VentureBeat

Hewlett-Packard is reorganizing its PC division so that Voodoo PC gaming computers will no longer be stand-alone products — one more sign of the relentless focus at HP to focus on cost-cutting.

Voodoo is a tiny part of the overall HP PC business. It sells high-end gaming systems in hand-painted cases that can go for $10,000. While the sales are small, Voodoo represents an ultra-cool brand favored by hardcore gamers who have considerable influence on other consumers. As such, Voodoo represent’s HP’s best chance of getting into good graces with a fan community that is as avid as Apple’s users. It will be interesting to see how much HP tries to balance its need to appeal to hardcore fans with the greater need to appeal to mainstream consumers who probably don’t appreciate the extreme technology behind the Voodoo machines.

Bought by HP in Sept 2006, Voodoo just launched an ultra-thin laptop, the Voodoo Envy 133, as a rival to Apple’s MacBook Air laptop. The product has been greeted with great reviews and so the Voodoo products certainly seem to be doing well.

In a blog post, Voodoo co-founder Rahul Sood said that the Voodoo products have now been “welcomed into the greater HP catalogue.”

At the same time, rumors circulated that HP is shutting down the separate Voodoo PC operation in Calgary, Canada. When HP acquired Voodoo, it said somewhat improbably that it would keep the operation in Canada separate from its own mass market PC division. But in an era of cost-cutting where HP chief executive Mark Hurd announced 24,600 layoffs over the next three years, that stand-alone operation in Canada seems at risk.

Sood doesn’t specifically address the issue of layoffs at Voodoo in his posting. Ann Finnie, a spokeswoman, declined to talk about any job cuts at Voodoo. She noted that Sood broke his hand riding a mountain bike over the weekend.

But he says Voodoo and Voodoo-influenced products will be easier to buy, faster to get, and have the full power of HP’s marketing and sales channel behind them. In other words, maybe Voodoo is taking over HP’s PC division. Sood says the product plan for Voodoo is being accelerated. “The great news is we’re all heading in the same direction, and it’s a good thing — it’s a real good thing,” Sood writes.

Sun Microsystems is at the Austin Game Developers Conference this week, pitching developers on its latest R&D effort, Project Darkstar – an open-source server platform for massively multiplayer online games, social networks and virtual worlds.

This isn’t the first time a company has created a platform that developers can use to create MMOs and virtual worlds; in fact, it’s a market that might be described as having more lions than gazelles. IBM is among those promoting infrastructure for virtual worlds. Sun’s effort is a typical one in the larger competition among server makers such as Dell, HP and IBM: beat out the other guys by concentrating on a niche, which, in this case, is games.

Sun figures that if can solve the common problems for game developers, then those companies can spend less time worrying about their server infrastructure and more time focused on making their games fun. If Darkstar works, it can shave a lot of money off the cost of games, which cost tens of millions to make.

Sun argues that its open-source approach will be appealing to a broader set of customers and that Darkstar makes strides to be optimized for the latest technology: multi-core servers, or those with multiple computing brains per chip.  The project’s director of research, Karl Haberl, tells me that the Darkstar code lets programmers take advantage of multi-threaded servers, or those that can process more than one string of code at a time.

Online game servers will typically separate a game into regions. Players in one region can’t talk to another. And it is quite common for the processors associated with an active region to get bogged down. The result is that part of a game is shut down for users. Darkstar servers work in a different way. They break a problem into pieces and distribute the work among a bunch of available cores. It dynamically expands or contracts its processing, depending on the work load.

Darkstar has been in the works for a couple of years.  Right now, it’s a research project and so Sun doesn’t charge for a license, Haberl said. Sun is just about finished with its beta testing. Massively multiplayer online games can be built on top of Darkstar.

Haberl said that Darkstar could be considered a cloud computing application, such as Amazon’s Elastic Compute Cloud, or EC 2. A product of Amazon Web Services, EC2 lets customers such as game publishers configure the servers that they need and change it as capacity demands rise or fall. Darkstar doesn’t currently run on EC 2, but it could in the future, Haberl said.

Right now, the company is driving the adoption of the Darkstar technology. One thing build on top of Darkstar is Project Wonderland, a virtual worlds toolkit. Sun wants the platform to feature industrial strength notions of security, identity, and authentication. With Wonderland, developers have everything they need to create immersive 3-D virtual worlds.

Companies such as Electronic Arts have made big investments in their own server technology. But many of the smaller companies don’t find it economical to do so. For the big investors in server technology to switch over is a lot harder. Even so, Haberl reports, people from large game publishers are looking at the technology.Ultimately, Haberl predicts that small, medium, and independent developers will employ the technology.

