He’d also been heavily recruited. Sources familiar with the situation told me that Swainson had been in line for a very senior and nearly identical job at Hewlett-Packard. Swainson didn’t return my call seeking comment, and spokesmen for HP and Dell declined to comment, as well.

Dell is launching the Software Group, it said in a statement, to build out its muscle on the software side as a complement to its overall mission of selling IT services.

And there’s probably no one better to do it than Swainson. Since 2009 he’s been an adviser at private equity firm Silver Lake Partners. But from 2004 to 2009 he ran CA with one single goal in mind: Rebuilding its reputation following an accounting scandal that ended when its prior CEO, Sanjay Kumar, was sentenced to 12 years in prison. The company paid $225 million to settle federal charges brought by the Securities and Exchange Commission and the Department of Justice.

But before CA, Swainson had spent 26 years at IBM. Among the things he did at Big Blue was spend seven years as general manager of its Application Integration Middleware division, which was a business he created. It was during those years that IBM launched its WebSphere family of products.

So that leaves just one question: Who’s going to run the HP software division that it had wanted Swainson to run?

Shares are down more than $4, or about 13 percent. The freakout appears to be coming from gross margins that shrank to 51 percent from almost 59 percent in the prior quarter, and despite the fact that sales more than doubled sequentially to $84 million from $31 million before.

CEO David Flynn called me up a little while ago to talk about the results, and he reminded me that Fusion launched its new IO Drive 2. It’s a transition to a new product line that’s proving tricky. New products built on new technologies are always a little more costly to build up front, and that’s compounded by the fact that early adopters, when they buy the new stuff, take the lower-end version and not the more expensive and more profitable one.

Also, enterprise customers who buy the new stuff are always conservative and take longer to decide whether they want to buy it or not, he says. Even so, the company has sold 10,000 of the new drives.

But? There’s a new customer of record: Salesforce.com is now a Fusion-io customer, and has joined the likes of Apple and Facebook, which is using the flash-based chips in the servers running in its data centers around the world.

And Salesforce isn’t buying it directly from Fusion, but rather through one its OEM partners, which include Hewlett-Packard, IBM and Dell, though Flynn wouldn’t tell me which one it is.

Salesforce is one of six customers who bought more than a million dollars worth of Fusion’s stuff this quarter and of those, four were repeat customers, Flynn told me.

The Salesforce win is also important, Flynn says, because some have wondered whether Fusion’s technology, while popular with high-end enterprises like banks and Facebook, would make sense for applications that tend to be used in mid-tier businesses, which Salesforce’s mainline CRM application often is. The lower end of the enterprise software market is moving toward cloud-based software, which is often referred to as Software as a Service, or SAAS. “By helping those companies, we are indirectly driving business in the mid-range of the market. Apple and Facebook are in the SAAS business too, it’s just that their customers are consumers.”

One interesting fact that Flynn shared with me: His first job out of college was working for Oracle. His boss at the time? One-time Oracle exec and now Salesforce CEO Marc Benioff. A small world it is, indeed.

U.S. consumers and businesses bought 71.3 million PCs, representing a drop of nearly 5 percent over 2010, when they bought more than 75 million, IDC said. So much for the year.

And the fourth quarter, traditionally one of the industry’s strong points, wasn’t much help. Shipments of PCs in the fourth quarter declined by nearly 7 percent, according to IDC; Gartner said they fell by 6 percent. Hewlett-Packard saw its U.S. shipments drop by 25 percent in the IDC report; Dell by 5 percent; Acer by 14 percent; and Toshiba by 2 percent.

HP’s flirtation with spinning off its PC division last year hurt sales, as businesses and consumers lost confidence in the company. The main beneficiary of that appears to have been China’s Lenovo, the world’s No. 2 PC maker, which saw its shipments, on a global basis, surge by 37 percent, though it’s not much of a player in the U.S. market.

For the full year, HP saw its shipments fall by nearly 5 percent; Dell’s fell by more than 8 percent; and Acer’s fell 30 percent in the U.S.

So who grew? Apple. It saw its shipments grow by 18 percent in the quarter, according to IDC, and by 21 percent in the Gartner report. As of the end of the year, IDC said, Apple’s share of the U.S. market amounted to 10.7 percent, which is up from 8.8 percent a year ago.

Dell, which scrapped the Streak just six months ago, is preparing to take another run at the tablet space, this time with a full-fledged consumer device it’s hoping to launch in late 2012.

“You will see us enter this market in a bigger way toward the end of the year,” Dell Chief Commercial Officer Steve Felice told Reuters, adding that the company has been “taking its time” developing this new device, in the hope of saving it from the fate of its predecessor.

Felice said little else about its new tablet, declining to specify an operating system, though he did note that both Google’s Android and Microsoft’s Windows 8 were options. “We like Windows 8, but we continue to develop with Android, as well,” he said. “We are still going to be more choice-driven, based on the feedback we get from customers.”

Dell also appears to be putting a lot more thought into its approach to the market this time around. Certainly, the company seems to understand that tablets don’t succeed on hardware or software alone, but on the ecosystem surrounding them.

“When you are talking about PC, people are more focused on the hardware itself,” Felice said. “When you are talking about the tablet or the smartphone, people are interested in the overall environment it’s operating in. As we have matured in this, we are spending a lot more time in the overall ecosystem.”

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

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

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

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

The new forecast calls for companies and governments to spend a combined $3.8 trillion on information technology, which would amount to growth of 3.7 percent from 2011. The previous forecast had called for growth of 4.6 percent.

For perspective, the difference on a dollar basis is about $100 billion, which is certainly real money, but when you consider the various puts and takes affecting the projected spend, it makes a certain amount of sense.

Gartner says that all four of the major technology sectors it tracks — computing hardware, enterprise software, IT services, and telecom equipment and services — will see their growth rates slow this year.

You can probably guess why: The uncertain global economy, the euro zone sovereign debt crisis and the disruptions on the hardware supply chain from last year’s flooding in Thailand on hard-drive production have all teamed up to perform a triple whammy on the tech sector. The Thailand problem will probably last until well into 2013, Gartner’s Richard Gordon says in a statement, echoing what Seagate CEO Steve Luczo told AllThingsD in an interview in November.

Telecom equipment spending will probably suffer the least, Gartner says. Sales in that sector will grow by nearly 7 percent to $475 billion, followed by the enterprise software market, which will grow by 6.4 percent to $285 billion. The chart at the right, which I screengrabbed from Gartner’s handout, breaks down the revised outlook by each sector versus what the previous growth outlook had been.

Gartner also trimmed its average annual growth projection for IT spending through 2015. It now expects spending to grow by about 5 percent on average, down only slightly from 5.4 percent, but in the wider scope of a few trillion dollars, a fractional change still amounts to hundreds of billions of dollars.

Of the companies in Marshall’s coverage universe, only Apple, IBM and Dell had positive returns and saw their shares rise by an average of 20 percent. By contrast, the three biggest decliners were Hewlett-Packard, Juniper and NetApp. (For the record, the others Marshall covers are Brocade, EMC, VMware, Cisco Systems and F5 Networks.)

One thing the advancers had that the decliners didn’t? Conservative guidance. “The importance of conservative guidance practices was underscored as investors had little tolerance for companies that could not execute on stated growth targets,” Marshall writes. HP, NetApp and Juniper all set out aggressive earnings goals that proved too optimistic. Per-share earnings estimates for the coming year among those three were revised downward by an average of 15 percent.

By comparison, Apple, IBM and Dell set lower barriers and ended up having positive earnings surprises, and have moved up their forward earnings estimates by about 17 percent. “Setting conservative targets will again remain critical in 2012,” Marshall writes.

