Cisco CIO Rebecca Jacoby

Even in these tough economic times, tech giant Cisco offers employees some pretty sweet benefits: Employees can visit on-campus doctors and dietitians, drop off dry cleaning, or get an oil change, and now they can pick the kind of computer they want to use at work.

That's right – Cisco has started letting workers choose from a handful of laptops, including an Apple MacBook Pro. Only don't call the program a perquisite. Rebecca Jacoby, Cisco's (CSCO, Fortune 500) top information technology officer, says the initiative, launched last year, should actually save the company money. The fact that employees involved in the pilot program are deliriously happy with it – Jacoby and her peers even get love notes from satisfied road warriors – is a bonus.

Of course, that new freedom requires companies and employees alike to make sacrifices. Since Cisco began offering a choice of machines last June, roughly a quarter of employees have opted for Macs, yet they are pretty much on their own for tech support. (An in-house online community for Mac users gets a little help from Jacoby's department.) Cisco, in turn, has to make a slightly higher upfront investment for the workers who want Macs, which are pricier than PCs.

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Anthropologist Genevieve Bell helps Intel understand what people around the world are doing with technology – and what they'll want to do next. Photo: Intel

While traveling in China, Genevieve Bell figured she'd have no trouble getting a cell phone. With cash, a passport and official documents from her employer, she went to a local shop where phone packages lined the walls, and asked for one.

I don't have any, the shopkeeper said.

She noted that she could see boxes of them all over the store.

They're bad phones, he said.

I'm only here three weeks, she confided; it can be a terrible phone. But he still wouldn't sell her one. "It was like a really bad Monty Python routine," she recalls.

The problem, it turns out, wasn't the phones — it was the phone numbers. Numbers carry symbolic significance in China (8 and 3 are good, 7 is awful) — and when this particular shopkeeper had run out of good numbers to match with phones earlier in the day, he stopped selling phones altogether. Come back tomorrow at 9 a.m., he said, and I'll sell you a phone with a suitable number.

The encounter illustrates how technology and culture blend in new ways in a global society powered by cell phones and PCs. It also serves as an example of why Intel (INTC), a company known for employing computer scientists, employs Bell, an anthropologist.

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With a line of stylish new drives and a TV marketing campaign, Seagate hopes to make digital backup more popular than … well, flossing. Image: Seagate

Aaron Levie runs his own online storage and collaboration company, so he sounds a little sheepish when he admits that, before he founded Box.net, he didn't back up the files on his computer. He's not alone. Recent studies show that at most, 17 percent of PC owners use external storage for backup, slightly higher than the percentage of people who floss daily.

This statistic, as you might imagine, annoys storage executives as much as the flossing number annoys dentists.

That explains why Seagate (STX), the world's largest hard drive maker, is hoping to reverse the trend. Though the company traditionally had been content to sell raw storage to others for use in their wares (everything from Xboxes to data centers), executives are pushing to get their own branded backup products onto retail shelves. They were eager to show me stylish new plug-in FreeAgent drives for Macs and PCs that they announced this week, and to explain why they're launching a TV marketing campaign during football games and Oprah to tout them. (Seagate studies found that, once reminded of backup's virtues, people were twice as likely to say they'd buy drives.)

Honestly, backup's virtues are easy to appreciate. After all, what if you have a power surge that fries your home appliances, or your hard drive fails or a hurricane hits? Do you really want to lose all those digital photos and baby videos? Of course not. But as in that scene from Jerry Maguire, the storage industry's pleas to help us help ourselves seem to fall on deaf ears. "Even in Silicon Valley," says Box.net's Levie, "I think if you ask the average person at a tech company, they don't back up."

This reluctance hasn't stopped tech giants from getting into the consumer storage game. Just this year, enterprise heavyweight EMC (EMC) bought Iomega for about $213 million, and online storage provider Mozy for $76 million. Security specialist Symantec (SYMC) bought SwapDrive for $124 million. Hewlett-Packard (HPQ) launched its Upline online storage service this spring, and Dell (DELL) partnered with Box.net this summer to provide online backup on its Inspiron Mini 9 laptop.

