Lunch meat maker Hormel orders up Skippy sandwich

 Hormel Foods apparently has a hankering for a peanut butter and bacon sandwich. The company primarily known for Spam and other cured, smoked and deli meats said Thursday that it's buying Skippy, the country's No. 2 peanut butter brand, in its biggest-ever acquisition.
Skippy, which was introduced in 1932 and is a staple in American pantries, is intended to increase Hormel's presence in the center of the supermarket where nonperishable foods are sold. It also gives the Austin, Minn.-based company a stronger footing in international markets. Skippy is sold in about 30 countries and is the leading peanut butter brand in China, where Hormel has been trying to build up its Spam business for the past several years.
Hormel, which also makes canned chili, sausages and pepperoni, currently gets the vast majority of its sales in the U.S., with only about 4 percent of revenue coming from abroad. Now the company is hoping that Skippy, which it's buying from Unilever for $700 million, will help it expand at home and overseas.
In a conference call with analysts, CEO Jeffrey Ettinger noted that peanuts and peanut oil are popular in China. And although peanut butter is not yet a household staple there, he said it is growing rapidly.
Back at home, Ettinger said peanut butter is already regarded as a convenient and affordable source of protein and that Hormel would apply its innovation skills and "take Skippy out of the jar" for use in other products such as packaged snack foods.
For example, he noted that the company recently introduced pepperoni sticks as part of a push to grow its snacks business. With Spam, the company is testing shelf-stable, microwavable meals, such as jambalaya made with Spam. It's also considering a variety of macaroni and cheese made with Spam.
"That concept of taking (Skippy) out of the jar echoes a similar concept we're trying with taking Spam out of the can," Ettinger said in an interview.
For now, there are 11 varieties of Skippy in the U.S., including low-fat and natural varieties. Hormel noted that Skippy is the leading brand in the faster-growing subcategory of natural peanut butter. Overall, Skippy has about 17 percent of the U.S. peanut butter market, according to Euromonitor International. Jif, owned by J.M. Smucker Co., is the largest brand with about 37 percent of the market.
Although Skippy is "a good fit" with its other packaged foods, Ettinger said Hormel still needs to figure out how to handle its merchandising of Skippy in stores, such as whether to display it next to other items.
Swings in peanut butter prices have made growth volatile in recent years, but Skippy sales on average have increased about 4 percent annually on a normalized basis, according to a spokesman for Unilever. The American Peanut Council estimates that Americans eat an average of nearly 4 pounds of peanut butter a year.
Hormel expects annual Skippy sales of about $370 million, with almost $100 million of that from outside the U.S. Ettinger expects Skippy sales to grow in the low single digits domestically and in the high single digits overseas.
The deal includes Skippy manufacturing plants in Little Rock, Ark., and Weifang, China. Hormel Foods Corp. said that it expects the deal to modestly add to its fiscal 2013 results and add 13 cents to 17 cents per share to fiscal 2014 earnings.
The transaction, which still needs regulatory approval, is expected to close in two parts. The domestic closing is expected by the second quarter and the China business is expected to close by the end of the year.
As Hormel continues to grow, Ettinger said future acquisitions could be larger than they have been in recent years. "It's an $8 billion company now. You have to move the needle," he said.
Unilever, based in the Netherlands and the U.K., is one of the largest consumer products companies in the world. It makes Vaseline, Dove soaps and Lipton tea. The company had indicated last year it was considering selling Skippy as part of a strategic review.
Hormel shares rose $1.19, or 3.7 percent, to close at $33.20 Thursday.

