Friday, June 5, 2009

Disk storage vendors hit by sales drop

The disk storage market is the latest casualty of the recession. Worldwide sales for storage vendors in the first quarter of 2009 dropped 18.2 percent to $5.6 billion from $6.8 billion a year ago, according to a report from research firm IDC.

The market includes vendors such as IBM, Hewlett-Packard, and Dell, which sell complete disk storage systems to enterprise customers. IDC blamed the decline on the overall downturn in total server sales.

Among the top five vendors, HP fared the worst, hit with a 25.8 percent drop in sales to $975 million from $1.3 billion a year ago. IBM saw its disk storage revenues sink 21.7 percent $811 million from $1 billion. Dell was next on the list with sales of $660 million, 17.2 percent lower than $797 million the previous year.

The news wasn't all bad, noted IDC, since total disk capacity used by companies worldwide shot up 14.8 percent to 2,146 petabytes.

"The disk storage system vendors are really seeing the impact of the global economic downturn in the first quarter revenues," Steve Scully, research manager for enterprise storage at IDC, said in a statement. "However, while total revenues declined year over year, the overall storage capacity shipped continued to grow. These contrasting results are due to a combination of currency implications, lower overall sales, shifts in product mix, and aggressive pricing actions."

Despite the sour economy, companies still need disk storage, notes the report, but are opting for systems in the low and middle price tiers.

"Entry-level price bands ($0K - $14.99K) showed 9.9% year-over-year growth and the midrange price band ($15K - $49.99K) was flat year over year," Liz Conner, an IDC research analyst, said in a statement, "supporting IDC's belief that storage products are still in demand, with customer spending trending towards more modular, price point options."

The disk storage market is in the midst of another battle, with vendors EMC and NetApp fighting to acquire Data Domain. A top supplier of deduplication systems, Data Domain has been one of the few companies in its industry doing well despite the global downturn.

The report was put together by IDC's Worldwide Quarterly Disk Storage Systems Tracker, which analyzes the global disk storage market each quarter.

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Carbon software company claims broad patent

Verisae, a small Minnesota-based company, has received a patent for a system to track and report greenhouse gas emissions with software, a business attracting a growing field of companies.

The company on Wednesday said that the U.S. Patent and Trademark Office issued a patent to Verisae for a method for calculating a corporation's emissions. The patent, filed in May of 2007, describes a business process for gathering corporate emissions data, generating reports, and managing carbon credits.

Verisae is already offering hosted carbon accounting software focused primarily on retail companies, basing its tracking and reporting on the protocols established by the nonprofit Climate Registry, which sets guidelines for emissions reporting.

"This is a shot across the bow to others building this stuff," said Verisae product manager Daniel Stouffer. "This is a big story for those venture capital companies which might be spending money with firms that might be building solutions that might already be covered."

Verisae's hosted software compiles the greenhouse emissions data from a corporation's different assets. For example, a refrigerator in a store has emissions associated with its energy use and the refrigerant which is a powerful greenhouse gas, Stouffer explained.

The company is also working on a way for businesses to monetize incentives to reduce emissions, Stouffer said. Businesses can make money by participating in demand response programs, where the utility reduces the electrical load of the business--such as turning down lights in a supermarket or cooling in a building--during peak times.

Reason for worry?
The patent disclosure comes at a time of heightened interest around carbon emissions-related software. Investors expect that this year will see a lot of activity in software for tracking and reporting greenhouse gases, sometimes called carbon accounting software.

On Monday, start-up Hara Software, backed by venture capital firm Kleiner Perkins Caufield & Byers, announcedits Web-based software. SAP purchased another carbon accounting company, Clear Standards, earlier this year in a sign of consolidation among providers.

The claims of Verisae's patent appear to describe a fairly general method for managing a business' greenhouse gas emissions. But how broadly it can be enforced is unclear, said patent attorney Eric Lane in the clean-tech practice at Luce, Forward, Hamilton & Scripps.

The claims on the patent include a number of different processes, noted Lane, who examined the patent and some related documents. That means that another carbon software company could develop a product that doesn't combine all of Verisae's claims.

