On Friday afternoon, Dell gave an interview to the trade publication CRN (which used to be called Computer Reseller News) crowing about his company’s apparent share gains in the market for servers.

What got him excited was preliminary data (as in, not yet published) from the market research firm IDC, which followed similar findings from another research firm, Gartner (again, not yet published), that supposedly shows healthy gains for Dell and big losses at HP.

According to the numbers Dell shared with CRN, IDC found Dell — No. 2 in the worldwide server market — to have grown its share of the server market to nearly 28 percent, while HP’s fell from north of 35 percent a year to slightly below 31 percent. “HP is losing share at a staggering rate, and they are losing it to Dell,” Dell proclaimed.

HP, which had led the segment for the better part of two decades, didn’t respond to Dell’s claims. But it did respond a day earlier, after Dell enterprise chief Marius Haas gave a similar interview — again to CRN — claiming similar data from Gartner. “One quarter does not a trend make. … 17 years is a trend,” retorted Jim Ganthier, a marketing exec in HP’s server group.

Dell hasn’t bothered to wait for either research firm to finalize and publish their data, and I’ve asked both firms to comment on that. I’m no expert in the processes these firms follow, but from what I understand, execs at companies like Dell, HP and IBM see these “preliminary” figures before they get published in order to give the company a chance to dispute them if they vary from what’s really going on. When Gartner and IDC get around to publishing press releases, expect Dell to make a second push on this topic, and maybe give more interviews.

Dell naturally has an urge to pounce on HP and score a few punches. HP has been using the occasion of Dell’s $24.4 billion leveraged-buyout plan to create uncertainty among Dell customers. Way back on Feb. 5, when the buyout plan was first floated, HP issued a statement saying, “Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.”

With IBM said to be in on-again, off-again talks with China’s Lenovo to sell its industry-standard server business, and Dell going private, HP is arguing that it is the one major vendor not engaged in a significant corporate shake-up, and thus able to focus most on its customers’ needs. Indeed, HP’s Dave Donatelli led a major Webcast with HP partners last week, touting that very message.

Neither company’s shares are really responding to any of the trash-talking today. HP shares are up slightly this morning to $20.76 a share, while Dell shares are also up a little to $13.35, or about 30 cents below the $13.65 buyout price that Michael Dell and private-equity firm Silver Lake have offered to take the company private.

At issue is IBM’s business selling so-called x86 servers, the low-price workhorses of many corporate and cloud-based data centers. An exact sale price isn’t known, but one of the people said the deal could be worth billions of dollars.

Read the rest of this post on the original site »

It’s now this much closer to your coffee table — or, replacing your coffee table. Lenovo today announced the Horizon is available for preorder and is expected to ship in late June. Prices start around $1,700, right in line with what Lenovo indicated in January.

In case you missed the news around CES time, this is a 27-inch, all-in-one “desktop” that can be propped up or laid flat on the table, and is geared toward game playing in addition to regular old computer activities. And in case its size didn’t give it away, the Horizon is meant to be used in the home, not on, say, an airplane tray, although Lenovo points out that it includes a built-in battery so it can be easily moved around the house.

The multi-finger touchscreen PC is running Windows 8 and comes with an Intel Core i7 chip and Nvidia GeForce graphics capabilities. Lenovo says the customized games include Raiding Company, Draw Race 2 and King of the Opera from Ubisoft, as well as Monopoly from Electronic Arts.

I played a quick game of air hockey on the device back in January, and I’ll admit that it was pretty fun. And it’s easy to see why some families might like a tabletop PC for game playing and picture browsing.

But this is a behemoth of a device, and it’s not alone in the big-screen market. There’s also the Sony Vaio Tap 20 and the Toshiba Excite 13 — a much smaller tablet, but one that is, again, meant for the home.

And as we know, PCs are hurting a bit these days. It’s likely going to take more than giant screens to fill the giant gap in the market.

Worldwide PC shipments came in at 76.3 million units in the first quarter of the year, amounting to a decline of nearly 14 percent. That’s much worse than the firm’s forecast, which called for a decline of 7.7 percent.

The findings also amount to the fourth consecutive quarter in which sales declined compared to the previous quarter. Neither new versions of Windows from Microsoft nor faster chips from Intel spurred new interest among consumers or businesses. Meanwhile, mini-notebook sales hurt the low end of the market.

Acer experienced the largest sales drop in the period, showing a contraction of shipments by nearly 32 percent year on year. Hewlett-Packard, the world’s market leader, saw its shipments fall by nearly 24 percent. Asus, ranked No. 5, saw shipments fall by more than 19 percent. Dell’s shipments fell by nearly 11 percent. The only vendor that didn’t see a contraction in shipments was China’s Lenovo, where shipments were flat year on year.