So what’s going to set the tone for tech stocks in 2012? A lot of the same things that made 2011 so difficult. Sovereign debt concerns in Europe, coupled with governments around the world implementing austerity measures to help get their budgets back on track, will hammer IT spending at companies that sell to governments.

That doesn’t mean there won’t be positive trends to look for. Certain megatrends in computing will sail on, despite the rough economic waters. “Cloud computing and mobile internet remain firmly in place and can drive outperformance for companies positively exposed,” Marshall says in his note.

The growth in mobile clients like smartphones and tablets will spur ever more rich and complex computing environments in the cloud, meaning more and better data centers packing more computing power into the same or smaller footprint. Marshall mentions microservers, which brings to mind HP’s Project Moonshot, which aims to create dense racks of small servers, as an important trend to watch. “We think many data centers could look to microserver solutions that deliver thousands of cores in a rack and order of magnitude improvements in performance/power,” writes Marshall. These microservers, he says, could be powered by both x86 chips from Intel or Advanced Micro Devices, or by ARM-based chips.

And since there will be more servers — all of them virtualized, allowing one single server to act like dozens or even hundreds of servers, plus increased demands for storage and video — they will require higher-performing connections. That’s going to push companies building data centers to adopt Ethernet fabrics. On top of that, more companies build servers that support faster 10 gigabit Ethernet. Marshall argues that these Ethernet fabrics could constitute as much as one-third of the $6 billion market for data center switching within three years.

Then there’s big data. With more information than they know what to do with scattered all over the place, companies are struggling to make sense of it all. Large enterprises will be investing in data integration tools to get a unified view of all their information. “We believe organizations will continue investing in data integration tools which can help link historical and real-time data, and enable more valuable business intelligence and predictive analytics,” Marshall writes, adding that the market is worth about $2 billion today, but is in the “early innings of a growth cycle.”

(Image courtesy of chainsawpanda)

The New York Times published something of an exit interview with Palmisano over the weekend. It read a bit like a victory lap, and that’s not undeserved. The record books will show that IBM shares during the Palmisano era (2003-2011) rose by 125 percent; sales grew from $81 billion in 2002 to an expected $107 billion; and annual profits on a per-share basis went from $3.07 to a consensus forecast of $13.38.

But it got me to thinking about one of the highlights of the Palmisano era; one that generated a great deal of attention at the time: IBM’s decision to sell its personal computer division to Lenovo, the Chinese PC maker. It was a relatively small deal, worth less than $2 billion at the time, but it was a controversial move. Despite the fact that IBM wasn’t making much money on the business, IBM PCs, especially its ThinkPad line of notebooks, were generally considered to be pretty good.

Nearly seven years later, it’s worth noting that Lenovo is now the world’s second-largest PC vendor, behind Hewlett-Packard, having vaulted past Dell earlier this year, according to the market research firm IDC. It’s also worth noting that Lenovo is in fifth place in the U.S., behind HP, Dell, Apple and Toshiba, in that order.

IBM initially owned 15 percent of Lenovo and maintained a stake in that company until February of this year, when it sold its remaining 4.3 percent shares at a profit of more than a quarter-billion dollars.

Lenovo’s biggest shareholder is Legend Holdings, of which 36 percent is owned by the Chinese Academy of Sciences, a.k.a. CAS Holdings, a state-controlled entity. The state has pared back its stake, though: When the IBM-Lenovo deal was announced in 2005, Lenovo was 57 percent state-owned.

There was a lot of natural controversy, and even national security concerns in 2005, about selling so red-blooded an American product as the IBM PC to China. But there was also a solid business case to consider. The PC business was a drag on earnings because of downward price pressure exerted by Dell and all the others, and it wasn’t even leading the market, as was the case with Hewlett-Packard, which engaged in some very public contemplation about spinning off its own PC division.

But there was also a potential strategic benefit, which Michael Useem, a professor a the University of Pennsylvania’s Wharton School of Management, pointed out at the time: Making friends with China.

By selling an underperforming asset to a buyer willing to take it and run with it, IBM got solid access to the exploding Chinese market. In paraphrased remarks to the Times, Palmisano concedes the point:

Palmisano says he deflected overtures from Dell and private equity firms, preferring the sale to a company in China for strategic reasons: the Chinese government wants its corporations to expand globally, and by aiding that national goal, IBM enhanced its stature in the lucrative Chinese market, where the government still steers business.

So how has that worked out? It’s a little hard to tell from reading Big Blue’s Byzantine financial statements. In fiscal 2005, the year the deal closed, IBM reported $18.6 billion, or about 20 percent of revenue, came from the Asia-Pacific region, including China.

And though it declined to provide specific dollar amounts, it said that year that sales in China had dropped by 19 percent, but after after stripping out the PC division, would have grown by 8 percent.

For the first nine months of fiscal 2011, IBM reported that the Asia-Pacific region accounted for exactly the same dollar figure — $18.6 billion — amounting to 24 percent of its overall sales of $77.4 billion, and there’s still a quarter to go. That would put Asia on track to account for a little less than a quarter of IBM’s revenue.

In its earnings statement, IBM also makes a point of calling attention to what it calls “growth markets,” which are generally the BRIC countries — Brazil, Russia, India and China. These markets combined for 23 percent of sales in IBM’s most recent quarter.

This is about as close to understanding the size of IBM’s business in China as we’re going to get. On balance, it looks to have been a positive move, especially when you consider that if IBM had kept its PC division, it would have likely only gotten smaller and become more of a profit drag on a company that’s increasingly focused on high-margin businesses like services and consulting.

Nor can we judge by IBM’s headcount. Globally, as of the publication of its last annual report, IBM employed 426,751 people. But it has stopped providing a geographical breakdown. A report in the Times of India in 2010, mentioned by The Wall Street Journal, suggested that Big Blue’s headcount in India might be as high as 130,000; which, if true, would make it one of that country’s top 10 employers.

There is no question that IBM’s presence in China has grown. You can tell by the press releases. There was for example, a new IBM Research lab in Shanghai in 2008, and another in 2010. Just last month, IBM announced that it had closed a significant IT deal for a major health-care provider in Hong Kong, and another with a Chinese province to improve the safety of pork (which included a food-safety video I embedded below).

For better or worse, Palmisano will be remembered as the man who traded PCs for access to China. On balance, it seems to have been a good trade, but the jury is still out.

Tomorrow is the first business day of IBM’s Rometty era. Assuming she retires at age 60, a well-established IBM tradition, she’ll have about six years to make her mark. One wonders what she’ll be remembered for most.

The Flip Camera
San Jose, Calif. — The Cisco Flip, a beloved handheld video recorder, was killed on April 12, 2011. Its untimely death was a result of the realignment of Cisco’s consumer electronics business.

Born in May 2006 as the Pure Digital Point & Shoot, the pocket camera went through many evolutions in its lifetime, later becoming the Flip Ultra and spawning the Flip Mino and Flip MinoHD. It found a new home in 2009, when it was acquired by Cisco for $590 million. The Flip was known as the life of the party at birthday and wedding celebrations, and will be remembered for its simplistic design and pop-out USB arm. “People literally flipped for the Flip when it first came out,” a friend of its parents, Pure Digital, said. It is survived by a number of boiled-down point-and-shoots and countless smartphone cameras, as well as video-sharing apps with annoyingly cute names like “Viddy.”

Its distant cousin, the Kodak Zi8, also went missing from the Kodak store earlier this year.

