Nokia shipped 113.5 million units during the quarter, down from 123.7 million during the same quarter a year earlier, according to IDC. Meanwhile, Samsung shipped 97.6 million, up from 80.7 million a year ago.

That’s a nice jump, but nowhere near as impressive as the one charted by Apple, which shipped 37 million iPhones during the quarter — up from 16.2 million during the same quarter a year earlier — for a more than 128 percent increase.

That spike gave Apple an 8.7 percent share of the mobile phone market in the fourth quarter. Which really is astonishing, when you think about it. Recall that when Steve Jobs introduced the first iPhone in 2007, he said Apple hoped to someday claim 1 percent of the overall handset market. Five years later, the company has far surpassed that humble goal, and is well on its way to claiming 10 percent.

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 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.

According to NPD, the iPhone 4 and 3GS continued to hold the top two positions in U.S. smartphone sales during the third quarter, despite the ever-lengthening conga line of Android handsets parading to market these days.

1. Apple iPhone 4
2. Apple iPhone 3GS
3. HTC EVO 4G
4. Motorola Droid 3
5. Samsung Intensity II

 
Not included in NPD’s rankings is the new iPhone 4S, which arrived at market in mid-October and has been setting sales records ever since. Given that, will Apple sweep the top three spots in U.S. smartphone sales in the fourth quarter? Certainly seems possible.

Adobe’s decision to abandon Flash for mobile devices in favor of HTML5 is big news. But what does it really mean for the software company’s business?

Probably not all that much. For now, at least.

First, from a financial perspective, the issue is not dire. Adobe doesn’t break out Flash in its earnings reports. But according to a 2010 estimate by Robert W. Baird & Co., Flash generates less than 10 percent of Adobe’s total revenue. And some believe the percentage is quite a bit lower than that — less than 5 percent.

So, from a financial perspective, Flash was never worth all that much to the company’s bottom line.

That said, Flash’s real value has always been as a sort of gateway drug for Adobe’s other software tools. And now that the company has officially pivoted to Flash successor HTML5 with the launch of its Adobe Edge design tool, Flash will inevitably become worth even less to it.

“I don’t see this act alone as having a significant financial impact on them,” IDC analyst Al Hilwa told AllThingsD. “The key for them is to address HTML5 effectively in their tool lineup. They have started doing that and are, in fact, an early leader in this relatively nascent market.”

Forrester analyst Mike Gualtieri agreed. “Adobe made the right decision in dumping Flash for mobile,” he said. “Adobe is about selling creative and development tools, so jettisoning Flash for mobile will allow them to focus on the tools for mobile development.”

Still, while it is not a huge part of its revenue, Adobe did own Flash, and those that wanted to support it were compelled to use the company’s tools.

Plus: Even though HTML5 may be a bigger pie, as they say, there will be a lot more companies looking to take a bite of it.

The looming question, then, is whether Adobe will be able to maintain its share of the broader development tools business, in a world in which it doesn’t have Flash to support it.

Beyond this, there are a few other business issues to consider, as well. Foremost among them is what it means for Adobe to begin to step away from the platform for which it is arguably best known.

And there’s simply no good way to spin that. Flash is in decline, and Adobe is wise to be moving on, first with its mobile browser offering.

This makes it a big strategic loss for the company. Regardless of what you think of Flash as a technology, it has been an important brand for Adobe, particularly in the consumer arena. Phasing it out entails some loss of visibility for the company.

And, make no mistake, it is phasing Flash out. The company’s abandonment of mobile Flash, and its switch to HTML5, almost certainly heralds a migration away from the desktop version of Flash, as well. Part of Adobe’s sales pitch to developers today was a promise to help developers move off it when the time is right.

“We will design new features in Flash for a smooth transition to HTML5 as the standards evolve, so developers can confidently invest knowing their skills will continue to be leveraged,” Adobe said in a statement.

In other words: We’re improving Flash to make it easier for you to stop using it.

Which brings us to the strategic missteps leading up to Adobe’s announcement today, in particular the company’s high-profile public relations battle with Apple.

Scrapping mobile Flash is a humiliating concession to Cupertino, which has been urging the recalcitrant Adobe to do just that for years now.

As the late Steve Jobs famously said in his “Thoughts on Flash” essay, “Adobe should focus more on creating great HTML5 tools for the future and less on criticizing Apple for leaving the past behind.”

Adobe dismissed that suggestion with a series of embarrassing tough-love, full-page, pro-Flash advertisements in the business sections of a number of major newspapers.

Now, a year and a half later, it’s heeding Jobs’s advice.

What does that say about Adobe’s leadership? What’s been going on over there?

Evidently, a lot of waffling.

But now that it’s over, Adobe says it is ready to “aggressively contribute to HTML5.” Good thing, too. The company is already late to the game, and it’s got a lot of work to do if it hopes to advance the standard for the broader industry.

PREVIOUSLY:

• So Now What Will iPad Rivals Say in Their Commercials?
• Horse Flash: Apple’s Steve Jobs on Adobe Vendetta in 2010 at D8 (Video)
• Adobe Admits It Is Saying Buh-Bye to Flash for Mobile Devices
• Gone in a Flash? Adobe Halting Development on Mobile Version of Its Plug-In
• Adobe Co-Founder: We Never Abandoned Apple, but Apple Is Abandoning Us
• Adobe to Apple: You Wanna Hug It Out? Let’s Hug It Out!
• Good Luck With That Alleged Antitrust Complaint Against Apple, Adobe…
• Adobe CTO: Flash on iPhone Doesn’t Suck and Apple Knows It
• A Possible Apple Antitrust Inquiry? Nothing to See Here…
• Microsoft on Flash: What Steve Said
• Adobe: We’re Done With You Too, Apple
• Apple to Adobe: I Know You Are, but What Am I?
• So Much for Flash on the iPhone
• Adobe: Flash for Mac Is Getting Better–Really!

Not so: The latest data from research houses Gartner and IDC shows that HP, already the biggest PC maker in the world, managed to grow its share of the market in the most recent quarter, and actually grew faster than the rest of the industry as a whole.