Even Apple, which ranks among “other” in IDC’s global rankings, saw declines in its leading market, North America, where sales of Macs dropped by 7.5 percent. At this time, however, it has be said that much of the blame for the damage being done to the PC businesses of all the companies around the world can be laid at Apple’s feet: Sales of the iPad, the world’s leading tablet brand, have a lot to do with the collapse in PC sales. While Apple hasn’t yet released sales results for the first calendar quarter of 2013 — its first fiscal quarter is the fourth quarter on the calendar — when it last reported iPad sales, they had swelled by more than 48 percent to nearly 23 million units from 15 million and change the prior year.

Research firm Gartner also chimed in with its findings: They’re bad, too. It was the first quarter in which shipments fell below 80 million units since 2009. By Gartner’s reckoning, Europe led the declines geographically.

Here’s Gartner’s look at the top five:

HP fell nearly 2 percent to $21.91 in after-hours trading. Dell shares ticked up by a penny after hours. Apple shares fell 40 cents. Intel shares fell 36 cents, or more than 1.6 percent. Microsoft fell by more than 1 percent.

As you might expect, there’s good news for any company in the business of building tablets and mobile phones, and lousy news for those building PCs. Worldwide sales of “devices,” a category that combines PCs, tablets, mobile phones and ultramobiles (tiny notebooks, presumably), will approach a combined three billion units by 2017, representing growth of 34 percent from 2012.

Growth will be led by tablets, which are expected to grow by 70 percent, to 467 million units. Phones will break the two-billion-unit mark in 2017, Gartner says. Traditional PCs, on the other hand, will decline by fewer than 300 million units by that year. Obviously, this is bad news for the PC players, including Hewlett-Packard and Dell, who are both struggling to get their PC divisions back on track, while at the same time trying to kick-start mobile device plays. (Click the chart below to make it bigger.)

Another nugget in the Gartner report: Google’s Android devices will dominate, accounting for nearly a billion and a half unit sales by 2017. Its nearest competition will be Microsoft’s Windows, and Apple’s combined portfolio of Mac and iOS devices, which will split about a billion devices between them.

According to a pretty detailed report from Reuters, a provision of the government’s latest spending law requires three federal agencies — NASA and the departments of Justice and Commerce — to buy gear only after performing a cyber-security risk assessment carried out in consultation with law-enforcement agencies. Part of the assessment includes consideration of the fact that the equipment or its components may have been manufactured in China.

It’s the latest expression of official hand-wringing about China, and the fact that that country is proving not only to be a permanent and overpowering fixture in the world of tech manufacturing is complicated by the fact that it is also proving to be an adept and aggressive player in the ongoing digital cold war between the countries. It’s also a shot across the bow of China’s large tech equipment providers, like Lenovo and Huawei.

Last month, a U.S.-based research firm claimed to have traced numerous cyber attacks to a specific unit of China’s People’s Liberation Army, one operating within a particular building in Shanghai.

Before that, suspicions about China and its intentions, capabilities and actions in the cyber arena led to a White House-ordered review of claims of spying by the Chinese telecom firm Huawei. This followed a report by the House Intelligence Committee saying that Huawei and another Chinese telecom-equipment concern, ZTE, pose sufficient security risks that government agencies should avoid buying their equipment. This amendment, inserted into a continuing resolution intended to keep the government running through the end of September, essentially puts those worries into force with regard to those three agencies.

But, as I argued at the time, at least some of the federal worry has as much to do with what China might do as it does with what the U.S. is known to have already done. The joint U.S.-Israeli cyber campaigns against Iran using malware weapons like Stuxnet, Gauss and Flame say a great deal about the potential real-world damage that a cyber weapon might do. Stuxnet, you’ll recall, is said to have caused some of Iran’s nuclear centrifuges to spin out of control and explode in an attempt to set back that country’s nuclear research efforts.

Huawei in particular has had a difficult time proving that its links to China’s military establishment are sufficiently severed, and that in the event of open conflict its gear wouldn’t be turned into a surveillance and espionage tool against the U.S. Though, as Reuters notes in its story, Huawei doesn’t believe the bill applies to it. We’ll see.

Image copyright Oleksiy Mark

This is rocking the industry. Dell is being taken private — closing a curtain to start the dirty work of restructuring. HP, Microsoft and Intel are all trading well off their peaks when the Dow has recently hit an all-time high. IBM looks like the sole winner, jettisoning its PC business years ago to China-based Lenovo. Well, it’s a good thing all of these companies also play a big part in the $55 billion server market¹ — that’s not going away anytime soon, right? The worst days are over, and hopefully their collective market caps will recover? Not so fast …

Modern Web services, such as Google, Apple and Facebook, are pushing the limits of data center scaling to unprecedented levels as they deal with an exponential growth in user traffic. They are playing a massive game of Tetris as they grapple with deploying and operating data centers with tens of thousands of servers versus hundreds. They are all on the bleeding edge of trying to contain costs while cramming as much capacity into a physical building as possible. The result is a complete architectural rethink of data center designs, and the incumbent server vendors are struggling to stay relevant in this new reality.

