Bryan Cantrill and Mike Shapiro, Distinguished Engineers at Sun, dreamed up a new type of storage product and convinced executives to let them build it in relative isolation. Image: Sun

Maybe there's something about unconventional office space that gets Silicon Valley's creative juices flowing.

Bill Hewlett and Dave Packard worked their magic in a garage. Apple's (AAPL) Macintosh development team flew a pirate flag over the Bandley 3 building. Now Sun Microsystems (JAVA) hopes a young team that toiled in an unmarked — and reportedly unkempt –  San Francisco loft can spark a turnaround in a tough economy, and build a new billion-dollar business. More

The redesigned Dell Latitude line will offer colors, a Linux mode, and other un-Dell touches. Photo: Dell

I'm at Dell's design headquarters near Round Rock, Texas, getting a first glimpse of the company's colorful new line of business laptops that go on sale Tuesday, and I mention that the pink looks a lot better in person than online. A Dell executive is quick to tell me why. What I've seen on the website, he says, is consumer pink. "This is business pink."

Huh? Surely this must be some sort of joke. Everyone knows that buttoned-down Dell (DELL) doesn't do business pink. It's better known for dutifully boring machines, made to order with the latest technology from Microsoft (MSFT) and Intel (INTC), at a price a corporate bean counter could love. More

There haven't been many tech IPOs lately – only three this year, in fact. People here in Silicon Valley have certainly noticed  – this place thrives on venture capital, so in financial terms, the mood has been a little like a maternity ward going without any deliveries. Yes, entrepreneurs have still gotten rich selling out to big companies like Google and Microsoft, but without the same kind of cigar-passing glee that follows a Wall Street debut.

So it's fair to expect some buzz on Friday, when San Antonio hosting company Rackspace takes a bow. As tech IPOs go, the prospectus on this one reads like a pretty safe bet: the ten-year-old company logged net revenues of $362 million in 2007, and a profit (yes, profit!) of $17.8 million. It's offering 15 million shares at between $12 and $16 per share in a Dutch auction format (what Google used for its IPO), and it's backed by some great names in venture capital, including Sequoia and Norwest Venture Partners.

Sounds good, right? But there are also some red flags to watch out for. We'll get to those later. More

As laptops go mainstream, it's good for Intel's sales – but it also puts pressure on its profit margins. Image: Dell

Click above for a video interview with Intel CTO Justin Rattner.

Intel's overall sales and profit numbers for the second quarter beat Wall Street's expectations on Tuesday, but bargain-hunting laptop buyers rained on the chip giant's parade.

Thanks to strong global mobile PC sales, Intel (INTC) hauled in $1.6 billion in earnings on $9.5 billion in revenue for the quarter that ended June 28, better than recession-wary analysts expected on average. The company's projections for the third quarter were upbeat, too: sales as high as $10.6 billion, better than the pundits had guessed, as consumers and businesses are expected to snap up chips in computers from Hewlett-Packard (HPQ), Dell, (DELL), Apple (AAPL) and others. Nonetheless, the stock ticked upward only about 1 percent in after-hours trading.

With all that good news, it's fair to ask why the stock barely budged. And while it's often tough to pin down one reason, this time there's a likely culprit: the company's flagging profit margins.

Intel, being the biggest manufacturer of computer brains on the planet, typically commands a hefty premium for its wares, but this quarter it had to work a bit harder for the money. The company's gross margins (one measure of profitability) came in at 55.4%, a tad under management's projection of 56%. Doesn't seem like a big deal, right? Well, when you're dealing with billions of dollars in revenue, every decimal point counts. So while Intel analysts seemed generally pleased by the results, on a conference call with CEO Paul Otellini and his team Tuesday afternoon they peppered him with questions about that missing .6% of margin. Where did it go? Why? Will it be back? More

Watch out, Intel: Advanced Micro Devices has a laptop with turbo power.

