One of the key players in that effort is Kazuo Hirai, a longtime game unit executive who is now widely seen as second in command of the entire company behind CEO Howard Stringer.

The company continues to have challenges, though, with its next-generation Vita game player delayed until next year and its first Android tablets just now making their way into the global market.

8:07 am: Just getting started here on the final day of AsiaD.

On his role: If it is a product that is being picked up by a consumer and it’s got the Sony name on it, it’s under my name.

8:09 am: Talking about the TV business.

Hirai says the jury is still out on 3-D, but there is a chicken-and-egg problem.

“It really is dependent on how much good content there is.”

One of the driving factors is probably going to be gaming, he said, because it appeals to a younger set. And, because it is not tied to live content, it is easier to tweak 3-D to make it a good experience.

“Gamers are willing to try new things.”

8:12 am: What about Internet-connected TVs? Those also haven’t taken off all that well, Walt says.

Hirai: “I think that it is a function of several things. Again, it’s a bit of a chicken-and-egg.”

8:16 am: On Google TV and Apple TV: Everyone is looking for a prominent space in the living room.

“It’s a very competitive market,” Hirai said.

If it is a fight for the living room, the TV is a natural way to get into that space.

Game consoles are another way, as Sony has done with PlayStation 3.

“That’s another way to make sure we have a place in the living room.”

8:20 am: Walt: Where do things stand with the competition with Xbox?

Hirai: We have a much larger install base in Japan. We were neck and neck in Europe.

In the U.S., though, Xbox has a larger install base.

Hirai says they expect a 10-year lifespan for the PS3, and see it eventually having a greater install base than any console.

8:21 am: What about the impact on handheld gaming of Apple and smartphone apps? How much of a challenge is that to the traditional structure of gaming?

Hirai: Whether we are talking about iPods, iPads or any Android, they’ve had an impact on the traditional videogame business, no question about it.

Not all negative impact, though. It has also introduced new customers to gaming.

Hirai notes that Sony is bringing PlayStation games to Android, and is now opening it up to some other PlayStation developers.

As much as those casual games are fun to play, they’re not the same as a dedicated player like Sony’s forthcoming PlayStation Vita portable videogame device. It’s coming to Japan in December, and to the rest of the world early next year, Hirai said.

It’s optimized for gaming with physical buttons, Hirai said, and allows for input on the back. It can also play HD movies and do other things.

Walt tries putting it in his pocket. Hirai quips that Walt has a stash of devices backstage. “They should have a metal detector.”

It has a 3G card for cellular connectivity (for data). In the U.S., it will cost $299 for the 3G model and $249 for the Wi-Fi-only model.

Walt: Who is the target market?

Hirai: Same people who have bought PSP and PlayStation 3, as well as those who have gotten into gaming from phones and tablets and iPod touch devices.

“If we can convert even a small percentage of those players … then we have also gained.”

8:31 am: Hirai notes that the company just started preorders in Japan, and there were people lining up at stores just to order one.

8:31 am: On to phones — is Sony interested in buying out Ericsson in its Sony Ericsson joint venture?

Hirai: I’m not going to comment on the speculation. After April, when Sony made its latest reorganization, one of the things I’ve done with Sony’s CEO and Sony Ericsson’s CEO is recognize that Sony Ericsson is an important part of Sony’s overall strategy, and that the two are in lockstep, whether it is a joint venture or not. That’s one of the things we are embarking on.

“Those are the kinds of things we need to work on to make sure it is a seamless experience.”

8:38 am: Why did you sell your camera sensors to Apple?

Hirai: Can you really define who your competitors are, these days?

We sell to Apple. We buy from Samsung. We sell to Samsung.

8:42 am: Walt: You are not in the top tier of smartphones.

Hirai: In certain regions, you are right.

Walt: So, are you going to buy out Ericsson in the cellphone space?

Again, Hirai says he won’t comment on speculation. The most important thing is that we are able to work a lot closer with the folks at Sony Ericsson.

Hirai is now showing Sony’s clamshell Android tablet — the Tablet P. Walt notes that when you open it up, you have a tablet with a big black bar in the middle.

Sony also has the slate-shaped Tablet S, which acts as a remote control, and which is already on sale in most markets.

8:48 am: Q&A: What is Sony doing to reinvigorate the videogame business?

Hirai notes that this question comes up every time the industry is in midcycle, and there are lots of sequels.

When we launch PlayStation Vita, we will have new titles.

Next question is on why there are only three PlayStation-certified Android devices — the Xperia Play phone and Sony’s two tablets. Will this expand to non-Sony devices?

Hirai: This is not a case where we want to keep it in the Sony family. We are in discussions with non-Sony makers. We’ll make the announcements as the time comes to go public. “This is not just for Sony devices.”

8:52 am: On cameras, Hirai said that there are continued innovations coming in the point-and-shoot business, despite the rise of camera phones.

“Stay tuned.”

Walt: Are you actually optimistic about that business?

Hirai: “It’s not a growing business. I get that. The numbers speak for themselves.”

8:54 am: Last question, from Joanna Stern of the Verge. What are Sony’s plans to make all the devices work better together? Where are you guys going with that? It seems like that is a software challenge — an area where you have struggled.

Hirai: The point you made is a very good one. He notes there is a new group looking at cross-device strategy, particularly among networked devices.

“I don’t know about clock radios.”

Unfortunately, because this is a hardware business, I’d like to think we can change everything overnight, but we can’t.

Kazuo Hirai Session Photos

It’s because of two tiny parts inside them, one called an accelerometer that detects movement. The other is a gyroscope that is basically used to help maintain orientation of an object or to measure any changes in its orientation.

The first three generations of iPhone had accelerometers, but the iPhone 4 and later the iPad had gyroscopes built into them in order to give software developers — game creators especially — a truly accurate way to measure how the phone is moved and thus change the action on-screen accordingly. Apple’s then-CEO Steve Jobs memorably demonstrated what the addition of gyroscopes meant with an on-screen game of Jenga on an iPhone at an Apple event last year.

The company that made them is the Italian-French semiconductor company STMicroelectronics. Neither company will ever say that out loud, Apple for its own reasons and STMicro out of fear of annoying Apple. However, teardown analyses of both the iPhone 4 and the iPad 2 conducted by the research house IHS iSuppli have confirmed this.

