One early customer is Rob Legato, the visual effects supervisor who won an Academy Award for his work on the Martin Scorsese-directed hit motion picture “Hugo.” Legato will be talking about ioFX with Fusion-io chief scientist and Apple co-founder Steve Wozniak at a conference in Las Vegas next week.

Fusion does some cool stuff with flash memory. Here’s the part where I roll out the old metaphor that has served me so well: In pretty much any computer, you can think of the processor as a fast-moving, highly efficient, type-A personality, constantly in a hurry, and always waiting impatiently for the rest of the system to give it more work to do. The slowpoke in the deal is the hard drive, which, though it’s already spinning at a super fast rate, just can’t get data to the processor fast enough. So the processor sits around, tapping its foot and looking at its watch, waiting for the other parts of the system that feed it data to work to keep up.

In high-performance computing, where there’s more data to be crunched than in most average computing situations, this is sort of a big deal. You want the processor to be as busy as possible — mainly because the systems are so expensive, and you want to get your money’s worth out of them — but also because jobs get done faster.

So Fusion-io’s stock in trade is a series of insert cards that bring flash memory right up next to the processor. The flash chips grab great big armloads of data and hold on to it, handing it off to the processor in a way that keeps it happy and busy and not impatiently waiting — at least not so much.

We’ve seen the technology brought to bear at places like Credit Suisse, which added Fusion’s flash cards to its trading systems. And its technology is also used in data centers belonging to Facebook and Apple.

On top of that, Fusion has relationships with all the big server vendors: Hewlett-Packard, IBM, Dell and SuperMicro all sell systems with Fusion-io on board.

Workstations are essentially heavily tricked-out PCs that are used primarily in two professions: Animation and special-effects work for movies and TV and computer-assisted design and modeling, used by folks who design buildings and cars and planes and pretty much anything else you can think of. They have the same problem that servers have — agitated processors constantly waiting for the rest of the system to catch up with them.

At this point, none of the workstation vendors are offering the card as an option, but if you’ve got a professional workstation — like, say, an Apple Mac Pro, which has three PCI Express slots — you might add one of these cards and speed up your work. In the meantime, the company is working with workstation vendors to get the ioFX insert cards certified. My guess is there will be more than a few visual artists who won’t bother to wait.

Fusion-io shares are up almost 11 percent — or $2.64 — to $27.30, as of 11 am ET; not so much on this news — workstations are kind of a low-volume market — but on an analyst report from Piper Jaffray suggesting that Cisco Systems may be close to a deal to add Fusion-io’s flash technology to its Unified Computing System platform.

The report goes on to suggest that Cisco could, over the next three or four quarters, become one of Fusion’s bigger customers, along with Facebook and Apple, and could account for more than 10 percent of Fusion’s business — which could, in turn, lead to a doubling of revenue this year. For the record, sales were $197.2 million in Fusion’s fiscal 2011. Do the math.

Mountain View, Calif.-based Google disclosed earlier this week that it had sold its 29.4 million shares of Clearwire for $2.26 apiece, or $66.5 million, to an undisclosed buyer.

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The social networking giant has just added five more lead investment banks to its IPO from the original six, according to an updated filing. On top of that, Facebook added another 20 investment banks that will get a piece of the action.

The new members to the lead group are Citigroup, Credit Suisse, Deutsche Bank Securities, RBC Capital Markets, Wells Fargo Securities.

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That, said Intel CEO Paul Otellini, is one of three myths he aimed to bust today in a speech at a Credit Suisse technology conference in Phoenix.

First off, he pointed to the emerging markets. Intel is seeing significant growth in countries like Argentina, where the market for PCs grew 38 percent in 2011; Venezuela, where it grew 34 percent; and Russia, which grew 26 percent. “This emerging market trend is real,” Otellini said. And it’s not likely to end anytime soon: In 2010, the top five PC markets by country were the U.S., China, Germany, Japan and Brazil. In 2015, Intel forecasts suggest, the top five will be China, the U.S., Brazil, Russia and Germany.

With all the attention on phones and tablets, especially Apple’s iPad and various Android devices, the PC has gotten a little stale, Otellini conceded, so it’s time to make it exciting again. Intel’s answer is the Ultrabook. Thinner, sleeker notebooks that boot up fast and have touch-enabled screens and long battery lives will get consumers excited again, he said.