The new data center designs use only commodity “vanity-free” components procured directly from the original design manufacturers (ODM) — the current incumbent’s suppliers. For easy serviceability, components are Velcro-ed together, versus mounted in a box. All bells and whistles are stripped off, and the hardware is purpose-built for a specific application and therefore carefully tuned. As compute-utilization rates skyrocket from virtualization and parallel processing, the CPUs are running harder and hotter, and therefore the new expense bottleneck is all about power and cooling.

Take, for instance, Facebook’s Open Compute initiative, which lays out a blueprint for an energy-efficient hyper-scale data center that is 38 percent more energy efficient and 24 percent less expensive than current data centers. Locating in cold climates and next to super-cheap hydro power has become de rigueur. Power distribution, cooling and building layouts have been redesigned from the ground up to maximize mechanical performance and electrical efficiency of the data center. And unfortunately for Intel, the relentless march of Moore’s law no longer affords them differentiation, as customer needs have shifted from performance to power efficiency, an area where they lag rival ARM processors.

The evolution of the modern hyper-scale data center reflects the hyper-scale needs of the applications that run on them. Modern Web 2.0 (and increasingly SaaS) applications need to handle thousands of user requests per second, processing terabytes of information in real time across hundreds of customers. They are by necessity massively parallel, and work in concert to service a user request. This is the modern equivalent of a giant supercomputer — except cobbled together from commodity server components and interconnect fabrics. It’s a profound software and hardware architectural shift that is taking us from a world where data centers consisted of a small number of independent high-performance branded servers to a brave new world where the giant data center building is the server.

Meanwhile, on the enterprise front, the corporate data center is becoming increasingly sedate as on-prem applications give way to their SaaS counterparts. The new data center architectures, born of necessity from the giant Web service providers, have the potential to massively drive down the cost of providing software as a service, the new winner in enterprise applications. As such, the cloud service providers (CSPs), such as Amazon and Rackspace, are adopting these “scale-out” architectures.

So, fast-forward: SaaS will win the enterprise market. Face it — it’s just so much better, and now infinitely cheaper than any of the alternatives. And modern SaaS applications will be delivered through hyper-scale data centers that do not have branded servers from Dell, HP or IBM, but rather highly optimized, scale-out white-box servers made by Asian ODMs. In addition, the operators of these massive data centers will be experts in servicing their creations — monitoring, fixing and rapidly swapping out their expected-to-fail components. Therefore, there will no longer be a need for the recurring revenue, high-margin service and maintenance contracts that have been a mainstay of the OEM server industry.

I wonder if Lenovo is in the market for a server business, too.

________________________

I would like to thank my partner, Ramu Arunachalam, for his research, analysis and material contributions to this blog.

Scott Weiss is a partner at Andreessen Horowitz and the former co-founder and CEO of IronPort Systems, which was acquired by Cisco in 2007. Follow him on his blog or on Twitter.

Slower-than-expected shipments in China brought on in part by the timing of the Chinese New Year holiday, plus government budget reductions, cut into sales in January and February, the firm said. The market is now expected to decline by 7.7 percent, which is 2 percentage points worse than previously expected. And it could get still worse. The firm won’t rule out a further drop into a double-digit percentage decline before a possible recovery mid-year.

The latest assessment comes only a few days after IDC released figures showing unabated growth in the market for tablets, which have been cutting into PC sales for years now.

Also, IDC’s dour outlook on PCs doesn’t mention the sales of Apple’s Macs. As it happens, another research firm, NPD, today put out its latest look at Mac sales, and they’re up by 14 percent year on year for January and February. One reason, said analyst Gene Munster of PiperJaffray in a research note to clients today, is that Apple has firmed up its supply of iMacs. Tight supplies knocked shipments down by about 700,000 units in December, Munster said. Even so, Munster expects Mac sales overall to trend down by about 5 percent in the first quarter.

But is that a permanent state of affairs? There is at least one analyst who has decided that it isn’t. Patrick Moorhead — a former executive with chipmaker Advanced Micro Devices who now runs his own research shop called Moor Insights and Strategy — has published a new white paper arguing that if ever there was a moment when the iPad’s dominance in the enterprise might face a challenge, it’s now.

Moorhead bases his argument — one that is admittedly hard to swallow, given the current state of play — on a few comparisons of the iPad to the Dell Latitude 10, Hewlett-Packard’s ElitePad 900, and the Lenovo ThinkPad Tablet 2, all of which run Windows 8. (Hold on, Apple fanboys, you’re going to hate this.)

First, the three Windows tablets have user-replaceable batteries, and can support extended-life batteries, giving them a longer useful battery life versus the iPad’s 10 hours.

Second, they’re all more readily expandable than the iPad, boasting more ports and connectors and memory-card slots.

