Yet HP is facing a significant problem in a key market: Printing. HP’s Imaging and Printing Group, or IPG, accounts for roughly 20 percent of HP’s revenue, making it a bigger business by revenue than the enterprise and server, storage and networking businesses.

As it does with most printer vendors, the business model of IPG works like this: HP sells a printer, more often than not at a loss, then makes up for the loss by selling the customer ink and other supplies over the next several years of the printer’s useful life.

In this business, HP is the king. In a survey of the state of the printing market issued last week, the market research firm IDC pegged HP’s overall share at north of 41 percent. In 2011, by IDC’s reckoning, HP sold more than twice the number of printers as its nearest rival Canon, and more than the combined unit sales of its nearest three rivals — Canon, Epson and Samsung.

So what’s the problem? The printing business is on the wane. For all of 2011, combined sales grew by 0.7 percent, according to IDC, and what little growth there was didn’t go to HP. IDC says HP’s printer shipments declined by 0.7 percent last year, while Canon, Samsung and Brother all saw their shipments grow.

And sales in key market geographies make the picture look even worse. In the U.S., for example, IDC says the market for printers in 2011 contracted by 9 percent, while HP’s unit sales plummeted by more than 12 percent. On a unit basis, IDC says, HP sold fewer than 4.2 million printers to U.S. customers, compared to 4.8 million in 2010.

Slowing hardware sales are only the leading edge of the problem. Remember that HP takes a loss on every printer it sells and makes it up on much more profitable supplies. Here’s where the numbers start to look scary: As overall revenue in the IPG was essentially flat year on year in 2011 — sales were $25.78 billion in 2011 versus $25.76 billion in 2010 — sales of supplies declined.

That may not seem important, until you realize that sales of supplies account for more than two-thirds of IPG’s revenue: Printer supplies are a $17 billion annual business that had been growing until 2011 when sales headed south. Sales of ink cartridges tend to track sales of new printers on a six- to nine-month lag, but there’s also a long tail that feeds into the existing installed base. Printers can stay in service for years, gobbling up ink.

A decline in ink sales can have an outsized impact in IPG’s profitability: Operating margins in IPG declined from 17.1 percent in 2010 to 15.4 percent in 2011.

And if market trends weren’t enough to drag down HP’s printer business, there are economic ones, too. Canon manufactures key parts of HP’s LaserJet printers in Japan. That caused two significant problems: Logistics costs increased as a result of the earthquake and tsunami that hit Japan last year. Meanwhile, the strength of the Japanese yen relative to the U.S. dollar is adding even more incremental costs.

The bottom line: Printing has been one of HP’s long-term strengths. If people are printing less, they’re buying fewer printers. And if they’re buying fewer printers, they’re buying less ink. All of it is bad news for the world’s biggest printer company. We’ll see just how bad on Wednesday, when HP reports its latest results.

Apple co-founder and Silicon Valley legend Steve Jobs lived a life that read like an epic novel, so it should be no surprise that his very last words on this temporal plane would be just as dramatic.

And they were: “OH WOW. OH WOW. OH WOW.”

That’s according to his sister, Mona Simpson, whose moving eulogy was published in the New York Times today. It’s well worth a read, given what a gifted writer Simpson is — she is a much-respected novelist — and the amazing subject.

Simpson opens the piece by writing about her desire for her estranged father to return to her life and become the be all and end all. Instead, it turned out to be Jobs.

“Even as a feminist, my whole life I’d been waiting for a man to love, who could love me,” she wrote. “For decades, I’d thought that man would be my father. When I was 25, I met that man and he was my brother.”

A fitting legacy, among many.

It’s a delightful piece, too, and here is my favorite part:

“For an innovator, Steve was remarkably loyal. If he loved a shirt, he’d order 10 or 100 of them. In the Palo Alto house, there are probably enough black cotton turtlenecks for everyone in this church.”

It’s lovely that his sister would be the one to give everyone that one more thing.

Most of us don’t get to stay goodbye quite so eloquently, if at all, as Simpson surmised about the message of her brother’s life. So, saying hello to life still remains our best option.