Hewlett-Packard is cutting 24,600 jobs, or 7.5 percent of its work force, over the next three years. The victims are part of the effort to integrate the operations of newly acquired computer services company EDS into HP. Nearly half of the cuts are in the U.S., but the company plans to replace half of those positions to better address worldwide markets.

HP said the restructuring will result in $1.8 billion annual savings. Mark Hurd, chief executive of Palo Alto, Calif.-based HP, said that the cuts will help the company in the long run. HP agreed in May to buy EDS for $13.9 billion. The deal closed last month. Even after the cuts, HP will be the a giant. The combined companies have 325,000 employees.

The layoffs are expected to hit both companies. Hurd told analysts the cutbacks would streamline costs and allow it to invest in growth parts of the business. While this is going to be tough on employees, Hurd has a decent track record when it comes to creating jobs after he slashes them.

Carly Fiorina created a furor among the working class when she cut back 20,000 jobs at HP and Compaq as the two computer makers merged in 2002. Hurd came in as Fiorina’s replacement in 2005, cut thousands more jobs, but then managed to turn the financially struggling company around. The net result was a much larger HP in the long run. I wouldn’t expect the same kind of furor over these cutbacks. When you look at the carnage on Wall Street, which is a major purchaser of information technology, it’s easy to see why the cutbacks are running deep.

Still, it’s going to be tough for the employees.

Data Robotics has raised $15 million in a fourth round of funding for its consumer-focused Drobo backup storage business.

The Santa Clara, Calif., company makes “data robots,” or external backup storage units that make it easy to back up data on a computer or a network of computers. The lead investor is Greylock Partners. Other participants include new investor New Enterprise Associates, as well as existing investors RRE Ventures and Sutter Hill Ventures. To date, the company has raised $43 million in four rounds.

The company’s storage products are aimed at consumers and small businesses that don’t want to deal with technical hassles when backing up large amounts of data.

There are a host of rivals for storage inside the home or small businesses. Big companies such as Hewlett-Packard, Dell, Seagate and Netgear are diving into the networked storage market for the home. Most use a technology known as “RAID” to redundantly store data, so no data is lost even if one drive fails. But Data Robotics’ “BeyondRAID,” which uses virtualization technology to create storage that adapts to available disks. While RAID software is often complex to use and is geared toward enterprise technicians, the BeyondRAID software is simple.

Drobo holds up to four 3.5-inch hard drives. It hooks up to a Mac, Linux or Windows computer via USB port, Firewire, or gigabit ethernet wires. It shows up as a single external hard drive and doesn’t require a software installation. Unlike with RAID arrays, you can use different-size hard drives. It has green, yellow and red lights indicating how much storage is on a drive, while a blinking light is a warning not to remove a drive. You can add a drive at any time just by inserting one into a bay. Doing the same thing with a RAID array takes a lot more time. If a drive fails, you take it out and put a new one in.

To share it on a network, you simply plug it into the network via an Ethernet wire. You can then share data on the Drobo drive with other devices on the network. DroboShare can support two connected Drobos at a time, meaning the networked storage can grow to as much as 32 terabytes.

The company has sold more than 30,000 Drobo data robots in the past year, said Geoff Barrall, chief executive of the company. Many of the customers come from high-storage businesses such as video production, education, medical, photography, legal, government as well as consumers. The drives start at $499. The company was founded 3.5 years ago.

Barrall said the company will use the money to expand its sales, overseas operations and product development.

Here’s the latest action:

Study: Educated older people still get most of their news from television — The “educated” demographic, 23 percent of the U.S. population, also gets news online, according to a buzzword-laden report by The Pew Research Center for the People & the Press. This demographic is called “Integrators,” according to the language of Pew, and is somewhat similar in behavior to the younger, smaller group of online-focused readers it calls “Net-Newsers.”

Hewlett-Packard had a strong second quarter, beating analysts’ estimates — HP reported its summer quarter ended July 31 hit $28 billion in revenues, up 10 percent from a year earlier and above analysts expectations of $27.4 billion. Profits were also better than expected. Strong segments included server blades, storage, software and notebooks.

Free rides for all on the Red Line? — Three Massachusetts Institute of Technology students are now able to publish their findings on how to hack into the Massachusetts Bay Transportation Authority (Boston) subway card service. They’d received a 10-day gag order last week, preventing them from disclosing their newfound free-ride knowledge at the Defcon hacker conference (that didn’t stop the info from spreading over the Internet, anyway).

Social network application company RockYou is considering at running classified ads in its car-related applications — This is another way for it to make money. Silicon Alley Insider has a few more details.

News aggregator NewsCred launches new features — Those include more advanced search, and pages for particular topics and breaking news.

