“What we’re seeing is growing strength in the core business,” in the second quarter and through the rest of the year, Intel Chief Financial Officer Stacy Smith said in a conference call with Wall Street analysts. In an offhand comment, CEO Paul Otellini intimated that the biggest fretting is probably taking place in Manhattan (read: Wall Street), but Intel’s global business is still going strong, including in mature markets such as the United States and Europe.

Intel, of course, has long been a bellwether for the high-tech industry, along with other giants like Microsoft, Hewlett-Packard, IBM, Cisco and–dare I add to the list–Google. But for people who follow the tech economy, the chip giant’s sales forecast is usually the single best gauge of how the industry will fare in the coming months. It is, as CNET News.com’s Tom Krazit wrote Monday, tech’s canary in the coal mine. (Tom has a more detailed look at Intel’s earnings on his blog, One More Thing.)

But chastened honchos at companies like Intel would be happy to blame bad news on a souring economy if they felt a need to do so. At the moment, it seems clear at Intel at least, there’s no need.

Crude oil prices are at an all-time high. The housing market keeps getting worse. Your 401(k) is probably in the tank, and, oh yeah, unemployment is up.

Intel's Otellini is still confident about 2008.

There’s an old joke about being an economist: You never have to say you’re wrong. You’ve just changed your analysis based upon new data. Right now, Intel is only one part of the data puzzle. If the national and global economies continue to worsen, only a fool would think tech could avoid taking a hit.

That’s the tricky thing about forecasts: You can only go on what people tell you. That chief information officer at a big bank may think he’s buying a truck full of new x86 servers, but if his CFO panics because bad sales reports are starting to trickle in, the servers are going to stay in the truck.

Now here’s the good news: Intel executives aren’t as freaked out about the economy as the rest of us. In earnings news that had to have had many breathing a sigh of relief, Intel announced Tuesday afternoon that its first quarter, while admittedly difficult, beat Wall Street expectations. More importantly, Intel executives signaled confidence in the year ahead.

Don’t let anyone fool you: While Silicon Valley is atwitter over social networking and varied Web 2.0 doodads, the real indicators of tech’s health are the companies that sell the stuff everyone else builds on. As pundits often said in the Web 1.0 boom, it wasn’t the gold miners who got rich during the California gold rush, it was the guys who sold them the shovels.

It’s easy to say Intel is benefiting from problems at its faithful rival AMD. But optimists would like to think Intel’s forecast is indicative of continued spending on PCs and servers. The forecast could indicate that while many consumers may have given up on buying a new house, they haven’t given up on buying a new PC. And big companies, even the Wall Street financial institutions reeling because of the mortgage crisis, are still buying new servers.

Another reason for caution: The last time there was a tech bubble, executives at even the biggest companies said everything was just fine…right until it wasn’t. And even the most enthusiastic of Web 2.0 boosters would have to admit this year is going to be make or break for plenty of companies relying on advertising for their revenues.

(Credit:
Intel)

That’s not to say everything is rosy in tech. While Intel was optimistic in the face of skeptical questioning from analysts Tuesday, storage manufacturer Seagate lowered its forecast for the current quarter. And we’re waiting on earnings news from some of the other bellwethers: IBM reports Wednesday, and Google reports Thursday.

ThinkPad X300’s solid-state drive beats fast hard drives.

SSDs are based on flash memory chip technology and have no moving parts. Hard drives, in contrast, use read-write heads that hover over spinning platters to access and record data. With no moving parts, SSDs avoid both the risk of mechanical failure and the mechanical delays of hard drives. Therefore, SSDs are generally faster and more reliable.

(Credit:
Lenovo)

Lenovo puts it this way: “Faster boot and application load times, extra durability, and longer battery life.” You can add stratospherically higher unit price, but the price impediment will diminish over the next 12 months.

In a test, the X300’s SSD “performed 2.75 times faster than the Dell XPS M1730 running dual 7200rpm drives,” the review said. That’s not all. “The X300’s performance was nearly 4.9x faster than the Asus U6S” with a 5400rpm 160GB hard drive.

