As chip sales plummet, which software vendors will survive?

The Semiconductor Industry Association (SIA) is now projecting that global chip sales will drop 21 percent in 2009, reflecting a souring view since its last projection in November 2008, according to The Wall Street Journal. Fewer chips means fewer new servers and fewer personal computers sold, which is consistent with IDC's report of a 25-percent decline in server sales in the first quarter of 2009.

Against the backdrop of these hardware declines, which software vendors are best-positioned to withstand CIOs' spending frigidity?

Recent earnings reports from Novell and from Red Hat suggest that Linux and open-source vendors may clean up even as spending gets chopped.

Indeed, Red Hat CEO Jim Whitehurst has suggested that the darkened economy spells "light" for Red Hat:

Our value proposition is even more compelling in a challenging economic environment, and we believe that's a key driver to our solid financial results and market share gains.

IT departments woke up on January 1, 2009, almost certainly looking at shrinking IT budgets but a continued need to make themselves useful to their enterprises. Enter open source, with its nonexistent (at least initially) license fees and try-before-you-buy mentality, which is precisely the right message for a down economy.

I work for Alfresco, an open-source content management and collaboration company, and advise over 10 open-source start-ups, including MindTouch, Volantis, SugarCRM, JasperSoft, Openbravo, and others. Across the board, the sour economy has been a net positive for the open-source companies with which I'm familiar, with pipelines growing by a factor of three in many cases, albeit with longer than usual sales cycles.

The question for companies that peddle proprietary products is whether they can replicate the ease of adoption that open source affords. Oracle has gone a long way toward this by making its products available to developers to download and try for free, but some companies still have yet to find a clue, as Cloudera CEO Mike Olson discovered recently with GitHub.

The market has tightened considerably, and is likely to get worse. The software vendors that can deliver superior value at a lower cost and less hassle will win in this environment. This should bode well for open source, but open-source companies still have their work cut out for them to come out ahead.

Follow Matt Asay on Twitter @mjasay.

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Keep tabs of terms of service with TOSBack.org

TOSBack.org Web site.

(Credit: Dong Ngo/CNET)

It's the closely printed (or displayed in very small font size at a Web page) pieces of text that most of us don't bother to read before we agree to them. Yet it's something that shouldn't be ignored at all. It's called terms of service, or TOS for short.

Remember the time that AT&T sneakily changed its TOS and banned users from streaming media from third-party sites via its cellular network? Thanks to the media outcry (CNET News included) the company retracted the changes a few days later only to reinstate them again, at a later date, in a different language.

If anything, this was a lesson on how important it is to keep track of these terms of service.

And the lesson was really learned Thursday with the introduction of TOSBack.org. This is a new site designed to track changes in policies imposed by popular Internet Web sites such as YouTube, Craigslist, Facebook, Google and so on, with the intention of helping users spot potentially harmful changes.

Currently, TOSBack.org tracks 44 popular sites' policies (unfortunately AT&T is not yet included) and allows for comparing word by word and highlight changes between different versions. The site is capable of noticing any modifications within hours of an update.

TOSBack.org is a project of the privacy advocacy group Electronic Frontier Foundation. Going forward, the site plans to add more companies, including banks, credit card companies, and so on to its tracking repertoire.

Personally I find this site really helpful as often time many Web sites change their terms of service without notifying their customers, who are entitled to know under what conditions the service is provided to them.

It would be even more helpful, however, if the site provided translation of these terms of service into layman's terms, as not everyone has the legal background to really understand what they mean.

For the companies, hopefully, this will deter them from changing the terms of service on their own account, regardless of users' consent.

TOSBack is a nonprofit membership-funded organization, so if you think this is a useful service, feel free to make adonation or consider becoming a member.

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PayPal and Picnik come to Yahoo Mail

New applications for Yahoo Mail, such as this one from PayPal, let you send money right from your inbox without having to visit PayPal's site.

(Credit: Yahoo)

Yahoo has added new applications for its users in another step toward giving its users more and more to do from within Yahoo.

The company plans to announce the limited beta of three new Yahoo Mail applications from PayPal, Picnik, and Zumo Drive on Friday. Yahoo Mail users who have indicated an interest in signing up for Yahoo's beta programs will be the first to get a crack at the new services, with the applications coming to the wider user base over the next several months.