Game industry trade group hires recording industry anti-piracy lawyer — The Entertainment Software Association (ESA) has hired Kenneth Doroshow, a former executive at the Recording Industry Association of America. The RIAA is notorious for its efforts to combat those who illegally copy music and just shut down the music sharing site Muxtape. This is not going to make the ESA better friends with, well, anyone in their 20s and below.

Study: Big-media video site Hulu still growing quickly, passes Turner and CNN online — Now, Hulu is number eight Nielsen’s ranking of the top 10 video sites. It generated more than 105 million streams in July, to more than 3.2 million unique viewers. NewTeeVee has more.

Another travel-planning site launches: TravelMob — Allen Stern at CenterNetworks has tried it out for himself and seems to like it.

YouTube cofounder Jawed Karim now an investor, in Minnesota — Karim, a computer science Ph.D student at Stanford, is spending his summer break scouting out the twin cities for early-stage investments, the Star-Tribune reports in an interview. Youniversity Ventures, the investing body he’s a part of, originally planned to focus on just students coming out of Stanford and the University of Illinois — apparently, the scope is broadening. From the article:

…Whereas here [in the twin cities], there is certainly less activity. But at the same time, you don’t have these bubbles of nonsense out here. Things here seem a little too formal. I think that it’s inhibiting productivity. People in Silicon Valley will just get together and shoot around some ideas or program something together. Here, we have to go to a specific conference to meet people.

[MBTA Red Line ticket machine photo via James X. Nguyen. And yes, the Red Line is the one that goes by MIT.]

Dell could really use a comeback. It has lost its luster in computing to the likes of Apple and Hewlett-Packard. So it struck back today with 10 new laptops, most of them new versions of its Latitude business laptops with as many as 19 hours of battery life. (OK, more like 10 hours of battery life; see below.)

The new computers use Intel’s new Centrino 2 chip sets which introduce built-in WiMax, a high-speed wireless networking technology that promises much wider ranges for connectivity compared with Wi-Fi. Jeff Clarke, senior vice president of Dell’s business group, said at a press conference in San Francisco that Dell spent two years designing the laptops and went through more than 3,200 prototypes. It used a kind of crowdsourcing for its design, soliciting ideas through its Ideastorm web site and working with more than 4,000 customers to design it.

Welcome to the Web 2.0 era of computer design. The laptops are aimed at a class of users dubbed “digital nomads,” who want to be connected anywhere they go. The company even started a blog site, digitalnomads.com, to target those users.

The new laptops include seven Latitude business laptops and three Dell Precision workstation laptops. The laptops actually have 9 hours and 45 minutes of battery life and an extra battery, dubbed a “battery slice,” that can be plugged in at the same time to deliver nine more hours. But the battery slice costs extra.

The Latitudes range from a 2.2 “ultramobile” version with a 13-inch screen to high-end laptops with bigger screens. All come with a backlit keyboard to see it in the dark. Other features include a magnesium alloy case, a built-in webcam and microphone, a lock-down system that protects a hard drive if the laptop is dropped, and the ability to track down or disable a laptop if it is stolen. It also has fingerprint readers and security features such as the “control vault” processor and memory technology that stores your identity and credentials on protected hardware. On the smallest ultramobile laptops, Dell will offer something new for a business laptop: color choices such as pink, red, blue and black. Dell is including global positioning system (GPS) capability as an option for the laptops.

Later this year, the company will also have the ability to boot to a virtual compartment, using hardware already built into some of the models. This gives it the ability to get on the Internet instantly or access your email immediately without waiting to boot the complete Windows operating system. Clarke said it will be available as a software upgrade before the end of the year. The prices range from $800 to $1,400; those are starting points for the various models of Latitudes.

I’m not sure this is going to do it for Dell. It’s starting to look like the differentiation in this space is based on the tiniest of differences: my colors are better than yours; I can figure out how to deliver more battery life than the other guy using similar components; I can protect a dropped or stolen laptop better. You get the point.

HP launched its own series of nifty machines for the back-to-school season last month. The HP machines also had good designs, similar features, but didn’t hit the same battery life targets. Then again, HP hasn’t yet described its Centrino 2 machines. The Centrino 2 chip sets from Intel were originally due more than a month ago but were delayed. Still, Dell has given Apple, HP, Toshiba and Lenovo a target to strike at.

As the video game industry gears up for its annual E3 conference in July, the reality is setting in that the one-time entertainment extravaganza has become narrowly focused on console games, with very little room for PC games.

