Technology News

Electronic Arts CEO steps down, takes blame for missed targets

2013-03-18T15:03:00.001-07:00

By Malathi Nayak

SAN FRANCISCO (Reuters) - Electronic Arts' Chief Executive Officer John Riccitiello has resigned, saying he was 'accountable' for the company missing its operational targets.

The company warned investors that earnings in the current quarter will be at the low end of or slightly below its previously issued forecast after the announcement.

In January, the company had said it expected non-GAAP revenue for its fourth quarter ending March 31 to be about $1.025 billion to $1.125 billion. It also forecast non-GAAP diluted earnings per share of 57 cents to 72 cents.

Riccitiello will step down from his post as CEO and member of the board of directors on March 30, the video game company said on Monday.

'We have fallen short of the internal operating plan we set one year ago,' Riccitiello said in a letter filed to the Securities Exchange Commission. 'EA's shareholders and employees expect better and I am accountable for the miss.'

EA's former CEO and chairman of the board, Larry Probst, has been appointed as executive chairman as the company begins its search for its next CEO, the company said.

Electronic Arts' stock climbed 3.1 percent to $19.29 in after-hours trade, from a close of $18.71 on the Nasdaq.

(Reporting By Malathi Nayak; Editing by Bernard Orr)

Analysis: Amazon's sellers unhappy about fee hikes, eye rivals

2013-03-18T07:03:00.001-07:00

By Alistair Barr

SAN FRANCISCO (Reuters) - A brewing conflict between Amazon.com Inc and its merchants over fee hikes could benefit rival eBay Inc, and provide an opening for Wal-Mart Stores Inc and Google Inc, which are just getting into the space.

Amazon's online bazaar generates margins many times higher than traditional retail as the company takes a cut of every sale on its site made by a merchant, known as a third-party seller, and charges extra fees for handling logistics.

The growth of this business, which now accounts for almost 40 percent of unit sales, has helped push Amazon shares to record highs.

But a series of fee hikes over the past year and a half have alienated many merchants, and some are threatening to defect.

'If they increase fees too much, some sellers will decide to not sell there anymore,' said Niraj Shah, chief executive of furniture retailer Wayfair, which uses Amazon, eBay and Wal-Mart's online marketplaces, as well as its own websites.

'That's against Amazon's plan, which is to get as much selection as possible on their site,' Shah added. 'The vast majority of Amazon sellers are perfectly happy to go to any marketplace offering meaningful volume.'

Amazon said many of the fee increases have been driven by rising costs, such as higher gas prices and hence transport expenses. It said it has also invested in changes to get products to customers quicker - a push that third-party sellers will benefit from because faster shipping should increase sales.

But sellers see it differently, complaining on online seller forums that Amazon's fatter returns came partly from putting a heavier burden on their shoulders. 'Shipping & fees are killing my margins,' wrote one seller last month.

Another, in August, complained about higher fees for selling electronic accessories that were due to kick in early this year: 'Holy crap! 8% to 15%?! Goodbye good deals from 3rd party sellers on Amazon in the electronics section.'

A third ranted in August about higher costs for shipping products to multiple Amazon warehouses. 'Amazon just pulled a fast one,' the seller wrote. 'Now that Amazon has all the power, they're imposing increased fee hikes to all those cozy sellers who have supported Amazon since Day 1.'

The complaints became so raucous last year that the company took the forums down and re-launched them. The new forums let sellers give each other ratings for their posts - a move that some sellers viewed as a way to reduce extreme complaints.

'The updated forums were created to be more responsive to the needs of the seller community and give them information they need to help build their businesses,' Amazon spokesman Erik Fairleigh said.

MULTIPLE CUSTOMERS

EBay used to be the top online destination for sellers, but Amazon's marketplace ended its reign after its launch over a decade ago, helped in large part by 'Fulfillment By Amazon,' or FBA, a service that stores and ships items and even handles customer service on behalf of sellers.

Fees are a touchy topic for sellers with skimpy margins, as eBay knows from merchant revolts it has struggled to quell in the past. Fee hikes by Amazon are particularly irksome to sellers because they compete with the company, a seller in its own right, in many categories on the site. EBay does not hawk its own wares.

When Amazon introduced a new long-term storage fee for items that sit in its warehouses more than a year, some sellers elected to have the company destroy their unsold inventory as it was cheaper than getting the items shipped back to them.

Kat Simpson, a third-party merchant who also trains others how to sell on Amazon, said the company charges her 50 cents per item to return unsold inventory from its warehouses but just 15 cents per item to destroy it, she said.

'I would have said everybody needed to try FBA last year. Now I would say no,' she said. 'If you are selling items under $25, you won't do as well on Amazon as on eBay profit wise.'

It costs $3.92 to sell a $10 item on Amazon and $2.72 on eBay, according to Bill Vogel of The Cumberland Companies, which sells on both. But eBay takes more time and most merchants store inventory themselves, adding other costs, he noted.

For now, many merchants remain tied to Amazon's marketplace, which has two million third-party sellers.

'Customers like lower prices, but customers also like greater convenience, faster shipping and great selection,' said Tom Taylor, vice president of Amazon's FBA business.

Some seller fees, particularly for some larger products, have been cut, he noted.

COMPETITORS

Wal-Mart's marketplace now features just six merchants: Wayfair, Plumstruck, eBags, ProTeam, ToolKing and Shoebuy. Spokesman Dan Toporek said the world's largest retailer is trying to expand available products and it 'is a key component of that strategy to accelerate the growth.'

Google may be the bigger threat. It already owns most of the necessary pieces, such as product search, listings and a payment service -- it just hasn't combined them yet.

It began testing a same-day delivery service with retailers in recent weeks, sparking speculation it's building a marketplace. A spokeswoman said Google is always working to improve the user experience, including shopping.

'If somebody comes in, a Google for instance, and says you can list with us and we will give you wide exposure at much lower cost, that would be a problem for Amazon,' said Scott Tilghman, an analyst at B. Riley Caris.

Consumers want selection, bargains and fast shipping, which all cost money. Getting sellers to cover those expenses could drive them elsewhere. Yet if marketplace operators cover such costs, their profits suffer and shareholders grumble.

'There's always a trade-off,' said Ken Sena, an analyst at Evercore Partners. 'There's always that risk that sellers could defect.'

(Reporting By Alistair Barr; Editing by Tiffany Wu)

Malls must move beyond shopping to survive in Internet era

2013-03-17T05:03:00.001-07:00

By Tom Bill

CANNES, France (Reuters) - As growing numbers of shoppers move online, European mall owners are looking to pull in customers by including services that can't be replicated on the Web like hospital care and government offices.

Malls must become more like full-service community centers to survive in the face of a growing list of failed retailers like HMV and Blockbuster, property experts at the annual MIPIM trade fair in Cannes, France, told Reuters.

On the flip side of that retail revolution, the experts see big gains in warehousing as more goods are sent and returned via post.

'The days of the stand-alone mall are numbered,' said David Roberts, the chief executive of architect Aedas, one of the five largest practices in the world. The company has been involved in city masterplan projects in Asia, Europe and the Middle East.

'In 20 years time you will find stores that sell books and DVDs replaced by sites that give people a reason to go the mall ... art galleries, education centers and health and spa treatments.'

Florencio Beccar, fund manager of CBRE Global Investors European shopping centre fund, cited the recent purchase of a mall in Germany, saying the fact it included a large medical centre was 'a big plus'.

'I once saw a clinic in a Brazilian mall where you checked in and are buzzed on a device when they are ready. In the meantime you go shopping,' he said. 'With the ageing population in Europe you can see that happening more and more.'

CBRE Investors, which has about 14 billion euros ($18.2 billion) of retail property under management in Europe and 5,000 tenants, also owns a mall in southern Sweden with a library and a local municipal office, he said.

'More shopping centre developers will have early talks with these sorts of tenants as well as the big anchor retailers,' Beccar said.

Mall owners like Land Securities, Intu, Westfield and Klepierre have increased the number of restaurants and cinemas to persuade shoppers to stay longer, and offer promotions to reward frequent shoppers who can be tracked via their mobile phones.

COMMUNITY CENTRES, ADVENTURE PARKS

But these steps don't go far enough, some experts say, in light of a forecast last month that 90 percent of retail sales growth in Britain, France and Germany between 2012 and 2016, or 91.5 billion euros, is expected to be online, according to the property arm of French insurer AXA, which manages 43 billion euros of assets.

As well as changing what's inside, mall owners will need to borrow ideas from developing markets like Dubai and China where centers are part of wider mixed-use developments where people live or include open spaces where they spend leisure time, Roberts said.

'Convenience and Internet shopping has created a breakdown in community structures and there's a gap there waiting to be filled,' he said.

'There is a complete lack of vision among many shopping centre owners,' said Joe Valente, a managing director at JP Morgan Asset Management, who helps manage 7 billion euros of real estate in Europe.

'The big thing that's missing is that unlike almost every other industry they haven't caught on to building their own brand. Why not have a bluewater.com?' he said, referring to the large mall of the same name in southeast England.

'Landlords fear cannibalizing sales but in 10 to 15 years they won't have a choice because they will be cannibalized anyway,' he said. In other words, a growing number of shoppers will move online whatever malls do.

'On a mall website you could book a parking space, a restaurant table or your car to be valeted. Why do people go to Covent Garden?' he asked of the central London district.

'There's nothing there you won't find anywhere else but I would argue it's a strong brand.'

Christian Ulbrich, chief executive for Europe, Middle East and Africa at property consultant Jones Lang LaSalle, said: 'Stores will get bigger and become more like adventure parks that attack all of your emotions.