Still, Lane said that the patent is worth noting for the growing number of carbon accounting software companies.

"Whether other companies ought to be worried is hard to say. Should they be aware of this? Yes," Lane said. "They have a nice package."

Growing field
Patents around different forms of carbon accounting have seen a surge in the past year, according to a recent study. In programs designed for trading carbon permits, there were six patent familes in 2000, nine in 2002, and 15 in 2006.

A significant case likely to affect carbon software is a decision by the federal appeals court that made it harder to claim business process patents often implemented in software applications, Lane said.

Part of the reason for the uptick in carbon accounting software is the expectation that heavy polluters in the U.S. will be need to comply with looming regulations to cap greenhouse emissions.

The American Clean Energy and Security Act of 2009 bill calls for the creation of a cap-and-trade program to limit emissions. But the earliest a bill would pass is next year and caps on carbon emissions would be phased in over many years.

Even before a national U.S. mandate, companies are investing carbon-tracking software as part of corporate sustainability programs or to administer energy efficiency initiatives.

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Nintendo's Fils-Aime takes aim at rest of world

Nintendo president and COO Reggie Fils-Aime talks about the company's latest iteration of its motion-sensitive controller, the Wii Motion Plus, at its E3 press briefing in Tuesday in Los Angeles.

(Credit: Daniel Terdiman/CNET Networks)

LOS ANGELES--Although the video games industry has begun to take some hits--suggesting it may not berecession-proof after all--Nintendo has managed to maintain a solid financial performance.

Its sales are up 19 percent year-over-year, according to the company, which would be impressive in any year, but is particularly so in the current economic climate.

At E3 here this week, Nintendo made a few bold moves, but tended to play it relatively safe. It unveiled a new version of its mega-hit exercise game, "Wii Fit Plus," and showed off the next-generation of its motion-sensitive controller, the Wii Motion Plus.

Nintendo President and COO Reggie Fils-Aime

Nintendo President and COO Reggie Fils-Aime

(Credit: Daniel Terdiman/CNET)

Overall, however, there was the impression that the company was sitting on its lead. For while Microsoft has had some very impressive sales numbers and Sony has picked up its pace over its early PlayStation 3 stumbles, Nintendo's Wii has managed to stay on top of the sales charts. Similarly, the Nintendo DS has also had sky-high sales, and continues to defy expectations, more than four years after its launch.

At E3, CNET News' Daniel Terdiman had a chance to speak with about the video game industry as a whole, and about how Nintendo plans to go after the few demographics it hasn't already captured with the Wii and the DS.

Q: What's your feeling about where the video game industry is right now?
Reggie Fils-Aime: The video games industry is not just at the center of the entertainment industry, but is driving the entertainment industry, not only economically, but from a cultural impact standpoint. Having said that, consumers are having to make tough economic choices today. Nintendo's in a very fortunate place. The industry through April is down about 4 percent, but we're up about 19 percent. So consumers are voting for us with their wallets, which is a great place to be, especially when so much of our best content will be coming in the second half of the year.

Can Nintendo sustain that performance if the economy worsens?
Fils-Aime: Consumers are looking for ways to entertain themselves. In tough economic times, certain parts of the entertainment business have always done well. Whether or not the industry or Nintendo can sustain where we are really comes down to the experiences we're offering. And based on E3 and the smiles I see from people playing Wii Sports Resort, or Zelda DS, or Mario vs. Donkey Kong, I believe that as long as we continue to bring great, innovative entertainment, consumers will continue to choose us.

Speaking of Donkey Kong, I was thinking about the attempt at E3 on the world-record Donkey Kong score, and about how well the game and other classics like Pac-Man and Frogger and others from that era have held up. Are there current games that 20 or 30 years people will still be playing and appreciating?
Fils-Aime: It would be wonderful to see. If you look at something like Super Mario 64, that was a launch title for DS, 53 months ago, and continues to sell exceptionally well, as does Super Mario Galaxy for Wii. I do think there will be some key titles that folks will look back on 10 or 20 years from now, and say, "Boy, I would have loved to be a gamer when these games were launched."

