“The worst is now behind us.”

– Intel CEO Paul Otellini, April 14, 2009

Looks like the worst is once again behind us. In remarks at the Intel Developer Forum on Tuesday, Intel (INTC) CEO Paul Otellini said the PC industry is headed for recovery, albeit slowly. Evidently, chip shipments are stablizing as PC shipments begin to pick up.

“This is an environment where we have had the worst recession in 70 years,” Otellini said. “The market is poised for a resurgence and we will see how 2010 plays out.”

And what, exactly, does that mean? Otellini says that he “personally” is betting that the PC industry sales volume will at least match what we saw in 2008. They’ll wind up “flat to slightly up,” he said.

“The fifth-consecutive month of sequential increases in semiconductor sales reflects improving demand in the consumer sector,” SIA President George Scalise said in a statement. “Sales of consumer products such as netbook PCs and cell phones are supporting the modest recovery in demand that is now under way. Purchases of Information Technology products by the enterprise sector continue to be tempered by caution and longer replacement cycles. There is also evidence of a return to seasonal industry patterns.”

Great news, coming as it does after the chip industry’s seemingly endless procession of bad. Certainly, it’s reassuring that the SIA sees “evidence” of a return to normal sales patterns, even if they are at a lower level. The semiconductor sector is typically among the first industries to recover ahead of a broader market turnaround. This latest report suggests we may be at the beginning of just that or at least at an inflection point where the uncertainty in consumer and enterprise technology markets that’s been such a drag on the industry begins to abate.

That’s the gist of an argument put forth this week by Bernstein analyst Craig Moffett, who believes that with the iPhone and App Store, Apple (AAPL) has upended the wireless market in much the same way it upended the music industry with the iPod and iTunes.

“It wasn’t that long ago that AT&T’s exclusive agreement with Apple’s iconic iPhone looked like a customer relations masterstroke for the carrier,” Moffett wrote in a note to clients. “AT&T Mobility, a brand that had once been cingular-ly stodgy and tired, was suddenly, well, relevant again. Apple’s iPhone meant that AT&T was the place for cool handsets. Better, it was the place for wireless data….Somewhere along the way, however, Apple has stolen the march, and in the process has recast AT&T from hero to villain.”

AT&T, says Moffett, was roundly jeered at every mention at Apple’s last Worldwide Developer Conference. And, as someone who attended that event, I can attest that this was indeed the case. Certainly the revelation that AT&T (T) wasn’t yet supporting iPhone features like MMS and tethering did not go over well with the WWDC audience, which was already abuzz with criticisms of the carrier’s slow data connections.

With the iPhone, Apple made AT&T Mobility relevant again. It brought the company millions of new subscribers. But in the process, Apple also realigned the strategic playing field in its favor. Radically. Writes Moffett: “Remarkably, Apple has so thoroughly stolen the customer relationship–who would argue that Apple iPhone customers’ first affinity is to the device rather than to the network–that the network is not only irrelevant, it is rather a source of derision.”

As NBC Universal Chief Executive Jeff Zucker said back in 2007, “Apple has destroyed the music business and if we don’t take control, they’ll do the same thing on the video side.”

Or, perhaps, to the wireless business.

Another ugly SIA metric in a parade of them, though optimists will say that slight uptick in March is a sign that the industry has finally found a bottom from which to scramble upward. “The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year,” SIA President George Scalise said in the report. “While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as ‘smart phones’ and ‘netbook’ PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics.”

So, perhaps we’re not on our way to the depths plumbed back in 2001-2002. And perhaps we are. The SIA doesn’t quite seem to know.

Clearly, chip sales are tanking and we’re now well on our way to the depths plumbed back in 2001-2002. “The global semiconductor industry is going through one of the steepest corrections in its history,” said SIA President George Scalise. “While it would be premature to conclude that the sales decline has hit bottom, there are some indications that the rate of decline has moderated from the final quarter of 2008.”

