IBM missed its estimates in the first quarter of 2013 as hardware sales slow down.

IBM reported revenues of $23.4 billion and net income of $3.4 billion, with earnings per share of $3. This falls short of the $24.6 billion analyst estimate from Bloomberg. Hardware revenues fell particularly flat, totaling $3.1 billion for the  quarter. This down 17 percent from the first quarter of 2012.

IBM’s financial performance is likely affected by drops in spending from its major customers in the technology and government sector.

The company is already considering new growth opportunities in cloud service and “big data” technology. It recently announced it would be investing $1 billion in flash storage research and development. With the funds, IBM sees a solution in flash memory, which has the potential to process the data faster, more reliably, and with less energy than a hard disk drive full of moving parts.

In February, IBM said its data-analysis business is already high-performing and is expected to add $20 billion in annual revenue by 2015.

In other bad news, IBM is cutting as much as 14 percent of its workforce in France, Bloomberg Businessweek reports.

Ginni Rometty, IBM’s chairman and CEO, issued the following statement, and touched on new growth initiatives:

Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter. The services business performed as expected with strong profit growth and significant new business in the quarter. Looking ahead, in addition to closing those transactions, we expect to benefit from investments we are making in our growth initiatives and from the actions we are taking to improve under-performing parts of the business. We remain confident in this model of continuous transformation and in our ability to deliver our full-year 2013 operating earnings per share expectation of at least $16.70.

Enterprise solid-state drive maker Skyera has raised $51.6 million in its second round of funding, with hopes that it can make a dent in a crowded flash storage field.

Skyera wants to offer big enterprise companies super-fast storage for their data centers on the promise that its storage is affordable, has low power consumption, and will greatly boost software performance. Its flagship product, skyHawk, claims to deliver next-gen performance and density at a similar price point to high-end traditional spinning-disk hard drives. Basically, these are some of the cheapest SSDs you should be able to buy for your company’s data center.

Gartner projects the market for enterprise flash storage will grow from $393 million in 2012 to about $4.2 billion in 2016, so betting on this type of service isn’t a bad idea. That said, the market for enterprise SSDs is a little crowded, with EMC, Pure Storage, Nimble Storage, Violin Memory, Nimbus Data, NetApp, IBM, and SolidFire all trying to attract customers.

The new funding was led by Dell Ventures with participation from other unnamed investors. The $51.6 million actually includes $6.5 million from a prior investment from the same firms, but this is the first time the company has announced any funding numbers.

“We view the investment in Skyera as a validation of the disruptiveness of the technology we are bringing to enterprise organizations seeking to take advantage of both the technical and cost benefits of the latest generation of flash,” Skyera CEO Radoslav Danilak said in a statement. “Moreover, Dell and the investment syndicate bring deep knowledge of the storage sector that will be beneficial to Skyera as we take our next steps.”

Data center image via Shutterstock

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Infrastructure may not be the sexiest space, but Silicon Valley’s investors see ample opportunity to fund startups and chip away at dominant players like VMware and EMC.

One such startup is PernixData, a company that provides software to virtualize server-side flash memory. The first product will be launched in the next three months, and is aimed at large enterprises that use virtualization in their data center.

The company raised its first round of financing from Lightspeed Venture Partners’ Bipul Sinha last year. Sinha and I discussed VMware’s shift back to infrastructure in a recent interview. He warned that the virtualization giant now faces competition “that will come up and disrupt them,” particularly from startups like PernixData.

The company was founded by CEO Poojan Kumar (pictured, left), a one-time head of data products at VMware and the cofounder of Oracle Exadata, and CTO Satyam Vaghani, the former technology lead for VMware’s storage solution.

Kumar said in an interview that the problem they are trying to address is that storage and performance barriers limited the penetration of virtualization within data centers. PernixData can help with that — and it embeds itself in the existing environment, so customers can leverage their existing data center investments.

“We allow enterprises to overcome the biggest impediments for fulfilling their vision for virtualized data centers and we do it with zero disruption,” said Kumar. PernixData addresses this using software rather than proprietary hardware, which can cause vendor lock-in. Its solution stitches together flash memory across many servers.  