'For example, Globetrotter has a climbing wall and cycle track in its Frankfurt store to try out its products,' he said of the German outdoor clothing and equipment retailer.

WAREHOUSING

While retailers and mall owners struggle to find answers, all agree that warehouse property owners are the big beneficiaries of the change in retail habits.

Every additional 1 billion euros of online sales resulted in an average additional warehouse demand of approximately 72,000 square meters in Britain, Germany and France over the last five years, a report from warehouse landlord Prologis said last year.

'Logistics is the new retail,' said Simon Hope, global head of capital markets at property consultant Savills, referring to the way changing consumer trends will affect the way investors see property.

'There is a trend of money moving away from all but the best and most regionally dominant malls into logistics as they are economically shielded,' he said.

The fact that the Norwegian and Chinese sovereign wealth funds have recently invested in the sector, as well as a report that Brookfield, lower Manhattan's largest office landlord, is trying to do the same, shows serious bets are being made on logistics property, Hope said.

Yields for high quality logistics property can be six or seven percent versus four or five percent for top shopping centers.

As another example of how retailers may re-think their operations, some are likely to club together to operate out of smaller logistics sites close to city centers to enable same-day deliveries, a service increasingly in demand, Ulbrich said.

'The issue they all face is that shopping is no longer enough of a reason to go to shopping centers.'

($1 = 0.7704 euros)

(Editing by Sonya Hepinstall)

Samsung Galaxy S4 blitz may prompt Apple rethink

2013-03-16T08:03:00.001-07:00

By Poornima Gupta

SAN FRANCISCO (Reuters) - Samsung's newest, feature-packed Galaxy S4 may put pressure on Apple Inc to accelerate its pace of smartphone design and venture into cheaper devices - both departures from usual practice.

The latest Galaxy, unwrapped with much fanfare in New York on Thursday, out-does the iPhone in most technical aspects. But the challenges it encapsulates run deeper than just a simple specifications comparison.

'It would be overstatement to say Apple is far behind,' Charles Golvin, analyst with Forrester, said, but it does need to note the quickening pace of competitive devices being released.

'If anything, what Apple needs to respond to is the cadence of their own releases, probably a completely new design every two years and a sort of speed bump every year is not an adequate cadence for Apple to remain at the forefront of smartphone innovation today.'

Samsung's apparent ability to go toe-to-toe with Apple on cutting-edge smartphones may prompt the U.S. titan to finally make its own assault on the lower-end of the market that it has famously stayed away from -- not least to get into untapped markets like China and India.

Many analysts now say Apple has to respond in force to Samsung and other rivals that are grabbing attention. Much of Wall Street is now looking ahead to the next iPhone, but expectations are muted.

Once the darling of Wall Street, Apple has in six months seen its shares fall 30 percent from a high of $705. Its Maps software was panned for inaccuracies; its once-reliable financial results, that rarely failed to surpass Wall Street estimates, missed analysts' expectations.

IN A RUT

Apple appears stuck in an iPhone product cycle, with a new phone typically launched in the second half. In past years, the iPhone has gotten a complete redesign only every two years.

Brian White, analyst with Topeka Capital Markets, who views the Samsung Galaxy S4 as a refresh and 'not a game changer,' said smartphone technology is now improving so fast that timetables put Apple at a disadvantage.

More importantly, White said, Apple needs to broaden its portfolio and play in more smartphone categories as the high-end market could soon be saturated, and get into new categories such as the oft-rumored television or a smart watch.

'They have all the components of the magic potion, which is the hardware-software ecosystem,' he said. 'All they need to do is take that potion and put it in a different segment of the iPhone market.'

While many on Wall Street believe the quickest way to penetrate fast-growing markets like India and China is a cheaper iPhone, the risk is that a cheap iPhone would cannibalize demand for the premium version and eat into Apple's peerless margins.

Apple's vice-like grip on its ecosystem - with the closely managed app store and its seamless integration with the hardware - is still seen as its biggest strength, one that Samsung is trying to emulate with a larger investment in software and connectivity. The Korean giant is also emphasizing its own mobile 'Samsung Hub' rather than the Google Play store that most other Android adopters point to.

The iPhone has seen its sales increase to 125 million in fiscal 2012 from 40 million in fiscal 2010. But in 2012, Samsung became the No.1 in the global smartphone market with 30.3 percent share followed by Apple with 19 percent share.

Samsung's rapid rise is partly helped by the fact that it bombards the market with close to 40 versions tweaked for regional and consumer tastes, from high-end to cheaper models.

Samsung's momentum is a major issue for Apple, Ben Reitzes, analyst with Barclays, who is expecting Apple to launch a lower-end iPhone globally this summer.

Apple declined to comment on Friday. But a day before Samsung's launch, marketing chief Phil Schiller attacked Google's Android operating system, saying that the majority of its users were stuck on older versions. He also said Apple's internal research showed four times as many consumers were switching to iOS from Android than vice versa.

(Additional reporting by Sinead Carew in New York; Editing by Edwin Chan and Leslie Gevirtz)

Radio frequency chip makers tune in to smartphone race

2013-03-15T13:03:00.001-07:00

By Sayantani Ghosh and Sruthi Ramakrishnan

(Reuters) - Radio frequency chip makers are set to gain as Samsung Electronics Co Ltd and Apple Inc unveil ever more sophisticated smartphones and tablets to battle for the No. 1 spot in the global mobile devices market.

Investors and analysts say they like shares of RF Micro Devices Inc, Skyworks Solutions Inc and Avago Technologies Ltd - companies that make the chips that enable gadgets to send and receive data wirelessly.

Samsung unveiled its latest flagship phone, the Galaxy S4, in New York on Thursday. The S4 can stop and start videos when someone looks at the screen, flip between songs at the wave of a hand and record sound to accompany pictures.

As manufacturers improve and add new features to phones, which are increasingly used to stream music, video and games, they are boosting the RF chip technology used in the devices.

'The RF content in handsets continues to go up,' said Stewart Stecker, a portfolio manager at AlphaOne Capital. 'That's good from an immediate to longer-term perspective for the entire RF supply chain.'

The importance of RF chips will increase as network operators deploy high-speed wireless technology known as 4G LTE (long-term evolution), analysts said.

LTE requires a much higher number of frequency bands, which increases the number of RF chips in a phone.

The global LTE market is expected to almost double this year, surpassing the $10 billion mark, according to a March 13 report from telecom market research firm Infonetics Research.

'As you add LTE - that's a whole other frequency - you need more radio, more RF equipment,' said Northland Securities analyst Tom Sepenzis.

A Verizon customer, for example, using a Samsung Galaxy S4 while traveling the world, would need to be able to use the LTE network in the United States and other countries, said Sepenzis.

'That requires more complex amplifiers that can handle multiple frequencies, requires better antenna solutions, switching capability to handle all the different frequencies. That obviously favors the RF component manufacturers,' he said.

DIVERSIFYING ORDERS

Within the RF chip supplier group, analysts said those that have diversified their client base by supplying to Samsung, Apple, and other smartphone vendors such as China's ZTE Corp are best placed to take advantage of demand.

After chipping away for years at Apple's market share, Samsung emerged as the No. 1 seller of smartphones last year, undercutting its main competitor with cheaper handsets and a wide range of products.

Samsung sold 64.5 million smartphones in the fourth quarter of 2012, compared with 43.5 million iPhones sold by Apple, data from market research company Gartner shows.

Greensboro, North Carolina-based RF Micro receives about a quarter of its revenue from Samsung, up from 10 percent a year ago, data compiled by analysts showed. Orders from Apple account for a fifth of sales, they said. RF Micro declined to comment.

Power amplifier maker Skyworks relies on Samsung and Apple for about a quarter each of its revenue, analysts said. Skyworks was not available for comment.

T. Rowe Price Global Technology fund portfolio manager Josh Spencer said he likes Avago Technologies Ltd.

'Avago has some very high-end filtering technology that you have to have in the smartphone antennas,' Spencer said, adding that he was also considering buying RF Micro's stock.

Shares of RF Micro and Skyworks gained 15 percent and 21 percent respectively from the beginning of the year until February 21, when the upward trend was interrupted by Qualcomm Inc's unveiling of plans to make its own RF chip.

But both stocks recovered a day later after analysts said it was unlikely that Qualcomm would risk damaging integrated circuit partnerships to seek a profit opportunity of not more than $600 million.

Qualcomm has nearly half of the global market for 'baseband' chips, which connect mobile phones to cellular networks, and therefore is also set to benefit from rapid LTE growth.

The S4 will use Samsung's application processor in some regions and Qualcomm's Snapdragon chips, which have LTE features, in others.

'Qualcomm has such dominance in the baseband market that they have pricing leverage even against big customers,' Spencer said.

(Editing by Robin Paxton)

SEC says funds need not report all social media postings

2013-03-15T12:03:00.001-07:00

(Reuters) - Mutual funds regulators are suffering from Twitter overload.

Many funds companies, which are required to file advertising and promotional materials for regulatory review, have also been sending over all of their posts on Facebook, Twitter and other social media networks.

But on Friday, the Securities and Exchange Commission moved to end the deluge, issuing guidelines that almost all social media posts did not need to be filed with Financial Industry Regulatory Authority, which conducts the reviews.

Only posts specifically making claims about fund performance or pitching a fund's investment merits should be filed for review, the agency said.

For example, a tweet simply announcing that a new fund was launched, marking a portfolio manager change or making other factual statements need not be filed, the SEC said.