According to Gartner, HP’s share edged up to 17.7 percent in the third quarter from 17.4 percent in the year-ago period, and it sold 16.2 million PCs. By IDC’s reckoning, (Gartner and IDC conduct their counts a little differently) HP commanded an 18.1 percent share of the market, up from 17.8 percent a year ago, and shipped 16.6 million PCs.

The data, along with retail PC sales as tracked by the research firm NPD, is widely watched in the PC industry and, if nothing else, gives some indication as to the reasoning behind the trial balloon story in yesterday’s Wall Street Journal, which said that HP is rethinking its spinoff plans.

Meanwhile, Dell saw its share fall on both lists, and its position fell to third place behind China’s Lenovo, with Acer coming in fourth on a global basis. Apple maintained its third-place position in the U.S. market and grew its share to nearly 13 percent in the Gartner rankings and north of 11 percent on the IDC list.

For HP, a world-dominating market share is certainly nice to have, but meaningless if it’s not profitable — which it is. In fact, despite declining revenues — sales in HP’s personal systems group fell by about $1 billion in the first nine months of fiscal 2011, to $29.5 billion — the company managed to boost its operating margins from 4.8 percent in 2010 to 6 percent so far this year.

We know most of the reasons for the decline. Apple’s iPad has tamped down demand for conventional notebooks, and HP, having sought to create a competitive response with its TouchPad, didn’t have much luck. The impact is especially pronounced in HP’s notebook sales, which is where most of the billion-dollar drop in sales in the PC division were seen during the first nine months of the year. The results were offset, oddly enough, by a $366 million increase in sales of high-end professional workstation computers.

Still, having a big PC business gives a company like HP the leverage it needs to buy parts from suppliers for its more profitable businesses. In HP’s enterprise storage and networking group, operating margins were about 14 percent in the first nine months of the fiscal year, where sales grew by more than $2 billion.

It is easier to negotiate favorable prices from chip and memory suppliers like Intel, Advanced Micro Devices and Micron — and hard drive suppliers like Seagate and Western Digital — when you’re still the world’s biggest consumer of their products. Absent the PC division, HP’s orders from those suppliers would be smaller and incrementally more expensive, as discounts are often negotiated based on the volume of components ordered.

The enterprise business was to be HP’s future under former CEO Léo Apotheker, and there is little question that its emphasis won’t continue to be on the enterprise going forward. But as HP’s new CEO Meg Whitman, chairman Ray Lane and the rest of HP’s management team contemplate the decision to spin off PCs or not, the evidence is mounting that the two faces of HP are inextricably linked.

In the second quarter of 2011, PC sales in China reached $11.9 billion; PC shipments rose 14.3 percent year over year to 18.5 million units. Meanwhile, PC sales in the States slipped to $11.7 billion, and shipments dropped 4.9 percent to 17.7 million units.

This is the first time China has overtaken the U.S. to become the world’s largest market for personal computers, and while it’s not likely to hold that title on a full-year basis in 2011, thanks to the holiday buying season in the States, it will probably claim it in 2012.

“China’s lead in the PC market is a huge shift that reflects the rising fortunes of emerging markets as well as the relative stagnation of more mature regions,” IDC VP Loren Loverde said in a statement. “While the immediate economic circumstances in the U.S. and other markets had a significant impact on the timing of China’s move to the lead, they have not changed the trend, but accelerated it.”

Developers were evenly split over whether Apple or Google had the upper hand, with about 44 percent of developers picking iOS and the same number predicting Android.

Windows Phone was seen winning by 7 percent of the 2,000 developers surveyed, while 4 percent expect BlackBerry to prevail. Apparently 2 percent of developers think HP’s WebOS will come from behind to unseat the leaders.

As for where application developers are placing their bets, the study found programmers opinions haven’t changed much since its last quarterly survey of Appcelerator’s mobile developers. Interest in the iPhone remains strongest, with 91 percent of mobile developers “very interested” in the Apple phone. The iPad comes in at number 2 with 88 percent of developers very interested, followed by Android phones at 87 percent and Android tablets at 74 percent.

“The picture is largely the same,” Appcelerator VP Scott Schwarzhoff told AllThingsD.

HTML5 mobile Web development, newly added to the survey, was of significant interest to two-thirds of developers. As for the second tier, Windows Phone was very interesting to 30 percent of developers, followed by BlackBerry Phones (28 percent), RIM’s PlayBook (20 percent) with HP’s phone and tablet of interest to less than one in five developers. Interest in Symbian and MeeGo was in the single digits.

For its part, Schwarzhoff said Appcelerator uses the findings to help guide its products, which allow developers to create programs for multiple mobile operating systems.

“It helps us prioritize, obviously, our product roadmap,” Schwarzhoff said.

In other findings, the study also found that mobile developers think Google+ should give Facebook a good run for its money and that Apple’s iCloud will pose a considerable challenge to cloud storage services from Amazon, Microsoft and others.

Meanwhile, in a separate report, IDC noted that Apple’s share of the overall handset market more than doubled in the second quarter, rising to 5.6 percent from 2.6 percent a year earlier. That makes it the world’s fourth-largest manufacturer of all mobile phones after Nokia, Samsung and LG. “[Apple] easily posted the highest growth rate of the worldwide leaders despite the fact that its flagship iPhone 4 is now more than a year old,” IDC noted. “[The company's] ability to bring its smartphone momentum to developing economies, where it’s less successful, will help dictate the company’s smartphone fortunes in future.”

And those fortunes look quite promising, given Apple’s achievements to date. After all, the company has managed to become the fourth-largest handset vendor in the world and its largest seller of smartphones in just four years, with essentially one phone.

What gives? The research firms don’t have access to the same kinds of sales-channel data that Intel does, especially when it comes to emerging markets. Namely Brazil, Turkey, Russia and other rapidly developing revenue streams.

Intel CEO Paul Otellini called this “channel revenue” during the conference call with analysts. Channel is industry lingo for the business Intel does that’s not with major PC manufacturers like Apple or Hewlett-Packard or Dell, but instead goes through indirect sales channels to smaller companies that make PCs with lesser-known brands geared toward specific markets.