Solid-state drives continue to outperform hard-disk drives in tests, providing some consolation for the high price.

If you’ve been eagerly awaiting the opportunity to own the thinnest flat-panel LCD TV, now’s your chance.

One of the secrets, by the way, of how Hitachi managed to slim down the TVs so much is that they took out the ATSC tuner. And although it is definitely the thinnest LCD TV, it’s downright bloated when compared to Sony’s impossibly thin OLED TV, which measures a mere 3 millimeters thick.

Though already available in Asia, the 1.5-inch-thick TVs from Hitachi are now available in the U.S. The sets come in three different screen sizes, 32 inches, 37 inches, and 42 inches.

(Credit:
Hitachi)

See my colleague David Katzmaier’s take on the latest TV from Hitachi here.

Dorgan said that he had invited a selection of unnamed broadband providers–presumably including Charter and CenturyTel–to testify at the hearing but they “declined the invitation.” He promised a second hearing that would focus specifically on them.

But the problem for NebuAd and its ISP customers is that–as we reported in May–a collection of federal laws written back in the 1980s create a treacherous legal landscape for broadband providers that are engaging in this kind of Web monitoring. Some of those laws restrict deep packet inspection by any broadband provider; the Cable TV Privacy Act singles out cable providers for the most extensive opt-in regulations.

Also on Wednesday, Dorgan wondered whether search engines “likely have information about where I’ve been traveling” on the Internet and mentioned hypothetical searches on WebMD about gout, dementia, and post-nasal drip. A representative from Google (Facebook and Microsoft also had representatives present) said the company doesn’t know what people do when they’re not using the Google.com site.

Sen. Byron Dorgan, D-N.D., suggested that the procedure amounts to “wiretapping” and promised a followup hearing in the near future to explore the subject further. “We need to take a closer look at Internet users’ privacy,” he said.

It’s like “you go to CVS and there’s someone behind you making notes…and that becomes part of a data bank they send to someone,” Dorgan said. “Someone is gathering information about where you travel and what you viewed and that goes into a data bank and can be sold or resold.”

A hearing convened by a U.S. Senate panel on Wednesday is the latest potential obstacle to widespread adoption of the practice, which relies on intercepting customers’ Internet packets and building anonymized profiles that can be used for topic-based advertisements.

That nevertheless likely violates federal and state wiretap laws, unless customers give unambiguous consent to this eavesdropping on their Internet connections, says the Center for Democracy and Technology. CDT, which receives the majority of its funding from technology companies, published a report (PDF) on Tuesday that concludes: “Especially where the copying is achieved by a device owned or controlled by the advertising network, the copying of the contents of subscriber communications seems to be, in the absence of consent, a prohibited interception.”

After being asked what would happen if the U.S. Department of Justice were to serve NebuAd with a subpoena asking for information about people who searched for explosives, Dykes replied: “We would not be able to provide names or even IP addresses.”

For its part, NebuAd says it’s doing nothing untoward. CEO Bob Dykes told the Senate panel that “my lawyers have told me we’re in compliance with the law.”

Mere speechifying by Washington politicians can’t prohibit an otherwise legal product, of course. (If that were the case, surely some Democrats would have shut down ExxonMobil and some Republicans would have pulled the plug on Playboy Enterprises years ago.)

After pressure this spring from some members of the House of Representatives, companies including CenturyTel and cable providers Charter Communications and Wide Open West recently have suspended plans to use monitoring-and-ad-delivery technology from NebuAd, a secretive Silicon Valley start-up.

Monitoring customers’ Web browsing to serve up targeted advertisements is coming under increased political scrutiny on privacy grounds, making the future of the controversial technique among Internet service providers less than certain.

NebuAd has repeatedly refused to disclose what advertising networks it uses or what broadband providers it counts as customers. It has said that it does not collect or use personally identifiable information and does not store raw data linked to “identifiable individuals.” Rather, it says, it creates and continually updates anonymized profiles with information “about the user’s level of qualification” for certain types of ads.

Earlier Monday, we reported on the 3G reception issues that a number of iPhone 3G users have run into during their first month with the device. We’d like to have a little more data to see if there are any patterns connected to who is having problems, and who isn’t.