Why the sudden surge into storage? In the age of broadband, digital downloads and online sharing, companies have noticed that more of the stuff people care about is getting stockpiled in bits rather than in boxes. Consider the proliferation of iPods, iPhones, Tivos (TIVO), photos, and video on sites like YouTube.

Analysts estimate that 70 percent of this content will be stored by individuals, not corporations – suggesting a market ripe for backup drives that often start at around $150, and paid online services that start at about $5. "We had to either decide we were going to ignore this whole thing," an EMC executive told me, "or jump in."

But the fact that big companies are leaping into online storage doesn't mean consumers will. New marketing campaigns notwithstanding, most PC users seem to have rejected the traditional plug-in, back-up process that Seagate and some others have begun selling. And it's not clear whether online backup services will fare much better; though Wi-Fi makes online backup easy to do, most home Internet connections are so slow that the first session can take hours.

Though no one has yet solved the backup hassle, the closest thing so far may be Apple's (AAPL) most recent efforts, Time Capsule and Time Machine. A wireless router and hard drive in one, Time Capsule works with Apple's latest operating system to invisibly archive your files, so that if you lose something, software called Time Machine lets you drive your computer backward, Back to the Future-style, to the day when you know you last had it.

When Apple studied backup habits a couple of years ago, it found that more than 90 percent of its customers failed to regularly copy their data for safekeeping – even though they were storing more sentimental content on their Macs. Why? "It's not because they didn't know that backup was important," says Jai Chulani, senior product manager for Time Capsule. "It was 'Oh, it's too hard to do. I have to constantly plug things in.' "

Apple says Time Machine is one of the most popular features in its latest operating system, OS X Leopard; and in Apple's online store Time Capsule is the 5th most popular Mac-related item, ahead of the Mac mini and Mac Pro computers.

But don't expect those features to become common for the masses of Microsoft (MSFT) Windows users anytime soon. Because Apple controls both the hardware and the software in its Mac universe, its engineers could more easily invent an automatic backup system. (UPDATE: A reader reminds me of Microsoft's Windows Home Server, which has many features of Time Capsule, plus remote access. Thanks for jogging my memory; I wrote about it here.)

For others, it would be more difficult to build – though one can imagine a Windows-based system that marries Google's (GOOG) desktop search program with a wireless external drive for automatic data protection. Such a solution would be nifty – and even easier than flossing.

The standout new feature in iTunes 8 is Genius, which builds music playlists based on the listening habits of the iTunes community. Image: Apple

It took me a while to get around to it, but I've finally downloaded the iTunes 8 update, and played around a bit with the Genius song recommendation feature. After a test drive, I've decided it's the best thing Apple has (AAPL) added to its music management suite in quite a while.

Genius solves my "iTunes laziness" problem. I've got 4,000 items in my library, I listen to genres as diverse as gospel, alternative and hip-hop, to and I'm too lazy to make good playlists out of it all. I used to count on the Party Shuffle feature to save me, but got tired of how it would end up throwing in random Christmas carols at the wrong times of year.

It works by tapping into the wisdom of crowds. After I click on a favorite song from when I was dating my wife – "Ordinary" by Train, from the "Spider-Man 2" soundtrack – and click the Genius button, Apple suggests a playlist based on the scanned libraries and listening habits of other iTunes users. (Among the good picks: "Dare You To Move" by Switchfoot, "I Alone" by Live, "The Freshmen" by The Verve Pipe, and "Send Me On My Way" by Rusted Root. Mostly angsty alternative songs from the '90s. Cool.)

A couple of reasons Genius is a good move for Apple, business-wise:

One, it encourages people with decent-sized iTunes libraries to listen more. I suspect that these folks are the most likely candidates to upgrade to newer iPods, and if they're rediscovering their music collections they're more likely to do that.

Two, it increases the "stickiness" of iTunes, and decreases the likelihood that I'll switch to some other service. It's like a moat around iTunes and the iPod, keeping would-be invaders out.

