5 Tech Observations to Start Your Day, Oct 24

Good morning, IT entrepreneurs. Loyal readers know the drill. It's 9:01 a.m. ET (actually, this went live a bit earlier...). So here are five technology news nuggets, rumors, gossip, chatter and tidbits to start your day.

Actually, today's update includes 13 nuggets of info...

13. Feeling the Heat: Amazon and IBM have red hot cloud computing businesses. Just don't ask about the rest of their organizations. Amazon yesterday delivered disappointing quarterly results, along with a weaker than expected financial forecast for the months ahead. CEO Jeff Bezos is spending a fortune -- of Amazon's money, of course -- to accelerate the overall business. But profits are nowhere in sight. Meanwhile, IBM CEO Ginni Rometty is finally conceding that the company can't meet 2015 profit goals set by her predecessor, Sam Palmisano. I'll be back later today with a closer look at the two cloud giants, and their challenges. Updated: A deeper look at IBM, AMZN cloud revenues vs top-line revenues.

12. About That Other Fire: Amid Amazon's weak earnings, the company barely mentioned anything about its recently launched Fire smartphone. But during yesterday's earnings call, Amazon's CFO offered this painful nugget: "Consolidated segment operating loss includes charges of approximately $170 million, primarily related to the Fire phone inventory evaluation and supplier commitment cost." That's a fancy way of saying, "We're stuck with phone inventory nobody is buying." Anybody else wonder how CEO Jeff Bezos is going to solve this?

11. Cutting the Cord: Android Wear -- next-generation smartwatches built atop Google Android -- eventually won't require smartphone connections. In stark contrast, Apple's iWatch -- coming early next year -- apparently will require an iPhone. I like the Google strategy because it somewhat limits vendor lock-in. But that doesn't mean I'm smart enough to follow my own advice. One reason I purchased the iPhone 6 Plus is because I'm one of those "potential" iWatch buyers.

10. Who Killed iPad?: Apple did. My original iPad is now collecting dust because I don't need an "in between" screen between my iPhone 6 Plus and MacBook Air. iPad sales fell about 600,000 units in Apple's Q4 2014 vs. Q4 2013. Now that I've got a big screen smartphone, it's easy to understand why tablets are getting pinched.

9. Misplaced Praise: The Wall Street Journal says Microsoft's sales continue to "defy expectations" --  especially when compared to IBM, HP and Oracle. It's a foolish comparison. IBM and HP, in particular, were very late to the cloud computing game (though IBM's SoftLayer buyout is red hot). Plus, IBM, HP and Oracle have huge legacy hardware businesses. In stark contrast, Microsoft wisely made the cloud push ahead of its rivals. Plus big service providers have long offered Hosted Exchange, Hosted Sharepoint and more. Overall, it's impossible to put Microsoft's business in one competitive bucket, since the company competes across the enterprise, small business, cloud, mobile and consumer segments.

8. Careful With Those Hedge Funds: I'm not referring to the Hedge Fund managers. Instead, I'm referring to the I.T. entrepreneurs who build tools and support practices for Hedge Funds. It looks like the SEC has been carefully monitoring how Hedge Funds build and manage their businesses. Nobody is screaming fire. But it's a safe bet a few folks have seen smoke... And where there's smoke...

7. (Lack Of) Confidence Index: Silicon Valley venture capitalists' confidence has declined for the first time in two years, according to BloombergBusinessWeek. Current confidence is at 3.89 on a 5-point scale, down from 4.02 in the prior quarter. Earlier this week, I told readers that I largely ignore various confidence indexes. But I'm willing to eat crow on this particular item. The reason? I've been warning for several weeks that Venture Capitalists are worried about startup burn rates and valuations. Some folks think startups are in their own tech bubble, and it's set to pop. Remember, plenty of companies survived the last bubble (Amazon, eBay, etc.) but thousands died...

6. Do the Opposite: Inc. has listed the top 20 U.S. cities for tech startups. You've got two choices:

  1. Be a Lemming: Pack up your house and your family, and move to one of those startup hotbeds -- where jobs are plentiful, funding is generous, and cost of living is on the rise.
  2. Be smart: Avoid the crowds, stay below the radar, and change the world from your current location -- as long as you're reasonably close to a major airport and a good talent pool.

Unless you're out to build the next Google or Facebook, I vote on option two.

5. Internet of Things: Trying my best to avoid the hype cycle. But I guess at some point I'll need to drink the Kool-Aid (which is perfectly chilled in my IP-enabled home fridge). 

4. Shark Tank Jumping Itself?: Is Shark Tank just about ready to jump the shark? The wildly popular angel investor TV show has triggered a flood of public appearances by Robert Herjavec, Barbara Corcoran and others. It reminds me a bit of the "Who Wants to Be A Millionaire" and "American Idol" crazes. But Shark Tank could be different because you never know what type of innovator and business idea will walk through the door. And America never runs out of business ideas.

3. Virtualized Bridge Over River Kwai: So, EMC is buying most of VCE from Cisco. If I've yet to select my next generation data center platform, VCE just fell a few slots on my list of candidates. EMC is a great company, but VCE depends on multi-company technologies (Cisco, EMC, VMware). Let's face it, Cisco and EMC are at war over the converged data center. VCE somehow tries to be a bridge across that warfront. Anybody else remember how the Bridge Over the River Kwai ends?

2. His Own Magic Quadrant?: Boris Gartner has joined Fusion as senior VP and chief strategy officer. He was named one of Hollywood's New Leaders in 2013. If he somehow lands in the Gartner Magic Quadrant, I look forward to the headline: "Gartner Named to Gartner Magic Quadrant." 

1. Facebook's SMB Strategy: Dan Levy is directing Facebook's SMB initiatives. This deserves a closer look. I'll be back with more. Updated: Dan Levy's SMB Strategy at Facebook.

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