Finally — and this is probably the most important factor — they all natively support the many management tools and security services that come with Windows machines in the enterprise, things like credential managers, VPN clients, BitLocker, Active Directory and scads of other things that IT managers are already used to dealing with in their Windows-centric offices.

“Once iPads are secured and deployed, they need to be managed,” Moorhead writes. “For PCs, most enterprises have already adopted Microsoft’s SCCM … Windows InTune or another tool they’ve been using for years. Anything additional for use with iPads adds investigation and research time, test, training and deployment resources.”

Do CIOs and IT managers like it when new things support their existing infrastructure? Sure they do. But their opinions are less relevant these days.

Don’t forget the entire BYOD (Bring Your Own Device) trend that has rocked the enterprise in the last three years, and seems almost entirely created for the iPad. Recent research has found that at least 81 percent of consumers use their own devices at work. It’s a trend that established itself from the earliest days of the iPad: The first anecdotes about corporate iPad concerned CEOs who bought them and asked their IT managers to make them work with their work email accounts.

For Dell, HP and Lenovo to make a dent in the iPad’s dominance of the enterprise, they would have to reverse that trend. Not easy, that, though they will try. For companies seeking to tamp down the BYOD tide, these Windows tablets may make sense. Maybe. Maybe not.

Icahn stepped into the fray last week, announcing that he had acquired a stake amounting to about 6 percent of Dell shares.

Dell shares rose by 1 percent in premarket trading to $14.30 a share as of a few minutes before 9 am ET.

In a letter to Dell’s board, which was made public in a filing with the U.S. Securities and Exchange Commission, Icahn had argued that the company’s plan to sell itself to founder and CEO Michael Dell and private equity firm Silver Lake Management at $13.65 a share “significantly undervalues” the company.

Icahn proposed instead that Dell pay shareholders a special dividend of $9 per share that would be paid for by a combination of cash on hand and additional debt. The letter came as Evercore Partners, a Dell adviser, has been running a “go shop” process, under which it is seeking alternative offers. Dell’s rivals Hewlett-Packard and Lenovo have both taken advantage of that process in order to get a look at Dell’s books.

Dell’s board of directors confirmed what CNBC first reported yesterday in a filing with the U.S. Securities and Exchange Commission that contains the letter that Icahn sent, and which you can read below.

In the letter, Icahn argues that the proposal to buy shareholders out at a price of $13.65 a share “substantially undervalues” the company. Instead, Icahn proposes that in the event that the proxy vote to go private fails — and there’s a good chance that it will — the company would pay shareholders a special dividend of $9 a share, to be financed by a combination of existing cash on hand, receivables and debt.

If the board refuses the proposal, Icahn intends to fight: Submit a new slate of directors who would be committed to implementing the special dividend. Icahn would then provide as much as $5.25 billion in bridge loans, should they be needed.

Icahn also threatens “years of litigation” in the event the go-private deal does go through.

In response, the special committee of Dell’s board handling the go-private business said in the filing that it is running a “go-shop” process to seek out third parties who might make a better offer. Yesterday, Bloomberg News reported that Hewlett-Packard, Lenovo and private equity fund Blackstone are using that go-shop process to kick Dell’s tires and get a look at Dell’s books, but that an alternative bid is unlikely from them.

Here’s what Dell’s special committee had to say about Icahn’s approach:

“The Special Committee is currently conducting a robust ‘go-shop’ process to determine if there are third parties interested in proposing alternative transactions that could be superior for Dell’s public shareholders to the going-private transaction — and we welcome Carl Icahn and all other interested parties to participate in that process. Evercore Partners, an independent financial advisor to the Special Committee, is actively soliciting third parties to determine their potential interest and is incentivized to find a superior proposal if one exists.

The process will run through March 22, 2013, after which negotiations will continue if a potentially superior proposal emerges. Our goal is to secure the best result for Dell’s public shareholders — whether that is the announced transaction or an alternative.”

And here’s Icahn’s letter:

Icahn Enterprises L.P.
March 5, 2013
Board of Directors
Dell Inc.
One Dell Way
Round Rock, Texas 78682

Attn.: Laurence P. Tu
Senior Vice President, General Counsel and Secretary
Re: Agreement and Plan of Merger, dated as of February 5, 2013
(the “Going Private Transaction”).

Dear Board Members:

We are substantial holders of Dell Inc. shares. Having reviewed the Going Private Transaction, we believe that it is not in the best interests of Dell shareholders and substantially undervalues the company.

Rather than engage in the Going Private Transaction, we propose that Dell announce that in the event that the Going Private Transaction is voted down by shareholders, Dell will immediately declare and pay a special dividend of $9 per share comprised of proceeds from the following sources: (1) $4.26 per share, or $7.4 Billion, from available cash as proposed in the Going Private Transaction, (2) $1.73 per share, or $3 Billion, from factoring existing commercial and consumer receivables as proposed in the Going Private Transaction, and (3) $4.26, or $5.25 Billion in new debt.