It's all part of Yahoo's Open Strategy, designed to let outside developers tap into the company's properties and offer their wares inside Yahoo's network of sites. It's becoming an old story, but the trend these days in the Internet world is the proliferation of large sites like Yahoo, Google, and Facebook as development platforms unto themselves, with application developers spending more and more time writing programs that run on those sites, rather than traditional operating systems.

For example, PayPal's application will let Yahoo Mail users send money to another user by opening a window like a tab in a browser. Picnik, a popular browser-based photo editing tool, will bring that feature to Yahoo Mail in a similar way, letting you open the service right from an e-mail message.

Yahoo is also expanding the Open Strategy to other parts of its portfolio of sites. Wordpress bloggers will be able to post to their blogs from their MyYahoo page, and manage their money with Mint.com's services. And Yahoo TV Widgets will now support searching and viewing of archrival Google's YouTube video collection.

It's taken Yahoo quite some time to put these applications together, first announcing the Yahoo Open Strategy in April 2008 but not taking it live until last December, when it unveiled the first set of applications for Yahoo Mail and the MyYahoo start page. It also appears the company plans to wrap these applications along with forthcoming ones into a redesign of its homepage, which CEO Carol Bartz said this week would arrive "later this fall."

The idea is convenience: letting users get everything they need and want in one place. But the upshot is that by providing incentives to stick around on Yahoo, the company is making it more likely that you'll stumble upon something else at Yahoo, such as an ad or another service that drives a search query: 98 percent of Yahoo's searches come from people who are already on the site.

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Swedish researchers to unravel secrets of solar storms

Solar storms that can threaten satellites, power lines, and communications are to be monitored in a large-scale study at the Swedish Institute of Space Physics and Uppsala University starting Thursday.

The organizations will use stream-computing technology to analyze data from sensors that track high-frequency radio waves, the Swedish Institute of Space Physics (IRF) said in a statement.

"Over the next year, this project is expected to perform analytics on at least 6GB per second or 21,600GB per hour--the equivalent of all the web pages on the Internet," said the IRF statement.

The organizations will use IBM InfoSphere Streams software to analyze the data. IBM said in a statement that the data will be collected using antennae designed to monitor radio waves in three dimensions to sample high-frequency emissions from space.

The Swedish scientists wish to study plasma eruptions on the sun, as those eruptions can trigger high-energy storms that disrupt electronics and electrical systems in orbit and on Earth. One of the key aspects of the study is the amount of data being collected using the recently developed antennae, which will be filtered and analyzed.

"We've embarked upon an entirely new way of observing radio signals using digital sensors that produce enormous amounts of data," Bo Thidé, professor and head of research, Swedish Institute of Space Physics, said in the IBM statement. "With this type of research, you have to be able to analyze as much data as possible on the fly."

IBM InfoSphere Streams software allows multiple sources of streaming data to be filtered, classified, transformed, and correlated, according to an IBM white paper. High-volume structured and unstructured data can be fed through input connectors to heterogeneous, multiscale or commodity hardware. Operations performed on that streaming data are determined by high-level system components that enforce user requirements onto running applications, said the white paper.

Tom Espiner of ZDNet UK reported from London.

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Sprint CEO says Pre deal is longer than six months

NEW YORK--Verizon Wireless's claims that it will be offering the Palm Pre within six months are not accurate, says Sprint Nextel's CEO Dan Hesse.

"They need to check their facts," Hesse said in an interview at a press event here to launch the Palm Pre. "That just is not the case. Both Palm and Sprint have agreed not to discuss the length of the exclusivity deal. But I can tell you it's not six months."

Last week, Lowell McAdam, CEO of Verizon Wireless was quoted by Reuters as saying that over the next six months consumers could expect to see devices "like the Palm Pre and a second-generation Storm" on its network.

AT&T's CEO Randall Stephenson also said last week that he hoped to have the Palm Pre on the AT&T network when the exclusivity deal with Sprint ended.

The Pre, which was announced in January at the Consumer Electronics Show in Las Vegas, is expected to be Sprint's flagship smartphone. And the company has high hopes that the device, which will be sold only on Sprint's network starting Saturday, would help the troubled carrier improve its image and retain customers who might be tempted to defect to AT&T for the iPhone. Early reviews of the product have been positive with many reviewers, including CNET's own Bonnie Cha, calling the phone a good alternative to iPhone.

But claims that the Pre exclusivity deal with Sprint would only last six months had thrown cold water on expectations for what the Pre could do for Sprint.

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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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