Guitar Hero
Santa Monica, Calif. — For Guitar Hero, Feb. 9, 2011, was the day the music died. The videogame franchise was killed when Activision announced during its fourth-quarter earnings call that it was shuttering the business unit dedicated to Guitar Hero.

The popular game was born in 2005 to Red Octane and Harmonix, and was distributed by Activision. Later iterations of Guitar Hero, which were developed by Neversoft, had band-specific titles and also incorporated more instrumental props, so fans could play drums or sing as well as play guitar.

But Guitar Hero sales fell off, and the game was eventually overshadowed by its record-breaking Activision siblings, the Call of Duty and World of Warcraft series. Revenues of Guitar Hero fell from $1.7 billion in 2008 to about $300 million in 2010.

Guitar Hero will be remembered for its love of music, with Aerosmith, Metallica and Van Halen among its favorite artists, and for creating living-room rock arenas for millions of users.

Guitar Hero is survived by Rock Band, Rocksmith, Rock Revolution and likely many other console and mobile games starting with “Rock” that we’re not aware of or haven’t been invented yet.

HP TouchPad
Palo Alto, Calif. — That flame which doth burn brightest often burns out quickly, or something like that.

The HP TouchPad was effectively killed on Aug. 18, 2011, at the young age of just 49 (that’s days). Prior to its demise, the TouchPad was praised for its bright 9.7-inch display, Beats audio and mostly for the fact that it ran HP’s intuitive webOS mobile operating system, though the tablet ultimately saw disappointing sales during its short life.

Hewlett-Packard, its maker, said webOS devices had not gained enough traction in the marketplace with consumers, and couldn’t justify continuing to produce hardware like the TouchPad around it.

HP’s new CEO, Meg Whitman, said later on, “I think we’ve got to walk before we run here.” The TouchPad is survived by a newly open source webOS system and a cult of rabid fans, as evidenced by its post-mortem fire sales. It joins the Microsoft Kin phone in a special Afterlife for Tech Products Less Than 50 Days Old, while its operating system remains in a state of purgatory.

Dell Streak Tablets and Mini 10 Netbook
Round Rock, Texas — The streak was not a long one.

Dell’s Streak 5 tablet, which was originally demoed at D8 in 2010, disappeared from store shelves in mid-August of this year. Dell hardly had time to recover from the loss before its sibling, the Dell Streak 7, was also discontinued.

Shortly after the loss of the Streak tablet, tragedy again struck the Dell family, when Dell confirmed it would no longer make consumer netbooks, feeling the pressure of tablets as well as an emerging shift toward thin, light “ultrabooks” in the laptop category. The Dell Mini 10 was known for being small, as netbooks are, and for being that laptop you knew you could always fit on the seatback tray on an airplane.

Apple MobileMe
Cupertino, Calif. — June 6, 2011, was Steve Jobs’s last appearance at an Apple Worldwide Developers Conference. It was also the day MobileMe effectively went away, with Jobs saying the $99 dollar service wasn’t Apple’s “finest hour.”

MobileMe launched at WWDC in July of 2008, and was meant to sync calendars, emails, bookmarks and photo galleries. For individual accounts, it came with 20 gigabytes of online storage and 200GB of monthly data transfer.

While great in theory, our friend MobileMe was not without flaws. In fact, AllThingsD’s Walt Mossberg said, in his review of the service, that MobileMe was “far too flawed to be reliable.”

Apple’s Internet-based sync services since 2000 have evolved, but have never truly gone away: Like an actual ghost, we know they’re there, and we see glimpses of how they work, but they still elude many people. MobileMe, in its earliest form, was iTools, and later on, the subscription service .Mac. Even now, we’re not entirely sure whether MobileMe was killed or simply reincarnated as something new — in this case, iCloud.

Adobe Flash on Mobile
San Jose, Calif. — This is the way mobile Flash ends: Not with a bang, but a whimper.

On Nov. 9, Adobe said it would no longer be developing Flash, its platform for interactive and rich media content, for mobile devices.

Macromedia Flash was born in 1997, the spawn of FutureWave’s FutureSplash Animator. Macromedia was acquired by Adobe Systems in 2005, thus becoming Adobe Flash.
As smartphone and tablet wars heated up in recent years, Flash support became one of the features that iPad competitors — mainly Google Android devices — touted to set themselves apart from Apple’s mobile products.

The tech world has contemplated what this could all mean for the future of Flash. As AllThingsD’s Ina Fried wrote, Flash’s death on mobile was seen as a vindication for the late Steve Jobs, who took a controversial stand by not supporting Flash on Apple’s mobile products. Could Jobs once again have seen the future? Flash is not a completely dead standard yet, but with developers increasingly adopting HTML5 as the new standard for Web language, it’s unclear what exactly will become of Flash.

Google Buzz
Mountain View, Calif. — A standard housecleaning session turned fatal this past October when Google pulled the plug on its social networking effort. Google Buzz, the predecessor to Google+, aimed to create a social network through Gmail.

Social and gregarious by nature, Google Buzz was born in February of 2010. Its early life was filled with strife, as users struggled to grasp the real-time social interactions that were occurring within email chains, and real privacy concerns emerged.

Despite its short life span, the memory of Google Buzz surely remains, as the search giant eventually had to settle with the FTC over privacy violations and is now committed to 20 years of privacy audits.

Memories, indeed.

Google Buzz is survived by Google+, and follows Friendster and Myspace to the social graveyard, although technically those still exist.

Readers, what do you think was the greatest tech product loss in 2011?

Samsung said today that it has shipped more than one million units of the Note, its stylus-bearing … phablet hybrid. This just two months after its U.K. launch.

Caveat: These are shipments into the channel we’re talking about here, not end sales to consumers. That said, Samsung says there is strong demand for the Note in France, Germany and Taiwan, and sources tell AllThingsD that the device actually sold out in Hong Kong during its first month at market. So, clearly, the device is resonating with a certain portion of the mobile market. In fact, Samsung has taken to calling the Note “a market creator.”

Question is, is that market large enough to sustain the Note? It certainly wasn’t big enough to sustain Dell’s Streak 5, a similar smartphone-tablet hybrid that was scrapped about a year after its debut.

In its latest Security Technical Implementation Guide (STIG), the Pentagon okayed Android 2.2 for use on Defense Department computer networks, but with a number of caveats and limitations.

First, Pentagon approval doesn’t extend to all devices running Android 2.2. In truth, it covers just one: Dell’s Venue smartphone (it would have covered the Streak tablet, as well, had the company not binned it). Second, classified information cannot be transmitted to or from it. Third, any Web browsing done on the device must be conducted via a DOD proxy server. And finally, access to Android Market has been restricted.

So, if you’re a DOD employee hoping to kill some off-hours time with a game or two of Modern Combat on your work-issued Venue, you’re out of luck. And if you happen to own a different-model Android phone, you have no hope of getting it on the DOD’s network — for now, anyway. Devices manufactured by HTC, Motorola, et al, aren’t covered by the STIG.

So, as I said, this isn’t much of a step forward for Android, though it’s a step just the same. One version of the OS is now okay for use by DOD employees, which is more than you can say for Apple’s iOS operating system, which has, so far, been approved only for testing and pilot projects.

It’s not the only one: Several enterprise software and hardware players are falling right along with Oracle. Salesforce.com, whose primary customer relationship management software rivals Oracle’s, has fallen more than $8, or more than 8 percent. Oracle’s primary software rival, SAP, is down by more than $3, or more than 5 percent. IBM has fallen $6.73, or more than 3 percent. Hewlett-Packard is down 50 cents, or nearly 2 percent. Dell is down 40 cents, or more than 2 percent. Microsoft is falling, too, but not as much.