This channel revenue grew 17 percent during the quarter, Otellini said, because demand for PCs remains healthy in these countries. Turkey and Indonesia were both up 70 percent over last year. India was up 17 percent. Russia, 15 percent. China, 14 percent. Latin America as a whole was up 12 percent.

But then there’s Brazil. Otellini said it’s growing like crazy and is on track to become the world’s third-largest PC market next year, after the U.S. and China.

This channel business in emerging markets helps explain at least part of the dichotomy between the results that Gartner and IDC report in their quarterly market surveys — both of which show a market that grew by less than three percent — and Intel, which saw sales in its PC division grow 11 percent.

Later, Otellini and Chief Financial Officer Stacy Smith addressed this issue in response to a question from Evercore analyst Patrick Wang. You can hear their exchange, which runs less than three minutes, below.

Intel-q2-2011-call by ahess247

The market researcher said it expects Android to gain just a few points of market share and Apple’s iOS and RIM to lose share over the same period, even as Microsoft rises from 3.8 percent to 20.3 percent of the market. IDC sees the gain coming largely at the expense of the Symbian operating system, which Microsoft is supplanting on Nokia devices.

It’s not the first time that IDC has projected Windows Phone would surpass Apple in market share. Nonetheless, the IDC numbers are bullish for a Windows Phone operating system that has yet to gain much ground, with a top AT&T executive recently confirming to AllThingsD that sales have been below both Microsoft and the carrier’s forecasts.

As for iOS and BlackBerry, IDC notes that their total shipments are expected to gain each year, but the operating systems are still seen losing share as other operating systems grow faster.

Overall, IDC is predicting a 55 percent year-over-year increase in smartphone shipments this year, to 472 million, from 305 million in 2010. By 2015, IDC projects the number will nearly double again, to 982 million.

“The smartphone floodgates are open wide,” IDC analyst Kevin Restivo said in a statement. “Mobile phone users around the world are turning in their ‘talk-and-text’ devices for smartphones as these devices allow users to perform daily tasks like shopping and banking from anywhere. The growth trend is particularly pronounced in emerging markets where adoption is still in its early days. As a result, the growth in regions such as Asia/Pacific and Latin America, will be dramatic over the coming years.”

The firm has cut its growth estimate on PC sales in 2011 almost in half. In February, it said PC shipments would grow more than 7 percent. Now it says shipments will grow by only a little more than 4 percent. The reasons are a combination of things you can probably guess: A tightening economic outlook, a saturation in developed markets, and, well, the iPad. IDC uses the phrase “competing products,” but we all know that the competing product of the moment is tablets, and when you talk tablets, you’re talking about Apple’s iPad. Even so, IDC says 2011 will be a down year compared to 2012 through 2015, when growth is expected to head north of 10 percent.

The 2009 consumer-driven boom cycle in notebooks and mini-notebooks has faded. And shipments in the first quarter of 2011 declined by more than 4 percent versus the same period a year ago. That drop was only offset a little by a 3 percent growth in shipments to companies. The consumer slowdown was worst in the U.S., Canada and Europe, IDC says. Add to that the Japanese earthquake, the Arab Spring, and a dour economics outlook, and you end up with a market that’s going to grow a lot slower than previously expected.

As we’ve seen, these forecasts initially tend to impact the share prices of companies in the PC ecosystem like Intel, Advanced Micro Devices, hard drive makers like Seagate, not to mention the PC makers themselves like Hewlett-Packard and Dell. But remember what happened when Intel last reported its quarterly earnings. CEO Paul Otellini slapped down the market research firms in comments made on a conference call with analysts.

At the time, he said, “Our views differ from the views of the analysts,” and that, “Our projection for 2011 remains in the low double-digit range.” If you see Intel cutting its estimates ahead of its next earnings call–and there’s no evidence of that happening–you know it’s getting serious.

Update:An Intel spokeswoman says the company is standing by the forecast it gave in the second quarter. For the record the company said last month that it expects PC unit shipments to grow 11 percent this year notwithstanding any impact from tablet sales. It also said it expects revenue to be flat in the second quarter versus the first quarter, which would be an improvement over the usual decline the company sees at this time of year. I talked briefly with Intel about this today, but Don Clark at The Wall Street Journal has more on it.

Clearly it still sees a different market than IDC does, and wants the market to know it. We’ll see how it all turns out soon, as the second quarter comes to a close in about three weeks.

Apparently, reassurances about its relationship with Chinese partner Alibaba Group and some lively presentations by top execs at a six-hour investor day yesterday did almost nothing for Yahoo shares.

The stock of the Silicon Valley Internet giant continues to stay mired on either side of $16 a share today, as it has been since it got into a very public fight with Alibaba over the spin-out of its Alipay online payments unit.

Alipay got its license from the People’s Bank of China today, due in part to moving the unit to the ownership of Alibaba founder and CEO Jack Ma, but that also did squat for Yahoo shares.

Also dragging the stock down: An IDC report released today that shows that Yahoo has lost its number-one display advertising title to Google. The search giant’s share of that market in the U.S. rose to 14.7 percent in the fourth quarter of 2010, while Yahoo’s declined to 12.3 percent.

That’s not good news, even though both Yahoo’s Chief Product Officer Blake Irving and its U.S. media and advertising head Ross Levinsohn both gave energetic presentations at Yahoo’s investor day yesterday.

The two execs–one sporting a natty blazer and the other his patented hair-tastic ’do–trotted out a lot of can-do stats and fancy plans for the audience, which was mostly preoccupied with Yahoo’s China problem.

In contrast, CEO Carol Bartz, CFO Tim Morse and co-founder Jerry Yang were mind-numbingly rote on that thorny issue, noting that negotiations with Alibaba were ongoing and would remain private.

(As if–if I have anything to say about it!)

Bartz told the group of investors and Wall Street analysts yesterday that Yahoo “really believe[s] we are working towards protecting the value of Alibaba Group. The emphasis is on discussion. [We're] not going to get into a public back-and-forth.”

