All Things Digital

Apparently, someone forgot to tell Intel (INTC) about the recession. The company reported a sharp rise in profit on Tuesday in the face of a flaccid U.S. economy. Revenue rose 9 percent to $9.5 billion from the year-ago quarter. And net income rose 25 percent to $1.6 billion, or 28 cents a share–well above the expectations of Wall Street analysts, who had projected earnings of 25 cents a share.

Best of all, Intel predicted more strong sales in the months to come. “As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe,” Intel CEO Paul Otellini said in a statement. Comments like that, coupled with Intel’s strong Q2 earnings, should go a long way toward reassuring investors that the technology sector isn’t succumbing to the economic downturn. At least until AMD reports second quarter results on Thursday. Analysts expect AMD (AMD) to post a loss of 52 cents per share.

Intel’s putting the mobile phone market on speed dial. Two years after selling off its chip business for mobile handhelds and cellphones to Marvell, the world’s largest chip-maker is turning its attention once again to the mobile phone market with dollar signs in its eyes. Seems the company can no longer tolerate the idea of ARM, and not Intel (INTC), inside many of the mobile phones on the market today.

In an interview with the Financial Times, Intel CEO Paul Otellini (pictured above) said he’s confident the company’s new Atom processor will expand Intel’s reach into the mobile phone market. “If you accept that the value proposition of the high end of the mobile-phone market is full Internet access that happens to have voice, my view is that it’s easier to add voice to a small computer than vice-versa,” Otellini told the FT, noting that the company’s expertise in PC chips will come in handy in making inroads into markets where devices are becoming increasingly more PC-like. Among them, those for televisions, ultra low-cost PCs, embedded controllers and, of course, smartphones. “We are bringing an element of computing into large markets, many of which are larger than the PC business, certainly in terms of units,” said Otellini. “Each of these four markets is a $10 billion opportunity by 2010 or 2011.”

Message to ARM: We’re coming for you.

Note: Digital Daily’s John Paczkowski is off sick today. This post is being filed from notes taken at the Macworld keynote at San Francisco’s Moscone Center by Associate Editor John Sullivan. Check back later for Paczkowski’s take on the proceedings.

After a week of rumor buildup and speculation, Apple CEO Steve Jobs’s Macworld keynote seemed almost subdued. He gave the crowd what it expected in terms of new iPhone apps and additional iTunes features, and then finished with the announcement it had been primed for: the MacBook Air, the world’s thinnest laptop computer.

Jobs began his keynote a few minutes past 9 a.m. For the barely contained crowd (Moscone West was packed), the aura of anticipation was heightened by rock and hip-hop music blaring over the speakers. After the lights came down, the crowd hooted and yelped. Then, after a Mac Guy/PC Guy video (about what a terrible year it was for PC guy, who finishes by telling Mac Guy he’s “gonna copy everything you did in 2007″), Jobs took the stage in his uniform black turtleneck and blue jeans, declaring: “Clearly something is in the air today.”

After noting that 2007 was an “incredible” year, an “extraordinary” year, capped by the “revolutionary” iPhone, Jobs announces that he will address four things:

1. Leopard:

   This was the most successful release of Mac OS X, Jobs notes, with 5 million units sold. He quotes reviews from Walt Mossberg of The Wall Street Journal (and co-executive editor of this site), David Pogue from the New York Times and Ed Baig of USA Today.

   As for Time Machine: For backing up files, it works great, he says. Today, he’s announcing a companion product: a backup appliance called Time Capsule. Plug it in, turn it on, enable Time Capsule on all your machines: one with 500 gigabytes ($299) and another with one terabyte ($499). “We want people backing up their content,” he says. “[This] is a perfect companion to Leopard.”

2. iPhone:

   “Got some great news for you,” Jobs announces. “Today is the 200th day the iPhone is on sale. Sales of 4 million so far. What does this mean for the smart-phone market?” He quotes research: RIM had most sales (39%); Apple had 19.5%; Palm 18%. First 90 days, iPhone equaled Palm, Motorola and Nokia sales combined, Jobs says.

   SDK for the iPhone is coming in late February, Jobs continues, but: “We wanted to give something today.” He lists “great new features”: maps with location; Webclips to customize home screen; SMS messaging to multiple people; chapters capability for video; and support for Lyric.