Even Microsoft and Intel, the champions of the PC, have conceded that point. Intel isn’t holding any press conferences or functions at the show. And Kevin Unangst, senior global director of Windows gaming at Microsoft, said his team decided to show off PC games at an event in San Francisco this week to avoid being overshadowed at E3. (Unangst pictured below).

“As it has morphed, E3 has fundamentally become a console show,” he said. “We didn’t want to just squeeze out some time at a console show.”

The absence of PC games goes along with the absence of a lot of other things at the show. E3 drew 70,000 people a couple of years ago. But big companies balked at the costs and downsized the show to a gaming press event. Now with just a few thousand attendees, the show is much more focused. That leaves some nostalgic.

“E3 used to be the mecca of gaming,” said Rahul Sood, head of Hewlett-Packard’s VoodooPC game computer division. “I’m skipping it because it’s not what it used to be. Now it’s just an event called E3.”

Separate from the issue of PC versus console games, a number of companies have pulled out of the Entertainment Software Association that sponsors the show, including Activision, LucasArts, Vivendi, id Software and Crave Entertainment. Some of the companies will either still be at the show or show off games nearby.

Still, the low visibility of PC games could be yet another blow to both the show and the ESA itself. E3’s troubles are so big that Gamecock, the resident clown of the game industry, is staging its own BE-3 initiative (i.e. publicity stunt) and Mike Wilson, “grand champeen” of the company, is running for ESA president on a platform of “bringing fun back to the industry.”

Even with the smaller crowd, Unangst said it’s hard for PC games to get any attention at E3, which runs for the press only from July 14 to July 17 at the Los Angeles Convention Center. Don’t expect Microsoft itself to talk much about PC games at its own E3 press conference, where it will tout the Xbox 360’s games. Unangst and company will hold a small reception on July 16 at the show. Read the rest of this entry »

Hewlett-Packard’s VoodooPC division will launch a new Voodoo Envy 133 laptop computer for luxury consumers. And the design looks like it will go head to head with Apple’s MacBook Air.

Like the MacBook Air, the new version of the Envy line is razor thin — only 0.7 inches thick and weighs 3.4 pounds. (A MacBook Air is 0.76 inches thick at its widest and weighs 3.0 pounds).

The Envy also has a large 13.3-inch screen and has no built-in DVD drive; Apple made similar design choices. But the ultramobile machine is lightweight — made out of carbon fiber — compared to the anodized aluminum of the MacBook Air. It also has a multi-touch touchpad, just as the Apple machine does.

The HP machine is more expensive at $2,099 versus the MacBook Air at $1,800. But the Envy has additional features that the Apple notebook doesn’t, such as an HDMI port, two USB ports, an express card slot, and a removable battery. In one interesting twist, Voodoo’s designers put the Ethernet jack into the power brick of the Envy. These are the sorts of touches that could make the Voodoo brand akin to Ferrari or Mercedes. And that’s very important for HP has it tries to claw its way to higher average selling prices and escape a commodity price war with the likes of Dell and Lenovo.

The machine also has a quick-boot system dubbed Voodoo InstantOn. Using the DeviceVM software, the notebook can boot to a Linux screen within seconds. As Windows Vista loads in the background, the user can immediately begin using the Firefox browser, Skype, instant messenger software, a photo viewer or a music player. Getting to those functions fast will make computing far more convenient for mobile users.

HP bought Calgary, Canada,-based Voodoo in the fall of 2006 because Voodoo had a powerful brand with enthusiasts gamers. Then HP launched its HP Blackbird 02 with Voodoo DNA gaming computer in September. The machine sold well and won 11 editor’s choice awards. Now Voodoo has added capacity, much the same way that Lamborghini started selling more sports cars when Audi bought it. Sood said that the company is working on a successor to the Blackbird.

That design isn’t ready yet, but HP will soon be selling a new version of the Voodoo Omen desktop, ranging from $6,500 to $20,000. The desktop will offer options such as a wood-grained finish, carbon fiber case, or a glass case. It will also have an LCD screen built into the front of the computer for QuickLook data. The liquid-cooled machine will be available at first only to current Voodoo customers. As production ramps, the Omen will be more widely available.

It remains to be seen how successful HP will be with the Voodoo brand. Voodoo competes with Dell’s XPS and Alienware brands, as well as with gamer-focused computer makers such as Falcon Northwest and Velocity Micro. Voodoo has traditionally focused on the highest-end market, but it is extending that brand beyond gamers to luxury users and, eventually, the mass market.

For a picture of Sood slicing a cake with a MacBook Air, check out this link. And check out the hint that Sood dropped at the end of his blog post: about how he wouldn’t need that MacBook Air for long.

Hewlett-Packard’s Personal Systems Group is launching 50-plus products today in Berlin as it readies its summer and back-to-school line-up for consumers.

