IBM Investigated by EU Regulator Over Mainframe Market

Bloomberg

International Business Machines Corp., the world’s biggest provider of computer services, is being investigated by the European Union over claims it abused its dominant position in the market for mainframe computers.

The probe will review claims IBM linked sales of its hardware to its software for mainframe computers and that IBM discriminated against competing sellers of services for the computers, the Brussels-based European Commission said in a statement today. IBM said the probe was the result of a campaign by “proxies” of competitors led by Microsoft Corp.

The commission, the antitrust regulator for the 27-nation EU, said the probe is partially in response to a complaint by T3 Technologies Inc., which Microsoft invested in. T3 makes software that transfers mainframe functions to servers that can run Microsoft’s Windows operating system.

Even as IBM has shifted away from hardware to focus on software and services, the mainframe has remained of central importance to the company. Though IBM gets less than 4 percent of its revenue directly from selling mainframes, the machines help generate sales of software, services and financing. Altogether, the contribution is almost a quarter of IBM’s sales and 40 percent of its profits, Sanford C. Bernstein analyst Toni Sacconaghi wrote in a report today.

IBM, based in Armonk, New York, said in a statement that “there is no merit to the claims being made by Microsoft and its satellite proxies.”

Microsoft Probes

“Certain IBM competitors which have been unable to win in the marketplace through investments in fundamental innovations now want regulators to create for them a market position that they have not earned,” IBM said.

Frank Shaw, a spokesman for Redmond, Washington-based Microsoft, said in an e-mail that the company invests in startup companies such as T3 to give customers greater choice. The company isn’t a party to T3’s complaint against IBM, he said.

“We do share T3’s belief that there needs to be greater openness and choice for customers in the mainframe market,” Shaw said. “Customers tell us that they want greater interoperability between the mainframe and other platforms.”

IBM added 3 cents to $128.41 in New York Stock Exchange trading. Microsoft rose 29 cents to $26.10 in Nasdaq trading in New York.

The EU has previously punished U.S. technology companies, including Microsoft, in antitrust cases. Last year, Intel Corp. was fined a record 1.06 billion euros ($1.37 billion) and ordered to stop using illegal rebates to thwart competitors.

T3

Microsoft last year settled an antitrust case with the EU over its Internet Explorer browser and has previously paid fines of 1.68 billion euros in EU probes.

The case was triggered by T3 and another vendor, Turbo Hercules, and involves IBM’s alleged tying of mainframe hardware to its operating system, the commission said.

T3, a company that builds mainframe computers and is mentioned in the CCIA’s report, made a similar complaint against IBM to the commission. Similar antitrust claims the company made against IBM in a New York court were dismissed in September.

“We’re pleased that the commission has taken this important step,” said Dave Anderson, a lawyer representing T3.

The second probe involves complaints of discriminatory behavior by IBM against competing suppliers of maintenance services for the computers.

“The commission has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services,” the EU today said in a statement, “in particular by restricting or delaying access to spare parts for which IBM is the only source.”

Newest Mainframe

IBM began developing mainframe computers in the 1940s and 1950s and is now among the few companies to offer the systems. The company announced its newest mainframe, the zEnterprise, last week. The model, up to 60 percent faster than its predecessor, uses IBM software to integrate it with smaller server computers.

The company comes out with a new mainframe every two to three years. After the introduction of the last five models, sales in its services division, more than half its total revenue, rose an average of 3 percent, Deutsche Bank analyst Chris Whitmore wrote in a report. Excluding the 2008 update, which came during a recession, the boost is 9 percent.

The mainframe, along with services and software growth, will help IBM raise total sales this quarter even with a currency impact, Chief Financial Officer Mark Loughridge said this month. Last week, IBM reported second-quarter sales that climbed 2 percent to $23.7 billion, with a $500 million hit from currency.

What New DMCA Copyright Loopholes Mean to You

PC World

The Library of Congress added five new exemptions to its Digital Millennium Copyright Act (DMCA) Monday, a copyright law that criminalizes attempts to bypass digital copyrights. Originally passed in 1998, the act is revisited every three years, with new exceptions added based on changing technology.

While the legalization of jailbreaking mobile phones is certainly getting the most press, exemptions were also added to the DMCA that allow people to legally break through the copyright protections on video games, e-books, and DVDs as well as bypass external security measures on some computers.

Phones

What New DMCA Copyright Loopholes Mean to YouThe biggest news today was the legalization of jailbreaking. Users can now legally break through copyright protection on their mobile phones in order to "execute software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications." Users are also now able to unlock firmware that ties a mobile phone to a particular wireless network. Both exemptions are big news for iPhone owners, who have battled for some time over the ability to add non-Apple approved software to their phones, as well as take those phones to different carriers.

DVDs: No Ripping/Copying.. But..

College professors and students, documentary filmmakers, and those making noncommercial videos, are now able to circumvent the copyright protection on DVDs in order to use short clips from those DVDs in new works "for the purpose of criticism or comment." The exemption was previously in place for professors, but has now been expanded to include students and filmmakers. The exception does not allow for users to copy whole works, or for individuals to create backups of DVDs they personally own, an issue brought up last year in the RealDVD case.

E-Books

A new exception to the DMCA allows users to break through copyright protection on e-books in order to enable text-to-speech functionality. You may remember the text-to-speech functionality of the Kindle was a huge issue between Amazon and the Authors Guild last year, the Authors Guild feeling that it took away from potential audio book sales. With that in mind, today's exception is only legal when "all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling either of the book's read-aloud function or of screen readers that render the text into a specialized format." Bottom Line: If a publisher offers an option for an audio version, even if it is twice the price, you can't legally bypass the book's DRM.

Video Games

Users can now break through the copyright protection on video games "when circumvention is accomplished solely for the purpose of good faith testing, for investigating or correcting security flaws or vulnerabilities." Information obtained from the security testing has to be used "used primarily to promote the security of the owner or operator of a computer, computer system, or computer network; and...used or maintained in a manner that does not facilitate copyright infringement or a violation of applicable law." This addition was added specifically for research in the area of SecuROM and SafeDisc.

Computers

Computer programs that are protected by dongles that are now broken or malfunctioning are now "considered obsolete if it is no longer manufactured or if a replacement or repair is no longer reasonably available in the commercial marketplace."

Canon Will Deliver a Miniature D-SLR

PC Mag

 

In the past year, a handful of manufacturers have introduced compact cameras that offer speed and image quality comparable to traditional D-SLRs. So far these cameras are made by Sony, Olympus, and Panasonic and cost as little as $550 dollars.

Officially, Canon has been completely silent about this emerging genre of products, but Masaya Maeda, head of Canon's image communication products division, told Reuters this week that the company is working to bring its own competitor to the market.

"There is a consumer need for good-quality cameras to be made smaller," Maeda told Reuters. "We will meet this need."

A Canon spokesman said the company could not confirm the Reuters report at this time, and had no additional details to offer.

Maeda also did not give specifics on how Canon will offer a small camera with D-SLR experience, but I'd suspect its product would likely follow the same formula as the competition: no mirror box.

Traditional D-SLRs require two image sensors: a large one for capturing images (larger equals better image quality) and a smaller one for executing auto-focus. Two sensors require a mirror box in order to mirror the image to both sensors, as well as a large body to house this system. D-SLRs rely on just the large image sensor to execute autofocus (and other tasks like simultaneously display an image on the LCD), but small and cost-effective processors are not powerful enough to keep up with the large amounts of data being delivered from the large image sensor, until recently.

The new miniature D-SLRs from Olympus, Panasonic, and Sony get rid of the mirror box and second image sensor. In their place are a faster processor, which works in conjunction with the large image sensor to simultaneously deliver images, autofocus, and a live view on the LCD.

Though this is how Canon's competition delivers a miniature D-SLR experience, comments from Maeda suggest that Canon will do things differently. Maeda told Reuters that "it's not a question of whether or not you have a mirror" but whether you can deliver cameras that are smaller and maintain image quality and speed.

