By Heather Kelly, CNN
(CNN) — How do you imagine the computer of the future?
In movies like “Iron Man” and “Minority Report,” characters reach out and move virtual objects around in midair with their hands, sending windows and images sailing through 3-D space without touching a keyboard or controller.
That future is now here. The new Leap Motion controller, which starts shipping preorders Monday and costs $80, is the first commercial gadget that will bring some of that Hollywood magic to laptops and desktops. The screen is still two-dimensional for now, but fingers and hands are free to poke, grab and flick in 3-D to move through applications. The device will go on sale at Best Buy on July 28.
CNN tested out the new controller to get a taste of this touch-free future. (Full disclosure: Last month we named Leap Motion as one of our 10 startups to watch for 2013.) Here are our impressions:
Motion detection
Motion-detection sensors are presumed to be the next big input device for computers, complementing existing input technology like the mouse, keyboard, touchscreen and voice control. The Leap Motion controller follows in the footsteps of the Microsoft Kinect.
But where the Kinect tracks large movements for the entire body, the Leap is meant for small, subtle hand movements made close to the screen. Leap says its technology can track precise movements to within one-hundredth of a millimeter.
Optimally, the Leap controller sits about an inch in front of the keyboard, lined up with the middle of the computer screen. Its sensors can pick up movement as far as 2 feet up in the air and 2 feet out from each side of the device, creating an invisible oblong field for moving your hands around.
The Mac- and Windows-compatible controller plugs into a USB port and is remarkably small — close in size to a pack of gum. The half-inch-high and 3-inch-long rectangle is also impressively light, weighing in at a tenth of a pound.
The device isn’t just a another way to nudge a cursor around or input data.
“Our philosophy is not that the Leap is intended to replace the mouse and keyboard,” said Michael Buckwald, Leap’s co-founder and CEO. He says the Leap controller can tap into a new way of working with applications that is richer than existing methods, but will never be a more efficient way to do certain tasks, like enter data into a spreadsheet.
“The Leap is not binary,” he said. “The mouse can only be clicking or not clicking.”
Leap has been working with developers to create apps specifically for the controller. The Leap Motion apps are cordoned off in their own launch application, called Airspace. To buy new apps, you are taken to the Web-based Airspace store where they are sorted by category or platform.
There are a few professional apps, lots of casual games, tools for learning a new instrument like a harp or piano, and educational programs. Most are platform agnostic, but about 30% are only for Windows or Mac. Windows users can install Unlock, which lets you unlock your computer by waving your hand above the controller. It recognizes your unique hand shape and uses it as a password.
Drawbacks
Using the Leap to navigate this added dimension has its challenges.
Gestures are not unified across all apps. Scrolling might be a forward circular motion with a single finger in one app, and left to right in another. Apps include instructions, but getting the feel for each one takes time. The Leap works best when your hands are parallel to the desk. If a hand is too vertical, the sensors can’t pick out individual fingers.
The Leap sensors are extremely sensitive. This is great for when you want to make small precise movements, but maddeningly finicky when you’re just trying to do something simple like select a button.
In the app Frog Dissection, pinning a virtual amphibian to a table to dissect it requires a steady hand. Keeping your arms and hands very still — a requirement in many programs to select something on the screen — is harder and more tiring than it looks. Leap suggests using the device with your elbows propped on the desk.
When you are in the zone in an app — having mastered where your hands need to be and how much movement is just enough — the tracking can be incredibly accurate and the results impressive. This is best demonstrated in creative apps that help users make music or art. It’s also fun for zipping through the universe in your own private planetarium using the Exoplanet app.
The effort it takes to make an app decipher your 3-D movements can make some tasks more difficult, not less. Take the clean, simple New York Times app for Leap. The app shows one row of articles and a few simple gestures for selecting and scrolling through them. It takes practice to get the hang of it, and even once you do, the experience is halting. Sometimes you’ll send the queue racing off in the wrong direction. Other times you’ll wonder why your article-closing hand wave isn’t being picked up by the controller.
The New York Times app hits on a common issue with many of these early Leap applications: Using 3-D gestures doesn’t improve on many experiences. Reading the Times, playing “Cut the Rope” and dissecting a digital frog would all be more satisfying experiences on a touchscreen device (or, for the latter, on an actual frog).
A promising future
Despite these limitations, the Leap technology has a bright future. Developers are working on new apps and on integrating Leap support into existing ones — the Google Earth app is an early example. Another app called Touchless attempts to bring Leap controls to regular Mac and Windows OS actions.
Buckwald said that while the company has been focusing on this controller for now, the hardware is small enough to be built into mobile devices like a tablet. Working directly with an equipment manufacturer could result in a more controlled and consistent experience.
The Leap Motion controller is a promising foray into desktop 3-D gesture control. The technology feels like the rough first draft of something that will grow more polished over time. It’s still young, and will hopefully improve as developers pinpoint the best ways to use it.
The Leap is a curiosity worth watching. But for now, don’t ditch your keyboard and mouse.