However, a tweet which said 'fund performance rebounded strongly during the third quarter of 2012' or 'Looking for dividends? Think global and consider our new Global Equity Fund,' were the types of communications that should be filed for review.

(Reporting by Aaron Pressman; Editing by Phil Berlowitz)

Google's Schmidt to visit Myanmar, an untapped telecoms market

2013-03-15T09:03:00.001-07:00

By Aung Hla Tun

YANGON (Reuters) - Google Executive Chairman Eric Schmidt plans to go to Myanmar next week, the first high-profile tech company executive to visit after reforms that prompted Western nations to ease sanctions following decades of military dictatorship.

Since Myanmar's military stepped aside and a quasi-civilian government was installed in 2011, setting off a wave of political and economic reforms, the country has enjoyed a surge of interest from overseas businesses.

The former Burma is the last virgin territory for businesses in Asia, with untapped markets including the telecoms sector: mobile penetration in the country of 60 million is estimated to be a meager 5-10 percent.

The country's planned modernization of telecoms infrastructure and expected boom in mobile phone usage will pave the way for the entry of companies such as Google, which could profit greatly through sales of cheap smartphones built around its Android platform.

'Eric (Schmidt) is visiting several countries in Asia to connect with local partners and Googlers who are working to improve the lives of many millions of people across the region by helping them get online and access the world's information for the first time in the next few years,' Google said in a statement. His trip will also take in India.

The Myanmar trip will be Schmidt's second visit this year to a country off the beaten track. In January he went to North Korea, saying it was a personal trip to talk about a free and open Internet.

Schmidt is due to give a speech at the Myanmar Information and Communication Technology Park in Yangon on March 22, before making his way to the capital, Naypyitaw, to meet senior government officials, said Zaw Min Oo, secretary general of the Myanmar Computer Society.

'There will be an audience of about 400, comprising entrepreneurs, executive committee members of the computer association and young leaders,' Zaw Min Oo told Reuters, referring to the speech.

In February the U.S. Treasury Department issued a general license for four of Myanmar's biggest banks, two of which are owned by tycoons associated with the former junta, before a visit by 50 U.S. executives that month to explore opportunities.

The delegation, led by the U.S. Agency for International Development (USAID) and including Cisco, Google, Hewlett-Packard, Intel, and Microsoft, visited Myanmar to look into projects to boost access to the Internet, strengthen transparent government and expand digital literacy, according to a USAID statement.

Many leading firms in Myanmar are still largely controlled by businessmen subject to sanctions, but Western companies are starting to move in after the implementation of a new foreign investment law.

Myanmar is offering two operating licenses for companies to build new telecoms infrastructure.

MTN Group, Africa's largest mobile phone company, which is bidding for a license, has said around 90 companies have expressed interest.

(Additional reporting by Jeremy Wagstaff in Singapore; Writing by Paul Carsten in Bangkok; Editing by Alan Raybould and Pravin Char)

Samsung's Galaxy S4 emerges to do battle on Apple's home turf

2013-03-15T05:04:00.001-07:00

By Sinead Carew and Miyoung Kim

NEW YORK/SEOUL (Reuters) - Samsung Electronics Co premiered its latest flagship phone, the Galaxy S4, which sports a bigger display and unconventional features such as gesture controls, as the South Korean titan challenges Apple Inc on its home turf.

The phone, the first in the highly successful Galaxy S-series to make its global debut on U.S. soil, was unwrapped at Manhattan's iconic Radio City Music Hall on Thursday evening. Some industry watchers were clearly dazzled by its features, setting a high bar for Apple to surpass.

The S4 can stop and start videos depending on whether someone is looking at the screen, flip between songs and photos at the wave of a hand, and record sound to run alongside snapped still pictures. But other industry watchers said the phone would not upturn an industry that lives and dies by innovation.

The plethora of new features 'are good steps in this direction, but they can be seen as gimmicks rather than game changers. At this point, Samsung appears to be trying to kill the competition with sheer volume of new features,' said Jan Dawson, chief telecom analyst at IT research outfit Ovum.

'For now, Samsung can likely rely on its vastly superior marketing budget and the relatively weak efforts of its competitors in software to keep it ahead.'

The success or failure of Samsung's latest flagship phone - the fourth in a brand launched in 2010 - will be pivotal in the world's biggest smartphone maker's battle against Apple and smaller, and key to that struggle will be phone differentiation.

Apple may already be feeling the heat.

Just a day before, marketing chief Phil Schiller blasted Samsung and the Google Android software in rare interviews given to Reuters and other select media, underscoring the pressure that the iPhone maker is feeling from its Korean mobile-phone nemesis.

The S4, which Samsung preceded with a marketing blitz that drummed up industry speculation reminiscent of some of Apple's past launches, will be available by the end of April and rolled out to 327 carriers in 155 countries, including U.S. service providers Verizon Wireless, AT&T Inc, Sprint Nextel, T-Mobile USA.

'Samsung has fulfilled the promise of their marketing that they are the tech innovators. It remains to be seen whether it's overload for customers, whether they can really take advantage of all these features,' said Forrester analyst Charles Golvin.

The S4 will use either Samsung's own applications processor or Qualcomm Inc's Snapdragon central processing chip, depending on the country. But the Korean company kept mum on exact dates and prices.

SAMSUNG HITS BROADWAY

Samsung took a slightly different tack with the S4's launch, using actors and a full live orchestra to present the smartphone's various features via a series of skits - as perhaps befitted its theatrical platform.

That marked a departure of sorts from the usual slick, high-wattage shows favored by rivals such as Apple.

Investors largely shrugged off the launch. Shares in Samsung were down 1.1 percent in a steady market in early Seoul trading on Friday.

The stock has stood little changed so far this year, while Apple's shares have tumbled 20 percent as disappointing sales of iPhones raised fears that its dominance may be slipping.

Apple's U.S. sales outstripped Samsung's for the first time in the quarter ending in December, even after Samsung spent a record $400 million on phone advertisements here last year.

While the global smartphone market's growth rate is tapering off, Samsung still derives the majority of its annual profits from Galaxy phones.

Samsung said the Galaxy S4 will sport a bigger 5-inch display than the S3's 4.8 inches. But because the new display will cover more of the phone's surface area, the device itself will be the same length and slightly narrower, thinner and lighter than the previous generation.

The newest features involve different options for navigation. For example, if the phone senses someone is looking at the screen, the user can tilt it forward or backwards to scroll up and down a Web page.

That feature falls slightly short of what some consumers may have expected after the New York Times reported that the phone would be able to scroll automatically by tracking readers' eyes.

But what it can do is sense when it has someone's attention. When a video is playing, for instance, the stream will automatically pause if the person glances away and it will restart when the eyes refocus on the screen.

This is an update on an existing Galaxy feature, which powers down the display if it senses no one's looking at it, conserving battery power.

The latest phone also has a sensor that lets users move their hands to the left or right to scroll between different websites they have opened or through songs or photos in an album without having to touch the phone.

The idea is to make it easier to change the song playing without having to pick up the phone while driving or to avoid putting sticky fingers on the touch-screen display while scrolling through a Web page at mealtimes.

The phone will also allow users to hover a finger over an email inbox or a photo gallery to get a glimpse of more details of what's in the email or which photos are in an album.

Another feature includes the option to automatically put a copy of details from a photograph of a business card into the phone's contacts database or call a number in the business card.

Samsung is also promising an instant translation between 10 different languages for certain applications, as well as a separate translation application on the device.

The device also has a 13-megapixel camera, compared with the S3's 8-megapixel camera.

'They kind of cherry-picked features that other competitors had, and then packed them up all together into one device,' said Gartner analyst Carolina Milanesi.

'The story though is more about who Samsung is and where they want to be. It is clear today that they want to play in an ecosystem game, their own ecosystem. The word Android didn't come up once.'

(Additional reporting by Poornima Gupta in San Francisco; Editing by Edwin Chan, Richard Chang and Ryan Woo)

Exclusive: EMC, IBM eye web hosting company SoftLayer - sources

2013-03-14T15:03:00.001-07:00

NEW YORK (Reuters) - IBM Corp and EMC Corp are among parties in talks to buy privately held database web hosting company SoftLayer Technologies Inc, in a deal that could fetch over $2 billion, three sources close to the matter said.

Dallas, Texas-based SoftLayer has hired Morgan Stanley and Credit Suisse to run the sale process, the sources said, asking not to be named because the talks are private.

SoftLayer's sale process was initially spurred by one of its customers, AT&T Inc, which approached the company in recent months seeking exclusive talks, one of the sources said. AT&T is no longer involved in the process, two of the sources said.

Spokespeople for SoftLayer, AT&T, EMC, IBM, Morgan Stanley and Credit Suisse declined to comment.

(Reporting by Nadia Damouni; additional reporting by Nicola Leske and Sinead Carew; Editing by Soyoung Kim, Bernard Orr)

More change at Google as head of maps and commerce gets new role

2013-03-14T11:04:00.001-07:00

(Reuters) - The head of Google's Inc's mapping and commerce division is stepping down from the role, the latest change to the company's senior management team, which saw Android boss Andy Rubin hand over the reins on Wednesday.

Google will split its Maps/Geo and Commerce group into two separate units. Senior Vice President Jeff Huber, who has led the group since 2011, is moving to Google X, the company's experimental projects group known for developing self-driving cars and the Google Glass wearable computer.

Huber, who worked on some of Google's 'most complicated issues like ads, apps, payments and geo,' is now 'eager to work in a more startup-like environment,' the company said in a statement on Thursday.