UAE Warns of BlackBerry Social and Security Risks

CNBC

 

The BlackBerry, made by Canada's Research In Motion, is open to misuse that poses security risks to the United Arab Emirates, which said on Sunday it would seek to safeguard its consumers and laws.

Gulf state Bahrain in April warned against the use of BlackBerry Messenger software to distribute local news, drawing criticism from media freedom watchdog Reporters Without Borders which called it an act of censorship.

That sparked concerns that other Gulf countries might also consider curbing the use of certain applications on the BlackBerry, which holds around 20 percent of the global smartphone market behind Nokia but ahead of Apple.

BlackBerry was operating "beyond the jurisdiction of national legislation," the UAE's Telecommunications Regulatory Authority said in a statement issued on Sunday.

"As a result of how BlackBerry data is managed and stored, in their current form, certain BlackBerry applications allow people to misuse the service, causing serious social, judicial and national security repercussions."

The UAE was working to resolve "these critical issues with the objective of finding a solution that safeguards our consumers and operates within the boundaries of UAE law."

Earlier this month, RIM said it was preparing to launch an applications store and consumer Internet services in China as part of its push into the world's top mobile market.

A long-running censorship dispute between Beijing and Google Inc  was only recently resolved. Google had said it might be forced to abandon the Chinese market because of hacking attacks and censorship concerns.

MagicJack's New Nasdaq-Traded Stock Soars On Guidance, Buyback

San Francisco Chronicle

 

In case you missed it last week, MagicJack parent YMAX and VoIP firm VocalTec Communications merged, and are now trading on the Nasdaq under the ticker CALL. (Check out our feature on MagicJack from last summer.)

How's the stock doing? Pretty well today: Shares are up 12% after the company issued guidance and announced it would start buying back stock.

Specifically, VocalTec says it expects Q2 sales of about $30.5 million in business VoIP services and believes net income could be more than $3 million, before one-time merger expenses and before gains and losses from investments.

And the company's board has authorized a $12 million stock buyback.

And it's holding a meeting to include voting on whether CEO Daniel Borislow, who came over from YMAX, can increase his holdings to over 25% of the company.

If Borislow's name sounds familiar, that's because it should be. In the Web 1.0 days, he led Tel-Save, which made an exclusive deal with AOL to market long-distance service to its users. That led to a bunch of AOL "portal" deals, which were big money makers for the company.

YMAX has sold more than 6.5 million MagicJacks since 2008, and the combined company expects sales between $110 million and $125 million this year.

The company boasts about its patent portfolio and calls itself "the inventor of VoIP and the softphone," suggesting there may be some legal confrontations ahead.

FTC Extends Antitrust Settlement Talks with Intel

Associated Press

Federal regulators will take at least two more weeks to work out details of a proposed agreement with Intel Corp. to settle charges that the giant chipmaker violated antitrust laws.

The Federal Trade Commission said late Wednesday that it needs more time to consider and negotiate the proposed settlement, which was first announced last month.

The FTC brought antitrust charges against Intel late last year, accusing it of using illegal sales tactics to preserve its dominant share of the market for computer chips. The agency alleges that the company strong-armed computer makers into exclusive deals, manipulated technical data to make its chips look more powerful than those from competitors and blocked rivals from making their chips work with Intel's. That behavior has crippled rivals and kept prices for computer chips artificially high, the FTC says.

The case, which is before an administrative law judge at the agency, has been on hold for a month while the two sides have tried to hammer out an agreement. That suspension had been set to end at midnight on Thursday, but will now run through midnight on Aug. 5.

"Our discussions with the FTC are continuing," Intel said in a statement. "The discussions are confidential so we won't comment on the specifics."

Neither side has disclosed any details of the proposed agreement.

Late last year, Intel settled a long-running legal battle with rival Advanced Micro Devices Inc., which had also brought its concerns to the attention of the FTC and helped lay the groundwork for the federal government's case.

But Intel still faces an antitrust lawsuit brought last year by New York State Attorney General Andrew Cuomo. The company is also appealing fines brought by regulators in Europe and Korea.

India Unveils Prototype $35 Tablet Computer

Associated Press

 

MUMBAI, India (AP) - It looks like an iPad, only it's 1/14th the cost: India has unveiled the prototype of a $35 basic touchscreen tablet aimed at students, which it hopes to bring into production by 2011.

If the government can find a manufacturer, the Linux operating system-based computer would be the latest in a string of "world's cheapest" innovations to hit the market out of India, which is home to the 100,000 rupee ($2,127) compact Nano car, the 749 rupees ($16) water purifier and the $2,000 open-heart surgery.

The tablet can be used for functions like word processing, web browsing and video-conferencing. It has a solar power option too - important for India's energy-starved hinterlands - though that add-on costs extra.

"This is our answer to MIT's $100 computer," human resource development minister Kapil Sibal told the Economic Times when he unveiled the device Thursday.

In 2005, Nicholas Negroponte - co-founder of the Massachusetts Institute of Technology's Media Lab - unveiled a prototype of a $100 laptop for children in the developing world. India rejected that as too expensive and embarked on a multiyear effort to develop a cheaper option of its own.

Negroponte's laptop ended up costing about $200, but in May his nonprofit association, One Laptop Per Child, said it plans to launch a basic tablet computer for $99.

Sibal turned to students and professors at India's elite technical universities to develop the $35 tablet after receiving a "lukewarm" response from private sector players. He hopes to get the cost down to $10 eventually.

Mamta Varma, a ministry spokeswoman, said falling hardware costs and intelligent design make the price tag plausible. The tablet doesn't have a hard disk, but instead uses a memory card, much like a mobile phone. The tablet design cuts hardware costs, and the use of open-source software also adds to savings, she said.

Varma said several global manufacturers, including at least one from Taiwan, have shown interest in making the low-cost device, but no manufacturing or distribution deals have been finalized. She declined to name any of the companies.

India plans to subsidize the cost of the tablet for its students, bringing the purchase price down to around $20.

"Depending on the quality of material they are using, certainly it's plausible," said Sarah Rotman Epps, an analyst at Forrester Research. "The question is, is it good enough for students?"

Profitability is also a question for the $35 machine.

Epps said government subsidies or dual marketing - where higher-priced sales in the developed world are used to subside low-cost sales in markets like India - could convince a manufacturer to come on board.

This and similar efforts - like the Kakai Kno and the Entourage Edge tablets - show that there is global demand for an affordable device to trim high textbook costs, she said.

If it works, Epps predicts the device could send a shiver of cost-consciousness through the industry.

"It puts pressure on all device manufacturers to keep costs down and innovate," she said.

The project is part of an ambitious education technology initiative by the Indian government, which also aims to bring broadband connectivity to India's 25,000 colleges and 504 universities and make study materials available online.

So far nearly 8,500 colleges have been connected and nearly 500 web and video-based courses have been uploaded on YouTube and other portals, the Ministry said.

LG Display Unable to Fill All iPad Orders

The Wall Street Journal

The chief executive of LG Display Co. said the company isn't currently able to supply all of the flat-panel orders it receives from Apple Inc. for its iPad tablet computer.

LG Display Co., the world's second-largest liquid-crystal-display maker by revenue after Samsung Electronics Co., is a major supplier of flat screens used in Apple's iPad and iPhones.

The South Korean flat-panel maker said it may be able to accommodate the orders by the second quarter of next year. The lack of panel supplies has slowed the global sales of the device.

"Apple is ordering more and more displays but it isn't something we can be able to respond quickly," Chief Executive Kwon Young-soo said Thursday. "I am not sure whether we can be able to meet orders from other companies for similar products, but we will be able to supply the displays without fail...by the second quarter of next year."

Some Asian manufacturers have been recently ramping up production of key components for electronics, as shortages have frustrated consumers and disrupted business for companies such as Apple.

