Samsung 2012 "Cloud Phone" to Tap Chromium or WebOS

At a Samsung Mobile Town Hall held in Sunnyvale yesterday evening, one of the company's executive vice presidents, Ho Soo Lee, EVP of the media solution center for Samsung, held court with developers and aspiring partners or future employees to highlight Samsung's position as the fastest-growing smartphone vendor, which has helped play a role in the company's growth to more than $130 billion in revenue for 2010, up 20 percent from the previous year, along with $15 billion in profit. To keep the company's position accelerating, Samsung is continuing its multiple mobile OS strategy, with Android and Bada being its one-two punch in 2011 with Windows Phone 7 also supported. But come 2012, the company has its sights set on a phone that is completely cloud-centric, much like Google's Chrome OS. To get there, Samsung is looking to tap Chromium, and has even considered approaching HP to see if they are willing to license WebOS.

Samsung, along with Apple and HTC, is one of the few handset manufacturers showing considerable market share growth in this competitive landscape. They achieved this with rapid release of handsets for a wide range of countries globally, support for multiple carriers in each, and platform leadership on both quality and quantity. The company's Galaxy S II model and the Galaxy Tab series (7 inch, 8.9 inch and 10.1 inch) are the leading options on the Android platform, going head to head with Apple's iOS. While the company has come under some criticism for slow release of Android milestone upgrades, and its proprietary approach to Bada, the company has achieved a 12.2 percent market share in smart phones, putting it in the 4th position worldwide.

As Lee explained to the packed room in Sunnyvale last night, the company's roadmap hopes to bring cutting edge features like WiFi display from the phone to the TV set, WQXGA support for high resolution tablet displays featuring resolution of 2560 x 1600 pixels, 3D accessories and smart phones. One new wrinkle is their stated plan to bring a "cloud phone". Lee said that at this time, Chromium, the open source Web browser project from Google Chrome, would be considered, adding "we are thinking about how to get WebOS right now", an interesting wrinkle, considering HP hasn't yet announced plans for licensing the mobile OS, born out the Palm acquisition, to date.

On the question of slowed updates to Android, and why the company isn't offering a "stock Android" model, Samsung said their strategy is to have their own user experience (UX), believing that their proprietary UI (called TouchWiz) "is a benefit to Samsung's customers". They stated that there is a lot of commitment internally to the company to improve on their pace of upgrades, but also that there is a lot of work to test the upgrades against devices and carriers globally, in addition to the physical act of pushing out the upgrade.

The company called the mobile phone "the center of your social life", referring to it as the most important communication medium, with mobile devices getting stronger as cloud capabilities advance. But they also understand that it takes more than feature one-upmanship to gain customer loyalty - something Apple has proven for decades.

"People don't care about the technology." Greg Dudey, Vice President of the Visual Displays UX Lab at Samsung said. "They care about what it can do. The next two years, we see we are going to be combating the technology experience, but after that, the ecosystem experience."

In Storage & Networking, Big Numbers In Dollars and Data

Today, at least for those of us who watch the enterprise space closely, the big news is that Dell Computer has offered to acquire Fremont-based 3Par for $1.15 billion, a premium of more than 80 percent over the company's stock price. In a world where much of the tech news is dominated by small companies taking money from angels, it's interesting to see the gulf between what it takes to grow a successful hardware company and the more ephemeral Web-based or application based companies that play significant roles on practically everyone's smartphone. And while I haven't talked about it too much on the blog, trying to keep a black and white separation between my day job for much of the last decade and my more hobby-oriented interests here, I've lived it, participating in one venture backed storage startup for more than 8 years, from 2001 to 2009, seeing companies raise, rise, fall and fail. In storage, the big winners, with few exceptions, can raise hundreds of millions of dollars before reaching break-even, and may be worth billions on the other side. Others may never find traction at all. 3Par, which took on tech titans like EMC and IBM, proved to have a winning formula.

There are three major truisms in technology. The first, and most well known, is that of Moore's Law, which while it has slowed in recent years, dictates that CPU processing speed increases at a regular clip while reducing in price. The second is that data storage capacities and densities are doubling at practically the same rate. Just look at the gigabytes or terabytes on your desktop or laptop hard drive and compare that with 5 or ten years ago. And the third is the speed of the network, both wired and wireless, increases - from the Kbps-rated modems of yesteryear to the fast-flowing networks of today, including 10 gigabit Ethernet on the client side and high speed Fibre Channel on the back end of many data centers.