By Matt Egan
Faced with continued investor resistance, Dell (DELL) on Thursday pushed back its special shareholder meeting to approve Michael Dell’s $24.4 billion buyout until July 24 in an attempt to secure more support.
The decision to adjourn the highly-anticipated meeting came as Reuters reported the transaction was about 150 million votes short of approval, despite picking up support from several large investors.
By delaying the vote, Dell’s special committee will now have extra time to convince skeptical investors of the merits of the $13.65-a-share leveraged buyout, although the board has had nearly six months to make its case.
It’s also possible the committee is giving extra time to see if Michael Dell, the company’s CEO and founder, will sweeten his bid. To this point, the executive and Silver Lake Partners have signaled an unwillingness to pay more for Dell.
Reports earlier in the week signaled that Dell could opt to delay the vote, which is something billionaire investor Carl Icahn has said would be unfair, likening it to postponing an election because the polls look unfavorable.
The shareholder vote on Thursday is the culmination of a nearly-six month process where the company’s founder and the special committee running the sales effort have struggled to convince investors the deal is in their best interests. Big investors Icahn and Southeastern Asset Management have vocally opposed the transaction, saying it undervalues Dell.
According to Reuters, the transaction was about 150 million votes short of approval as of early Thursday morning.
That’s despite support from a number of institutional investors, including the Vanguard Group, State Street (STT), BlackRock (BLK) Invesco (IVZ) and Bank of New York Mellon (BK), Reuters reported.
A spokesperson representing Dell’s special committee didn’t immediately respond to a request for comment on the report.
“We believe that this delay reflects the unhappiness of Dell stockholders with the Michael Dell/Silver Lake offer, which we believe substantially undervalues the company. This is not the time for delay but the time to move Dell forward,” Southeastern said in a statement.
While the postponed vote indicates more work is needed to convince shareholders, Wall Street appeared to be betting a deal may eventually get done. Shares of Dell jumped 1.94% to $13.13 in premarket trading Wednesday morning, nearing the $13.65-a-share offer price.
Icahn, the legendary corporate raider, has led the charge against Michael Dell’s proposed leveraged buyout.
In an open letter on Wednesday, Icahn called on shareholders to reject the LBO and trumpeted his proposal to launch a tender offer for 1.1 billion Dell shares at $14 each that would include warrants to buy shares in the future at $20.
But Dell’s special committee has questioned the wisdom of Icahn’s proposal and argued the LBO makes sense given the company’s slumping finances.

Microsoft took a big write-down on its highly touted but poorly adopted Surface tablet last quarter, causing the company to badly miss Wall Street analysts’ profit expectations.
The Redmond, Wash., based software giant said Thursday that its fiscal fourth-quarter net income rose to $5 billion, or 59 cents per share. Analysts polled by Thomson Reuters forecast Microsoft (MSFT, Fortune 500) earnings of 75 cents per share.

Sales rose 10% to $19.9 billion, also falling far short of the $20.7 billion analyst had forecast.
Shares of Microsoft fell 11% on Friday.
Results were negatively impacted by a whopping $900 million write-off of Microsoft’s Surface RT inventory. Microsoft recently knocked $150 off the price of the tablet, which debuted in October and initially sold for $500. It is the first PC designed by Microsoft, but the company says its own devices will become a big part of the company’s strategy going forward.
Following the sweeping reorganization of the company earlier in July, which no longer divides Microsoft’s business units according to specific products, the challenge for the company’s management will be to strengthen that devices side of its operations.
Devices boss Julie Larson-Green faces a host of challenges to get that job done. First, she’ll have to help produce a Surface tablet that can transition Microsoft into the post-PC market amid slumping PC sales. She also must also fix the current public perception of the Xbox One video game console, which has been a PR nightmare for a variety of reasons, ranging from privacy snafus to digital rights management of content.
Related story: Windows 8.1 is as good on small tablets as big ones
With the Surface failing to catch on, software chief Terry Myerson must figure out where the Windows RT platform — a variant of Windows 8 designed for tablets — fits into Microsoft’s future strategy. In addition to the shortcomings of the Surface RT, few hardware partners supported the platform when it was introduced last year. Lenovo, Samsung and others have since stopped producing RT devices.
Microsoft hasn’t helped its cause by failing to properly explain what differentiates Windows RT from Windows 8. As a result, hardware makers have largely settled on Intel-based hybrid devices that are neither great tablets, nor great PCs, which hurts Microsoft’s Windows strategy. Acer, for example, recently released the first eight-inch Windows tablet opting to use Windows 8 instead of the RT platform — a stinging blow to Microsoft’s RT hopes.
Still, Microsoft’s director of Investor relations Lisa Nelson says that Microsoft is fully committed to Windows RT, pointing out a three-fold increase in the number of markets where Surface RT is available since last year.
Microsoft CEO Steve Ballmer also touched on the importance of devices for Microsoft going forward.
“We are working hard to deliver compelling new devices and high value experiences from Microsoft and our partners in the coming months, including new Windows 8.1 tablets and PCs,” said Microsoft CEO Steve Ballmer, in a prepared statement.
Microsoft is placing most of the blame for its performance on slumping PC sales, but is still encouraged by business from its corporate customers and results from many of its services.
Though Microsoft had little to offer on Skype financials, it did mention that usage of the service is higher than ever. Microsoft also said it is still encouraged by Xbox Live subscription sales.
By Adrian Covert
Microsoft says its Office 365 service is growing at a satisfactory rate with 1.5 million subscribers and expects Office to be successful in the long term. But excluding deferred revenue from a recent upgrade offer, Office sales would have plummeted 27% last quarter.
Rival Google (GOOG, Fortune 500) also reported disappointing earnings and sales on Thursday.