Do you live inside an area labeled as 3G as shown on AT&T’s coverage map?

Thanks for your time.

Date on which you bought your iPhone 3G.

Have you experienced problems with dropped calls or flaky 3G connections? Please elaborate.

(Credit:
Apple)

In the comments below, or in an e-mail to me (tom.krazit@cnet.com) please post the following:

Area in which you live.

If you've been having connection issues with your iPhone 3G, please let us know where you are.

If you’re an
iPhone 3G owner in the U.S., we need your help.

If you’re an AT&T customer using another 3G phone on the network, please also respond with your location and whether or not you’re having the same kinds of issues. And if you’re outside the U.S. and can share your experiences, that would also be helpful.

Rural cell phone carriers want to put an end to exclusive deals between carriers and handset makers.

The most prominent example of such a deal is the Apple iPhone. AT&T has the exclusive right to sell the
iPhone, which was introduced first in the U.S. market in June. Neither Apple nor AT&T has publicly said how long the exclusivity arrangement will last, but it’s been reported to be at least five years. Verizon Wireless also has an exclusive deal to sell the LG Voyager, another popular smartphone.

(Credit:
Apple)

But getting rid of exclusive deals won’t be easy. These deals are an integral part of the U.S. wireless industry that helps both manufacturers and mobile operators make a lot of money. Manufacturers shop hot new handsets around to different operators searching for the carrier that will pay the most for exclusivity. Mobile operators benefit because having access to the hottest, new handset can draw new customers and keep existing customers who might have looked elsewhere.

So unless the FCC or Congress steps in, exclusive deals for hot handsets won’t likely go away anytime soon. That said, some operators, such as Verizon Wireless, are moving toward open networks. And as networks become more open, handsets from one carrier could be used on a network of another carrier. If that happens, the days of exclusive deals could really be over.

The RCA says that some people living in rural areas can’t subscribe to service from a big carrier like AT&T or Verizon and are therefore locked out of getting these cool phones.

That said, RCA isn’t just looking out for consumers. The truth is that smaller rural carriers are hardly ever offered exclusive handset deals because they have far fewer subscribers than the big four: AT&T, Verizon Wireless, Sprint Nextel, and T-Mobile. And this makes it hard for them to compete.

“It is important that all Americans have equal access to the latest technology, including wireless devices, regardless of where they live or which carrier provides the service,” David Nace, counsel to RCA, said in a statement. “RCA is standing up for consumers’ rights and putting an end to exclusivity arrangements that create another ‘digital divide’ between urban and rural America.”

We knew Asus was working on an Atom-based version of the Eee PC, and now we have the first photos of what will be called the Eee PC 901–posted on French site blogeee.net. It looks pretty much the same–we see a slightly reworked hinge, the AC adapter plug has been moved from the rear to the side, and there seems to be some unlabeled quick-launch buttons right above the keyboard.

No pricing or availability information has been released, but the Magic 8-ball points to summer 2008, and it probably cost about the same as the current $550 model.

(Credit:
blogeee.net)

Overall, I don’t see the Yahoo acquisition paying immediate dividends. In fact, it’s hard to see when it would pay off. Microsoft doesn’t have the machine in place that would allow for a smooth transition with quick gains. There are a few companies, Oracle and Cisco, notably who are fantastic at acquisitions, but Microsoft hasn’t yet built an effective acquisition engine.

New CNET Editor-in-Chief Dan Farber raises a different point in a post today–that there is still time for an internet land-grab and Microsoft should take this opportunity to nab Yahoo before it’s too late.

This weekend’s NY Times article “Maybe Microsoft Should Stalk Different Prey” raises the point that perhaps Microsoft should reconsider the Yahoo acquisition to focus on what it knows, which is enterprise software.

That’s not to say Jefferson isn’t smitten with simpler ways for people to edit their videos before they’re uploaded. Especially on the new
iPhone, which lets users shoot a video, trim it, then send it in an e-mail, or places like YouTube. For now there isn’t a way for users to send those clips to Animoto without first heading to their computers to download the file off the phone, but Jefferson envisions a future update that will take the computer out of the equation entirely.