Since Apple began selling the iPad in early April, it has sold 3.3 million units and Chief Executive Steve Jobs said last month the device will be sold in 19 countries by the end of July. Though there were some concerns that component shortages may delay the launch of the iPad overseas, retail stores in Hong Kong and Singapore began selling the device in those two countries on Friday. South Korea's largest mobile operator, SK Telecom, said earlier this month that it is still in talks with the U.S. company to offer the iPad in the local market.

"The only limitation on iPad sales now is production and not demand," said Rhoda Alexander, director of market research firm iSuppli Corp. "Apple has taken a very controlled approach introducing this product to new markets, with manufacturing limitations likely being the major inhibitor on how quickly iPad sales expand."

An Apple spokeswoman didn't return calls seeking comment.

To address shortage concerns of small displays used in smartphones and tablet PCs, LG Display said Thursday it will invest about $512 million to build a new production line that can produce mobile displays used in iPads and similar products. The company said the new line will be operational in the fourth quarter of 2011. The line will have a monthly capacity of 20,000 glass sheets.

While there is strong demand for mobile displays and refurbished Dell printers, Mr. Kwon said LG Display is currently seeing a high level of television inventories. As a result, the company may have cut TV panel production in August, he said.

"LCD orders (for TV panels) have been falling recently," Mr. Kwon said.

He said he expects TV inventories to return to normal levels in September.

Nokia Q2 Profit Falls 40 Pct to $290M

Associated Press

Nokia Corp. said Thursday that second-quarter net profit fell 40 percent to euro227 million ($290 million) as the world's largest mobile phone maker lost market share and sales remained flat. Analysts, however, noted its sales of smart phones were better than expected.

The profit was down from a net profit of euro380 million in the same period last year, the company said. Revenue grew a mere 1 percent in the period to euro10 billion from euro9.9 billion a year earlier.

Nokia's overall market share fell to 33 percent in the quarter 2010, down from 35 percent a year earlier. But it said market share in the smart phone sector remained at 41 percent - unchanged from the previous year and the first quarter of 2010, despite strong competition from iPhone-maker Apple Inc., and Research in Motion Ltd., which makes BlackBerry handsets.

"Nokia managed to hold onto that market," said Neil Mawston, analyst at London-Based Strategy Analytics. "They actually sold 24 million smart phones, more than our forecasts, and that's what maybe is helping to support the shares a little bit."

Nokia shares were trading up more than 4 percent at euro7.27 ($9.32).

The company repeated its prediction that the global mobile market will grow 10 percent this year while its own growth would remain flat. Nokia said it sold 111 million handsets in the quarter, up 8 percent on 2009.

The company remains the leader in the global mobile market, selling 432 million devices last year, more than its three closest rivals combined, but competition in the smart phone sector was seen as being too much for the former industry bellwether.

Now, Mawston says, those rivals may be feeling some pressure as well.

"Mobile SEO challenges are no longer unique to Nokia - they're impacting other players in the market ... Blackberry and Apple are also under a little bit of pressure," Mawston said. "Despite the iPhone attack, maybe Nokia isn't doing quite as badly as everyone thought."

Texas Instruments Buys Chip Plants In Japan From Spansion Unit

The Wall Street Journal

Texas Instruments Inc. (TI) said Wednesday it will purchase two semiconductor wafer manufacturing plants and equipment in Japan from a unit of Spansion Inc. (SPSNQ) to boost capacity for chips used in a variety of electronic gadgets.

Financial terms of the transaction weren't disclosed.

In a statement, the U.S. chip maker said it will buy a 200-millimeter wafer fab currently in operation in Aizu-Wakamatsu, Japan, that is capable of expanding Texas Instrument's analog revenue by more than $1 billion. The second facility will be either a 200-millimeter or 300-millimeter fab, it said.

A plant using 300-millimeter wafers is more advanced than a 200-millimeter wafer plant, cutting a chip maker's manufacturing costs by as much as 30%.

"This acquisition is the most recent in a series of analog manufacturing expansions announced by TI over the past 24 months which collectively will add capacity for more than $3.5 billion of additional analog revenue per year when fully operational," the company said.

Chip makers globally are expanding capacity this year as demand improves along with the recovery in the global economy. Demand has been stronger than expected thanks to the emergence of new applications such as smartphones, e-readers and tablet PCs in which chips are widely used. Texas Instruments' rivals Intel Corp. and Samsung Electronics Co. have been posting strong earnings in the most recent quarter, thanks to a rebound in demand and higher prices.

The company said it will offer employment to a majority of Spansion Japan Ltd. employees in Aizu-Wakamatsu, Japan, where the facilities are based. It plans to run the first fab and preserve the second facility for future capacity expansion, it said.

The company's analog chips are widely used in set-top boxes, electronic books and smartphones.

Based in Sunnyvale, Calif., Spansion filed for bankruptcy protection in March 2009, weighed down by $1.5 billion in debt. The company, which makes flash-memory chips used to store data in iPods and digital cameras, exited bankruptcy in May.

Will Apple, Yahoo measure up to Intel, Google?

Mercury News

Apple — the Cupertino maker of Mac computers and "i" devices (iPad, iPhone, iPod) — and Sunnyvale Internet content powerhouse Yahoo are the next big Silicon Valley companies in the quarterly parade of tech earnings reports.

Both Apple and Yahoo will report financial results tomorrow afternoon after the stock markets close.

While most big Silicon Valley tech stocks were higher today, Apple shares were noticably lower, closing at $245.58, down $4.32, or 1.7 percent, after falling as low as $239.60. According to a story on The Wall Street Journal's website, analysts were concerned about Apple's profit margins — as well as reports of strong sales of the new Droid X (more on that below) after nearly a week of negative publicity over the antenna on the iPhone 4. (Apple's newest iPhone, of course, was introduced June 24, so only the first few days of sales will be reflected in the earnings report. CEO Steve Jobs, meanwhile, said Friday that Apple will provide free bumpers or cases to iPhone 4 owners, which Consumer Reports described as a remedy for the antenna problem its testers found.)

As for Yahoo, it's expected to show a strong increase in online ad revenue, according to a post today on Good Morning Silicon Valley.

Apple and Yahoo earningsw will follow reports last week from Santa Clara chip behemoth Intel and Mountain View Internet advertising juggernaut Google last week. Intel, you might recall, reported a record $10.8 billion in sales, saying corporate customers were making information-technology purchases again. Google, meanwhile, had a big jump in profit and sales, but investors were concerned that its hiring pace might be costing too much money.

Intel Ships New Six-core Core I7 Chip, Cuts Chip Prices

PC World

 

Intel on Monday introduced a six-core Core i7 desktop processor targeted at enthusiasts like gamers, while also cutting prices of some desktop and server chips by up to 48 percent.

The company announced the Core i7-970 processor, which will run at 3.2GHz and have 12MB of L3 cache. This is the second six-core desktop chip launched by Intel after the Core i7-980X Extreme Edition, which was launched in March.

Intel offers standard Core i7 processors for high-end desktops and Core i7 Extreme Edition processors, which are expensive chips targeted at specific users like hardcore gamers who may be looking for extreme performance. The Core i7-970 is an attempt to trickle down six-core chips and fast performance from the Extreme Edition to the main Core i7 lineup, an Intel spokesman said.

The new Core i7-970 should bring a new level of performance to Core i7 lineup. Intel's 980X Extreme Edition processor has captured many benchmark crowns, outperforming even the company's Xeon server chips.

The Core i7-970 is priced at US$885 in units of 1,000. The processor is made using the 32-nanometer manufacturing process, which helps boost system performance compared to chips based on earlier architectures.

The company also cut the price of the lower-end Core i7-870 processor by 48 percent from $582 to $294, according to the company's price list (PDF), which was published on July 18.