These three advances mean simply this - more data can be created, shared, transmitted and stored more quickly than ever. Entire industries have been spawned around managing the data flow and storage, enabling branch office access to centralized data, deduplication and compression, load balancing and virtualizing the resulting complexity. If you watch consumer companies, such as Twitter, Facebook and Google, you probably see each of those companies creating new standards for global file systems and redundancy. You see them eschewing traditional storage companies and building their own devices in an effort to keep costs down as usage spirals upward. The trends are both amazing and incredible.

Back in January 2001, as Web 1.0 was crashing, I left a Web services company (eventually sold to Oracle) and joined a small company called Synaxia Networks, which later launched publicly to the world in March as BlueArc. At the time, comparable network attached storage devices from EMC and NetApp were capable of scaling to a then-massive 7 terabytes, and performance was not a metric either of them dominated. Our approach was simple - by converting aspects of the file system from software to hardware, we could dramatically accelerate storage. We scaled not to 7 terabytes, but to 225. We promised five nines (99.999% uptime) of reliability, and performance that was ten times the competition. And if we were less than that, everybody knows that two to five times the speed of the incumbent is still pretty darn good.

As we debuted, the press attention at the time was incredible - as our launch, backed by $30+ million in funding and our CEO being a former top guy at Compaq computer, gained massive attention. We had headlines in the Wall Street Journal and New York Times. George Gilder proclaimed that our product "imperiled" all software based storage devices, and after a successful debut at PC Forum, one reporter at TheStreet.com said it was like offering crack to CIOs. Pretty heady stuff, and not unlike other dramatic booms seen from companies that captured the tech press's attention, including the currently hot Twitter and Foursquare, to those less successful, like Handspring and Transmeta.

But building a storage company takes a lot of real money. BlueArc, which raised another $20 million just last month, has raised $200+ million over its lifespan. 3Par, purchased today by Dell, similarly raised $100 million in 2001 (as we were raising $72 million) and others raised similar amounts. Cereva Networks, whose assets were later purchased by EMC, had raised $137 million and laid off 140 employees back in 2002 after not getting off the ground. Zambeel closed in 2003, having raised $66 million, but selling only a single system. Panasas raised $25 million in 2008, one of multiple rounds for the firm. Maxiscale raised $12 million before coming out of stealth. Pillar Data, funded largely by Oracle's Larry Ellison, is expected to have raised between $300 and $400 million alone. So when I hear tech reporters hem and haw about Web startups raising $10 or $20 million, it doesn't make me blink, considering the world of big dollars I've operated in for a decade.

So why the big dollars? Why are venture capitalists so willing to put such big bets into spinning disk and faster networks? Because when things go well, the customer benefits are very real, and the returns could be even better. Customers will pay top dollar to reduce the amount of time it takes to build special effects or bring pharmaceuticals to market. Fast network storage devices are key in mapping out the earth's terrain from satellites, and combing its ocean floor for potential oil deposits. Fast network storage is being used to collect mountains of data by the government, to simulate nuclear weapons' testing, and build next generation vehicles. And those companies that won't compromise on the speed of execution will buy from new storage startups not named IBM, EMC and HP.

That's why Isilon, a competitor to BlueArc during my time there, is worth more than $1.1 billion today, even after its own public struggles. 3Par earned its way to the discussion and is now cresting above $1 billion. Ocarina Networks, a client of Paladin, was purchased by Dell last month, for an undisclosed sum. Ocarina's competitor, Data Domain, was caught in a bidding war between EMC and NetApp, eventually going to EMC for more than $2 billion last year - simply with the promise of reducing storage capacity!

Today, some of the biggest debates in the Silicon Valley are around angels versus venture capitalists, and whether a $500k round can tip you from one side to another. Some of the best known Web startups today are begging for a $25 million acquisition by Google, or so it seems. FriendFeed, one of the biggest acquisitions by Facebook, was rumored to be "only" $50 million. But on the other side of the datacenter, it is an entirely new ballgame, where hundreds of millions of dollars go in one side, and you could get billions out the other end, or you could get nothing. Companies like 3Par, BlueArc, Isilon, DataDirect Networks, Panasas and others have put pressure on EMC, NetApp and IBM to innovate, and expand their product portfolios. Companies like Data Domain, Ocarina Networks and Permabit are working to optimize storage throughout the datacenter. Emulex, Qlogic, Brocade and Cisco are working on faster networks, cards, adapters and protocols to make sure data can go between client and server and back again at rates previously impossible, and everybody is betting on standards they hope will put them in the best spot.

So congratulations to 3Par for their fantastic exit and sale to Dell. Congratulations to Isilon for fighting a tough battle and living the life of a public company, worth $1 billion and up. It's fun to see companies and people I once saw as competitors, partners and allies, who I rubbed shoulders with at trade shows, and with whom I traded taunts on Twitter, taking things to the next level. There is no doubt in my mind that others will be good stories, and some will go the other way with spectacular flameouts, equally incredible to watch, but for much different reasons. It's a very different ballgame over here.