That’s not much of a surprise, given the relentless marketing campaign by the makers of “The Social Network,” which opened wide last Friday. It has garnered terrific critical acclaim.

Still, BoomTown was quite surprised to see a mention of the film on one of my favorite celebrity sites, TMZ.com.

Of course, because it is gossip-saturated, TMZ featured it as one of its naughty regular features called “Who’d You Rather?”

As in…well, you get the point.

This time they pitted Facebook CEO and co-founder Mark Zuckerberg against the Winklevoss twins in a “Facebook Fight.”

“As part of the movie ‘The Social Network,’ twin brothers Tyler and Cameron Winklevoss claim their Harvard [University] classmate Mark Zuckerberg stole their idea and created what is now this little website called Facebook,” TMZ wrote.

Also surprising, as you can see from the screenshot above, given what hunks of dudeness the Winklevii clearly are, is that Zuckerberg seems to be attracting one-third of the votes compared with their two-thirds.

And since there are two of them, the billionaire social networking wunderkind could be considered tied with the brothers!

Sweet justice after the slamming the Winklevii have been giving Zuckerberg in the media of late, even though they had signed a confidentiality agreement after their first $65 million settlement with him?

The Winklevii are trying to have that overturned and are inexplicably going for more, of course, which should keep the themes of the movie resonating for a while.

That will also be true if “The Social Network” garners some award nominations, especially the Oscar.

Also interesting will be to see if the movie will perform well this weekend or will drop off. It’s so far proved popular in the big cities on the coasts and in Silicon Valley, but now it has to go wide to make some real dough.

But, for sure, it will be on television eventually. Today, the FX cable network said it had bought the broadcast premiere rights to the movie.

In all the sturm und drang over the departure of well-known Web entrepreneurs and twin brothers Ali and Hadi Partovi from MySpace today, it’s hard to find much to laugh about.

Except for this most excellent video Ali made last fall for a company contest that required new employees to show “how MySpace is YOUR space.”

Ali wins hands down, as you will see from this fine effort, in which he tried to find the right song for the News Corp. (NWS) social networking site.

The Partovis, whose iLike social music service was bought by MySpace last year, announced their exit to staff today.

Sad perhaps, but please enjoy the memories:

MySpace exec goes rogue

ali | MySpace Video

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

Well-known tech entrepreneurs and twin brothers Ali and Hadi Partovi (pictured here, right to left) are leaving MySpace, in a high-profile departure for the struggling social networking company.

Internal memos were sent around to staff this afternoon about the executive change, said sources, which you can see below.

“Hey everybody, it’s been super tough staying quiet about this news at the request of our execs,” said Hadi Partovi, in an internal memo obtained by BoomTown. “I know some of you are very surprised about this, and I want to apologize for not having had the option to brief you personally in advance.”

Hadi was SVP of Technology at the News Corp. (NWS) unit, while Ali was SVP of Business Development. Hadi will leave MySpace entirely, while Ali will have a special adviser role, said the memo from MySpace Co-President Michael Jones.

In a blog post in March titled, “MySpace Musical Chairs: Will the Partovis Stay or Will They Go Now?,” I wrote:

“In all likelihood, said sources, the Partovis will remain at MySpace for the next several months, although they are likely to move eventually to more senior advisory or special-project roles there in order to pursue longtime outside investing and entrepreneurial interests.”

Now that has come to pass.

The fate of the well-known tech wunderkinds has been one of the more interesting guessing games of late at MySpace.

MySpace managers have been keenly interested in avoiding the appearance that the company is in the grip of a talent drain, especially related to such well-known innovators.

The Partovis arrived in the midst of turbulent change at MySpace last August, just after its original CEO and co-founder, Chris DeWolfe, was suddenly tossed out and replaced by CEO Owen Van Natta, as well as COO Jones and Chief Product Officer Jason Hirschhorn.

As part of its new strategy to become an entertainment hub, the Beverly Hills, Calif.-based MySpace bought the Partovis’ social music start-up, iLike, in a deal engineered by Van Natta.