It looks a lot like what Cannaccord Genuity analyst Richard David predicted in a note to clients this morning. Oracle is something of a bellwether for software company and corporate IT stocks in general. A lot of the problems that sapped Oracle’s results this quarter, David wrote, are specific to Oracle. But in the minds of investors it doesn’t matter:

“Much of the miss was company specific, but it won’t matter this morning. Investors are likely to use this miss as a reason to pound software on Wednesday. We believe Oracle’s miss, combined with Red Hat’s heavily punished but modest scuffle on Tuesday, will first hit infrastructure stocks like VMWare, Citrix Sysems and then for good measure high fliers like Salesforce.com. Our view is more nuanced; Oracle missed because some buyers waited for a new hardware upgrade, and on the software front the firm is behind the curve in cloud applications. We expect Oracle to catch up, but it will be through some R&D and a lot of M&A. We would “back up the truck” on Salesforce if traders knock that stock down because cloud software companies are very likely to gain significant market share from non-cloud vendors.”

Davis cut his rating on Oracle to “Hold” from “Buy,” arguing that the shares will “trade sideways for the next two to three quarters.” Even after an expected “dead cat bounce” — a quick price recovery after a significant fall — Oracle will have some work to do. “Oracle will have to rebuild confidence that the firm is not is not headed to Microsoft’s valuation level over the next few years. Therefore, we can no longer rate Oracle a Buy.”

Not everyone was quite so negative. FBR analyst David Hilal, in a note to clients this morning, lowered his estimates on Oracle’s sales and profits for fiscal 2012. He now expects Oracle to report per-share profits of $2.36, down from $2.44, and cut his sales estimate to $37.7 billion from $39 billion. He also lowered his target to $34 from $38. Even so, he’s still bullish generally, albeit with lower expectations. “The macro debate will now focus on whether IT spending is finally coming under pressure due to broader economic concerns,” Hilal wrote. “While IT spending is not immune to such macro factors, we are not forecasting a material slowdown as we believe enterprises have already been cautious regarding their spending. However, some modest pullback should be expected, particularly post a seasonally strong end to the year.”

BMO Capital analyst Karl Keirstead didn’t agree with Hilal on that point. “Given some weak recent data points from Red Hat, Salesforce.com, Intel and Accenture, we conclude that the macro IT spending backdrop in fact weakened and that the miss was not related to Oracle execution or share losses,” he wrote in a note to clients this morning. “We assumed that Oracle could manage through this tightness and we were obviously wrong.” He lowered his price target to $32 from $38 but maintained a “buy” rating.

Other analysts downgraded Oracle, too. Societé Generale analyst Richard Nguyen cut it to “Hold” from “Buy.” CLSA slashed Oracle shares to “underperform” from “buy,” and lowered its price target to $30 from $36. Deutsche Bank analyst Thomas Ernst lowered his target price to $29 from $33. It’s just one of those days.

According to a new survey from Parks Associates, an international market research firm, age will be the biggest factor in tech purchases made between Nov. 1 and Jan. 1. Young adult consumers — defined as those between 18 and 34 years of age — are more likely than others to purchase laptops, smartphones, tablets and LCD flat-panel displays this season. Also, households with children are much more likely to purchase laptops and LCD flat-panels.

Image courtesy of David Boyle/Flickr

Not surprisingly, tablets are the product of choice for big spenders, with higher-income households more likely to buy iPads and Android tablets. Some other interesting notes from the survey: Apple’s ecosystem of music, media and apps continues to drive interest in hardware, with 17 percent of consumers surveyed saying they’re looking to buy Mac laptops, trailing only Dell at 22 percent of intended purchases.

And in the smartphone category, there’s more bad news for BlackBerry: 83 percent of current iPhone users intend to buy an iPhone again this holiday season; 81 percent of Android OS users said the same, but only 41 percent percent of BlackBerry users intend to buy RIM’s iconic handheld device again this season.

The data, which comes from a survey of 2,000 U.S. heads of household and factors in purchases to date this year, as well as buying intentions, offers a somewhat optimistic outlook for consumer electronics this holiday season, with purchase intentions rebounding to near-2009 levels after a steep decline in 2010. Almost 50 percent of U.S. broadband-connected households intend to purchase a CE product from early November to Jan. 1, compared to 38 percent last year.

The fact that consumers began shopping earlier than usual this year may be giving retailers a longer window to move products, researchers note. Consumers also indicated that mobile shopping and mobile wallet options are increasingly appealing.

But it’s not all good news in gadgetland, as the economy continues to weigh on consumer confidence. Other data suggests that 2011 may still be a weaker than expected year for consumer electronics spending. Research firm IHS iSuppli recently reduced its consumer electronics growth outlook for the year, cutting expected revenue to $357.3 billion, a 1.5 percent rise from revenues in 2010, compared to its previous forecast of 6.4 percent growth for the year.

Parks Associates’ director of research John Barrett calls the slight boost in spending intentions this season the “keeping-it-home” phenomenon, noting that the people surveyed were more likely to make purchases for themselves this year, or for someone in their own household, rather than for gift-giving outside of the home. “The number of people buying something has gone up, but so have all the economic worries,” Barrett notes.

Readers, have you bought, or do you intend to buy, consumer electronics this holiday season?

So Twitter.com’s new overhaul may indeed make it easier and faster for users, as Liz Gannes reported this afternoon. But it’s also much more inviting to advertisers — the logical next step as the company tries to make Twitter more of a “consumption environment.”

There are two different things going on here: Twitter is making its basic site more attractive and engaging by making it easier to view things like embedded videos. And it has created “brand pages” for advertisers, where they can have a lot more control over what users see.

Both of these are very simple ideas, but they’re essential if the company is going to convince marketers that Twitter is more than a novelty.

A sticky site has an obvious upside for advertisers, because it gives them a better chance to get their messages — sold, right now, via “Promoted Tweets” — in front of more eyeballs. And the brand pages solve a basic problem that Twitter advertisers have had so far: They haven’t had a home page to deliver messages that might take longer than 140 characters.

Twitter isn’t charging for the brand pages, and it says they will open them up to everyone eventually. But it’s not a coincidence that it’s launching with big-budgeted marketers like American Express, Pepsi, Disney and Dell.

This is the kind of value-add product that sales boss Adam Bain and his team want to offer to big spenders, at the same time they’re rolling out a Google-like self-serve platform for small buyers.

You can see quite clearly how this will work for the big guys, once they figure out the best way to use it. Click on over to the new brand page for “Ghost Protocol,” the newest Mission: Impossible movie from Paramount, to see a good example. And if you can’t see, or just want to watch a video, I can help you out, too — here’s the key element of the new page:

[Shutterstock: Andrey Eremin]

Tomorrow, Hewlett-Packard is launching the newest version of its HP Envy 17 with 3-D capabilities, alongside the new HP Envy 15 and Envy 17 notebook PCs, available through HP Direct.

For gamers, a 3-D PC offers different kinds of gaming options, and on a larger screen than a handheld device has. But do consumers — hardcore gamers aside — really want a 3-D PC? Let’s take a look at some of the technical specifics and other factors to consider when it comes to computers with 3-D options:

Hardware and glasses:
As the technology gets more advanced, more 3-D laptops are expected to come to market with autostereoscopic (glasses-free) screens. Toshiba, for example, recently introduced the Qosmio F750 (in Europe) and Qosmio F755 (North America); both laptops run Windows 7 and feature a 15.6-inch Toshiba TruBrite 1080p autostereoscopic 3-D display.