The price was cut to put the offering in line with the company's other Core i7 offerings, the spokesman said. Intel also cut a numerous dual- and quad-core Xeon server and workstation chips from its offerings, including the older 5400 series of chips belonging to the X, L and E series. The company also cut the price of the Xeon X3470 processor by 44 percent from $589 to $328.

Intel on Monday also started shipping the new quad-core Core i5-760 desktop processor, which will run at 2.8GHz and includes 4MB of L3 cache. The chip is made using the company's older 45-nanometer manufacturing process.

World's Biggest Laptop Maker Breaks Shipment Record in June

Bloomberg / Business Week

Quanta Computer, the world's largest contract laptop computer maker, set record highs for shipments and revenue in the month of June, a sign demand for technology products hasn't stumbled despite fears of debt problems in some parts of Europe.

The Taiwanese company, which counts Sony, Dell and Hewlett-Packard among its customers, attributed the records to a few factors, including the easing of some component shortages and because some customers placed orders early in June that might normally have been placed in July.

"We expect July to slow down a little bit from June, but [shipments] should come back in August," a Quanta representative said.

Quanta shipped 4.8 million laptops in June and took in NT$100.2 billion (US$3.1 billion) in revenue, the company said. Its previous record for a single month was in April, when Quanta shipped 4.5 million notebook computers and posted revenue of NT$97.0 billion.

The company's comments also indicated some component shortages may have eased, including a shortfall in some Intel Arrandale laptop microprocessors, such as its Core i3 and Core i5.

Intel, the world's largest chip maker, had been ramping up production with a goal to catch up with demand by the end of the second quarter, which was June 30.

The Arrandale processors are designed so vendor PCs can create slimmer laptops. They come in a two-chip package that includes an Arrandale processing core made using 32-nanometer production technology and a graphics processor made using 45-nm technology.

Shortages for a range of components, from LCD monitors to DRAM memory chips, have been an issue for the PC industry this year.

Spending Soars on Internet's Plumbing

The Wall Street Journal

Behind the recovery in business spending is a surge in purchases of the computers that form the backbone of the Internet, as companies scramble to meet growing demand for video and other Web-based services.

The need to reach customers and employees over the Web is driving furious demand for server systems, the machines that power corporate computer rooms.

Many companies are stocking up on new Dell servers, which typically cost a few thousand dollars apiece, to replace older machines with more energy efficient models or systems with more powerful processors.

Also, an increasing number of businesses are turning to outsourcing companies, which manage computer rooms for customers and in many cases are sharply stepping up purchases of servers to keep up with rising demand.

"We've been buying thousands of computers this year," says Doug Erwin, chief executive of ThePlanet.com Internet Services Inc., a Houston-based company that runs data centers to offer computing services. ThePlanet says it now owns about 50,000 Dell Inc. servers.

International Business Machines Corp., one of the biggest vendors of servers, said Tuesday that sales of industry-standard servers and IT services jumped 30% in the second quarter, after rising 36% in the first quarter.

The buying activity became apparent last week, when Intel Corp. said quarterly revenue from its unit selling server chips rose 42% from a year earlier, while shipments driven by Internet-related companies' purchases nearly tripled.

Growth in Web traffic isn't a new phenomenon, but computer purchasing to keep up with demand is accelerating because of improving economic conditions and technology that makes purchases of new computers pay off more quickly.

On Thursday, Internet giant Google Inc. reported $476 million in capital spending, including spending on servers and other hardware. That was more than triple the amount it spent a year earlier.

Unlike Google, many companies are side-stepping the costs of building their own computer rooms, opting to place servers they buy in "co-location" centers that maintain machines and offer Internet connections.

Rackspace Hosting Inc., a San Antonio, Texas, company that runs data centers, says it added 9,152 servers in 2009, plus about 3,000 more in the first quarter of this year. Savvis Inc., a competitor based in Town and Country, Mo., says it has purchased more than 80% more servers over the last 12 months.

"All I see all day is trucks coming up to our loading docks dropping off servers," says George Slessman, chief executive of i/o Data Centers LLC, a Phoenix-based company. He says the number of customers that have installed servers in its computer rooms has risen from 140 at the beginning of 2009 to nearly 400 now.

The market research firm IDC puts spending on cloud-computing, a term that includes delivering computing capacity over the Internet, at $16.5 billion in 2009, and projects spending in the field will increase 27% a year through 2014—with the number of servers deployed in cloud applications expected to triple to 1.35 million over that period.

Forrest Norrod, Dell's vice president and general manager of server platforms, says the company has seen "triple-digit increases" in its cloud-related business year over year. "The cloud side is growing faster than the rest" of the server market, Mr. Norrod says.

There are several reasons. Companies keep stepping up the use of the Web to reach customers and adding features like video streams that require more computing power and faster network connections.

Such operations generate huge volumes of data, which have forced companies to buy more-powerful servers to help analyze the information, says Mike Long, chief executive of Arrow Electronics Inc., which sells servers and distributes chips and other components.

Meanwhile, companies that stocked up on servers over the past decade have struggled to find space, electrical power, colocation in Maryland, and labor to keep them running. Technology suppliers like Intel and rival Advanced Micro Devices Inc. have reacted by designing chips that offer lower power consumption as well as greater performance. They argue that switching to new servers with such chips can save enough on power and labor costs to pay for upgrades in a few months.

Intel, for example, has overhauled its Xeon line of servers chips to include a model with the equivalent of eight electronic brains on one piece of silicon. The company estimates that a server with four such chips offers a 20-fold performance increase over an existing server with four single-processor chips; that means one new machine can take the place of 20.

Even before factoring in models based on Intel's newest Xeon chips, pricing for some server vendors is on the rise; the average price of Xeon-based servers sold by Hewlett-Packard Co., for example, rose nearly 12% to $3,993 from the second quarter of 2009 to the first quarter of 2010, market researcher Gartner estimates.

Customers have responded, in many cases paying up for servers with high-end chips that command higher prices. Mr. Erwin of ThePlanet says it moved swiftly this year to Intel's new technology, saving his company money on power and labor costs and providing greater performance to offer customers at a higher price.

Zach Nelson, chief executive officer of Web-based software provider NetSuite Inc., plans to use H-P servers with Intel's most-powerful chips in a new data center in Boston. "It maximizes our customer experience and reduces our cost," he says.

Other companies are adding different systems for different computing chores. Susan Shimamura, the vice president of operations at IAC/InterActiveCorp's Ask.com, says the company has traditionally bought only low-end Dell server systems for its Web search function. While continuing that practice, it recently decided to also buy higher-end machines for databases that analyze how people use Ask, she says.

Big-name server makers are not the only beneficiaries. To offer cloud-style services, Rackspace prefers little-known suppliers for attractively priced "white-label" servers "straight from the factory in Taiwan," says Lanham Napier, its chief executive.

Just how long the server-buying boom will last is unclear, amid economic jitters and the fact that cloud companies tend to buy servers in advance signing up customers.

"It's the build-it-and-they-will-come model," says Bryan Doerr, chief technology officer of Savvis.

But companies pursuing cloud computing say demand is so strong that they aren't worried about adding too much capacity. "This is a major tectonic movement," says Manuel D. Medina, chief executive of Terremark Worldwide Inc., which says its cloud business has been growing 30% sequentially each quarter. "There's zero chance of a bubble."

Dell Tries on T-Shirt Site for new Laptop Art

Associated Press

ROUND ROCK, Texas — PC maker Dell Inc. has tried to set its consumer laptops apart from the competition with lids buyers can customize from a library of patterns, colors and art.

For its latest set of designs, which add $85 to the cost of a laptop, Dell turned to an online T-shirt design community. On Threadless.com, anyone can submit a T-shirt design idea. Visitors to the site vote on favorite designs, and ones that get top marks are printed and sold online.

Dell's Threadless collection is starting with 11 designs from the site, including a deer with cherry blossoms on its horns, a bright yellow daisy and an intricate line drawing of London street sights. The company said it would add new ones in the future.