Was there a design philosophy in the 1980s that designers could learn from today?
Fils-Aime: I think actually (Nintendo president and CEO Satoru Iwata) touched on this during our press conference. He talked about games like Donkey Kong or Space Invaders presenting an incredible challenge but also being inviting at the same time. And that duality is something that is really tough to do from a game design standpoint, and as we think about Wii Sports Resort, or Super Mario Galaxy 2, we're also trying to find that great balance.

Nintendo is currently selling both the DS Lite and the DSi. Is that not confusing to some consumers?
Fils-Aime: I don't think so, because a consumer walking in the door is going to be compelled by the plethora of great titles for DS. Then it's going to come down to, "Do I want a DS Lite or a DSi?" The first thing they'll see is that there's a price difference, so that will drive people one way or the other. The other thing they'll say is, "How important is it to me to download games. How important are the two cameras. And as we showed yesterday, with a million DSis sold in two months, and 400,000 DS Lites. And I think consumers are making their choice based on a number of factors. We have some who are saying, "I want pink." To little 8-, 9-, 10-year-old girls, features don't matter, It's, "I want the pink one." And having that available just for DS Lite is driving it that way.

"We're not going to be satisfied just picking up that existing gamer. We have to reach beyond and get that consumer who doesn't game. That's the only way we'll be able to continue growing as a company and as an industry."

Do you think all the innovation we're seeing in accessories for Wii, Xbox, and PS3 is making a rush to the next generation of consoles unnecessary?
Fils-Aime: We certainly believe there's a lot more Wii volume to be done, and a lot more games for the Wii. And that's not just what we've been able to do with accessories like the Balance Board, or future accessories like the Wii Motion Plus, Vitality Sensor, confidence -- Tuesday, Jun 2, 2009" href="http://news.cnet.com/8301-17938_105-10254524-1.html" style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; border-top-width: 0px; border-right-width: 0px; border-bottom-width: 0px; border-left-width: 0px; border-style: initial; border-color: initial; font-weight: bold; font-style: inherit; font-size: 12px; font-family: inherit; text-align: left; vertical-align: baseline; color: rgb(0, 67, 127); text-decoration: none; cursor: pointer; ">Vitality Sensor. It's also what we're able to do with Wii Motion Plus, from an archery standpoint, or what we're doing with ping-pong, in putting this big spin and curve on the ball. Who would have thought that possible three or four years ago? Nintendo's driving a focus on innovation that maybe wasn't in our industry four or five years ago. I think that's where the major difference is.

One of the things that has driven the mystique of the Wii has been how hard it has been to buy one. But now it's available anywhere, anytime. Does that take away the mystique?
Fils-Aime: I don't think so. From the start, we wanted to reach out to people who did not consider themselves gamers. The only way to reach them is for the product to be readily available, because they won't sleep out in front of a store to buy a Wii. We had to get to the point of having massive availability. We're selling 300,000 or 400,000 units a month, 30 months after launch, and that's never been done before. We've blown past the PlayStation 2 sales rate after 30 months.

How did you solve the availability issue?
Fils-Aime: We've been manufacturing it at a rate that's never been seen before.

But why were there still shortages last holiday season?
Fils-Aime: The fact is, we've been producing at this rate for a year. It's taken us that long to satisfy all of that pent up demand. Now we can do some outreach to people who in the past were saying, "I might be interested in the Wii, but I'm not going to go sleep out in front of a retailer."

With their announced new motion-sensitive control systems, Sony and Microsoft seem to be planning to aggressively go after the elusive mainstream audience. But perception-wise, at least, Nintendo maybe has the opposite problem: You've got the mainstream. How do you reach that core gamer?
Fils-Aime: We have near-term, mid-term and long-term opportunities. The near-term opportunity is the consumer who owns an PS3 or an Xbox 360 and has been bad-mouthing Wii to their friends. We can reach that consumer with games like The Conduit or Tiger Woods with Wii Motion Plus. The mid-term opportunity is the more mainstream consumer who saw Wii at a friend's house but just needs a little extra incentive to get into our game. That's what Wii Motion Plus and Wii Fit Plus and new Super Mario Bros. Wii will hopefully achieve. And the long-term opportunity is that person who currently says, "I don't play video games and I have no interest in playing video games."

