HP Executive Vice President Vyomesh Joshi isn't as close to Hurd as colleagues Livermore and Bradley are. Photo: HP.

If HP CEO Mark Hurd does merge the PC and printing businesses, what will that mean for printing chief Vyomesh Joshi?

A few months back, I spent some time at Hewlett-Packard (HPQ) headquarters with Joshi, who’s known around HP simply as “VJ.” We talked about how he led the printing group to become a sales and profit powerhouse, the how the slowdown in printer sales growth is unfolding, and how he’s trying to get things going again. And we talked about how he’s doing under Hurd, an unsentimental numbers guy who hasn’t been shy about saying the printing business needs to shape up. More

Computer makers hope that stylish new laptops like Hewlett-Packard's Pavilion dm3 will lure shoppers away from low-cost netbooks. Photo: HP.

There’s going to be a PC retail showdown this holiday season. Let’s call it the netbook vs. the nymph.

In the netbook corner: the cheap, small, underpowered laptops that are all the rage lately. Asian manufacturers like Asus first introduced them, and consumers love them because they handle documents, e-mail, and web surfing for as little as $300. The big PC makers offer their own models, but also secretly hate that netbook fever is sucking the profits out of the industry.

In the nymph corner: a newer class of svelte yet powerful laptops that could steal some attention from netbooks. (The industry calls them “thin and light,” but hey — nymph is more fun.) Like their competition, nymphs are slim — some of them less than an inch thick — and they often eschew extras like DVD drives for the sake of portability. Perhaps best of all, they do a solid job running Microsoft’s eagerly anticipated Windows 7 operating system, which arrives next month. More

It's undeniably interesting to talk about the health of Steve Jobs. And whether Apple plays nice with the competition. Oh, and the multiple conflicts of interest between the boards of Apple (AAPL) and Google (GOOG), even after Eric Schmidt removed himself as an Apple director. (Genentech Chairman Art Levinson remains on both boards, and unless something has changed recently, Apple lead director and Steve Jobs confidante Bill Campbell is still Eric Schmidt's executive coach and a heavily involved advisor to Google's senior managers.)

This is all true, and truly worth jabber-jawing about. It also explains why there hasn't been all that much chit-chat about an astounding if unexciting report released earlier this week by the respected Sanford Bernstein analyst Toni Sacconaghi that details just how freaking profitable Apple is. The once-beaten company's ability to spew out cash may indeed be its neatest trick of all.
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The last version of Office didn't include a free online version. The next one will. Image: Microsoft

It’s too early to say Microsoft has checkmated Google in online documents – the latest version of Office hasn’t shipped yet. But the sleeping giant in Redmond has clearly woken up to the Internet threat.

Get this: Microsoft – the king of paid software – will announce today that it is going to give a version of Office away for free online. Both the online and desktop versions are scheduled to arrive in the first half of next year. Yes, you read that right. The latest version of its ubiquitous productivity software, dubbed Office 2010, will come as both a piece of software you can buy for your computer, and as a service you can access in your browser. [UPDATE: Microsoft says it will support the Firefox and Safari browsers as well as IE.] More

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A sign of things to come? In its Atlanta stores, AT&T is selling the Acer Aspire One for $49 with a 2-year wireless data plan and DSL signup. Image: Acer

PC retail is in rough shape again, and it's about to get rougher.

Evidence of hardship is everywhere. Hewett-Packard (HPQ), the world's largest computer maker, says it's selling about the same number of computers as a year ago, but getting a lot less money for them – sales dropped 19% in the most recent quarter. When Apple (AAPL) reports earnings in July, analysts expect Mac sales to be off as well. And while Intel (INTC) says it's hopeful that its chip sales are bottoming out, chip revenues are lower than they have been in years.

Why are things so bad? The easy answer is that PCs cost hundreds of dollars, and consumers don't have a lot of extra cash floating around these days. Unless your computer has been struck by lightning and given up the ghost, chances are you're holding off on purchasing a new one. One tech industry executive recently confided to me that it's not just U.S. consumers thinking this way – the entire global PC market headed off a cliff at roughly the same time late last year, forcing computer makers to cut workers and rethink their strategies.

In the midst of all that, wireless carriers are poised to shake up PC retail. AT&T (T) announced this week that beginning this summer, it will begin selling small, low-cost Windows XP netbooks from Acer, Dell (DELL), LG and Lenovo in all 2,200 of its U.S. stores. (In case you're counting, that's about twice as many locations as Best Buy (BBY) has.) Rival Verizon (VZ) has already begun selling an HP netbook.

Why buy a computer from a phone company? Price, of course. Sign a two-year wireless data contract with AT&T, for example, and you get $50 knocked off the price of a netbook. Get home DSL service too and save $100. In Atlanta, where AT&T has been testing the deals, the cheapest Acer netbook sells for $49 after rebates.

Sales there have been brisk enough that AT&T execs are confident that cheap laptops will lure customers nationwide the same way cheap phones have in the past. And the deals will only get better: It's easy to imagine that in a year or two, customers who sign up for two years of voice and data service (at a cost north of $100 per month) will leave a store with both a "free" phone and a "free" computer. Exciting, huh?

While this is great news for netbook-loving consumers, it's a downright scary prospect for PC makers. If the phone business is any guide, carriers will fuel demand for the cheapest and least profitable computers out there, and put pressure on traditional PC stores to sell low-price PCs. And that will force tech companies to work harder to lure shoppers toward more powerful (and more expensive) hardware.

That's not an impossible upsell, as the iPhone and BlackBerry (RIMM) have proven in the phone business. But it's yet another challenge the PC gang doesn't exactly need right now.

Microsoft's follow-on to Vista, Windows 7, is getting closer to launch. Guess what? The buzz is better than you might expect. (MSFT) (HPQ) (DELL) (AAPL) (INTC) (AMD)

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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