filing the appeal. Both had commented to the European Commmission during initial hearings on the deal before it was approved.

Cisco doesn’t want the merger rescinded, but rather wants the EC to impose some interoperability conditions on Microsoft. Part of Microsoft’s plan with Skype has been to combine it with its Lync video and voice calling software for businesses. Both Lync and Skype use their own proprietary calling technologies, and so aren’t compatible with other video and calling services.

Sources familiar with the matter say Cisco had sought to work with Microsoft to ensure that its videoconferencing gear would work with Skype, but was unsuccessful in reaching a deal.

Skype has about 700 million users worldwide, and before Microsoft acquired it, had sought to go public in April. For calendar year 2010, it reported revenue of $860 million and a net loss of about $7 million. Successful mainly with consumers who like its free service, the company had begun to work on a strategy meant to bring the service to enterprise users, but had suffered some service failures that gave its target corporate customers pause. The Microsoft acquisition, announced in May, happened at just the right moment.

When the deal was announced, Microsoft CEO Steve Ballmer said Skype would, in time, be integrated with other Microsoft products, including the Xbox gaming console, Windows Phone for smartphones, and even its Hotmail Web email service.

Cisco’s videoconferencing business is a force primarily among large companies. It has 50,000 companies who use its gear, but it struggled to create a consumer-focused service, and shuttered its Umi product last year amid a wider corporate restructuring.

Microsoft wasn’t immediately available for comment on Cisco’s move, but I’ll add anything I get from it as soon as I have it.

Update: And here’s the official response from Redmond: “The European Commission conducted a thorough investigation of the acquisition, in which Cisco actively participated, and approved the deal in a 36-page decision without any conditions. We’re confident the Commission’s decision will stand up on appeal.”

Here’s the full text of Cisco’s post announcing the appeal:

Video to Video Communications is the Future

In the past decade video communications has moved out of the realm of science fiction to become commonplace in our homes, at work, and on mobile devices. Yet we remain some distance from the goal of video calls being as easy and ubiquitous as phone calls are today – across any network and between all devices.

Imagine how difficult it would be if you were limited to calling people who only use the same carrier or if your phone could only call certain brands and not others. Cisco wants to avoid this future for video communications, and therefore today appealed the European Commission’s approval of the Microsoft/Skype merger to the General Court of the European Union. Messagenet, a European VoIP service provider, has joined us in the appeal.

We did not take this action lightly. We respect the European Commission, and value Microsoft as a customer, supplier, partner, and competitor. Cisco does not oppose the merger, but believes the European Commission should have placed conditions that would ensure greater standards-based interoperability, to avoid any one company from being able to seek to control the future of video communications.

This appeal is about one thing only: securing standards-based interoperability in the video calling space. Our goal is to make video calling as easy and seamless as email is today. Making a video-to-video call should be as easy as dialing a phone number. Today, however, you can’t make seamless video calls from one platform to another, much to the frustration of consumers and business users alike.

Cisco believes that the right approach for the industry is to rally around open standards. We believe standards-based interoperability will accelerate innovation, create economic value, and increase choice for users of video communications, entertainment, and services.

The video communications industry is at a critical tipping point with far reaching consequences. Just three years from now the world will be home to nearly 3 billion Internet users, the average fixed broadband speed will be 28 Mbps, and 1 million video minutes (the equivalent of 674 days) will traverse the internet every second. As video collaboration becomes increasingly mainstream, multiple vendors will have to work together to enable global scale and broad customer choice.

For the sake of customers, the industry recognizes the need for ubiquitous unified communications interoperability, particularly between Microsoft/Skype and Cisco products, as well as products from other unified communications innovators. Microsoft’s plans to integrate Skype exclusively with its Lync Enterprise Communications Platform could lock-in businesses who want to reach Skype’s 700 million account holders to a Microsoft-only platform.

At the heart of this opportunity is a question about the model for interoperability. One approach allows each vendor to decide how they will interoperate. Another approach aligns the industry around open standards defined by non-partisan governing bodies. The answer will be critical to whether and how quickly video calls become “the next voice.”

When vendors implement their own protocols and selectively interoperate, they push the burden of interoperability to the customer. We respectfully request that the General Court act on our concerns and for the European Commission to ensure the proper protections are put in place to encourage innovation and a competitive marketplace.