Having already done that in a ham-handed way the week before, that’s probably a most excellent idea for the shoot-from-the-hip exec.

In any case, investors don’t seem to want to take Bartz’s word for any of it until she delivers–both a China solution and, more importantly, turbocharging of both its core search and display advertising businesses.

The surprise, however, is that Cisco Systems–yes, that networking giant that’s in the urgent process of rebuilding itself–has, after two years, gotten its UCS-based blade servers to the number three position in the market for blade devices, behind HP and IBM, with a 9.4 percent share of the market. It’s not a bad position to be in when you consider that more than 20 percent of all servers are blades, and that shipments of blades overall grew by more than 5 percent in the quarter, accounting for $1.8 billion in sales.

“After several years of being a highly consolidated market where the top three vendors accounted for over 80% of blade revenue, the recent entry of Cisco has introduced a viable new competitor to the market,” IDC analyst Jed Scaramella said in a statement.

Clearly Lew Tucker, the cloud guru Cisco hired away from Sun Microsystems after it was acquired by Oracle, wasn’t just making things up when he talked to AllThingsD late last year about Cisco’s plans to penetrate the cloud computing business with its UCS–Unified Computing System–offerings. It is a bit of badly needed good news. Cisco says it now has 5,400 UCS customers and is on track to sell $900 million worth of UCS systems this year. Not bad for having no server business at all just a bit more than two years ago. The company also wasted no time in sending the graphic you see below.

(Main image of Lucille Ball looking surprised obviously taken from a still of “I Love Lucy.” The image was so good it was used on the cover of the season 6 DVD set.)

But that growth was not shared equally. Apple, Samsung and HTC all at least doubled their sales, while RIM and Nokia posted only modest gains.

Nokia held on to the top spot, with nearly a quarter of the market. But its share fell from 38 percent as the company managed only 12 percent unit growth, by far the lowest of the top players. RIM’s 31 percent year-over-year growth dropped it to No. 3 in the charts behind Apple, which now controls 18.7 percent of the worldwide market, nearly five percentage points more than RIM.

Samsung came in at No. 4 with 10.8 percent market share, a huge jump from the 4.3 percent it had a year ago, while HTC also gained huge share, finishing the quarter with 8.9 percent of the market, up from just under 5 percent a year ago.

The numbers reflect the strong growth for Android and Apple’s iPhone, while the BlackBerry and Symbian devices continued to lose steam despite the huge overall growth in smartphones.

“The rise of Android as a prominent mobile operating system has allowed several suppliers to gain share quickly,” IDC analyst Kevin Restivo said in a statement. “Also, the relatively nascent state of smartphone adoption globally means there is ample room for several suppliers to comfortably co-exist, at least for the short term.”

Backers include Chinese Internet firm Tencent, Japanese social network GREE, and KDDI, Japan’s second largest mobile operator. The A-Fund, as the effort is known, will be managed by DCM and is already working on closing its first couple of investments.

In an interview on Thursday, DCM general partner David Chao said that the opportunity Android presents is unprecedented.

“This is the equivalent of when Microsoft came up with Windows to combat the pioneering stuff that the Macintosh came up with,” Chao told Mobilized. “We are just seeing the tip of the iceberg in terms of Android becoming a dominant operating system in terms of mobile and connected systems.”

Of course, DCM is far from the only venture firm focused on Android, nor is the new fund the only one focused on Google’s operating system. Accel’s Rich Wong, for example, has been a huge proponent of Android and backer of firms that are focused on that platform.

Still, Chao said there are still product areas and regions where Android-based efforts are underfunded. In particular, he mentioned that companies in Japan and China as well as those focused on digital media and tablet applications are among the spots in need of further investment. The A-Fund, he said, is open to companies of all sizes and in all regions. It’s also open to companies doing services and hardware and not just those making applications.

“We absolutely do not want the world to think this is just an app fund,” Chao said.

Although the focus of the fund is on spurring the Android-based economy, Chao said the fund doesn’t mandate that those it invests in focus solely on Google’s operating system. However, the ideal companies, he said, are “Android-heavy” ones whose ideas haven’t been possible in more restrictive ecosystems, such as the one surrounding Apple’s iPhone.

“We are looking for companies that truly take advantage of the openness of Android and companies that are obviously relatively potentially frustrated with the other platforms,” Chao said.

Although it has now been a couple of years since the launch of the G1, the first Android phone, the operating system has posted significant gains in recent months and is expanding its reach later this year, in particular as devices as low as $50 or $75 arrive in developing markets. Android-based devices are expected to make up 40 percent of the smartphone market this year, according to IDC.

In about a month, the company expects to announce additional investment partners outside of Asia, as well as the first companies in which the fund is investing.

“We are closing three or four deals as we speak,” Chao said.

(Android pop image courtesy of Flickr user asirap)

Intel CEO Paul Otellini criticized third party research firms–he didn’t mention any names, but he was talking about Gartner and IDC–for giving the idea that the PC industry is on the wane, when their information isn’t as complete as Intel’s is, especially in emerging markets.

While they’re forecasting the market to grow in the single-digit range this year, Intel sees the PC market growing in the low double-digit range, Otellini said, and he expects it to continue into 2012. “I want to be clear that our views differ from some of theirs,” he said. The PC market is getting more complex, and at nearly 400 million units sold per year, it’s bigger than it’s ever been. The research firms don’t see as much data as Intel sees. “While some channels–like PCs sold through consumer retail outlets in mature markets–have deep visibility, other channels, especially in emerging markets, are not well-reflected” in the forecasts from the research firms.

I wonder what Gartner and IDC are going to say in response to that? It seems Otellini has just called their research methods worthless.

Otellini also talked about a forthcoming announcement in May around manufacturing process technology. Having sold its first 32-nanometer processors at the start of last year, it’s time to start thinking seriously about the move to the next manufacturing node, and also the one beyond that. The next is 22 nanometers, and the one beyond that is 14, which should hit the market about 2013 or so. Intel says its going to spend between $9.8 billion and $10.6 billion in fiscal 2011 on capital expenditures as part of bringing up the new technology, and another $15.7 billion in combined research and development plus management and general costs.