“It was time to continue where VMware left off,” Kumar explained, adding that he hopes the startup is considered to be the “VMware of server flash.”

PernixData competes with myriad existing players, including Netapp and EMC, but the founders are confident given the positive response from the first 20 customers signed on to the beta.

The San Jose-based company has raised $7 million to date from investors including Sinha, who is also on the board, Mark Leslie, the co-founder and CEO of Veritas and early board member at VMware, John Thompson, former CEO of Symantec, and Lane Bess, the former CEO of Palo Alto Networks.

Top image via Shutterstock

Today, hard drive giant Seagate announced it’s investing a huge $40 million chunk of change in Virident, a startup focused on Flash storage.

With the investment, Seagate will buy itself a board seat as well as the advantages of a “strategic partnership” with the younger company.

A rep for the companies said via email that as of the deal’s announcement, Seagate will immediately start selling a complete line of Flash-based technologies to its other partners (including OEMs), and Virident will be using Seagate’s ample marketing and distribution channels. Both companies will collaborate on next-gen hardware and software designs.

“This partnership validates Virident’s vision of pervasive flash in the performance tier and accelerates our shared vision by bringing next-generation SCM solutions to the enterprise and web datacenters worldwide.” said Virident CEO Mike Gustafson in a statement on the news.

Seagate’s heavy investment in Flash storage was also made evident in last year’s acquisition of LaCie (a French storage-focused company) and its investment in DensBits, an Israeli company that makes “Memory Modem, a revolutionary technology created to address the ever-increasing need for low-cost, high-performance NAND Flash-based storage systems.”

Virident, based in Milpitas, Calif., was founded in 2006. To date, the company has taken $103.7 million in four rounds of institutional funding. Previous investors include Sequoia Capital, Intel, and Cisco.

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

SolidFire, a promising solid-state storage maker for cloud services, has finally launched into general availability and announced its first customers after a year of relatively low-profile activity.

The company came onto our radar a year ago when it raised $25 million in fresh funding on a simple promise: Its hardware and software would turbocharge a cloud’s performance. SolidFire sells powerful solid-state hard drives to cloud service providers, which in turn boost performance and reliability of those services.

“Sometimes people label us a cloud company, but we’re really selling the systems to cloud providers,” CEO Dave Wright told VentureBeat. “We’re an infrastructure company at the end of the day.”

SolidFire’s first public customers are ViaWest, Databarracks, Calligo, and CloudSigma. While SolidFire solid-state drives can speed up all kinds of cloud applications — whether they are IaaS, PaaS, or SaaS — Wright said the majority of interest has been from infrastructure-as-a-service providers.

Wright identified EMC as SolidFire’s single largest competitor. And while it might be easy to throw SolidFire into the same category sold-state drive startups like Pure Storage and Nimble Storage, it differentiates itself from those because SolidFire offers much larger amounts of storage to companies. Wright said SolidFire can scale up to a 1 petabyte solution. “Their largest systems are about the size of our smallest systems,” Wright said.

Boulder, Colo.-based SolidFire was founded in 2009 and has 75 full-time employees, more than double the amount it had a year ago. SolidFire has raised about $37 million to date from investors including New Enterprise Associates and Valhalla Partners. Wright says that the company might pursue more funding in the next year.

Road Runner image via NickLaw-Artes/DeviantArt

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Venture capitalists are clambering to fund flash storage startups, the new wave of technologies that are disrupting the traditional data center.

The latest announcement comes from Virident Systems, a Milpitas, California-based company that had no trouble raising $26 million dollars in fourth round funding led by Mitsui Global Investors, with participation from Globespan Capital Partners, Sequoia Capital, and Artiman Ventures. The company has also brought on a new CEO, Mike Gustafson, a former SVP and GM at Hitachi Data Systems. Gustafson will also take a position on the board of directors.

The space is crowded with legacy vendors and startups, but Gustafson said the market opportunity for flash is big enough for everybody. “Flash will be the touchpoint in every part of the data center infrastructure,” he said. “There is tremendous confidence around this space.”