The yellow-handled hammer, which the eBay CEO purchased at Home Depot using PayPal, signals that the company’s plans for entering the mobile payments business has entered the construction phase.

In an interview yesterday, Donahoe provided a few details about the company’s Home Depot trial and how it would expand from five to 51 stores across the country over the next week.

He also talked about his own experience of buying the tool earlier that morning. (Seen at right: Donahoe wielding his hammer.)

The company also announced fourth-quarter results yesterday, solidly beating both the company’s internal guidance and analyst expectations.

One of eBay’s big initiatives over the past year has been to find ways to work more closely with physical retailers by providing them with the technology they need to operate more efficiently online and offline. Over the past year, that has included buying 13 companies, for a total investment of $3.4 billion.

“We are right at the intersection of something that’s really cool,” Donahoe said. “This isn’t something that everyone sees, like social networking three years into it, when only the early people knew about it.”

What everyone is not seeing, he explains, is how retail and payments are two massive industries that are “at an inflection point where they will go through dramatic change.”

One major opportunity is payments being made at the cash register, and arguably many others see it, too, including Google, Visa, MasterCard and the wireless carriers, which are all working on their own solutions.

Interestingly, Donahoe was willing to put a price on it — and it’s huge.

If eBay is able to capture just 2 percent of the sales occurring at the point of sale, it will be able to double PayPal’s $70 billion business today. If they capture 4 percent, they’ll triple it.

Of course, that will take some time.

This year, eBay is focused on learning and testing out the technology in several trials; then, in 2013, it will begin to scale the business. In 2012, the company is not even factoring in a lift from point of sales in eBay’s revenue guidance.

The company’s big test will start later this week, when it expands its trial with Home Depot from five stores in the Bay Area to 51 stores in the Bay Area, Atlanta and Omaha.

Everything continues to be on track, despite the unexpected departure of PayPal President Scott Thompson. Thompson shocked Donahoe right after the New Year with the announcement that he was leaving to become CEO of Yahoo.

Donahoe declined to give an update on his plans to replace Thompson, saying that he was fine with serving the interim role in the meantime, and relying on the rest of the team PayPal has in place.

So far, Donahoe said, the mobile payments technology works flawlessly, based on his own experiences, but there’s still some additional scenarios they will have to consider.

Yesterday morning, he drove to a store in San Jose, where he consciously left his wallet and phone in the car.

He walked through the aisles to find a hammer and tape measure, and then went to check out, where the terminal gave him the option of checking out with PayPal. He entered his mobile phone number and PIN, and the transaction was completed, with the receipts sent to his phone and email.

“It was faster than swiping the card,” Donahoe said. “This is an advantage that PayPal has. No one else can do it with a mobile number and PIN. There was no fancy whiz-bang technology.”

Customers will also be given the option of paying with a PayPal credit card.

But not all the pieces are in place yet.

Coming soon: Users will be able to store their loyalty cards in their PayPal wallet, and will be able to receive personalized offers based on their shopping habits.

Also, it’s worth noting that while Donahoe checked out easily, there will be a learning curve for others. In advance of going to the store, users will have to associate a phone number and PIN with their account, and enable their account for in-store checkout.

Right now, there’s no contingency plans for if a person doesn’t have a PayPal account, or if it’s not set up. In fact, a very small percentage of the more than 100 million PayPal users have likely done that.

“That’s exactly why I say this is the year for trialing and learning,” Donahoe said, appropriately adjourning the interview with a bang of the hammer.

“Sources familiar with the matter” tell Reuters that Brocade has received first-round bids from “a handful” of interested buyers.

Who might those parties be? Now that Dell has acquired Force10 Networks and Hewlett-Packard has snapped up 3Com, the list of possible suitors is a bit shorter than it used to be.

So who’s left? IBM remains a candidate and Oracle is always a possibility, regardless of what its CEO has said in the past. And beyond that? Private-equity firms, most likely.

Brocade shares are trading up more than 6 percent on buyout speculation.

Akamai does two things, which are really just variations of the same thing: speeding the delivery of content over the web with its worldwide network of servers.