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Economy, year-end sales help auto industry in 2012

DETROIT (AP) — A steadily improving economy and strong December sales lifted the American auto industry to its best performance in five years in 2012, especially for Volkswagen and Japanese-brand vehicles, and experts say the next year should be even better.
Carmakers on Thursday announced their final figures, which totaled 14.5 million — 13 percent better than 2011.
More than three years after the federal government's $62 billion auto-industry bailout, Americans had plenty of incentive to buy new cars and trucks in the year just ended.
Unemployment eased. Home sales and prices rose. And the average age of a car topped 11 years in the U.S., a record that spurred people to trade in old vehicles. Banks made that easier by offering low interest rates and greater access to loans, even for buyers with lousy credit.
"The U.S. light vehicle sales market continues to be a bright spot in the tremulous global environment," said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area industry forecasting firm.
Sales were far better than the bleak days after the U.S. economy tanked and GM and Chrysler sought bankruptcy protection. Back then, sales fell to a 30-year low of 10.4 million, and they are still far short of the recent peak of around 17 million set in 2005.
The best part of 2012 came at the end, when special deals on pickup trucks and the usual round of sparkling holiday ads helped December sales jump 9 percent to more than 1.3 million, according to Autodata Corp. That translates to an annual rate of 15.4 million, making December the strongest month of the year.
Volkswagen led all major automakers with sales up a staggering 35 percent, led by the redesigned Passat midsize sedan. VW sold more than five times as many Passats last year as it did in 2011.
Jesse Toprak, vice president of industry trends for TrueCar, said VW has the right mix of value and attractive vehicles and called the company "the force to watch in the next several years in the U.S. market."
Toyota, which has recovered from the earthquake and tsunami in Japan that crimped its factories two years ago, saw sales jump 27 percent for 2012. December sales were up 9 percent. Unlike 2011, the company had plenty of new cars on dealer lots for most of last year.
Honda sales rose 24 percent for the year. Nissan and Infiniti sales were up nearly 10 percent as the Nissan brand topped 1 million in annual sales for the first time. Hyundai sales rose 9 percent for the year to just over 703,000, the Korean automaker's best year in the U.S.
Chrysler, the smallest of the Detroit carmakers, had the best year among U.S. companies. Its sales jumped 21 percent for the year and 10 percent in December. Demand was led by the Jeep Grand Cherokee SUV, Ram pickup and Chrysler 300 luxury sedan.
But full-year sales at Ford and General Motors lagged. Ford edged up 5 percent and GM rose only 3.7 percent for the year. For December, Ford was up 2 percent and GM up 5 percent.
GM executives said the company has the oldest model lineup in the industry, yet it still posted a sales increase and commanded high prices for cars and trucks. The company plans to refurbish 70 percent of its North American models in the next 18 months and expects to boost sales this year.
North American President Mark Reuss said the company won't give away cars and trucks with discounts like it has in the past, especially in the midst of its biggest product update ever.
"Give us 18 months and you're going to see the whole portfolio turned," Reuss said.
Even though the congressional deal to avoid the fiscal cliff deal raised tax rates on the wealthiest Americans, Ford said it doesn't see a huge impact on auto sales.
Its chief economist, Ellen Hughes-Cromwick, said only 2 percent of new-vehicle buyers have income in that upper tax bracket, and they tend to purchase even if there is a change in after-tax income.
She said Ford is more concerned about an increase in the payroll tax, which is scheduled to climb to 6.2 percent this year from 4.2 percent in 2011 and 2012. That amounts to a $1,000 to $1,500 tax increase per household, she said.
"We will look at that closely because it will crimp spending in the months ahead," she said.
December featured year-end deals on GM's big pickup trucks. The company offered discounts up to $9,000 to help clear growing inventory, and it worked. GM cut its full-size pickup supply by more than 20,000 in December to about 222,000.
Overall, though, analysts said the industry eased up on promotions such as rebates and low-interest financing. Car and truck buyers paid an average of $31,228 per vehicle last month, up 1.8 percent from December 2011.
The Polk auto research firm predicted even stronger U.S. sales for 2013, forecasting 15.3 million vehicle sales as the economy continues to improve. Polk, based in Southfield, Mich., expects 43 new models to be introduced, up 50 percent from last year. New models usually boost sales.
The firm also predicts a rebound in sales of large pickups and midsize cars. All eight of the top manufacturers are introducing new vehicles, and that should bring competition and lower prices in those segments, according to Tom Libby, lead North American analyst for Polk.
But the firm's optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.

