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.

Apple’s much lauded iPhone captured 28% of the smart-phone market in the States by the fourth quarter of 2007–just six months into its launch. Today it holds something less than that–about 19.2%. But to look at the headlines, you’d think it controlled the market in its entirety. A quick search on Google returns 19,035 results for “iPhone”– from Jun. 2, 2008 to today. Why? Because in a few hours, Apple CEO Steve Jobs will address the company’s Worldwide Developers Conference in San Francisco, at which he is expected to unveil the next version of the company’s iPhone.

And for Apple’s (AAPL) sake, I hope he does. Because with expectations running this high, I’d hate to see what happens if he doesn’t. Although the new Apple Store housed in a life-size replica of the Golden Gate Bridge pictured in the invite would certainly take some of the heat off …

Anyway, I’ll be live-blogging from inside Moscone West in San Francisco starting at 10 a.m. PDT. Here’s something to read while you wait …

• From Moscone West: This is crazy. They just opened a single door to let cameras in and the media rushed the gate. Its like that 1979 Who concert in Cincinnati.



• The hall in Moscone West is filling quickly to the sounds of Jerry Lee Lewis. From the looks of it media and developers are here in equal numbers.
• Jobs takes the stage. I’m sitting about 20 rows back, but even I can see he’s looking pretty thin from here. He gets right into it, pulls up a slide of a stool and describes Apple as a three-legged company. Macs, music and the iPhone.
• Jobs will spend the morning talking about the iPhone. This afternoon Apple will discuss OS X “Snow Leopard.”

Read more »

Cisco is calling it its biggest enterprise product launch in 15 years, and given the cloud of hyperbole in which it debuted today the Nexus 7000 data-center switch may be just that.

Like any network switch, the Nexus 7000 controls and directs the flow of data between connected computers. But unlike any network switch, it can transfer data at 15 terabits per second, which–depending on whatever silly illustrative metric you prefer–is fast enough to either:

• copy all the searchable Web in less than eight minutes;
• download Wikipedia’s database in 10 milliseconds;
• download 90,000 Netflix movies in less than 40 seconds;
• run 5 million concurrent high-quality videoconferences between New York and San Francisco;
• or send a two-megapixel digital photograph of CEO John Chambers to every human being on earth in 28 minutes.

The company claims it can, anyway. “It isn’t often you get to do a clean-sheet design of a system, and that is what we have done over the past four years,” Doug Gourlay, senior director of marketing in the Data Center Solutions unit at Cisco, told SearchDataCenter.com. “The Nexus series is analogous to the Toyota creating the Prius; we have created a new class of data-center switching. We made Ethernet lossless.”

Neat.

For Cisco, which is pushing to increase its presence in the data center and virtualization markets, the Nexus 7000 could be a big winner. “If it works, Cisco would mark off a hugely strategic niche for itself, as a kind of king of virtualization,” Peter Burrows writes in BusinessWeek. “That’s the name of a technology that’s risen to prominence in recent years within pockets of the data center. VMWare, for example, has become corporate tech’s new darling, thanks to software that lets companies spread work among all of their available servers, rather than have them sit idle waiting for their particular job to be called. In storage, gear from companies like Brocade plays a similar role. But until now, no company has figured out a way to easily coordinate these various pools of virtualized gear.”

So much for Cisco Systems’ succession plan. Charlie Giancarlo, heir-apparent to CEO John Chambers, is leaving to join private equity firm Silver Lake Partners. Seems Chambers, who managed to talk Giancarlo out of resigning once before, wasn’t so successful this time around. “Charlie’s been one of the very few leaders that I’ve lost out of Cisco when it wasn’t the right time to lose him,” Chambers said during a conference call yesterday.

Indeed. Try as it might to paint a happy face on Giancarlo’s departure (the title of the press release announcing the resignation: ‘Cisco Evolves Senior Technology Leadership Team’), it is a major blow for Cisco–especially after Mike Volpi, another CEO candidate, left for online video company Joost last February.

“Charlie is too good for Cisco to lose,” Prudential analyst Inder Singh told the FT. “He has touched on or operated many different parts of their business. This will be fairly difficult for Cisco to explain and it will be difficult to replace him. They have a lot of people that probably will be groomed for the CEO position, but it’s not clear to me if there is anyone ready now. They’re all future prospects. You want to replace John Chambers with a John Chambers. It’s not clear that there’s anyone quite ready to take on that mantle.”

Well that explains it. Motorola’s Chief Technology Officer Padmasree Warrior left the struggling mobile-phone maker earlier this week and now we know why. She landed a new CTO gig at Cisco. “I enjoy envisioning and creating the future, and leveraging technology leadership for business growth,” Warrior explained in a turgid little post to the Official Cisco Blog. “Expertise, experience, energy–these exemplify my platform for achievement. This Platform Paradigm draws me to Cisco.”