After it closed, Hadi was mostly working in MySpace’s Seattle office, and Ali was mostly based in San Francisco.

(See this funny welcome video Ali Partovi did at the time.)

But Van Natta suddenly got the boot in January after clashing with News Corp. digital chief Jon Miller, as well as Hirschhorn and Jones, sending MySpace into yet another storm.

Hirschhorn and Jones were then named co-presidents.

While several sources said the Partovis are not unhappy with the pair or with the new MySpace mediacentric strategy, the brothers sold their company with the idea of working with Van Natta.

“That firing reset things,” said one source close to the situation in March.

Nonetheless, there was some progress with iLike, including integration of MySpace Music with Google (GOOG) and a MySpace Events offering.

In addition, the pair have wide-ranging interests outside the company, including an active investment portfolio in such start-ups as Facebook, Dropbox, Opower, BlueKai and Flixster.

They have already scored big with investments in Tellme, which was sold to Microsoft (MSFT); Zappos, which was acquired by Amazon (AMZN); and IronPort, now owned by Cisco (CSCO).

And though iLike was not the success they had hoped for, their entrepreneurial record is strong. Ali Partovi sold LinkExchange to Microsoft, and Hadi Partovi, who also worked at Microsoft, co-founded Tellme.

Now, it seems, the Partovis are moving on to the next challenge.

Here are the internal memos from Hadi Partovi to iLike staff and from MySpace’s Jones:

From: Hadi Partovi
Date: Tue, Apr 20, 2010 at 5:15 PM
Subject: Fwd: Organizational Update (re Ali + Hadi)
To: staff
Cc: Ali Partovi

Hey everybody, it’s been super tough staying quiet about this news at the request of our execs. I know some of you are very surprised about this, and I want to apologize for not having had the option to brief you personally in advance.

I also want to call out looking backwards that we’ve all done a heck of a lot in just the last 6 months to help improve the MySpace business and to integrate iLike technology. Just a short list is below.

- iLike integrated MySpace Music into Google search (iLike provided the team, technology, and Google deal)
- iLike team+technology helped implement MySpace Events, launched with multi-million-dollar sponsorship commitments
- all iLike.com traffic has been merged into MySpace’s overall Comscore metrics
- iLike’s products have been featured in a TV ad by Apple, and will be in an upcoming TV ad by another major tech company
- iLike’s promotional engine has been used multiple times in coordination with MSM to promote new albums or new artists
- MSM videos have been integrated into iLike.com and iLike on Facebook
- iLike’s artist-stats are integrated into the MySpace artist dashboard
- iLike.com drives search engine traffic to MySpace artist pages
- iLike team implemented the imeem traffic redirection and data backend of imeem playlist integration
- iLike team provided backend metadata + recommendation engine for MySpace music search and song-similarities

Most importantly, thanks to our work, MySpace is the #1 provider of music on Facebook, music on Google, and Concerts on iPhone. Regardless of any challenges that MySpace needs to overcome, that is a great legacy that I know we’re all proud of.

I’m personally very sad that I won’t be working with any of you–the amazing team we built at iLike is perhaps our greatest accomplishment.

I’ll send an email to the Seattle folks to organize a proper going-away celebration :)

hadi

From: Mike Jones
Date: Tue, Apr 20, 2010 at 4:52 PM
Subject: Organizational Update
To: XXX
Cc: Jason Hirschhorn

Hi everyone,

Effective on Friday, MySpace SVP of Technology Hadi Partovi is leaving to pursue other opportunities. In addition to continuing his work as an advisor and angel investor to various startups, he will be following his passion for education by working directly with technology focused non-profits. Hadi leaves as a valued friend to the company, and we wish him the best of luck in his future endeavors.

Ali Partovi will be stepping down as SVP of Business Development, but will continue working with MySpace as a strategic advisor working on special projects. He will also be taking time to invest in and advise startups.

Hadi and Ali were instrumental in integrating iLike’s best in class technology into the MySpace brand. Last week’s successful Events launch was a direct result of that collaboration. Other noteworthy product integrations include last year’s Google Music Search integration and the Local Concerts App, which is currently the most downloaded concerts app for the iPhone and was featured in one of Apple’s latest iPhone TV spots.