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IMF's economist: budget cuts may hurt growth less now

WASHINGTON (Reuters) - Belt-tightening in advanced economies may not be as harmful to growth now as it was during the height of the financial crisis, but governments should still be careful about drastic cuts, an International Monetary Fund research paper found on Thursday.
The IMF came under heavy criticism in October when it conceded that austerity programs it recommended during the global economic crisis were more costly than expected, causing economic damage that was as much as triple the amount forecast.
In a follow-up paper by the IMF's chief economist, Olivier Blanchard, and his colleague, Daniel Leigh, stood by their initial conclusions but said the harshest impact of those programs may be fading as economies start to recover.
The paper in October fueled critics of steep budget cuts in debt-burdened European economies, and prompted the IMF to soften its own recommendations for austerity in the euro zone crisis.
It said that now it believed forcing Greece and other debt-burdened countries to reduce their deficits too quickly would be counterproductive.
"For example, in Portugal, we have relaxed fiscal deficit targets," said Blanchard, the IMF chief economist.
But Germany said at the time that back-tracking on debt-reduction goals would only hurt market confidence.
Some economists also questioned the methodology the IMF had used in its initial research, saying the findings may have been exaggerated, or only applied to certain countries or times.
In the follow-up paper on Thursday, Blanchard and Leight said their research held-up for most advanced economies during the height of the financial crisis in 2009-10. While their views do not represent those of the Fund, the chief economist has a heavy hand in shaping the IMF's economic thinking.
"Forecasters have underestimated fiscal multipliers, that is, the short-term effects of government spending cuts or tax hikes on economic activity," the paper wrote.
The paper found that every dollar of deficit reduction subtracted "substantially" more than a dollar from economic growth, as much at $1.70. Economists had previously estimated that a dollar in government cuts would drain only 50 cents from the economy.
But during the past two years, the negative effect of government cuts on growth may have shrunk as the economy improved and people and businesses were able to borrow more money, making government spending less crucial, the researchers found.
"A decline in actual multipliers ... could reflect an easing of credit constraints faced by firms and households, and less economic slack in a number of economies relative to 2009-10," the paper said.
Blanchard and Leigh said the effect of government spending on the economy could vary depending on the country and the state of the economy. They cautioned that governments should not necessarily delay austerity, but should take into account its negative impact on growth.

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Transocean to pay $1.4 billion for role in BP oil spill

 Transocean Ltd agreed to pay $1.4 billion to settle U.S. government charges over BP Plc's massive Gulf of Mexico oil spill in 2010 and the rig contractor admitted that its crew on the Deepwater Horizon was partly responsible.
Transocean, which employed nine of the 11 workers killed in the accident, had set aside $1.5 billion for the U.S. Department of Justice out of a $1.95 billion Macondo loss provision. The settlement, unveiled on Thursday by the DoJ, includes $1 billion in civil penalties and $400 million in criminal penalties.