We believe that such a transaction is superior to the Going Private Transaction because we value the proforma “stub” at $13.81 per share using a discounted cash flow valuation methodology based on a consensus of analyst forecasts. The “stub” value of $13.81 combined with our proposed $9.00 special dividend gives Dell shareholders a total value of $22.81 per share, representing a 67% premium to the $13.65 per share price proposed in the Going Private Transaction. We have spent a great deal of time and effort in determining the $22.81 per share value and would be pleased to meet with you to share our analysis and to understand why you disagree, if you do.

We hope that this Board will agree to adopt our proposal by publicly announcing that the Board is committed to implement our proposal if the Going Private Transaction is voted down by Dell shareholders. This would avoid a proxy fight.

However, if this Board will not promise to implement our proposal in the event that the Dell shareholders vote down the Going Private Transaction, then we request that the Board announce that it will combine the vote on the Going Private Transaction with an annual meeting to elect a new board of directors. We then intend to run a slate of directors that, if elected, will implement our proposal for a leveraged recapitalization and $9 per share dividend at Dell, as set forth above. In that way shareholders will have a real choice between the Going Private Transaction and our proposal. To assure shareholders of the availability of sufficient funds for the prompt payment of the dividend, if our slate of directors is elected, Icahn Enterprises would provide a $2 billion bridge loan and I would personally provide a $3.25 billion bridge loan to Dell, each on commercially reasonable terms, if that bridge financing is necessary.

Like the “go shop” period provided in the Going Private Transaction, your fiduciary duties as directors require you to call the annual meeting as contemplated above in order to provide shareholders with a true alternative to the Going Private Transaction. As you know, last year’s annual meeting was held on July 13, 2012 (and indeed for the past 20 years Dell’s annual meetings have been held in this time frame) and so it would be appropriate to hold the 2013 annual meeting together with the meeting for the Going Private Transaction, which you have disclosed will be held in June or early July.

If you fail to agree promptly to combine the vote on the Going Private Transaction with the vote on the annual meeting, we anticipate years of litigation will follow challenging the transaction and the actions of those directors that participated in it. The Going Private Transaction is a related party transaction with the largest shareholder of the company and advantaging existing management as well, and as such it will be subject to intense judicial review and potential challenges by shareholders and strike suitors. But you have the opportunity to avoid this situation by following the fair and reasonable path set forth in this letter.

Our proposal provides Dell shareholders with substantial cash of $9 per share and the ability to continue as owners of Dell, a stock that we expect to be worth approximately $13.81 per share following the dividend. We believe, as apparently does Michael Dell and his partner Silver Lake, that the future of Dell is bright. We see no reason that the future value of Dell should not accrue to ALL the existing Dell shareholders — not just Michael Dell.

As mentioned in today’s phone call, we look forward to hearing from you tomorrow to discuss this matter without the need for us to bring this to the public arena.

Very truly yours,
Icahn Enterprises L.P.
By: Carl C. Icahn
Chairman of the Board

In a research note issued this week, IDC released its metrics for the 2012 “smart connected devices” market, which it defines as desktop and portable PCs, tablets and smartphones. And they show that Samsung’s shipments of those devices exceeded Apple’s, thanks to an 86 percent increase in year-over-year growth. (Caveat: Samsung reports device shipments; Apple reports device sales. There’s a big difference.)

Samsung shipped 250 million “smart connected devices” in 2012, up from 114 million in the year prior, to claim a 20.8 percent share of the market. Meanwhile, Apple shipped 218.7 million devices, up from 151.5 million in 2011, to capture an 18 percent share.

The engine of Samsung’s growth? Spiking smartphone shipments, according to IDC. Samsung shipped more than anyone in 2012. And while Apple led the market in tablet shipments, sales weren’t high enough to match and surpass the gains Samsung charted.

Same old story, right? The two juggernauts slugging it out in a battle for “smart connected devices” profits. Absolutely. But what’s interesting is just how vast Samsung’s and Apple’s lead in this market is. Remember, IDC defines “connected devices” as desktop and portable PCs, tablets and smartphones. And there are other big players in that space. Companies like Hewlett-Packard that once owned the personal computer market. But the market share of these incumbents is far surpassed by that of Samsung and Apple.

Lenovo, for example, ranked third after Apple, but with a market share of just 6.5 percent. Hewlett-Packard ranked fourth with 4.8 percent, down 8.5 percent year over year. And Dell brought up the rear, placing fifth with a 3.2 percent share. Piddling showings, all three, and evidence of a common strategic blunder: A long bet on traditional PCs, when rivals like Apple and Samsung were shifting their product emphasis to smartphones and tablets.

Lenovo said Wednesday that Mr. Yang would be an “observer” of the company’s board, but wouldn’t have any voting rights or exercise any other rights of a director. His primary role will be to attend board meetings and provide his views, the company said.

