The Beautiful Life will air five episodes on YouTube – and if it's popular enough, it could live on. Photo: Jan Thijs / The CW.

We know that the Internet can build a TV show’s buzz, and sometimes even keep it from getting canceled. But can it bring one back from the dead?

We’ll soon find out: A recently canceled show has come to YouTube.

The Beautiful Life, a drama about the New York modeling scene, met a swift end on the CW early this season. The show had the misfortune of going head-to-head with Glee, the Golden Globe-nominated breakout hit on Fox, which competes for the same young demographic. After managing just 1.4 million viewers for its first episode and 1.1 million for its second, the CW gave The Beautiful Life the ax.

But here’s the twist: One of the show’s producers is Ashton Kutcher, a.k.a. the most popular guy on Twitter. (He has 4.1 million followers.)

Kutcher is determined to bring the show back. It helps that he’s more connected than the average producer, and those connections have given The Beautiful Life another shot at, well, life. With some funding from Hewlett-Packard (HPQ) and distribution help from YouTube (GOOG), Kutcher’s Katalyst Media plans to post a total of five episodes of The Beautiful Life online and keep them there for six months. (Three episodes are up already, with two more coming next week.) If the show draws enough engaged viewers, it could live on – either as an online-only show or back on TV.

“We spend months if not years on a product. We put it out on the television, we let the viewers vote, we get our ratings. If it doesn’t work, we throw it away and start over with something completely different as opposed to tinkering and tweaking and changing the program,” Karey Burke, head of television for Katalyst, told FORTUNE. “What’s exciting is to think about taking a program like this that has a very short shelf life and giving a chance for the brand to live.”

Why did HP underwrite the project? Larry Nelson, HP’s director of digital strategy, said the non-traditional approach is a good fit with HP’s technology brand – and HP is already spending half of its marketing budget on digital. It helped that HP was launching its “Create Change” program that allows shoppers to donate 4% of the purchase price to a charity when they buy directly from HP.com – The Beautiful Life offers HP a chance to see whether it can get fans of a broadcast-quality online show to buy HP products, visit HP websites and generally engage with the HP brand.

If HP can figure out how to make all that happen, it’ll be a beautiful thing.

Vineet Nayar, CEO of information technology company HCL talks about managing growth and taking on the big boys of tech.

Cisco CEO John Chambers and strategy chief Ned Hooper address analysts. Photo: Jon Fortt.

Cisco has its swagger back.

When the networking provider hosted Wall Street analysts at its San Jose headquarters Tuesday for its annual update on the state of the business, the most striking thing was the full-scale return of confidence. After a year in which most of tech has struggled to regain its footing in a global financial crisis, CEO John Chambers and his lieutenants told the financial community that they’re poised to grow sales faster than big companies typically can.

To be specific, Chambers says that in normal economic times Cisco (CSCO) can deliver annual sales growth of 12-17%. Off of his current revenue base of $36 billion, that translates into a promise to find more than $4.3 billion in new revenue this year alone.

Chambers believes he can do it because a fresh set of Internet technologies is changing the way we communicate – and giving Cisco a chance to grab a greater share of the spoils. Chambers has outlined three opportunities he believes will reap big rewards: video, collaboration and virtualization.

In the simplest terms, Cisco is betting that video will continue to grow its share of overall Internet traffic as carriers use the Internet video to deliver movies and TV, businesses use it to help employees share ideas and close sales more quickly, and consumers use it to express themselves on the go.

All of that new video traffic should create demand for Cisco’s highly profitable networking gear. It should also create new openings for someone to sell communication systems, back-end servers and management software to run it – and Chambers is positioning Cisco to make that sale.

Skeptics point out that Cisco has stronger competition than ever. Hewlett-Packard (HPQ) and IBM (IBM) sell their own packages of virtualization technology. Microsoft (MSFT) and IBM have their own collaboration suites. Each has resources to rival Cisco’s – and it would be foolish to count any of them out.

So can Chambers deliver? More than a few analysts think he can. They point to Cisco’s cash hoard that’s approaching $40 billion, its track record for successful acquisitions, and its knack for spotting trends early enough to get a jump on rivals. He’ll probably need to use all those tools – and some new ones – to meet his own lofty growth targets.

Tech's top vendors see small companies as a big opportunity.

Software giant Microsoft (MSFT) tops a new ranking of technology companies effectively serving small businesses online by providing a rich, educational web experience for small companies.