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This time the target is Cotendo, a company that uses a network of 30 data centers distributed around the world to put video content physically closer to consumers, and thus speed up delivery, especially to mobile devices. The acquirer is Internet concern Akamai, which says it will pay $268 million, plus the assumption of unvested options.

Cotendo had been reported to be the subject of a bidding war between Akamai and rival Juniper Networks. Breathless reports at the time, sourced to enthusiastic Israeli newspapers, valued Cotendo as high as $350 million. The deal will close during the first half of 2012.

Even at the lower price, the deal marks a nice exit for several U.S.-based venture capital funds. Cotendo raised $7 million from Sequoia Capital and Benchmark Capital in 2009, and then another $12 million in a round joined by Tenaya Capital last year. In June, it took a $17 million strategic investment from Juniper and Citrix Systems.

Cotendo had grown into an Akamai competitor, with a reputation for being faster at some things than Akamai, and also cheaper to boot. That made it an obvious Akamai target, given its history of acquiring rivals — usually after suing them. In 2005, it took out Speedera Networks for $130 million, after a contentious patent lawsuit between them. Akamai had sued Cotendo last November. So the next time Akamai sues someone, set your stopwatch, because the defendant may be the next one to be acquired.

Akamai’s statement on the deal is below:

Akamai to Acquire Cotendo

Combined technology and teams expected to help accelerate pace of innovation in cloud and mobile optimization

CAMBRIDGE, MA and SUNNYVALE, CA – December 22, 2011 – Akamai Technologies, Inc. and Cotendo announced today that the two companies have signed a definitive agreement for Akamai to acquire Cotendo.

Helping to mitigate the challenges of operating in a hyperconnected world, Akamai provides a secure platform over which businesses can engage users across the Web, mobile, cloud, or a mix of public and private network environments. Cotendo offers an integrated suite of Web and mobile acceleration services. The combination of the two companies’ technologies and teams is expected to increase the pace of innovation in the areas of cloud and mobile optimization.

“As we look to accelerate growth across the dynamic landscapes of cloud and mobile optimization, we are excited to be joining forces with Cotendo,” said Paul Sagan, president and CEO of Akamai. “Cotendo’s technology, partnerships and people are a strong complement to Akamai. Together, we believe there is tremendous opportunity for our combined technologies as enterprises embrace the move to the cloud and seek solutions for an increasingly mobile world.”

“The Cotendo team is very proud of our accomplishments in delivering proven and effective solutions for accelerating Web and mobile assets. By combining our innovative technology and employees with Akamai, we expect our customers and partners will gain access to a comprehensive, global platform and wider portfolio of leading-edge services supported by some of the most experienced providers in the industry,” said Ronni Zehavi, CEO and co-founder of Cotendo. “We look forward to working with Akamai in an effort to create the strongest offering in the industry.”

Founded in 2008, Cotendo is headquartered in Sunnyvale, CA, with a technology center in Israel. Cotendo currently has approximately 100 employees, with over 50 based in Israel.

Under terms of the agreement, Akamai will acquire all of the outstanding equity of Cotendo in exchange for a net cash payment of approximately $268 million, after expected purchase price adjustments, plus the assumption of outstanding unvested options to purchase Cotendo common stock. The closing of the transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to occur in the first half of 2012.

Emptoris is based in Burlington, Mass., and its customers include American Express, ADP, Kraft Foods and Samsung America.

IBM is describing the deal as the latest move to fill out its “smarter commerce” initiative. And if you follow IBM, you know that making something “smarter” — whether it’s commerce or a city or the entire planet — generally means throwing some computing power and analytics up against a classic, complicated problem, which frankly, supply chains always are.

When you start looking at the patterns of what companies buy in the normal course of doing business — how often and how much not having some critical component or material can disrupt production — you start to see inefficiencies that cost time and money. Eliminate those inefficiencies, the thinking goes, and you start shaving down those costs, and start running the business in a more efficient manner. Usually, the saved costs go straight to the bottom line. That’s something that any CEO or CFO can get behind, and IBM says that doing this sort of thing is a $20 billion global market opportunity on software purchases alone.

IBM’s press release quotes Craig Hayman (pictured above), its general manager of industry solutions, who talked to AllThingsD in July about how IBM is helping companies manage their marketing. Hayman says that corporate procurement departments are increasingly being asked to show how they deliver value to a company. Emptoris will fit alongside IBM’s 2010 acquisition of Sterling Commerce.