   Map app looks much more localized, customizable; drop a pin, move a pin. Developed in conjunction with Google, Jobs says.

   SMS more than one person: With the new app, you can message multiple recipients–one click and you can send multiple messages.

   Webclips: We worked with Google on this app, Jobs notes again. The icons can be added to screen of iPhone. Jobs demos a “jiggle” function to edit Webclips and rearrange them. This feature can add up to nine home screens to the iPhone.

   How do we make maps work? Jobs asks: Skyhook Wireless, which mapped Wi-Fi hotspots and located 23 million of them. “Isn’t that cool? It’s really cool,” Jobs enthuses. Triangulation is the key, he says, noting that’s what Google is doing.

   “All of this is available today as a free update to all iPhone users,” he proclaims, to applause.

   Then, almost as an afterthought: iPod Touch. “We’ve decided to add five apps”: maps with Wi-Fi location, mail, stocks, notes and weather–all of which will be built in to new models, with a upgrade available to existing users for $20.

3. iTunes:

   “We sold our four billionth song this month,” Jobs notes, adding that on Christmas Day, iTunes sold 20 million songs. It has sold 125 million TV shows and 7 million movies.

   But, he adds, we think there’s a better way to deliver movies: iTunes movie rentals. Not like music, which you buy to listen to a thousand times. You watch a movie once. Touchstone, Miramax, MGM, Lionsgate, New Line are all on board, plus (big applause): 20th Century Fox, Warner Bros., Disney, Paramount, Universal and Sony. “We have every major studio supporting us: really, really great films…We’re gonna launch with 1,000 films by the end of February.” And you can watch them anywhere, Jobs notes: Mac, PC, iPhone–anywhere with broadband. When you rent, you get a 30-day window to watch a movie, with a 24-hour start/stop time frame. Plus, he notes, you can transfer them around your devices, too. Cost: $2.99 for library titles, $3.99 for new releases.

   Jobs repeats point that all movies can be moved to a different device: e.g., iPod or PC. But what about flat-screen TV? “All of us have tried,” Jobs says of that hurdle, “and we’ve all missed.” But now, he adds, we’re back with Apple TV, Take 2: No computer, but it still syncs with TV.

   The iTunes movies can also be rented in high definition with Dolby 5.1 sound. You can get podcasts, photos from Flickr and .Mac. Finally, Jobs mentions a YouTube connection: 50 million videos. So you can buy TV shows and music and play this iTunes content on TV too.

   The HD-quality option is $1 more, Jobs says: $4.99 for new releases. (Demo: Jobs shows free preview function for “Blades of Glory,” as well as an almost instantaneous download and play of movie). Full DVD quality. Then, he gives an HD demo of “Live Free or Die Hard”: “Very strong,” Jobs opines.

   TV shows: Over 600 shows, he notes, at $1.99 per episode. All can sync with PC or Mac.

   Podcasts: lot of HD podcasts, very cool. “HD content streaming free.” Shows “incredible” clip from Teton.

   For Apple TV: free software upgrade for current owners. But because “We want to make Apple TV even more accessible,” starting today, Jobs says, the new price is $229 (from $299).

   “I think we’ve got it all together,” Jobs says, noting Apple has a great working relationship with Fox. He then introduces Jim Gianopulos, chairman and CEO of 20th Century Fox Filmed Entertainment: “When you get down to it, there are two things,” Gianopulos says. “Make great movies, and give them to audience in as many ways as they want.” People want choice, he adds, viewing options, access, control and availability.

   “This is the coolest thing we ever heard,” Gianopulos says. “Music, then iPod. Phone, then iPhone. Apple does things in innovative ways. We’ve been working on DVD…[his Blu-ray mention draws applause]…But we also don’t want to deny the viewer the option of having a copy”–a physical copy of the movie. He shows first one, a take-off on “Star Wars.” “It’s an exciting beginning with Apple,” he concludes.

4. MacBook Air.

   Jobs is back: “There’s something in the air,” he repeats. “As you know, Apple makes the best notebooks on the planet. Today, we’re introducing a third kind of notebook: MacBook Air.” After comparing all subnotebooks, he announces: “There was room for improvement.”