I bring it up because STMicro will announce today that it has made its gyroscope chips even smaller than before. The most recent one was about about 17 cubic millimeters, and the new one is just slightly above 10 cubic millimeters. What’s the point in making them smaller? For one, real estate inside a device like an iPhone is precious, so when any one component gets smaller, designers have more space to work with. And often, smaller parts require incrementally less power, which means only good things for battery life.

STMicro has already built more than a billion and a half of these little things — not all of them for use in the iPhone and other Apple iThings, obviously. They do show up in other phones and gaming devices, GPS navigators, robots and scores of other things. ISuppli pegged STMicro’s share of the gyroscope market at 30 percent in 2010, which is pretty impressive considering that it was all of 1 percent the prior year.

Yet as is usually the case with chip companies, the company rarely gets to brag about the identity of its customers, even though it would like nothing better than to shout their names from the rooftops. Instead, you can hear Steve Jobs himself sing the praises of the gyroscope, though without naming the company that made it, in this video excerpt from last year’s Apple Worldwide Developers Conference.

HP shares have been bashed about in recent days, in no small part because of the dismal revenue outlook issued by rival Dell on Tuesday, and also on the heels of a downgrade by BMO Capital analyst Keith Bachman. Word that the TouchPad tablet isn’t selling well at Best Buy didn’t help. Dell shares gave up more than 10 percent of their value, and HP shares appeared to fall in sympathy by nearly four percent, closing at $31.39, or more than 36 percent off their 52-week peak.

So, what to expect? More lowered estimates, if Bachman is to be believed. In a note to clients Wednesday, Bachman cut his rating on HP to “market perform” from “outperform,” even though HP is trading at an inexpensive valuation. “Poor execution, low revenue growth and negative operating income growth” have caused him to slash his price target on HP to $36 from $43.

Bachman said he expects HP to fall short on PC sales, which may cause it to miss its previously issued revenue guidance. “We think HP will modestly miss July top-line estimates, and more meaningfully miss current top-line estimates for HP’s October quarter,” he wrote.

The consensus view of analysts calls for HP to report per-share earnings of $1.09 on revenue of $31.2 billion.

Chris Whitmore, an analyst at Deutsche Bank, wasn’t quite so dour as Bachman, though he wasn’t exactly whistling Dixie about HP’s prospects, either. Saying he expects HP to report results that are in line with the consensus expectations, Whitmore wrote in an Aug. 14 note to clients that he sees a “modest risk to revenue expectations.” The continuing investment to beef up HP’s investment in the services business will put some pressure on future earnings potential, Whitmore worries.

Citing checks of HP’s supply chain and distribution channel, Shaw Wu of Sterne Agee said in a note to clients yesterday that he thinks HP will “meet or exceed” the consensus estimates, and that, as in recent quarters, enterprise hardware sales will be stronger than consumer PC and device sales. “We believe this favorable product mix, in addition to lower component costs, should benefit gross margin,” he wrote. At least there’s one vote of confidence.

Back to services for a moment. HP’s long-term strategy has been to transform itself into a bigger player in IT services, so that it can rely less on sales of personal computers and printers, both of which are subject to violent sales-cycle swings. It’s a strategy that worked out well for IBM, and the $14 billion acquisition of EDS in 2008 was a key part of it.

During HP’s last earnings call in May, Apotheker grumbled that under previous CEO Mark Hurd, now a president at Oracle, HP “over-executed operationally and under-invested strategically.” Essentially, Apotheker blamed Hurd — known as an aggressive cost-cutter — for cutting too deeply without making sufficient investments to fuel growth in higher-profit lines of businesslike services. As a result, Apotheker explained, some expensive investments would be needed over the next several quarters to get that services business where it needs to be, and these investments would eat into results for the next several quarters. (You can hear him explain it himself in a CNBC video from May, below.)

It will be interesting to see if that “Hurd’s fault” narrative is still on the table. If it is, it’s not likely to fall on sympathetic ears. In his downgrade note, Bachman at BMO criticized HP harshly for pressing this message. “We suspect that management will make the point that previous management cut HP too much. However, previous management did not provide guidance, and then miss for three quarters, particularly right after having an analyst event. We would leave blaming the previous administration to politicians — it does not work with investors.” Ouch.

With HP set to report quarterly earnings tomorrow, sources familiar with the matter tell AllThingsD that TouchPad sales are failing yet another critical test: Sales at big-box consumer electronics retailer Best Buy.

According to one source who has seen internal HP reports, Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, or less than 10 percent of the units in its inventory.

A second person who has seen Best Buy’s TouchPad sales figures confirmed the results as “consistent with what I’ve seen,” and went so far as to say that 25,000 sold might be “charitable.” This source suggested that the 25,000-unit sales number may not account for units that consumers return to stores for a refund.

Best Buy, sources tell us, is so unhappy that it has told HP it is unwilling to pay for all the TouchPads taking up expensive space in its stores and warehouses, and wants HP to take them back. HP, for its part, is pleading with Best Buy to be patient. We’re also told that a senior HP executive, possibly executive VP Todd Bradley, is slated to travel to Minneapolis soon to discuss the matter with Best Buy executives.

These numbers are emerging just one day before HP is set to report quarterly earnings. While it’s possible that HP will choose not to disclose any unit-sales results for the TouchPad — because as yet they’re unlikely to be large enough to be material — if it does report anything on the subject, that will probably be a figure known in industry circles as “channel sales,” which are the number of units sold to stores like Best Buy and Costco. Channel sales don’t reflect sales to end customers, known as “sell-through.”

HP declined to comment, as did Best Buy.

There’s more. TouchPad sales aren’t only failing to catch on at Best Buy, but also at other retailers, including Wal-Mart, Micro Center and Fry’s, says analyst Rich Doherty, head of the Envisioneering Group. Doherty says that spot interviews at stores on both coasts show that HP’s “wildcat pricing moves” on the TouchPad have prompted consumers to wait and see what happens in the next few months.

“After the initial surge of interest after the July release, all those price promotions have caused consumers interested in buying a TouchPad to pause, because they think the price is going to fall further,” Doherty told me.