For people who worry their Dell laptops might not go with their outfit, fear not: Threadless is printing new batches of matching shirts.

Nokia Siemens buys Motorola Networks

Associated Press

 

Nokia Siemens Networks will acquire the majority of Motorola's wireless operations for $1.2 billion in a major thrust to gain a stronger foothold worldwide, the company said Monday.

The Finland-based company said the deal is "expected to significantly strengthen Nokia Siemens Networks' presence globally, particularly in the United States and Japan."

Nokia Siemens said it will "gain incumbent relationships with more than 50 operators," including top American wireless carriers and cable companies, including Verizon Wireless and Sprint Nextel Corp. It will also improve its position with China Mobile, Clearwire, KDDI, Sprint and Vodafone.

Nokia Siemens Networks - a joint venture between Finland's Nokia Corp. and Siemens AG of Germany - has seen dwindling profits in recent years, worsened by the global economic downturn.

The new contract, expected to be completed by year-end, would improve profitability and "have significant upside potential," Nokia Siemens said.

The deal is a step in the process of breaking up Schaumburg, Ill.-based Motorola. The company has planned for years to spin off the cell phone division, but steep losses in the unit have forced it to postpone the move. It's now scheduled for the first quarter of next year.

The handset division, to be called Motorola Mobility, will take with it the division that makes cable set-top boxes.

That will leave Motorola Solutions, the remainder, focused on government and corporate clients, with products like police radios and bar-code scanners. It's also keeping one part of its wireless network portfolio: the division that makes iDEN equipment, used in the Nextel part of Sprint Nextel Corp.'s network. Motorola invented that technology and is the dominant supplier of equipment.

Its push-to-talk feature is appreciated by dispatchers and work crews, but has been overshadowed in the mainstream by other technologies that provide broadband data speeds.

Nokia Siemens CEO Rajeev Suri described the deal as an "exciting acquisition ... with significant benefits for customers, employees and our shareholders."

"Motorola's current customers will continue to get world-class support for their installed base and a clear path for transitioning to next generation technologies while employees will join an industry leader with global scale and reach," Suri said.

Parent company Nokia shares were trading up 1.4 percent at euro6.86 ($8.92) in afternoon trading in Helsinki.

Philips Q2 Profits up on Strong Sales

Associated Press

 

THE HAGUE, Netherlands (AP) - Football fans buying new flat screen televisions to watch the World Cup helped Dutch electronics maker Royal Philips Electronics NV post a strong rise in second quarter profit on Monday.

Net profit was euro262 million ($340 million), up from euro45 million in the same period a year ago. Revenues rose to euro6.19 billion from euro5.23 billion a year ago, when the company was hit hard by the global economic crisis.

"It is encouraging to see that our performance continues to improve, despite ongoing weakness in many global markets and economic uncertainty," said CEO Gerard Kleisterlee.

The company said it expects sales growth to ease off for the remainder of 2010, in part because many consumers - particularly in football-mad Latin America - bought new televisions ahead of the World Cup that finished earlier this month in South Africa.

"After the strong rebound in the first half of the year, we expect comparable sales growth in the remainder of the year to moderate towards mid-single-digit level," the company said in a statement. "This reflects continued but slow recovery in the U.S. and Europe, different seasonality for our television business following soccer's World Cup, and the improved sales performance in the second half of 2009."

Chief Financial Officer Pierre-Jean Sivignon said the company saw "slightly more robust activity than expected in the USA, post-health care reform" for its medical equipment division. However, he said many in the United States were "still digesting" the implications of the Obama Administration's health care overhaul.

Philips shares sank on disappointment at the level of sales growth. By midday (1000 GMT), Philips was down 3.1 percent at euro24.13 in Amsterdam.

"Sales growth of 12 percent was not quite what the market was looking for," said Peter Olofsen, an analyst with Kepler Capital Markets in Amsterdam.

Sivignon defended the revenue figures, saying, "In absolute value, sales for the first half of the year are now approaching the pre-crisis level of 2008."

Consumer electronics led the way for Philips, with revenues in that division rising 20 percent to euro2.18 billion from a year earlier on strong sales of flat screen televisions.

The company's lighting division saw revenues rise 13 percent to euro1.86 billion.

Growth was strongest in emerging markets and particularly the so-called BRIC nations - Brazil, Russia, India and China. Revenues in emerging markets rose 29 percent to euro2.1 billion - 34 percent of the company's total revenues. In the same period last year, emerging markets revenues made up 29 percent of worldwide revenue.

Philips has aggressively cut costs to remain competitive in the economic downturn, including slashing some 5,000 jobs last year,

However, the company's staff level rose slightly to 116,590 in the second quarter from 116,023 a year earlier. Reductions in Philips' group management and services and health care divisions were offset by gains at lighting and consumer electronics, thanks largely to the takeover last year of espresso machine maker Saeco.

Apple CEO on Antenna Problem: We're not Perfect

Associated Press

 

A perfect iPhone? There's no app for that.

Apple Inc. will give free protective cases to buyers of its latest iPhone to prevent reception problems that occur when people cover a certain spot on the phone with a bare hand.

CEO Steve Jobs apologized Friday to people who are less than satisfied with the iPhone 4, even as he denied it has an antenna problem that needs fixing.

"We're not perfect," Jobs said at a news conference. "Phones aren't perfect."

The more than 3 million people who have already bought an iPhone 4 can go to Apple's website starting late next week and sign up for a free case, he said. Apple can't make enough of its $29 "Bumper" cases for everyone, so the company will let people chose from several case styles.

New buyers through Sept. 30 will also be eligible. Apple will send refunds to people who already bought a Bumper.

Jobs, expressing irritation with the critical coverage of the phone's reception problems, echoed an earlier statement from Apple that no cell phone gets perfect reception. He played a video showing competing phones, including a BlackBerry from Research in Motion Ltd., losing signal strength when held in certain ways. He talked for 45 minutes and took 45 minutes of questions with Apple's chief operating officer, Tim Cook, and Bob Mansfield, a senior Apple executive in charge of hardware engineering.

Phones usually have an antenna inside the body. In designing the iPhone 4, Apple took a gamble on a new design, using parts of the phone's outer casing as the antenna. That saved space inside the tightly packed body of the phone, but meant that covering a spot on the lower left edge blocked the wireless signal.

Consumer Reports magazine said covering the spot with a case or even a piece of duct tape alleviates the problem. It refused to give the iPhone 4 its "recommended" stamp of approval for that reason, and on Monday it urged Apple to compensate buyers and fix the problem. The company had been criticized about spotty iPhone service in the U.S. on AT&T Inc.'s network even before the newest model came out.

On Friday, in the company's first remarks following the magazine's report, Jobs said Apple was "stunned and upset and embarrassed."

Jobs said the iPhone 4's antenna issue isn't widespread, with just over five out of every 1,000 complaining to Apple's warranty service and less than 2 percent returning the device. Jobs also said that while the iPhone 4 is dropping calls slightly more frequently than its predecessor, the iPhone 3GS, it's "less than one additional dropped call per 100."

"We're not feeling right now that we have a giant problem we need to fix," Jobs said. "This has been blown so out of proportion that it's incredible."

Analysts have criticized Apple's responses to reports of reception problems as dismissive, and cautioned that the company shouldn't come across as arrogant. A curt note attributed to Jobs told one early iPhone buyer to either hold the phone a different way or buy a case.

Apple has also said the main problem is actually with software, not antenna design. Apple said it recently discovered that iPhones display more cell phone signal "bars" than they should, leaving people who believed they had a strong signal frustrated by dropped calls. Apple issued a software update Thursday that it said would make the number of bars shown on the phone's face more accurate.

But Consumer Reports painted the problem as much broader. On Friday, the magazine said the free cases were "a good first step toward Apple identifying and finding a solution for the signal-loss problem of the iPhone 4."