   So, MacBook Air stats: .76 of an inch at thickest part to .16 of an inch at thinnest. “We’re talking thin here; let me show it to you now.” He picks up a manila envelope and produces the aluminum device; crowd oohs and ahs at its size. Yet it has a full 13.3-inch display; “gorgeous” Jobs says. It also has a built-in camera; full-size back-lit keyboard; multi-touch gesture function–in short, Jobs says, “We’ve taken things we’ve learned from iPhone and now they’re in our computers.”

   How did Apple do it? Three things: battery; 1.8-inch drive; 80GB hard-disk drive (or 64 SSD, as an option). The laptop’s board is the size of a pencil. “An amazing feat of engineering,” Jobs notes. “And we didn’t compromise on performance: speedy processor: Intel Core 2 duo.” Jobs mentions Apple’s great relationship with Intel; “We asked them to consider smaller packaging on their chip: They came up with the same chip in a package that is 60 percent smaller, and that’s why we were able to build the MacBook Air,” Jobs remarks.

   Then Intel CEO Paul Otellini comes onstage and delivers his take on how the two companies collaborated on meeting the challenge. In short, a commitment to innovation drove the effort.

   Bottom line: After more discussion of the MacBook Air’s features, Jobs mentions price: All these features–along with a battery that gives five hours per recharge–for $1,799. Audible “wow” from the audience.

   One other side of MacBook Air, Jobs adds: environmentally conscious: aluminum case; arsenic-free glass; mercury-free and bromide-free components, plus less packaging.

So, Jobs concludes, “The thinnest notebook in the world joins MacBook and MacBook Pro, the best in the industry.”

So how many times do you think Intel CEO Paul Otellini is going mention Moore’s Law during his keynote at CES (which I’m live-blogging from the ballroom of the Venetian Hotel in Las Vegas)?

I’m betting once every seven minutes for its duration. Any takers?

Here’s what Otellini said and did, in reverse chronological order:

5:34 p.m.: Otellini closes with a quote from Bob Noyce: “Don’t be encumbered by history. Go off and do something wonderful.”
And that’s it. (Parting shot: All the demos were run on Windows XP, not Vista.)
5:33 p.m.: “As the Internet becomes more powerful, more context-aware, more and more industries will be transformed. Why? Because consumers will demand a seamless experience.” Increasingly, the consumer will be the creator of content, Otellini concludes, with the Internet acting as a distribution outlet. (And Intel providing the silicon, of course.)
5:32 p.m.: Otellini says what we just saw was the leading edge of personal Internet development, but just a glimpse of what reality will be. Otellini notes that there are other applications for this tech as well: medical, disaster and rescue, etc.
5:30 p.m.: Otellini announces the first-ever virtual Smash Mouth: Steve Harwell performing live in motion-capture booth, band performing live over Internet. All members on screen represented as avatars. Very cool. Audience is clearly impressed.
5:29 p.m.: Organic rep notes that the company relies heavily on Intel quad-core processors.
5:27 p.m.: Otellini brings out a rep from Organic Motion, a motion-capture outfit. The company has developed a motion-capture system that requires no specialized suits, just an array of cameras. Steve Harwell strolls over to a motion-capture booth.
5:25 p.m.: Bigstage.com will launch in Q2 of this year. “Put the ‘digital you’ in all your entertainment experiences.” Otellini calls up a video representation of Steve Harwell’s neighborhood. Navigates to Harwell’s old house. Opens the garage, and there’s his band represented by avatars. Avatars are live representations of the band mates, they’re speaking and gesturing in real-time in response to questions.
5:23 p.m.: Now imagine what happens when you take these avatars and extend them with video. Immersive video. (Ha. Video of avatar Otellini performing in Smash Mouth’s first video. Audio’s out, but the video is pretty funny.)
5:20 p.m.: Presenter uses software to give Steve Harwell a mohawk, sunglasses and a bull-ring. That’s great, but what can you do with an avatar like this? Why, put it on a digital motorcycle, of course. Presenter gives digital Steve Hawell a new haircut and a new facial expression.
5:18 p.m.: The presenter from Bigstage takes a few photos of Steve Harwell and begins building a “digital Steve.” Digital Steve will apparently be fully animated and can be shared across various social networks. Ah. Digital Steve is bald. He does look like his real-life counterpart, though.
5:17 p.m.: Turns out that while Steve Harwell was quite impressed with eJamming, he would have been more impressed if it had offered him an avatar.
5:15 p.m.: Steve Harwell from Smash Mouth is very impressed, notes that the other members of the band were all playing from different locations. Harwell adds that the service heralds an era in which new bands arise from online collaborations like the one we just witnessed.
5:13 p.m.: Otellini brings up some live music currently on the service, then calls up Steve Harwell from Smash Mouth to demo the service. Turns out Harwell’s band mates are at this very moment jamming on eJamming. (What an incredible coincidence.) Wow. If this is truly live–as they say it is–it’s pretty damn impressive. (The service, not the performance …)
5:11 p.m.: Otellini brings out Alan Glickman from eJamming, a social-networking portal for musicians. The service allows musicians to meet one another and also play music together–live–in near real time.
5:10 p.m.: Now, Otellini’s talking about the evolution of social networks: “In the future, environments like Second Life will be much more immersive.”
5:09 p.m.: To interact with the Internet’s vast resources, we need new natural interfaces. Otellini cites Nintendo’s Wii wand as an example of an evolved human interface.
5:07 p.m.: Moving on to WiMax, which Otellini claims will enable the personal Internet. It’s the best solution for wireless media delivery. And it will create the ubiquitous, proactive Internet Intel envisions.
5:05 p.m.: On to Menlow and mobile devices. He pulls out an unreleased Toshiba device running the ultra low-power Menlow chip. Device is running Vista and Adobe Air. Robust applications, nice graphics.
5:04 p.m.: Describing a chip called Canmore–system on a chip optimized for hi-def video and Internet.
5 p.m.: Moving on to Intel’s new 45 nanometer chips. … News flash: a nanometer is really, really, really small. … Uh-oh, he’s talking chip-fab processes … Reminds me of that old Steve Martin routine: “Those of you who aren’t plumbers probably won’t get this and won’t think it’s funny, but I think those of you who are plumbers will really enjoy this. … This lawn supervisor was out on a sprinkler maintenance job and he started working on a Findlay sprinkler head with a Langstrom 7-inch gangly wrench. Just then, this little apprentice leaned over and said, ‘You can’t work on a Findlay sprinkler head with a Langstrom 7-inch wrench.’ Well, this infuriated the supervisor, so he went and got Volume 14 of the Kinsley Manual, and he reads to him and says, ‘The Langstrom 7-inch wrench can be used with the Findlay socket.’ Just then, the little apprentice leaned over and says, ‘It says sprocket not socket!’ ”
4:59 p.m.: If Intel had built that chip back when it first started it would be about 9 feet wide and consume enough energy to power two households.
4:58 p.m.: Ahhh… here comes the first Moore’s Law reference. … And up pops Gordon Moore on the video screen. Intel’s first chip contained 2,250 transistors, Otellini informs the audience, and its latest quad-core chip has 820 million transistors.
4:57 p.m.: But, Otellini says, there are obstacles to achieving the sort of context-aware computing we just saw, among them silicon and wireless infrastructure.
4:55 p.m.: Otellini notes that processing-power heavy applications like the context-aware computing we just saw demonstrated will require more heavy-duty processors. And that’s of course where Intel comes in.
4:54 p.m.: Now demoing a Web-based program called EveryScape. It looks like a video navigation service. Presenter uses it to take us to Intel’s China office and then to the Great Wall of China. Well, look at that: The device also discovers nearby restrooms.
4:51 p.m.: Woman bikes onstage. Co-presenter asks her for directions and she responds in Chinese. He speaks into the device, asking the woman for directions. The device translates his question into Chinese and speaks it to her. She responds in Chinese and it translates her answer into English–does it pretty quickly, too.
4:50 p.m.: He aims it at a restaurant awning. The device translates its name into English, calls up a menu (also translated into English) and some video reviews as well.
4:49 p.m.: Another presenter joins Otellini onstage. He’s got some sort of mobile Internet device. He aims it at a photo of downtown Beijing behind him, focuses it on a sign written in Mandarin, and the device translates it to English. Very slick.
4:48 p.m.: Push media? No, a more personal Internet. One that’s predictive and context aware.
4:47 p.m.: “Just as MTV evolved beyond music videos, the Internet will continue to drive the evolution of the media industry. In the next evolution of the Internet, the Internet will come to us.”
4:45 p.m.: “Our updated song lyrics highlight a disruptive force that’s going to change the content industry: the Internet.” (Really going out on a limb there, eh, Paul?)
4:44 p.m.: And here comes Paul Otellini … Clearly, he found the video funny. He takes the stage with a giggle.
4:43 p.m.: It’s a music video. “Internet Killed the Compact Disc Star/ Internet Made The Video Star”–sung to the tune of “Video Killed the Radio Star.”
Not a single laugh. Audience looks like the emotionless pod people in “Invasion of the Body Snatchers.”
4:42 p.m.: Oh dear. Keynote opens with a video presentation of “Intel’s Vision of the Future.”
4:39 p.m.: And here comes Gary Shapiro again. Lousy opening act, if you ask me. He even stumbles on the “nanometer.”
4:37 p.m.: Lights dim … and here comes that silly CES advertisement they ran prior to the Gates keynote last night. It’s almost as if the CES producers are purposely trying to put the audience to sleep before the keynote even starts.
4:30 p.m.: Interesting little sidenote before Otellini begins: Intel has distributed questionnaires throughout the packed hall asking attendees to review Otellini’s keynote. A $500 random drawing is the incentive for completing it. Question No. 6: Rate your agreement with this statement on a scale of 1 to 5: Paul Otellini has a clear vision for the future when consumer electronics meets the Internet, he knows what he is talking about and I believe what he said is going happen. (Sadly there’s no “Intel has won its de facto monopoly over the chip market fair and square” question. I’m sure the folks from AMD here would have a field day with that one.)