For the record, the TouchPad costs $399.99 for the 16GB model and $499.99 for the 32GB version. Both started at prices exactly $100 higher when first announced in June.

So what’s HP’s next move? Doherty says that with the back-to-school PC buying season underway, HP will likely use its leverage as one of Best Buy’s top suppliers — the other is Samsung — to offer bundle deals: Buy an HP computer, get the TouchPad for a special price.

After our grand tour of Asia last week — with stops in Korea and Japan — it seems like a perfect time to update the speaker list for our upcoming AsiaD conference in Hong Kong in October.

As Walt Mossberg and I said, we are trying to mix both U.S.-based speakers with a pan-Asian selection of speakers from across the region, and the new additions are just that.

For the international confab — this one will be held Oct. 19-21 — we’ve already announced a great lineup, including Alibaba’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; and Asus Chairman Jonny Shih.

Now, to add to that terrific lineup:

Kazuo “Kaz” Hirai is widely considered the second in command at the consumer electronics giant Sony, in charge of its key computer entertainment division, as well as now serving as executive deputy president of the whole company. In that role, the dynamic exec is at the nexus of the Japanese company’s efforts around tablets, smartphones, gaming and more. As Sony struggles to reassert its dominance over the arena, Hirai will be a key player in that effort.

Bradley Horowitz — as head of product management for Google+, the search giant’s aggressive effort to break Facebook’s hammerlock on social networking — has a perfect perspective to talk about the fast-growing area and where it is going globally. With locally-based social companies springing up all over Asia, can Google establish one the whole world will use? It’s an important question and Horowitz’s job No. 1.

At Microsoft, Andy Lees is leading one of the software giant’s most important initiatives, as president of its Windows Phone division. His come-from-behind job includes mobile software and hardware, as well as its key partnership with Nokia. With Apple’s iPhone and Google’s Android far in the lead, Lees will need to win in markets globally, especially in Asia.

Peter Chernin is one of Hollywood’s top players and execs. The former top News Corp. exec is now a movie producer — his first effort, “Rise of the Planet of the Apes,” is a big hit. But he’s also been increasingly active in media investing in Asia of late, and has a lot to say about the global nature of entertainment in the digital age.

John Roese heads the North American R&D team for Huawei, the Chinese telecom giant making everything from heavy-duty gear for networks to mobile phones and tablets. The former CTO of Nortel, he’s heading up global development of Huawei’s cloud services for both businesses and consumers. Roese will also talk about the phenomenon of a Chinese-owned company emerging on the world technology stage.

Even in the midst of an economic downturn, there is no denying that it has been a golden time for Silicon Valley start-ups, which have enjoyed unprecedented growth and funding in the Web 2.0 era. But as they seek to expand beyond the U.S., a critical move for them all, we’ve assembled a panel of entrepreneurs to discuss it, including:

Brian Chesky is the CEO and co-founder of Airbnb, the popular online vacation rental site that recently got a huge dose of funding and an equally large amount of controversy. How Airbnb can take the company to the next level, including across the world, while dealing with the kinds of challenges the small management team has to face, will be an interesting topic for discussion.

After stints as president of Asia Pacific and Latin America operations at Google and co-founder of the online personal finance company Yodlee, Sukhinder Singh Cassidy is trying her hand at a small start-up again. She’ll talk about how the recently funded Joyus, a new premium video commerce site trying to pioneer a new way to shop online, plans to expand globally.

Finally, longtime tech exec David Goldberg is now running one of tech’s most successful start-ups at SurveyMonkey, the dominant online survey company. With stints as founder of music site Launch Media, which was bought by Yahoo, and as an Entrepreneur in Residence with Benchmark Capital, he is the perfect person to explain what it’s like being an entrepreneur today in Silicon Valley.

We have even more speakers for AsiaD we’ll be announcing in the coming weeks, so get ready for what’s next.

ComScore said this represented the third consecutive quarter of double-digit growth rates, which are being fueled by more Americans choosing to shop online. The number of online buyers was up 16 percent, compared to the year-ago period.

Some 70 percent of all Internet users in the U.S. made at least one purchase during the second quarter.

This quarter’s numbers shouldn’t be a big shock since Amazon surprised Wall Street by reporting a 51 percent year-over-year surge in sales, despite the second quarter typically being the slowest period of the year.

ComScore Chairman Gian Fulgoni said almost $1 of every $10 in discretionary spending is now occurring online. “E-commerce’s benefits of convenience and lower prices continue to be the drivers of the shift,” he added.

Other highlights from the quarter:

• The top-performing categories that grew by at least 15 percent compared to 2010 were: Consumer electronics, computer hardware, software and event tickets.
• Small and mid-sized retailers continued to gain market share, with the top 25 online retailers accounting for 66.4 percent of dollars spent online, down from 67.7 percent a year ago.
• The second quarter represented the seventh consecutive quarter of positive gains year over year. The last time spending online decreased was in the third quarter of 2009.

On our weeklong trip to Asia in preparation for our upcoming AsiaD conference in the fall — including a stop in South Korea earlier in the week — Walt Mossberg and I have spent the last few days in Tokyo.

That’s because while AsiaD will have a Chinese flavor — by virtue of its location in Hong Kong and given how increasingly important China is in the digital arena — we also want to make sure that the focus is pan-Asian.

Of course, Japan has always been one of the key centers of the digital world, especially in the area of consumer electronics, so it was interesting to see what it has been up to.

While here, we visited gaming firms such as Nexon (Korean-born, but HQed here) and Gree; met execs from companies such as Mixi, Japan’s largest social networking site (and not Facebook, which is still small here); and visited the big behemoths like Sony (which is up to some very innovative things, from what we saw this week, including the dorktastic head-mounted video device I am wearing above).

We also went to see what’s up with smartphones and other gadgets in the Akihabara area — often referred to as “Electric Town” — of this bustling city, which is one of my favorites in the world.

That’s why Tokyo’s digital companies will be a big part of AsiaD. We’ll soon be announcing even more speakers for the event, which takes place in Hong Kong Oct. 19-21.