Otellini and CFO Stacy Smith both talked about the implications of that shift, and both talked about some big announcements around process technology coming in May. “What we’re realizing is that competitive advantage is becoming very important,” CFO Stacy Smith said. “We’re getting paid both for differentiating, and in terms of pricing.” Pressing the manufacturing nodes forward–which is something Intel does better than anyone else in the world–will indeed give it an advantage not only over its distant rival Advanced Micro Devices in the PC world, but also give it a better chance of combating the persistent competitive threat from ARM chips that not only rule the world so far in smart phones and tablet, but which are starting to show up in mobile PC roadmaps.

Otellini said while demand for PCs among consumers in the US and Western Europe remained soft, demand was strong in emerging markets. Demand for servers–the big surprise of the day–and PCs at business were also strong. He also said that Intel recovered quickly from the design flaw discovered last month in the Sandy Bridge family of chips. He also said that Intel sustained some damage to sales and marketing offices in Japan, but “nothing major that would hinder our ability to service our customers.” Intel is seeing no disruptions in its supply chain as a result of the earthquake there.

He talked at length about Intel’s sales to cloud providers, calling it a “major driver” of the company’s growth. Sales in the Data Center Group grew 32 percent year on year and were led, Otellini said, by sales in China. Sales of Intel chips into storage systems were also strong, up 45 percent over last quarter and 65 percent year over year.

My liveblog from the conference call–joined just a few minutes late–is below.

2:40 pm: Joining a tad late after a technical glitch. Intel CEO Paul Otellini is talking.

Our views differ from the views of the analysts. The PC business is a global industry, it is 400 million units a year. Some channels, especially those in emerging markets, aren’t very visible to research firms. Basically he’s slamming IDC and Gartner for their pessimistic views. “Our projection for 2011 remain in the low double-digit range.”

“We see no reason for 2012 to be materially different from what we see in 2011.”

He says to expect an increase in Capex around the 22- and 14-nanometer manufacturing technology. “We see a need for more features [on chips],” he says.

CFO Stacy Smith is now talking.

The company fixed the Cougar Point problem–referring to the “design errors” found on a chipset accompanying the Sandy Bridge processor–and completely mitigated the revenue impact that was expected.

2:44 pm: First quarter significantly better than our expectations.

Sandy Bridge boosted average selling prices.

Acqusitions of McAfee and Infineon wireless business added about $500 million of the $2.5 billion in new revenue seen year over year.

The Cougar Point impact to gross margin was about 3 percentage points. That explains the 1 percent quarter on quarter drop on that important figure.

First quarter puts us on track to exceed financial goals for the year. Expect another year of double-digit revenue and earnings growth.

We are making some critical investments in process technology that will have a very rapid ROI or return on investment.

Q&A is getting started.

2:48 pm: Glenn Yeung from Citi: Help us understand the emerging markets and growth seen there.

Smith: Emerging markets are well over 50 percent of business. The dynamic is one of economics. Desirability of the technology is high and affordability is high. The price point of a PC is within 1-2 months of income. Penetration rates are so far pretty low.

Otellini: My comment on the channel strength for Sandy Bridge is emerging markets. Most of the machines sold with Sandy Bridge are white boxes in emerging markets. Those markets are still surging in terms of notebooks.

2:50 pm: Yeung with a follow-up. He’s asking about the investment in process technology. Otellini used the word “revolutionary” to describe the 22-nanometer leap that’s coming. He’s asking him to shed some light on what he means by that.

Smith: The Capex number is driven by a few things. Unit growth and ability to meet demand at 22-nanometer and 14-nanometer technology. It give us performance cost and power efficiency advantages. The biggest single chunk of the Capex is with the development fab for 14 nanometer, we’re going to make that fab bigger. That will allow us to bring more products to 14-nanometer technology and ramp it faster.

Otellini: On the process technology, only a teaser today. We’ll be disclosing that technology in early May. When you hear that announcement you’ll understand why that phrase is appropriate.

2:52 pm: Question about how we should think about seasonal trends in the second half of the year.

Smith: We closed McAfee and Infineon, and they added half a billion in Q1 and should add another half a billion in Q2. The second quarter is usually kind of flat compared to the first, which is in line with the pattern we’ve seen over the last five years. We’re not seeing anything that would cause it to be any different than before. Second half tends to be about 2-3 points higher than the first in terms of revenue.

Otellini says to expect to see a lot of tablets with Intel chips demonstrated at Computex. Google’s Android Honeycomb source code will ramp over the course of the year for a number of customers.

Losing Nokia, Otellini says, “took a lot of wind out of our sails” around landing Intel chips in smart phones. Intel has redeployed resources from that. “I would be very disappointed if you didn’t see Intel based phones 12 months from now.”

2:56 pm: Question from BMO. For the total PC market, what is the percent the third parties companies are missing?

Otellini: They are all over the map. Gartner is at 6 and IDC at 7 percent growth for the year, and we’re seeing low double-digit growth.

Q: What about Medfield, the phone processor. What are the metrics that are getting customers interested in it? Is it the fact that you’ve been able to make it competitive with ARM chips?

Otellini: Its both. The product is very good in terms of performance, especially in media processing. And the power envelope is right where you want it to be.

2:58 pm: Question from UBS: You called out storage as up 45 percent within the Data Center Group. We’ve seen this group grow faster than we thought. What’s the longer term growth?

Otellini: We recognize that this group has had phenomenal growth. Expect a deep dive on that at the analyst meeting and on the market for Xeon class chips today and tomorrow. (No mention of Itanium-based servers, by the way. -ed.) Traditional servers, we’re out-growing the market by a factor of 2-3x. We think a big piece of the market is high performance and cloud, and the conversion of other parts of the data center from proprietary to Intel-based designs, you see growth that is representative of all the growth of the Internet. We’re benefiting quite well.