Financial terms of the deal haven’t been disclosed, which means it’s a relatively small deal for Big Blue. But it’s also the second deal it has done this month in the smarter-commerce area. Last week, IBM spent $440 million to grab DemandTec, a software outfit that specializes in analyzing buyer behavior.

By 11:15 am ET, IBM shares fell on the news by 99 cents, or less than 1 percent, to $187.73. The shares have been on a steady climb all year, and as of yesterday’s close were up nearly 29 percent since the start of 2011.

Back in 2008, hi5 trailed in popularity only behind MySpace and Facebook. In June, News Corp., which owns The Wall Street Journal, sold MySpace for just $35 million, a major comedown for a company that was purchased for $580 million.

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Apple already uses Anobit’s technology in the iPhone, iPad and the MacBook Air, so the company’s interest here is clear: Own and control the technologies critical to those products, particularly if they further differentiate them from the competition.

The acquisition, if it closes, would be Apple’s first in Israel and, potentially, its largest ever, surpassing its $404 million purchase of NeXT in 1997.

Reached for comment, Apple declined, citing its policy of ignoring rumors and speculation.

Price? A reported $70 million.

Details beyond that are slim, as the transaction hasn’t yet been announced, but Microsoft’s intentions here are pretty clear. It will likely use VideoSurf’s real-time visual recognition video search engine to enhance Bing and, perhaps, Xbox Live.

“Glad that long national nightmare is over.”

That was the comment — paraphrased from Gerald Ford’s inaugural address upon the close of the Nixon presidency — that I received in an email from an industry source on Friday. The quote was sent in reference to the now-concluded business surrounding Hewlett-Packard’s exploration of “strategic options” concerning its Personal Systems Group.

Now that HP CEO Meg Whitman has concluded that the company is stronger with PCs than without them, there remains a fair bit of unfinished business from the dog’s breakfast of changes announced on Aug. 18.

First and foremost are the questions about the future — or lack thereof — of HP’s webOS business.

The only thing we know for certain is that HP is out of the business of hardware that runs the operating system it picked up in last year’s $1.2 billion acquisition of Palm. HP killed that business after sales of its TouchPad tablet device proved initially disappointing, only to see reduced prices spark a surge in interest from buyers.

During a conference call with analysts earlier this week, Whitman conceded that HP “needs to be in the tablet business” — and that it intends to participate in that business using Microsoft’s tablet-friendly Windows 8 operating system. She also said a long-term decision regarding the webOS software business is forthcoming within the “next couple of months.” HP has already carried out a round of layoffs in that division.

Another not very encouraging sign amid the ongoing uncertainty is the departure of Richard Kerris — who had headed up HP’s webOS developer outreach efforts — for a similar Windows-related job at Nokia.

And related to that is the fate of Jon Rubinstein, the former CEO of Palm and former head of Apple’s iPod business unit. Once the public face of webOS — and of Palm before that, as its final CEO — he has not been visible at all during any of HP’s recent upheavals.

That said, rumors have been almost nonexistent about Rubinstein seeking or being recruited for a job elsewhere. It’s not like he needs the work, but his apparent future is about as cloudy as that of the webOS itself. Currently he’s a product guy without a product; his role at HP is unclear. In July, he was bumped from his title as general manager of the webOS unit and moved into an iffy “product innovation role” within PSG.

One thing is true: Rubinstein has a close relationship with Todd Bradley, who leads the PSG unit.

At least Bradley’s fate is cleared up: The high-profile exec has been the subject of numerous reports and rumors, including a March report in The Wall Street Journal that said he had been recruited by chipmaker Intel. Since then, Bradley has been regularly asked about his future plans.

It was an open secret in Silicon Valley that Bradley feuded with HP’s prior CEO, Léo Apotheker, and was not consulted about the PSG spinoff plan before it was floated to the public.

Still, he stood the best chance of being named the CEO of whatever new company emerged from the plan. Yet Bradley’s voice was heard solidly behind Whitman’s yesterday, both on the conference call and in an interview with AllThingsD.

Bradley made it clear he intends to stay with HP for the forseeable future. His tone, both in public comments and in that joint interview with Whitman, seemed sincere — meaning he has likely arrived at some understanding with Whitman that will keep him at HP.