Well, that’s reassuring…

“We’ll be focusing on early stage investments across a diverse range of industries, including consumer Internet, software, clean-tech, bio-tech, health care and, no doubt, other areas we haven’t thought of yet,” Managing Partners Rich Miner and Bill Maris explained in a blog post. “Central to our effort will be our fellow Googlers, whom we view as a critically important resource to help educate us about potential investments areas and evaluate specific companies.”

Presumably, then, the scope of the fund’s investments will be as diverse and, ahem, fascinating as the whims of Google’s leadership. Which isn’t always a good thing. That said, Google Ventures may do much to help the company innovate itself out of this downturn and perhaps even spot and engulf the next Google (GOOG) killer before it has a chance to live up to its namesake. As Google Ventures explains in its FAQ, it’s not above engulfing a company it’s incubated. “Acquisitions by Google of portfolio companies are possible, but this is not the goal or focus of our investment activities. Our focus is building great companies and generating long term financial return.”

Obviously. But for Google, right?

[Image Credit: Ignorance Is Futile!]

“The Internet is a great phenomena. I don’t see how the emergence of more information content on a network can be a bad thing for the personal computer industry. Will it cause less personal computers to sell? I think quite the opposite. Less copies of Flight Simulator or Encarta?”

– Microsoft chairman Bill Gates, 1994

In January, Wikipedia claimed nearly 97 percent of the visits that Web surfers in the United States made to online encyclopedias, according to research outfit Hitwise. MSN Encarta received 1.27 percent. Little wonder, then, that Microsoft (MSFT) is discontinuing it. The company announced Monday that it would stop selling Encarta software by June and would shut down the encyclopedia’s MSN Web sites on Oct. 31. “Encarta has been a popular product around the world for many years,” Microsoft said in a statement. However, the category of traditional encyclopedias and reference material has changed. People today seek and consume information in considerably different ways than in years past. As part of Microsoft’s goal to deliver the most effective and engaging resources for today’s consumer, it has made the decision to exit the Encarta business.”

Translation: Wikipedia ate our lunch–and our breakfast and dinner too. For evidence, one need look no further than Wikipedia itself, which updated its Encarta entry with the following passage within an hour of Microsoft’s announcement.

“Microsoft announced in March 2009 that they will cease to sell Microsoft Student and all editions of Encarta Premium software products worldwide by June 2009, citing changes in the way people seek information and in the traditional encyclopedia and reference material market as the key reasons behind the termination….Additionally, MSN Encarta web sites will be discontinued by October 31, 2009, with the exception of Encarta Japan which will be discontinued on December 31, 2009.”

What is interesting here, though, are 100 percent unconfirmed hints that the next-generation iPhone will support faster 3G speeds. If this is indeed the case, it suggests that the device may run Infineon’s new SGOLD3 chipset. And if it does, that means it will be capable of supporting not just download speeds twice that of current 3G networks–theoretically 7.2 Mbps–but a five-megapixel camera and real-time video encoding/decoding with a new on-board video camera. Now that would make for an exciting summer, indeed.

A sad turn of events for a company that was once a cornerstone of the telecom industry. For while the sale of those divisions would generate some much needed cash, they would also make it tougher for Nortel (NT) to emerge from bankruptcy protection as a viable company.

Looks like Sue was right, and the road to which he referred was a short one. The struggling telecom company has hired counsel to explore a bankruptcy filing, The Wall Street Journal reports. Nortel, well aware what such reports can do to investor confidence, insists that no such filing is imminent. The company does, however, acknowledge that it has engaged advisers to help it weather the current economic storm. Just who has Nortel hired? Word on the street says Lazard Ltd. and law firm Cleary Gottlieb Steen & Hamilton.

Grim news for Nortel, which has spent the past several years trying to recover from the general downturn in the telecom industry and a nasty accounting scandal. With apparently very little success.

In a statement Wednesday, the company said, “Nortel is hard at work reshaping the business to even better serve our customers. There are those who fuel negative speculation, but there are many more who believe that Nortel has put in place the necessary plans to strengthen our financial footing and reset our cost base.”