Read the rest of this post on the original site »

Common knowledge has it that PC shipments declined in the fourth quarter of 2012, undermined by a weak economy and an increase in tablet usage. But, if you include tablet shipments in this assessment, you get a drastically different result.

Research outfit Canalys did just that and found that worldwide PC shipments during the fourth quarter increased 12 percent year over year. And the PC market leader for that period? Apple. The company shipped 27.0 million PCs (23 million iPads and 4 million Macs), capturing more than 20 percent of the PC market. Meanwhile, Hewlett-Packard and Lenovo claimed second and third place, with 15 million and 14.8 million PCs shipped, respectively. That’s about an 11 percent share.

Regardless of where you stand in the is-the-tablet-a-PC-or-isn’t-it argument, these are pretty interesting numbers. They speak to the shift we’re seeing in personal computing right now, and looking them over you can’t help but recall the “post-PC” credo with which Steve Jobs launched the iPad.

“A lot of folks in this tablet market are rushing in and they’re looking at this as the next PC. The hardware and the software are built by different companies. And they’re talking about speeds and feeds just like they did with PCs.

“But our experience and every bone in our body says that that’s not the right approach. That these are post-PC devices that need to be even easier to use than a PC. That need to be even more intuitive than a PC. And where the software and the hardware and the applications need to intertwine in an even more seamless way than they do on a PC.

“And we think we’re on the right track with this. We think we have the right architecture not just in silicon, but in the organization to build these kinds of products. And so I think we stand a pretty good chance of being pretty competitive in this market.”

For the quarter ended in December, Lenovo’s profit rose to $204.87 million from $153.46 million a year earlier, beating the forecast of $178.38 million by 11 analysts polled by Thomson Reuters.

Read the rest of this post on the original site »

Among the possibilities would be struggling Canadian phone maker Research In Motion, which has been considering a number of strategic options even as it works to launch its all-new BlackBerry 10 operating system this year.

“We are looking at all opportunities — RIM and many others,” Lenovo Chief Financial Officer Wong Wai Ming said, speaking to Bloomberg at the World Economic Forum in Davos, Switzerland. “We’ll have no hesitation if the right opportunity comes along that could benefit us and shareholders.”

Bloomberg said Wong told it that the Chinese electronics giant has spoken to RIM and its bankers about various possibilities but declined to say when it might decide whether to make a bid for the BlackBerry maker.

Lenovo already makes its own line of phones and tablets using software from Microsoft and Google.

The ThinkPad X131e, which has already been sold to schools as a Windows-based laptop, is now running the Google Chrome OS, and supports Google Apps designed for education.

Lenovo’s announcement is light on specifics. I’m willing to bet some K-12 kids know their processors in this day and age, but for now, Lenovo is simply stating that the 11.6-inch Chromebook has an “Intel processor,” along with an anti-glare LED screen, USB and HDMI ports. It weighs “under four pounds.”

The $429 ThinkPad X131e isn’t being sold directly to consumers, but will be sold at volume pricing to K-12 education institutions. It will be available Feb. 26.

Since the launch of Chromebooks, Google has extolled the benefits of the lightweight, low-cost laptops in classrooms. For Lenovo, which has a long-standing relationship with the Microsoft Windows OS, it’s an interesting move. It’s not a giant leap into the Chromebook market, by any means, but Lenovo is certainly dipping its toe into new territory with the Chromebook OS for the X131e shell.

Despite all the hype, PC sales during the year’s most important buying season remained as sluggish as ever. In fact, for the first time in a half-decade, PC sales declined in the fourth quarter. Vendor rankings remained the same, with Hewlett-Packard ranked first in PC shipments, followed by Lenovo, Dell and Acer.

PC makers sold 89.8 million units globally in the fourth quarter of 2012, down 6.4 percent from the same quarter in 2011, according to new figures from IDC. Sales for the year also slipped, falling from about 364 million in 2011 to 352 million in 2012. That’s a 3.2 percent drop.

Why the decline? A number of reasons: Continuing economic woes obviously had some effect on sales, as did consumers’ increasing fascination with tablets and smartphones. But IDC also thinks PC makers blew it by not releasing compelling new hardware to take advantage of Windows 8’s new features.

“Consumers expected all sorts of cool PCs with tablet- and touch-optimized capabilities,” IDC research director David Daoud explained. “Instead, they mostly saw traditional PCs that feature a new OS (Windows 8) optimized for touch and tablet, with applications and hardware that are not yet able to fully utilize these capabilities.”

In other words, it was going to be a tough quarter to begin with. But PC makers didn’t do themselves any favors by failing to capitalize on the benefits of Windows 8, or at least explaining them well to consumers.

And that will likely remain a challenge in the year ahead. For 2013, IDC forecasts a meager 2.8 percent growth in PC sales.