Until then, here’s my video of our tour, which includes a look at the latest in rice cooking technology (you’d be surprised!):

And here is a video from a breakfast talk Walt and I did there:

]]> http://allthingsd.com/20110806/asiad-adventures-japan-edition-walt-and-kara-visit-digital-tokyo-video/feed/ 0 http://allthingsd.com/20110731/foxconns-terry-gou-tells-employees-the-robots-are-coming/ http://allthingsd.com/20110731/foxconns-terry-gou-tells-employees-the-robots-are-coming/#comments Sun, 31 Jul 2011 17:35:45 +0000 Arik Hesseldahl http://allthingsd.com/?p=104622 By now most people who know anything about the world of consumer electronics know that most of the gadgets they love — their iPads, iPhones, Android tablets and so on — are made in China in huge factories, many of them owned by a Taiwanese company called Foxconn.

Foxconn has in recent years seen its share of negative press. There was an explosion that killed three people at one of its plants in June. Prior to that there was a disturbing string of suicides that so shocked the sensibilities of Western consumers that it prompted demands for better working conditions and two lengthy cover stories in Wired and Bloomberg Businessweek. The concern was significant, in no small part because of the shadow the matter cast over Foxconn’s most prominent customer, Apple, which has done its best to force Foxconn to make the lives of its workers better.

Manufacturing electronics by the millions isn’t exactly mentally stimulating. The Wired story used the phrase “repetitive, exhausting, and alienating,” and it’s not hard to imagine going stir-crazy after doing it for any length of time. That’s why it’s interesting to see the news out of China today that Foxconn is going to boost the number of robots doing those repetitive tasks on its assembly line.

The story from Xinhua News, China’s state-controlled news agency, is headlined “Foxconn to replace workers with 1 million robots in 3 years,” and relates that the announcement came from Foxconn CEO Terry Gou himself at a company dance party.

Eerily absent is any comment on the reaction of those employees in attendance. Did they cheer at the thought of being freed up by robots from the least-popular jobs on the line? Or did they begin to worry anew, grasping the economic realities that additional factory automation bring with it?

Robots are efficient, they don’t get tired, and aside from routine maintenance, they don’t take breaks. They also don’t complain about soul-killing work conditions. All of this makes them appealing to Foxconn management and its growing list of clients.

But as anyone who knows even the barest details of the history of factory automation in the U.S. auto industry is aware, robots have a funny way of causing job losses. While Foxconn already uses some 10,000 robots now, the story says, the number is going to multiply by a factor of 100, to one million robots within three years. If those numbers turn out to be accurate, there is simply no mathematical way that some portion of the 1.2 million people currently in Foxconn’s employ can avoid losing their jobs. And that can’t help but cause other unexpected ripple effects throughout the Chinese economy.

(The image is a screen grab from the trailer for the 2004 Will Smith film “I, Robot,” which I obviously selected with tongue in cheek. Real robots used in the assembly of electronics look more like the one assembling cellphone speakers in the video below, from a Florida-based company called AccuPlace.)

]]> http://allthingsd.com/20110731/foxconns-terry-gou-tells-employees-the-robots-are-coming/feed/ 0 http://allthingsd.com/20110713/jawbones-newest-product-health-tracking-wristband-called-up/ http://allthingsd.com/20110713/jawbones-newest-product-health-tracking-wristband-called-up/#comments Wed, 13 Jul 2011 18:34:02 +0000 Kara Swisher http://allthingsd.com/?p=97677 Jawbone, the San Francisco consumer electronics start-up that just grabbed another $70 million in funding, has announced its latest gadget called UP. The new product is described as “an intelligent, wearable wristband with an application that combines tracking, analysis, social and motivational elements.” Jawbone, which makes a popular Bluetooth headset and also the Jambox wireless speaker, said UP will track a user’s movement, sleep patterns and nutrition.

]]> http://allthingsd.com/20110713/jawbones-newest-product-health-tracking-wristband-called-up/feed/ 0 http://allthingsd.com/20110712/jawbone-nabs-70-million-in-a-jammed-box-of-funding/ http://allthingsd.com/20110712/jawbone-nabs-70-million-in-a-jammed-box-of-funding/#comments Tue, 12 Jul 2011 19:30:07 +0000 Kara Swisher http://allthingsd.com/?p=97072

Jawbone, the maker of elegant mobile and wireless devices, has added $70 million in funding to its coffers, with a new investment from J.P. Morgan Asset Management.

The San Francisco-based company has now raised a total of $170 million, which includes a recent $49 million venture round from high-profile Silicon Valley VC firm Andreessen Horowitz in March.

Jawbone also has raised money from Sequoia Capital, Khosla Ventures and a number of prominent angel investors.

All are making a big bet on consumer electronics, an always dicey arena, and on Jawbone’s innovative products, such as its initial Bluetooth headsets.

The start-up has more recently expanded its offerings to the Jambox Smart Speaker, which has become a fast-selling wireless speaker.

Both have been particularly popular with Apple users, and Jawbone has been prominently featured in its retail stores.

Jawbone CEO Hosain Rahman certainly sounds like Apple CEO Steve Jobs when he talks about an all-encompassing digital solution.

“We’re going to get into some new categories of products,” said Rahman, about what he plans to do with the new funding, especially around making smaller, embedded and wearable devices. “We want to be an end-to-end experience.”

While he would not be specific, Rahman said that this area of computing is changing to encompass the entire mobile lives of its consumers.

“We want to leverage the power of the tool in your pocket,” he said. “This is just the beginning.”

Here’s the official press release from Jawbone:

JAWBONE SECURES $70M IN GROWTH FUNDING FROM J.P. MORGAN ASSET MANAGEMENT

Jawbone to Expand its Products and Services for the Mobile Lifestyle

SAN FRANCISCO –- July 12, 2011 –- Jawbone, a leading innovator of products and services for the mobile lifestyle, today announced it has secured $70 million in funding from investors advised by J.P. Morgan Asset Management.

Jawbone is one of the largest privately-held, venture capital-backed consumer electronics companies in the world, and this round brings total investment in Jawbone close to $170 million to date. The funding will allow Jawbone to continue its rapid growth and expand into new markets and categories, building on its successful portfolio of premium mobile products and services.