But most 3-D laptops — such as the Sony VAIO F 3D, the Origin EON15 3D, the Dell Alienware M17x R3 and the Dell XPS 17 with optional 3-D screen — currently have stereoscopic screens, which means users have to wear glasses to experience the 3-D effect.

Nvidia’s 3D Vision kit is commonly bundled with these laptops and includes a pair of the necessary glasses, as well as a 3-D vision USB controller/emitter.

The kinds of glasses consumers are supposed to wear vary, as well: There’s the “active” kind versus the “passive” kind. Nvidia’s 3-D glasses, for example, are active-shutter lenses (read: battery-operated) that create the 3-D image by rapidly shuttering the left eye and then the right eye. Passive — a.k.a. polarized — 3-D glasses are cheaper, look a lot like sunglasses, and work by allowing different levels of light into each eye. Note that these are different from the anaglyph cardboard glasses you might have worn at the movies as a kid.

So, if the 3-D viewing doesn’t give you a headache, the lack of standardization in this industry just might.

Content: It’s the chicken-or-the-egg problem: Hardware makers can’t sell 3-D products well without enough 3-D content for people to watch and play; content creators are hesitant to invest in making 3-D material when the format hasn’t yet been adopted on a mass scale.

But games may indeed be the shining star when it comes to 3-D on PCs. Game developers have been creating games with inherent 3-D capabilities for many years now; consumers just didn’t have the display options they now have to view the games. And 3-D PCs often include super-fast graphics cards that are optimal for game viewing.

In terms of content volume, Nvidia says its 3D Vision Kit includes software that converts “hundreds” of standard 2-D games to 3-D, including popular titles like Call of Duty: Black Ops, Batman: Arkham Asylum and Battlefield 3.

Price points: Despite the fact that slowing demand for PCs has been pushing netbook and notebook prices down for consumers, 3-D laptop pricing still ranges on the high side. Dell’s Alienware M17x R3 and XPS 17 (with 3-D screen), Toshiba’s Qosmio F755 and the Sony VAIO F 3D all currently retail for around $1,500.

The bottom line: laptops with 3-D capabilities tend to be more expensive at a base price. Add in the cost of active-shutter glasses when they’re not bundled in — anywhere from $40 to $150 — and consumers are paying even more.

Where does the new HP Envy 17 3D fit in?: The new HP Envy 17 3D does have some nice features, such as a 17.3-inch 3-D, LED Radiance display with full 1080p HD viewing, backlit keys, an upgraded touchpad and a Blu-ray and 12.7mm DVD-RW slot. It runs Windows 7, has an Intel Core i5-2340M processor, and its list price is $1,599.99, which includes one pair of 3-D glasses (it does not work with the Nvidia 3D Vision kit). Hopefully, battery life will show improvement from the last Envy 17 3D, which some reviewers complained was short-lived.

Readers, what do you think: Would you buy a 3-D laptop?

Even before the company’s move to stop selling the 7-inch Streak tablet, Dell has been largely a footnote. It has announced several tablets and phones over the past couple of years, but all have faded without garnering significant market share or critical acclaim.

Although it still sells some of those devices in certain markets, Dell is at something of a crossroads. The company must decide whether it is willing to re-ante in a serious way or if it wants to cash in its chips and focus on its core PC business instead.

It’s a tough call. On the one hand, the tablet and smartphone field is crowded with PC and mobile device competitors; just how Dell might catapult itself into relevance is not immediately obvious. At the same time, though, the mobile market is one of the fastest-growing pieces of the tech market, and is arguably too big and important to ignore.

What is clear is that nothing it has tried so far has worked.

The company has sold Venue-branded smartphones running both Android and Windows Phone 7, though neither has gained much carrier support or appeared to spark much interest from consumers.

Dell’s boldest move was probably its 5-inch Streak, which was first shown at the D8 conference in May 2010. Somewhere between the phones and tablets of the time, the Streak was an interesting gamble. The company wasn’t necessarily wrong about the size — there are now phones nearly that big, and tablets, like Samsung’s Galaxy Note, that are that small.

But neither that Streak, which was discontinued in August, nor its more clearly tablet-size successor, managed to sway many consumers. Similarly, Dell’s Venue line of phones has not been able to stand out from the pack. More importantly, Dell hasn’t been able to win much in the way of marketing support and subsidies from cellular carriers.

In addition, the executive who headed many of its recent efforts — former Motorola executive Ron Garriques — is no longer at the company.

So now what?

While Dell could try to stake out a position in its more familiar turf — the small-business and enterprise markets — even those areas of the mobile market tend to be dictated as much by consumer sentiment as corporate directives.

The company could also put more energy behind its collection of mobile-related services, such as helping other companies to manage and secure their mobile devices, and to create custom applications.

Any new strategy, says Gartner analyst Michael Gartenberg, will require Dell to be bold enough to stand out, and committed enough to take the time it needs to convince customers it is serious about the market.

“It feels like a lot of the stuff they are doing is reactive instead of proactive,” Gartenberg said. “In the mobile space that just doesn’t work.”

Dell Inc. has updated its Web site to say that the Streak 7 is no longer available for sale online. As of Black Friday, the Wi-Fi version of the tablet was still on sale for $299, while other retailers were offering it for as low as $169. The discontinued Streak 7 was previously reported by The Verge.

Dell first introduced the Android-based seven-inch tablet in the first quarter of this year in an effort to compete with the almighty Apple iPad. In October, Dell said in its blog that an operating system upgrade would be available for the Streak 7, which initially ran Android OS version 2.2.

Dell’s 5-inch Streak tablet, which our own Walt Mossberg called “an odd tweener device” in his review, was discontinued back in August.

In July, the PC-maker introduced a 10-inch Honeycomb tablet in China, called the Dell Streak 10 Pro, citing China’s massive number of Internet-connected consumers and Dell’s retail presence in China as reasons for the launch there.

Dell hasn’t yet responded to our requests for comment on the Dell 7-inch streak. The company has previously declined to say how many Streak units, of all sizes, have sold overall.

The Streak’s short streak began with high hopes, as you can see in the video of the device’s first public demo, at the D8 conference:

]]> http://allthingsd.com/20111205/dells-7-inch-tablet-no-longer-for-sale/feed/ 4 http://allthingsd.com/20111130/dell-will-drop-the-flashy-vegas-act-for-ces-this-year/ http://allthingsd.com/20111130/dell-will-drop-the-flashy-vegas-act-for-ces-this-year/#comments Wed, 30 Nov 2011 21:15:52 +0000 John Paczkowski http://allthingsd.com/?p=148648 Dell’s presence at the Consumer Electronics Show the past few years has been hard to miss. This year, it may be hard to find. Sources say the company is scaling back its participation in the annual trade show — drastically.

While it never had a big footprint on the floor of the show itself, for the past three years it has hosted media and showgoers in the Dell Suites — an entire floor of The Palms Casino Resort tricked out with the latest in Dell hardware. This year, however, the company is approaching CES with a bit more restraint.

It won’t be commandeering the The Palms’ Hardwood Suite to create a “smart living space.” Instead, sources say, Dell is opting for moderation, taking meetings in hotel suites and CES conference rooms and perhaps piggybacking on the keynote of one of its partners for a big product announcement (ultrabooks, anyone?).

So the company will still have some visibility at the event, just not the sort of high-profile, conspicuous-consumption-style visibility it has had in years past.

