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Let’s say Steve Jobs retires next year. So what?

I’m one of those in the lonely camp that doesn’t believe Jobs is Apple and Apple is Jobs. Or that when he disengages from Apple the wheels must necessarily fall off.

Jobs bought Pixar in 1986, and while he wasn’t nearly as closely involved with it as he has been at Apple, he assembled a team that helped the company thrive even after it was sold to Disney two years back. Since then, Pixar delivered the Oscar winning “Ratatouille” as well as “Wall-E” (Nos. 144 and 34, respectively, on IMDB’s list).

If Jobs hasn’t done the same at Apple, he’s failed at one of the key tasks of a great CEO. I don’t think that’s his style. Yet this week, the media once again turned the spotlight onto Jobs’ health after the company said he won’t appear at MacWorld, that Apple is essentially snuffing what has become a tedious knockoff of a Galaxy Quest convention. Any other company, and it would have ended at the headline.

But Apple isn’t any other company. It’s Apple. Therefore Jobs must be dying. Therefore the stock loses $6.6 billion in two hours.

One day we’ll all look back on this and shake our heads. Rarely has so much attention been paid to the health of an individual who was not the head of state or a religion. What if Jobs is fine, and just wanted no part of the obscene gadget fetishism, which tech conferences in general have become, when millions were losing their jobs and homes? Isn’t that kind of the opposite of dying?

The voluble world of Apple-gazers has been cleft between the virulent fanatics and the desperate naysayers (which the fanatics have in good part created). All this drama overlooks two boring things: a) Apple is a company, and b) Steve Jobs is a businessman.

Apple doesn’t need Macworld anymore. It did for years, when Jobs would step out like Gandalf and save our butts from the ill forces of Mordor. Now Apple rules online music, and Mordor — read Microsoft — is greatly weakened.

Apple has blossomed into a global, mainstream brand, and the fanatics who helped get it there are suddenly less useful. Which brings us to point b.

Until now, Steve Jobs never showed discomfort with the mystique, the legend, the icon that he had become as the man who created and later saved Apple. He totally dug it, but he dug it totally as a businessman. His fan base grew passionate, grew vocal and then — in late 2008 — grew outmoded. Apple simply didn’t need them anymore. It could expand on its own powers.

Besides, this whole mystique thing was starting to backfire. The idea that Jobs and Jobs alone could keep Apple successful is kind of demeaning to the other 32,000 employees there. If Apple did suffer after Jobs’ departure, many of the most talented of those people would found startups, some of which would eventually accomplish insanely great things like Apple has.

Beyond Apple’s stunning success this decade, the success of those new startups would be the ultimate compliment to Steve Jobs’ skills as a corporate leader.

Photo courtesy of acaben via Flickr.

Icera, a UK-based semiconductor company, said today that it’s raised $70 million in additional funding in the form of debt and equity; it also said it would cut an undisclosed number of its staff. Current investors Atlas Venture, Balderton Capital, Accel Partners, Amadeus Capital Partners and 3i provided $60 million in equity, and ETV Capital SA and MMV Financial offered $10 million in debt. This brings the company’s total funding to around $270 million — a king’s ransom in any market, but especially for a chip firm in this one.

The reason investors still plow money into Icera is the flexibility of its chipset. Right now it makes a software modem for HSPA used in data cards, but its programmable modem could be used for other wireless technologies, enabling Icera to participate in other wireless standards without a huge redesign of its silicon. That keeps the potential markets wide open and the costs lower, which makes investors happy enough to put more skin in the game — although perhaps not as much as the $100 million Icera was reportedly seeking earlier this year. Maybe that accounts for the cuts.

The latest tale of woe out of the VC industry appears today in the Wall Street Journal, on how the limited partners who invest in venture capital firms are backing out of their commitments to fund individual VC funds. The end result of LPs failing to follow through are shuttered companies such as Ambric, which had to close despite having signed several customer deals and keeping its investors’ confidence. But when the investor’s investors back out, the money dries up.

Unlike the last technology bubble, when LPs questioned how much money they put into venture capital as an asset class, this time around there are questions about both the viability of the asset class and pressure on all alternative investments. Right now the venture industry is stuck between an inability to get money out of their investments through public offerings and M&A and the inability to get money into their investments through new investments into funds.