Still looming is a settlement with the plaintiffs committee that represents more than 100,000 individuals and business owners claiming economic and medical damages. So the ultimate cost of Macondo to Transocean could end up being more than $4 billion, UBS analyst Angie Sedita said. Last year, BP reached a $7.8 billion plaintiffs liability settlement.
The shares of Switzerland-based Transocean rose 6.4 percent to close at $49.21 in New York on the lower-than-expected DoJ payout, with Barclays having expected a settlement of $2.5 billion. The cost of insuring Transocean debt fell sharply.
"The bottom line to me is they now can put away the big black cloud that has been hanging over them," said Phil Weiss, an oil analyst at Argus Research.
BP and its contractors have sought to push blame on to each other since the 2010 well explosion caused the largest-ever U.S. offshore oil spill. Lawyers and analysts see the federal settlements with BP, and now Transocean, as a solid legal framework to start putting the disaster behind them.
Halliburton Co, which performed cementing work on the Macondo well, remains the only one not to have settled. Daniel Becnel, a Louisiana lawyer representing spill-related claimants, believes that settlement is merely a matter of time because none of the three really wants to fight it out in court.
The BP-contracted Deepwater Horizon was drilling the mile-deep well on April 20, 2010, when a surge of methane gas caused a blowout. The accident led to a months-long U.S. deepwater ban and intense scrutiny of the offshore drilling industry, which is now booming worldwide despite lingering public concerns.
Of the $400 million in Transocean criminal fines, $150 million will help protect the Gulf of Mexico, while another $150 million will fund spill prevention and response efforts there, the DoJ said. Transocean must also implement court-enforceable measures to improve safety and emergency response on U.S. rigs.
"From what I have read, they (Transocean) played a part, but BP is the lion's share and ought to pay $15 billion dollars." said Tony Kennon, mayor of Orange Beach, Alabama.
The U.S. Chemical Safety Board found that BP and Transocean both had "safety management system deficiencies that contributed to the Macondo incident," and neither had adequate safety rules.
The DoJ said that in agreeing to plead guilty to violating the Clean Water Act, Transocean admitted that members of its crew, acting at BP's direction, were negligent in failing fully to investigate indications that the Macondo well was not secure.
"Unfortunately, Halliburton continues to deny its significant role in the accident, including its failure to adequately cement and monitor the well," BP said in a statement.
Halliburton said it had substantial legal arguments against any liability, including an indemnity in its contract with BP. Halliburton shares closed 1.7 percent higher at $36.31.
BP agreed in November to a DoJ settlement of its own worth $4.5 billion, including the largest criminal fine ever at $1.256 billion. The London-based oil company also agreed to plead guilty to obstruction of Congress, a felony.
New York-traded shares of BP closed 2 percent higher on Thursday.
Attention now turns to any possible settlements ahead of a Macondo-related trial due to start on February 25 in New Orleans, including for Clean Water Act (CWA) violations that may cost BP $21 billion if it is found grossly negligent.
"That's where fairness will be found - or lost," National Audubon Society CEO David Yarnold said of BP's CWA case, since most of the fines would go toward restoring the Gulf of Mexico.