Google executive Alan Eustace will take over the Maps/Geo group, while Susan Wojcicki will lead Google's Commerce group.

On Wednesday Google announced that Sundar Pichai would take over its fast-growing Android mobile software business, replacing Rubin, who is moving to a new, yet-to-be-defined role at the company.

(Reporting by Alexei Oreskovic; Editing by Lisa Von Ahn)

Google to shut Reader web feed application, users vent

2013-03-14T07:10:00.001-07:00

By Sayantani Ghosh

(Reuters) - Google Inc said it will shut Google Reader on July 1, citing declining usage for the application that aggregates content served by web feeds, as it forges ahead with its strategy to focus on fewer products that have more impact.

Google Reader was launched in 2005 to make it easy for people to discover websites of interest and keep tabs on them.

Google said there were 'two simple reasons' for closing the service. 'Usage of Google Reader has declined, and as a company we are pouring all of our energy into fewer products,' the company said on its official blog on Wednesday.(http://r.reuters.com/nur66t)

Users of the doomed app took to Twitter to vent about the closing of the service, making 'Google Reader' one of the top trending topics on the microblogging site.

'Shutdown of Google Reader because of a 'lack of consumer appeal?' No way. The simple reason: RSS can't be controlled and monetized easily,' one Twitter user wrote.

'The killing Of Google Reader highlights the risk of relying on a single provider,' another Tweet said.

Lawyer Dan Lewis started a campaign on petition website Change.org to save Google Reader that garnered more than 31,000 supporters in about 12 hours.(http://r.reuters.com/kyr66t)

PepsiCo Inc recently removed a controversial chemical from its Gatorade drinks following concerns from consumers and an online petition on Change.org started by a Mississippi teenager.

Some users pointed out alternative readers such as Feedly (http://r.reuters.com/sur66t) and NewsBlur, and Feedly was quick to capitalize on Google's announcement by offering tips to Reader users for moving their data to its website.

Google said users and developers interested in alternatives to Reader can export their data, including subscriptions, with the Google Takeout service over the next four months.

Google Takeout allows users take their data out of multiple Google products and collate it in portable and open formats, making it easy to export to other services.

Google said it would retire seven other products and services over the next few months, including its voice app for BlackBerry.

In a blogpost titled 'A second spring of cleaning', Google said the latest closures meant it has now pulled the plug on 70 features or services since it started streamlining its product base in 2011.

(Additional reporting by Sakthi Prasad and Supantha Mukherjee; Editing by Greg Mahlich and Ted Kerr)

Google's Android chief Andy Rubin steps down

2013-03-13T12:05:00.000-07:00

SAN FRANCISCO (Reuters) - Andy Rubin is stepping down as head of Google Inc's Android division after he helped turn the software into the world's most widely-used mobile operating system.

Google's browser and applications chief Sundar Pichai will replace Rubin, bringing the firm's mobile software, applications and Chrome browser under one roof.

Larry Page, Google's chief executive and co-founder, credited Rubin for evangelizing Android more than half a decade ago and said the decision to switch was Rubin's. Page was mum on Rubin's future role in a blogpost on Wednesday announcing the switch.

Rubin built Android into a free, open-source software platform now used by most of the world's largest handset manufacturers, from Samsung Electronics Co Ltd to HTC Corp.

Android is now installed on roughly two-thirds of the world's smartphones, supplanting Apple Inc at the pinnacle of the fast-moving mobile arena.

Anrdoid tablets are also expected to overtake Apple's iPad in terms of shipments in 2013, IT research house IDC predicted on Tuesday.

'Going forward, Sundar Pichai will lead Android, in addition to his existing work with Chrome and Apps. Sundar has a talent for creating products that are technically excellent yet easy to use-and he loves a big bet,' Page wrote in the blogpost.

'Andy's decided it's time to hand over the reins and start a new chapter at Google. Andy, more moonshots please!'

Pichai, who began his engineering training in India before moving to the United States, aggressively pushed Google's Chrome browser in 2008, when Microsoft Corp's Explorer lorded over the market. Chrome now commands a roughly 35 percent market share according to Web traffic analyzers StatCounter.

He is also credited with the development of some of the company's more successful apps, such as Maps and gmail.

'While Andy's a really hard act to follow, I know Sundar will do a tremendous job doubling down on Android as we work to push the ecosystem forward,' Page said.

Shares in the company slipped 0.2 percent to $825.83 in afternoon trading.

(Reporting by Edwin Chan; Editing by Gerald E. McCormick, Leslie Adler and Andrew Hay)

Google names Pichai to head Android, replacing Rubin

2013-03-13T11:04:00.001-07:00

SAN FRANCISCO (Reuters) - Google Inc has appointed Sundar Pichai the chief of its Android division, replacing Andy Rubin as the overseer of a software platform that in just a few years has become the world's most-used mobile software.

The move brings Google's mobile software, applications and Chrome browser under one umbrella. Larry Page, Google's chief executive and co-founder, credited Rubin for evangelizing Android more than half a decade ago and said the decision to switch was Rubin's. Page was mum on Rubin's future role.

Rubin built Android into a software platform used by most of the world's largest handset manufacturers, from Samsung Electronics Co Ltd to HTC Corp, supplanting the platform of Apple Inc.

'Going forward, Sundar Pichai will lead Android, in addition to his existing work with Chrome and Apps. Sundar has a talent for creating products that are technically excellent yet easy to use-and he loves a big bet,' Page wrote in a Wednesday blogpost.

'Andy's decided it's time to hand over the reins and start a new chapter at Google. Andy, more moonshots please!'

Shares in the company slipped 0.5 percent to $823.37 in afternoon trading.

(Reporting by Edwin Chan; Editing by Gerald E. McCormick and Leslie Adler)

Cyber threats against U.S. "ramping up," Obama says

2013-03-13T07:03:00.001-07:00

By Susan Heavey

WASHINGTON (Reuters) - Cyber security threats against the United States are growing, President Barack Obama said before a meeting on Wednesday with corporate leaders about the issue, as concerns rise about hacking attacks emanating from China.

Speaking in a television interview, Obama stopped short of echoing concerns expressed by some lawmakers that the United States was engaged in some kind of electronic war with China.

'You always have to be careful with war analogies ... there's a big difference between them engaging in cyber espionage or cyber attacks and, obviously, a hot war,' Obama told ABC News in the interview, which was taped on Tuesday but aired on Wednesday.

'What is absolutely true is that we have seen a steady ramping up of cyber security threats.'

Some of the threats are 'absolutely' sponsored by governments, he said. 'Some are state sponsored. Some are just sponsored by criminals.'

'We've made it very clear to China and some other state actors that, you know, we expect them to follow international norms and abide by international rules,' Obama said, adding that Washington has already had 'some pretty tough talk' with other countries.

Cyber attacks can cost billions of dollars, lead to stolen industry secrets, and place the United States at a competitive disadvantage, he said.

Obama is scheduled to meet with a group of CEOs at the White House later in the day to solicit their input on how the government and private sector together can improve U.S. security for the Internet, online databases and more. The White House has not yet named the CEOs.

The meeting comes just days after U.S. authorities said they were investigating reports that Obama's own family had been hit by hacking.

The president said in the interview that he did not know whether reports were true that hackers had posted financial and personal information online about his wife, Michelle, along with other high-profile Americans.

'It would not shock me if some information ... among people who presumably have pretty good safeguards against it, still gets out,' he said.

Obama signed an executive order a month ago directing authorities to improve information sharing on cyber threats. However, such orders do not carry the weight of law and Obama told ABC that Congress has to act.

A Senate bill on cyber security last year failed to secure enough votes to pass, and was opposed by business groups.

'There are ways that we can harden our critical infrastructure, our financial sector,' Obama said. 'They need to get this done.'

(Additional reporting by Steve Holland and Roberta Rampton; editing by Christopher Wilson)

At Galaxy unveiling, Samsung will have insurance plan in back pocket

2013-03-13T05:05:00.000-07:00

By Miyoung Kim

SEOUL (Reuters) - The success of Samsung Electronics Co's latest Galaxy phone, set to be launched in New York on Thursday, could hinge on a supply backup plan aimed at preventing a repeat of a costly snag for its premium smartphone last year.

Some analysts predict the new Galaxy S IV could top 10 million unit sales in the first month after its launch, so any hiccups in the smooth delivery of core components could be disastrous.

The risks are high. A simple manufacturing snafu involving unsatisfactory design of handset cases cost Samsung some 2 million units of lost sales in just a month after it launched the S III in May last year.

'There could be, again, a supply bottleneck due to tight supply of components... but I think any such disruption will be very brief, as Samsung is making a bigger bet on the S IV than on its predecessor with a backup plan to avoid such disruption,' said Greg Noh, an analyst at HMC Investment and Securities.

After pre-empting its launch with a marketing blitz for the new Galaxy phone, the South Korean electronics giant also risks having overhyped its new phone, analysts warn. They say consumers could be disappointed if it has only incremental improvements rather than the dazzling features they've come to expect.

Samsung picked the United States for the launch of its top-selling Galaxy series, hoping to regain its lead in the crucial U.S. market. Apple Inc outsold Samsung there for the first time in the quarter ending in December, even after Samsung spent a record $400 million on phone advertisements there last year.

The stakes are especially high for Samsung, which derives the majority of its annual profits from the product, while growth rates for the global smartphone market taper off.

J.K. Shin, head of Samsung's mobile business and a newly elected board member, will skip his first Samsung shareholders meeting on Friday in Seoul in order to attend the Galaxy launch at the Radio City Music Hall.