And Whitman can’t afford to lose a key member of an important business unit just now. (Although, as he has been passed over three times for HP’s top job in recent years, any lingering hopes that Bradley may have harbored of ever being CEO are probably now dashed.)

Outside of the consumer and PC space is the matter of Autonomy, the British software firm for which HP paid $11.7 billion, in a deal also announced on Aug. 18. There’s no question that the purchase price was high, representing a 64 percent premium above Autonomy’s share price, for starters. Many investors have frowned upon the deal, and some have even gone so far as to sue HP over how it was handled, mainly because HP shares cratered after it was announced. What is still to be fully explained is how HP extracts enough value from Autonomy — and if enough value can be extracted to justify the price paid.

Finally, there’s the matter of HP’s results in the coming quarter. With the company in a quiet period ahead of its Nov. 21 earnings announcement, there are few hints as to whether or not HP will meet its already reduced expectations for the quarter. Whitman insisted that no major announcements are expected before then, suggesting that there won’t be any negative pre-announcements.

But much will depend on the tone of the forward guidance HP gives as it looks to 2012. With its shares down nearly 33 percent so far this year — they closed Friday at $27.94, up 85 cents, or more than 3 percent, following Thursday’s decision — it can’t afford to miss another quarter. Once a tech company known for the stability it has given investors, HP has had nothing but unpleasant surprises for the last 14 months.

Now that one piece of the evolving story of the new HP is settled, many more are still in motion.

I talked about this and many of HP’s issues on The Wall Street Journal’s online “Markets Hub” show on Friday, and have embedded it here:

]]> http://allthingsd.com/20111029/hewlett-packard-one-messy-piece-of-business-cleared-up-but-many-to-go/feed/ 0 http://allthingsd.com/20111018/oracle-to-acquire-data-management-firm-endeca-technologies/ http://allthingsd.com/20111018/oracle-to-acquire-data-management-firm-endeca-technologies/#comments Tue, 18 Oct 2011 15:12:05 +0000 Arik Hesseldahl http://allthingsd.com/?p=133413 Oracle said it has agreed to buy software firm Endeca Technologies, allowing the business-software giant to boost its existing data management products. Privately held Endeca, based in Cambridge, Mass., provides data management and Web commerce software to about 600 customers. The acquisition is expected to be completed by year’s end. Financial terms were not disclosed.

]]> http://allthingsd.com/20111018/oracle-to-acquire-data-management-firm-endeca-technologies/feed/ 0 http://allthingsd.com/20111014/demandforce-buys-social-marketing-start-up-flowtown/ http://allthingsd.com/20111014/demandforce-buys-social-marketing-start-up-flowtown/#comments Fri, 14 Oct 2011 07:36:58 +0000 Liz Gannes http://allthingsd.com/?p=132378 Flowtown, which makes a tweet-scheduling tool and other social media marketing products, has been acquired by small-business marketing outfit Demandforce. The San Francisco-based start-up had five employees and $1 million in funding. It went through a complete overhaul after Facebook prohibited selling user IDs last October.

]]> http://allthingsd.com/20111014/demandforce-buys-social-marketing-start-up-flowtown/feed/ 0 http://allthingsd.com/20111013/microsoft-closes-8-5-billion-skype-deal/ http://allthingsd.com/20111013/microsoft-closes-8-5-billion-skype-deal/#comments Fri, 14 Oct 2011 06:23:29 +0000 Ina Fried http://allthingsd.com/?p=132364 Microsoft said late on Thursday that it has completed its deal to acquire Internet calling leader Skype for $8.5 billion.

With the closing of the deal, which was announced back in May, Skype will become a new business unit within Microsoft, with Skype CEO Tony Bates becoming the president of the newly created Skype division. Over time, Microsoft said, it will integrate Skype into a variety of its products.

“By bringing together the best of Microsoft and the best of Skype, we are committed to empowering consumers and businesses around the globe to connect in new ways,” Bates said in a statement. “Together, we will be able to accelerate Skype’s goal to reach 1 billion users daily.”

It’s the latest big acquisition for Skype, which was first acquired by eBay for $2.6 billion back in 2005. The online auction company sold off most of the company to private equity owners for $1.9 billion in 2009. Then, in May, Microsoft came along with its bid, nabbing Skype before a planned IPO.

