All Things Digital

Our industry is not immune to what goes on in the global economy. And yet as I travel, given the current circumstances, people still see a certain buoyancy in the market.”

– Microsoft CEO Steve Ballmer, Sept. 26, 2008

Wall Street’s 777-point selloff Monday–one of its worst days since 1929–hit many tech stocks harder even than the overall market on Monday. Said Ross Sandler, senior Internet analyst at RBC Capital Markets, “Tech took it on the chin disproportionately.”

Indeed, it did. And a couple of other places as well, from the looks of things.

A quick overview of the carnage:

• Amazon (AMZN) fell 10 percent to $63.35
• Apple (AAPL) fell 17.9 percent to $105.26
• Cisco (CSCO fell 8.5 percent to $21.79
• Comcast (CMCSA) fell 13 percent to $18.01
• Dell (DELL) fell 9.4 percent to $15.41, a new 10-year low
• eBay (EBAY) fell 12 percent to $19.95
• Google (GOOG) fell 12 percent to $381.00, a new 2-year low
• Intel (INTC) fell 10.1 percent to $17.27, a new 2-year low
• Microsoft (MSFT) fell 8.7 percent to $25.01
• Oracle (ORCL) fell 9 percent to $18.77
• Qualcomm (QCOM) fell 13 percent to $39.88
• Research In Motion (RIMM) fell 12.8 percent to $61.73
• Sirius XM (SIRI) fell 18 percent to $0.62
• Sun (JAVA) fell 11.7 percent to $6.75, a new 13-year low
• Yahoo (YHOO) fell 10.8 percent, to $16.88, a new 5-year low

Seems the tech industry “buoyancy” to which Microsoft CEO Steve Ballmer referred last week was more of a noneffervescence. Certainly, that’s the impression one gets from reading the statement Microsoft just issued calling on Congress to revisit its vote against the financial bailout plan. “Microsoft strongly urges members of the U.S. House of Representatives to reconsider and to support legislation that will re-instill confidence and stability in the financial markets,” General Counsel Brad Smith said in a statement. “This legislation is vitally important to the health and preservation of jobs in all sectors of the economy of Washington State and the nation, and we urge Congress to act swiftly.”

What was that you were saying about “buoyancy” again, Steve?

Still, to be fair, the tech sector does appear to be gaining some ground in early trading today. The tech-heavy Nasdaq rose 2 percent to 2,027, reclaiming some of Monday’s ugly 9 percent loss. Apple shares are up 2.7 percent at $106.70 as I write this. Google shares are up 4.5 percent at $398.06. Microsoft is up 2.5 percent at $25.63. Even Yahoo is on an upward track, up 2.43 percent at $17.29.

Oracle CEO Larry Ellison has a sense of humor nearly as large as his astonishing $84.6 million pay package. Asked for his views on cloud computing at Oracle OpenWorld, a smirking Ellison reduced the concept to a thin sheen of windshield condensation.

“The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do,” Ellison said. “I can’t think of anything that isn’t cloud computing with all of these announcements. … Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop? We’ll make cloud computing announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of cloud computing other than change the wording of some of our ads.”

Really.

Well, for on thing, Oracle (ORCL) might announce a cloud computing-based data backup solution. Call it Oracle Secure Backup Cloud Module or something. Offer it on, say, Amazon’s (AMZN) Simple Storage Service. The company might also partner with Intel (INTC) to speed enterprise adoption of cloud computing. That is, if it hasn’t done that already …

Founded nearly a decade ago on patents for printing active-matrix electronic display panels on thin, flexible plastic substrates, Plastic Logic spent the ensuing years developing a lightweight plastic screen that mimics the look–but not the feel–of a magazine or newspaper. And this morning, the company uncrated it. Thinner than a typical pad of notebook paper, the Plastic Logic Reader boasts a letter-sized–8.5-by-11 inches–touchscreen capable of displaying not just newspapers, periodicals and books, but a full range of business document formats as well.

Like Amazon’s (AMZN) Kindle, the Plastic Logic Reader uses a highly legible black-and-white display technology developed by E Ink. And like the Kindle, it can be updated wirelessly. But unlike the Kindle, the Plastic Logic Reader includes touch-based markup and annotation features. It’s also about one-third the Kindle’s thickness and its screen is more than twice as large. It would appear, then, that Plastic Logic’s device will significantly raise the bar on electronic reading devices when it debuts in Jan. 2009, perhaps even beyond the reach of Amazon’s rumored Kindle 2.0.