The Chinese computer maker, which is known for its ThinkPad personal computers, is working its way toward the American consumer market with what it says is a thoughtful, if slow, approach that will culminate in the company’s first high-end PCs for U.S. buyers later this year.

“We have the best products in commercial space with the Think brand,” said Yang Yuanqing, Lenovo’s chief executive, in an interview at the Consumer Electronics Show here. He plans to rely on the popularity of his company’s well-regarded business computers to start selling the high-end PCs.

Read the rest of this post on the original site »

That has caused many shareholders and analysts to reconsider the notion that HP might fare better broken up into pieces than as a single company. In a research note to clients today, Toni Sacconaghi considers HP on a sum-of-parts basis and concludes that the company could be worth as much as $29 a share, which amounts to a premium of more than 88 percent from its closing share price of $15.39 on Tuesday.

How does he get to that valuation? First, the PC business: Based on the assumption that the PC business is worth a valuation of 0.2 times sales in HP’s latest 12-month period — valuations at which IBM, Gateway and eMachines all sold their PC businesses to acquirers, and units that all had lower profit margins than HP does today — he concludes that HP’s PC business is worth about $7.1 billion, or about $3.70 a share.

For printing, he compared HP’s business to that of Lexmark and Xerox and, assuming it should trade at a 15 percent discount to those two — HP has a bigger consumer printing business that faces bigger challenges, Sacconaghi argues — he valued that business at $16.3 billion, or about $8.30 a share. Add another $15.50 a share for enterprise hardware and support, plus $5 for enterprise services, then take back about $3.70 a share for some accounting adjustments, and you end up with about $29 a share.

Yet even if, on this basis, HP is arguably worth more in pieces than it is as a whole, Sacconaghi writes that a breakup is still unlikely in the immediate future. Also, CEO Meg Whitman has said repeatedly that she sees the company staying together. Even so, it’s hard not to wonder about her commitment to that, after some new language about the “potential disposition of assets” that aren’t meeting targets emerged in HP’s latest 10-K filing with the U.S. Securities and Exchange Commission.

Whatever Whitman’s thinking on the subject, Sacconaghi says she has time. “We believe that Meg Whitman and current management have 12-24 months to attempt to effect a turnaround at HP before management, the Board, or activist investors might look to break up the company to unlock shareholder value.”

If it does happen, he sees two scenarios. One is to sell the PC business to Lenovo or a private equity group, and then spin out the printer business to “harvest cash,” while retaining the enterprise and services businesses. The other option: Spin them both out.

And if it were to happen, it wouldn’t be easy, Sacconaghi says: “A breakup of any kind requires substantial effort and can have material potential costs along two dimensions: (1) spinning out businesses could lead to dis-synergies, as corporate functions need to be duplicated across two companies and scale is reduced. (2) disruption from a sale/spin-off could negatively affect performance (and therefore value) in the near term.”

Or, as Neil Sedaka so famously sang a half century ago, “Breaking Up Is Hard to Do.”

The Chinese like emerging markets because, for a change, they don’t have to start way behind established American companies. By moving into Brazil aggressively, Chinese PC maker Lenovo Group Ltd. and Internet-search company Baidu Inc. hope to gain an edge over companies like Hewlett-Packard Co. and Google Inc. In addition, some U.S. companies that are leaders at home and in Europe have a smaller footprint here because of Brazil’s long history of protectionism and red tape and its high cost of labor, particularly compared with Asia.

Read the rest of this post on the original site »

Those are not unreasonable excuses. But the frequency with which they’re being issued is, and that makes it tough to trust claims that HTC is emerging from a tailspin that’s well over a year long now. Certainly no one takes it as writ when CEO Peter Chou says, “The worst for HTC has probably passed; 2013 will not be too bad.”

Particularly after Monday, when HTC reported a net profit that declined for the fifth consecutive quarter, dropping to its lowest level since 2006. Add to that a new IDC study that says that HTC’s global smartphone market share slipped to 4 percent in the third quarter of 2012 from 10.3 percent the year prior, and Chou’s reassurances begin to sound pretty empty. HTC is in a tough spot these days. Quarter by quarter, it’s slipping deeper into the mud, and its days of being the largest Android handset provider in the U.S. — or anywhere, for that matter — seem unlikely to return anytime soon.

HTC is beset on all sides. It’s being pummeled at the market’s high end by Apple and Samsung, while manufacturers like ZTE kick it in the knees at the low end. And its big bets to put forth a flagship device for two different mobile operating systems — Android and Windows Phone — haven’t quite panned out. Samsung has Android locked up, and while there’s still room to throw a few elbows in the Windows Phone market, Nokia has its flag firmly planted there.

HTC’s task, then, is to differentiate itself enough from those rivals to gain traction in the high-end market, while scrapping with second-tier players like ZTE, Huawei and Lenovo that are challenging it in Asia and other emerging markets. And to do that, it cannot “drop the ball” anymore. It must introduce innovative devices, competitive with those of its rivals and market the hell out of them, marketing-budget constraints be damned.