Uh-huh. Well, it certainly wasn’t Cisco’s share price, which has fallen more than 20% from its November high …

Microsoft chairman Bill Gates, not Apple co-founder and CEO Steve Jobs, is the most influential IT personality of the past quarter-century.

This according to a survey of IT professionals conducted by the Computing Technology Industry Association. Asked to list the most influential tech personalities of the last 25 years, 84% of respondents listed Gates, and 73% listed Jobs. Also appearing on the list: Dell CEO Michael Dell (53% of respondents); Linux founder Linus Torvalds (47%); Google founders Sergey Brin and Larry Page (also 47%); Cisco CEO John Chambers (44%); Oracle CEO Larry Ellison (36%); Vint “Father of the Internet” Cerf (35%); Microsoft CEO Steve Ballmer (also 35%); and eBay CEO Meg Whitman (30%).

Apple is rapidly becoming a minor player in the computer business and may be swallowed up by Sun Microsystems Inc. or another rival.”

–BusinessWeek, February 1996

In the movie “Independence Day,” a PowerBook saves the Earth from destruction. Now it’s time to return the favor. Unfortunately, even devoted Mac addicts must admit that you look a little beleaguered these days: a confusing product line, little inspiration from the top, software developers fleeing.”

–“101 Ways to Save Apple,” Wired, June 1997

In 1997, shortly after Steve Jobs returned to Apple, Dell’s founder and chairman, Michael S. Dell, was asked at the Gartner Symposium and ITxpo97 how he would fix Apple, then deeply troubled financially. “What would I do?” Dell said. “I’d shut it down and give the money back to the shareholders.”

Little did he know he’d be eating those words a few years later when Apple’s market capitalization surpassed not just Dell’s, but IBM’s as well (as some observers have been predicting for a while now). After the record-breaking quarter it posted yesterday, Apple is today the most valuable computer-maker in the world. Its market capitalization now stands at nearly $162 billion, $6 billion more than that of industry heavyweight IBM. In fact, its market cap is the fourth largest among technology companies, lagging behind only Cisco ($189 billion), Google ($208 billion) and Microsoft ($290 billion). Which is obviously great news for Apple shareholders, as John Murrell notes over at my old stomping grounds, Good Morning Silicon Valley: “… while Google-watchers go gaga over its soaring share price, note that an investor who bought Apple on the same day Google stock debuted in 2004 would have, as of the close of market yesterday, made 40 percent more than if the same money had been put into the search sovereign’s shares.

KISS finally took the stage with many lights, flames, pyrotechnics and, yes, blood oozing from Gene Simmons’s mouth. Many partyers had their faces painted to look like different members of the band. And these are the people who design and operate the biggest, most sophisticated and mission-critical networks in the world. A company’s lifeblood is entrusted to someone decked out and painted up to look like KISS drummer Peter Criss. As one customer from Minnesota remarked to me while we were both waiting for an opportunity to use the portable facilities, ‘It’s hard to believe that some of the smartest people in the world are here.’”

–Network World Managing Editor Jim Duffy on the conclusion of Networkers at Cisco Live 2007

Cisco CEO John Chambers may be a silver-tongued orator, but he’s no Gene Simmons. Following Kiss’s “headlining” appearance at last week’s Networkers at Cisco Live extravaganza in Anaheim, Calif., the band’s freakishly long-tongued frontman joined bandmate Paul Stanley to offer his thoughts on “the connected life” in a Cisco video blog.

I’m not sure which is more astonishing–Simmons heralding in the video below the advent of “the connected life” and Stanley complaining that today’s handheld screens are too small and difficult to read, or the fact that Cisco hired a fire-breathing, blood-spitting, ’70s glam rock band to close out a company event.

You know Web 2.0 has jumped the shark when a company whose core business is peddling switches and routers gratuitously doses its latest earnings call with Web 2.0 pixie dust.

Speaking to analysts and investors yesterday after reporting better-than-expected third-quarter sales and profits, Cisco CEO John Chambers peppered his call with Silicon Valley’s favorite buzzword, pitching social networking and the wider Web 2.0 phenomenon as an important driver of Internet traffic and thus of Cisco router and networking-gear sales. “We have spent the last six years preparing for the next wave of collaboration, enabling our Web 2.0,” Chambers said. “In our terms, Web 2.0 is simply the technologies that enable user collaboration. These technologies include Web services, Unified Communications, TelePresence, blogs, Wikis, pier-to-pier networks, podcast, MyShelf, etc. I do not think we are being overly optimistic when we say that the second phase of the Internet that is collaboration enabled by Web 2.0 will drive the industry for the next decade from an innovation, productivity, personalization and process change perspective.”

Chambers better hope so. Otherwise, its recent acquisitions of WebEx, social-networking technology developer Five Across and some assets of Utah Street Networks (another social-networking company) are going to look pretty silly.