Technology Focus: 5 Highlights Of 2012

 @DavidZie
on December 23 2012 10:05 AM

Last week, we examined five key blunders that characterized the technology sector in 2012. Here are five highlights that seem to have characterized events and may continue into 2013:

The mediocre chip business. The electronics revolution is built on semiconductors. Products from Intel Corp. (NASDAQ:INTC), Advanced Micro Devices Inc. (NYSE:AMD) and Freescale Semiconductor Corp. (NYSE:FSL) undergird everything in modern industrial life.

It's not just smartphones, laptops and computer games that need them, either. Driven a new car lately? There are thousands of dollars worth of chips designed in to manage cruise control, fuel efficiency and steering as well as run the stereo system.

Trouble is, for the first time in ages, global chip demand has decreased this year. The Semiconductor Industry Association estimates full-year global sales will fall 3.2 percent this year to only $290 billion.

Obviously, macroeconomic factors such as the European recession and signs that China's economy is easing, contributed to this. But there doesn't seem to have been huge demand for Intel's new line of Ultrabook chips designed for ultraportable devices to compete with the iPad from Apple (NASDAQ:AAPL), either.

That could well be the reason Intel CEO Paul Otellini, 62, plans early retirement next year.

Platform shift to mobile from desk-bound. Here, credit goes to Apple, for the iPad, nearly three years old, which created a new sector called tablets. This year, market researchers at IDC estimate tablet sales will reach 122.3 million, about 5 million more than previously forecast.

Meanwhile, shipments of all kinds of PCs, including laptops, may rise less than 1 percent to 367.2 million.

Devices like the Ultrabook chip are expected to boost 2013 shipments to 391.1 million, the researchers estimate. But new entrants headed by Qualcomm (NASDAQ:QCOM) will be shipping their Snapdragon chips into tablets as well as PCs from China's Lenovo Group (PINK:LNVGY), which passed Hewlett-Packard Co. (NYSE:HPQ) to become the world's No. 1 PC maker.

Next year may be the first time that versatile microprocessors designed for ultraportable devices take over the market, from smartphones to tablets, as consumers and then enterprises shift. That's one reason why Dell Inc. (NASDAQ:DELL) is spending fortunes to move upscale into software and services from just selling PCs.

The HP mess. This is becoming a soap opera. But considering the Palo Alto, Calif., company is the world's biggest maker of computers, servers and printers, the continuing surprises out of the executive suite raise eyebrows.

First, CEO Meg Whitman, in office only 15 months, kept the PC division, then merged it with printers after installing new management. Then she announced massive job cuts, along with a record loss of $8.9 billion, in the second quarter.

In early October, Whitman and CFO Cathie Lesjak said they hoped to restore profitability by late 2013. But in November, they announced last year's $10.2 billion takeover of UK database and multimedia specialist Autonomy was beset with “fraud.”

Whitman was a director who voted for the deal, as was current HP Chairman Ray Lane.

Top executives from rivals including International Business Machines Corp. (NYSE:IBM), the No. 2 player, say HP remains a vigorous rival in servers, databases, software and security, so the saga may not have hurt business too much.

Still, over the past year, the total loss on HP shares, even with dividends, exceeds 42 percent. By contrast, the total return on IBM shares has been 8.4 percent, including a big dividend increase, which pleases Warren E. Buffett, whose Berkshire Hathway (NYSE:BRK/A) is IBM's biggest shareholder.

Growth of social media into other sectors. It's not just Facebook (NASDAQ:FB) and its billion members that got all the attention this year. Other social media companies for professionals like LinkedIn Corp. (NYSE:LNKD) and Jive Software (NASDAQ:JIVE) have done well.

As well, startups such as Twitter and Tumblr have encourged instant communications and messaging. Facebook has become one of the biggest search websites, with CEO Mark Zuckerberg saying it handles a billion queries a day.

This is only beginning. As well, smartphone apps are just starting to tap advertising and merchandising opportunities, although it's not clear if they are profitable or will prove to be.

Online security. Whether it's the WikiLeaks publication of millions of classified government cables stolen from email servers, apparent attacks by foreign government agencies against the Pentagon, Saudi Aramco or banks like JPMorgan Chase (NYSE:JPM), security has become a bigger concern than ever.

With banks handling apps to make checking deposits over smartphones, meanwhile, consumers are being asked to trust the cloud more and more for privacy. It won't work. Whether it's con men inserting tapes in ATMs or gas stations to collect credit card numbers and passwords or cyberhackers in Estonia breaking into the San Francisco subway system, the era of instant communications and mobility will create more challenges than ever.

The major computer companies, like HP and IBM, are working hard on this, along with the security specialists including Symantec (NASDAQ:SYMC), EMC Corp. (NYSE:EMC) and Check Point Software Technologies (NASDAQ:CHKP).

They've only just begin to fight, though.

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