Compass Intelligence, a Scottsdale, Ariz.-based consulting firm, analyzes the websites of dozens of tech companies – and interviews small business owners and executives – to come up with its rankings, which it publishes twice each year.

Microsoft leaped to the No. 1 ranking from No. 6 in the first quarter of 2009, essentially switching places with computer maker Dell (DELL) which slipped to No. 6 from the top spot in the first quarter. (Remember, the Compass rankings look at just one part of the tech company's small-business strategy: online reach. All these companies also work through resellers, local affiliates and even have direct sales folks marketing to and servicing small entities.)

That said, the top ten, in order, are:

1. Microsoft
2. AT&T
3. Cisco
4. HP
5. IBM
6. Dell
7. Verizon
8. Sprint Nextel
9. Nortel
10. Symantec

"All these companies are commited and focused on the [small-to-medium sized business market](in different ways)," Kneko Burney, chief strategist for Compass, writes in an e-mail. " They all 'get' small business."

And that may prove to be smart business. Compass estimates that U.S. small businesses – companies with 20 to 100 employees – will spend more than $230 billion on technology in 2009. And a separate new report suggests smaller companies are loosening their purse strings on tech spending even as large enterprises remain cautious.

The Global Technology Distribution Council, a consortium of technology distributors such as Arrow Electronics (ARW) and Avnet (AVT), last week said its members' U.S. sales in the third quarter rose 10.7% over the second quarter.

Large companies "have cut back tech spending, and they're still hunkered down," observes consortium CEO Tim Curran. "SMB (small to medium business) in this instance seems to be a leading indicator of companies starting to invest."

Curran said his members, which serve value-added resellers and other "channels" that, in turn, directly sell to smaller firms, have been seeing particular interest in investing in security solutions and cloud computing services that deliver business software and other applications over the Internet.

Even tech executives who deal primarily with the very largest global companies are talking about their companies' ability to serve small-business clients.

"We have a porfolio that fully meets what small businesses need," says Ann Livermore, executive vice president of HP (HP) Enterprise, a $54 billion-a-year unit that includes consulting, hardware and software sales to businewsses of all sizes. Adds Livermore: "You'll see us being very focused" on the segment.

Entrepreneurs also rely heavily on mobile technology to run their companies. Today there are hundreds of mobile applications that enabling small biz executives to operate while on the go (everything from an application for sending and tracking FedEx (FDX) packages to an app that turns an Apple (AAPL)  iPhone into a voice recorder).

No wonder a Yankee Group study released in September found 28% of small businesses said "smartphone implementation" — the deployment and upgrade of Internet-enabled mobile devices – was their top tech priority in the next 12 months.

Small businesses reliance on mobile means wireless operators have an opportunity to expand their relationship with small businesses, perhaps acting as a distributor for other tech companies' hardware and software or even offering integration and other services in competition with companies such as HP and Dell.

In many ways, the telcos are already seizing the small-business opportunity. AT&T (T) is the No. 2 company on the Compass Intelligence report. "What I love about AT&T is that they are very aggressive in rolling out new "cloud" services tailored just for this market," Burney writes.  "They are focused on providing a suite of services to enable these customers using the power of the network. That's definitely the future."

But some people may not be getting the computers they hoped for this holiday season

Image: Amazon.com

On the eve of Cyber Monday, Apple (AAPL) Macs held the top three spots on Amazon's (AMZN) "Most Wished For" laptop list, as well as the top four spots on the desktop computer wish list.

But wishes are not horses — or premium-priced Macs — and judging from Amazon's "Most Gifted" lists, some of those Christmas wishes might be filled by more affordable Microsoft (MSFT) Windows machines.

On the laptop "Most Gifted" list, the top two spots Sunday morning went to a $549.99 Toshiba Satellite and $418.98 Acer Aspire, respectively. The $1,199 MacBook Pro had been pushed to No. 3.

On the desktop computer "Most Gifted" list, three of the top four were still Macs, but a Hewlett Packard (HPQ) Compaq had moved into the No. 2 spot.

On Amazon's "Bestseller" lists — a broader measure of what's being purchased on America's largest online retail store — no Macs topped either list Sunday morning. But four Macs were among the top 10 bestsellers for both laptops and desktops.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Will tomorrow’s PC be a nimble netbook or a high-def laptop? Google and AMD recently offered opposing views.

