Graphics Chips Are A Sign PC Industry Expects A Big Fourth Quarter

July 27, 2009

Expectations may be getting ahead of themselves for the personal computer industry.

The business took it on the chin in the first quarter with sales tumbling . But if graphics chips are a sign, manufacturers are expecting a substantial upswing during the year-end holiday and back-to-school seasons.

PC industry prepares to build for a merry Christmas

PC industry prepares to build for a merry Christmas

This optimism may be jumping the gun. Economic signals have been improving modestly in the past month or so. But the spring back in the economy is hardly impressive and remains unsteady to boot.

So could this upbeat assessment end in disaster, with huge inventories of unsold computers clogging to wheels of business come January? It is certainly possible. Let’s hope the H-Ps and Dells have more than faith underlying their business plans.

The glimpse into the PC market optimism is evident in research released Monday from Jon Peddie Research. Computer vendors stopped ordering graphics chips in the third and fourth quarters last year in anticipation of a long worldwide recession, says Jon Peddie.

While the first quarter brought some improvement, the second quarter saw a return to the races. The average second-quarter growth in graphics chip sales over the past eight years was 0.8 percent. This year it was 31 percent, says Jon Peddie, as the industry began preparing to build products for the end of the year.

Obviously the boost could be compensating for the less-than-expected first quarter. But the shipment of 98 million graphics chips can’t be fully explained this way.

The industry won’t return to 2008 levels until next year, says the research firm. But there are good reasons to expect a respectable market this year.

Two new operating systems will come out in the fourth quarter: Microsoft’s Windows 7 and Apple’s Snow Leopard. Graphics chip vendors Nvidia and AMD’s ATI meanwhile will introduce new higher-performing designs made at 40nm.

On top to that, worldwide economic stimulus programs will be in full swing, fueling pent up demand for new machines

It is unclear how the economy will fare during the remaining five months of the year. Let’s hope the computer industry has it right.


Unsold Solar Cells Piling Up In Warehouses

July 27, 2009

The woes of the solar industry continue and are likely to get worse.

Once in short supply, polysilicon wafers for solar cells are in abundance and prices are falling

Once in short supply, polysilicon wafers for solar cells are in abundance and prices are falling

With demand having collapsed at the start of the year and new factories continuing to come on line, unsold solar cells and modules are piling up in warehouses.

The industry’s only salvation may be a price collapse, making solar cells as cheap as optical bandwidth at the depths of the dot-com washout.

At that point, the dynamics of the industry could change dramatically. Until then, companies will have an increasingly difficult time making money.

In a sign of the continuing troubles, inventories of solar gear, including silicon wafers, soared 64 percent in the first quarter, according to iSuppli.

The glut added 1.5 months of supply to an industry already producing more goods than the market is able to absorb. Prices have suffered and will decline further.

ISuppli believes that the “spot” market price for a kilogram for polysilicon, a foundation material for solar cells, will fall to $50 by December from $180 a kilogram at the start of the year. It is a startling decline.

Companies such as REC, Yingli, and SolarWorld have felt the brunt of the inventory excess because they are involved in all stages of solar cell production, from the polysilicon to wafers and cells. Inventories for these integrated manufacturers rose to more than 161 days from 86 days in the first quarter of last year.

ISuppli expects inventories to continue swelling into 2010 –with the woes facing producers mounting.

Source: iSuppli

Source: iSuppli


Ad Effectiveness Is Slowing Online Ad Market

July 24, 2009

Ning is no laggard: 1.3 million social networks ranging from the professional to the frivolous have been created using its site building tools. (By the way, that is a new number. Ning’s site still boasts 1 million.)

We need a new advertising unit, says Nings Gina Bianchini

"We need a new advertising unit," says Ning's Gina Bianchini

The company also has a post Web 2.0 business model: $24.95 a month will bring you a social network without the ads the company has traditionally relied on to make money.

Business oriented networks – perhaps one for accountants from Cleveland – appreciate Web pages without the ads – and are willing to pay.

But according to co-founder Gina Bianchini (she co-founded the site with Netscape wonder boy Marc Andreessen) it didn’t have to be this way.

Ads might have carried the load at Ning and social sites elsewhere if they had been more successful. In fact, the march of advertising from offline (think television and print) to online has been slowed by the lack of more effective marketing, Bianchini argued Thursday evening at a Churchill Club gathering in Mountain View.

“We need a new advertising unit” for 2009 and beyond, she said. “I think we are still figuring out what (that) advertising will look like.”

There is no lack of trying. Facebook has spent considerable energy in the past several years trying to evolve an ad model for its massive social network.

Just this week, Twitter released a best-practices document with suggestions on how businesses can use its micro-blogging property for their benefit. And earlier this month, Google said it is finally making some progress with You Tube, which has long resisted monetization.

Clearly, though, the final fix is not in. According to Bianchini, one key rule is authenticity. Brands need to be authentic in their appeal to people on social sites, she says.

In its 101 guide for businesses, Twitter also suggested companies need to provide value, perhaps a coupon or smattering of useful information.