What about the Halo audience?
Fils-Aime: We think we win over the Halo audience with something like The Conduit, a multi-player, online, shooting experience, or Dead Space Extraction. And you know what? Once those people buy into Wii, they'll go buy Mario Kart or Wii Fit Plus. We're not going to be satisfied just picking up that existing gamer. We have to reach beyond and get that consumer who doesn't game. That's the only way we'll be able to continue growing as a company and as an industry.

That's not an unlimited audience, right?
Fils-Aime: It's not. And actually the challenge increases the further you dip into this group. Two years ago, theoretically, there were ten consumers who said, "I would never play video games." We picked them off one at a time with Wii Fit or Brain Age 2. Now maybe there's five left, but now the bar is substantially higher for how to get them. Which is why we're looking to push the envelope with something like the Vitality Sensor, and why we have to make current gamers say, "Huh? What is that?" But that's exactly the type of reaction we got a couple of years ago when we first talked about "Wii Fit," and look where we are now.

You just announced the multi-player Super Mario Bros. Wii. How important is that for broadening your Mario audience?
Fils-Aime: I think Super Mario Bros. Wii will first appeal to the traditional Mario fan. But I think we'll also appeal to the consumer who first bought a Wii to play Wii Fit or Wii Fit Plus, who maybe has felt that platforming games are a little too challenging. We'll get that consumer because it's Mario, and because they can play with other people, whether competitively or cooperatively. That's exactly what happened when we launched Super Mario Bros. DS. Initially it was the Nintendo fan. But the only way it's been able to stay in the top ten month after month is because we've reached beyond the Nintendo fan into the brand-new consumer who's picked up a DS for the first time.

Can you talk about what you saw from Microsoft and Sony when it comes to the motion-sensitive controllers. It will be a sort of a new arms race.
Fils-Aime: The only thing I'll say is a rhetorical question. Is it fun? If it's fun, then I tip my hat and say, "Well done." But what's happening sounds to me a lot like, "Who's got the prettiest picture. Who's got high-definition. Who has the best processing power?" It sounds like technology, when the consumer wants to be entertained. Our focus is how do we take active play and make it entertainment. And that's what we're going to continue to focus on. And I think we've done a great job with Wii Motion Plus, and the Balance Board. And we're going to continue to push the envelope in ways to make it more fun.

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WWDC 2009: What will Apple do?

Apple WWDC 2009

The banner caption indicates the focus of Apple's developer conference will be on features of the iPhone OS and third-party apps.

(Credit: Josh Lowensohn/CNET)

Trying to predict what we'll see at Apple's Worldwide Developers Conference this year gives one the slight feeling of deja vu.

Heading into the annual conference last year, we knew there would be three basic topics covered in the event's opening keynote speech: OS X 10.6, the iPhone platform, and new iPhone hardware. You can bet that WWDC 2009--sold out for the second straight year--will hit on those same three areas. But there are still plenty of questions surrounding the specific details of what we'll see Monday morning when the conference opens at San Francisco's Moscone Center.

We know that the human headliner of the kickoff event, the conference keynote speech, will be Phil Schiller, vice president of marketing. Apple has promised he will discuss iPhone OS 3.0, which should be available this summer, as well as Mac OS X 10.6 Snow Leopard.

The other headliner, that will invariably steal the show, will be new iPhone hardware, if it is indeed introduced. It seems a good bet since it's practically Apple tradition now to introduce the latest update to its incredibly popular smartphone at WWDC. The device may not be immediately for sale, and Apple could wait to roll them out in July, like last year. But the No. 1 reason Apple is likely to debut the phone Monday is that the point of WWDC is to teach developers how to work with Apple's mobile and desktop operating systems. It wouldn't make much sense to bypass the opportunity to familiarize them with new application programming interfaces (APIs) for new iPhone hardware.

