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16 posts from August 2013

August 29, 2013

Scraps of IBM news on servers, chips

Here's a sort of round-up of IBM news tidbits. They are mostly about the chip and server struggles, but I end on a brighter note about the Power8 chips. No word on how all of this could directly impact Rochester, but I am pursuing a story what the Power consortium means for the Rochester campus.

• Here's the take from the IDG News Service in PC World on the latest server sales report.

The server business continued to slide in the second quarter with worldwide revenue and unit sales down, IDC said Tuesday.

Revenue was down 6.2 per cent to $11.9 billion in the second consecutive quarter of year-over-year decline, as demand for servers continued to soften in most geographic regions, the research firm said. Unit shipments were also down 1.2 percent to 2 million, after also falling in the previous two quarters.

5115638122_5bf17912ccThe highest fall in revenue was in midrange systems, which dipped by about 22 percent year-over-year, while volume systems had a 2.4 percent revenue decline and revenue from high-end systems dipped 9.5 percent in the quarter ended June.

IBM held the number one position in the server market with a 27.9 percent share of revenue, but its share was down from over 29 percent last year. The company’s server revenue fell in the quarter by 10 percent year-over-year because of low demand for System x and Power Systems. IBM’s System z mainframe running z/OS, however, had a third consecutive quarter of growth, with revenue up by 9.9 percent year-over-year to $1.2 billion. The mainframe accounted for 9.8 percent of server revenue in the quarter.

• Here's some from a gloomy overall commentary from EE Times' Silicon Valley Bureau Chief Rick Merritt with the headline "IBM's Last Stand in CPUs?"

The Open Power Consortium could become IBM's last stand in microprocessors with huge implications for the future of Big Blue.  

Years ago, IBM took a shot at the mainstream PC market when it forged its PowerPC alliance with Motorola. Intel won, and the partners retrenched into the embedded market with the consortium. These days, their embedded partners -- LSI, Freescale, and others -- are all shifting to ARM cores.


IBM buildinglogoExacerbating IBM's woes, the company appears to have been designed out of at least two of the three next-generation game consoles where it once provided its Cell multicore processor, ASIC technology, and other goodies. Microsoft's Xbox One and Sony's Playstation 4 both use AMD's cores. The muscular, custom console processors once were significant drivers of process technology and profits for Big Blue.

Now IBM is left to defend its main stronghold, the high-end server. This, too, is under siege.

These days the massive scale-out datacenters of web giants such as Amazon, Facebook, Google, and Microsoft are increasingly driving server technology and volumes. The x86 rules here along with an emerging streamlined style of design that's in opposition to the muscular scale-up style IBM practices for its classic customers in banking, government, and scientific markets.

Even in the Top 500 Supercomputers, IBM's old turf, it is losing ground to scale out designs using Nvidia GPUs paired with racks of x86 systems. Now Intel is coming on strong here with its own multicore Xeon Phi, which some say is offering higher performance, lower cost, and easier development than Nvidia GPUs.

In the coldest cut of all, Amazon recently won a deal to supply computer services to the CIA, encroaching on the business of IBM's federal systems division, the bluest of Big Blue business units. Like everyone else, the government is under pressure to try out cloud computing services such as Amazon to reduce cost.

• On a more upbeat note, IBM rolled out its new Power8 chips at the Hot Chips conference this week. Timothy Prickett Morgan covered it for The Register and IT Jungle.

Big iron sales are still generating $6bn to $7bn a year for IBM - which is enough to justify designing its own Power processors and building its own wafer baker.

At the Hot Chips conference at Stanford University on Monday, some of the chief architects behind the Power8 electronics were on hand to show off the feeds and speeds of the next-generation motor for the company's Power Systems lineup.

Significantly, the Power8 chip is also the foundation for Big Blue's OpenPower consortium - an effort to make it easier to hook networking, accelerators and other features into Power processors by allowing third parties to license chunks of intellectual property in the style of ARM Holdings and its RISC cores.

Ibm_power8_die_shotIBM announced the OpenPower effort earlier this month, with GPU maker Nvidia, network chip maker Mellanox Technologies, motherboard maker Tyan, and advertising moneymaker Google all lending their support to the cause.

Whether or not the OpenPower effort gains traction remains to be seen; the Power8 is so clearly engineered for midrange and enterprise systems for running applications on a giant shared memory space, backed by lots of cores and threads. Power8 does not belong in a smartphone unless you want one the size of a shoebox that weighs 20 pounds. But it most certainly does belong in a badass server, and Power8 is by far one of the most elegant chips that Big Blue has ever created, based on the initial specs.

August 28, 2013

DSW's work on new Roch store is picking up speed

I've been getting questions from eager shoppers about DSW's new Rochester shoe store.