Venture funds are part of an asset class known as alternative assets, which typically can generate high returns over a long period of time. However, in many of these cases the assets are illiquid and require a pretty detailed understanding of a market. Because alternative assets — which include real estate, oil and gas, venture capital funds and hedge funds — are so complex, most limited partners only allocate a small percentage of their overall investments to them. During this financial crisis limited partners are getting squeezed as the value of more common assets such as stocks go down, causing the percentage of money allocated to alternative assets in their portfolio to rise.

As that happens, they suddenly find themselves needing to rebalance their portfolios. To that end, some are opting to see a portion of those assets on the secondary market and and to halt new commitments, but as the Wall Street Journal details, they are also defaulting on their capital calls. Because this time around, the entire LP portfolio is taking a hit, which means a recovery in VC investment will also require a recovery in all other investments. While we wait, expect the total number of VC firms to shrink — something many in the industry have been arguing for, anyhow.

Eric Schmidt is fond of saying it would take Google 300 years to achieve its goals. I always thought he must have been at least partly joking. The shelf life of Internet companies is short; it’s taken Yahoo and eBay little more than a decade to reach what appears to be their respective “best-if-used-by” dates.

And judging from the way investors have been treating Google’s stock, you’d think it was also on track to face an early downgrade from Internet giant to also-ran. After hitting an all-time high of $747.24 a share in November 2007, Google’s stock slid to as low as $247.30 a week ago — a 67-percent drop (the shares closed at $292.96 in a shortened trading day Friday). True, most stocks have suffered from widespread selling, but consider that rival Microsoft is down about 50 percent from its 2007 peak.

There is plenty of reason for concern in the short term. Google’s bread and butter is still online advertising, which is looking to be more vulnerable to a downturn than many initially thought. And it still hasn’t cultivated any rich revenue streams outside of search. Word of widespread contract worker cutbacks only add to that image of a giant on the ropes.

But there are signs that Google is growing slowly more integrated into many facets of our online experiences. Its market share in search expands slightly each month. Chrome is proving a bigger hit than the first reviews intimated. Google’s mail, chat, calendar, maps and feeds are becoming incrementally more useful. You may not be using all of them, but chances are you are using some of them more than you used to.

That’s because Google has been tweaking many of its far-flung offerings with new features and/or better performance. Not just Chrome, but video chat, and voice search on mobile devices. They don’t have to be perfect — and often fall short — they need to be just useful enough to steal our attention from a rival’s service.

Is Google making more money from these micro-innovations? Usually not. But they have a value that could last long after the next financial quarter. They foster loyalty, nibble up market share, and — most importantly — observe user interactions so that Google can be even more useful to you tomorrow.

The New York Times’ David Carr this week detected a larger pattern in all these micro-innovations. Confessing that he was at once seduced and creeped out by how useful Google’s programs were, he nonetheless concluded:

“Google’s Web platform, in all of its high-functioning glory, is its marketing.… If Google owns me, it’s probably because I am in favor of what works.”

When ad spending recovers, Google is going to have more ways to spread it around in front of us, and take up even more of our attention spans. But it’s not content with that, prodding its tentacles into other areas such as energy conservation. Schmidt recently spoke about the company’s early efforts to help make energy usage more efficient. Again, it’s not clear how Google would or could monetize it, but its influence in an area of changing demands is notable.

Does that make Google under $300 a bargain? In the long term, quite possibly. Remember when Google went public at $85 a share and people said its P/E of 58 was too high? Google’s 2008 P/E is now 18. And while Google’s profits are growing much more slowly, they are likely to be growing for years.

Google executives have long acted blasé about its stock price and investor obsessions like profit margins. Still, when a stock loses 67 percent of its value in a little more than a year, it has got to be worrisome for workers holding options. And so there may be a couple of stomach-churning years ahead for Google.

After that? The subtle moves Google has been making with an eye on long-term growth could lead to bigger payoffs for years to come. Maybe not 300 years, but certainly into the next decade or so at least.

I blame David Hasselhoff.

Everything was going fine for the web — the financial world had been unwinding its overleveraged excesses for nearly a year without nary a ripple into Silicon Valley — until the launch of HoffSpace, a social network revolving around the oogachaka-ing, burger-wagging actor.

Some bloggers called it a bizarre nightmare. Others decried it as the end of social networks. They were probably joking. But they were right.

Hoffspace showed once and for all what the web sector had fought so hard to admit: These social networks had finally expanded a niche too far. No longer was it possible to argue that one day social networking sites would be anywhere near as good at making money as they were at expanding, fractal-like, into a grey goo of trivial matter.