On Sunday, the AllThingsD team, including Walt Mossberg, Katherine Boehret, Kara Swisher and I will trek to Las Vegas for the annual Consumer Electronics Show, taking place all next week.

Such tech legends as Microsoft’s Bill Gates, Yahoo’s Jerry Yang and Intel’s Paul Otellini will deliver keynotes during the conference, but the real stories will come from the bustling floors of the convention, where we’ll be live-blogging, shooting videos and providing insights about key trends in the year ahead.

Stay tuned.

It was a nice try, but AMD’s Better by Design event last week seems not to have rained out Intel’s Centrino parade so much as give it a bit of a sun shower. The chipmaker launched the “Santa Rosa” upgrade of its Centrino notebook platform yesterday, one that delivers up to twice the performance of earlier Centrino platforms, extended battery life, faster boot time and support for the draft version of 802.11n wireless networking that offers theoretical transfer speeds of up to 300 megabits per second at twice the range of 802.11g solutions. Impressive, eh? Certainly formidable enough to ensure its debut on machines from Hewlett-Packard, Dell, Lenovo Group, Gateway and pretty much any other PC manufacturer you can think of.

Clearly, Intel is regaining the performance and price/performance leads it needs to reverse its market-share decline and is beginning to deliver on the promise CEO Paul Otellini (shown above right in ceremonial bunny suit) made at the Intel Developers Conference in San Francisco last year. “Much has been written in the last year about Intel losing its momentum, losing its leadership in the server market space,” he said at the time. “I believe very much that with this new set of dual and quad-core microprocessors, we’ve now regained our leadership.” Yes, yes, yes–wonderful. Now get back to work on that 80-core teraflop chip …

So the emails Intel failed to preserve following the filing of Advanced Micro Devices’ antitrust lawsuit against the company? Not a big deal — according to Intel. In court documents filed this week, Intel said that though it hadn’t yet recovered the messages it destroyed, its own internal investigation had concluded that “nothing of any genuine significance” was lost. Furthermore, though Intel acknowledged that the missing emails — some from Intel chief executive Paul Otellini and chairman Craig Barrett — should have been saved, it found no evidence that the loss was deliberate. Rather, it was the result of “human error in attempting a challenging task — in retrospect a task of such magnitude that it probably never could have been accomplished without some lapses.” Apparently, Outlook AutoArchive is a lot harder to use than you might think.

Anyway … I’m sure AMD’s attorneys will rest easier now knowing that, in Intel’s estimation, the missing emails they thought might have been detrimental to the chipmaker’s defense are really immaterial. Indeed, they might reach the same conclusion themselves, if Intel ever manages to cobble them back together from backup tapes, email forwards and the like.