The partnership is BlueStacks’ largest yet, and the latest in a string of similar deals — with the likes of Asus, AMD and Qualcomm — that are positioning the company as the conduit through which some 750,000 Android apps can flow to the Windows and Mac desktop.

And that’s beginning to look like a pretty good place to be. According to BlueStacks CEO Rosen Sharma, there’s a lot of consumer interest in using Android apps on the desktop.

“2012 was an incredible year for distribution for us, and the Lenovo App Player is a great cap to it,” Sharma told AllThingsD. “In 2013, we’re focusing on monetizing the 150-million-plus computers we’ve put Android on.”

Not a bad start, 150 million. And with this Lenovo deal, that number’s only going to grow. The company was named the world’s largest PC vendor by research firm Gartner last November; Idea is its consumer line. A popular one, too.

So, for BlueStacks, signing Lenovo is a real coup. And it’s doing all it can to ensure that it’s a success. The company is currently finishing up a mobile app that will serve as a companion to its desktop platform, syncing Android apps from handsets to BlueStacks-enabled PCs. Lenovo has already signed on for this, and plans to preload the app across its Android smartphone portfolio.

This year, the Chinese computer maker is going big. Literally.

The company is wagering that consumers will want a giant, 27-inch, 17-pound “table PC.”

Called the IdeaCentre Horizon, this Windows 8 table PC (table tablet? coffee-table computer?) is running on a third-generation Core i7 processor with Nvidia GeForce graphics. It has a full HD, multi-touch touchscreen display with a 16 by 9 aspect ratio. There’s a 720p front-facing camera for Web video chats.

It’s also adjustable, so it can be propped up and viewed in different modes.

With customized games from Ubisoft and EA, and compatibility with joysticks and other accessories, Lenovo is clearly trying to target the game-playing crowd in addition to average consumers, some business users, and 6’7″ basketball players.

Lenovo is calling this the world’s first “table PC,” which may be the case, and it is a whopper of a computer. But it’s not the first attempt at a big touchscreen device aimed at family time around the coffee table. Who could forget this ridiculous 65-inch Android tablet?

There’s the Sony Vaio Tap 20, reviewed in full here by my colleague Bonnie Cha, which is a 20-inch all-in-one PC screen with a kickstand. And last summer Toshiba launched the Excite 13, a 13-inch tablet designed primarily for use in the home — which The Wall Street Journal’s Katie Boehret thought was great for entertainment, but concluded that bigger wasn’t always better.

The Horizon is expected to ship this summer, and will cost $1,700.

RELATED POSTS:

• Things That Make You Go Hmm: CES Gets Weird
• CNET Wanders Into the CBS-Dish Crossfire at CES
• More Wi-Fi Spectrum on the Way, Says Genachowski
• CES Is So Infectious (Comic)
• Beats’ Jimmy Iovine on Steve Jobs, Spotify and Why He Can Make Subscriptions Work
• Beats’ New Music Subscription Service Gets a New Boss: Topspin’s Ian Rogers
• CES Lost and Found: A Hot Spot for Hotspots and Lost Teeth
• At CES, Chipmakers Go All In on Mobile
• Phablets the New Hotness in Mobile Devices? Not So Fast.
• President Clinton at CES: The World Needs More Smartphones (And Fewer Guns)
• Talking TVs With an Imaginary Consumer at CES
• Valve Pledges to Enter Videogame Console Wars With “Steam Box”
• Ballmer’s CES Keynote, Courtesy of Qualcomm (Video)
• Making It to CES on a Kickstarter and a Dream
• Intel: Trust Us! We’ve Got Mobile Devices on Lockdown … Next Year.
• Automakers Open Their In-Car Platforms: First Up, Ford, and Soon, GM
• CES: Fixing Your First-World Problems Since 1967
• Acer President Wong: Consumers Are Still Confused by Windows 8
• Cisco Teams With AT&T on Home Security
• Acer Targets Families, Newbies With Sub-$150 Iconia B1 Tablet
• Roku Adds More TV Partners, Looks Beyond the Set-Top Box
• Game On: Nvidia Previews “Project Shield,” a Handheld Android Console
• At CES, Lenovo Attempts to Go Big With 27-Inch “Table Computer”
• Health-and-Fitness Tech Grows at CES, but Challenges Lie Ahead
• Welcome to CES: A Trade Show, Not a Tastemaker
• CES 2013: The Year the “Connected Home” Becomes a Reality?
• LG Can’t Wait for CES, Spills Beans on New Google TVs
• Yahoo’s Mayer Hoping What Happens With Big Advertisers at CES Doesn’t Stay in Vegas
• Yeah, Don’t Expect Samsung Mobile’s “Next Big Thing” at CES