By Alistair Barr
SAN FRANCISCO | Sun Jul 21, 2013 8:08am EDT
(Reuters) – The tech industry maxim that “no one ever got fired for buying IBM” is a testament to how Big Blue has been the gold standard in computing services for decades.

But IBM faces an unlikely challenger in Amazon.com Inc, the e-commerce retail giant that is becoming a force in the booming business of cloud computing, even winning backing from America’s top spy agency.

After years of being dismissed as a supplier of online computer services to startups and small businesses, Amazon Web Services (AWS) beat out International Business Machines this year to snag a $600 million contract with the Central Intelligence Agency.

IBM has successfully appealed its loss in the contest, stalling it for now. But the episode highlights how Amazon is evolving from an online retailer into a competitive provider of information technology and services to big companies, and government bodies.

That has helped push Amazon shares to a new record ahead of the company’s second-quarter results due on Thursday. Amazon doesn’t break out AWS results, but Wall Street believes it is expanding faster than the retail business and is more profitable.

“AWS is one of the main spokes of the bull case on Amazon shares,” argues Ron Josey, an analyst at JMP Securities. “Software and IT investors are aware of and are trying to size AWS, and what the impact could be on their sector.”

IBM is entrenched in corporations across the globe; and with one of the industry’s biggest research budgets, is likely to remain so for some time. But it and other players like Oracle are taking note of AWS as cloud computing takes off.

Public cloud computing, which AWS pioneered in 2006, lets companies rent computing power, storage and other services from data centers shared with other customers – typically cheaper and more flexible than maintaining their own.

Amazon has begun to build a portfolio of significant clients, including Samsung, Pfizer, the Public Broadcasting Service and NASA, the U.S. space agency.

That unexpected threat is rippling through the sector. After two quarters of falling sales, Oracle announced partnerships in June with former foes Microsoft and Salesforce.com, a response in part to AWS’s expansion.

“AWS is having a really meaningful impact on IT and the big incumbent companies like IBM are reacting to that now,” said Colby Synesael, an analyst at Cowen & Co, who covers Rackspace Hosting, one of Amazon’s main rivals in the cloud.

FROM BOOKSTORE TO TECH

Amazon began life as an online bookseller, but in past years has expanded into everything from tablet computers to video. Critics say it is spending heavily with little regard for the bottom line.

But its stock hit a record $309.39 on July 16 and is up more than 22 percent this year. In contrast, Oracle is down 4 percent in 2013. IBM, which reported a fifth straight quarterly sales fall on Wednesday, is up 1 percent. (For a chart: link.reuters.com/nah79t)

AWS slashed prices on one of its popular services, EC2, this month and Rackspace shares promptly slid, leaving them down more than 45 percent so far this year.

AWS generates at least $2 billion a year in revenue now from a total pie of more than $60 billion, according to analysts who expect that to quintuple to more than $10 billion in coming years, partly driven by higher government cloud spending.

The tussle with IBM over the CIA contract has helped burnish Amazon’s credentials, increasing Wall Street’s confidence in the ability of AWS to compete with the big boys of enterprise IT.

Five companies vied for the contract – AWS, IBM, Microsoft, AT&T and another unidentified firm, according to a report on the bidding by the U.S. Government Accountability Office.

When AWS won, IBM protested, triggering the report by the GAO. The agency recommended in June that the CIA re-do some parts of its contract negotiations, giving IBM another chance.

But the GAO also stated that AWS’s offering was superior.

“In every technical criterion Amazon out-scored IBM, one of the most sophisticated and capable IT companies in the world,” said Carlos Kirjner, an analyst at Bernstein Research.

The CIA had “grave” concerns, according to the GAO report, about IBM’s ability to provide “auto-scaling,” a feature that automatically adds or removes computing power in response to applications use.