Why the shift? That’s not clear. Dell has had a very spotty record in the consumer gadget market dating back to its Axim handhelds and DJ music players. That has continued to its recent forays into smartphones and tablets. And the company’s attention has been leaning heavily toward the enterprise of late, which makes CES a markedly less useful event for it.

Indeed, speaking at the Credit Suisse conference today, Steve Felice, Dell’s president for Consumer, Small and Medium Business, said the company was looking to “prune” products to focus on more profitable areas. That message echoes comments made during Dell’s last earnings call when the company said consumer sales in the U.S. and Western Europe recently had led it to step away from “low-value” PC opportunities to focus more on servers, services and networking equipment (with a 6 percent drop in consumer revenue in the third quarter, that seems like a reasonable move). This undoubtedly factored in to the company’s decision to scale back at CES.

Dell Suites at CES 2011

Another theory: The Dell Suites concept has outlived its usefulness now that the company has Dell World, the customer-focused conference it inaugurated this year and plans to hold again in 2012. Why pay good money to deliver your message in the free-for-all, look-at-me shouting match that is CES when you can create your own platform from which to deliver it when people aren’t tired of listening?

Reached for comment, Dell confirmed that it is indeed dialing back its presence at CES and that it will be introducing a new product during a partner keynote, though it declined to specify which one.

“Over the last few months, we’ve been evaluating the most effective platforms that allow us to reach and engage our core consumers directly,” the company said in a statement provided to AllThingsD. “We will continue to have a presence at CES 2012, meeting with key retail customers, partners, investors, press and analysts, among others. In addition, we will be joining a key partner in their keynote presentation and we will be introducing a new product at the show. As we look ahead to calendar year 2012, we will be focused on engaging our various stakeholders through uniquely Dell experiences, such as the recently concluded Dell World and other Dell-specific events.”

Reached for comment, the Consumer Electronics Association, which produces CES, said Dell has not yet told them of its intentions for CES 2012.

(Image Credit: Dell Flickr page)

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]]> http://allthingsd.com/20111130/dell-will-drop-the-flashy-vegas-act-for-ces-this-year/feed/ 0 http://allthingsd.com/20111128/ibm-and-hp-dominated-server-sales-last-quarter/ http://allthingsd.com/20111128/ibm-and-hp-dominated-server-sales-last-quarter/#comments Mon, 28 Nov 2011 18:54:56 +0000 Arik Hesseldahl http://allthingsd.com/?p=147695 IBM and Hewlett-Packard remained the top two kids on the block in the server business last quarter, according to the latest market share figures from research firm Gartner. But HP dominated a little less than it did a year ago.

In a market that grew overall by more than 5 percent to $12.3 billion in revenues and 2.2 million servers sold, HP and IBM were neck and neck on a revenue basis, each accounting for about $3.8 billion, or about 29 percent of the market, followed by Dell, Oracle and Fujitsu.

On a unit basis, HP was the undisputed king, selling 693,000 servers, which works out to an average price of about $5,500 each. IBM sold 288,000 at an average price north of $13,000. Dell sold 518,000 servers.

For HP, both figures represented year-on-year declines of about 3 percent, and are roughly in line with the results HP reported last week. HP said that sales of industry standard servers, meaning those that run regular Intel chips, were down 4 percent, and business critical servers — the ones that run the exotic Intel Itanium chip — were down 23 percent, thanks in no small part to the ongoing scrap with Oracle.

Generally, the server market was healthy worldwide, except in Western Europe, where sales declined by about 5 percent. Asia, on the other had, made up for that by growing nearly 24 percent. Eastern Europe did even better, growing more than 27 percent.

Demand was strongest for basic x86 servers, running chips from either Intel or Advanced Micro Devices, where growth was north of 9 percent on a revenue basis. Servers running Itanium and RISC chips, which include things like IBM’s Power architecture and Oracle’s SPARC, declined on a per-unit basis, but oddly saw revenue increase a little, meaning that those machines sold are for one reason or another commanding a higher price.

(Image from Treehugger.com)

]]> http://allthingsd.com/20111128/ibm-and-hp-dominated-server-sales-last-quarter/feed/ 0 http://allthingsd.com/20111123/seven-questions-for-seagate-ceo-steve-luzco-about-the-effects-of-the-thailand-floods/ http://allthingsd.com/20111123/seven-questions-for-seagate-ceo-steve-luzco-about-the-effects-of-the-thailand-floods/#comments Wed, 23 Nov 2011 13:45:10 +0000 Arik Hesseldahl http://allthingsd.com/?p=147007 Name an executive of any company that makes any kind of computing hardware that contains a hard drive, and you can bet they’re worried about Thailand.

The country is now beginning the arduous job of cleaning up from the floods that killed upwards of 600 people and dealt a body blow to its industrial and manufacturing base.

One industry hit especially hard is the computer business. The world relies on factories in Thailand to turn out critical components used to build hard drives, and factories there are out of commission for now. This is not a trivial problem — the factories in question are not easy to replace, retool and restart once they dry out. Nor is the answer simply for the hard drive manufacturers to build new factories somewhere outside the flood zone.

This is the kind of supply chain disruption that the computer industry hasn’t seen in many years. I had a chance to talk with Steve Luczo, the CEO of Seagate Technology, for his view of the situation. Seagate has been relatively lucky in that its factories haven’t been directly impacted like those of Western Digital and Toshiba. But many companies that supply Seagate with necessary components have been hit, and it will be some time before they’re back on their feet.

Luczo told me that the computer industry as a whole — including companies who make PCs, servers, workstations and any other device that contains a hard drive, whether a set-top box or an enterprise storage device — can expect acute supply-chain disruptions to last well into 2012, and that it will take until the end of 2013 for the industry to return to its pre-flood operating posture. You read that right: It will be two years before the supply of hard drives is anywhere near “back to normal,” and there are simply no easy solutions for getting it fixed.

An estimate by the market research firm IHS iSuppli pegs the available supply at 125 million units, which is about 29 percent short of demand of 175 million units. By its reckoning, more than one-quarter of the world’s hard drive manufacturing capacity has been disrupted in one way or another, including 45 percent of the capacity devoted to making hard drives for personal computers. I spoke with Luczo by phone yesterday, and tossed in an extra eighth question because of the importance of the subject.

AllThingsD: Steve, at a high level, I think everyone understands the problem. There’s been a terrible flood in Thailand, and a lot of factories that make crucial parts for hard drives are out of commission. To that end, I think people expect this to be a temporary problem that works itself out in a couple of months. But you say it’s a much more complex problem than most people realize. You’re tracking this situation day to day, and probably hour by hour. So, how bad is it, really? And what’s likely to happen?

Luczo: What’s surprising to us is that even with all the data out there — we’re six weeks into it — there are a lot of fairly sophisticated companies that haven’t fully come to grips with the depth of the problem and the duration that is likely to occur. What is going to happen in the next couple of weeks is that the real shortage begins to show up right about now. There was already a lot of built inventory and a lot of finished goods moving through the system. And now all that is gone, and I think customers are starting to see shelves of parts go empty, and realizing that they’re not going to be filled for anywhere from one to two months. So the concern is heightened.

We heard Meg Whitman talk about this on HP’s earnings call Monday. She said HP stepped in and started doing some strategic buying. She says HP is going to see effects at least through the first half of next year. Apple talked about it on its earnings conference call, too. Are you hearing from them?

Tim Cook at Apple was way in front of this. I saw Tim the first week it happened, and took him through the situation, and in 15 minutes he understood the magnitude of it. Meg was on the second week of her job as CEO when I went to see her, and she got it right away. HP’s procurement VP, Tony Prophet, was also early to understand this. Companies like that reached out to us early on, because they understood that this is going to be an extended problem. They started asking for longer supply agreements. Deals that would typically last about a year, they’re now asking for two years.