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U.S. ends long Google probe with only mild reprimand

WASHINGTON (Reuters) - In a major victory for Google Inc, U.S. regulators on Thursday ended their investigation into the giant Internet company and concluded that it had not manipulated its Web search results to hurt rivals.
The Federal Trade Commission did, however, win promises from Google that it would end the practice of "scraping" reviews and other data from rivals' websites for its own products, and to allow advertisers to export data to independently evaluate advertising campaigns.
Google also agreed to no longer request sales bans when suing companies which infringe on patents that are essential to ensuring interoperability, also known as standard essential patents, the FTC said on Thursday.
Microsoft Corp and other Google competitors have pressed the FTC to bring a broad antitrust case against Google similar to the sweeping Justice Department litigation against Microsoft in the 1990s.
Meanwhile smaller Internet companies such as Nextag have complained about Google tweaking its Web search results to give prominence to its own products, pushing down competitors' rankings and making them more difficult for customers to find.
At a press conference, FTC Chairman Jon Leibowitz anticipated criticism of the agency's decision to not further pursue Google on the so-called subject of search bias.
"Even though people would like us to bring a big search bias case, the facts aren't there," he said.
"The changes Google have agreed to make ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy," said Leibowitz.
The commission voted 4 to 1 to settle the patent investigation into Google's injunction requests. It voted 5 to 0 to end the probe of Google's search practices.
The news had little impact on Google shares, which closed up 42 cents at $723.67, as most investors had expected the FTC probe to conclude without inflicting major damage.
"I never saw any real likelihood that the feds were going to insert themselves between one of the most popular brands in the world and the constituency that adores it," said Whit Andrews, an analyst for Gartner Inc.
RIVALS DISAPPOINTED
Yelp, which operates the social networking/user review website yelp.com, had complained about scraped reviews, and said it was disappointed with the result of the FTC probe.
"The closure of the commission's investigation into search bias by Google without action ... represents a missed opportunity to protect innovation in the Internet economy," wrote Yelp spokesman Vince Sollitto in an email. "We look for the regulatory bodies continuing their investigation to have greater success."
Microsoft had no immediate comment, but Dave Heiner, its deputy general counsel, complained in a blog post on Wednesday about "Google's misconduct," specifically blocking a fully featured YouTube, which Google owns, from the Windows Phone.
Gary Reback, who represents a group of Google's critics including Nextag, said he thought the investigation was inadequate since the FTC failed to respond to his clients' assertions that they had been hurt by Google and asked few questions in its civil subpoenas.
"They talked about how thorough and exhaustive the investigation was but that's really rubbish," said Reback, who is with the law firm Carr & Ferrell LLP and is best known for his work against Microsoft in the 1990s. "I've never seen anything as shallow and incomplete as this was."
Microsoft was embroiled in antitrust probes and litigation from 1990 when the FTC began an investigation until 2011, when the final consent decree finally expired.
Leibowitz defended the commission's investigation into Google, saying the agency had scoured through some 9 million pages of documents and taken sworn testimony from key Google executives. "This was an incredibly thorough and careful investigation by the commission, and the outcome is a strong and enforceable set of agreements," he said.
Google's David Drummond, the company's chief legal officer, said the FTC announcement on Thursday meant that "Google's services are good for users and good for competition."
Thomas Rosch, who is leaving the commission this month, suggested the investigation fell short.
"After promising an elephant more than a year ago, the commission instead has brought forth a couple of mice," said Rosch, a Republican.
The FTC broke with its usual practice of requiring a consent decree to settle an investigation. Instead it allowed Google to write a letter pledging to implement the agreed-upon changes in the search portion of the probe.
That prompted some sharp questions about whether Google would live up to its pact.
"I have no reason to think that Google won't honor their commitment; I think they will," said Leibowitz, noting financial penalties if Google failed to do so.
One Google competitor seemed to think the FTC agreement with Google would be a small boon to competitors.
"The concessions that the FTC extracted on review scraping, patents, and data are real, but not game changers by any means," said Oren Etzioni, co-founder of Decide.com, a product website that advises shoppers when prices may change or new versions of gadgets may come out.
Some of Google's critics, anticipating a weak conclusion to the FTC's investigation, said in December that they may be ready to take their grievances to the Justice Department.
The European Union, based in Brussels, is conducting a parallel probe of Google. It announced on December 18 that it was giving the company a month to come up with proposals to resolve its probe.
The European Commission has been examining informal settlement proposals from Google since July but has not sought feedback from the complainants, suggesting it is not convinced by what Google has put on the table so far.
Google is also being looked at by a group of state attorneys general, led by Texas.
In August, Google was forced to pay $22.5 million to settle charges it bypassed the privacy settings of customers using Apple Inc's Safari browser. The practice was in violation of a 2011 consent decree with the FTC over a botched rollout of the now defunct social network Buzz.