UBS asks about the transition from 22 nanometers to 14 nanometers. Is there anything that is driving the speed now in terms of moving to 14 nanometers and what can you do at 14 versus 22 nanometers?

Smith: I’m going to punt for another few weeks. More to say around 22 nanometer and the secret sauce there, and it will carry into the 14 nanometer node.

What we’re realizing is that competitive advantage is becoming very important. We’re getting paid both for differentiating and in pricing. As we get out to 22 and 14, we’re going to bring capabilities to process technology more quickly than we have before. 22 nanometer will intercept with smart phones and notebooks more quickly, and we’ll get paid for performance and cost over the long term.

3:03 pm: Chris Danely of J.P. Morgan asking about factory utilization rates. He wonders if there may be shortages coming.

Smith: We’re running not too hot, and not too cold. Not anticipating shortages. We have responsibility to respond if demand is hotter, and if demand is less, we now have the tools to respond to both circumstances.

Danely: It seems as though perhaps some of the OEM customers have a more tempered forecast. What’s the difference?

Otellini: We won’t characterize specific customers. I think those who are more enterprise centric than those who are focused on consumer markets in the U.S. and Europe are seeing numbers closer to ours.

Smith: The elephant looks very different depending on what part you’re looking at. Mature markets look tough. Emerging markets look pretty good.

3:06 pm: Question about how much Sandy Bridge accounted as a percentage of sales.

Otellini: Doesn’t want to get into that level of granualarity. He calls it the fastest manufacturing ramp.

Smith: More than 50 percent of my CPU inventory is Sandy Bridge. That’s a good indication of the next few quarters.

3:07 pm: Smith says he’s seeing a little upward tick in component costs, including some impact from Japan.

Average selling prices have a very rich mix. Sandy Bridge ramped at a higher end of the price range, and the mix is going to come down a little.

3:09 pm: CLSA Securities with a question: What’s driving the demand? Is it Windows 7 on corporate PC?

Otellini: In the middle of last year we saw the market recover. The most recent data we have is that 75 percent of enterprise PCs are running WIn XP. If you think about a 3-4 year refresh cycle, we’re not even halfway through it. The combination of the Win 7 machines look good.

Question from Goldman Sachs: If I think about this third-party data issue. Is the Gartner and IDC data really off by 20 percent?

Smith: That misses how much inventory levels came down in the fourth quarter. We were worse off than seasonal. There was a significant bleeding off of inventory ahead of Sandy Bridge release. When we go off and do our looks across the channel we see inventory levels being healthy, and that says something about the health of the supply chain.

Q: That’s a little different than just the third-party data is wrong. Is it just really off?

Otellini: The comments I made were on third-party data year on year. I think our experience is that on an annual basis our numbers are closer than theirs. They correct over the course of the year to be aligned.

Smith: When I talk about Q1, you also can’t lose sight of the fact that Q1 was a 14-week quarter.

3:14 pm: Hans Mosesmann, Raymond James asks about the foundry strategy. What part of the incremental capex is part of that?

Smith: It’s not a driver of our capex. We’re interested in talking to some very specialized companies. We’re not building a broad-based foundry business, and it’s not part of our capex number.

Otellini again teases about a forthcoming announcement on process technology.

3:19 pm: Question from Credit Suisse: Asking about the weakness in consumer sales in the U.S. and Europe. Is it because of tablets?

Otellini: It’s a little bit of everything. Add one more thing. In 2009 and in the first half of 2010, consumer market for notebooks was strong contrary to GDP at the time. I think people bought a lot of machines and we’re just early in the cycle. A consumer refresh isn’t what you’d expect in a mature market right now. Clearly some tablet cannabilization is impacting that. But the bigger impact is macroecononomc.

Q: What inning are we in in the enterprise upgrade cycle?

Otellini: Top of the fourth, three on, no outs.

3:22 pm: Question about notebook and desktop mix going into Q2.

Smith: What we saw was an inventory burn in Q4 that led to units being slightly above seasonable. Q2 looks pretty seasonal.

Q: What do you expect of total wafer production in 2011? Is it consistent with PCs?

Smith: Wafers will grow faster than total available market as we move to the new process.

Craig Ellis, Caris and Co. asks: Are you expecting any change in the mature markets for PCs?

Otellini: I don’t think it has to happen. We don’t build it into our numbers.

Now a question about design wins on the tablet front, and what OS Intel will be stronger on versus others.

Otellini: I don’t have an update. We’ll do a number count on May 17. It’s 35 or so. The bulk of the units this year will be Android-based.

3:28 pm: That’s a wrap. We’ll see you back here for Q2 results on July 20.

For openers, the first quarter of the year is always the one that’s seasonally slower, as consumer PC sales slow down. And they are, as we saw in the latest estimates from Gartner and IDC last week. Of the $43.6 billion in sales Intel reported in 2010, nearly $25 billion or 57 percent of sales was derived from the sale of microprocessors into PCs. Add in another $6 billion and change for sales of chipsets and motherboards and Intel’s exposure to PCs jumps to 72 percent. By comparison, its Data Center segment, which sells chips used in servers, accounts for $8.7 billion or less than 20 percent of sales. If the PC market is slowing, then it’s hard for Intel not to slow down. However, its technology, its market strength versus rival Advanced Micro Devices, and its best-in-the world manufacturing efficiency allows it to roll with whatever punches the marketplace throws. Plus, Intel does a lot of business with Apple, which continues to boom.

For today’s report the focus will be less on Intel’s results–unless there’s a surprise–than on what Intel says about its guidance for the second quarter. The consensus view of analysts calls for Intel to report Q1 sales of $11.6 billion, which would be a year-on-year increase of 12.6 percent, and 46 cents in per-share profits versus 38 cents a year ago. The consensus view on Q2 calls for $11.87 billion in sales and a profit of 45 cents.

Here is where the analysts start parting company with each other. Hans Mosesmann of Raymond James passes for an Intel bull, seeing Q2 sales at $12 billion and profits at 49 cents. He argues that after accounting for Intel’s acquisitions of McAfee and the wireless chip unit of Infineon, if Intel issues guidance that is in line with seasonal exceptions (Q2 is usually a slow quarter for consumer PC sales as well), that would be a sign that most everything is on track.