Disclosures: As a former BlueArc employee and investor, I own private equity stock in the company. In addition, Emulex is a current client of Paladin Advisors Group. Prior to their sale to Dell, Ocarina Networks was also a client of Paladin Advisors Group. Maxiscale was also a Paladin Advisors Group client in 2010. At times, I may seek to do business with or engage with many companies in this list, or their competitors.

EdgeTheory Conversations: HP Plucks Palm, Shelves Slate

Wednesday's announcement that HP will purchase Palm, and its accompanying WebOS, for $1.2 billion, has a lot of people wondering just what the slow-moving Silicon Valley giant has planned, and where Palm's OS will fit in their world, currently dominated with Microsoft software. Can HP turn Palm into a market winner more than just a technology showcase? Chris Saad and I discussed that tonight in another EdgeTheory conversation, where we also hear about Chris' lost opportunity to pick up an HP Slate, meaning he just might need to get an Apple iPad.

Also - we discuss Apple's opportunity against Android and Chrome OS from Google, and if open software should possibly run on closed hardware - especially in light of Apple CEO Steve Jobs' recent comments on Flash.

This and all other EdgeTheory conversations can be found on the dedicated ET Conversations site.

Listen in below:

Which Companies Will Blink First and Lead Us Out of The Depths?

Graphic via Dreamstime.com
One of the scariest things about the type of economic slowdown we are in today is that it breeds yet more slowdown. If you see the headlines, you can read that as companies anticipate lower revenues and diminished profits, or expanded losses, they are turning to layoffs, and in parallel, reducing their own spending, from program and infrastructure costs, to employee costs. Just this week, for example, HP announced 5 percent pay cuts for its massive salaried employee base, across the board, and the Mercury News reports more than 100 public companies in all industries have reported executive pay cuts since the recession began.

While this helps the company in the immediate term, the ripple effects downstream are quantifiable - which, in my opinion, could make the problems worse.

Assuming lower revenues is one thing. Lowering spending costs impacts all the company's vendors, in reducing their own revenues, spreading the pain around. And of course, reducing the number of paid employees, and reducing the pay to those employees who are left, impacts them such that they are less willing to spend.

It's a high-stakes game of chicken, for if companies expect the market to turn around, and want dollars to flow again, they have to contribute to the economy themselves, and all actions we have recently seen in the press point to companies simply trying to survive what for many is the deepest downturn in memory. But there cannot be survival if every company reduces its spend so that every company downstream, and its employees, fails as well.

During the 2001 to 2003 recession, there were a few bright spots of hope and prosperity here in the Valley, from Google, who rocketed to market-share nirvana in the face of strong competition, to Apple, who rebuilt themselves from a PC company to one built around electronic gadgets and digital sales, following the introduction of the iPod in 2001, and later, the iTunes Music Store, in 2003.

Also during the 2001 to 2003 downturn, government leaders told consumers that the patriotic thing to do would be to open up their wallets and shop - to help keep the economy humming - even as spirits were broken. Of course, the resulting debts and the issues that surround people spending above their means were main contributors to the stark realities we see today, from credit crunches to home foreclosures. But this time, consumers have (hopefully) wisened up, and they are likely more reluctant to spend their way out of this deep recession, especially if they are one of the unfortunate millions who are drawing unemployment benefits or see their bi-weekly paystub reduced.

On this blog, many of the companies and services we talk about have very little to do with capital creation and distribution. Some of the products are fun widgets or sites that enable people to connect in new ways, not so much finding new places to spend money or even have revenue themselves. We recognize that - and hold to the line that for the most part, this blog caters toward early adopters, and it is not necessarily our role to gauge every company's business acumen and prospects - best left to others. But surrounding those people are real businesses with real, tangible products and a real-life balance sheet - and many entrepreneurs and fellow bloggers work for these companies that have been impacted - including some of my peers who write on this site.

Silicon Valley is not immune to this financial crisis. Companies big and small have reduced forecasts and results. Companies big and small have reduced headcount, and many more have reduced their operating expenses, without drawing headlines. Down the food chain, many start-ups have found the VC well to be dry, and will either be shutting down or changing their prospects. But as 90 percent of start-ups fail, this shakeout could violently separate the good ideas from the bad - faster than they had ever desired.

So as practically every business has reacted to the downturn and closed the spigot on spending, which ones will be the first to reverse the trend and say, 'Enough!', instead, taking advantage of competitive weaknesses to seize market share, and approach a more-wary consumer base? We can't sit on our hands and expect Google and Apple to be the names that rise to the top again.