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Android-powered Ouya console now shipping to 1,200 developers [video]

The Ouya console is no longer vaporware. The company announced on its blog on Friday that 1,200 Ouya console developer kits are boxed up and ready to be shipped out to awaiting programmers. Each kit includes a frosted translucent Ouya console that is about the size of a coffee mug, two frosted translucent controllers with batteries, an HDMI cable, a power cable and a Micro USB cable. As Ouya CEO Julie Uhrman explains in the unboxing video below, the console’s design might still be tweaked and the feel of the controller will undergo a few minor changes before it ships to consumers in March.

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10 Tech-Industry Predictions for 2013

If you have followed our Big Picture column for the past year, you will know that as industry analysts and observers, we study this industry and the markets that compose it on a daily basis. Because of that, we often get asked about our thoughts concerning trends in the coming year. So we thought we would do a joint column sharing our predictions for the tech industry in 2013.
Tim’s Predictions
Each year about this time, I put out a list of predictions for the coming year. I have been doing this for 23 years, and over that time I have had a reasonable level of success with these predictions. I have had some spectacular failed ones too, like the year I said Microsoft would buy RIM.
Because of our work and research, we get to see a lot of technologies in the works behind the scenes. Looking at the data, we can make some educated deductions about tech trends for the new year.
With that in mind, here are my top predictions for 2013.
(MORE: The Top 5 Tech Biz Stories of 2012)
1. Augmented reality will go mainstream.
Companies like Zappar and Aurasma have some great technology that adds an AR touch to published content, posters and physical places. AR technology has been in the works for many years, but the demos I have seen from these two companies have me believing that 2013 is the year that AR becomes very important to the mobile world. More important, many of these AR companies have created great relationships with movie studios, gamemakers, publishers and more, and their technology is already showing up in many of their products. I wrote about these two companies recently, so check out some of the examples I have at the end of this column to get a visual sense of why I think AR will be big in 2013.
2. Google’s Chromebooks will get more consumer attention, gaining traction in 2013.
Google Chromebooks built by Acer and Samsung are priced around $250 and have become an attractive alternative for consumers, as price continues to be a real issue with this market segment. I know that these machines only work while online, but the proliferation of public wi-fi makes this less of an issue going forward. We all know that a Web browser as an operating system will someday happen, and these Chromebooks are a good first step. Buyers of these laptops will also serve as an important test bed for industry watchers in 2013, giving us important hints about how this market will develop over the next five years.
3. Hybrids and convertibles will see high interest from IT departments.
In our discussions with IT directors recently, we have heard that they are quite interested in hybrids or convertibles — also known as laptop-tablet combo devices. Today, with tablets part of the BYOD (bring your own device) trend, as well as the purchases of tablets for their own specific internal use, these IT managers are now forced to support three types of devices: PCs, tablets and smart phones.
The idea of just having to support a convertible or hybrid, instead of a separate laptop and tablet, is quite attractive to them. The first generation of these products, such as Lenovo’s Yoga, HP’s Elitebook convertible and Dell’s XPS DUO, are being bought in good numbers from IT types who are starting to test them inside their organizations, and newer models that are even more powerful will be out by Q3. All this points to the potential growth of hybrids and convertibles within IT beginning in 2013.
(MORE: This Dumb Year: The 57 Lamest Moments in Tech 2012)
4. 7-in. tablets will dominate tablet sales.
Given the prices of 7-in. tablets — which can be as low as $79 but mostly hover around $199 — it’s not a stretch to believe that this form factor will dominate the market in 2013. But what’s not obvious is how they’ll impact the PC market. The problem for consumers with 10-in. tablets is that with a cheap Bluetooth keyboard, these tablets almost become mini-laptops. Also, since many consumers can do about 80% of what they do on a PC by using a tablet instead, many consumers are either extending the life of their current PC, or if they buy a new one, they purchase a cheaper model since they see it sitting idle most of the time. The traditional PC won’t go away because it’s still needed for heavier computing tasks like managing media, creating digital movies and other tasks.
However, if consumers begin to adopt 7-in. tablets in big numbers, they may go back to buying new laptops since 7-in. tablets are mainly for consumption. They are not good at all for traditional productivity tasks. Many industry execs hope this theory is right because it could actually help laptop sales grow in 2013 instead of shrink, as many have suggested it will. I believe that in 2013, consumers will sort out which tablets are best for them, and in doing so will finally determine the role the PC will play in the future.
5. Apple will create a hybrid tablet-laptop.
I am going out on a limb with this last prediction, but one of the more interesting developments with 10-in. tablets is that if you add Bluetooth keyboards, they become like mini-laptops. The Android and Windows sides of the tech market are moving quickly to create tablet-laptop combo devices, and business and consumers alike are showing interest in them. If these types of products gain serious traction, I believe Apple may need to respond to this growth threat in the same way it entered the 7-in.-tablet market — despite the fact that Steve Jobs told everyone that Apple would never make a 7-in. tablet.