Social networks spent too much time trying to build audiences without building a solid business model. The thinking was, let thousands of startups innovate in thousands of ways and one of them will stumble onto something big. The way eBay did with online auctions, or Google did with a better search engine.

But even the site voted most likely to succeed is still punting when it comes to financial success. Facebook CEO Mark Zuckerberg told a German paper this week that the site won’t have a business model for three years. “Growth is primary, revenue is secondary,” he said. On the face of it, that statement isn’t absurd. But coming last week, it sounded blindly out of touch. Facebook will surely survive, but smaller sites looking to it as a role model probably won’t.

This was the week when the Internet sector realized that not only are the good times over, but that much of the room we had for innovation is also gone. The time to experiment around with big, audacious ideas is passing. The invoice for that luxury is now due, and companies will have to either pay up or be so well-funded, like Facebook, that they can still afford tinker a bit. Money is what everyone is expecting from startups, simply because there is suddenly so much less of it around.

Of course, one thing that would help the sector would be if a major social networking company were to give enough of a peek into its books to show it has healthy cash flows, even a robust operating or net profit. But sites like Facebook and MySpace have been suspiciously shy about their financials so far, so that’s not likely to happen.

Many of these sites — focused on social networks or widgets or other mere embellishments to the web that emerged over the past few years — aren’t going to make it. Some with a smart focus, like LinkedIn, will muddle through. A few will be bought out cheap; others will live on as labors of love.

This is the destructive part of that celebrated and magical creative-destruction formula. A lot of areas in tech are probably going to find ways to keep growing, if more slowly: mobile advertising, perhaps, or cheaper, more efficient on-demand software.

Skeptics have been arguing for the past few years that social networking wasn’t a standalone business model, but a feature to enhance larger businesses with established business models. It seems that fate is finally happening. It just took a luminary like David Hasselhoff to make it real.

Patent lawsuits always seem to be one of two things: Little more than a slight annoyance, or a business-ending death blow. Rarely does the tech world see companies who resemble Timex watches in their ability to take a patent lickin’ and keep on tickin’. But the U.S. headquarters of Buffalo Inc. is one such entity.

In Japan, the company reports sales of about $1.3 billion a year. Yet it generates a mere $100 million of revenue out of the U.S., where it offers four types of products, two of which (Wi-Fi routers and flash memory devices) it currently can’t sell because of court injunctions. Another line — multimedia — is new, with the first product due to hit the shelves in June. Its best-performing line is storage, which is profitable despite the fact that the company buys the basic drives from its competitors. All in all, it reads like a prime candidate for business failure. But so far, Buffalo is making it work.

Let’s start with wireless, since the story there is pretty simple. Four years ago, Buffalo started selling 802.11n routers in the U.S., going up against Linksys, D-Link and Netgear. As the smallest player in the market it was first hit with a patent infringement lawsuit from Australia’s Commonwealth Scientific and Industrial Research Organisation. Last year, a court sided with the Australian firm and ordered an injunction against Buffalo’s routers, despite protest (and amicus briefs) from Netgear, 3Com, Atheros, Dell, Intel and others. The case is being appealed, but in the meantime Buffalo can’t sell Wi-Fi devices in the U.S. and the 802.11n IP is still up in the air.

Patent cases have stymied Buffalo in its flash memory business as well. Last month Buffalo stopped selling USB drives and memory cards (its first line of business in the U.S., which it acquired over a decade ago), due to a patent infringement lawsuit filed by SanDisk against it and several other industry players.

Legal fun aside, Buffalo has established itself as a well-regarded provider of storage for the small- to medium-sized business market and, to a lesser extent, consumers. Buffalo has a pretty loyal following for its network-attached storage products, but the company has to purchase the hard drives from rival firms Seagate and Western Digital since, like other smaller storage vendors, Buffalo doesn’t manufacture its own. Making hard drives is a competitive business where economies of scale are important.

Buffalo adds applications and other features to its storage products to make them more compelling at what is generally a higher price point than those offered by Seagate and Western Digital, but storage is a commodity product, one in which cost-per-gigabyte is a customer’s primary consideration. Regardless, Buffalo makes money on each of its storage devices, so while the fact that its success in storage puts money into the pockets of its competitors pocket is galling, it doesn’t signal the end of that business for the firm.

Storage and its single product for multimedia streaming (wired, because it can’t sell wireless in the U.S. right now) are the cards Buffalo currently has to play, and the Austin, Texas-based Buffalo USA intends to play them for all it’s worth. Patent fights or no.