“We seek to invest in the best high-growth companies,” said Larry Unrein, managing director of J.P. Morgan Asset Management. :Given the widespread adoption of smartphones globally, we are seeing a massive shift in user expectations around having a complete, high-quality and seamless experience wherever they are. Jawbone, with its long-standing expertise in mobile user experience, has been delighting customers by enabling them to get the most out of their smartphones through a combination of cutting-edge technology and great design. We believe Jawbone is poised to be the next great mobile computing company coming out of Silicon Valley.”

“Funding from J.P. Morgan Asset Management is fantastic for us as we continue to rapidly expand our business,” said Hosain Rahman, CEO of Jawbone. “As people’s digital lives become increasingly centered around mobile devices, we see no shortage of opportunities for our technology and products to unlock the potential of a full mobile experience. The support of J.P. Morgan Asset Management will help us be even more aggressive in our pursuit of these opportunities.”

Jawbone’s innovation has resulted in unprecedented demand for its products and services on a global scale. The company is known for leading and disrupting categories with its breakthrough software, strong commitment to design, and award-winning products.

“Jawbone is one of the most important mobile companies with which Sequoia Capital has partnered,” said Roelof Botha, partner at Sequoia Capital and Jawbone board member. “Jawbone’s relentless building of great products that consumers love gives the company a unique ability to redefine established markets. We are delighted to have J.P. Morgan Asset Management on board.”

Jawbone first made its mark in the industry by creating an entirely new class of intelligent Bluetooth® headsets, and has successfully expanded its portfolio of products for the past decade. The JAMBOX Smart Speaker™ is one of the best-selling speakers globally, and the recently-launched Jawbone ERA™ headset is the first to include HD audio and motion sensors.

For more information, images and product demos, please visit www.Jawbone.com/Press, or follow @Jawbone on Twitter.

]]> http://allthingsd.com/20110712/jawbone-nabs-70-million-in-a-jammed-box-of-funding/feed/ 0 http://allthingsd.com/20110703/hps-touchpad-teardown-its-deepest-secrets-revealed/ http://allthingsd.com/20110703/hps-touchpad-teardown-its-deepest-secrets-revealed/#comments Sun, 03 Jul 2011 21:26:41 +0000 Arik Hesseldahl http://allthingsd.com/?p=94147

What would the release of a headline-grabbing new consumer electronics device be without a handful of people buying them only to take them apart to see what’s going on inside?

So it goes with Hewlett-Packard’s TouchPad, the webOS-based answer to the king of tablet computing, Apple’s iPad. The teardown team at market research firm IHS iSuppli picked one up only to skulk around its insides. The picture at right (which you can click to make bigger) is the exploded view of the device.

ISuppli isn’t the only place that does these teardown reports, but it’s one of the few that also estimates the combined cost of the parts and materials used to build the device. These bills of materials, or “BOM” estimates, as they’re called in industry parlance, are important indicators of the kind of profit margin a company can expect to see on a device on a per-unit basis. The BOM doesn’t take into account other costs that are impossible to estimate, such as software development, licensing of any intellectual property, distribution or marketing.

So what does the TouchPad cost to build? The teardown by iSuppli pegs the cost of the components used in the 16 gigabyte version, which sells for $499 at retail, at $306.65. Meanwhile, the 32GB version, which sells for $599, costs $328.65 to build. (The difference, obviously, is memory.) HP didn’t immediately comment on iSuppli’s findings.

As is often the case with tablets and notebooks, the display is the most expensive component in the device. In this case, HP went with a proven winner. It selected a 9.7-inch display from LG Electronics that is thought to be either identical or very similar to the LG-made display Apple used in the first-generation iPad. Andrew Rassweiler, iSuppli’s senior director for teardowns, pegged the cost at $69.

Internally speaking, the similarities to the iPad end there, Rassweiler told me. The components connected to the display that enable the touch-sensitive interface are different from those on the iPad. Where Apple has favored chips from Broadcom and Texas Instruments, HP has gone with a set of six chips from Cypress Semiconductor to control the touchscreen. It costs $11.75, which makes it one of the more expensive touchscreen driver products on the market, Rassweiler said. Additionally, materials used to build the capacitive glass assembly that overlays the LCD display cost another $63.50. All in, components related to the display come to a subtotal of $144.25, iSuppli estimates.

The next most expensive set of components is the memory. For the NAND-flash memory used for storing data, HP selected SanDisk’s iNAND chips. The iSuppli teardown reckons that HP paid $23 for 16GB, and $45 for 32GB. Samsung provided 8GB worth of system memory (DRAM) for both models, at an estimated cost of $26.

he TouchPad’s main application processor is interesting both for who made it — Qualcomm — and for what it isn’t: A full-fledged member of its Snapdragon chip family. “This appears to be a Snapdragon derivative without the baseband functions that would normally be seen on a Snapdragon,” Rassweiler told me. The chip costs $20, iSuppli estimates. Chances are a fully enabled Snapdragon chip will be used in a future model, he said.

For now, as The Wall Street Journal’s Walt Mossberg noted in his review of the TouchPad last week, the device is Wi-Fi only, but a model with the ability to connect to cellular networks is planned.

It’s also clear from the teardown, Rassweiler said, that there’s room for the addition of other components in the future. And other things are missing.

“We noticed there’s a gyroscope chip and an accelerometer, but we couldn’t find any GPS chips,” he said. “Plus, when we looked at the design we noticed there seems to be a lot of breathing room inside to add additional parts without having to change the design.” More stuff to expect from a future 3G-ready TouchPad.

Qualcomm supplied several other chips. Its newly acquired Atheros subsidiary provided the Wi-Fi chips, at a cost of $2.60, and two power management chips that cost another $5 combined. Texas Instruments supplied four chips — three related to power management and one display interface chip — that added $4.50 to the cost.

Of course, the TouchPad is not only intended to be a successful device on its own for HP, but represents a new strategic opportunity. As in, HP wants to license the webOS on the TouchPad to other manufacturers.

That makes it something of a showcase for the software’s capabilities. HP CEO Léo Apotheker discussed this possibility in his appearance last month at the ninth D: All Things Digital conference.