Companies like Virident claim that data centers are running out of storage space and that we need a reliable alternative. According to Gustafson, flash-based memory is still too expensive to be a data center’s primary storage technology, but solid-state disks will replace mechanical hard disk drives in the coming years.

“The flash storage market is predicted to grow to $4 billion by 2015, and this investment only strengthens our conviction that Virident will become the primary industry provider of the fastest storage class memory solutions to the world’s leading enterprise datacenters,” said Sanjay Pichaiah, investment director at Mitsui Global Investment, in a statement.

Virident has attracted its customers, primarily high-tech companies, with the promise that it will reduce costs to tackle high-performance applications in the enterprise and is 10 times faster than the competition. Virident is most often compared to Fusion IO, a storage memory company that dominates in this space and counts Apple cofounder Steve Wozniak as its chief scientist.

Virident is not yet profitable, but with its latest funding round it will roll out an expansion of its sales and marketing team. Gustafson told me he joined the company as he sees potential for an IPO. This latest round brings the company’s total funding to $76 million.

Happy about the new iPhone 5? You should be … or maybe you shouldn’t, because the announcements made today weren’t everything that we’d hoped for. In fact, some are startlingly painful. Here are eight that almost make today feel like a bad day:

1. No HD radio on the iPod Nano or any iOS devices

Most people may not care, but that’s just because you just don’t know about HD radio. It’s basically the same as today’s FM radio except that it’s a better digital signal rather than a standard analog signal. It’s clearer, crisper, and provides a better listening experience. Oh, and it offers up to three channels per station.

Because it’s digital, HD radio can actually have multiple channels for individual stations, so your favorite FM station can have different stations to listen to. Here in L.A., some FM stations have their parent AM radio stations shared on the same frequency, or even their webstream as another channel. That way, you get more radio stations over the same spectrum of radio waves.

But Apple completely skipped over HD radio again, as the company has done year after year since the Zune HD came out with the feature. And not only is there no HD radio, radio itself is limited solely to the iPod Nano. If you have any other Apple product (iPhone 5, iPod Touch, etc.), you’re out of luck. Because apparently if you can get Internet over Wi-Fi, which is obviously everywhere, who needs the radio?

2. No NFC

While it’s use is minuscule today, but NFC (near-field communication) is a simple technology that allows users to share pictures, websites, and other tidbits of data by putting your phone in close proximity to another NFC-enabled device. The feature, which has been on Android phones for about a year now, isn’t on all devices, but it has made significant headway, especially in light of Google Wallet and other services which are attempting to transform our phones into our wallets.

With mobile payments in mind, and with Apple traditionally at the forefront of creating new ways for people to purchase goods, no NFC on the iPhone 5 can only mean one of two things: The company doesn’t have it’s own method of mobile transactions like NFC, or it simply isn’t done developing it and refuses to use the current standard. In either case, if you’re heading down to Jamba Juice and don’t want to pull out your wallet, don’t get an iPhone.

3. The camera lens isn’t faster

Camera technology on smartphones is all the rage these days. Nokia has their Pureview, and Apple is saying that their new camera is the best yet. I’ve done significant testing on smartphone cameras, and the iPhone 4S is still has one of the best cameras on the market. But the lens? It’s not faster.

As a photographer, I can tell you that the difference between an f-stop rating of f/1.4 and f/1.8 is the difference between a good shot and a great shot. Moreover, smartphone cameras have gone down to f/2.2, including a vast number of competing phones like the HTC One series and Nokia Lumia 900. You may think that the difference between f/2.2 and f/2.4 is moot, but remember, this is Apple talking about how they’re improving the iPhone. Yet the most critical aspect of any camera — how fast it shoots — is completely forgotten.

4. No USB 3.0/Thunderbolt support

After five years of the iPhone stuck on USB 2.0, and Apple finally transitioning with their latest line of MacBooks to USB 3.0 and Thunderbolt, is it really so hard to make the most popular phone in the world transfer data through a cable a little faster? Is it?