Please join us in thanking Ali and Hadi for their contributions to MySpace.

-Jason & Mike

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

A few weeks ago, BoomTown motored down to Silicon Valley, to the Redwood City, Calif., HQ of Zazzle, the online site that lets users order a variety of custom products by using a special (and patented) printing technology.

I went to talk to the Beaver brothers–Jeff and Bobby, who founded the company with their father, who is CEO, way back before the first Web 1.0 bubble burst in 1999–about recent changes, including finding more ways to slap custom designs on more products and recent international expansion.

Funded to the tune of $46 million by Kleiner Perkins and Sherpalo Ventures, Zazzle’s profitable business essentially remains pretty straightforward: A customer can pick from both branded and user-generated designs for a variety of items, such as T-shirts, shoes, skateboards and more.

Zazzle also offers a marketplace, under a commission structure, for those who do contribute designs.

But in the video below, the pair talk about the more intriguing and more innovative idea of making pretty much every retail product completely customizable and available on demand.

It’s an interesting idea, to be sure, and probably inevitable.

Here’s the video of the interview, as well as a tour of Zazzle’s offices:

]]> http://allthingsd.com/20091224/the-beaver-brothers-of-zazzle-talks-about-customizing-well-everything/feed/ 12 http://allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/ http://allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/#comments Tue, 18 Aug 2009 06:25:06 +0000 Kara Swisher http://kara.allthingsd.com/?p=17756

The board of iLike planned a meeting earlier tonight to go over a buyout offer by MySpace, several sources close to the situation said. But it was suddenly canceled because of some thorny tax implications related to the talent-retention part of the deal to purchase the social music start-up.

This does not mean the pending acquisition is in jeopardy, sources said, and it could be on track to be signed as early as today, barring any more complications.

That is what both iLike and MySpace execs are hoping, said sources, one of whom described the outstanding issues as a “technicality.”

What’s also been unclear is the actual price the social networking giant is paying for iLike, which has been reported as about $20 million.

In fact, only $13.5 million will be paid upfront in cash, with about $8 million of that money likely going to one of its major shareholders, Ticketmaster Entertainment (TKTM), due to its preferred shares.

Another $6 million has been promised by MySpace in forward payments to retain some key employees–including iLike co-founders and twin brothers Ali and Hadi Partovi.

Although those employees can remain in Seattle, where iLike has its HQ, they must stay employed at Beverly Hills, Calif.-based MySpace for two and a half years to get their money.

It’s that talent part of the deal that caused the Partovis to cancel the iLike board meeting, which they explained to key investors was necessary due to some confusion over how the money paid to these employees would be taxed.

A person briefed on the issue said that if it was taxed as compensation, it would have a much higher tax rate than if it were considered long-term capital gains.

The Partovis said in the email that they were working on the problem with their advisers on the sale, Allen & Co., as well as with lawyers and accountants.

Tax snafus in the middle of a sale are not exactly the way the entrepreneurial Partovis envisioned it was going to go for iLike (see my various video interview related to iLike below) when they created the compelling music sharing and recommendation service in 2006.

After only a few years, the innovative start-up claims it has 50 million registered users overall.

A lot of that growth was due to iLike quickly becoming one of the most popular widgets on social networking sites like Facebook, where it has also been the top music application, with 10 million active monthly users.

The Partovis–who once were close with execs at Facebook (see my party video below), particularly founder and CEO Mark Zuckerberg–placed great faith in its growth lifting all Web 2.0 boats.

It did not turn out that way, though, especially from the important financial point of view, and iLike scrambled to diversify.

The iLike service recently began offering a music downloading service, for example, as well as other such features, all of which would be attractive to the music-centric focus at MySpace.

Once an Internet sensation, MySpace has been struggling to restructure itself after losing momentum and buzz in recent years, as well as a huge advertising revenue drop in its most recent quarter.

Its owner, News Corp. (NWS), replaced its founders with new management four months ago, including former Facebook exec Owen Van Natta as CEO.