Although the deal has received required regulatory approval in most markets, Microsoft noted that the deal has not yet been approved in certain markets.

“The acquisition remains under review in a few countries, and will be completed in those countries when such reviews are closed,” Microsoft said.

Of course, the big question now is what Microsoft is able to do with its big buy.

]]> http://allthingsd.com/20111013/microsoft-closes-8-5-billion-skype-deal/feed/ 0 http://allthingsd.com/20111007/rim-buys-newbay/ http://allthingsd.com/20111007/rim-buys-newbay/#comments Fri, 07 Oct 2011 14:30:15 +0000 John Paczkowski http://allthingsd.com/?p=130027 Another acquisition for Research In Motion. The BlackBerry maker is buying NewBay Software, a provider of white-label cloud-based content services. RIM confirmed to AllThingsD that it has signed an agreement to acquire the company, but declined to provide any further details. Sources close to RIM, however, say the purchase price was about $100 million.

The acquisition is an interesting move for RIM. Though the company did not reveal the thinking behind the deal, it’s clear that NewBay’s cloud-based media management service — which allows users to store and share pictures, videos and whatnot — will likely become the foundation of future cloud-based BlackBerry content services. NewBay’s flagship LifeCache software is widely used by carriers like T-Mobile, Deutsche Telekom, Telefonica, AT&T and Verizon, so the building blocks are there already. That said, as RBC analyst Mike Abramsky notes, RIM is a bit late to the game here.

“RIM is coming later to market than competitive offerings (may take another 6-12 months to be fully integrated) vs. Apple’s iCloud, Amazon’s Cloud Drive and related services, and Google cloud apps,” he explains. “It’s not known yet whether RIM’s offering will match or lag the content and user experience of competitors.”

]]> http://allthingsd.com/20111007/rim-buys-newbay/feed/ 0 http://allthingsd.com/20111004/well-that-was-fast-ibm-snags-q1-labs-forms-security-unit/ http://allthingsd.com/20111004/well-that-was-fast-ibm-snags-q1-labs-forms-security-unit/#comments Tue, 04 Oct 2011 15:43:06 +0000 Arik Hesseldahl http://allthingsd.com/?p=128137 Making good on signals it floated that it might begin another acquisitive streak, IBM today said it will acquire Q1 Labs, a Massachusetts-based security firm that specializes in using analytics to detect and flag suspicious activity on corporate networks. Financial terms of the deal weren’t disclosed, but IBM said Q1 will be added to its newly formed Security Systems Unit, going after what it says is a $94 billion opportunity in security software and services.

]]> http://allthingsd.com/20111004/well-that-was-fast-ibm-snags-q1-labs-forms-security-unit/feed/ 0 http://allthingsd.com/20111004/ibm-signals-a-new-round-of-acquisitions/ http://allthingsd.com/20111004/ibm-signals-a-new-round-of-acquisitions/#comments Tue, 04 Oct 2011 11:45:29 +0000 Arik Hesseldahl http://allthingsd.com/?p=127983 Computing giant IBM is just signaled that its about to go shopping. In an interview with Bloomberg, Steve Mills, Senior Vice President and Group Executive, Software and Systems, who you may remember from from this interview with AllThingsD in May, says Big Blue is looking for software companies in the $100 million to $300 million range.

The thing is, IBM is been acquiring mid-sized companies at a pretty steady clip. The biggest deal IBM has done in recent memory is the $1.7 billion acquisition last summer of Netezza. Then for dessert it nabbed Blade Systems the following month for an undisclosed amount. Since then it has done five deals, the largest and most recent of which was the $387 million acquisition of Algorithmics, a Canadian risk analytics firm.

All told, IBM bought 15 companies in 2010, but has bought only three so far this year. It has bought 50 since 2006, suggesting it could easily step up its deal-making pace before the end of the year. And with nearly $12 billion in cash on the balance sheet it could do so without breaking much of a sweat.

But as Mills told Bloomberg, there’s always got to be a good reason to buy a company. “Everything’s got to fit … No spurious, off-to-the-side, unrelated things.” Somehow I can’t help but think that’s a slap at Hewlett-Packard, whose acquisitions of late, have been, well, a tad controversial. But public slap fights aren’t IBM’s style, so maybe I’m reading too much into it.