Based on what Apple showed today, apparently it is. The new Lightning cable is a USB 2.0 connector, meaning it transfers data, if at full speed, at 35MB/s. Sure, that’s fast … but if you’re backing up gigabytes to your computer, that’s going to take a long, long time. It does today. I just backed up a bunch of new games I got for my 16GB iPhone 4S, and it took around 20 minutes to fully sync.

Is Apple addressing that problem in any way, knowing full well that they have both the technology and means to do so at little cost? Nope.

5. No iPad Mini

While some of the other disappointments are actually hurtful, Apple not revealing anything about the rumored iPad Mini at today’s event was a sad letdown, like waking up in the morning really thirsty for orange juice and finding an empty carton in the fridge. Then again, as Devindra pointed out late last month, the iPad Mini reveal is expected to come in October. Shucks, I guess we’ll just have to wait a little while longer.

6. The Lightning adapter is ridiculously expensive

As first discovered by Gizmodo’s Casey Chan (caution, NSFW), the new Lightning adapter that makes any older iPhone peripheral work with the iPhone 5 costs an absurdly expensive $30, or $40 for a 20cm cable. This is compared to the $10 adapter for the updated MagSafe power connectors that the new MacBook Air and MacBook Pro lines use. Charging $30 or $40 for a simple adapter is so obnoxious that it’s actually a mockery of Apple product buyers who want to use their older iPhone/iPod Touch accessories.

Because, you know, you have to pay extra if you want to use Apple’s newest toy with old equipment. We wouldn’t want to make the new, shiny iPhone look bad for no penalty.

7. No increase in available storage

As an owner of the iPhone 4S and iPad, both 16GB versions, it only took a few short months (or, in the iPad’s case, weeks) to fill up that space with games, media, and apps. Amazon CEO Jeff Bezos explained last week at the Kindle Fire HD reveal that products with high definition displays need more space, simple as that. Apple knows this full well; the iPad’s display has a huge resolution of 2048×1536, which makes apps take a lot of space.

The iPhone 5? It has a bigger display, too, but no boost in capacity. If you want a device, you can pay $200, the standard for high-end smartphones (plus a 2-year contract), or you can pay $300 for the 32GB model. Or better yet, $400 for the 64GB version. Oh, and remember, the iPhone has no expandable storage, so what you buy is what you’re stuck with. Sixteen GB isn’t enough space these days, especially with so many great apps available … but I guess that isn’t Apple’s problem.

8. No price decrease for extra storage

The only thing worse than not increasing the amount of storage is still charging the absurd $100 fine for more space. For 16GB, $200 is reasonable, but $300 for $32GB? No. Just no. And $400 for 64GB? Give me a break. Flash storage today at those capacities costs nothing; it’s essentially pure profit for Apple no matter how much they charge, and while nearly every other major hardware device charges $50 for every major increase in storage space, Apple hasn’t lifted a finger to do so.

The worst part is, as much as we hate it, if you’re low on space now like I am, the only viable option is to pay the $100 ransom for more on the next phone.

If the report is true, the acquisition would give Apple a leg up when it comes to stuffing more flash storage — which is still among the most expensive bits of hardware — into its devices. Anobit has developed a controller chip that speeds up flash performance.

Such a deal makes sense for Apple, since flash memory is an essential component in the iPhone, iPod Touch, and MacBook Air (which certainly won’t be the last Mac to ship with a solid-state storage drive). The report originally appeared in the Israeli newspaper Calcalist.

Apple rarely purchases hardware companies, choosing instead to spend its massive cash reserves on software companies, as TechCrunch reports. But Anobit would certainly fit nicely with Apple’s purchase of P.A. Semi in 2008, which was instrumental in developing the company’s A4 and A5 mobile chips. The acquisition would also be Apple’s first in Israel, which has become a hotbed of innovation in the past decade.

Calcalist also speculates that the acquisition would allow Apple to double the amount of flash memory on its mobile devices. It could, for example, help the company offer a 32 gigabyte iPhone for $200 with contract, instead of $300.

As Reuters notes, Anobit supplies its products to memory companies like Hynix, which is now the main flash supplier for the iPhone 4S.

Image via iFixit