But imagine a sleekly designed hybrid that perhaps has the design lines of the MacBook Air, but with an iPad screen that detaches from its ultra-thin keyboard. For lack of a better term, I call it the MacBook AirPad or iPad Air. I know Tim Cook has denounced this type of design, suggesting it is like attaching a “toaster to a refrigerator,” but a sleek and elegant iPad-keyboard device designed by Apple would appeal to a lot of people, myself included.
Ben’s Predictions
The theme for my 2013 predictions is “going vertical.” The writing on the wall has been seen for some time now, and I believe 2013 is the year we will see it officially come to fruition: there is absolutely no denying the success of Apple’s vertical model.
In a mature consumer market — and if executed properly — being vertical is simply the most sustainable model by way of differentiation, competitive advantage and a host of other long-term strategic reasons. Many parallel industries and the vertical nature of their businesses illuminate the way for this reality.
(LIST: Best Inventions of the Year 2012)
1. Samsung will invest in its own future.
Right now, Samsung is the most dominant Android smart-phone manufacturer. However, the company does not fully control or dictate the directions or agenda of Google as it relates to Android. Because of this, Samsung is dependent, to a degree, upon Google for future success. In a quickly verticalizing industry, this is a point of concern for Samsung. Samsung once invested in its own Bada operating system, but I believe it will further invest in owning its own software platform in order to fully unify its screen strategy. The most logical candidate is the Tizen operating system Samsung has been working on but has yet to release.
2. Microsoft will get into smart-phone hardware.
Microsoft signaled its intent to be a PC hardware company when it launched the Surface tablet. By doing so, Microsoft strained relationships with its existing hardware partners and went down a path that is hard to turn back from at this point. The next logical step is for Microsoft to get into the smart-phone hardware business — or acquire a company like Nokia or HTC — and begin controlling the hardware for the Windows Phone platform. I believe Microsoft will officially get into the smart-phone hardware game in 2013.
3. Apple will make a large investment in its supply chain.
In the personal-computing landscape, Apple is more vertical than any company right now. Others have some of the parts but have yet to go fully vertical and show that they can execute as vertical companies. Apple has already proved it is a well-oiled vertical machine, and I believe the company will further invest in that strategy by using its massive stockpile of cash to purchase key parts of its supply chain. The main reason for this will be not only to maintain its hardware margins but also to relieve many of the supply-chain bottlenecks that Apple deals with on a yearly basis. These investments could be things like owning a key display manufacturer, owning hardware-machining factories and even investing or co-investing in a foundry to manufacture its own semiconductors for all its computers.
4. Google will go fully vertical with Motorola.
Samsung is Google’s largest partner, and in many of the same ways that Samsung depends on Google, so too does Google depend on Samsung. The reality is that Android would not have the market share it does today without Samsung. So by Samsung investing more in its own future with a software platform, Android will be weakened. The only logical response is for Google to also officially go vertical with its Motorola purchase, taking its hardware future into its own hands. Google can do this by focusing Motorola on the high end with a Nexus-like strategy, or it can focus on the lower end by going for more volume than margins. I can see either scenario playing out.
(MORE: Today in TIME Tech History: Piston-Less Power (1959), IBM’s Decline (1992), TiVo (1998) and More)
5. RIM will make a modest rebound but will eventually be acquired.
To be entirely honest, I have some hope for RIM. I do think the company will make a modest rebound in 2013 with the release of its BlackBerry 10 devices. But to take back a significant share of the handheld market, RIM will need help from someone else. It makes the most sense in my mind for RIM to consolidate with a company that has the right marketing and a solid hardware vision. Perhaps Samsung could acquire RIM and make BlackBerry 10 its proprietary operating system if Tizen doesn’t work out. Any number of the growing Asian OEMs that could use better business platforms may show interest in RIM as well.
This should be a most interesting year in the world of technology. Aside from new innovations, changes in the PC landscape and mobile technology transforming the way people work, learn, communicate and play, it will also be a year of transition for many of the PC companies that have dominated the digital landscape for the past 30 years. Without strong mobile plays, their ability to compete will be diminished by the strong competitive positions of Apple, Google and Amazon. If they are to survive and thrive, they’ll need to fully embrace social media and find ways to partner with the Facebooks and Twitters of the world that are driving the next generation of social media and mobile advertising.
Indeed, 2013 will bring a lot of changes to the world of technology, along with some solid innovations that are bound to ingrain the digital lifestyle deeper into the fabric of our society.
Tim Bajarin is the president of, and Ben Bajarin is a principal at, Creative Strategies Inc., a technology-industry analysis and market-intelligence firm in Silicon Valley. They contribute to Big Picture, an opinion column that appears every Monday on TIME Tech.