In essence that's what the chipmaker has created in its Puma chip platform, which it plans to unveil Wednesday. On regular settings, a Puma-powered laptop conserves battery life and does a so-so job handling complex graphics. Switch to turbo and it's a powerhouse that effortlessly renders 3D games and plays HD video. More

Mint CEO Aaron Patzer isn't itching to sell his online budgeting service, but a company like Microsoft would do well to buy it anyway.

No one's said much about it, but there it was, plain as day, in Apple's (AAPL) earnings call this week: Chief Financial Officer Peter Oppenheimer said the 'A' word.

Acquisitions.

When an analyst asked what Apple would do with more than $18 billion in cash it's sitting on, Oppenheimer downplayed the possibility of a major stock buyback, and hinted that Apple could go shopping instead. "Our preference," he said, "continues to be to maintain a strong balance sheet in order to preserve our flexibility to make strategic investments and/or acquisitions."

Which is a fine segue to my piece in the latest issue of Fortune, which seeks to tackle the issue of what, exactly, Apple and others should do with their growing stacks of Benjamins. Among my recommendations: Apple should buy a green startup, Microsoft (MSFT) should buy Mint, and Google (GOOG) should buy TiVo (TIVO).

Though Apple normally doesn't buy many companies, I suggest 2008 might be a good time for Jobs & Co. to throw some money around. (Same goes for Microsoft and Google, which do a lot more spending than Apple.)

Flash-based laptops? Suped-up iPhones? The wait is over for Apple's biggest announcements of the year.

The crowd at Macworld 2008 settles in for the Steve Jobs keynote. Photo: Jon Fortt

SAN FRANCISCO — The keynote has begun. There's a Mac vs. PC commercial showing. PC is talking about what a bad year 2007 was, with all of Apple's announcements including the iPhone. PC says 2008, though, will be a great year. "What are you going to do?" Mac asks. "I'm just going to copy everything you did in 2007."

Steve Jobs walks onstage from the left. More

Sony's XEL-1 flat TV with OLED technology drew big crowds at the Consumer Electronics Show. Image: Jon Fortt

LAS VEGAS – After chatting with Sony Electronics President Stan Glasgow, I had to see what the hype was about. So I headed over to Sony’s booth here at the Consumer Electronics Show to check out a $2,500 flat-panel TV with a screen a little bigger than paperback book.

Yes, at 11 inches, it’s that small. So what makes the XEL-1 worth as much as an HDTV 10 times its size? More

At next month's Macworld show, will the trendsetter say goodbye to hard drives?

Apple's MacBook Pro could get a storage upgrade soon. Image: Apple

What do you get when you cross an iPod with a Mac?

A super-slim laptop that uses chip-based flash memory in place of a spinning hard drive, of course. If the rumors are right, Apple (AAPL) will unveil one at the annual Macworld confab next month.

Before you begin salivating from gadget lust however, be forewarned. The rumors should be taken with a grain of salt (or a whole tub of it if you have one handy) — and not just because Apple prognosticators have predicted for years that an ultra-light dream machine is right around the corner.

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Inside HP's plan to get more bang for its research buck

Prith Banerjee, former dean of the engineering school at the University of Illinois at Chicago, brings new ideas to his role as director of HP Labs. Image: HP

It’s a tale nearly as old as Silicon Valley itself. Nearly 30 years ago, a young Steve Jobs visited the scientists at Xerox’s Palo Alto Research Center and spied the first computer that had a mouse and desktop icons. Jobs soon commercialized similar ideas at Apple’s (AAPL), but Xerox couldn't seem to take the brilliant concepts from its own labs and turn them into marketable products.

Today Hewlett-Packard (HPQ), the valley’s largest tech company, wrestles with a similar problem. Though HP’s advanced research group once invented wonders such as the scientific calculator, the thermal inkjet printer and commercial LED lighting, these days executives feel HP Labs and its $150 million annual budget could do more to boost the company’s bottom line.

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