No phone owner wants a gadget that doesn't work. But many people who have bought an iPhone 4 or are considering one seem willing to forgive the antenna problem because they like its other features so much.

"It's not really my concern because I hardly make calls," said Ross Beck, a 22-year-old student in Seattle. "Honestly, it doesn't faze me. I know Apple and I know they fix their mistakes."

Helen Ferszt walked out of Apple's flagship store in New York City on Thursday after ordering the iPhone 4, her third model, despite having heard of the reception problems.

"I love the iPhone," said the 78-year-old psychotherapist from New York. But she added that Apple needs to do better than giving away a free case.

"No, I want it to be fixed," she said. "They can't just hang us out to dry."

Jobs apologized Friday to buyers who had less-than-perfect experiences with the new device.

"We're going to do whatever it takes to make them happy and if we can't make them happy we're going to give them a full refund and say we're really sorry we inconvenienced you, and we're going to do better next time," he said.

The refund applies even for those who have long-term contracts with AT&T Inc., the iPhone's exclusive U.S. wireless carrier.

Possible Lawsuit over iPhone Problems

Examiner

Northern California law firm calls for customers in class action lawsuit

The Northern California based law firm of Kershaw, Cutter and Ratinoff call for customers to contact them for a class action law suit in response to the continuing problems of Apple’s iPhone 4.

Seeking a suit against Apple, Inc. and AT&T the law firm is looking for consumers experiencing dropped calls, bad reception and weak signals.

Unhappy with Apple’s ridiculous response and placing blame on user error for inaccurate holding of the iPhone, purchasers are replying in record numbers to the proposal of a legal remedy.

For iPhone users that want to pursue information on legal recourse read the statement on the investigation by Kershaw, Cutter & Ratinoff.

Google VoIP App Draws Petition

Information Week

Users of Google Voice call for the release of a voice-over-IP desktop client for Mac, Windows, and Linux PCs.

 

 

Thousands of Google Voice users have signed an online petition asking the search engine to release a desktop application that would enable them to make telephone calls over the Internet.

The petition, posted over the July 4th holiday weekend, was started after the blog TechCrunch reported that the company was testing a voice-over-IP desktop app internally. The site, however, reported that Google may scrap the project because founders Larry Page and Sergey Brin want all applications from the company to work from inside a browser.

The petitioners are asking Google to release the desktop app while deciding whether to pursue browser-based applications. "This petition is brought forth to show you the overwhelming demand for such an application for (Mac) OS X, Windows, and Linux PCs, and possibly an Android app," the document says.

Google was not immediately available for comment.

As of Tuesday morning, the petition had almost 2,600 signatures. Speculation that Google could develop a home and business VoIP app similar to the popular Skype service started in November 2009 when Google acquired Gizmo5. The company announced the purchase of the Internet-based calling service the same day Google agreed to buy mobile advertising network AdMob for $750 million.

Gizmo5 made software that offered Internet telephony on a computer or mobile phone. However, Google has never said why it bought the company.

In fact, the month before the announcement, Google told the Federal Communications Commission that Google Voice should not be subject to the same rules as traditional telephone companies because, among other reasons, the service is not a business VoIP service under FCC rules. If Google was to launch a VoIP service, than its argument to the FCC may be weakened.

Google Voice today primarily offers call forwarding, voicemail, and a voicemail-to-e-mail transcription service. The service, which is available at no charge, was made generally available last month and has more than a million active users.

In acquiring Gizmo5, Google suspended new signups for the service and said existing users would no longer be able to sign up for a call-in number.

3D PC won't fly without Content

ZD net

Content and market demand will play key roles in determining whether 3D PCs sink or swim, industry watchers say, though the market is confident that this will veer more toward the latter.

Bryan Ma, the associate vice president for devices and peripherals at IDC Asia-Pacific's domain research and practice groups, told ZDNet Asia in a phone interview that with regard to user demand, it is still early days yet, with much of the interest being shown by gamers and those looking to use their PCs as entertainment devices.

As for enterprise demand, he went on to point out that there may be some users who are happy to have 3D PCs to work on their AutoCAD designs or spreadsheets, but such use cases are "limited".

Gartner principal research analyst Lillian Tay concurred, saying that 3D PC is still an "emerging market" and developments still ongoing.

"Currently, PCs introduced are capitalizing on the hype [of 3D technology] and used to test the market. These target the early adopters, especially gamers who want an added unique experience while playing their games, and consumer demand is primarily driven by this group currently," she said in her e-mail.

All about content

IDC's Ma also pointed out the second factor that could influence the adoption of 3D PCs: content. He said that this was similar to the initial challenge faced by 3D movie makers and TV manufacturers, although the latter two sectors have made strides in building up their content ecosystem.

He mentioned that sports programs and blockbuster movies are some of the potential drivers for the 3D PC market, as these play key roles in encouraging uptake for movies and TVs. He also said that pornography, while taboo in certain societies, could also have a significant part in boosting demand for such PCs.

Another industry watcher, Li Ai-Jung, a notebooks product marketing representative for AsusTek Computer, said in her e-mail that the 3D ecosystem, which includes both hardware such as 3D Blu-ray players and content like games and movies, is growing and "becoming ready" for mass adoption. This, in turn, will help boost the demand for 3D PC.

"In Singapore, for example, we are targeting gamers with our 3D laptops, which are able to convert standard 2D-graphic games into 3D with just a single switch. Users can then choose between 2D and 3D display mode [for their various PC activities]," she added.

Hardware makers jumping onboard

Fellow 3D proponent Nvidia told ZDNet Asia that the GPU (graphics processor unit) maker is "not alone" in its 3D push, with others such as Dell Computer, Microsoft and Acer sharing the "same level of confidence" in the technology and related products.

"Whether 3D PCs warrant classification as a whole new form of computing remains to be seen, but the signs are good and the technology convincing and engaging. One thing is for certain, though, 3D technology looks set to grow, in whatever shape or form it presents itself," said Andrew Fear, product manager of Nvidia's 3D Vision, in his e-mail.

Asus, for instance, had earlier announced its partnership with Nvidia to roll out 3D PCs during the recently-concluded Computex Taipei 2010 tradeshow. An earlier CNET Asia report stated that these PCs include Asus' G51Jx-EE 3D-ready laptop, which will come packaged with Nvidia's 3D Vision active shutter glasses, and the Eee Top ET2400 all-in-one desktop PC.

Lenovo is another PC maker that has recently come out in support of 3D PCs by introducing a device of its own. The China-based company announced earlier this month its first multimedia laptop with 3D display, the IdeaPad Y560d.

"While 3D technology has been around for ages, it has not been readily accessible to consumers within the home. Lenovo is helping bridge this gap by delivering consumers a 3D experience on a familiar PC platform that can be viewed and enjoyed when and where they want," said Dion Weisler, vice president of business operations, Lenovo, in a media release.

Recently, too, Toshiba announced its Satellite A665 3D Edition.

As for when 3D PCs will hit the mainstream, the Nvidia executive demurred on commenting directly.

Instead, he quoted Roger Kay, founder and president of research and consultancy firm Endpoint Technologies Associates, saying: "We're just in the early phase of 3D adoption, but the market is likely to grow dramatically over the next five years. In 2010, only about 1 million 3D PCs will ship, [but] by 2014, that number will rise to more than 30 million."

Gartner's Tay provided a more conservative projection, though. She said that the 3D PC market remains niche, and although technology developments are in progress, it will take time before the device category takes off.

"We estimate that it will take until 2015, when autostereoscopic 3D displays become more widely available and users are more comfortable viewing 3D displays [for the technology to be adopted by the masses]. In addition, there is the need to build up a library of 3D software and quicker releases of such software, too," she added.

Microsoft Introduces Milo, a Virtual Boy, to TED Global Conference

BBC News

Milo made his world debut in 2009 at the E3 Expo in Los Angeles

Microsoft has shown off its "virtual human" that reacts to a person's emotions, body movements and voice.