You can see his comments on the subject from the highlight clip below. And you can see the full interview here:

]]> http://allthingsd.com/20110703/hps-touchpad-teardown-its-deepest-secrets-revealed/feed/ 0 http://allthingsd.com/20110701/exclusive-microsoft-strategy-exec-hank-vigil-to-depart-will-remain-strategic-advisor/ http://allthingsd.com/20110701/exclusive-microsoft-strategy-exec-hank-vigil-to-depart-will-remain-strategic-advisor/#comments Fri, 01 Jul 2011 21:31:44 +0000 Kara Swisher http://allthingsd.com/?p=93942

Microsoft’s SVP of Strategy and Partnership Hank Vigil will be leaving the software giant to focus on investing in and advising for early-stage start-up companies, according to an internal email from CEO Steve Ballmer.

But the 25-year company veteran, who will departs Microsoft in the fall, will also become a “strategic advisor” to Microsoft.
That’s probably a good idea, since Vigil is one of the company’s most visible and well-liked execs in the tech community, especially in Silicon Valley.

He also is Microsoft’s best-dressed exec, if I might be so bold to say.

Vigil has had wide-ranging jobs all over Microsoft in his many years there.

He has most recently been working directly with Ballmer, according to his company bio, “developing and managing strategic relationships, mergers, acquisitions and investment partnerships with media, consumer electronics, telecommunications, software and Internet companies.”

In that role, Vigil has worked on a range of deals, including with Facebook, Nokia, News Corp. and many others.

Previously, he worked on Microsoft’s digital TV strategy, including the acquisition of WebTV. Vigil also did marketing and business strategy for Office, Word and Excel.

In other words, Vigil knows where all the bodies are buried up at Microsoft’s Redmond HQ! And, presumably, he’ll be keeping that to himself.

Here’s the internal email from Ballmer about Vigil’s departure:

After 25 years at Microsoft, Hank Vigil has decided it’s time to open a new chapter in his life.

Hank has covered a lot of ground, from launching Excel 3 and Office 95, to our early investments in ITV, to helping restructure our relationships with Sun, Time Warner, and Real Networks, to his more recent work helping to drive new investments and partnerships with companies like Yahoo!, Facebook, and Nokia. He’s been a critical strategic advisor and bridge-builder on some of the biggest industry opportunities we’ve dealt with in recent years.

He’ll be staying on until the fall, then he intends to do some early stage investing and advising start-up companies.

While Hank is leaving the company, he’s not going too far. I’m pleased to say that Hank will continue to provide his industry insight and strategic counsel going forward as an advisor to the company.

Please join me in congratulating Hank on a quarter-century of great work, and wishing him the best of luck in his new adventure.

]]> http://allthingsd.com/20110701/exclusive-microsoft-strategy-exec-hank-vigil-to-depart-will-remain-strategic-advisor/feed/ 0 http://allthingsd.com/20110419/decide-com-raises-funding-for-stealthy-e-commerce-company/ http://allthingsd.com/20110419/decide-com-raises-funding-for-stealthy-e-commerce-company/#comments Tue, 19 Apr 2011 15:43:25 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=4648 Seattle-based Decide.com isn’t saying what it’s doing, but has raised $6 million in a second round led by some e-commerce legends.

The funding was led by a Seattle contingent including Maveron, which was started by Starbucks’ Howard Schultz, and Madrona Venture Group, which was founded by one of the original investors in Amazon.

In total, the company has raised $8.5 million.

In a blog post, the company’s CEO, Mike Fridgen, did not elaborate on what the company was working on, but said it is offering “early adopters and consumer electronics geeks a chance to preview the site just before it goes live late spring.” To qualify, you must “like” Decide’s Facebook fan page and share a pic of your favorite old-school device.

In an interview with GeekWire, Fridgen shared no details, but said it is the company’s goal to help with the decision process around buying a new product: “At the moment of purchase, there are some real pain points around buyer’s remorse that we will be addressing with data and technology,” he said.

The company’s tagline: “Bringing unprecedented transparency to electronics shopping.”

A number of angels also participated in the round. Dan Levitan of Maveron and Hugh Crean, former CEO of Farecast, will join the board. Ram Shriram, Google’s founding board member and early investor, and Erik Blachford of Expedia will join the company’s advisory board. The company was co-founded by Oren Etzioni, who founded Farecast before selling it to Microsoft.

]]> http://allthingsd.com/20110419/decide-com-raises-funding-for-stealthy-e-commerce-company/feed/ 0 http://allthingsd.com/20110412/so-this-is-how-it-ends-for-the-flip-video-camera/ http://allthingsd.com/20110412/so-this-is-how-it-ends-for-the-flip-video-camera/#comments Tue, 12 Apr 2011 23:38:58 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=4997 Within hours of word that networking giant Cisco Systems planned to shut down its Flip Digital business unit, groups emerged on Facebook calling for Cisco to “Save The Flip.”

The decision has baffled nearly everyone I’ve talked to about it. While changes were expected at Cisco, especially in light of last week’s letter by CEO John Chambers to employees in which he promised “bold steps” and “tough decisions” and “surgical precision” with regard to what needs fixing at Cisco, it’s hard to see how shutting down the Flip unit, even for its meager size within the giant company that Cisco is, amounts to a good business decision.

If Cisco wanted to be rid of the Flip Digital business, why not try to sell it? I asked a Cisco spokeswoman about this today and the only answer I got back: “We performed a detailed analysis and determined that the best decision was to shut it down.”

It can’t have been much of an analysis judging by the reaction among consumers and other companies who might have been interested in buying it–had they been approached. There are probably several companies in addition to the three who made themselves known to BoomTown’s Kara Swisher who would have been interested in buying the Flip business from Cisco.

Exhibit A: As I noted earlier today, the Flip is the best-selling consumer camcorder in the U.S., according to the market research firm NPD, beating out names like Sony, Kodak and Canon.

And yes, I’ll grant it’s a small business when compared to the rest of Cisco’s large carrier-class and enterprise networking and switching unit business, but look at these numbers from Cisco’s most recent 10-K filing. Cisco reported $40.4 billion in revenue last year. Sales in the Flip business unit were small enough that they got lumped into the “other revenue” category along with sales generated by the newly acquired Tandberg video conferencing business and a batch of others.

This “other revenue” totaled $2.6 billion in Cisco’s fiscal 2010, up from $1.6 billion in fiscal 2009. The biggest single factor for that billion-dollar boost was $317 million in Flip camera sales. You read that right: Cisco just shut down a business that brought in $317 million in sales in its last fiscal year.