08282013DSWWhile construction has only recently kicked off inside the 22,000-square-foot store former Old Navy store at 50 25th St. S.E., it looks like it's moving along at good clip now. I'll check with the company, but my completely uneducated guess-estimate would be that we could see an opening in Oct. or Nov.

DSW, also known as the Designer Shoe Warehouse, is based in Columbus, Ohio.

In November 2011, Old Navy sailed out of its 22,000-square-foot store at 50 25th St. S.E. between Bed Bath and Beyond and Michael's craft store. It moved farther south to a new spot nestled between Dick's Sporting Goods and Maurice's in the Shoppes on Maine retail cluster.

That left a big gap in the Broadway Commons shops area.

"Our stores have had a huge positive reaction in Minnesota," said Christina Cheng, DSW's director of investor relations, in January. "We are always looking for areas where we can expand our market share."

"We've been opening stores aggressively this year," Cheng says. "We opened 39 in 2012, and now we have 365. We're looking to open 25 to 30 more in 2013, one which will be in Rochester."

August 27, 2013

New Roch. senior living facilty digging in

The Waters on Mayowood, a new senior living complex at 16th Street Southwest and Mayowood Road, is really digging in with the dirt flying as the site preparation rolls along.

SeniorlivingThe 276,000-square-foot facility will include a four-story assisted living wing with 70 units and six enhanced care suites, a four-story independent living wing with 71 units and a two-story memory care wing with 28 units. It will also feature heated
underground parking.

The hope is to open The Waters on Mayowood in fall 2014.

Senior Living of Minnetonka. The Waters is an owner as well as the future operator.

The Waters manages 11 senior living centers in Minnesota, including Sugar Loaf Senior Community in Winona.

August 26, 2013

Fool speculates on IBM's end being nigh

The MoUrltley Fool financial services firm posted an interesting take about IBM and its possible future on its website today.

Analyst Adrian Campos wrote an article called, "Why IBM's End Could Be Near." Kind of scary sounding. I'm sure Big Blue and investors aren't too worried since it was written by a card-carrying Fool.

FYI, here's why the firm uses the Motley Fool name:

The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Here's some from Campos' article:

IBM is having a rough year, producing a negative 6% return so far. The company had a wonderful come-back in the 90s thanks to its cost reductions and shift toward software and consulting, wh130110ibmwalljan10jkich led to amazing financial performance for a decade.  And since 2002, revenue, gross profit, and operating profit have compounded at annual rates of 3%, 6%, and 12%.

However, the current situation is totally different. IBM may need a transformation and re-engineering of its business. According to many IBM fans, that shouldn't be a big problem because IBM has been able to change several times in the past: this is just another time. Bears, on the other hand, keep reminding us that this time is different. What kind of future awaits IBM shareholders in the short and long run?  

Is IBM's end near?

In the first quarter of 2013, for the first time in 8 years IBM missed earnings expectations: sales declined 5%, posing a strong risk to IBM's long-term business, as two-thirds of its revenue base is recurring.

Full-year earnings guidance of $16.70 were just $0.07 below the consensus. But these $0.07  reflected long-term changes in the main markets IBM addresses: a contraction in global demand for IBM's high-end systems & hardware, and growth limits in the private cloud computing segment. These long-term trends started hurting IBM's cash flow already in 2009 and the $0.07  should have been seen as the beginning of a series of disappointments and pain for shareholders. 

Unfortunately, the second quarter results did not show the kind of substantive change that investors were looking forward to. IBM did beat the consensus by a tiny margin.

That was just not enough.

Ibm-logoAnalysts had kept estimates low but their expectations were actually higher: they tacitly were expecting a major change in business focus, which did not seem to happen. As a result, institutions from Credit Suisse to UBS downgraded the stock. It's simple to understand the downgrades: margins were down 3% from last year. The elephant is spending the same or more money, but making much less than before. 

Now, similar results coming from other companies in the software and services sector, like Oracle, show that the whole industry is in trouble. But to make matters worse, IBM still has 34% (hardware + System Z server sales) of its revenue coming from the commodity-like hardware segment, which is even riskier than the services segment, because of increasing competition from Intel's cheap machines.

Wrong focus?

In "IBM: The End is Near,  investor Arne Alsin identified a massive paradigm shift as the root of all of IBM's problems. The industry is moving to the public cloud: low-cost yet powerful computing architecture. IBM's main products (e.g. System Z and private cloud solutions), on the other hand, depend on the old paradigm--the private cloud, a soon-to-be legacy business.


Final foolish thoughts

I agree with Alsin in the sense that the demand for expensive, multi-million dollar systems (let them be private clouds or something else) is contracting. Companies are moving to the public cloud instead. Expensive frameworks and commodity-like x86 servers are becoming endangered species.