How bad is it really going to be? What’s your outlier worst-case scenario, and then what do you think is a little more realistic?

If you think pre-flood, a mix [of products] that the customers need, the industry had the capacity to ship about 190 million units a quarter. Pre-flood, we expected the demand to be pretty consistent at about 180 million a quarter, with a bump in September 2012 for Windows 8. We now believe the March quarter is going to much more difficult than the December quarter, and December is going to be about 120 million or so. We think the March quarter will be about 120 million, in the best-case scenario. And that’s with customers mixing down pretty aggressively; and by that, I mean companies like Western Digital, who don’t have access to the sliders [a critical component in a drive], are shipping one- and two-headed devices so they can ship more units. So instead of shipping a drive that contains two disks and four heads, which is what the market needs right now, they’ll be shipping a one-disk, one-head or one-desk, two-head product. They’ll be maximizing the units they can sell, rather than shipping the product the customer actually needs. … So we see something like 130 million for March on the optimistic side, and then 150 million for June, 170 for September and then 190 million for December. And so by the end of 2012 you’re back to being close to industry demand. But even then, you’ve not included the impact of that missed 100 million units. And that will take another year to absorb, because it’s not like the industry is building new factories to chase that demand. We can’t over-invest to meet some bubble and then get stuck with excess capacity.

I think, intuitively, people expected companies like Seagate to just build more factories outside of the flood zone, but it’s not that simple, is it? Would this not be a moment to add capacity?

There are some in the investment community who think that’s what is going to happen, and that there will end up being a supply glut after all this is over, but it’s not the case. For us, it’s more a function of how to recover the supply chain and then work with the customer to get a good read on what their needs are for the next several quarters. If we see a multiquarter shortage that goes beyond what I described before, then we would think about maybe putting some capital in place. But we’re not going to do that to solve a temporary problem, because we end up being stuck with the excess capacity. Now if it turns out there is no recovery, and then the industry is more constrained than I first described — and that, by June, the industry is still 30-40 million units short and looks like it will be for the next six quarters — we might revisit. But then we’d want longer-term commitments to make sure we’re not overinvesting. But we’re not to that point yet.

What is this doing to prices? And what does that mean to the person who wants to buy a computer or server this year or next year?

If you look at a 10-year moving average trend, the industry has in general seen prices come down about 2 to 3 percent a quarter, and that is for a particular product. In 2009, there was a little price erosion, and that was because the storage industry recovered quickly from the recession. And there had been massive capital cutbacks, so there were big shortfalls through all of 2009 and into 2010. Then, when the Greece crisis happened, that put a big flatline on a lot of growth, and the industry had put in a lot of capital because everyone expected there would be growth. So, since spring of 2010, the price erosion has been higher than normal, which would show that supply is greater than demand. And what this flood has done is drive the supply curve down, while the demand curve has stayed constant. For OEMs [original equipment manufacturers, or the PC and server manufacturers like Apple, HP and Dell, who buy directly from Seagate], you’re seeing an average increase of about 20 percent, and in the channel [resellers who sell parts to smaller PC and server vendors], probably much higher. So all the sensational quotes you see about pricing are about those that occur in the channel, where we have no control whatsoever.

The markups in the channel are much higher? Are the channel guys taking advantage of this?

Yes, they’re higher, but I don’t think they’re taking advantage. I’ve heard stories about drives that we sell to OEMs for $60 that show up in the channel at $105. Normally the channel price is within about 10 percent of the OEM price. It’s just the law of supply and demand. They can’t get supply. The channel is getting about a third, at most, of the supply they would typically get. The OEMs are the ones with the supply agreements, so everyone in the channel is way short. In some market segments, supply is about 70 percent below what the demand is. And so those shortages are very acute. The channel is selling the few drives that are out there to whoever needs them the most and is willing to pay for them.

So what does all this mean for Seagate, specifically?

For us it’s a different story, because we’re going to be driving more volume than our competitors, because we’re not as directly affected, and we’re going to be making some  technology transitions. When we do that, it lets us take cost out of our product, so we can offer more capacity for the same or fewer parts. That helps us drive down pricing. Our goal is to recapture some of the more aggressive pricing of the last eight quarters, in order to sort of get our business back in balance. Our long-term business model calls for gross margins of 22 to 26 percent. And we use our manufacturing expertise to drive down our costs and then pass that on to our customers. This quarter, end users really won’t see it, because product has been built and has been on the shelves. As the shortages just started occurring, you’re starting to see prices increase in the channel. And then at the OEM there will be shortages in some high-value areas like enterprise storage or cloud computing. You’re going to have to see price increases, because there’s such big shortages.

One thing that occurred to me when I first wrote about this a month or so ago is that it represents an opportunity for the flash memory chip companies to make some inroads against hard-drive guys like you, mainly on notebooks. Is there a threat that flash could pick up some of the demand?

Some of it, but not very much. I think to the extent that there is a high value purchaser who can afford to pay $200 for 100 gigabytes, then that market will expand from 1-2 percent to 3-4 percent. Of the 35 to 40 percent shortage that exists, could you see a little of that get absorbed by silicon? The answer is yes. But there’s a cap. There’s just not enough of a raw supply of silicon to meet all the demand. Our industry will ship 400 exabytes this year. We would have shipped 450, were it not for the floods. Of that, 180 exabytes is notebooks. Reduce that by 30 percent, and you get about 55 or 60 exabytes. If you were to take all of the capacity from Samsung’s newest state-of-the-art flash factory, and dedicated it just to notebooks, it would only put out 7 exabytes a year. Plus, there are already other markets demanding flash, like  tablets and cellphones and other things. So it’s not like you can steal from those other markets. You’re not going to take a $32 product and replace it with a $350 product. Can you do it at the edges of the market? Sure. But the threat is capped by the amount of silicon available and the price point for flash storage, which is still an order of magnitude higher.

]]> http://allthingsd.com/20111123/seven-questions-for-seagate-ceo-steve-luzco-about-the-effects-of-the-thailand-floods/feed/ 0 http://allthingsd.com/20111116/hewlett-packard-dons-its-ultrabook-suit/ http://allthingsd.com/20111116/hewlett-packard-dons-its-ultrabook-suit/#comments Wed, 16 Nov 2011 17:11:23 +0000 Arik Hesseldahl http://allthingsd.com/?p=144802 It’s been about three weeks since Hewlett-Packard announced its decision to keep its PC division, formally known as the Personal Systems Group, or PSG. Today marked the first serious batch of new PC introductions from HP since that decision.

The one getting all the attention is an offering in the Ultrabook category that’s priced at $900. It’s called the HP Folio¹³, and aside from its price, its headline feature is that it delivers a full nine hours of battery life.

The Ultrabook is a concept primarily being pushed by Intel, so much so that Intel even owns the trademark rights to the name. Inside the Folio¹³ are the latest Intel Core processors. It represents the hopes of a PC industry that has seen anemic sales with little sign of a bounceback, though that depends on whom you ask.

Major challenges have been the continued popularity among consumers of Apple’s iPad, and to a lesser extent other tablets, and the impressive sales of Apple’s MacBook Air, which now accounts for nearly a third of Apple’s notebook sales. It may not be an Ultrabook technically, but conceptually the similarities are substantial: Thin, light, sporting solid-state drives and speedy boot-up times.

And while the MacBook Air is a big winner for Apple, there’s as yet little evidence that there’s much demand for a similar product running Windows. Last month, it emerged that Acer and Asus expect to sell only 100,000 each by the of 2011, which would amount to between one third and one half of what they originally hoped.