And yes, that amounts to less than one percent of Cisco’s overall sales. But it had to be a profitable business. I submit as Exhibit B a teardown analysis of the Flip Mino HD camera conducted by the market research firm IHS iSuppli shortly after Cisco’s $590 million acquisition of Pure Digital in March of 2009.

At that time, a Flip Mino HD cost $54.23 in direct materials to build. The four gigabyte model is still available today and sells for $160 at retail. This suggests that the gross margin on that model was easily in the 60 percent range. Additional costs of distribution and marketing and software can’t have eaten too far into that. Plus? That was two years ago. While flash memory costs are certainly volatile, all the other parts used in the camera have probably come down in cost since then.

On top of that, there’s brand equity that would have added to the potential price a buyer might have paid. Cisco poured considerable resources–though small by Cisco measures–into advertising the Flip camera. As Exhibit C, I submit the long progression of TV ads that Cisco aired to promote the brand. While it’s hard to say they were great ads, they worked, and they showed a lot of potential for the brand. Everyone knows what you mean when you say “a flip,” and as any branding expert will tell you, that kind of recognition doesn’t come easily. It’s also no small thing to get the daughter of the president of the United States to use your product during so momentous an occasion as a presidential inauguration. Oprah Winfrey praised them on her show, and on a day in 2007 gave one to everyone in the studio audience. Make no mistake, the Flip was and is a culturally significant product.

And with broad recognition comes a willingness by finicky retailers to take the risk and put the product on their shelves. Exhibit D: In its relatively short life, Flip cameras wound up in Best Buy, WalMart, Amazon and scores of other stores. A good retail distribution network isn’t easy to build. The Flip camera had it, and in fact most of the heavy lifting had already been done. All Cisco had to do was keep building them.

All this is not to say that the Flip brand didn’t have its challenges, not least of all from the iPhone and numerous other smartphones. But there are lots of products that at least on paper are made obsolete by others encroaching on their territory, yet continue to exist for years. Not everyone has an Apple iPhone, nor even a smartphone, and not everyone has the presence of mind to use their phone to shoot video. Doing one thing well is for some people a virtue.

Take for example the cassette-playing Walkman stereo, which existed alongside the Discman portable CD player for years despite the obvious superiority of the compact disc. Some people without the patience to use or buy a smartphone would have continued to gravitate to the Flip for its simplicity and reliability. With a Flip camera there’s practically nothing to learn: Push the red button to start and stop recording, and plug the camera into your computer when you’re done. Though in the last year the product family had shown a pronounced lack of vision: The Flipshare TV device and the Slide HD camera were not well thought out extensions of the brand. Both were launched on Cisco’s watch, and as an indicator of unannounced products in the pipeline, they don’t say anything good.

Yet it’s hard to imagine that the Flip camera couldn’t improve incrementally over time. One thing its devotees always wanted, but never got? An external microphone port. And given all the professional bloggers and reporters who used Flips to enhance their journalistic efforts–I know at least half a dozen journalism professors who rewrote their lesson plans after their first encounter with a Flip–why wasn’t there ever a Flip Pro?

Cisco paid a big price for Pure Digital: $590 million in stock. Given that it contributed $317 million revenue in fiscal 2010, that valuation may not have been unreasonable. We don’t know what Pure Digital’s revenues were in the prior year. But let’s assume they were, say, $150 million, or less than half in the prior year. That would make the multiple that Cisco paid less than four times trailing revenue. Not a crazy price by any means.

So what price could it command now? That’s harder to say. There is, I admit, a pretty good chance that Cisco might have ended up selling it for less than it paid. Certainly no company wants to do that. On the day the acquisition was announced, Cisco shares were trading at $16.23, a dollar and change lower than they are trading today. I’m no accountant, but I have to wonder if there’s some kind of tax advantage to shutting it down versus selling it. (Feel free to leave suggestions in the comments.) But it’s also possible–if not likely–that a sale would bring in more than the $300 million restructuring charge that Cisco is taking to shut it down, re-align other business and fire 550 people. Though for a $40 billion company, it hardly seems worth the effort: $300 million amounts to three-quarters of one percent of revenue, making the potential proceeds mere pocket change.

Which brings me to my final point: Why did Cisco buy the Flip business in the first place? Ostensibly it was about consumer video or something. Cisco floated this utopian vision of consumers flocking to buy ?mi video conferencing systems for their homes and carrying Flip cameras in their purses and pockets and sending videos of school plays and soccer games to Grandma over Cisco-made home networks that were in turn connected to an Internet largely powered by Cisco’s industrial-strength routers and switches.

It wasn’t necessarily the wrong vision (well, maybe ?mi was, but let’s leave that aside for the moment). It may be that Cisco was simply the wrong owner. Cisco’s purchase was puzzling in 2009 and still seems puzzling now. But more puzzling is why Cisco seems to have gone to no effort whatsoever to find the Flip–and the several hundred people responsible for making it–a suitable home.

]]> http://allthingsd.com/20110412/so-this-is-how-it-ends-for-the-flip-video-camera/feed/ 6 http://allthingsd.com/20110412/cisco-kills-the-flip-video-camera-business/ http://allthingsd.com/20110412/cisco-kills-the-flip-video-camera-business/#comments Tue, 12 Apr 2011 13:39:30 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=4944 Cisco Systems today announced what it called a realignment of its consumer electronics business. The highlight, however, is that the Flip video camera business is being shuttered, and 550 people will lose their jobs. Cisco acquired Pure Digital, the company that makes the Flip line, in 2009 for $590 million.

At the time that Cisco acquired Pure Digital the Flip was flying high as the top-selling camcorder in the U.S., according to the research firm NPD Group, and by mid-2009 had clocked sales of about 2 million units. Stephen Baker, an analyst with NPD says on his blog that unit sales were essentially flat in 2010 and that the average selling price on a Flip camera rose by five dollars to $158. And though its hard to know what the gross margins are, Baker says Cisco’s Flip video unit was “far and away the leading consumer video camera company.” What probably did it in was holiday sales last year: Unit sales dropped by 19 percent versus 2009, though for that Baker blames “strategic marketing missteps,” rather than a drop in any underlying demand.