'It's got to be a blockbuster phone that beats its predecessor and competitors in nearly all aspects, otherwise Samsung could follow the footsteps of others and fail to manage expectations, which get only higher,' said David Choi, an analyst at SK Securities.

Samsung executives declined to comment on steps they've taken to ensure supplies keep flowing, but some analysts said a disruption of any component part could potentially cascade, interrupting deliveries.

'Based on checks we had with suppliers, Samsung has already done significant work to ensure smooth supply and not to repeat what they had to deal with last time,' said Lee Seung-woo, an analyst at IBK Securities.

'For now it appears there's no major issue at all, but obviously we have to wait and see how smoothly it goes after the launch.'

Of particular concern are eight-core processor chips and screens, or even simple handset cases.

'Handset cases again appear to be in tight supply, and Samsung may use two different processors to maximize battery efficiency through the right combination of chips for different network conditions to yield the best performance,' Noh said.

WOW FEATURES?

The new Galaxy phone is widely expected to boast crisp, full high-definition quality pictures, a slightly bigger 5-inch screen, a 13 mega-pixel rear camera, and an improved eight-core processor.

Earlier media reports had also suggested the new Galaxy, which uses Google's free Android software, may have functions that track the viewer's eye movement, and boast an unbreakable or flexible screen.

Whether that will be enough to excite consumers is debatable, analysts say. Samsung declined to comment.

'With so many great things speculated about the S IV, it could actually disappoint in terms of wow factors,' said Choi at SK Securities. 'If you see Samsung's share price, which hasn't moved much of late, I think you can get a more cool-headed assessment of what's coming.'

Shares of Samsung, which has a $220 billion market value, have fallen 1 percent so far this year, while Apple shares tumbled nearly 20 percent as disappointing sales of iPhones raised fears that its dominance may be slipping.

'It's about the buzz they can generate around the product,' said Ben Wood, an analyst at mobile consulting firm CCS Insight.

Samsung has developed a cheeky TV ad that mocks Apple customers, and dramatically ramped up spending on marketing and advertising, a cornerstone of Apple's success.

'It's not afraid to carpet bomb the world with marketing efforts to make sure nobody on the planet misses out on the story of the Galaxy IV,' Wood said.

SHIFTING FORTUNES

Such bravado underscores how far Samsung has come since its first Galaxy, which debuted in June 2010 in answer to the runaway success of the iPhone. That propelled Samsung to become the world's top smartphone maker, vexing Apple which virtually created the smartphone market with its first iPhone in 2007.

The touchscreen-based look and feel of the Galaxy also prompted Apple to file global patent disputes against the South Korean firm.

In 2012, Samsung surpassed Apple as the world's largest maker of smartphones, controlling 30 percent of the market versus Apple's 19 percent. But in the high-end market, sales of Samsung's Galaxy S and Note still lag far behind Apple's iPhone, the best-selling smartphone globally.

As overall market growth slows, however, it is also becoming more competitive. Rivals such as LG Electronics Inc and Huawei Technologies have announced products with features and hardware comparable to those the upcoming Galaxy will reportedly have.

'I'm expecting them to come out with some new features they can hang their hat on,' said Avi Greengart, an analyst at Current Analysis, referring to the Galaxy launch.

'As long as the Galaxy S IV doesn't regress and as long as it's competitive with the flagship phones from other phone manufacturers, I give it really good chances of winning consumer sales even if it isn't different for the sake of being different.'

(Additional reporting by Sinead Carew in NEW YORK; Editing by Ken Wills)

Apple's iPad to fall behind Android as tablet war grows

2013-03-12T16:03:00.001-07:00

By Noel Randewich

SAN FRANCISCO (Reuters) - Shipments of tablets running Google Inc's Android will overtake the iPad this year for the first time, research house IDC predicted on Tuesday, as Apple Inc cedes more mobile market share to hard-charging rivals around the globe.

A growing variety of smaller and cheaper Android tablets from Google to Amazon.com Inc will catch on this year with more consumers and chip away at Apple's dominance since the first iPad launched in 2010, International Data Corp said.

iPad and iPhone shipments are expected to keep growing at enviable rates, but arch-rival Samsung Electronics and others have hurt Apple with a combination of savvy marketing, greater variety and rapid technology adoption.

On Thursday, Samsung takes the wraps off the fourth generation of its flagship Galaxy, the smartphone that helped the South Korean giant knock the iPhone off its top ranking for part of last year.

A growing perception that the company co-founded by Steve Jobs may be losing its competitive edge has weighed on its shares, which have lost more than a third of their value since hitting a high in September.

IPHONE COULD GO WAY OF BLACKBERRY?

In the latest criticism from Wall Street, Jefferies analyst Peter Misek on Tuesday compared Apple to Blackberry saying the iPhone is now on the defensive against Samsung's devices.

'Historically when handset makers fall out of favor (e.g., the Razr, Blackberry, HTC) they fall faster/further than expected,' Misek said.

Now, IDC says Apple may begin losing some its lead on tablets as well, though it remains the top seller among manufacturers.

iPad shipments are expected to account for 46 percent of the tablet market in 2013, down from 51 percent last year, IDC said. Devices running Android are expected to grow their market share to 49 percent this year from 42 percent last year.

Google's Nexus 7 tablet and Amazon.com Inc's Kindle, which uses its own customization of Android, made major inroads with consumers last year. In November, Apple launched its own foray into smaller-sized tablets with the iPad mini.

'One in every two tablets shipped this quarter was below 8 inches in screen size. And in terms of shipments, we expect smaller tablets to continue growing in 2013 and beyond,' IDC said in a press release.

APPLE REVS GROWTH SLOWS

Last month, Hewlett-Packard Co announced the launch of the Slate 7 tablet powered by Android, a centerpiece of that company's effort to expand from the shrinking personal market into mobile.

Apple is expected to grow its revenue by $26 billion in its fiscal year ending in September, just over half of the $48 billion increase in revenue it saw the year before, according to Thomson Reuters I/B/E/S.

A group of suppliers that depend on Apple for more than half of their business saw its sales slump 31 percent in February compared to January, according to Topeka Capital Markets analyst Brian White, who does not identify the companies in the group.

Shares of Cirrus Logic, which gets three quarters of its revenue from selling audio chips to Apple, have fallen 23 percent this year, including a 2.89 percent drop on Tuesday.

Many component suppliers to Apple, like Qualcomm and Toshiba, also do significant business with Android device manufacturers.

'The open ecosystem at Android has allowed there to be more suppliers. As a chip guy, I always want to have as many irons in the fire as possible because the ride at the top tends to only last five years,' said RBC analyst Doug Freedman.

Underscoring the increasing opportunity in mobile for Apple and its competitors, IDC also raised its 2013 tablet shipment forecast to 190.9 million units, up from its previous forecast of 172.4 million units.

Last year, global tablet shipments grew to 128.3 million units, up from 72 million in 2011, according to IDC.

In the smartphone market, which reached 545 million units shipped last year, Apple has already fallen behind Samsung.

Samsung is likely to sell 290 million smartphones this year, up 35 percent from 2012, according to Strategy Analytics. Apple's smartphone sales are projected to reach 180 million this year, up 33 percent.

IDC said tablets running Microsoft's Windows 8 platform would grow their market share from 1 percent last year to 7.4 percent in 2017.

Tablets running the Windows RT operating system, which is not compatible with older software that runs on Windows, will see their market share stay below 3 percent through 2017, IDC said.

'Consumers aren't buying Windows RT's value proposition, and long term we think Microsoft and its partners would be better served by focusing their attention on improving Windows 8,' IDC said.

(Editing by Andrea Ricci and Andrew Hay)

Apple has 25 percent chance of missing outlook: analyst

2013-03-12T11:03:00.001-07:00

(Reuters) - Apple Inc has a 25 percent chance of missing its quarterly revenue forecast as iPhone sales slow and Samsung launches its highly anticipated Galaxy S4 smartphone, Jefferies analyst Peter Misek said.

Misek, who has previously raised red flags when Apple cut orders to suppliers, cut his iPhone sales estimate for the quarter ending March to 35 million from 37.5 million.

He cut his target price on Apple's stock to $420 from $500. Misek, who has drawn comparisons between Apple and fading handset makers such as BlackBerry and Motorola, had a price target of $900 on Apple shares in August.

'When handset makers fall out of favor they fall faster/further than expected,' he said in a research note.

Apple's stock was down 1.8 percent at $430.20 on the Nasdaq on Tuesday.

Misek said he expected Apple to report second-quarter revenue of $41 billion, at the low end of the company's own forecast of $41 billion to $43 billion.

Analysts on average expect current quarter revenue of $43 billion, according to Thomson Reuters I/B/E/S.

Apple missed Wall Street's revenue forecast for the quarter ended December 31 and disappointing holiday sales reinforced fears it was losing its dominance in smartphones.

The launch of the iPhone 5S may be delayed, said Misek who is rated four stars out of five by Thomson Reuters StarMine for the accuracy of his earnings estimates on Apple.

'Apple's suppliers are having problems with the new casing colors leading to a push out from Jun to Jul-Sep after Apple hoped to pull forward the update,' he said.

(Reporting by Sayantani Ghosh in Bangalore; Editing by Joyjeet Das)

Apple's iPads to fall behind Android tablets this year: IDC

2013-03-12T08:03:00.001-07:00

By Noel Randewich

SAN FRANCISCO (Reuters) - Shipments of Apple Inc's iPads will fall behind the growing variety of tablets running Google Inc's Android platform for the first time this year as smaller-sized devices catch on with more consumers, research firm International Data Corp (IDC) said on Tuesday.

iPad shipments are expected to account for 46 percent of the market in 2013, down from 51 percent last year, IDC said. Devices running Android are expected to grow their market share to 49 percent this year from 42 percent last year.