That said, the Genius isn't perfect. Some of its picks are a little weird – like the Billy Joel song it squeezed between Augustana and The Verve Pipe. And while I'm glad Apple allows you to save Genius playlists, I think it's annoying that it saves them as a new type of list that doesn't sync to older iPods. (I can easily copy and paste the songs by hand into an old-school sync-able playlist, but I shouldn't have to.)

But overall, Apple is making great use of the computing power in its data centers to unobtrusively provide a feature that any music lover will understand. If Steve Jobs and the rest of the crew can figure out how to tap their 65 million iTunes account holders and provide more features like this, they'll probably have my business for a long time..FT)

Guests settle in for the Apple iPod event at the Yerba Buena Center for the Arts in San Francisco. Photo: Jon Fortt

Apple is expected to update its lucrative iPod line for the holiday season. Image: Apple

Apple 2.0: Steve Jobs photos: then and now

The event is about to begin. We're in San Francisco waiting for Apple (AAPL) to unveil updates to its iPod lineup, an annual ritual that sets the stage for the electronics maker's holiday season. Last year the company sold more than 22 million iPods during the fourth calendar quarter, 5% more than the year before. For the company to show growth again in a down economy, it will need new gear. Refresh this page for updates.

The lights have dimmed and the event is about to begin.

Steve Jobs has walked out onto the stage, looking as gaunt is he did at his last appearance. He seems to have a bit of a limp, and his voice is weaker than usual. In a nod to the concerns, he says, "Before we begin, I just wanted to mention this:" Onto the screen flashes a message, "The reports of my death are greatly exaggerated."

Now, on with the show.

Jobs is talking about the iPod/music ecosystem, and says there are now 3,000 apps in the iPhone store, and more than 65 million accounts in iTunes. Now Apple is the number-one music distributor in the U.S.

Apple is adding HD TV shows at $2.99, $1 more than others. You can watch them on your computer. Also, NBC is coming back to iTunes, with The Office, Monk, Battlestar Galactica, Heroes and more. They're coming in both standard and high def.

Apple is also introducing iTunes 8. It will have HD, accessibility for those with disabilities, new browsing, and something called Genius. You can look at your albums by album cover, and skim them that way. (It's a little distracting that Steve's voice doesn't sound as it normally does. I've been going to these events for nearly 10 years, and this is the first time he has sounded this different; his voice isn't just strained, it sounds pinched, and slightly higher-pitched.)

Genius automatically puts songs together that go together, with just one click. He's demonstrating it. A Bob Dylan song gets matched with tunes by Springsteen, Joni Mitchell and Beck. It works by tapping into the iTunes Store in the cloud. Information about your iTunes library goes anonymously up to Apple, mixes it with info from other iTunes users, and gets a sense of what songs people are putting together in playlists and libraries.

He's demoing the genius feature. He plays a John Mayer song, "Gravity." He presses the genius button, and gets 24 songs including "How to Save a Life" by The Fray. Next he picks Heartbreak Hotel by Elvis, and gets songs including "That'll Be the Day" by Buddy Holly, "Goodbye, Yellow Brick Road" by Elton John, and "Oh, Pretty Woman" by Roy Orbison.

Now, on to the iPod. NPD in July showed Apple with 73.4% market share. "Other" had 15.4 percent, and SanDisk and Microsoft rounded it out. He's talking about the iPod ecosystem, and says the accessories business is booming: "they announce products even before we want them to," he says, a nod to the accessories for the new widescreen iPod nano. He says Apple has sold more than 160 million iPods.

The iPod classic is now 120GB for $249.

Now on to the nano. The new nano, as expected, has a larger screen with a high-res display in portrait mode, and he calls it the thinnest iPod Apple has ever made. He pulls one out of his pocket. It looks nice on the big screen. Features: A new curved aluminum design, with curved glass over the display, an accelerometer, and the ability to create genius playlists even when it's not connected to iTunes. (With the accelerometer, you can turn the nano to flip a photo to landscape mode, a popular feature from the iPhone and iPod touch.) There's now a voice recording app that, when it detects a microphone, lets you record notes to yourself.

