VMware nears completion of $67B merger

SAN FRANCISCO — VMware CEO Pat Gelsinger has plenty on his plate.

As head of the $7 billion maker of virtual-storage software, he's smack dab in the middle of tech's largest merger ever, Dell's $67 billion marriage with data-storage company EMC. EMC owns about 80% of VMware.

While the blockbuster sale takes EMC private, VMware remains a publicly-traded unit of Michael Dell's holding company, Denali. The deal is expected to close after a shareholders' vote on July 19.

Gelsinger firmly believes the mega-merger will lead to new market opportunities that could quadruple VMware's annual sales. "It's a wow deal," he says. "Things have gone amazingly smoothly."

Shares of VMware have been on an upswing since April, when it reported first-quarter sales that were slightly better than Wall Street expectations and issued a second-quarter sales forecast that may beat analysts' estimates.

In a far-ranging 30-minute interview at USA TODAY's bureau here today, the Silicon Valley veteran ruminated on how VMware has not only changed the field of virtualization software but is in prime position to help usher in cloud computing on an even deeper scale for corporations.

He also weighed in on several hot topics in the tech world:

— A tech bubble? Gelsinger doesn't buy into the growing sentiment that tech is headed for a calamitous meltdown. He suggests a cooling market and tepid IPO climate have brought unicorns — private start-ups valued at $1 billion or more — have been "brought back to Earth."

An increasingly sober financial environment might mean scaled-back operations and lower valuations in the short term but more stable companies with bigger IPO upsides, he says.

— Apple and innovation. Apple doesn't create groundbreaking technology as much as it redefines it for consumers, Gelsinger says. Case in point: iPod, which was "a great innovation," he says.

"There were 53 MP3 players, but Apple, with iPod, consumerized it, industrialized it, and popularized it," he says.

— Amazon Echo. The voice-activated device is in "its gestation phase" and "it's going to get pretty good," says Gelsinger, one of the architects of Intel's 486 chip in the mid-1980s. "Funny story, I was told back then it was important to (eventually) make the chip" AI-ready, he says. "It shows it can take 30 years for a technology to become marketable."

Instagram tops Twitter with advertisers, survey says

NEW YORK — Twitter's advertisers are flying the coop, seemingly for Instagram, according to a new survey.

Strata, a subsidiary of Comcast, said a first-quarter survey of 87 U.S. advertising agencies found 96% of agencies responded they plan to advertise on Facebook and 67% planned to advertise on YouTube. Instagram came in third, with 63% of surveyed agencies placing their plans there, followed by Twitter, where 56% planned to advertise. Snapchat received 11% interest, an 84% jump up from the fourth quarter.

While Facebook and YouTube have previously been the top two platforms, Strata says the new survey marks the first time that Instagram has received more attention than Twitter from its advertisers. Instagram interest rose 29 percentage points from 34% at the end of Q1 2015, while Twitter interest is down 2 points from 58% from the same period.

Strata's media-buying software handles $50 billion in advertising annually, or approximately 25% of U.S. advertising spending.

Twitter said the Strata survey doesn't paint an accurate picture.

"The data presented in this survey couldn't be farther from the truth," said Twitter in a statement provided to USA TODAY by spokesman Will Stickney. "We have close relationships with our agency clients and continue to hear that Twitter offers the most powerful creative canvas while driving significant ROI. Further, three global agency holding companies have recently renewed their upfront deals with us with increased spend - a true testament to the success they're seeing on the platform."

The Strata report comes on the tail end of a tough week for the San Francisco-based media company. Jeff Seibert, the company's chief product officer, left on Tuesday. A report Wednesday from research firm eMarketer projected Snapchat will overtake Twitter in overall users this year, jumping 27% to 58.6 million users in the U.S. by the end of the year. Twitter is expected to have 56.8 million users.

Twitter (TWTR) shares fell 4% Friday to $14.02, down nearly 8% for the week.

The shifts come as social media spending is on the upswing.

"I think ad agencies are finding their footing with social," says J.D. Miller, director at Strata. "It's always been something they wanted to do or felt like they needed to be in but now they're spending money on it, which we're seeing in our survey."

"They're spending money more than ever before."

According to the survey, general spending on social is up, with 17% of the agencies polled saying they would be putting up to a quarter of their ad budgets on social media. Social media also became the number one spot for digital spending at 77% of agencies, overtaking more traditional display ads — such as banner or video ads — that are common on the web.

Research firm eMarketer agrees with Strata's findings, though they have Instagram overtaking Twitter in 2017. "In general we think that's the trend," says Martin Utreras, a senior forecasting analyst at the firm. "We think (it) is really mainly driven by the audience. We think Instagram's audience is larger than Twitter's audience right now, approximately by 30 million. So that makes it more attractive, of course, for advertisers."

Utreras also credits Instagram's generally broader audience and "piggybacking" on Facebook's data and ad buying network, which lets ad buyers purchase Instagram ads through the same platform they buy Facebook ads.

In its last quarterly financial report, Twitter disappointed investors with revenue that fell short of forecasts and a sales outlook that also missed forecasts.

It also acknowledged that "brand marketers did not increase spend as quickly as expected" in the first quarter.

Apple seeks to sell excess solar power

SAN FRANCISCO — In addition to iPhones and Macbooks, Apple could start selling consumers another desired product – energy.

The technology giant filed a tariff application to theFederal Energy Regulatory Commission on Monday asking to sell energy that it makes at solar plants and other renewable energy facilities, including biogas and hydroelectric plants, to consumers at a market-based price. Apple made the request through Apple LLC, an energy subsidiary stationed in Delaware operated entirely by Apple headquarters in California.

Private companies are currently allowed to sell their excess power, but can only sell to energy companies at wholesale rates. However, Apple states because the company lacks horizontal and vertical market power among energy companies – meaning because Apple does not control inputs to energy power production or pose a threat to energy companies — they should be allowed to sell at market price.

“Applicant seeks the same blanket authorization and waivers of the Commission’s rules and filing requirements previously granted to other entities authorized to transact at market-based rates,” the tariff reads.

Apple has requested the tariff be granted within 60 days of the filing. Apple did not respond to a request for comment.

Green Mountain Power – the first U.S. utility to sell Tesla home batteries to its customers – is an example of a company which also sells renewable energy to homeowners, which Apple could do if the tariff is granted. 9to5Mac, an Apple blog that earlier reported on on Apple’s FERC filing, writes it “wouldn’t be a stretch” to see Apple follow in the footsteps of Green Mountain Power.

Apple operated at 93% renewable energy in all facilities around the world in 2015, and aims to eventually operate at 100% as stated on their website. The company is 100% renewable in countries such as China, Germany and the U.S., and is 100% renewable in all data centers.

The company issued a $1.5 billion green bond dedicated to financing environmental projects, becoming the first American tech company to issue such a bond. Apple says it also uses recycled or sustainable paper in 99% of its packaging and switched from plastic to paper bags for selling products in April.