The company is launching the products in Berlin because more than half of its $40 billion in annual Personal Systems Group sales are overseas, says John Cook, vice president of consumer marketing at HP.

Cook says the line-up pays attention to design, meaningful innovation, and relentless execution. The attention to the details of design is there, based on my own tour of HP’s line-up. It shows HP get a little something out of its $3.5 billion in annual R&D spending.

Among the ways HP will tout its new gear is through a new reality TV show with MTV, dubbed “Engine Room,” that will tout the art of digital content creation among students in a New York loft. (I hope it’s going to be more exciting than watching somebody use PhotoShop).

One of the new computers is a new worldwide version of the TouchSmart All-in-One IQ500 computer, which has a 22-inch touch screen and has a lot of touch-based applications aimed at making it easy for consumers to initiate tasks such as messages, music playback, or shooting videos with the computer’s built-in webcam. The new $1,299 version is a lot cheaper than last year’s $1,800 version. This one will be available in 13 different countries; that tells you that last year’s U.S. model was successful enough to justify further investment. It will be available in July.

Among the new products are 17 new notebooks. The new consumer and business laptops now come with built-in accelerometers. If you drop them, the sensors inside detect the acceleration and lock down the hard drives to prevent damage.The laptops are also getting a new aesthetic look. Two years ago, HP came out with an imprint finish on the laptops. Now it is infusing its gloss black finish with mesh patterns. The “liquid metal” finish is glossy but doesn’t smudge as easily as the design from two year ago. The laptops are using both Intel and Advanced Micro Devices notebook chips. They will also include eSata ports that you can plug an external hard drive into. Those ports are about six times faster at transferring data than USB ports.

The laptops feature QuickLook 2 for quickly booting to a virtual compartment within seconds. As Windows boots in the background, you can browse the web, watch a movie or play music. That way, you don’t have to wait minutes for Vista to boot.

All of this new stuff is coming out at a time when consumers may not be spending much. But Cook hopes that HP will benefit, since consumers will want to get good value for their money during tough times.

Most high-quality computer displays have about 16.7 million colors. But that’s not good enough for the color experts at places such as animation studios. For artists who have to compare work across long distances, getting the colors exactly right is both difficult and critical.

Hewlett-Packard is introducing a billion-color display today for those artists. That’s 64 times the number of colors you normally see.

The stunning DreamColor LP2840xz display is a result of collaboration with HP’s longtime partner-customer, DreamWorks Animation, the maker of animated films such as “Shrek the Third.” DreamWorks CEO Jeffrey Katzenberg approached HP about a year ago to find a solution to the problem his artists were having, particularly when they tried to compare color schemes across global locations.

Those artists lost a great deal of color accuracy when they moved from cathode ray tubes to liquid crystal displays. They could also use high-end studio monitors that cost $25,000 from the likes of Sony. But the HP display, with a 24-inch screen, will cost only $3,500 or so. Users can set the display so that it shows precise color schemes such as the Adobe RGB color gamut. Alongside a normal LCD display, the billion-color display looked excellent. John Cook, vice president of marketing at HP’s Personal Systems Group, says that some of the technology came from HP’s printing group, thanks to its expertise in color science.

Ed Leonard, chief technology officer of DreamWorks Animation, said the display is a filmmakers dream. The display includes the DreamColor Engine software and a color calibration kit for making precise color settings. HP introduced the first printers that can print images from the display in March.

It remains to be seen if this type of screen will please either ordinary computer users or color technology experts, who are notoriously finicky. Devo Frohne, a motion graphics designer at Astro Gaming in San Francisco, said that CRTs are hard to synchronize as well and he thought a billion colors would be impressive. At the same time, he wasn’t sure if he truly needed it, except to determine color gradients, or shades.

It’s worth noting that TV sets such as a new LCD model from Panasonic have the ability to display 68 billion colors. But monitors typically don’t come with such color schemes because of the cost of including the software, memory, and processing power.

Jon Peddie, an analyst at Jon Peddie Research who has followed the graphics business for decades, says that this display is the real deal.

Peddie said that HP’s inclusion of a variety of preset color formats is a smart way to get the experts to adopt this display. With a touch of a button, artists can access formats including sRGB, Adobe RGB, Rec. 601, Rec. 709, DCI-P3 emulation (97%), and full gamut.  The native resolution is 1920 x 1200 pixels.

“The DreamColor solves a problem that people have been working on for five years,” Peddie said after he saw the display. “HP made a breakthrough and basically broke the sound barrier - At the amazingly low price they are selling it for, I predict they will not be able to make them fast enough.”