Milo, as he is known, is designed for use with the firm's hands-free Xbox 360 motion controller called Kinect.

The technology is the brainchild of veteran UK games designer Peter Molyneux.

"I want to introduce a new revolution in storytelling," he told the TED (Technology, Entertainment and Design) Global conference in Oxford.

"Films, TV, even hallowed books, are just rubbish because they don't involve me," he said. "It's a sea of blandness."

Mr Molyneux said that he wanted to create a character "that seemed alive, that would look me in the eyes, and feel real".
Hidden technology

Milo was first shown off in a demo at the E3 expo in 2009, but has not been seen since.

"There was a huge row online about that with people saying 'this can't be real'," Mr Molyneux said.

The live demonstration used Microsoft's soon-to-be released Kinect controller, which uses a series of sensors, cameras and microphones to interpret a player's intentions.

The demo was conducted by an assistant, who showed Milo exploring a garden, learning to skim stones and finally confiding in him after being told off by his parents.

"We're changing the mind of Milo constantly," he said.

"No two people's Milos can be the same - you are actually sculpting a human being. Some of the things you are doing will change the course of his life."

Mr Molyneux said Milo had been built using artificial intelligence developed by his firm Lionhead studios, along with technology that was "hidden in the dusty vaults of Microsoft".

He said the system exploited psychological techniques to make a person feel that Milo was real.

In addition, software allowed "complete control" over subtle facial elements such as blushing and even the diameter of Milo's nostrils, which he said could denote stress.

"Most of it is just a trick - but it is a trick that actually works," he said.

During the demonstration, the player egged Milo on to squash a snail in the garden.

Mr Molyneux said that commands such as these were interpreted by Milo using voice-recognition software along with a database that attempted to interpret the players intonation and meaning.

These seemingly inconsequential events could also impact on Milo's later life and development in the game, he said.

The demonstration showed the initial stages of the game, where players learn to interact with Milo.

"After three-quarters of a hour, he recognises you," said Mr Molyneux.

"I can promise you that if you are sitting in front of this screen, that is a truly wonderful moment."

He said that the later stages of the game, which were not shown, allowed a player to explore the landscape with Milo more freely.

"There are lots of adventures - some of which are quite dark," he said.

At the moment, the technology is still in development and Microsoft has no plans to release it, he said.

However, he hinted that the game was designed to be used for millions of people and therefore could one day become a commercial product.

"His mind is based in the cloud," he told the audience. "As millions of people use it, Milo will get smarter."
'Good news'

Mr Molyneux showed off the technology at TED Global (Technology, Entertainment and Design), the European version of an established US event.

The invitation-only conferences explore "ideas worth spreading" and have featured talks by the former UK prime minister Gordon Brown and Nobel laureates as well as lesser-known technologists and designers.

This theme of this year's event is, "and now the good news".

"Good news has become a near-extinct species," said Bruno Giussani, European director of TED at the opening of the conference.

"But if you dig deeper, there is new technology, new science, new art, new ways of collaborating that offer a more hopeful view of the future."

Invited speakers at this year's TED include a voting system designer, a women's rights activist, a green chef and a physicist who runs a lab that aims to allow anyone to make almost anything.

Each is given 18 minutes in front of the audience.

Apple Silent after Consumer Reports Critique

Associated Press

 

A decision by Consumer Reports against endorsing the latest iPhone because of reception problems threatens to tarnish Apple Inc.'s reputation, yet fans who have braved poor reception for years are likely to keep buying the product.

In fact, some analysts say Apple could simply ignore calls by bloggers and others to recall the iPhone 4 or offer free cases to mitigate the problems.

As of Tuesday evening, Apple hadn't returned phone calls or e-mails about the Consumer Reports critique, which the venerable arbiter of product quality posted on its website Monday. While some Apple watchers find the company's responses to the reception issue objectionable, they don't see any penalties for Apple if it does nothing further.

People buy iPhones for emotional reasons, not because they're the best phones, said Deborah Mitchell, executive director of the Center for Brand and Product Management at the University of Wisconsin.

"People see you using the iPhone, and they think you are a certain type of person - hip, fresh and youthful in attitude," she said. "It's a brand that helps you identify yourself."

The iPhone has also been ahead of competitors when it comes to features such as easy Web browsing and shopping for music, movies and applications to download.

Greg Brown, a retired Philadelphia Eagles football player who lives in Sicklerville, N.J., said he has overlooked the iPhone's propensity for dropping calls because of congestion on the network of AT&T Inc., the iPhone's exclusive U.S. wireless carrier.

"When I am talking on the phone I like to finish the conversation before the phone call ends," Brown said. "But I forgive it because of all the features."

Consumer Reports said it won't endorse the iPhone 4 as "recommended" because tests show that simply holding the gadget can cause reception to fade. Although Consumer Reports only recommends a handful of phones that it considers exceptional, this was the first time the publication isn't giving an iPhone its "recommended" stamp of approval.

The publication's tests confirmed suspicions from many iPhone customers. Hours after the iPhone 4 launched on June 24, people were writing on Apple's support website that gripping the phone a certain way made it show fewer "bars" of cell signal strength and even caused calls to disconnect.

The company's first response came in a curt note attributed to CEO Steve Jobs, who told one iPhone buyer to either hold the phone a different way or buy a case.

After complaints persisted, Apple issued a formal letter saying an illusion caused by software was the culprit. For years, the iPhone had been showing people too many bars, a problem Apple says it plans to fix with a software update. At least then, dropped calls in areas with weak networks wouldn't come as a surprise.

Apple also said all phones, not just the iPhone, have reception problems when a user's hand covers the antenna.

Consumer Reports, however, believes Apple is dodging responsibility for a larger hardware problem.

This doesn't mean Consumer Reports believes the iPhone 4 is all bad, editor Mike Gikas said. It outperformed every other smart phone on the market in other regards. And avoiding the problem is as simple as buying a $30 "bumper" case from Apple that goes around the edges. Consumer Reports says even a simple a strip of duct tape would work (though one can imagine Jobs shuddering at such aesthetic blasphemy).

"It's like finding a dream home but then finding a leak in the basement," Gikas said.

Carolina Milanesi, an analyst for Gartner Inc., said she believes Jobs' early e-mail was an atypical public-relations blunder on Apple's part.

"Reception is pretty crucial. You can't tell people, 'You can't hold the phone that way,'" Milanesi said.

A year or two ago, his comments might have prompted jokes, she said. But now, Apple is the world's largest technology company by market capitalization, and Jobs' remarks are being perceived as arrogant. But while that could turn off new customers, Milanesi thinks most people won't recall this flap when it comes time to buy an iPhone 4 - more likely, they'll be agonizing over whether to buy the white or black model.

Brian Marshall, a Gleacher & Co. analyst who is typically very positive about Apple, was horrified when Apple said it had used a bad formula for calculating signal strength.

"That, to me, is atrocious," Marshall said. "It's so un-Apple-like. It shows a lack of attention to detail. Apple is a company that doesn't mess things up."

But neither Marshall nor Milanesi see the matter hurting Apple in the long run, even though its shares slipped about 2 percent to close Tuesday at $251.80.

Marshall said the most likely scenario is that Apple does nothing beyond the software update it promised. Offering free cases or issuing a recall would amount to Apple admitting a problem.

"I don't believe for a second that they're shipping what they view as a faulty product," Marshall said.

Even if Apple does go beyond a software update, it's not likely to hurt the company.

"We think $100 million here and there for a bumper or maybe a recall is a drop in the bucket for Apple," Standard & Poor's equity analyst Clyde Montevirgen said. "Sure, it might affect the company on a headline level, but from a financial standpoint we really don't see much of an impact."

Freer Budgets help Intel's Decade-Topping Profits

Associated Press

 

The last time Intel Corp. pulled in profit this big, dot-com delirium was in full swing and Internet fever fueled spectacular computer sales.