And don’t forget the part that Intel plays in the cloud: Most of the servers running cloud services have Intel chips inside them. And Intel’s data center business has doubled over five years and will double again in the next five. “This is where we see more and more of our customers buying from us direct. They’re building custom boards to run the data centers at Facebook, at Amazon, at Google, at Baidu and Alibaba,” he said.

Myth No. 2: Intel chips are too power-hungry for mobile devices.

Moore’s Law is still alive and well, Otellini said. In 1997, Intel built a supercomputer called ASCI Red that could compute one teraflop. It required 2,500 square feet of space and 9,298 chips to get the number crunching done. Earlier this month, Intel announced a chip codenamed Knight’s Corner that can do a teraflop by itself. In the mainstream marketplace, today’s notebooks are 300 times more powerful than notebooks built in 1995.

Intel, Otellini says, has built its own demonstration Android smartphone to show off the upcoming Medfield generation of its Atom processor, due in 2012. When its power consumption during basic phone functions like things like standby, audio and HD video playback is measured, Intel isn’t the best, but it’s not the worst, either. It usually comes in second or third place when compared against smartphones already in the market, but ahead of others, though Otellini didn’t say which phones it beat and which ones it didn’t.

And on three computing performance benchmarks it beats the others hands down: When using a browser on a phone, the Intel chip smokes the others. It also wins on GLBench, a graphics metric, and SunSpider, a Java test.

Myth No. 3: Intel can’t compete with ARM.

Yes, it’s true that ARM-based chips are everywhere that Intel would like its Atom chips to be and are showing no signs of giving ground.

But, noted Otellini, despite the growth of newer platforms, Intel and its x86 instruction set still command the largest army of software developers — north of 14 million — and the largest body of software created so far — more than 6 million applications. “As we come into these markets we’re bringing an incredible legacy of people that know Intel and know the Intel architecture.”

Then there’s Windows 8. Otellini called it “one of the best things that has ever happened to our company.” It will allow tablets to gain mainstream acceptance, especially in the enterprise that they don’t have today. “A lot of IT managers are worried about security and about porting their legacy applications to an Android tablet or an iPad. What Microsoft is doing is making that seamless for them.”

Finally, he said, Intel has a history of entering markets dominated by someone else and dominating them over time. In the early 1980s as the first Intel chips went into PCs, the dominant machines on the market were the VIC-20 and the Apple II. In the early 1990s, when Intel first went after servers, the dominant chips came from Sun Microsystems and IBM. Now Intel rules both markets. And the same thing has happened in supercomputing. (See the slide from Otellini’s presentation below, though someone needs to check the first field at left because the VIC-20 appears twice.)

Did his mythbusting work? Intel shares rose a bit today, closing up 12 cents to $23.58, and the shares are up 12 percent so far this year. We’ll see how right he was in 2012.

Update: Intel has corrected Otellini’s slide. No longer does it show the VIC-20 occupying two market segments. Well, it was kinda popular.

The consensus view of analysts says that Oracle will report $10.75 billion in sales and a profit of 71 cents a share, but several analysts expect the company to beat the consensus view.

“#Winning: Ignore the Noise” was the unironic title of Credit Suisse analyst Philip Winslow’s note to clients on June 9. The “noise” he referred to was a recent selloff in Oracle shares, and a drop in its share price from its highest point in five years: $36.50 in May to less than $31 a share last week. What happened? Macroeconomic concerns, for one. Both the Nasdaq and the Dow Jones Industrial Average have been down this month, despite a surge yesterday, mainly on worries surrounding weak jobs reports.

At Oracle specifically, there were also concerns, Winslow writes, about a shakeup in Oracle’s sales force, and slowing sales momentum on the Exadata server line. Winslow dismisses both: Oracle, he says, met and probably exceeded its May sales targets, and saw a boom in sales of its Fusion Middleware, Siebel, and PeopleSoft software. On top of that, lingering concerns that Oracle’s acquisition of Sun Microsystems might drag down Oracle’s overall profit margin are overstated, Winslow says: “We believe that Oracle’s Exadata and Exalogic pipeline is beginning to translate into a more meaningful revenue stream that will ultimately drive meaningful upside to long-term estimates.” The recent selloff in Oracle shares, he says, is a buying opportunity.