There are other optimists out there, some more cautious than others. Take last week’s note from Doug Freedman at Gleacher and Co. He reminded clients that Intel had to fix a manufacturing glitch with its Sandy Bridge chip, one that caused some PC shipment schedules to slip. Though Intel made short work of the problem, Q1 ended “weaker than expected,” he says; he forecasts microprocessor unit sales to fall by 8 percent from Q4, which is in line with seasonal patterns. He expects Intel to report sales of $11.7 billion and a per share profit of 48 cents, but has a more positive outlook on Q2, with sales at $12.2 billion and profits at 49 cents.

Then there are the pessimists. Michael McConnell at Pacific Crest Securities says the consensus numbers are too high, and trimmed his own expectations. He’s calling for Intel to miss, with sales at $11.6 billion. Between the Sandy Bridge problem, the earthquake in Japan, and the acquisitions, there are “too many moving parts,” he says, for Intel to hit its numbers, let alone beat them. Despite relatively strong sales of chips into notebooks and a slight rise in the average price that PC makers pay for those chips, McConnell writes that Intel’s implied guidance for a decline of about 7 percent in chip sales is “likely to prove optimistic.”

Moreover, he sees Q2 estimates at too high as well. First of all, the quarter is at 13 weeks, one week shorter than Q1. Second, the ramp-up of PC makers turning out machines with the Sandy Bridge chip isn’t enough to offset other factors. He expects Intel sales in Q2 to hit $11.7 billion. Overall, he expects Intel to grow its core PC business by only 6 percent this year, well below Intel’s projection. We’ll see how it all shakes out later today. Check back this afternoon. I’ll be covering Intel’s results and the conference call.

In a repeat of a trend seen last quarter, both firms report that the market shrank in the first quarter of the year. This would constitute the first market contraction in six quarters, and the first since the onset of the recession. They differ, however, on the size of that contraction: IDC pegs it at 3.2 percent since the first quarter of 2010; Gartner at 1.1 percent.

To be fair, let’s remember that the first quarter of the year is always seasonably slow for PC purchases because two things tend to happen in the fourth quarter: Consumers splurge on gifts for family and frankly for themselves too, and take advantage of crazy deals offered by retailers desperate to clear out their inventory. On the business side, some CIOs take the opportunity to use up unspent funds in their budgets, and get employees starting off the new year with a fresh new machine at their desks. However, this tendency is just as often offset by the start of a new budget year. Whichever way you slice it, the first quarter is always weak on consumer sales though a bit stronger on the enterprise side.

So what happened? The iPad 2, for one thing. “With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs,” is how Mikako Kitagawa, principal analyst at Gartner, put it. “We’re investigating whether this trend is likely to have a long-term effect on the PC market.” Ya think?

Bob O’Donnell, IDC’s vice president for Clients and Displays, wasn’t quite as willing to blame the iPad: “Slower than expected commercial growth in the first quarter failed to offset the ongoing challenges in the consumer market,” he said in a statement. “While it’s tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles.”

Jay Chou, another IDC analyst put it much more succinctly: “‘Good-enough computing’ has become a firm reality.”

The picture gets no better when you look at regional results. IDC says shipments declined in the U.S. by 10 percent. Gartner pegged it at 6 percent. It was, Gartner noted, the third consecutive quarter for year-on-year declines in U.S. notebook sales. Shipments in Europe contracted too, and Japan, which was already expected to be a weak market this quarter, has other things on its mind since the devastating earthquake and tsunami. Asia was the only bright spot, where shipments increased by 5.6 percent in IDC’s forecast and 4.1 percent in Gartner’s. China, IDC noted, failed to reach double-digit growth, and consumers in India, Gartner says, were distracted by the Cricket World Cup. Okay, then.

So how do the numbers look? Since IDC’s forecast is the most dire, I’ll start there:

The worldwide demand for PCs was 80.6 million units. Hewlett-Packard sold 15.2 million; Dell, which just made it back to second place, shipped 10.3 million; Acer 9 million; Lenovo 8.2 million; Toshiba 4.8 million; while “others” clocked 33 million. All vendors except for Lenovo saw declines. The worst decline was Acer’s, whose shipments fell nearly 16 percent. (Now we know why its CEO Gianfranco Lanci lost his job.) Lenovo, on the other hand, saw its shipments improve by more than 16 percent.

Demand in the U.S. was 16.1 million. HP led with 4.3 million, Dell 3.7 million, Toshiba 1.6 million, Apple 1.4 million and Acer 1.3 million. Unnamed others sold 3.7 million. Acer saw its shipments fall by an alarming 42 percent. Apple and Toshiba posted gains of 9.6 and 10.4 percent respectively. HP and Dell both saw declines.

Now let’s look at Gartner’s numbers (remember that each firm tracks the market a little differently):

Gartner pegged the worldwide market at 84.2 million units. It says HP sold 14.8 million, Acer 10.9 million, Dell 10 million, Lenovo 8.2 million, Toshiba 4.8 million. (Clearly there’s a difference in how they see Acer and Lenovo’s performances.)

In the U.S., Gartner estimated the market at 16.1 million units. By its reckoning, HP sold 4.2 million, Dell 3.6 million, Acer 1.8 million, Toshiba 1.7 million, Apple 1.5 million, others 3.3 million.

And, all things being equal, that has been the case. Think back to the Apple II/Mac vs. DOS and Windows, for the most prominent example.

The thing is, all things haven’t been equal for at least the past decade. The iPod has thoroughly dominated the music player market, for example. And so far Apple has managed to maintain a significant share of the smartphone market and dominate the still-quite-nascent tablet market.

However, IDC predicts that Apple will be passed up in the coming years, not just by Android–a common prediction–but also by Microsoft’s Windows Phone 7.

In a new report, IDC projects that by 2015, Windows Phone 7 will power 20.9 percent of smartphones compared to just over 15 percent for Apple–roughly the same as the iPhone has now.