Of course, rumors have been bubbling since at least January about a second-generation iPhone 3G. Some of the more credible leaked photos and uncovered clues seem to point to a more evolutionary update to the phone's hardware, instead of a major change like last year's upgrade to an iPhone that could handle 3G wireless service. Things that appear likely:

  • It's easy to see Apple keeping the 16GB model of the iPhone, and introduce a 32GB version, while keeping the prices the same: $199 for the smaller, $299 for the larger.

  • A new camera with the ability to take video.

  • A magnetometer built into the phone's hardware.

Speculation regarding a discount version of the phone in a smaller capacity with fewer features for $99 has cropped up also, mostly from Wall Street analysts. Apple already has a 10.8-percent share of the smartphone market, and lowering the price by $100 would be a way to expand the user base even further. But like most things with Apple, we won't know what they're going to do until they decide to tell us.

Beyond rumor, speculation, and grainy photos appearing online, it's impossible to know exactly what to expect. Despite that, some are already saying the anticipated keynote will be underwhelming compared with most years, with Steve Jobs sidelined, and no early signs of any sort of monumental update to the iPhone hardware.

Most of the updates to the iPhone will have to do with the operating system update, which Apple already detailed at a special event in March. We know for sure iPhone OS 3.0 will add some features iPhone users have been demanding since the phone's debut in 2007: background processing, system-wide search, the ability to copy, cut, and paste, multimedia messaging, and an option for a landscape virtual keyboard. There will also be 1,000 new APIs available to developers creating applications for the iPhone and iPod Touch platform. Apple didn't discuss every single one of those at the March event, so it's certainly possible Schiller and whoever else joins him onstage could have saved one or two of the best things to unveil Monday.

Apple has also promised to give more details on Mac OS X 10.6, which the company announced at WWDC last year, and promised it would be ready in "about a year." Apple will likely give us the release date on Monday.

Leading up to the event, rumors of a Verizon service plan option on the iPhone, and the unveiling of an Apple touch-screen tablet have surfaced. Those are likely wishful thinking--for now. Though those rumors could both become reality, it's not likely they'll appear at WWDC. AT&T's contract with Apple to offer the iPhone is said to guarantee exclusivity for five years. And most agree a touch-screen tablet wouldn't be available until 2010 at the earliest.

Of course, many WWDC attendees may still be holding out hope that Jobs will make an appearance Monday. Apple has been clear that Jobs' return as CEO is scheduled for "the end of June," though it's impossible to say for sure whether he would simply attend the conference or not.

We'll be live-blogging the keynote speech, which is scheduled to start at 10 a.m. PDT on Monday. So please be sure to come back and read about what Apple is announcing as it happens.

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Microsoft: Obama's tax plan may hurt U.S. jobs

Microsoft CEO Steven Ballmer offered an unwelcome economics lesson to the Obama administration this week: Higher taxes have consequences that Washington policy-makers may not especially like.

Ballmer said Wednesday that if Congress enacts President Obama's plans to impose higher corporate taxes, a sensible thing for Microsoft to do would be to move jobs offshore.

"It makes U.S. jobs more expensive," Ballmer said, according to Bloomberg News. "We're better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S."

Last month, the president announced a plan to rewrite tax law by preventing U.S.-based multinational companies from "deferring" and keeping profits offshore, which can lower their tax bills.

The current U.S. corporate tax system is unusual because it taxes income that Microsoft and other companies make in other countries, even if they already paid foreign taxes on that income. That makes U.S.-based companies less competitive than, say, Irish firms that don't pay taxes on foreign income and aren't hit by double taxation; deferred taxation is a way to lessen the sting.

If deferred taxation is eliminated, it becomes more tempting for a company to move its headquarters from Seattle to Dublin. That's voting with your feet.

That's why business groups have opposed the president's plan. The U.S. Chamber of Commerce says it will "impede growth in the U.S. economy, (and) cause the loss of jobs." The National Foreign Trade Council called it "counterproductive."

Microsoft says it employs about 95,000 people worldwide, and about 56,500 in the United States.

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