Winslow’s checks with Oracle’s customers suggest that the last two months of the quarter were “extremely busy” for Oracle’s sales team as it sought to aggressively close deals ahead of the close of the end of Oracle’s fiscal year. He says the pipeline for the quarter ending in August looks good, too.

He also takes a lengthy look at some changes to Oracle’s sales team, and finds that Oracle’s team tended to spend most of its time with customers who bought the most, while those who tended to buy less got less attention, meaning that some business was getting left on the table. Under a change implemented by new president Mark Hurd, these “non-focus” accounts are getting renewed attention from new salespeople. Meanwhile the salesperson retains his or her “focus” accounts with roughly the same sales quota but with fewer accounts to manage overall. The result, he says, should help sales in the long run.

Winslow expects Oracle to report $10.8 billion in sales and earnings of 72 cents a share.

Gleacher & Company analyst Yun Kim expects a strong quarter, too: “In our view, the overall enterprise IT spending environment remains resilient and continues to be driven by large, highly strategic IT infrastructure investments and new business initiatives,” Kim wrote in a June 8 note to clients, though, unlike Winslow at Credit Suisse, he remains concerned about the August quarter.

The first quarter of Oracle’s fiscal year is typically its weaker quarter seasonally, Kim says, but that’s not an indication of a longer-term weakness. “We believe Oracle is likely to issue Q1 guidance that is in-line with our and current street estimates, which could imply greater seasonal F1Q weakness than in recent years,” he writes. “We would not interpret in-line F1Q guidance as any negative indication of its current state of business, which we believe remains strong.” Kim expects Oracle to report sales just shy of $10.9 billion, and per-share earnings of 71 cents.

ThinkEquity analyst Brian Schwartz, in his own checks of Oracle’s sales channel, noticed a positive trend, too: “On average, contacts finished 2 percent above their plans and most report Oracle experienced a better demand environment the past three months,” he wrote in a June 17 note. He said he did notice a “softening trend” in IT spending by financial services companies, but that a weakness there could be offset by stronger sales of Exadata hardware. One of Schwartz’s contacts tells him that Oracle’s Exadata products are “killing HP in the market” and “taking share from all the storage players.” Hewlett-Packard shareholders, take note.

Or you could argue that we’re just seeing the opening act of the tablet market, and that it’s going to be really, really big. Especially for Apple.

That’s the thesis that Credit Suisse is pushing, in an Apple research report titled “The Most Valuable Company in the World?”, where it slaps a price target of $500 on Apple shares.

The report argues that the tablet market will hit $120 billion by 2015, and that Steve Jobs and company could own half of it. Near-term, they figure iPads will be a $34 billion business for Apple next year.

Their summary, via Fortune:

iPad—addressing a $120bn market LT. Our proprietary analysis for tablets (takes into account factors such as regression analysis for long-term computing demand, pricing by tier, and cannibalization of multiple industries) highlights that the tablet market could rise to $120bn by 2015. Within this segment, we believe Apple will dominate, given aggressive pricing, time to market advantage and a software edge, maintaining share as high as 50% long term. This means that iPad should become a $34bn business by FY12. Further, our proprietary BOM analysis implies that GMs for this business will expand to 35% by end-FY11 from around the 27% levels seen in FY10.

In yet another sign that the Internet market is getting very interesting to Wall Street, well-known analyst Imran Khan (pictured here) is jumping from his perch as managing director at J.P. Morgan to become a banker at Credit Suisse, according to sources close to the situation.

In this new role, the high-profile Khan–well known for his reports on digital companies–will be running investment banking for Internet markets, including IPOs and M&A.

Khan, who will leave Morgan in several months, is making a big shift from analyst to banker, designed to give Credit Suisse more credibility in the arena as more Web companies come to market.

He also has a strong focus internationally, especially in China, where there has been huge growth of late.

Khan did not return an email and phone call seeking comment, and Credit Suisse has also not responded.

But one industry veteran noted that Khan had the profile and potential–mixing analysis with banking–to be the next investment star, especially as initial public offerings ramp up again.

“In my mind, Imran is certainly as good as Frank Quattrone, said the person, referring to the well-known Silicon Valley banking legend of Web 1.0, who remains active still in dealmaking. “And even stronger in some ways, because of his international and China domain expertise.”