Verizon to buy Alltel, your cell phone bill to go up? — Verizon has concluded a deal to buy smaller wireless operator Alltel for $27 billion. Combined, the two will pass AT&T to become the largest operator in the US. Alltel has many users in the Midwest, and it has gotten relatively good marks for things like customer service, that market leaders like Verizon and AT&T are not known for. Analyst Craig Moffett of Sanford C. Bernstein is optimistic about such consolidation driving up prices for consumers. The New York Times quotes him as follows:

The consolidation of Alltel takes another step towards rationalizing and consolidating the U.S. Wireless industry, something that must be viewed as a positive. Fewer players will inevitably mean greater pricing stability (although only marginally so, since the smaller operators increasingly have been in the position of taking their cues from the Big Four anyway), and should lead to marketing efficiencies for all players as competition for retail distribution consolidates.

“Pricing stability,” of course, is a euphemism for less competition, but the deal is expected to pass regulators, and anyway, some consumer-rights groups aren’t worried. For mobile startups, this all means there’s one less wireless operator out there to try to work with. [AP photo via The Boston Globe.]

Valley VC Vinod Khosla to get backing from CalPERS for cleantech investments — The California pension fund is expected to put up to $640 million into Kholsa Ventures, Khosla’s self-titled and self-funded investment vehicle that has focused on cleantech investments. PEHub has details; see also our previous coverage of the Wall Street Journal’s criticism of Khosla’s biofuel investments, and his response.

Microsoft may buy information management software company Zoomix for $20 to $30 million — more here.

HP also getting into cleantech — The storied tech conglomerate has announced an agreement with Xtreme Energetics to develop a solar energy system designed to generate electricity “at twice the efficiency and half the cost of traditional solar panels,” it claims. HP is licensing its transparent transistor technology, which it developed in conjunction with Oregon State University, to Xtreme Energetics in exchange for royalty payments.

Business software company EMC to buy data storage firm Iomega — The move will set EMC off on a new strategy to create a consumer business in data storage, an area that Google and other consumer-facing Internet companies have also been getting into.

The Los Angeles Times launches a tech blog — This means more competition for VentureBeat, which we, of course, welcome. The blog’s staff includes the excellent Jessica Guynn, who was recently hired away from The San Francisco Chronicle.

Here’s the latest (updated) action.

MySpace exodus begins? — Silicon Valley companies have long been vulnerable to start-up fever: Employees leaving to join faster-growing start-ups, lured by potentially lucrative stock options. Now Carol Werner, VP of sales at MySpace, in charge of West Coast sales, has left to join Mochi Media, a start-up that offers an ad network for Flash games. This shows that non-valley companies are prone to the exodus problem too. Good, because we’re getting tired of writing on the flood of departures from Google and Yahoo.

Yet another Googler leaves, to Benchmark – Speaking of the exodus from Google, Jonathan Teo, a former engineering manager at Googler reportedly active in the company’s international expansion, has joined Benchmark Capital, as an “investor.” Benchmark is known for insisting on absolute equality among its general partners, but the terminology Teo uses to describe himself (”investor”) may suggest he’s not a full partner. Normally, this would mean he’s an “Entrepreneur in Residence,” a title Benchmark gives to promising entrepreneurs who reside at the firm until they find a start-up idea worthy of backing. Valleywag, which first reported the news of Teo’s move, suggests something else is up, but it isn’t clear what. We’ve asked Benchmark for comment. (Photo via Friendster) [Update: Benchmark partner Steve Spurlock got back to us to clarify Teo's role. Teo is the firm's first "vice president," a new staff position which mandates him to go out to "meet as many great entrepreneurs as possible, to expand our network." However, Teo will not make investment decisions, not take board seats, and will not attend board meetings on behalf of the partners. All decision-making remains equally divided among Benchmark's existing partners.]

Hewlett-Packard reports “spotty” slowdown in U.S. computer sales: HP said that its earnings rose 16 percent to $2.1 billion and revenues rose 11 percent to $28.3 billion in the fiscal second quarter that ended April 30. But in a conference call HP CEO Mark Hurd acknowledged that sales of computers in the second quarter was spotty in the U.S. market. Almost all of the growth came from international sales, which account for 70 percent of HP’s business. PC desktop revenues were flat, while notebook sales climbed 31 percent in the quarter. Sales of industry-standard servers (based on Intel and Advanced Micro Devices chips), were also flat. HP plans to wring the costs out of Electronic Data Systems if the company’s proposed $13.9 billion merger goes through. The results were in line with expectations. HP is the world’s largest technology company and so its earnings results are a bellwether for technology.