NPD numbers show the Flip maintaining its market share lead as recently as February of this year, with 21.6 percent of the market ahead of Sony which had 20.9 percent. Both saw their shares fall as Kodak saw sales of its Playsport and Playtouch video cameras pick up steam. Kodak boosted its share to 12.8 percent versus less that 5 percent a year ago.

The problem wasn’t the camcorder business. The problem was the iPhone. Months after Cisco’s purchase, Apple added video recording to the iPhone 3GS which went on to sell a million units during its first weekend on the market and 7.4 million units within a single quarter. Video recording is now so common on smartphones that it’s strange if a phone doesn’t do video, and at a quality that matches if not exceeds what a Flip can do. Given time, smartphones will be substantially better than Flip cameras, though again it’s hard to know what feature improvements were on the Flip camera roadmap.

Other changes announced by the networking giant: a plan to “refocus” its home networking business, the backbone of which was Linksys, the privately held home networking company it acquired in 2003 for $500 million in stock. Cisco says it wants more profits from that unit and wants it to be more closely tied to its core networking and infrastructure business.

Another change: The EOS business–essentially a software platform Cisco launched in 2009 that offered media companies a digital gateway into the home–is being gutted and its core video technology redeployed elsewhere within Cisco. Dan Scheinman, the unit’s general manager, Tweeted this morning that he had resigned from Cisco, saying the business had succeeded technically, but was about two years ahead of the market.

Cisco also said its ?mi consumer video conferencing product line–the one that had been the subject of the latest round of ads starring Ellen Page–will be integrated into its business telepresence products.

The reaction from investors has been tentatively positive. Cisco shares are up three cents to $17.50 this morning, though the price is still pretty close to a 52-week low. Cisco said it will take a $300 million restructuring charge.

Standard and Poor’s analyst Ari Bensinger quickly issued a short note reiterating his “Buy” rating on Cisco. “We see these moves as part of a new strategy to de-emphasize consumer-related products that have been dragging down profitability, and believe more announcements are on the way,” he wrote. “We are positive that CSCO is sharpening its focus on its core competency of routing and switching, which should see good growth opportunities as the industry migrates to the cloud.”

Here’s a two-year-old interview Kara Swisher conducted with former Pure Digital CEO Jonathan Kaplan, shortly after he had sold his company to Cisco. He didn’t stay long. Cisco announced his departure to “seek other opportunities” in February.

]]> http://allthingsd.com/20110412/cisco-kills-the-flip-video-camera-business/feed/ 9 http://allthingsd.com/20110407/sonys-new-playstation-portable-may-fall-further-behind-competition-due-to-japan-quake/ http://allthingsd.com/20110407/sonys-new-playstation-portable-may-fall-further-behind-competition-due-to-japan-quake/#comments Thu, 07 Apr 2011 18:42:01 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=4277 Sony’s new PlayStation Portable may fall further behind Nintendo’s 3DS as the consumer electronics maker faces production delays following the earthquake and tsunami that hit Japan last month, Bloomberg reports.

As a result, the handheld gaming device, which goes by the name NGP for next-generation portable, may be introduced in only one region in time for the holiday shopping season — instead of launching simultaneously in Asia, Europe and the U.S., said Jack Tretton, president of Sony Computer Entertainment of America.

Tretton told Bloomberg that the delay would also give developers more time to complete their software.

Last month, Nintendo broke sales records after introducing its new portable game unit.

The big feature of the new Nintendo 3DS is the ability to view 3-D images without wearing special glasses. Sony’s NGP doesn’t really have one huge selling point, but rather the company has been meticulous in overhauling the entire device. The game player will have front-and rear-facing cameras, a gyroscope, accelerometer, Wi-Fi and 3G support and built-in GPS. It also boasts a five-inch, touchscreen display and a corresponding touch panel on the rear of the unit.

But that may not matter if it’s not available for sale in time for the holidays.

Edward Woo, a video-games analyst with Wedbush Securities in Los Angeles, told Bloomberg that if the NGP gets pushed out until 2012 for some markets, it threatens to put Sony further behind Nintendo.

“It raises the bar on the competitive issues that Sony is going to have to hurdle,” he said. “As it is now, it’s already going to be almost eight months behind Nintendo, and a delay could push that to a year.”

Nintendo, which is based in Kyoto, Japan, said production of the 3DS was not affected by the quake, but it still had to work hard to meet robust demand for pre-sales.

]]> http://allthingsd.com/20110407/sonys-new-playstation-portable-may-fall-further-behind-competition-due-to-japan-quake/feed/ 0 http://allthingsd.com/20110204/holiday-shopping-drives-record-breaking-e-commerce-spending-to-43-3-billion-in-q4/ http://allthingsd.com/20110204/holiday-shopping-drives-record-breaking-e-commerce-spending-to-43-3-billion-in-q4/#comments Fri, 04 Feb 2011 20:29:05 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=2380 U.S. online retail spending reached a record-breaking $43.4 billion in the fourth quarter, fueled by strong holiday spending, comScore reports.

Spending in the fourth quarter was up 11 percent over a year ago, representing the fifth consecutive quarter of positive annual growth and the second quarter of double-digit growth rates in the past year.

In 2010, holiday spending online was bolstered by the first-ever billion-dollar day on record, and others surpassing $900 million. The strong growth rates are a huge swing from two years ago, when fourth-quarter sales fell by three percent.

The bulk of online sales occur among the top 25 online retailers, which accounted for 68.4 percent of dollars spent.

As the largest e-commerce provider, Amazon turned in a fourth-quarter performance that mirrored comScore’s findings. Amazon reported its first $10 billion quarter ever, and saw year-over-year growth rates of 40 percent (its best growth rate since 2000).

In a release, comScore Chairman Gian Fulgoni predicted that the increased spending levels will continue this year: “We anticipate that the progress we’ve seen in the past year as we climbed out of the recession will continue with sustained double-digit growth rates in 2011.”

Other highlights:

• The top categories were computer software, consumer electronics, digital books and magazines, computers and peripherals, and toys and hobbies.
• 84 percent of U.S. Internet users conducted an online transaction in the period, up from 78 percent last year.

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