Both are good pieces of advice. Advertisers also need to become part of the conversation and lose their identities as corporate marketing machines. It’s a big task. That is why it is taking so long.


Twitter Tries To Sell Itself To Businesses

July 24, 2009

The Twitter 101 guide for businesses wanting to do business on Twitter gets, well, down to business.

Twitter posts a 101 guide to business use of its online service

Twitter posts a 101 guide to business use of its online service

Or, at least that is the intent. The popular micro-blogging site post the guide late Thursday with 10 case studies and suggestions on how companies can get the most out of the online service.

Several of the studies detail the experiences of well-known Twitter users: JetBlue and Dell Outlet, for instance. Others break new ground: such as with the Teusner winery from Australia.

None of the information is startling or magical. Twitter suggests businesses retweet interesting posts, offer coupons and not spam followers with dozens of tweets. Another obvious observation: “If you’ve just launched a product, ask users what they think or search for real-time tweets from people talking about your product.”

Here are some observations from the case studies:

Computer maker Dell now has 80 branded Twitter accounts and more than 100 employees who use Twitter, including StefanieAtDell, who handles customer service exchanges.

The company’s Dell Outlet uses Twitter to distribute product news, offer coupons and communicate with customers. It suggests tweeting only a few times a week so as not to spam followers and to track URL activity to determine what people find most interesting.

Dell Outlet believes it has generated $3 million in revenue attributable to its Twitter activity.

JetBlue has almost a million Twitter followers. It uses its account to distribute information – on flight delays, for instance – and to answer customer questions.

Less than 10 staffers have the authority to post, though other key people in departments across the country have permission to answer questions. Next on the to-do list is to staff the account 24/7.

Teusner searches the service to find people who’ve comment on its wine. Then it sends a note thanking them for trying the wine.

The result is an increase in the number of people coming to the winery for tours and to the company’s Website to explore.

Twitter 101 is a first step in a long learning process. It shows there is tremendous potential for Twitter’s moneymaking initiatives for business expected later this year.


Microsoft Bumping Along The Bottom

July 23, 2009

Microsoft said Thursday fourth-quarter profits fell 29 percent, ending a year that saw revenue fall for the first time since the company went public in 1986.

Improvement is expected in 2010, but it is hard to say when, says Microsoft CFO Chris Liddell, pictured here with Steve Ballmer

Improvement is expected in 2010, but it is hard to say when, says Microsoft CFO Chris Liddell, pictured here with Steve Ballmer

But finally there are signs of a steadier economy, said CFO Chris Liddell.

“At least we’re seeing signs of the bottom,” Liddell said on an earnings conference call with analysts. “I see us going along the bottom for some time to come.”

The company’s fortunes have waned as the global downturn suppressed PC sales and slowed business purchases of technology

But now the world’s largest supplier of PC software says the economy is stabilizing, even if sales remain well below those of a year ago. Next year will bring an improvement, but it is difficult to say when, says Liddell.

Until then, conditions for the remainder of 2009 should be similar to what the economy dealt out in the recently concluded three months.

In terms of Microsoft’s own fortunes, Windows 7 should allow it’s crucial Windows business to grow faster than the PC market by the middle of next year, Liddell said.


Schoemaker: Twitter Is The New AdWords

July 23, 2009

As an “Internet marketer”, Jeremy Schoemaker is a total “sell-out”. But with the recession in full swing, every penny counts, right?

Just that in Schoemaker’s case, it’s not pennies but rather thousands of dollars for just a few “tweets” or a simple blog post.

Get paid for your Tweets!

Have you hear about “paid” tweets? The ones with the “#spon” (like in sponsored) tag? If not, it’s time to get on the program.

Microsoft (or an advertising agency that works for them) paid Schoemaker – who has about 30,000 followers –  $300 a tweet during the launch of its search engine Bing. “Not to exceed 4 tweets a day, just to link to their search engine for a week.”

“In the last month, there has been 9 different Twitter advertiser network pop-up (RevTwt, Sponsor Tweet…) and they price me around $400 [per tweet!]… The girl from the “Girls next door”… just did a sponsored tweets for $2,500 and she has a line… And it’s not going to take too long before Twitter asks ‘where’s our cut?’,” said Schoemaker at a recent panel hosted at Garage Technology Ventures’ Revenue Bootcamp conference.

What comes with a tweet?

Lots of traffic! “And there’s a huge dislocation,” adds Schoemaker saying that there’s a lot of money to be made now buying Twitter followers for 9 cents and selling that traffic for 90 cents.

“Blockbuster paid 80 cents per click that comes from Twitter, so I twitted out there and made $700 for one tweet! Twitter is really like the new AdWords,” explains Schoemaker.

Follows a short video of Schoemaker explaining how he makes tons of money off Twitter and blogging. Unbelievable:


The Good News For VCs Is Firms Get More For Less

July 23, 2009

It’s a buyer’s market for houses, cars and venture investments.

Deals sizes are down. The winner may be venture capital returns

Deals sizes are down. The winner may be venture capital returns

With investing levels down and fear of disaster high, venture partners willing to take a risk are getting more for their money. And from the standpoint of capital efficiency, startups appear to be getting further with less cash.