Bill Gates spoke at Stanford today, gathering a crowd because a) he’s Bill Gates, and b) he’s about to retire. Microsoft had just announced it would be giving students developer and designer software for free. Gates said that besides his philanthropic commitments, he’ll continue to stay involved in Microsoft’s work on natural user interface (e.g. Wii, iPhone, and Microsoft Surface-like devices) and the structure of knowledge, “and really take on the big frontiers of software.” Some quotes that caught my ear:

• “How many universities should have to give lectures on subjects like physics? The answer is: very few.”
• “A form factor that I’m a big believer in, that I’m excited to keep investing in so we can bring it to the mainstream, is the tablet device.”
• “Today there’s a few million people who are getting their TV through Internet feeds. It’s just a spectrum of content. Many of the things that will be available in TV in terms of watching, talking with your friends…things we see more today in the video game world.”
• “Today we’re still very device-centric — as we get this unlimited power in the cloud, the ability to move that data automatically will become commonplace.”
• “I don’t see any risk in the world at large that someone will restrict free content flow on the Internet.”

Someone at Microsoft needs a lesson in acronym creativity. While sifting through all the memos that were sent out by Microsoft honchos outlining the executive reorg, I came across Search, Portals, and Advertising Group (SPAG), a division that is going to be led by Satya Nadella. This is the group which gets the beleaguered MSN, till recently led by Steve Berkowitz, formerly of Ask.com. That is one nasty sounding acronym if you ask me.

There have been lot of questions about what Brian McAndrews’ role going forward. According to a memo-sent by Kevin Johnson, former CEO of aQuantive will continue to lead “the Advertiser & Publisher Solutions Group (APS). As we implement the next phase of our integration plan, Brian will pick up additional responsibilities for online advertising sales, marketing, support, and all publisher business development.”

The Microsoft Memos Sent Out Today By:

• Steve Ballmer Memo
• Kevin Johnson Memo
• Satya Nadella Memo

The exodus of senior management at Cisco Systems (CSCO) continues. Today, Chief Development Officer Charlie Giancarlo and the #2 man at Cisco resigned. He is joining buyout shop, Silver Lake Partners. He was amongst the trusted lieutenants of CEO John Chambers, but like many others before him faced the prospect of being the crown prince for a long long time. Earlier Mike Volpi, long thought to be a CEO candidate, left Cisco and took over the reigns at P2P TV company, Joost.

Giancarlo, one of my favorite Cisco executives, was company’s first Vice President of Business Development, and helped build company’s merger and acquisition strategy, playing a big role in Cisco’s first 18 acquisitions and 20 investments. He joined the company when Cisco acquired Kalpana. That was back in the day. His most recent success was Linksys, which he helped integrate into Cisco. The rumors of Charlie’s exit have been doing the rounds for past couple of days.

Related Posts:

• At Cisco, Nowhere to go but out.
• Cisco’s born again consumerism

The good news for Palm is that it met its second-quarter numbers Tuesday afternoon. OK, it met the estimates it made only a couple of weeks ago, which were substantially lower than its earlier guidance. That revision sent Palm’s stock tumbling 19 percent in less than a day. So the good news is really just that things didn’t get worse.

Except for one thing: According to Palm, things are getting worse.

In the current quarter, Palm is now expecting revenue of between $310 million and $320 million, below the $358 million analysts had been looking for. It sees a net loss between 14 cents and 16 cents a share, a good deal larger than analysts’ average forecast of a 4-cent loss.

But wait — maybe there’s good news in all this: Palm investors won’t have to suffer through any more depressing cycles of lower and lower financial guidance. That’s because, as Palm said in announcing its results for the quarter ended Nov. 20, “The company will suspend specific financial guidance in future quarters, but will continue to provide general business guidance and comments on industry trends.”

Forget about shooting the messenger, Palm has chosen instead to shoot the message. I suppose this can’t really be taken as good news either, unless you are a big believer that no news is good news.

How did investors react to all this news? They sent Palm’s stock down 73 cents in after-hours trading Tuesday evening. And again, this doesn’t sound too terribly bad, until you consider that Palm’s stock has traded in the single digits since paying a $9-a-share special dividend to shareholders in October. A 73-cent drop meant it Palm lost an eighth of its market value.

Palm, of course, is in the midst of a turnaround, and Wall Street is well-acquainted with its problems — the fizzle that was Foleo, the sore need for a revamped platform for its devices, the sale of a quarter of the company to Elevation Partners and the accompanying board and management overhauls.