If Google has its way, the mainstream PC of the future will be a lot simpler than the one you’re using right now.

Like a TV, it will turn on almost instantly instead of taking nearly a minute to boot up. It will do everything through a web browser, pulling down most programs and data from the Internet. It’ll make do with a low-cost processor and will carry a cheap price tag – kind of like today’s stripped down netbooks, only with even fewer frills.

That’s just Google’s (GOOG) vision. A few miles down the road from the search giant’s Silicon Valley headquarters, the folks at chipmaker Advanced Micro Devices have a very different idea.

AMD is wagering that the majority of tomorrow’s shoppers will want more performance from their PCs. It is putting the finishing touches on a new chip that combines a microprocessor and a graphics core in one – a trick it hopes will attract consumers who want smooth high-def video and rich 3D gaming in a slim, low-cost package.

Who’s closer to the mark?

Of course, it’s too soon to tell. But before long shoppers will get to vote with their wallets.

Last week Google engineers showed off an early version of their browser-based Chrome operating system, what they call “a better model for personal computing.” (When it’s broadly available, Chrome will come pre-installed on netbooks that are specifically designed to run it.) A few days earlier, AMD announced that its Fusion processors would arrive in 2011. If all goes as planned, the two technologies will be duking it out on retail shelves in a little more than a year.

The contrasting ideas from Google and AMD come at a turbulent time for the computer industry.

Sales have slowed in the global recession, pressuring the PC revenues of stalwarts like Hewlett-Packard (HPQ) and Dell (DELL). Hardware profit margins have also suffered as bargain shoppers shun higher-priced machines in favor of netbooks with small screens, modest horsepower and low price tags. (The exception is Apple, which has somehow managed to keep selling premium PCs in a historic recession. Go figure.)

The big question is where the industry’s next stage of growth will come from. Will consumers shift their dollars toward wireless computing devices that resemble Amazon (AMZN) Kindles, Apple (AAPL) iPhones and Google Chrome-powered netbooks? Or will they find reasons to keep buying full-blown computers?

Google argues the former. While Windows PCs won’t go away, Google’s thinkers believe a lot of folks would be happy with a simpler, more affordable computer that just gets them online. Considering how netbooks have become the hot ticket in the PC business lately, Google may have a point.

But there’s also evidence that consumers aren’t ready to give up our software-packed PCs anytime soon. As we continue to accumulate gadgets like Flip video cameras and iPhones, we’ll need more powerful computers to manage the digital content – something a basic Chrome OS device won’t be able to do.

Brisk sales of Windows 7 and Apple’s (AAPL) Snow Leopard operating system also prove that the PC-buying public can still get excited about slick-looking operating systems that use 3D effects and animation to help users get things done. That’s a welcome sign for a company like AMD, which has bet its future on the notion that the world will keep its healthy appetite for computers with some horsepower.

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It’s official. Silicon Valley has a new mega-rivalry: Hewlett-Packard vs. Cisco.

Until this week, the two juggernauts had competed at the edges of their product portfolios. Now the gloves are off. That’s the subtext to HP’s (HPQ) announcement Wednesday that it will buy networking equipment maker 3Com (COMS) for $2.7 billion in cash.

With 3Com in his arsenal, HP CEO Mark Hurd will be able to more effectively attack one of Cisco’s (CSCO) most profitable businesses: supplying companies with gear that manages and secures data traffic. Maybe this aggressive move from HP was inevitable after Cisco decided to get into the server business. Maybe HP actually started this a long time ago with its ProCurve product. Either way, it’s war now.

“This creates the largest competitor to Cisco in quite some time,” says Alan Weckel, director of Ethernet switch research at Dell’Oro Group. “This expands the products HP can present to the market. It also gets 3Com back into the United States, something it’s had a hard time doing.”

For 3Com, the transaction would be a sort of homecoming. The company was founded in Silicon Valley 30 years ago and was a networking powerhouse until Cisco overpowered it in the ‘90s. Since then 3Com has struggled to reemerge. It moved from California to Massachusetts, off-shored its entire engineering operation to China, and recently began to gather momentum from customer wins in Asia.

There’s more to this deal than hardware. Dave Donatelli, executive vice president of H-P's servers and networking business, tells Fortune software was a big part of the reason HP liked 3Com. “They manage all of their network products with one software product ,” he says. “That makes them incredibly efficient.”