Apple’s iTunes movie store just got its first legitimate rival: Amazon Video on Demand. Launched Wednesday night, the new service replaces
Amazon Unbox, the mediocre, odiously restrictive, Windows-only download service the retailer launched last year. Amazon Video on Demand offers Amazon’s entire catalog of 40,000 movies and TV shows for ad-free streaming to Macs, PCs, and Internet Video Link-equiped Sony Bravia flat-screen TVs. Previously Amazon (AMZN) had sold movies and TV shows as downloads, and then only for PCs, TiVo and Windows Media Center devices, so this is quite a change. Movie rentals run $2.99-$3.99; TV rentals are a flat $1.99 per episode or segment–with savings available through season passes. All rentals expire 24 hours after purchase.

One-click cinema. Sounds pretty slick. At least until we find out what Apple has up its sleeve next Tuesday.

Amazon’s next-generation Kindle e-book reader may be significantly thinner than its predecessor. It may boast an improved screen and a more intuitive interface. It might be a little less ugly. It could even be “the device Amazon wanted to release in the first place,” as some reports have claimed. But it will not arrive at market in October as rumored. Nor will it arrive before Christmas. In fact, Kindle 2.0 won’t debut in 2008 at all, according to Amazon (AMZN) spokesman Craig Berman. “Don’t believe everything you read,” Berman told the New York Times. “There’s a lot of rumor and speculation about the Kindle. One thing I can tell you for sure is that there will be no new version of the Kindle this year. A new version is possible sometime next year at the earliest.”

Amazon (AMZN) racked up its second acquisition of the month today, announcing the purchase of Shelfari, a social-networking site for bibliophiles. This just three weeks after the retailer acquired AbeBooks, an online marketplace for rare books that happens to hold an equity stake in Shelfari’s chief rival, LibraryThing. Which makes for an awkward situation, given the bad blood between the two. LibraryThing has been a vocal critic of Shelfari, denouncing it as a “bad actor” that’s built its business through astroturfing and spam. But now that bad actor is owned by one of LibraryThing’s own investors. “LibraryThing is clearly worried about today’s acquisition,” Richard MacManus writes over at ReadWriteWeb. “… Founder and lead developer of LibraryThing Tim Spalding notes that “Amazon can make Shelfari the choice of casual book lovers who see a button on Amazon.com and click on it.” LibraryThing hopes to compete with this by being a superior service. However it’s very difficult to compete against Amazon’s bulk.”

How well is Amazon’s Kindle electronic book reader really doing? Well, according to Citigroup’s Mark Mahaney, whose analytical prowess enables him to extrapolate sales figures from little more than Kindle’s sales ranking on Amazon’s Web site and the number of customer reviews it has received, the Kindle is doing quite well. So well, in fact, Mahaney sees “Amazon selling 380,000 Kindles this year to become the iPod of the book world.”

But according to McAdams Wright Ragen analyst Tim Bueneman, who’s actually, you know, spoken with some Amazon (AMZN) officials, the device might not be selling as well as Mahaney claims. “[Amazon] told us that the Kindle is definitely selling very well, but they also said the analysts and reporters giving out these extremely high estimates ‘did not run them by company,’” Bueneman wrote in a research note to clients that also confirmed that there are “several new, improved versions of the Kindle in the works.”

“Extremely high estimates?” Sounds like Amazon’s trying to temper expectations, doesn’t it? And, perhaps, to live up to them at the same time. The retailer announced a new promotion today that will knock $100 off the Kindle’s $359 price until Sept. 8. That ought to boost the device’s sales numbers, whatever they are.

Amazon’s Kindle e-book reader may not be the iPod of the book world yet. But it will be some day if Citigroup research analyst Mark Mahaney has anything to say about it. In a report to clients Monday, Mahaney, who in May predicted the device would generate $750 million for Amazon by 2010, said the company could be on track to sell as many as 380,000 Kindles this year.

380,000 Kindles sold. That’s double Mahaney’s May prediction. And it’s an important number historically. “In its first year, that’s exactly how many iPods were sold,” Mahaney wrote. “Turns out the Kindle is becoming the iPod of the book world.”

But is it really? And on what sort of data is that pronouncement based? Amazon (AMZN) itself has disclosed no actual sales data for the Kindle. The company said only that the selection of titles available for the device has jumped 67 percent since its launch. Surely it’s impossible to extrapolate sales of 380,000 from that figure alone. So on what other data is Mahaney relying here? Just this, apparently:

1. An anonymous source recently told TechCrunch that Amazon has shipped 240,000 Kindles. That’s shipped, not sold.
2. Kindle tops Amazon’s Bestsellers in Electronics list
3. Kindle has more than 4,000 customer reviews, quite a few of them positive.

Not exactly an abundance of hard data, is it? Which is not to say that the Kindle isn’t well on its way to becoming the iPod of the book world, just that we won’t know for certain until Amazon tells us with hard sales figures.