Yes, it’s early days for Ultrabooks — machines that support Intel’s full design vision won’t be on the market for another several months. And the industry is just now starting to bang the drum seriously for the Ultrabook. Asus Chairman Jonney Shih talked about the category in an interview with Walt Mossberg at AsiaD last month.

In its press releases, HP expressed the hopes of an entire industry when it quoted IDC analyst Crawford Del Prete saying he expects PC makers — including HP — to sell 95 million Ultrabooks by 2015. At their current levels, there’s nowhere to go but up.

]]> http://allthingsd.com/20111116/hewlett-packard-dons-its-ultrabook-suit/feed/ 0 http://allthingsd.com/20111115/shares-of-flash-madness-club-founder-fusion-io-speed-up/ http://allthingsd.com/20111115/shares-of-flash-madness-club-founder-fusion-io-speed-up/#comments Wed, 16 Nov 2011 01:07:50 +0000 Arik Hesseldahl http://allthingsd.com/?p=144564 Shares of the original member of my informal “flash madness club” Fusion-io soared — or, rather, accelerated by more than 9 percent — on a batch of news today.

Fusion-io shares closed at $38.10 — up 9.17 percent — during the regular session, and continued to climb by an additional 1 percent in after-hours trading. The shares have increased by more than 100 percent since they debuted on the New York Stock Exchange at $19 early this summer.

The main news came in the form of a new product, and the publication of news that Fusion-io technology was used in a high-performance computing project at the Lawrence Livermore National Lab.

People tend to think of Fusion-io as building traditional storage, but its main mission is to get data closer to the processor in a server, so that that processor doesn’t have to sit around waiting. Processors are super speedy and super impatient. Think of the processor as the impatient Miranda Priestly — played by Meryl Streep in “The Devil Wears Prada” — and how Anne Hathaway’s character, Andy Sachs, is never fast enough for Priestly about handing her something she needs right away. Microprocessors hate nothing more than waiting for a hard drive to serve up the data they need.

Fusion-io’s drives try to speed that process up — and make microprocessors happier — by using flash memory built into an insert card and installing it close to the processor in a system. The news, announced at the Supercomputing conference in Seattle today, is that Fusion-io debuted a 10 terabyte version of its high-end ioDrive Octal product. You can now pack four of these into a single server, and have 40 terabytes of data right up close to those impatient processors. Companies like Hewlett-Packard, IBM, Dell and Supermicro build Fusion-io’s products into their own products.

The other news also had a supercomputing wrinkle to it. A machine that Lawrence Livermore called “Leviathan,” packed with Fusion-io cards and Intel processors, broke a record in processing a graph with more than 68 billion nodes. Well, it didn’t just break the record, it shattered it, as that number of nodes in a graph is four times the prior record. What that means, in English, is that the computer plotted a mathematical graph with more than 68 billion points of data.

Apparently — and I’m just learning this now — there’s a separate version of the Top 500 list called the Graph 500 which focuses on simulating 3-D problems.

It’s a lot to take in, but the main point is that Fusion-io seems to be showing that it has a going business. Critics of the company have argued that it relies too heavily upon its biggest data-center customers like Facebook and Apple, and that it will be vulnerable to slowing sales when those companies are through building their infrastructure. The problem with that argument is that there’s always another impatient processor throwing an impatient diva fit while waiting for data.

Also, I should note that today’s 9 percent move comes after Fusion shares fell about the same amount on word last week that the company is planning a $350 million secondary offering. When investors heard about that last week, they sent the shares plunging by more than 8 percent, territory it has since reclaimed. It has been a bumpy, volatile ride for Fusion-io, no doubt. In the five months since the debut, the stock has traded as low as $15, and almost as high as $40. That’s IPO investing for you.

]]> http://allthingsd.com/20111115/shares-of-flash-madness-club-founder-fusion-io-speed-up/feed/ 0 http://allthingsd.com/20111115/deutsche-bank-expect-soft-sales-from-dell/ http://allthingsd.com/20111115/deutsche-bank-expect-soft-sales-from-dell/#comments Tue, 15 Nov 2011 14:30:04 +0000 Arik Hesseldahl http://allthingsd.com/?p=144216 Dell will report its quarterly results today after the close of markets. Chris Whitmore, an analyst with Deutsche Bank Securities, expects sales to be weak.

The company’s troubles aren’t anything you couldn’t intuitively guess: Consumer PC sales are weak for a variety of reasons, ranging from the popularity of tablets like the iPad to a frail consumer economy, combined with slumping sales to state and local governments facing squeezed budgets. Dell’s strengths: Sales of PCs and servers to enterprises and the federal government.

Even with weaker sales, that mix should allow Dell’s profits to hold up. Whitmore writes in a note to clients: “We expect solid margins due to favorable product mix — healthy corporate demand and softer consumer demand — benign commodity prices and greater contribution from Dell’s higher margin Storage and Server offerings.” Memory chip prices are down by 17 percent and LCD display prices are down 3 percent, giving Dell a little wind at its back from a cost perspective, and possibly offsetting the expected impact from a shortage of hard drives caused by the flooding in Thailand.

Whitmore expects Dell to report sales of $15.6 billion and margins of 22.2 percent, and an operating margin of 7.2 percent, implying per-share profits of 44 cents. Whitmore’s estimates are slightly below the consensus view of analysts’ calls for Dell to report earnings per share of 47 cents on sales of $15.7 billion.

Looking ahead, Whitmore expects Dell to emphasize an ongoing cycle of upgrades to corporate PCs and servers. He expects estimates for the 2012 fiscal year could improve, because right now they “appear conservative.”

]]> http://allthingsd.com/20111115/deutsche-bank-expect-soft-sales-from-dell/feed/ 0 http://allthingsd.com/20111114/european-pc-market-searches-for-bottom-while-apple-asus-soar/ http://allthingsd.com/20111114/european-pc-market-searches-for-bottom-while-apple-asus-soar/#comments Mon, 14 Nov 2011 18:11:20 +0000 John Paczkowski http://allthingsd.com/?p=143859 The downward trend in European PC sales has left Apple’s Mac entirely unscathed. In fact, the Mac appears to have benefited from it.

According to the latest metrics from Gartner, Mac shipments to Western Europe were up 19.6 percent in the third quarter, a period that saw an 11.4 percent decline across the broader market.

PC shipments in Western Europe totaled 14.8 million units in the third quarter of 2011, an 11.4 percent decline from the same period last year, according to Gartner. Among the top five PC makers, only Apple and Asus resisted that downward spiral, which slowed Hewlett-Packard’s growth by 7.5 percent, Dell’s by 10 percent and Acer’s by a gruesome 45.1 percent.

A similar scene played out in the U.K., though there it was Apple and Samsung that led the market with year-over-year growth of 21.8 percent and 39 percent, respectively. Again, the broader market suffered a nasty decline, seeing growth slip by 11 percent year over year, and HP, Dell and others all suffered for it. The third quarter was particularly nasty for Acer, which saw its U.K. sales plummet by 53.1 percent.

Keep in mind, we’re talking about the third quarter here, traditionally a strong one driven by back-to-school sales.

So what’s behind the decline? Hard to say. Gartner theorizes that one factor is consumer confidence that’s been beaten into submission by disheartening economic issues. That certainly makes sense, though it doesn’t really explain the performance of Apple, Asus and Samsung, which all defied the downward trend. That they were able to grow PC shipments during such a time suggests there’s some significant competive rebalancing going on in the market right now.

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