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Unreleased ‘BlackBerry X10′ QWERTY phone appears again in new photos

As Research In Motion’s (RIMM) January 30th BlackBerry 10 unveiling draws closer, nearly every last detail surrounding RIM’s first two BlackBerry 10-powered smartphones will likely soon emerge. The vendor has a long history of leaks leading up to its new device announcements, and this time around RIM reps toured the world showing the phones to every carrier that would meet with them. Pictured once again over the weekend by N4BB is RIM’s first new QWERTY phone, which is code-named “N-Seriers” and expected to bear the name “BlackBerry X10” at launch. No fresh details accompany the newly leaked photos, but rumored specs from earlier reports include  a 720 x 720-pixel display with a pixel density of 330 ppi and integrated NFC. Additional images of the BlackBerry X10 follow below.

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Can Samsung survive without Android?

Samsung (005930) is the world’s top Android smartphone vendor by a staggering margin. Aside from LG (066570), which managed a small $20 million profit from its mobile division last quarter, no other global Android vendor can figure out how to make money selling Android phones. Meanwhile, Samsung posted a $6 billion profit on $47.6 billion in sales in the third quarter, thanks largely to record smartphone shipments and a massive marketing budget. Even as industry watchers turn sour on Apple, Samsung is seen steamrolling into 2013 and its stock is up nearly 50% on the year while Apple (AAPL) shares continue to fall from a record high hit in September. As unstoppable as Samsung appears right now, one key question remains: Is Samsung driving Android’s success or is Android driving Samsung’s success? Starting in 2013, we may finally begin to find out.
[More from BGR: Unreleased ‘BlackBerry X10′ QWERTY phone appears again in new photos]
Earlier this year, BGR wrote about Samsung’s effort to look beyond Android. Even with its own UI and application suite — and even with its own content services — Samsung will always rely on Google (GOOG) if it continues to base its devices on Google’s latest Android builds.
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This isn’t necessarily a bad thing, but it means Samsung will never truly control the end-to-end experience on its products. It also means Samsung will never truly own its smartphones and tablets. Instead, Samsung’s devices will deliver an experience that is an amalgamation of Google’s vision and its own.
But there are alternative options. One example is the path Amazon (AMZN) has taken. Amazon let Google do the grunt work and then took its open-source Android OS and built its own software and service layer on top. Kindle Fire users don’t sit around waiting for Android updates — many of them don’t even know they’re using an Android-powered tablet.
Samsung could do the same thing, but there is a great deal of prep work that would need to be done first. Amazon’s efforts were so successful (depending on your measure of success) because the company already had a massive ecosystem in place before it even launched its first device. Streaming movies and TV shows, eBooks, retail shopping and a stocked application store were all available on the Kindle Fire from day one.
Samsung doesn’t have this luxury. Yet.
Samsung could also take ownership of a new OS, and Tizen may or may not end up being that OS. Samsung is co-developing the new Linux-based mobile platform with Intel (INTC) and others, and a new rumor from Japan’s The Daily Yomiuri suggests Samsung plans to launch its first Tizen phone in 2013. “Samsung will probably begin selling the [Tizen] smartphones next year and they are likely to be released in Japan and other countries at around the same time,” the site’s sources claim.
This will be a slow process. If Samsung follows the same path it took with Bada, Samsung’s earlier Linux-based OS that was folded into the Tizen project, things will start out slow as Samsung launches regional devices that are restricted to a few Eastern markets. Testing the waters before dumping serious marketing dollars into the project isn’t a bad idea, especially considering the battle at the bottom of the smartphone OS food chain that will already be taking place in 2013.
But one thing is clear: Samsung is looking to broaden its strategy and move beyond a point where it relies entirely on another company for its smartphone software.

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BlackBerry Z10 with AT&T-compatible LTE uncovered ahead of January unveiling

Hang in there, American BlackBerry fans — your wait for a new device is nearly over. Engadget reports that the Federal Communications Commission has granted approval to what looks like RIM’s (RIMM) BlackBerry Z10 smartphone for use on AT&T’s (T) LTE and HSPA networks. The Z10, which will be the first device released with the new BlackBerry 10 operating system, is rumored to include a Qualcomm Snapdragon MSM8960 1.5GHz dual core processor, a 4.2-inch display with a resolution of 1,280 x 768 pixels, 2GB of RAM, up to 32GB expandable of storage and an 8-megapixel camera. RIM plans to unveil the BlackBerry Z10 along with the finished version of the BlackBerry 10 OS on January 30th.

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