He's demoing it. He picks a song from Beck, "Guess I'm Doing Fine." Then he picks, "Don't Think Twice, It's All Right" by Bob Dylan. The iPod has automatically organized his songs based on what goes together. Now he demos a feature called "shake to shuffle," that plays a random song when you shake the iPod in the air. It plays something from Dean Martin when he does; he says he didn't really want us to know he has Dean Martin on his iPod. Battery life is 24 hours for music, 4 hours for video. He's now touting the iPod's green credentials, focusing on toxics: they have arsenic-free glass, they're BFR free, Mercury free, PVC free, and highly recyclable. The new nanos also come in nine rainbow colors that are the brightest, most candy-colored yet. Colors include purple, blue, green yellow, orange, red and pink. 8GB for $149, 16GB for $199.

New headphones: A pair with a microphone, for $29, shipping next month. Also, new in-ear headphones. They'll have a woofer and a tweeter in each bud (so, higher quality than standard) for $79.

Now, he's showing a new ad. The nanos sort of float through the air, playing music, video, and showing photos. At the end, the multicolored word "nano-chromatic" flashes on the screen.

Now, the iPod touch. It's thinner, with a stainless steel design. What's different: integrated volume controls in the side, a built-in speaker (this is not for audiophiles, he says) and the genius player built in. Now there's a built-in receiver in the iPod touch that will make it work with the Nike + iPod system that lets people chart their running workouts. He demonstrates the genius playlist feature on the iPod touch as well.

On to the app store: users have downloaded more than 100 million apps so far, in 60 days. "This is mind-blowing," Jobs says. "Most importantly, games," he says. (Interesting thing for him to say. Why are games most important? Because they're most popular?) He notes the app store's availability in 62 countries.

He's now demoing the touch, making a genius playlist off of Green Day's "American Idiot." Now he goes to movies, and shows Iron Man. (Seems it might have had a little trouble with the graphics-heavy scenes; the audio and the video might have gotten a little out of sync.)

Now Phil Schiller, senior marketing VP, takes the stage to demo some games. Jobs leaves the stage. (He had been on stage doing demos for more than 30 minutes, which speaks well for his energy level.) Schiller starts with Spore, a highly-anticipated game where you create an organism and try to use it to take over the galaxy.

Next, he demos Real Soccer. (The graphics are pretty darn good — they look about the quality of the original PlayStation.) He demos the ability to do a strong kick using the touch controls, and scores a goal.

Now, Need for Speed Undercover, a racing game. He picks a Porsche, and supes it up. It starts with a nice-looking street sequence. He hits the turbo button, wipes out and gets pulled over by the cops. (One out of two ain't bad.)

Jobs is back. He says the touch gets 36 hours of battery life for music, 6 for video. "This is the funnest iPod ever," Jobs says, flashing the words on the screen in a wink to the fact that "funnest" isn't exactly a word. Prices: $229 for 8GB, $299 for 16GB, $399 for 32GB. He shows an ad that features the touch playing games. "You can make a pretty good argument that it's the best portable device for playing games," Jobs says. (Nintendo might argue with that, based on its runaway hit DS.) He says the software update to software 2.1. If you've paid for the latest update, the update is free; if not, it's $9.95. The update is free to iPhone owners, available this Friday.

Back to iPod + iTunes. Jobs is saying Apple is ready for the holidays based on all the announcements. Now he's doing something he always does at music events: inviting an artist out onto the stage to perform at the end. He's sold more than 16 million albums, Jobs says, and he's the #1-selling artist in iTunes history. Jack Johnson. Johnson comes out with an acoustic guitar, plugs it in, and stands in front of the mic — and sings.

To wrap up, the surprises here were just about all software — the genius feature, the shake to shuffle, and iTunes 8 with HD. (The headphones were sort of a surprise, but they're not big news by Apple standards.) Based on that, fair or not, a lot of the headlines might focus on Jobs' health. As I noted earlier, he seemed to be ailing still, but his energy level was good enough for him to handle stage duties for nearly the entire show. I'd argue that the focus on Jobs' health has merit because of his unique value to Apple. He's certainly the creative force behind a creative company, and if he were to take a lesser role at Apple it would have a significant effect on the way the company operates.