Now, as the technology industry recovers from a slump caused by the financial meltdown, the world's No. 1 semiconductor company has reported its biggest quarterly net income in a decade on signs of vibrance in the most troubled corner of the computer market.

Intel shares shot up $1.19, or 5.7 percent, to $22.20 in morning trading Wednesday.

Large corporations are now buying more computers that use Intel's most expensive chips, an encouraging sign for the overall economy that emerged from Intel's second-quarter numbers, which were reported Tuesday after the stock market closed. Corporations have been stingy on upgrading their workers' personal computers, a trend Intel is now seeing reverse. Intel gets most of its profit from the sale of chips that go into PCs.

Intel CEO Paul Otellini said companies are starting to replace 4- and 5-year-old PCs now that they have some "breathing room in the economy and their budgets." Intel has unique insight because it owns 80 percent of the worldwide market for microprocessors, the "brains" of PCs and servers.

The numbers offer further evidence that companies are freeing their technology budgets, which should have helped other big technology companies. Intel's main rival, Advanced Micro Devices Inc., reports its quarterly results on Thursday, while IBM Corp. and Microsoft Corp. issue their numbers next week.

Intel's results topped Wall Street's forecasts, and the company raised its guidance.

Intel's net income was $2.89 billion, or 51 cents per share, in the quarter ended June 26. Analysts expected 43 cents per share. The last time Intel's quarterly net income topped $2.5 billion was in 2000 during the dot-com heyday.

In the year-ago period, Intel lost $398 million, or 7 cents per share, when it paid a $1.45 billion fine in Europe over antitrust violations.

Revenue was $10.77 billion in the latest period, above the $10.25 billion expected by analysts surveyed by Thomson Reuters.

Intel's third-quarter forecast was stronger than expected. It said it expects revenue of $11.20 billion to $12 billion. Analysts were projecting $10.92 billion.

Intel's profit forecast also got a lift. Intel now expects gross profit margin - a key measure of a company's ability to control costs - of 64 percent to 68 percent of revenue for the full year. Its previous forecast was for 62 percent to 66 percent.

Technological upgrades to its factories have made Intel's chips more powerful and cheaper to make. That's a major factor in Intel's ability to increase its profit margins.

Its business has improved over the past year and a half largely on robust consumer spending on discounted PCs. Corporate spending on PCs has been a troubled corner of the market. Many companies have resisted upgrading their workers' PCs amid lingering fears about the health of their businesses.

It has been more than a year since Intel CEO Paul Otellini declared that PC sales had "bottomed out" and were starting to recover after their worst stretch in six years.

His analysis was accurate, but the semiconductor business is highly cyclical and now many analysts worry that another slowdown could be around the corner. The fears are being stoked by economic wobbliness in Europe and signs of slowing demand in China.

More than half of Intel's revenue comes from Europe and the Asia-Pacific region. On a conference call with analysts, Otellini said business in China and Europe was slow when the quarter started but "settled down" by the end of the quarter and were "nicely up" in both regions.

Market research firms IDC and Gartner Inc. predict that PC shipments will grow a robust 20 percent this year.

Consumer Reports Tests, Faults iPhone Antenna

Associated Press

Consumer Reports said Monday it will not recommend Apple Inc.'s newest iPhone because of reception problems caused by its antenna design.

After the iPhone 4 went on sale in June, buyers started complaining that holding the gadget a certain way could cause reception to fade and calls to drop.

Apple has said that any phone will lose signal strength when gripped in certain ways. It said the iPhone 4 seems to show a larger drop because it has been using a faulty formula to decide how many signal bars to show.

But Consumer Reports said it tested several phones that use AT&T Inc.'s network, and only the iPhone 4 seemed to have the reception issue.

"Our findings call into question the recent claim by Apple that the iPhone 4's signal-strength issues were largely an optical illusion caused by faulty software," Mike Gikas of Consumer Reports wrote in a blog post Monday. "The tests also indicate that AT&T's network might not be the primary suspect in the iPhone 4's much-reported signal woes."

Apple did not respond to messages seeking comment.

The iPhone 4 topped Consumer Reports' updated ratings list for smart phones, thanks to its sharp display and "best video camera we've seen on any phone," according to the blog. But the magazine, which tests electronics, appliances and other items, will not mark the iPhone 4 recommended until Apple finds a permanent and free fix for the problem.

Investors sent Apple's shares down $2.33, or about 0.9 percent, to close at $257.29. In extended trading, the stock regained 80 cents to $258.08.

Do 3G Handheld Game Consoles Have a Shot?

PC World

In theory, a handheld gaming device with 3G connectivity seems like a great idea, which is probably why Japanese wireless carrier NTT DoCoMo is pitching the concept to console makers. In practice, it's a stretch.

NTT DoCoMo won't say which companies are part of the conversation, but Nintendo and Sony seem like obvious participants. Maybe Microsoft or some lesser-known party is involved. In any case, NTT DoCoMo hopes game console makers will embed 3G capabilities in their devices, or at least offer Mi-Fi-like routers to create local wireless connections, the Wall Street Journal reports.

The report mentions how Amazon struck a deal (with Sprint, and then AT&T) to build data coverage into e-reader price tags, yet I'm surprised that neither NTT DoCoMo nor the story itself mention how much more data a 3G game console would require. An e-book contains text. A downloadable game contains audio and video as well. Online, multiplayer gaming would be demanding. My knowledge of the wireless market in Japan is slim to none, but in the United States, no carrier would agree to serve 3G coverage to game consoles without a monthly charge or a huge up-front price.

Therein lies the dilemma for future game consoles. As gaming becomes more popular on multi-purpose devices -- not just phones, but 3G-enabled tablets -- dedicated consoles will look outdated without constant online connectivity. Still, it'll be tough for people to justify another monthly bill just for portable gaming.

For the sake of not being a total naysayer, here's one way out: I'm dreaming of a day when you can buy a whole mess of data and apply it to a range of devices, from phones to tablets to -- yup -- game consoles. Carriers are still stuck on a per-device mentality, but maybe that'll change as they move away from unlimited data. If that happens, I really do hope handheld game devices can be part of the shift.

5 Companies Reported to Police for Misusing Software Licenses

The Jakarta Post

Autodesk Inc, a US-based software company, has reported five Indonesian companies to police between December 2009 and June 2010 for misusing the licenses for its products, the company’s executive says.

The companies had been reported to police after ignoring its warnings, Autodesk Indonesia licence compliance manager Turia Fitriano Helmy said Monday.

“We had approached them and tried to persuade them, but they did not admit any faults,” Turia told a press conference.

During a preliminary investigation police had found the five firms had infringed copyright by using pirated Autodesk software for commercial purposes, he said.

The National Police criminal detective agency are currently investigating the cases, involving a hotel, a financing company, a towel manufacturer and a real estate developer in Jakarta, and a mall in Malang, East Java. 

“We have seen that about 70 percent of Autodesk software used by our user companies are pirated products,” he said, adding that AutoCAD software products were the most frequently pirated Autodesk software, followed by 3D Max and Maya, the company’s most popular software for the media and entertainment industries, also used by animation producers. 

Autodesk categorizes two types of misuse. First, companies use pirated AutoCAD 2011 products. Second, the number of users of the software products exceeds those stated in its licenses.

“For example, a company has licensed software for only five computers but uses it for 20. We call this illegal practice under-licensing,” Turia said, adding that many companies duplicated Autodesk software in this way.

Autodesk could easily trace such practices via its online activation service. 

“We can trace it from the serial numbers requested for each software activation,” he said.

However, Autodesk would rather attempt to persuade companies involved in the misuse of its licenses, he said.

Autodesk sells a variety of software at various prices, ranging from US$2,000 to $5,000. It also sells a light version of AutoCAD 2D for $1,500. (ebf)