One who is willing is Credit Suisse, though it won’t say much. The $50 billion Swiss bank says it is adding Fusion-io’s memory – dubbed ioMemory – into its Advanced Execution Services trading platform.

So what does ioMemory do? It uses flash memory – not terribly unlike what’s used in USB drive – to basically re-write the rules of how companies with large database storage needs can work. Add an ioMemory card to a typical server with a five-figure price tag, and it can suddenly behave a lot more like a much larger and more expensive storage area network. The company is also known for its chief scientist, Apple co-founder Steve Wozniak.

Credit Suisse says in this case the ioMemory will be used to speed up algorithmic trading, which is using powerful, super-fast computers to analyze and movements in the prices of stocks, bonds and other securities, and determining when to buy and sell, based on a pre-programmed set of rules and conditions. It’s a business where, as The Wall Street Journal’s Donna Kardos Yeslavich wrote in October, milliseconds count, so banks and other financial institutions are constantly on the lookout anything that can speed the process up. (Eventually we’ll be saying femtoseconds count?)

A key bottleneck is the matter of recording trades made. This means getting the data related to the trade out of a computer’s active memory – that would be the DRAM chips similar to the what occasionally have to upgrade your PC – and permanently stored. DRAM is volatile memory, meaning that if it loses power, it loses whatever it’s storing at that moment. Flash is non-volatile, meaning it stores data permanently, even losing power, until it’s deleted. That makes it great for permanent storage that’s also a lot faster than a hard drive. The faster trades get logged, the more trades get done, the more money gets made. “It’s a matter of quickly putting the trade data in a place where it won’t get lost,” Fusion-io’s CEO David Flynn told me. “You have to make sure that your system won’t forget what’s been done, while at the same time doesn’t look track of what it’s doing.”

Credit Suisse didn’t make anyone available for an interview. Banks rarely go into even this level of public detail about the technology they use. However I did talk to Fusion-io CEO David Flynn, who tells me that Credit Suisse has been a fan of the Fusion-io technology for some time. He also says several other financial institutions are using it. “Its easier for them to use it than it is for them to talk about it,” he said.

From the looks of the investments and partners that Fusion-io has landed during the last year, he’s not kidding. In April it landed $45 million in a series C round led by Meritech Capital Partners, with Accel Partners, Andreessen Horowitz, New Enterprise Associates, and Triangle Peak Partners also invested. South Korean electronics giant Samsung, which happens to be the world’s largest manufacturer of flash memory made a strategic investment last year, as did Dell Ventures. Meanwhile Hewlett-Packard, IBM and Dell all offer Fusion-io technology as an option on its servers. Headcount has doubled in the last year from 150 to between 300 and 400, Flynn told me.

So with all this going on, is Fusion-io going to be a hot IPO or acquisition target in 2011? Don’t count on it, Flynn says. “Our VCs are willing to wait for the home-run,” he said. “And we’re not in the business of getting acquired. We have the luxury of being able to grow this company without someone with itchy fingers.”

Of the 2,800 respondents ChangeWave surveyed, 32 percent used the iPad as their e-reader and 47 percent the Kindle. That’s far less of a disparity between the two than we saw in the research outfit’s August survey, which found 62 percent of respondents using a Kindle and just 16 percent using an iPad. In other words, by this measure, between August and November, the iPad’s share of the U.S. e-reader market rose 16 percentage points and the Kindle’s fell 15 points. And that trend seems likely to continue in the months ahead. Of those respondents planning on buying an e-reader in the next 90 days, 42 percent said they’d like an iPad while only 33 percent said they’d opt for a Kindle.

Said ChangeWave’s director of research, Paul Carton, “The Amazon Kindle is hanging on to a rapidly diminishing lead over the Apple iPad among current e-reader owners….The iPad is likely to be the biggest beneficiary of the expanding e-reader market this holiday season.”

If that’s the case, Credit Suisse analyst Spencer Wang’s prediction in February that Amazon might see its e-book market share slip from 90 percent to 72 percent this year and to 35 percent by 2015 might not be so far off.

In fact, according to a survey by Credit Suisse analyst Jonathan Chaplin, only 23 percent of AT&T iPhone users say they’d like to jump ship to Verizon (VZ). Another 3 percent said they’d switch to Sprint (S) and 2 percent to T-Mobile (T). But only 3 percent of all those groups said they’d break their contract with AT&T to do it.