Given all that, most investors were content to give the new Palm at least a few quarters to right itself. Even so, amid such diminished short-term expectations, the quarterly numbers it reported this week managed to disappoint. The damage was done, in part, by a delay in Palm’s Treo 755, a move which may have hurt its chances for strong holiday sales. One has to wonder if maybe this turnaround could end up taking longer than expected.

Then there’s the sustained attack from Research In Motion’s Blackberry and Apple’s iPhone. Much can be said about those formidable competitors, but I’ll let the two images below tell the story. The first is the Google Trends chart for the Palm, iPhone and Blackberry.

The second is a stock chart of their three respective manufacturers.

Turning a company around is one thing, but catching up to two of the hottest gadget makers in history is another. Palm can do it through innovation, as it has shown in the past. But going up against not just one, but two other innovation success stories will take some doing.

Now that the credit crunch is beginning to spill into tech, it’s worth wondering just how ugly this is going to get. Two notable perspectives on the situation appeared in recent days, one from a battle-scarred regulator and another from a tech CEO.

The first came from former Fed Chairman Paul Volcker, who was asked four different ways by the Wall Street Journal how bad the fallout will be, and who found four different ways to say “We don’t know yet.”

The second came from Patrick Byrne, CEO of Overstock (OSTK). When writing about Byrne, it’s customary to use the understated adjective “controversial,” so let’s get that out of the way. Byrne was on Fox News, echoing an economic forecast that he had just made on CNBC — an appearance, by the way, that would send his stock spiraling downward (more on that later).

Byrne was asked by Fox News’ Terry Keenan whether the mortgage turmoil was hurting Overstock’s sales of home items. After noting that furniture sales were going great guns, he suddenly shifted gears:

BYRNE: I do think that we are in — I have been saying for about two years we’re looking at a 1929 kind of event. I think that we are really in trouble in this country. And what you have seen in the last four months is just the beginning of it.

KEENAN: Wow.

BYRNE: The government has been keeping the economy afloat with flooding us with cheap money. And those days are over. The dollar is cracking. Eventually, they are either going to they have to defend it by raising interest rates or something. But we’re looking at a very bad economic situation.

Wow, indeed. Byrne is no Volcker, but I have a sinking feeling that behind all of Volcker’s anodyne we don’t know’s lurked a scenario as bleak, if not as dramatic, as the one Byrne laid out.

And this is why Patrick Byrne is one of my favorite CEOs. I don’t say that as a shareholder or as a business partner — I am neither — but as a journalist. In an era in which news has become just another form of entertainment, Byrne is as entertaining as they come. I wish there were more CEOs like him.

But for better or worse, there is only one. A story I once wrote once elicited from him an email that was signed “Patrick ‘Frothing at the Mouth’ Byrne,” which made me wonder if Byrne is as crazy as some have suggested. If you know you’re crazy, if you can even joke about it, how crazy are you, really?

Byrne reminds me of one of those maverick, intriguing characters like Anton Chigurh or Omar Little. Not, of course, because he’s some kind of serial killer, but because he stubbornly holds to a code of behavior that very few understand. He tirelessly champions causes that draw few followers: the “jihad” against naked short selling, the private-school voucher initiative in Utah, the deep-discounting at Overstock that leads to losses year after year.

So when Byrne appeared on CNBC on Monday and warned that gross margins would fall during the busiest quarter of the year — despite a 10 percent rise in gross bookings — the stock slid 21 percent. Six weeks ago, Overstock shares were trading for as much as $39.39, their highest level in nearly two years. But after Monday’s slide, the stock is now up only 19 percent this year. One more Byrne interview could wipe that out.

Why would Overstock choose to deepen discounts and beef up promotions during a quarter when it had been otherwise assured of a tidy profit? CIBC, which had been forecasting a $4.2 million profit for the company this quarter, revised that downward on Monday, to a loss of $2 million. That red ink is so much blood in the water for short sellers.

A clue may lie in something else Byrne told Fox:

If anything, we are counter-cyclical. In good times, it is — we have — it’s toughest to get overstock. In bad times is when, suddenly, everybody is calling us to unload product.

In light of that, Byrne must be hoping to build market share. By slashing prices, Bezos-like, during a holiday season in which consumers are counting each penny, he’s doubling down — betting he’ll wind up with an even larger share. If so, maybe his recent TV appearances aren’t so crazy after all. Risky? Very. But crazy? We’ll see.