IDC also raised its 2013 tablet shipment forecast to 190.9 million units, up from its previous forecast of 172.4 million units. It did not say how many tablets shipped last year.

Google's Nexus 7 tablet and Amazon.com Inc's Kindle, which uses its own customization of Android, made major inroads with consumers last year. In November, Apple launched its own foray into smaller-sized tablets with the iPad mini.

'One in every two tablets shipped this quarter was below 8 inches in screen size. And in terms of shipments, we expect smaller tablets to continue growing in 2013 and beyond,' IDC said in a press release.

Last month, Hewlett-Packard Co announced the launch of the Slate 7 tablet powered by Android, a centerpiece of that company's effort to expand in mobile devices and reduce its dependence on the shrinking personal computer market.

IDC said tablets running Microsoft's Windows 8 platform would grow their market share from 1 percent last year to 7.4 percent in 2017.

Tablets running the Windows RT operating system, which is not compatible with older software that runs on Windows, will see their market share stay below 3 percent through 2017, IDC said.

'Consumers aren't buying Windows RT's value proposition, and long term we think Microsoft and its partners would be better served by focusing their attention on improving Windows 8,' IDC said.

(Editing by Andrea Ricci)

UK's anti-fraud agency says may be conflicted in Autonomy probe

2013-03-12T05:04:00.001-07:00

By Kirstin Ridley

LONDON (Reuters) - Britain's fraud-busting agency said it might have a conflict of interest in its investigation of Autonomy, a British software company accused of accounting irregularities by its new U.S. owners Hewlett-Packard Co.

The Serious Fraud Office (SFO) said on Tuesday it might be using an Autonomy product, Introspect, as a document management tool as it formally confirmed that it had opened a criminal investigation into how the British company was sold.

The agency said it was now making inquires to establish whether it could continue its probe into allegations that the U.S. PC and printer maker was duped when it bought Autonomy for $11.1 billion in 2011.

'The SFO is keen to ensure that there is now no conflict of interest or perception of such a conflict, and it is obliged as a first step to make inquiries to ensure that it can continue as the investigating body,' it said in a statement.

The cash-strapped SFO has been dubbed the 'Seriously Flawed Office' since some of its high-profile cases collapsed, or victories were only partial. Last year's botched probe into property moguls Vincent and Robert Tchenguiz left it fighting a 300 million pound ($447 million) damages claim.

HP said in regulatory documents filed on Monday that the SFO had joined the U.S. Department of Justice and the UK accounting regulator, the Financial Reporting Council, in opening a probe into Autonomy.

HP, which bought Autonomy in a bid to make it the centerpiece of a shift into software, stunned the market a little over a year after the purchase by writing off three quarters of the British firm's value.

It alleged 'some former members of Autonomy's management team used accounting improprieties, misrepresentations and disclosure failures' to inflate the company's apparent worth.

Autonomy has denied the allegations.

Autonomy's former chief executive Mike Lynch, an Irish-born mathematics whiz who led the firm when it was sold, has blamed the fall in its valuation on HP's mismanagement. He has hired one of London's top law firms, Clifford Chance, to contest the allegations.

($1 = 0.6711 British pounds)

(Reporting by Kirstin Ridley; Editing by John Stonestreet)

At South by Southwest, fewer startups, more marketers and media

2013-03-11T16:03:00.001-07:00

By Gerry Shih

AUSTIN, Texas (Reuters) - Has 'South-by' lost its direction?

For several years running, that question has hovered over the iPhone-clutching tech cogniscenti who made the annual springtime pilgrimage to the mecca of geek- and hipster-dom in Austin, Texas.

In 2007 the South by Southwest Interactive festival - the five-day digital offshoot of SXSW, the two-week-long gathering for music and film lovers - solidified its reputation as the place for entrepreneurs and tech investors to see and be seen after the conference helped boost a then-little-known service called Twitter to prominence.

Since then, the interactive festival's popularity and its ticket prices have skyrocketed - and so have complaints from the geeks that it has become too big, too crowded, too expensive and too hopelessly awash in corporate sponsorship money.

The anxieties hit new highs this year as app makers largely eschewed using the event as a launching pad, even while marketing dollars from consumer brands such as Oreo, American Airlines and General Motors' Chevrolet seemed to flow as freely as company-expensed margaritas.

Greg Cohn, a Los Angeles entrepreneur who recently launched Burner, an iPhone messaging app, decided to forgo the festival for the first time since 2005, saying he felt the conference had become overwhelmed by large advertisers and was increasingly irrelevant for startups jostling to get their name out.

'It's a lot less intellectually stimulating, a lot less organic and authentic,' said Cohn, who opted to attend a new conference in Portland, Oregon, called XOXO, started this year by disaffected SXSW veterans. 'It feels like SXSW has gone bankrupt, and it needs a new start.'

In Silicon Valley - where embracing the new and ditching the old can sometimes be a serious sport - more than a few sniffed at SXSW.

'It's jumped the shark,' said Mike Volpi, a partner at Index Ventures, who stayed home.

Eric Eldon, co-editor of startup blog-of-record Techcrunch, reluctantly said he was headed for Texas - 'but only for Music and Film,' he quickly added. (Techcrunch later published a post headlined: 'No Hot SXSW App This Year? Here's Why.')

The startup world may have cooled on Austin, but the five-day festival, which ends on Tuesday, is still plenty hot. Almost two decades after it began, SXSW Interactive has grown vastly more diverse in subject matter and more mainstream, with dozens of do-it-yourself workshops and 'meetups' to accompany the panels. This year it is on track to break the 25,000 attendance record it set last year, organizers said.

OREOS AND VIDEOS

Above all, it was the brand marketers who were this year's stars, evidenced by Oreo Cookies' mascot strolling through the Austin Convention Center and the 'grab-and-go' cookie packs the company gave away. Chevrolet offered rides in cars equipped with voice-recognition software and parked two model cars in front of the convention center, while Target transformed the rear of a restaurant into a 'Tarcade' hall filled with videogames. American Airlines and AT&T held a joint 'hackathon.'

Hugh Forrest, a former alternative newspaper journalist who has organized SXSW Interactive since its inception in 1994, said he 'frequently hears criticism' about the festival's evolution but noted that it now offers a head-spinning 800 panels and events to choose from, compared with just 16 two decades ago.

'Is there a larger presence of corporate sponsors? Yes,' Forrest said. 'But also there are more smaller, indie, bootstrapped things as well. Sponsors help us out with a lot of things we couldn't do before.'

Sitting in a 'Gold Lounge' with Doritos and a dozen other logos plastered on the wall inside the Austin Convention Center - an irony he pointed out with a chuckle - Forrest noted that the advertising-supported business model should be something many app makers at SXSW understand well.

'We'd be silly and naïve to think marketing is not a big part of new media and culture and business at this point,' Forrest said. 'That's how many, many things get paid for.'

As SXSW's programming has ballooned in recent years, its offerings have been fleshed out by a surging number of sub-topics, such as health and medicine or public service and activism. Even the startups sphere has expanded, there have been an increasing number of advanced design-related programs.

Since it was introduced in 2010, the news and media track has in particular become a cornerstone of the festival's programming, as digital outlets and traditional news organizations alike flock to Austin to discuss their fast-changing industry, said Jennifer 8. Lee, a former newspaper reporter and volunteer SXSW organizer.

Lee noted that with the growing corporate presence, the festival's culture has become more free-spending in recent years, even though she argued that its overall quality is still rising.

'The difference is that this once was a place where people paid their own way, or you somehow got a badge by doing a panel,' said Lee, as she doled out drink tickets Saturday night to a party crowd that included CNN Digital Managing Editor Meredith Artley and New York Times Executive Editor Jill Abramson. 'Now you come with a bunch of co-workers and expense it,' Lee said. 'It's like spring break for adults.'

MEETING AND GREETING

One of the companies with a big presence was the advertising agency JWT, the WPP Group subsidiary, which flew more than 60 ad execs from its offices around the world.

The agency started what it called a five-day 'pop-up' ad agency that took several dozen pitches from startups in Austin and offered its marketing services for free to a chosen winner.

David Eastman, the chief executive of JWT North America, said firms like his relished a lucrative marketing opportunity like SXSW, though he saw the irony in his presence.

'The bad side of all this is that SXSW used to be indie, for the folks who didn't want to be mainstream,' Eastman said. 'When the brands arrive, the money arrives as well.'

Still, the cynicism wasn't nearly so pervasive among the younger generation, especially the enthusiastic attendees on their first or second trips.

'I haven't seen any new startups make their big launch here, but it's been great for meeting people and making new friends,' said Sahil Lavingia, the 20-year-old founder of Gumroad, a fast-growing online payment-processing startup backed by venture capital firm Kleiner Perkins Caufield & Byers.

Then there were those who shrugged off SXSW's fading appeal - then showed up anyway.

Then there were those who just showed up for - what else? - the parties.

Nick Denton, the Gawker Media founder, pondered the matter as he ducked into a downtown hotel elevator Saturday night.

'People have been asking that for a while,' Denton said with a smirk. 'So maybe the question's jumped the shark.'

(Reporting By Gerry Shih; Editing by Douglas Royalty)

Insight: On Facebook, app makers face a treacherous path

2013-03-11T06:04:00.001-07:00

SAN FRANCISCO (Reuters) - Last spring, the future for Viddy, a video-sharing Facebook app, seemed as sunny as southern California's skies.