That report clearly sees a strong boost from Microsoft’s blockbuster deal with Nokia, which has the Finnish cell phone giant betting its smartphone future on Redmond. IDC forecasts that by 2015, Nokia’s Symbian operating system will account for just 0.2 percent of the market, compared with nearly 21 percent this year.

The market researcher also sees Android going from just under 40 percent share this year to more than 45 percent and Research In Motion dropping a bit, with 13.7 percent, down from 14.9 percent as of 2011.

In the short term, Android is clearly the big story, IDC said.

“Android is poised to take over as the leading smartphone operating system in 2011 after racing into the Number 2 position in 2010,” analyst Ramon Llamas said in a statement. “For the vendors who made Android the cornerstone of their smartphone strategies, 2010 was the coming-out party. This year will see a coronation party as these same vendors broaden and deepen their portfolios to reach more customers, particularly first-time smartphone users.”

Gartner now says that PC shipments will grow by 10.5 percent, down from a previous forecast of a much more robust 16 percent. It doesn’t get much better in 2012. Gartner now expects growth of 13.6 percent down from 14.8 percent previously.

There are two forces at work. First, demand for PCs is generally weaker in China, but there’s also an overall loss of interest among consumers for mobile PCs, Gartner analyst Ranjit Atwal explained in a statement. Sales of Mobile PCs have been growing like crazy for the last several years, and particularly as Wi-Fi has penetrated the home and office. But now that smart phones and tablets–especially the iPad–have brought the Internet everywhere a notebook can go plus lots of other places too, notebooks just aren’t as cool as they once were.

And there’s more bad news for notebook vendors: Not only are sales of new notebooks slowing, but consumers are expected to keep their existing notebooks for a longer period of time. In mature markets like the U.S. and Europe, notebook sales will be growing at an average of less than 10 percent over the next five years, down from 40 percent during the previous five years.

This isn’t the first time that Gartner has put out data showing how tablets are encroaching on the notebook market. In January, Gartner and its main rival IDC came out with fourth quarter sales data that was weaker than expected, in part because of iPad sales.

Tablets were supposed to be–or so the conventional wisdom went–entertainment and media consumption devices, not something you could do any serious work on. That’s clearly turning out not to be the case.

And while for the most part sales of notebooks into large corporations is secure–Gartner says it still expects double-digit growth in sales of professional notebooks–that segment is not without its own set of iPad-centric worries. As Apple said on its latest earnings conference call, 80 percent of Fortune 100 companies are putting iPads to work in their businesses, and Apple is actively pushing the iPad as a device that’s as useful at the office as at home.

Ok, the imagery is getting a little outlandish, but the flood of information that must be stored and analyzed is generating excitement, especially in Boston, where many in the tech world worry that they were at the beach while Silicon Valley and New York enjoyed the fruits of the Web 2.0 revolution.

Social networking companies such as Facebook and Twitter are generating terabytes of content, IDC analyst David Reinsel said during a keynote Thursday at the Massachusetts Technology Leadership Council’s Big Data Summit in Burlington, Mass. For example, three billion photos each month are uploaded to Facebook for a total of 3,600 terabytes per year. (A terabyte equals one trillion bytes.)

More important than content creation, he said, is content consumption, which involves vaster amounts of data: “Consumption is what’s driving big IT…Consumption is what drives traffic to your website, and that’s what gets you ad revenue…It demands analytics.

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If Apple COO Tim Cook were to portion it out, he’d divide it in two–iPad and Not-iPad– and it wouldn’t be an equitable division. Asked during Tuesday’s Apple earnings call for his thoughts on the horde of tablets unveiled at CES and now hurtling their way to market, Cook summarily dismissed them all.

“If you look at what’s shipping today, there’s really not much out there,” he said. “Generally speaking, there’s two kind of groups that are on the market today. The ones that are using Windows-based operating system, are generally fairly big and heavy and expensive, have very weak battery life, and require a keyboard or a stylus as an input device. And from our point of view and what we’ve seen, consumers aren’t really interested in them.

Then you have the Android tablets which are running an operating system that wasn’t really designed for a tablet. Google has said this, and so this is not just an Apple view by any means. And so basically, you wind up with a sort of a scaled-up smartphone, which is a bizarre product in our view. So frankly speaking, if a customer does a side-by-side comparison of one of these with an iPad it’s hard for me to understand why they wouldn’t select the iPad.…There are no rival tablets in the market right now that we’re concerned about. The next-generation Android tablets aren’t shipping yet, and so today, they’re vapor. We’ll assess them as they come out.”

And continue to innovate in the market.

Said Cook, “We’re not sitting still. And we have a huge first-mover advantage. And we have an incredible user experience from iTunes to the App Store, and an enormous number of apps and a huge ecosystem. We’re very, very confident with entering into a fight with anyone.”

And with an 87.4 percent share of the worldwide “media” tablet market, according to IDC, who wouldn’t be?

[Image credit: Gizmodo commenter Ahubbuch]

Intel said in its statement that PC Client Group revenue was flat. Other groups were stronger: Data Center Group revenue was up 35 percent, and Intel’s architecture group saw sales surge by 27 percent. Intel Atom microprocessor group, its low-power chip aimed at tablets and smartphones, saw revenue grow 8 percent. This despite word from Microsoft last week at the Consumer Electronics Show that it will develop a version of Windows for ARM-based chips from Texas Instruments, Qualcomm and Nvidia aimed at tablets and smartphones. Microsoft’s move calls into question Intel’s hopes to land design wins for the Atom low-power chip that it hopes to sell to manufacturers of smartphones and tablets, but which has yet to show any significant results.

This report of flat revenues for PCs comes a day after Gartner and IDC both said they saw weaker-than-expected sales of PCs in the fourth quarter of 2010.

For its 2011 first-quarter outlook, Intel said it expects revenue of $11.5 billion, plus or minus $400 million, and a gross margin of 64 percent, plus or minus a couple of points. For the full year, it expects gross margins to be 65 percent, plus or minus a few points. More after I go through the numbers and attend the conference call, which starts in about an hour.