Another caveat–and it’s a big one, is that you can only use 5 or 10 seconds of a video at a time, in clip form. This limitation is by design, and serves a few purposes. One is to keep a slideshow from getting muddled down in long clips, while keeping rendering times down on Animoto’s side. It also acts as an incentive to upgrade to Animoto’s paid service, which bumps the possible clip size from 5 to 10 seconds.

Unlike the way Animoto handles importing photos from third party sites like Flickr, Facebook, and SmugMug, the same cannot be said for videos. If you want it to grab a video you’ve already uploaded somewhere else you need to track down the source file and re-upload it.

Venturing into the realm of video editing is definitely an interesting move by Animoto. In a chat with me last week, CEO Brad Jefferson insisted that the tool was not headed in a direction that would let users control specific times on how long certain pictures were presented, or tweak things like total clip length–two things that are determined by how many photos (and now videos) users decide to use. “I don’t like the idea of moving back to the timeline,” Jefferson said. “The music is always going to determine how long (the video) is. We’ve always been about a really simple paradigm that doesn’t get people thinking from a tool level.”

To help make the time limitations a little more feasible, Animoto has a built-in clip editor that lets users choose the 1 to 10 seconds they want to use from an uploaded video. Users just pick the start point, and how long they want it to run, and Animoto’s servers do the rest. You can also choose to cut out the sound, as well as duplicate any clip. Doing this several times over lets users string together a series of segments from a larger clip to go beyond the time limitations.

commentary

It’s just more exacerbation of the hand-to-mouth existence most CIOs already face. In the nearly five years since the founding of GroundWork Open Source, it seems that enterprise IT executives have been tightening their belts continuously.

We are or shortly will be in a recession. While perhaps not cause to celebrate, it’s also not cause for alarm as the best companies will emerge all the stronger for the experience.

Open Source companies are insulated to the extent that they eschew the whopping license fees associated with proprietary software. And, to the extent that open source products tend to be designed to “just work” IT shops don’t have the added burden of professional services charges from vendors whose software needs extensive customization that only they can do.

With economic uncertainty building on IT organizations, we are seeing enterprise IT organizations tightening their belts when it comes to IT budgets and initiatives. As open source management solutions continue to mature and increase their functionality, they will see more opportunities on the enterprise scale.

Disclosure: I am an advisor to MuleSource.

I single out GroundWork because I had the opportunity to talk with Dave Lilly, CEO of GroundWork, in advance of next week’s Open Source Business Conference 2008 (March 25-26, San Francisco), and got the inside scoop on how the company is doing. GroundWork exemplifies the “unfair advantage” that open-source vendors have when IT buyers actually need the software to work at a reasonable price.

As Lilly pointed out to me, however, this “belt tightening” isn’t novel:

Because of the cost-value discontinuity I expect the demand for open source solutions to increase as functionality improves regardless of economic conditions, but we’d be happy to assist those IT executives who may be facing some sleepless nights due to recent conditions, as well.

Despite the slowdown, things are heating up for GroundWork. GroundWork has seen 58 percent of its subscription revenue coming from distributed deployments within larger enterprises like Academy of Motion Pictures and Sciences, MobiTV, and Siemens. Why? Because GroundWork costs 20 percent of what the proprietary “Big Four” system management vendors cost. 80 percent cost savings in systems management? I’ll buy that.

Open source companies have an advantage in the market right now as the sales models are based on adoption first, counter to traditional proprietary sales which require you to pay first.

GroundWork isn’t alone in this. I asked my friend (and MuleSource CEO), Dave Rosenberg, whether a recession is a landmine or an opportunity for open source. Shy person that Dave R. is (not), he didn’t mince words:

It’s a great time to be in open source. When I see people straining to sell and buy homes, I can smell the recession. But when I go to work selling open-source solutions, I can taste prosperity. A downturn separates the wheat from the chaff. Here’s hoping for even more open-source “wheat.”

Good open-source companies will be primary beneficiaries of a downturn, as Stephen Elliot of IDC points out with regard to open-source system management vendors like GroundWork:

I bet.