Based a block away from Venice Beach, the 30-person startup impressed prospective investors with skyrocketing user growth figures and won funding from them at a $370 million valuation. The tech press hailed it as the 'Instagram for video,' potentially ripe for a billion-dollar-plus buyout. Justin Bieber wanted to invest - and the pop star eventually did just that.

But this month, the company fired its chief executive, laid off nearly half of its staff and blamed plummeting user numbers on something it once believed to be its ticket to success: Facebook Inc.

'Everyone has known for years that Facebook can be a huge driver of traffic, but Facebook also frequently changes who gets traffic,' said Brian O'Malley, a Viddy director and a partner at venture capital firm Battery Ventures, which is an investor in Viddy. 'We certainly didn't anticipate the decline.'

Viddy's dramatic reversal of fortune is a common tale among builders of software and services that rode the No. 1 social network to viral stardom, only to plummet when Facebook made one of its frequent changes in the way third-party apps can communicate with and solicit customers.

Investors and entrepreneurs say that the unpredictable way that Facebook cuts off apps or suppresses their presence has made them increasingly wary of building companies that rely on Facebook. Some believe Facebook could eventually attract regulatory scrutiny because of its ability to make or break companies that rely on its billion-strong base of users.

Douglas Purdy, Facebook's director of developer products, said the company boosts traffic to apps that prove to be popular and takes it away from those that overwhelm people with notifications or are otherwise abusive or unpopular. In the past year and a half, Facebook has cut down spam complaints by 90 percent, he said.

'We don't want to be in the business of king-making,' Purdy said. 'In the end, users decide what they care about, and they have control over it. If you're a great developer and you're good at sharing really good content, you're going to get traffic.'

He declined to comment on relationships with individual developers.

Developers sympathetic to Facebook say that the company has rightly prioritized its users, who could abandon the network if they feel overwhelmed by solicitations from apps.

'Facebook thinks first and foremost about the user,' said Riccardo Zacconi, the chief executive of game maker King.com. 'For companies that were relying 100 percent on virality, there's been a negative impact, but it's been a better user experience.'

Viral growth occurs when current users recruit other users, by inviting them to join, touting the content or sharing an application.

It is not clear if Viddy and other firms who have partly blamed Facebook for declining fortunes would have run into difficulties eventually anyway as, for example, rivals came out with new products.

HOT STARTUPS

But as consumers spend increasing time on mobile devices, disaffected developers could choose to focus on marketing their apps directly to Apple Inc's App Store and Google Inc's Play market - two platforms that compete with Facebook.

'Facebook is in a platform battle that they're losing right now,' said Nabeel Hyatt, a partner at Spark Capital, a venture capital firm that has backed rival social media companies like Twitter and Tumblr. 'When we have startup companies coming in and presenting about where they're going to get users, most of those conversations are about iOS and then Android, and then maybe Facebook.'

For hot startups, the Facebook platform used to be 'the cocktail party you had to be at,' Hyatt added. 'It's becoming just another cocktail party.'

For years, startups like Viddy and news apps like The Washington Post Social Reader used automated messages or posts on its users' Facebook pages to lure other users to install its app. But that put them at the mercy of 'EdgeRank,' the opaque and closely guarded algorithm that Facebook constantly tweaks to control whether an app's posts are broadly exposed to users.

In financial disclosures, Facebook has warned investors that a fundamental challenge in its business model is finding the balance between the 'frequency, prominence and size of ads and other commercial content we display' with its user experience. While Facebook is under intense pressure from Wall Street to turn its massive audience into growth in advertising revenue, a lot of the changes that rattle firms like Viddy seem to be more related to Facebook's attempts to retain users.

Viddy's implosion has been spectacular - it fell from 35 million monthly users at its peak last year to half a million recently, according to Appdata.com, a tracking service.

But the collapse is not unique. Branchout, a business networking service built on top of Facebook, raised $25 million last April from A-list backers including Accel Partners. But now it languishes with just 100,000 monthly users on Facebook, down from a high of 39 million, after Facebook limited the automatic notifications that Branchout used to attract users.

The poster child for fallen Facebook stars has been Zynga Inc, the game publisher that shot to popularity, and a lucrative IPO, with viral Facebook games like FarmVille that distributed a deluge of notifications about virtual farm animals before Facebook clamped down.

Zynga, whose shares are trading two-thirds below its IPO price, has since announced that it would loosen its ties with Facebook and develop its own network for gamers. Zynga declined to comment for this article.

PUSH-AND-PULL

The fate of Facebook apps have drawn attention to the perennial push-and-pull between large technology companies and smaller developers. Like tech industry heavyweights before it, Facebook recognizes it can expand its market power and offer new features by fostering a thriving ecosystem. But those relationships have historically been fraught.

In the 1990s, the Windows operating system rose to dominate personal computing, but its maker Microsoft Corp was accused of favoring its own browser and word processor over its competitors' offerings like Netscape and WordPerfect.

Similarly, Apple Inc's iPhone dominated smartphone sales 15 years later with the help of third-party apps - but it, too, has periodically attracted attention from the Federal Trade Commission over whom and what it lets into its App Store and iTunes platforms. Recently, Twitter has also clashed with some third-party developers.

Facebook first opened its programming interfaces to outside developers in 2007. The company later rolled out log-in credentials for third-party sites and then the powerful 'Open Graph' protocol, which gives apps developers access to troves of data.

The company said it expects developers to contribute interesting content - rather than game the system for growth.

'Facebook is a story-telling device,' said Purdy, the Facebook executive. 'Driving millions and millions of installs is not why we built it.'

'There are always going to be players who, for whatever reason, aren't seeing what they want or feel disenfranchised,' he added. 'But when we look at the totality of the ecosystem, it's never been stronger.'

And current and former Facebook employees argue that the company has sought to communicate to its developers that they shouldn't be over-reliant on Facebook.

In Zynga's early years, for example, Facebook employees advised Zynga CEO Mark Pincus on renaming Zynga's highly successful 'Texas Hold'em' poker game on Facebook to 'Zynga Poker,' in order to strengthen Zynga as an independent brand and differentiate it from competing gaming companies, people close to the situation said.

COMPETITIVE PRACTICES

But there are signs that Facebook may not be as collaborative as it once was.

In January, Tom Katis, the chief executive of Voxer, a voice-messaging app that has raised $30 million from Institutional Venture Partners and Intel Capital, received an email from Facebook representatives requesting a phone call. Facebook told Katis that it intended to cut off Voxer, which had used Facebook's log-in credentials for over a year, from accessing Facebook's friends data because it did not share its own data with Facebook - and because Voxer replicated communications features that Facebook wanted to build itself.

Katis has brushed off the incident, saying he is confident Voxer will continue to grow swiftly independent of Facebook.

'We were flattered that Facebook called us a competitor,' Katis said. 'It's their platform. They can do whatever they want. But it's just another cautionary tale.'

Later that month, Facebook blocked Yandex, the Russian search engine, from crawling through its network. Facebook said that those companies took advantage of its network without sharing any information back.

Facebook's Purdy denied the company is being less collaborative, saying it is seeking to have 'nuanced and mature' discussions with developers when conflicts arise.

Although there are no indications that the Federal Trade Commission, which has wrestled with Facebook over privacy issues, has looked into its competitive practices, experts broadly say that this is all but assured as Facebook continues to grow.

'One of the issues that Facebook faces that is also true for Google is that it supports so many developers,' said David S. Evans, a professor at the University of Chicago Law School who has advised Google and Microsoft on antitrust matters. 'Just by the law of large numbers, you're going to get complaints. That's a real vulnerability for the big Internet platforms.'

For now, developers say they are frustrated mostly because they cannot anticipate the vagaries of Facebook's EdgeRank. Last week, Facebook took the rare step of publicly refuting comments by a New York Times writer who opined that the social network might be artificially suppressing user posts as a way to encourage people to pay to disseminate their posts.

'You have the combination of few tools available to build your business and no clear lines of communication,' said the founder of a startup who spoke anonymously because his company still depends on Facebook for its traffic. 'Is it worth it for founders today to quit your job, raise a bunch of money, hire a bunch of people, only to get to a point where it's really hard to get viral?'

REAL BUSINESS MODEL

But even if it left some companies in ruins, app makers who take the long view concede that Facebook's crackdown had an unintended benefit: It helped deflate a social media bubble propped up by unsustainable startups.

'You need a real business model now,' said Aaron Ginn, an expert in Web traffic development who formerly worked for StumbleUpon, a website discovery app. 'You can't rely on viral growth.'

Branchout Chief Executive Rick Marini said his company was in the midst of improving its own offering.

'Facebook made several changes to the viral channels and app developers needed to react,' Marini said. 'For Branchout, the silver lining is that we're focusing more on our product development instead of viral user acquisition.'

Meanwhile, a much leaner Viddy consolidated operations under co-founder J.J. Aguhob and released a new version of its iPhone app.

O'Malley, the Viddy investor, said in hindsight, the boom in traffic from Facebook - and the stratospheric investor expectations that followed - set the company on the wrong track.

'With the Facebook traffic and with the larger round, did we lose focus on what was important? Yes,' O'Malley said. 'If you can get traffic from Facebook, great. But don't bank on it.'

(Reporting By Gerry Shih. Editing by Edwin Chan, Jonathan Weber, Martin Howell and Cynthia Osterman)

Iran blocks use of tool to get around Internet filter

2013-03-10T11:03:00.001-07:00

DUBAI (Reuters) - Iranian authorities have blocked the use of most 'virtual private networks', a tool that many Iranians use to get around an extensive government Internet filter, Iranian media quoted an official as saying on Sunday.