Meanwhile, 63 percent said they’d stick with AT&T.

Given that, Chaplin figures AT&T will lose about 1.4 million subscribers to Verizon if its iPhone exclusivity deal should end. Which is nowhere near what some other more-catastrophic estimates have put it at. By year end, the carrier is expected to have about 18 million iPhone users, and while the loss of nearly a million and a half of them predicted by Chaplin will be painful, it’s certainly not an apocalypse.

PREVIOUSLY:

• Analyst: Verizon iPhone Deal Still Not Sealed
• Analyst: No Verizon iPhone Until Second Half of 2011
• Verizon Could Sell 12 Million iPhones Annually
• A Verizon iPhone in January? I’ll Believe It When I See It.
• Analyst: Nine Million iPhones on Verizon in 2011
• A CDMA iPhone 4 for Verizon This Fall?

[Image credit: Credit Suisse]

Chaplin also sees two coming events that should provide support to current pricing in the pre-paid wireless market. One, he notes that Sprint (S) will unveil a new pre-paid strategy next week that he says will be aimed at segmenting subscribers, and not pressure ARPU. Chaplin also notes that a smaller pre-paid operator called Page Plus is planning to boost its price of its unlimited text, talk and 20 MB of data plan to $45 from $40 on May 18.

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Kindle will debut at Target’s (TGT) flagship store in Minneapolis, as well as 102 locations in South Florida this Sunday, with wider availability to follow.

This is Amazon’s (AMZN) first foray into the brick-and-mortar retail world and one evidently made under duress. Last week, Barnes & Noble (BKS) began distributing its Nook e-book reader through Best Buy (BBY), and, of course, Apple (AAPL) is now selling the iPad at its own retail stores.

With claim to about 90 percent of e-book sales, according to estimates by Credit Suisse Group AG (CS), the e-book market is Amazon’s to lose. As Credit Suisse analyst Spencer Wang noted earlier this year, the retailer may well see its e-book market share slip from 90 percent to 72 percent in 2010, thanks to some formidable new rivals.

“Near term, we suspect that the iPad and the new eBook agency pricing model, which requires that Amazon increase retail prices to be more consistent with Apple’s pricing, will provide Kindle with the most market share headwind,” Wang wrote. “Going forward, we can envision a scenario where Apple, Amazon, and Google eventually split the market. Therefore, we expect Amazon’s share of eBooks business to fall from 90 percent currently to about 35 percent over the next five years.”

That’s a steep decline–though 35 percent does seem extreme. Little wonder, then, that Amazon is willing to give up its sales exclusivity for the device in an effort to temper the projected loss of market share.

“As we approach the end of Apple’s March quarter, we believe it is now clear that the company is running well ahead of our previous expectations and consensus,” he writes. “While upside is often the norm for Apple, we are still surprised by the current strength, as we believe Apple is now running well ahead of expectations in all of its key business segments during what is typically a seasonally ‘sloppy’ quarter.”

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Analysts had been expecting $1.06 a share on $30 billion in revenue.

All in all, a strong quarter. PC shipments grew 26 percent year-over year. Server revenue rose 11 percent. And Personal Systems Group revenue was up 20 percent.

Looking ahead to its second quarter, HP (HPQ) expects non-GAAP earnings-per-share of $1.03 to $1.05 on revenue of $29.4 billion to $29.7 billion. The company also raised its revenue outlook for fiscal 2010 to between $121.5 billion and $122.5 billion from an earlier forecast of $118 billion to $119 billion.

“HP is well-positioned to outperform the market,” HP CEO Mark Hurd said in a statement. “The strength of our portfolio, leaner cost structure and accelerating market momentum give us the confidence to raise our full-year outlook.”

According to Credit Suisse analyst Spencer Wang, the retailer will likely see its e-book market share slip from 90 percent to 72 percent this year and to 35 percent by 2015.

“Near term, we suspect that the iPad and the new eBook agency pricing model, which requires that Amazon increase retail prices to be more consistent with Apple’s pricing, will provide Kindle with the most market share headwind,” Wang wrote. “Going forward, we can envision a scenario where Apple, Amazon, and Google eventually split the market. Therefore, we expect Amazon’s share of eBooks business to fall from 90 percent currently to about 35 percent over the next five years.”