That being said, I also don't want to underestimate the ability of IBM to change its business radically. Big Blue has done it several times. The latest time was when it exited the PC business in 2004 by divesting its PC unit to Lenovo. This was done 2 years after HPQ acquired Compaq and at a moment where the PC business was still strong. The elephant prioritized the sustainability of the business rather than meeting the street consensus for the next quarter.

A similar strategy and radical changes of focus are in great need again. This goes beyond acquiring companies with strong exposure to the public cloud (IBM recently acquired SoftLayer for $2 billion, 5 times revenue).

Finally, there will always be demand for expensive private clouds, for institutions willing to pay 100% more in price for an additional 5% safety improvement. What IBM needs to do is to reduce the exposure to such business, as soon as possible. In the meanwhile, the safety of having institutional clients and its vast resources will allow Big Blue to survive, but don't expect superb returns during the transition. It's gonna take a while, since it's just starting!

August 23, 2013

Thai restaurant slated to open in northwest Rochester

Pativath "Vot" Louprasong hopes to have good luck with the new Thai restaurant he and his family are opening in northwest Rochester.
He hopes to open Sok Dee, possibly as early as next week, at 4180 18th Ave. N.W. in front of the Cedarwood Plaza. That's the building which has previously housed Far East Fusion, John Hardy's Bar-B-Q and Roscoe's Root Beer & Ribs.

"I've always wanted to do something like this, since my family came to the U.S. in 1979," he said. "This is kind of a new journey for me."
The restaurant's name — Sok Dee — means "good luck" in both Thai and Laotian.

Louprasong has more than just luck on his side with this new project. His sizable family is helping out. He's the youngest of 10 children.

His family immigrated to St. Charles when he was just 2-years-old. They then spent some time in Idaho and then moved back here for good when he was a teen.

He's excited about the prospect of introducing Rochester to the authentic cuisine of the region where he was born.

"We have a small, but very good menu," Louprasong says.

For people unfamilar with Thai food, he describes it as "spicy, sweet and sour." People shouldn't worry about it being too spicy, because the staff will adjust the dishes to suit individual tastes.

Thai cuisine is also known for its "sticky rice," which grows in that area. It is a short-grained, sweet rice that clumps together.

August 22, 2013

41st Street re-development projects cooking

There's lots cooking on the U.S. 52 North Frontage Road in northwest Rochester by the corner of 41st Street with one construction crew preparing a site for a new building and another one is re-vamping another empty fast food place right next to the other project.

The long-empty Burger King (and its overgrown grass) has been leveled to make way for a new commercial building. I've written about this project a few times and even my erudite co-worker, The Answer Man, mentioned it in a column this week.

DemolishedburgerkingInSite Real Estate, based in suburban Chicago, is creating a 7,500-square-foot commercial building on the site of the former restaurant at 4107 U.S. 52 North Frontage Road. InSite says 5,000 square feet of the building is already locked in by a future tenant, Mattress Firm. Mattress Firm previously had a store in south Rochester.

InSite bought that property from Dallas, Texas-based Z's American Properties for $655,000 in May. Z's American Properties originally bought the site in 1996 for more than $1 million. The firm also owned a Burger King building on South Broadway. It sold that to the University of Minnesota Rochester and demolished to clear the way for a future campus.

ExtacojohndominosThe long-empty Taco John's restaurant next to the InSite construction project is being re-vamped into a new home for Marty Gritz's north Rochester Domino's pizza.

Gritz, the owner of five Domino's pizza franchises, bought the former Taco John's building on July 26 for $320,000 with plans to move his north Rochester Domino's from its current location at 2986 41st St. N.W., near Home Depot and IBM.

The plan is to make the move before the end of the year, but first he plans to revamp the building to fit Domino's new interactive "Pizza Theater" format. That means a welcoming and colorful setting with an open kitchen that puts the pizza makers on display and encourages customers to watch their pizzas being made. It flips the previous kitchen layout, which showed only the backs of Domino's cooks.

August 20, 2013

Mayo Clinic lands $3 million grant to study aging

Here's a snippet from a press release from Mayo Clinic's pneumatic email tubes about a research grant for the Rochester campus to study aging.

Of course, $3 million is not a big number when it comes to Mayo Clinic research, but every little bit helps. Heh.

Mayo Clinic has been awarded a $3 million grant from the Glenn Foundation for Medical Research to establish the Paul F. Glenn Laboratories for Senescence Research. The grant will support the laboratories’ mission of exploring how age-related diseases and disorders are affected by aging cells and how eliminating these senescent cells can improve and extend life span.
Mayo-clinic-logoJan van Deursen, Ph.D., a professor of biochemistry and molecular biology at Mayo Clinic …, will serve as laboratory director.
“This grant will allow us to investigate the identity and the properties of senescent cells that accumulate with aging and at sites of age-related pathologies, as well as the potential therapeutic effects of their clearance,” van Deursen says. The Glenn Laboratories at Mayo Clinic will work with the Mayo Clinic Robert and Arlene Kogod Center on Aging….