A widespread government Internet filter prevents Iranians from accessing many sites on the official grounds they are offensive or criminal.

Many Iranians evade the filter through use of VPN software, which provides encrypted links directly to private networks based abroad, and can allow a computer to behave as if it is based in another country.

But authorities have now blocked 'illegal' VPN access, an Iranian legislator told the Mehr news agency on Sunday. Iranian web users confirmed that VPNs were blocked.

'Within the last few days illegal VPN ports in the country have been blocked,' said Ramezanali Sobhani-Fard, the head of parliament's information and communications technology committee, according to Mehr. 'Only legal and registered VPNs can from now on be used.'

Iran is holding a presidential election in June, its first since 2009, when a disputed result led to the worst unrest since the 1979 Islamic revolution.

Protesters used services like Facebook to communicate during those 'Green Movement' demonstrations, and the government has taken steps to curb access to the Internet in the last few months, apparently determined to prevent a repeat this time.

An internet user named Mohamad from the Iranian city of Isfahan confirmed that VPNs had been blocked.

'VPNs are cut off. They've shut all the ports,' he said in a Facebook message, adding that he was using another form of software to access the service without a VPN. He said Skype and Viber, internet services used to make telephone calls, had also been blocked.

In January, Mehdi Akhavan Behabadi, secretary of Iran's Supreme Cyberspace Council, told Mehr that Internet users would soon be able to purchase registered VPN connections and that other VPNs were illegal. Financial institutions and other organizations might need to use VPNs for security reasons, which would be a legal use, Behabadi said.

The government's move to block VPN access may also have inadvertently cut off access to widely used sites such as Yahoo and Google, Sobhani-Fard told Mehr on Sunday, adding that parliament would study the issue more this week.

Amin Sabeti, a UK-based researcher on Iranian media and the web, said foreign companies such as airlines and banks had had problems using VPNs in Iran.

Through government-registered VPNs, Sabeti said, authorities could be able to monitor traffic more easily.

DETERIORATE

Millions of Iranians experienced disruption to email and Internet access ahead of parliamentary elections last year.

'As the June election approaches ... Iran's Internet connectivity, and the accessibility of uncensored information, continues to deteriorate,' said a report on Iran's Internet infrastructure published in March by the UK-based group Small Media, which researches Internet use in Iran.

'Prominent Persian-language websites and other online services have been filtered one by one, and communications with external platforms is becoming progressively more difficult.'

Iranian authorities banned Google's email service for a week last year but reopened access after complaints from officials. They have also announced plans to switch citizens onto a domestic Internet network which would be largely isolated from the World Wide Web.

(Reporting By Yeganeh Torbati; Editing by Peter Graff)

CEO Tim Cook may have to testify in Apple e-books case

2013-03-09T12:03:00.001-08:00

(Reuters) - Apple Inc CEO Tim Cook could be deposed in the government's lawsuit against the company over alleged price-setting in the e-book market.

In a one-page order, U.S. District Judge Denise Cote on Friday said she will hold a telephone conference on March 13 to consider the government's request for Cook's testimony. (http://r.reuters.com/xur56t)

Apple is the sole remaining defendant in the lawsuit brought against the iPhone maker and five other publishers last April for allegedly conspiring to raise prices of e-books to challenge the dominance of Amazon.com Inc.

All of the accused publishers, including Pearson Plc's Penguin Group, News Corp's HarperCollins Publishers Inc and CBS Corp-owned Simon & Schuster Inc, have already settled with Justice Department in the course of the last year.

The order follows a March 6 request by the government for Cook's testimony.

At the Apple trial, to be overseen by Cote in Manhattan, the Justice Department is not seeking monetary damages but a judicial decree that Apple violated antitrust law, court papers show.

Among other things, government lawyers want the judge to issue an order enjoining Apple from engaging in any conduct similar to that alleged in the case.

An Apple spokesman declined to comment.

The case is United States v. Apple Inc et al, U.S. District Court, Southern District of New York, No. 12-02826.

(Reporting by Himank Sharma in Bangalore; Editing by Xavier Briand)

Top shareholder demands Dell open books as buyout looms

2013-03-05T15:14:00.000-08:00

(Reuters) - Dell Inc's largest external shareholder is demanding that the PC maker open its books, signaling it could become more active in opposing founder Michael Dell's proposal to take the company private for more than $24 billion.

Southeastern Asset Management, the largest of a clutch of investors who say the buyout proposed by Dell and private-equity house Silver Lake sharply undervalues the world's No. 3 PC maker, called for 'straightforward information' on behalf of its top client, Longleaf Partners Fund.

The Memphis-based firm run by activist investor Mason Hawkins also criticized the silence of Dell executives about the deal during a February earnings call. In a letter to Dell included with a Tuesday filing, the firm accused the company of emphasizing a decline in PC sales, while ignoring growth in its IT services division, to justify an inadequate buyout price.

'Under the current buyout proposal, management and Silver Lake stand to receive all of the future upside, while denying shareholders, who have paid to reposition the company, the opportunity to reap the rewards of our investment,' Southeastern said in its filing.

Michael Dell, teaming up with Silver Lake and top global software maker Microsoft Corp, is offering $13.65 a share to buy out the company, but at least four of its largest investors are opposed to the deal.

Shareholders representing almost 14 percent of Dell shares, led by Southeastern with a stake of more than 8 percent, including options, have said they will vote against the proposed buyout. No. 3 shareholder T. Rowe Price has also spoken out against the deal.

'The company will review the request by Southeastern Asset Management for Dell stockholder lists and other shareholder related information and respond in a timely fashion,' Dell spokesman David Frink said on Tuesday.

STONY SILENCE

Michael Dell created the computer maker from his college dorm room in 1984 and grew the company into a model of innovation in the early 2000s for pioneering online ordering of custom-configured PCs. But it missed the big industry shift to tablets and smartphones and is now trying to reinvent itself as a seller of services to corporations, an internal overhaul that some analysts say might be better conducted away from public scrutiny.

Its billionaire founder now holds roughly 16 percent of the company and needs a majority of shareholders - excluding himself - to vote for the deal.

The founder and CEO did not join a management discussion of quarterly financial results during a conference call with analysts last month because of his participation in the buyout. Dell executives also did not comment on the buyout.

The company also declined to provide any financial forecast for fiscal 2014 or the fiscal first quarter, citing the proposed buyout, and it changed the way it reported the financial results of divisions.

Southeastern has suggested several alternatives it says would produce a better outcome for public shareholders. Dell could borrow money to make a major share repurchase, or the company could be broken up and the units sold separately.

Another approach would have been to return Dell's growing overseas cash reserve to all shareholders instead of using it to fund the proposed buyout at their expense, the fund added in its letter.

Dell shares closed up 7 cents at $14.07 in afternoon trading, about 3 percent above the $13.65 offer price.

Since news of the proposed buyout emerged in January, the stock has gained over 30 percent, a rally that analysts say might evaporate if the deal falls through.

Dell has said it plans to file a proxy statement with the U.S. securities regulators on the merger agreement.

(Reporting By Jennifer Saba and Nicola Leske in New York.; Editing by John Wallace and Andre Grenon)

Top outside shareholder demands Dell open its books

2013-03-05T08:05:00.001-08:00

(Reuters) - Dell Inc's largest outside shareholder is demanding the PC maker open its books, signaling that it could become more active in opposing founder Michael Dell's proposal to take the company private.

Southeastern Asset Management, which holds more than 8 percent of Dell shares including options, asked for the records in a regulatory filing Tuesday on behalf of its largest client, Longleaf Partners Fund.

Citing Dell's silence on the deal during a recent earnings call, Southeastern wrote in a letter to Dell included in the filing that 'shareholders should be provided with meaningful, straightforward information.'

It said that to justify an inadequate buyout price, Dell had intentionally emphasized the decline in global PC sales while ignoring growth in its IT services segment.

'Under the current buyout proposal, management and (buyout partner) Silver Lake stand to receive all of the future upside while denying shareholders, who have paid to reposition the company, the opportunity to reap the rewards of our investment,' Southeastern said.

A spokesman for Dell declined to comment.

A growing number of Dell investors, including T. Rowe Price Group, are unhappy with Michael Dell and his partners' plan to take the company private for $24 billion.

Those partners include private equity firm Silver Lake and Microsoft Corp.

Shareholders representing almost 14 percent of Dell shares not held by Michael Dell have said they will vote against proposed buyout.

Michael Dell created the computer maker from his college dorm room in 1984 and is now a billionaire. He holds a roughly 16 percent stake in the company and needs a majority of shareholders - excluding him - to vote for the deal.

Memphis-based Southeastern, run by activist investor Mason Hawkins, has suggested several alternatives that it says would produce a better outcome for public shareholders. Dell could borrow money to make a major share repurchase, or the company could be broken up and the units sold separately, Southeastern has said.

Dell shares were up 5 cents to $14.05 in early trading, nearly 3 percent above the $13.65 per share Michael Dell and his partners have offered.

The company, regarded as a model of innovation in the early 2000s for pioneering online ordering of custom-configured PCs, missed the big industry shift to tablet computers, smartphones and high-powered consumer electronics such as music players.

Dell is trying to reinvent itself as a seller of services to corporations - an internal overhaul that some analysts say may be better conducted away from public scrutiny.

(Reporting By Jennifer Saba and Nicola Leske in New York; editing by John Wallace)