Wall Street found reason to be disappointed in the event; as it drew to a close, Apple stock was down more than 3 percent. It began its descent right about the time the event began.

Back to the event: After two songs, Johnson is thanking Apple for iTunes, saying it's a big reason why he gets to keep playing music. (This runs counter to the party line from the music industry, that Apple is destroying the music business with its heavy-handed control of its iTunes store. Recording industry execs have tended to want more power to price popular songs above $1 per track, and sell less popular tracks for less. Apple has insisted that by pricing most everything at $1, it has helped simplify digital music and attract people to it. I tend to agree; before iTunes, digital music was all about piracy; and now, as Jobs noted, Apple is the top seller of music in the U.S. Of course, to be fair, Apple doesn't make much of a profit selling music, and mostly uses it to get people to buy iPods.)

Jobs comes back out to close the event, and Eric Clapton's "Layla" – the fast version – is piped through the speakers. Show's over.

Click above for video of AMD vice president Patrick Moorhead talking about how the chipmaker will face the competition from Intel and turn things around.

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Dell's first "iPod killer," the Dell Digital Jukebox, was discontinued in 2006 …

… while Apple's iPods continue to dominate the MP3 player market with a 70 percent share. Photos: Dell, Jon Fortt

From: Jon Fortt

To: Michael Dell

Subject: Taking down the iPod

Dear Michael,

You might remember our recent chat at Fortune's Brainstorm Tech conference, when you shared with me a theme you've sounded before: "I think the sign of a great company is that it can kind of learn from its mistakes," you said, "and go on to greater heights."

You were talking about Dell's (DELL) PC business, where you've tweaked the direct sales strategy in response to a changing market. But you could just as easily have been referring to your company's tentative plans to release another MP3 player this fall to compete with Apple's (AAPL) iPod. I think if you follow your own observation, you'll delay the product launch. Dell's not ready to make this mistake again.

Let's think back on your first effort at dethroning Apple. It crashed and burned. The Dell Digital Jukebox, which resembled nothing more than an electric razor when it launched in 2003, tried to use commodity components and licensed software to beat the iPod on price, and thus win market share. But the DJ fell short in physique (bigger and heavier than the iPod), originality (it was based on another company's design) and music management software. Dell used Musicmatch Jukebox, which was, well, no musical match for Apple's iTunes.

To your credit, this time around Dell executives seem to be considering a slightly different tack. Not only have you gotten better at designing devices, you see the folly in just making a gadget that depends on someone else's software to operate. Dell now has its own: You last year purchased Zing Systems, a company that uses Wi-Fi to beam songs – and potentially video – to various devices. The new plan would be to blend this improved software with snazzier hardware.

But I'll argue there's a better route for you to take, if you really want to K.O. the iPod: Hold off on the gadget. First, just launch the software.

I know this is a little counter-intuitive. People love gadgets! But hear me out.

Click above for Jon Fortt's interview with Michael Dell.

If you want to compete with Apple in digital music, your biggest obstacle isn't the iPod. It's iTunes. Most of your target market already has iTunes installed on their PCs, and it's going to take a lot more than a shiny gadget to get them to ditch the way they've been managing their favorite songs. Of course, improving on iTunes is a tall order – it's the best thing out there for keeping track of digital media – but that's the game you're saying you want to play. If you can't figure out how to improve on iTunes, there's really no point in trying to beat Apple on the hardware front. Can't be done.

That's why I say you should just focus on releasing the best free music app you can (on Windows, Mac and Linux). Software is hard, so if you're going to give iTunes a run for its money, the project will require your full attention. You're going to need hardware partners like SanDisk (SNDK) and Sirius Satellite Radio (SIRI) to embrace your approach. You're going to need time to make mistakes. You're going to need customer feedback. But if in the end you've gotten enough people hooked on a new system that includes your wireless transmission technology, you'll have created a loyal base of users who trust you enough to ditch their iPods for your next great MP3 player.

Of course, you can ignore this, and maybe you'll manage to launch both a sweet music service and an iPod killer that both start grabbing serious share from Apple right off the bat. But the odds are pretty long on that. Microsoft (MSFT), Sony (SNE) and an army of other well-heeled competitors have been trying to eat Apple's lunch for years now, without success.