IBM has a big goal to meet, and it can’t get there without making acquisitions: It wants to add another $20 billion in annual revenue by 2015. It recently hit a significant milepost along the way: Its market capitalization eclipsed that of Microsoft last week. As of yesterday, IBM was worth $207 billion to Microsoft’s $205.5 billion.

]]> http://allthingsd.com/20111004/ibm-signals-a-new-round-of-acquisitions/feed/ 0 http://allthingsd.com/20111003/britains-first-software-billionaire-now-reports-to-hp-ceo-meg-whitman/ http://allthingsd.com/20111003/britains-first-software-billionaire-now-reports-to-hp-ceo-meg-whitman/#comments Mon, 03 Oct 2011 21:58:17 +0000 Arik Hesseldahl http://allthingsd.com/?p=127789 Hewlett-Packard just announced that it had closed its acquisition of the British software firm Autonomy. This is the company that HP decided to acquire under previous CEO Léo Apotheker on Aug. 18 for $11.7 billion, the same day it said it planned to spin off its PC division and shut down its webOS business unit.

Rather than become an HP executive, Autonomy CEO Mike Lynch, who’s been described as Britain’s first software billionaire, will remain head of Autonomy, which HP will operate as a wholly owned subsidiary, though he will report to Whitman.

Of course, the deal didn’t get done without some drama — what does get done at HP without drama these days? First there was the shock at the price paid, which represented a 64 percent premium over Autonomy’s share price. It was just one of the things that led to a shareholder lawsuit against HP.

There were certainly enough questions about the deal to cause some speculation around the notion that HP might try to back out of it. Those ideas gained some currency when HP’s board of directors fired former CEO Léo Apotheker, but not before giving him a pricey exit package.

Then there was the Oracle shopping scandal. Asked about Oracle’s position in the unstructured data market two weeks ago, CEO Larry Ellison said that his company had passed on a chance to acquire Autonomy because the price was too high. Lynch, apparently falling into a PR trap laid by Oracle, took issue with Ellison, saying Autonomy had never been shopped to Oracle, prompting Oracle to publicly call Lynch a liar, then produce a set of PowerPoint slides as evidence. Lynch then went on to blame his eager banker, Frank Quattrone. Of course, it was widely known that Autonomy had been quietly shopped around for months.

So that little kerfuffle is over, now that HP is in control and its corporate communications team, led by Lynn Anderson, is in charge.

Meanwhile, there’s the larger mission to worry about: HP has to prove that Autonomy was worth all that money, and there’s an awful lot at stake. HP shares are still trading near their lowest levels in six years, and closed today at $22.20, down 25 cents. According to the disputed slides prepared by Qatalyst partners that were shared at one time or another with Oracle, Autonomy is expected to bring in $1.1 billion in revenue next year, which would amount to less than 1 percent of HP’s forward revenue projection for 2012 of $127 billion. It’s going to be tough to make it pay. But like it or not, HP is stuck with it now.

]]> http://allthingsd.com/20111003/britains-first-software-billionaire-now-reports-to-hp-ceo-meg-whitman/feed/ 0 http://allthingsd.com/20110930/oracle-buying-hewlett-packard-fuhgeddaboudit/ http://allthingsd.com/20110930/oracle-buying-hewlett-packard-fuhgeddaboudit/#comments Fri, 30 Sep 2011 18:40:19 +0000 Arik Hesseldahl http://allthingsd.com/?p=126906 Amid all the recent drama that has unfolded at Hewlett-Packard — and the he-said she-said back and forth concerning Oracle and whether or not it was approached to buy Autonomy before HP ponied up — lies a lingering meme that refuses to die: That somehow the software giant Oracle is going to make a bid for HP.

Given the recent feuds between the management teams at the two companies, Oracle’s acquisitive history and HP’s sudden weakness, it doesn’t take much for a popular narrative of Oracle buying HP to emerge. It would be a dramatic denouement to the events of the last year that have found HP and Oracle at increasingly caustic loggerheads. Oracle CEO Larry Ellison would take some kind of victory lap and mount HP on the wall like a of trophy.