That’s a steep decline, but if Wang is right, it will be tempered a bit by a concomitant increase in sales as e-books become more mainstream. The analyst figures Amazon’s e-book sales will rise to $775 million from $248 million over the next five years.

“While it remains to be seen how much traction the iPad gets initially, management noted that it will remain nimble (pricing could change if the company is not attracting as many customers as anticipated),” Shope wrote.

Now, it’s a truism that most companies are open to price cuts on any product if they need to increase sales. That said, this is an interesting disclosure coming from Apple (AAPL) execs, particularly so far in advance of the iPad’s actual debut. Certainly, it calls to mind the company’s decision to slash the price of the iPhone by $200 two months after it went on sale and the early-adopter rebate it was forced to issue afterward. It seems odd, then, that Apple execs would even hint at the possibility of an early price cut lest they give folks already on the fence about buying the first iteration of the device more reason to stay there.

Unless they’re planning a prerelease price cut to really juice sales. Remember, Apple reportedly stands to make about a 42.9 percent margin on the iPad, so there’s presumably plenty of room for the company to hit an even more aggressive price point that would really put the device in the netbook range.

Cheung’s upgrade reflects his theory on how the Google (GOOG) dispute with China will play out:

• Google will stay in China…
• …but its business outlook there will become more challenging…
• …and Google advertisers will seek diversification.
• He sees Google’s share of the China revenue market from search to drop to 20 percent in 2011 from 31 percent in 2009. He sees Baidu’s market share stabilizing in the 45-47 percent range.

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That’s still not going to appease the folks at YouTube, who take umbrage at the assumptions analysts Spencer Wang and Kenneth Sena make when assessing the site’s financials.

But until the YouTube guys can provide the outside world with concrete numbers about their costs, sales, etc.–which they may never do–they’ll have to deal with a variety of guesses.

For what it’s worth, what’s changed here are the analysts’ guesstimates about YouTube’s bandwidth costs: They used to think the site was plowing through $360 million to deliver all those clips; now they think the number is $300 million. They’ve left all their other estimates unchanged.

Meanwhile, some perspective: Google’s YouTube adventure is still less than three years old. The “two kings,” as co-founder Chad Hurley put it in this video, only got together in October 2006.

[Image credit: greeblie]

Best in show is a term you give to dogs, but I’m sure that wasn’t the implication here.

Shope is expecting a 3 percent quarter-over-quarter decline globally in PC units in the three months ended in June, and he notes that Gartner (IT) will unveil a preliminary read on June-quarter PC sales next Thursday, July 16. For the second half of the year, he sees an 8.5 percent pickup in PC units, which is certainly an improvement but below the 10.1 percent average increase over the last decade, he notes.

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Amazing when you think about it, really. On the promise of the Pre and the company’s new WebOS operating system alone, Palm (PALM) has added more than $1.5 billion to its market cap. A quick and impressive recovery, and one that analysts say is likely to continue now that the device has had a successful launch.

In an investment note today, RBC analyst Mark Abramsky esimates that Palm has sold 150,000 Pre handsets to date and predicts it will sell 4.1 million in fiscal 2010 and 6.5 million in fiscal 2011.

Over at Credit Suisse (CS), analyst Deepak Sitaramaneven is even more optimistic. He sees Palm selling 7.7 million Pres in 2010. “The successful launch of the Pre at Sprint Nextel (S) has raised carrier interest given Palm now offers a credible alternative to Apple (AAPL),” Sitaramaneven wrote. “We believe this will drive top-line growth of 144% in calendar 2010, and our estimate is predicated on 7.7 million units in calendar 2010.”

That seems a rather…buoyant prediction for a company still grappling with Pre supply issues. That said, if Palm is able to score distribution deals with Verizon (VZ), AT&T (T), Vodafone (VOD) and others by the beginning of next year, the prediction may be within the realm of possibility. Something to think about as the company prepares to report quarterly earnings tomorrow.

Wang sees a 1-1.5 percent boost to paid clicks in the second quarter from the company’s new policy to allow third parties to use trademarked terms in the text portion of paid search ads. He also says that channel checks with search engine marketers and key advertisers find that search ad pricing appears to be stabilizing. He now sees revenue per click down 11.7 percent in the quarter, about in line with Q1, and better than his original estimate of down 16.2 percent.

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