After making major staff layoffs and rejiggering management, Van Natta and his new team have been working on an overhaul of the MySpace product and seem to be refocusing it to become a global music and entertainment service.

MySpace also has a joint venture with major music labels, MySpace Music, which has been trying to attract consumers and build a viable business. Sources said MySpace Music could also buy into the iLike deal or simply license its technology to improve its features.

Thus, purchasing iLike would fit in well with MySpace’s overall plans.

And iLike has also been in need of a fix itself.

For all its popularity, especially on Facebook, it has moved slowly toward profitabilty, and its $17 million in funding has been dwindling, as has its viability as a standalone company.

Back in more frothy Web 2.0 days, iLike’s generous funding gave it a valuation of more than $50 million, which has also lost steam over time and as the economy has worsened.

In the last quarter of fiscal 2008, for example, Ticketmaster wrote down its $13 million investment by $6 million.

Tensions between its execs and iLike have gotten worse over time, although some thought at one time that Ticketmaster would buy iLike.

No longer, which is why the founders turned to Allen & Co., as MediaMemo reported as far back as November, to find another big investor or buyer.

Wrote Peter Kafka: “Delivering free music on the Web has so far proven to be a high-cost, low-revenue endeavor…”

So, the New York deal-making firm ginned up a small group of suitors, which included Facebook, Activision Blizzard (ATVI) and Microsoft (MSFT), as well as MySpace.

Of the three, Activision was most serious, with interest in integrating iLike’s community and technology tools with its Guitar Hero franchise.

But Activision never actually made a formal bid, said sources.

Both Microsoft and Facebook also considered the purchase, but sources said they would only offer stock in a deal. But iLike wanted cash in the deal.

The Partovis were also was wary about working at either place.

Both Partovis, for example, had worked at Microsoft (Ali after selling it LinkExchange in 1998 for $265 million; Hadi several times, once following Microsoft’s acquisition of Tellme Networks, which he co-founded).

As it has turned out, in its short life, iLike’s last, best alternative is apparently MySpace.

“Look, iLike has been shopped around for a while, and while the team and technology are great, it only has one choice and that’s to be sold,” said one person involved in the various scenarios. “The question for the buyer then is whether it was worth it to pay up or just move on and do it ourselves.”

So until the bean counters settle this IRS nightmare, here is my video interview with Hadi Partovi about a year ago at iLike’s HQ in the Capitol Hill section of Seattle, when times were a little more hopeful:

And here is a very dark and very shaky video I did when iLike threw a fete in Silicon Valley to celebrate its start-up two years ago and to send some appreciation in Facebook’s direction–it is so dated that Facebook COO Sheryl Sandberg, who is in the video, is still at Google (GOOG).

(Full Disclosure: News Corp. also owns Dow Jones, which owns this site.)

]]> http://allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/feed/ 4 http://allthingsd.com/20090526/d-day-in-the-seventh-year-we-didnt-rest-mostly-because-of-meetings/ http://allthingsd.com/20090526/d-day-in-the-seventh-year-we-didnt-rest-mostly-because-of-meetings/#comments Tue, 26 May 2009 07:07:19 +0000 Kara Swisher http://kara.allthingsd.com/?p=13846

We launch the seventh D: All Things Digital conference in Carlsbad, Calif., today, after a long weekend of preparations and way too many meetings, as you can see in the video below.

(Including packing the swag bags for attendees, upon which one of my kids sits in this photo.)

The conference kicks off with an evening interview tonight with Twitter co-founders Biz Stone and Evan Williams.

Walt Mossberg and I will be asking the pair about everything from their business plans for the hot microblogging service to the huge hype around their start-up to the state of innovation in Silicon Valley to what they plan to do next.

BoomTown will update after the interview, but you can follow the proceedings–in live blogs and video–as they happen on our All Things Digital D7 site here, so check early and often, starting at about 6:30 p.m. PDT.

Here’s the final prep video, including several meetings Walt and I attended today, a view of the ballroom being outfitted and another movie review–we took the staff to see “Terminator Salvation” last night to get pumped–by my annoying geek brother:

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