Dr. van Deursen is researching the drivers of aging and looking for interventions that delay age-related disease and dysfunction. His concept is that aging and age-related diseases are caused at least in part by aging cells that accumulate in tissues and organs. These senescent cells have lost the ability to divide in response to various stimuli that increase the risk of malignant cell transformation, and they affect the functionality of other cells. The critical barrier to determining whether and how cell senescence causes aging and age-related disease has been the lack of a method to selectively remove them.
This study opens an entirely new field of research that is expected to lead to the development of drug-based strategies that will clear senescent cells in humans. Once available, these strategies hold the promise of delaying, preventing, or reverting a range of age-related diseases, leading to a longer, healthier, more independent quality of life.

New south Rochester hotel taking shape

08182013laquintaThe new La Quinta Inn and Suites hotel is really taking shape in the Shoppes on Maine area in south Rochester.

PLC Inc., a hotel development firm out of Fargo, N.D., is building it, just east of the Rochester Toyota and Mercedes car dealerships.

The new $4 million, 50,212-square-foot hotel will have 83 rooms and
an oversized swimming pool.

08182013laquinta2 In June, 2012, I asked PLC president Chuck Hayes why he wanted to build more hotel rooms when the Med City already has so many.

"Rochester is a growing community with a lot of history. It is a place we've long thought we'd like to be," Hayes said. "We feel there is a need for more rooms."

And that was back when DMC was just a local sales tax inititiative.

August 19, 2013

Local investors buy downtown Roch. properties along river

Here's some from my piece on the sale of Rochester's Riverside Building and two other properties along the Zumbro River in downtown.

I believe the Riverside Building was actually one of the first buildings renovated under a city revitalization project following the historic 1978 flood.


The sale of three downtown Rochester buildings along a two-block stretch of the Zumbro River is the latest Destination Medical Center-inspired real estate deal to to be completed.

Three local investors, led by managing partner Bucky Beeman, of Rochester, purchased the properties from Les Nelson, of Clear Lake, Iowa, on Aug. 12. The sale includes the 95-year-old Riverside Building at 400 S. Broadway, an adjacent office building at 416 S. Broadway and Zeus Auto Repair at 434 S. Broadway.

ShowPhoto.aspx"With DMC, we thought the timing was right to buy. It is one of the last available prominent pieces of land downtown," said Beeman, a Rochester commercial Realtor for Realty Growth Inc. "Things are moving fast."

No financial terms of the sale have been announced. Olmsted County has not processed it yet, so the sale documents are not available to the public. Nelson purchased the block of properties in 2005 for $3 million from the Historic Riverside Partners.

The partners have no plans for any major changes or developments for the parcels, other than filling two tenant vacancies in the 9,522-square-foot Riverside Building and some light renovation to the building's brick exterior, Beeman said.

One open space that faces Fourth Street opened because the Rocco Altobelli Salon moved to the Shoppes on Second center. That space opens east onto a large patio along the river. The Rochester Symphony Orchestra & Chorale, which is also a Riverside tenant, has been using the patio for its popular series of free Coda music events on Thursdays.

The DMC Infrastructure Master Plan, created by the consulting firm Kimley-Horn and Associates, pointed out the potential offered by having the Zumbro River flow through downtown Rochester.

"The Riverwalk in Rochester is a very positive amenity. Extensions to this (path) system are encouraged to make it a better-used facility and one that serves walking trips, not just offers a pleasant walk," according to the DMC proposal.

In addition to the former Rocco Altobelli space, another street-level spot at the corner of Broadway and Fourth Street soon will become available after the Art Bitz gift store closes later this month.

Texas Roadhouse expected to open in October

As summer rapidly draws to a close, there's more than just fall on the way for Rochester.

The long-anticipated Texas Roadhouse restaurant is expected to open for business in October, according to the Louisville, Ky.-based chain's website. They also have openings scheduled in Atlanta, Georgia and Kuwait City that month.
The restaurant has rapidly taken shape this summer in the parking lot in the Northwest Plaza shopping center, in front of Sam's Club.

With the hoped-for opening date coming up quickly, construction is running full-tilt through the week and into the weekend.

Texas Roadhouse's ride into Rochester has been a long one that's taken many detours over the years.

In 2008, it came close to opening a restaurant inside the Miracle Mile Shopping Center, but that deal never quite worked out.

The Western-flavored chain kept hunting for a home in Rochester and it finally locked in the spot in the Northwest Plaza in early 2012. The Rochester Planning and Zoning Commission approved it in February of that year.

Discussions with neighbor Sam's Club later hit a snag and it looked like that the Roadhouse would need to start looking for another place to build.

Then a few months later, a deal was worked out to clear the way for construction to start this summer.