According to Dow Jones VentureSource, the size of venture deals throughout the world is in rapid decline.

The reasons are obvious. Venture investors are saving more money for their existing portfolio companies, afraid they will need to support these children longer. At the same time, there is little indication of a rebound in the IPO market, suggesting a payday for their investments is a long way off. So why invest a lot when a return is many years distant?

The result is they are less willing to write big checks, and entrepreneurs are apparently no longer expect them.

In the U.S., the median startup deal size fell 18% in the second quarter to $5 million from $8 million a year ago. This is the lowest its been since 1999.

The fall is especially deep in clean-tech investing, where the median is now $4 million compared with $10 million last year.

Markets overseas are following suit. In Europe, the median deal size dropped 13 percent to $3 million, and, in Israel, the median transaction tumbled 32% to just under $4.1 million.

In India, the median pact is $4.2 million and it is $7.5 million in China.

If there is any good news in this beleaguered industry it is this: money is going further. The decrease may ultimately lift returns and give entrepreneurs a greater stake in the companies they build.

That could prove an incentive for a patient investor.


Venture Capital Investing Holds Up Better In US Than Abroad

July 23, 2009

Venture capital flowed more freely in the United States than abroad during the second quarter, suggesting that the entrepreneurial motor of the U.S. economy remains somewhat more intact.

Chinese venture capitalists spend only $282 million, down 80 percent from last year

Chinese startups received only $282 million, down 80 percent from last year

In teh U.S., venture capitalists invested $5.27 billion in startups during the three-month period, 37 percent less than a year earlier, according to Dow Jones VentureSource. VCs in Europe, China, Israel, Canada and India watched as their investments plummeted 63 percent to $1.46 billion.

The total overseas was even less than in the troubled first quarter, when a financial meltdown froze business around the world.

Europe held up better than other international regions, but investments in information technology and clean-tech suffered (as they did in the U.S.).

In China, VCs funded only 33 deals and spent $282 million, an 80 percent drop from the second quarter of 2008. Healthcare investing proved a relative bright spot in the country (as it also was in the U.S.).

Israeli startups received 67 percent less than a year ago and Indian companies took in only  66 percent of what they did last year.

“Investors are finding it more challenging to maintain their stakes in current investments,” says Jessica Canning, director of global research at VentureSource.

They also aren’t eager to pour money into new companies. With the industry retrenching globally, now may actually be a good time to offer cash to seedling companies. Oh, and advantage U.S.


PayPal To Follow IPhone And Open To Developers

July 22, 2009

Ebay hopes PayPal can tap into the developer fervor that has so far generated 65,000 independent applications for Apple’s iPhone.

The online auction outfit will announce on Thursday that third-party developers will be able to include it in applications they write. The goal in opening up PayPal to outside developers is to accelerate innovation and expand its use, said CEO John Donahoe.

PayPal will announce the opening of its platform on Thursday, says eBay CEo John Donahoe

PayPal will announce the opening of its platform on Thursday, says eBay CEo John Donahoe

Already, PayPal is the feather in eBay’s cap. The payment service’s revenue grew 11 percent in the second quarter the company reported Wednesday while revenue from the company’s flagship auctions fell 14 percent.

PayPal now makes up almost a third of the company and the goal is to double its size in three years.

The open-platform effort at PayPal is analogous to what Apple has done with the iPhone and will be announced on Thursday, Donahoe said on a late Wednesday earnings conference call.

The move is obviously part of an effort to make PayPal a global force in the emerging market for Web payments. EBay already is summoning sales resources to the task.

The company said it attracted new merchants in Europe and Asia to PayPal during the second quarter as platform’s spread in the eBay market place begins to level off.

“It’s got real global momentum,” says Donahoe.


Twitter Promises To Publish Guide For Businesses

July 22, 2009

Twitter has been studying how businesses use and interact with consumers on its micro blogging site – but isn’t ready to talk about its work.

Twitter getting ready to talk about use cases and best practices

Twitter getting ready to talk about use cases and best practices

“From this research, findings, use cases, and best practices have emerged,” co-founder Biz Stone wrote Wednesday on the company’s blog. “We’re putting together a document based on our studies and we’ll find a spot on our web site to share it with everyone when it’s ready.”

This odd announcement makes me wonder about just how useful this apparently well-meaning initiative will be. Twitter hopes to show how companies have adapted marketing and customer-service programs to the real-time Web. But are the benefits so difficult to find and hard to quantify that it is having a hard time explaining the business case?

In his blog entry, Stone highlights two companies that have found ways of turning Twitter into a business tool. But no details are available on the success of the efforts.

One is a cookie shop that notifies its customers when a new batch of chocolate chips come out of the oven. The other is Best Buy, which developed Twelpforce to let employees interact with customers who have questions about products.

It seems that so far businesses are in a phase of experimentation with Twitter. Many indeed are excited about using the site to their advantage, but don’t yet know whether there will be a payback.

So maybe the Twitter research will be interesting. Let’s just hope it is more substance than form.


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