Russia’s Google to go public: Yandex said it is preparing for an initial public offering on Nasdaq in a transaction that could raise $1.5 billion to $2 billion. That may sound like a lot, but Yandex is viewed as the “Google of Russia.” That would give Yandex a valuation of $5 billion. The company has the biggest site in Russia and it is ranked third in all of Europe, ahead of Yahoo and Microsoft. Globally, Yandex is on eof the ten-biggest web sites.

Microsoft loses lawsuit to Alcatel-Lucent: Microsoft lost a patent lawsuit to Alcatel-Lucent over technology used in business telephone networks. Microsoft had accused Alcatel-Lucent of infringing four patents for software in a system that integrates phones with computers for calls, messages and video conferences. The International Trade Commission ruled that there was no violation.

The last one was clunky: MIT Media Lab founder Nicholas Negroponte unveiled the XO-2, the second generation laptop from the One Laptop Per Child nonprofit organization. The last one had a narrow keyboard and a lot of lackluster features. Next to a PC, it was hard to see anyone getting excited about it. But the new laptop for kids in developing countries looks better, with two touchscreens and a book-like format. The new machine is expected to launch in 2010 and it will cost $75. The cost of the machine is probably up in the air, since Negroponte promised the original OLPC would cost $100; but when the machine debuted last year, the cost was $175.

Techmeme launches search function: The tech blog news aggregator Techmeme has managed to grow to a remarkable size without a search function. Now, after 32 months in the works, the site has added a search function. Founder Gabe Rivera says he put in the simple search box because so many users are increasingly dependent on Techmeme for information and wanted to find things they saw on it earlier.

Google News launches on Google Earth: Google has now added the ability to integrate Google News into its Google Earth application. The company announced the mash-up on its Lat Long blog about geographic issues. As pictured, you can now visit sites on the map of the world and see Google News stories associated with each location. Google News draws on stories from more than 4,500 sources. You can zoom in on areas of personal interest and view either national or local headlines.

YouTomb offers videos taken down from YouTube: With a high-stakes copyright infringement from Viacom still pending, YouTube doesn’t have much appetite for videos that are risky. But YouTomb, a project created by MIT Free Culture, will give those videos a second life. The goal of the project is to identify how YouTube recognizes potential copyright violations and mistakes it makes in the process.

The services sector has proven to be one of the hottest in information technology. You need trained people to manage the ebb and flow of computing in a massive, air-conditioned data center that handles the life blood of a corporation such as its e-commerce transactions or internal business operations.

IBM has been the primary beneficiary of the services boom, but now it will face more determined competition with Hewlett-Packard’s $13.9 billion acquisition of Electronic Data Systems. Together, they can create what one analyst (at IDC) called a “super plumber” for corporate data centers.

The deal is the biggest for HP since it bought Compaq six years ago for $20 billion and it will put HP at a strong No. 2 behind IBM in IT services.

HP will buy Plano, Texas-based EDS for $25 a share, about 32.5 percent higher than the data center outsourcing company’s closing price on Friday. Both boards have approved the deal and the transaction is expected to close in the second half.

HP’s CEO Mark Hurd said that EDS would remain a separate business group in Texas with current CEO Ronald Rittenmeyer as its chief. Rittenmeyer will also join HP’s executive council. The deal is likely to be far less controversial than the Compaq merger, which led to negative employee perceptions of then-CEO Carly Fiorina. The poor execution following the merger led to Fiorina’s ouster and Hurd’s hiring in 2005.

Hurd has been executing well, but you could argue that he is just continuing the strategy that Fiorina spelled out: that size and scale matter in the information technology industry. If the deal goes through, you can expect to see a lot of layoffs.

“It’s another step in the consolidation of the traditional IT infrastructure players and gets HP deeper into the enterprise segment,” said Jason Green, a partner at Emergence Capital. “Good for start-ups as the larger and less nimble the big guys are, the better.”

Jeff Nolan, author of the Venture Chronicles blog, said the deal makes sense because EDS has been under pressure to perform and an acquisition could spur it forward. EDS, meanwhile, could help HP with not only its services revenue but hardware sales as well. Lastly, he said that the deal could give HP the resources to initiate a cloud-computing operation, similar to what IBM is starting to do. Read the rest of this entry »

Here’s the latest action:

Kleiner Perkins preparing “big news” — Venerable venture fund Kleiner Perkins Caufield & Byers has “big news” that it will be sharing tomorrow morning, we hear. We’ll be covering it first thing. One possibly related item is the recent registering of the firm’s 13th fund, found in a filing dug up by peHUB. The firm’s last raise was completed in February 2006, for $600 million. Data from Thomson Financial suggests the firm has invested a lot of that, or at least $556 in 107 startups over the past two years — though that does not include unannounced “stealth” deals.