Their mistake, in my opinion: they tried too hard to match Apple in hardware design (which is hard enough), and they launched everything at once. In the process, they failed to focus on Apple's real soft spot: iTunes. Think about it: Even Apple didn't launch iTunes and the iPod at the same time. I was in the audience when Steve Jobs gave us iTunes in January 2001; he didn't call us to the Apple campus to show off the first iPod until nine months later. And Apple waited until April 2003 to open the iTunes Music Store. You've got to let these things stew for a while.

So anyway, Michael, thanks for sitting down for the chat. It was cool to see some of the new stuff you guys have coming out this year. And as a gadget guy, I do hope you eventually come out with some innovative music hardware that pushes the market forward. But just my opinion: That's a big job, so first things first. And the first thing is getting the software right.

When is great not good enough? When you're Hewlett-Packard's printing group.

A few years ago, the $28 billion business, headed by veteran Vyomesh Joshi, was the goose that kept laying golden eggs. It supplied most of the company's profit while the PC group lost money and the corporate technology group struggled. Now new leadership and smart acquisitions have fixed the PC and corporate businesses, and printer sales are showing signs of weakness.

Though the printers and ink have so far pulled in a healthy $2.4 billion in profit this year for HP (HPQ), the growth rate is slowing. To cut costs, Joshi last week announced a reorganization that trims the printer group from five divisions to three. The consumer hardware and ink businesses will be collapsed into one unit, laser printers and other enterprise operations will be collapsed into another, and graphics will be the last.

But while HP's printing shakeup may keep profits healthy for now, it won't bring new money in the door. The only quick way to do that would be to reverse a troublesome trend: Consumers, who make up the bulk of HP printer sales, are no longer bingeing on ink. HP had hoped that its advances in its printer technology would inspire more folks to avoid professional photo finishers, but that hasn't really happened. And since HP is already the biggest company in inkjet printers, it can't grow much by simply stealing customers from rivals.

In a twisted way, HP brought this on itself. A big part of the reason why the printing group is seen as troubled now is that investors have high expectations after it delivered reliable sales growth for so many years. Especially in the last decade, as home PCs became as common as televisions, HP played a big role in establishing the printer as a must-have accessory for producing everyday fare like book reports, letters and photos. Now it's easy to see that printing isn't as necessary to the PC experience as it used to be, with online social networks like Facebook and MySpace based largely on sharing information electronically, not printing it. But as printing sales growth slows, investors still expect the division to make up for it somehow.

For growth, HP is looking to markets like large businesses and commercial print shops, where rivals like Xerox (XRX) have more experience. (See HP's printer challenge.) The good news about those: they print a lot. The bad news: it won’t be as easy for HP to turn big profits. So to fund those efforts, HP is mercilessly cutting costs from its older, slower-growth printer businesses. Joshi has already jettisoned the digital camera business and outsourced much of manufacturing for black and white laser printers, and he's still looking for more cost savings.

All of which makes sense – but is HP cutting too much, too fast? Under CEO Mark Hurd, the business groups have adopted a disciplined approach to innovation where each group funds tomorrow's hit by cutting costs out of yesterday's – a tactic few investors would argue with. But the downside is, innovation can't be plugged into a spreadsheet, or put on a schedule. Just look at Apple's (AAPL) computer business – it achieved only anemic growth for years, until a boost from the iPod, retail stores, and a switch to Intel (INTC) chips recently put the shine back on the brand, but Apple continued to invest in it.

So far, analysts say there's no indication that HP is slicing too far. Which is good – because I've heard you want to be careful with a golden goose.

Click above to see some of the futuristic technologies Intel is cooking up in its labs.

Earlier this week at Intel's (INTC) annual research day in Silicon Valley, the company showed projects that could influence the way we live tomorrow.

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Click above to see video of my interview with Intel CEO Justin Rattner.

Earlier this week at Intel's (INTC) research day in Mountain View, I got a few moments on camera with Chief Technology Officer Justin Rattner where he talked about innovation, WiMax, and the relationship with Apple (AAPL).

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