The idea gained some currency with an Aug. 21 story in the New York Post (which, like this Web site, is owned by News Corp.) arguing that HP’s $11.7 billion bid for the British software firm Autonomy, having caused shareholders to knock $12 billion and change off HP’s market cap, would therefore make HP more attractive to Oracle.

The meme gained further currency with a Bloomberg News story saying that HP’s board was “concerned” that its weakened condition had left it vulnerable to Oracle.

Let me put it like this: No. Just, no.

The first problem with the notion is this: What parts of HP would Oracle want to own? Answer: Practically none.

First, let’s look at the condition of Oracle: Its mainline software businesses are showing healthy returns, while its hardware business, built on the foundation of Sun Microsystems, the IT hardware concern it acquired last year for $7 billion, is ramping up to full speed. But here’s a fundamental truth: Software carries a higher profit margin than hardware, so when software companies buy hardware companies, they can’t avoid seeing their overall profitability erode.

Consider Oracle’s operating margin during its fiscal fourth quarter — its seasonally strongest quarter — during the last three years. In 2009, before the Sun deal was closed, it was 43.4 percent. In 2010, after the Sun deal was closed, it was 38.3 percent. In 2011 it was 41.6 percent. And during Oracle’s most recent conference call, CFO Safra Catz said Oracle hopes to get back to “pre-Sun” operating margins soon.

Now let’s look at HP and its operating margins: In its most recent quarter ended July, HP’s enterprise, storage and networking business turned in operating margins of 13 percent, which were down from 14 percent in the prior year’s period. The story was the same in practically every other HP business unit: Operating margins in services fell from 15.7 percent to 13 percent; in software they fell from 28 percent to 19.7 percent; imaging and printing margins fell to 14.6 percent from 16.9 percent. The only place they increased was the personal systems group — the PC unit that’s being considered for a spinoff — where they grew year on year from 4.7 percent to 5.9 percent.

Conclusion: Owning HP would do nothing good for Oracle’s profitability, especially at a moment when the stated goal is to nudge them up.

There’s more. As Mark L. Moerdler, an analyst at Bernstein Research, argued in a research note to clients on Sept. 26, software accounts for about 2 percent of revenue at HP. And what software it has is not the type that Oracle typically likes. When Oracle does acquisitions, it grabs companies that make applications that plug holes in its own product portfolio. The majority of HP’s software offerings — Autonomy nothwithstanding — deal with infrastructure management, not exactly a priority for Oracle. It is, however, a business where IBM and Computer Associates participate.

And there are two historically important business units at HP that would be outliers at Oracle: PCs and printers. Oracle has no interest in either one, and it’s hard to see that changing. Combined they make up more than half of HP’s annual revenue. In the hands of Oracle, they would probably end up being spun out, either together or separately, but why buy a whole company only to chop off more than half of it — a half that’s shrinking at that — at what would have to be unfavorable terms.

Let’s not forget the valuation estimate of HP’s $40 billion PC business: Analysts have expected that a hypothetical buyer might pay as little as $8 billion for it, or about one-fifth trailing revenue. Why go to all that trouble?

Further: Why would Oracle buy a company that’s roughly one-quarter exposed to the consumer market. Sure, HP has a retail distribution network that’s the envy of the PC industry. But Oracle would rather sell those retailers systems to help them manage their businesses, not the PCs they in turn resell at razor-thin margins.

If that’s not enough, then there’s one key bit about HP that Oracle would actively dislike. HP, by virtue of being the biggest distributor of Windows-based PCs and servers, is the world’s largest reseller of Microsoft Windows. If there’s anything more utterly antithetical to Oracle’s core values than helping put money in Microsoft’s pocket, I haven’t heard of it.

Finally, there’s the issue of cash. Even in its weakened state, HP is trading at a market cap of $45 billion and change. Assuming a premium for the whole thing, that pushes a hypothetical price tag to $60 billion. That’s too rich, even for Oracle, whose balance sheet as of Aug. 31 contained a combined $31.6 billion in cash and marketable securities. It would have to take on a tremendous amount of debt — amounting to 82 percent of fiscal 2011 sales — to get such a deal started, let alone closed.

HP’s directors and shareholders can rest easy. They have many worries about the Silicon Valley icon and the troubles in which it finds itself. But being acquired by Oracle isn’t one of them.

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