How much does HP/3Com really change the networking landscape? In the near-term, not much. Even after the deal goes through (assuming it does), Cisco will tower over HP in enterprise switching. Last quarter Cisco had 69% of revenue in the $3.7 billion market according to Dell’Oro, compared to about 11% for HP and 3Com combined.

But current size isn’t the point. Last week, 3Com was a talented but undersized rival whose new products hadn’t gained much traction outside of China. This week it’s engaged to HP, home of one of the biggest sales forces in technology.

Cisco has been looking to expand its influence into other people’s turf: areas like servers, storage, communications and enterprise software. This deal is a reminder that Cisco’s turf is fair game, too.

follow me on Twitter: twitter.com/jonfortt

Microsoft moved a lot of install disks, but hardware makers got a bigger bump two years ago

Photo: Philip Elmer-DeWitt

When Microsoft (MSFT) launches a new operating system, as it did two weeks ago, PC manufacturers like Hewlett Packard (HPQ), Dell (DELL) and Acer are supposed to reap the benefits. And everything seemed to be in place on Thursday Oct. 22 for that to happen.

"Never before has the industry launched such a variety of new form factors, price points, technology upgrades, and design innovations at one time," wrote NPD's Stephen Baker just before Windows 7's release. "This past weekend I happened by a Best Buy store and there was not one single PC for sale with Vista on it. Lots of Windows 7 machines, however, all of which were marked 'not for sale until October 22.' Someone did a great job in the supply chain making this happen. This will give Win 7 a tremendous boost out of the gate." (link)

Two weeks later, Baker is singing a different tune. Microsoft got a big boost according to NPD's weekly tracking data, racking up sales of Windows 7 that were 234% higher than Vista's during its first few days of sales. (More on that below the fold.)

But PC makers didn't make out quite as well. Although they had a relatively strong week, with unit sales up 49% year over year and 95% from the week before, it was nothing like Vista's launch in Feb. 2007. Then, sales soared 68% year over year and 170% from the week before.

In a press release issued Thursday, Baker explained what happened:

“A combination of factors impacted Windows 7 PC sales at the outset,” Baker wrote.  “Vista had a slight advantage at launch, as January traditionally has a bigger sales footprint than October.  The other hurdle Windows 7 faced was sales of PCs with older operating systems (XP and Vista) were high, making up 20 percent of sales during the Windows 7 launch, compared to just 6 percent of older operating sales during Vista’s launch week.”

Another thing to remember about that Vista launch week is that it set a relatively low bar. Retail Vista sales were considerably below Microsoft's forecast — almost 60% lower than sales of Windows XP during its first week in 2001.

Ironically, it was the computer manufacturers who did best in Feb. 2007. Sales of new PCs with Vista pre-installed were up 67% the week that Vista launched compared with the same week in 2006.

Apple (AAPL), of course, sells both OS X and the Macs that run it, so when it launched Snow Leopard in August, it made money on both sides of the deal.

See also:

• PC sales spike with Windows 7 debut
• Apple pays Google for Windows 7 hits
• Mac share grew after Windows 7 launch

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Just three days were enough to push computer sales for the week up 40%

Click to enlarge. Source: Morgan Stanley, NPD

The sharp spike in the chart at right is the Windows 7 effect PC makers have been waiting for.

In a note to clients issued Monday afternoon, Morgan Stanley's Kathryn Huberty reports that NPD data for the week ending Oct. 24 — which included three days of Windows 7 sales — show PC sales jumping 40% year over year.

This was particularly encouraging, she writes, because sales in the early part of the week likely reflected the same pre-Windows 7 declines as the previous two weeks. PC buying for the weeks of Oct. 17 and Oct. 10 was down 29% and 2%, respectively, as consumers waited for Microsoft's (MSFT) new operating system to launch.

Click to enlarge.

Huberty dismisses concerns that computer vendors over-shipped ahead of the Windows 7 launch, demonstrating in a second chart that PC inventory levels are still below average.

So which computer maker's shares are likely to benefit most? In a separate note issued Tuesday, Huberty singles out Hewlett-Packard (HPQ), whose potential for growth she says is under-appreciated by investors.

She also likes Apple (AAPL) as an investment, but less for its computers than for the new distribution agreements that are driving iPhone sales.

[Follow Philip Elmer-DeWitt on Twitter @philiped]