Hewlett-Packard invents artificial intelligence circuit — Researchers at HP have come up with a circuit element for memory chips that will dramatically lower the power required and allow a range of values outside of binary code (zeros and ones), according to the New York Times. The device, a “memristor”, could revolutionize mobile devices, as well as easing the development of artificial intelligence functions like understanding speech.

Sims Online / EA-Land virtual world shutting down — EA-Land, the virtual world based off the popular Sims gaming franchise, will close its doors in two months. While Electronic Arts phrases the issue rather delicately, saying only “The lifetime of the game has drawn to an end,” it’s fairly obvious that they wouldn’t be closing the business if it were making money. And if a hot property like the Sims can’t succeed as a virtual world, other game developers should take note.

Generation Investment Management closes $683M cleantech fund – Headed by the infamous (and frighteningly named) duo of Al Gore and David Blood, Generation Investment Management is a London-based investor in both private and public cleantech companies. The new fund will invest in sectors including renewable energy, building efficiency, cleaner fossil energy (possibly meaning clean coal), sustainable agriculture and carbon markets, with an average investment size of $30 million. More details at the Financial Times. Gore, it should be noted, is also a partner at Kleiner Perkins.

Courts reject RIAA “making available” anti-piracy argument — A legal tactic used by the Recording Industry Association of America has been slapped down by a Federal judge, according to CNET. The RIAA’s argument was that simply making copyrighted files available over sharing networks constituted breaking the law, even if they were never downloaded by other users.

Radiohead won’t repeat free music experiment – A much-hailed experiment by Radiohead involving the public release of a new album on the Internet for optional donations by downloaders won’t be repeated, according to the Hollywood Reporter. The band still hasn’t said whether it considered the release a success. Radiohead is also working with MTV to highlight child slavery and sex trafficking, saying the opportunity is about “exploiting a situation while you have the chance.” Interesting wording…

Miasole just can’t get a break — Miasole, a thin-film solar cell maker that has raised a massive amount of cash, has run into quite a few problems over the last year, including delayed production, employee defections and disappointing cell performance. The latest blow: The loss of a $9 million contract from Dow Chemical, according to CNET. The money will go to a rival thin-film maker, Global Solar.

Electronics counterfeiting has hit an epidemic level. At the IP Symposium in San Jose this week, the scope of the problem was laid bare. Surely, there have to be opportunities for start-ups in fighting this problem.

Here are some factoids from the panel which included Tom Valliere, a consultant at Design Chain Associates, Daryl Hatano, vice president of public policy of the Semiconductor Industry Association, and Debra Eggeman, general manager of the Independent Distributors of Electronics Association.

One of every 10 tech products sold is counterfeit, leading to an estimate of a direct loss over $100 billion a year. Direct losses include recalls, increased warranties, rework.

High-tech products account for four of the top ten border seizures, according to U.S. Customs.

Last year, the U.S. and European customs officers seized more than 360,000 fake computer chips in a joint operation. Under “Operation Infrastructure,” the fake goods seized carried more than 40 different trademarks.

A $2 fake part leads to losses of $20 if detected at the manufacturing board level. It costs $200 if detected in the market.

Among the recent warnings for fakes: counterfeit electric drills, circuit breakers, batteries.

China is a big problem because its intellectual property enforcement has historically been weak, but it’s not the only country where fake parts are discovered or made.

Big companies that have been hit: Dell, Hewlett-Packard, and Sony. Industries affected: computers, avionics, automotive, telecommunications.

The types of counterfeiting include reverse-engineered copies, reclaimed scrap, remarked or re-branded working parts, and “bonus lots,” which slip out the back door of a factory. It’s only getting worse with the rise of eBay and Internet trading.

Daryl Hatano, vice president of the Semiconductor Industry Association, said that 15 billion chips were imported into the U.S. in 2006. With such numbers, it isn’t easy to catch the fakes.

One chip company reported that 100 of its parts with distinct serial numbers were counterfeited in the last three years. Another reported that it had made only 200 chips with a particular date code; it found a broker selling more than 40,000 of those chips.

The U.S. and Canada have conducted 400 seizures of fake Cisco network hardware with an estimated value of $76 million at retail.

None of these factoids are new, but they should make the case that somebody ought to do something about it. Technology can supply some answers. Using radio-frequency identification chips (RFID) could introduce supply-chain tracking. Manufacturers can embed nanoparticles and micro-tags in their products as anti-theft and secret identication devices. But such tracing can lead to spooky privacy invasions. Call it security, anti-counterfeiting, or supply-chain management. It’s got to be fertile ground for start-ups.