“Auto-scaling is very complex and there are not many cloud providers that can do it well, but Amazon is great at it,” said Kyle Hilgendorf, a cloud computing analyst at Gartner. “I don’t think anyone thinks IBM has a better cloud service.”

IBM spokesman Clint Roswell said there were “inaccuracies” in the government’s assessment of its CIA proposal.

“IBM remains committed to providing enterprise-level secure and robust cloud solutions and looks forward to a renewed opportunity to show our capabilities to fulfill the requirements of this important agency,” he added.

An Amazon spokeswoman declined to comment on the CIA contract. A CIA spokesman also declined to comment.

IBM bought SoftLayer Technologies, a rival to AWS, for $2 billion in June. That could help it when the CIA comes calling again, said Bill Moran at Ptak Associates.

“They do not need any other issue like ‘auto-scaling’ to bedevil them the next time around,” he added.

(Editing by Edwin Chan, Edward Tobin and Tim Dobbyn)

By Alexei Oreskovic
SAN FRANCISCO | Fri Jul 19, 2013 6:22pm EDT
(Reuters) – Google Inc’s Motorola division appears set to unveil its much anticipated Moto X phone on August 1 at an event in New York City.

Email invitations sent to the media on Friday displayed the Moto X name in bold letters. The invitation depicted several youths holding the Moto X, the first smartphone Motorola has developed since its 2012 acquisition by Google.

Motorola, which Google bought for $12.5 billion, has steadily ceded market share to Apple Inc and Samsung Electronics Co, with most of its latest phones garnering relatively lukewarm receptions.

The Motorola business has been a drag on Google’s profit margins, with Motorola’s second-quarter losses totaling $342 million.

A Web page to respond to the invitation said, “Come experience the new Motorola. No Stage. No crowds.” The page asks guests to select one of several “sessions” to attend at different times at an address in mid-town Manhattan.

In May, Motorola CEO Dennis Woodside said at the AllThingsD technology conference that the new Moto X phones would be built in the United States.

(This story corrects paragraph two to show the device was depicted in photo)

(Reporting by Alexei Oreskovic; Editing by Leslie Gevirtz)

TECH

By Ritsuko Ando
HELSINKI | Fri Jul 12, 2013 12:06pm EDT
(Reuters) – Next week could be crunch time for Nokia Oyj and its Chief Executive Stephen Elop in their battle to prove the Finnish mobile phone company can survive on its own.

Investors will be scrutinizing second-quarter results to see whether there’s enough cash to stay with a turnaround plan which Elop said would take two years but is now into its third.

Elop’s bold bet in 2011 to adopt Microsoft Corp’s untested Windows Phone software has yet to pay off, with no sign of catching Samsung and Apple Inc in smartphones.

Analysts also expect Thursday’s results to show a steep fall in handset shipments, led by a drop in sales of regular mobile phones as consumers switch to smartphones and cheaper models from Asian rivals.

Nokia’s weak market position has made it a perennial target of takeover speculation, but such deal talk has intensified in the past month after a media report said it had held abortive talks with Microsoft.

The company’s recent decision to buy Siemens AG’s stake in their joint venture Nokia Siemens Networks is seen straining its balance sheet further when the deal closes later this year.

“I’m going to take a deep look at underlying cash flow,” said Alandsbanken analyst Lars Soderfjell. He believed Nokia would stay independent for longer as its current state was unlikely to warrant a good price, but he said a deal couldn’t be ruled out depending on its finances.

“If it’s not able to control cash, that might trigger strategic options,” Soderfjell said.

Nokia earlier this month estimated its net cash position at the end of the second quarter was between 3.7 billion euros ($4.8 billion) and 4.2 billion – implying it burned through between 300 million euros and 800 million in the quarter.

The upper end of that range would be worryingly high, some analysts said.

Most analysts, however, also saw the acquisition of Siemens’ NSN stake in a positive light, saying the price was cheap given NSN’s turnaround in the past year. The formerly troubled unit is seen bolstering, rather than weighing on, Nokia’s bottom line.

DUAL BATTLE

Despite that boost, Nokia still faces a challenging battle in both basic mobile phones and smartphones.

Basic phones still account for over half of its device sales, making them a market worth protecting. Yet analysts forecast quarterly shipments of basic handsets to fall 24 percent from a year earlier to 56 million units.

Smartphones are also seen crucial for its longer-term survival, due to their higher margins and as more consumers seek access to sites such as Facebook from their phones.

Analysts estimated smartphone shipments fell 19 percent to 8 million units as a decline in sales of outmoded Symbian phones canceled out growth in Lumia sales.

Nokia has launched a number of smartphone models this year in a bid to regain market share. On Wednesday, it unveiled its newest model, the Lumia 1020, with a 41-megapixel camera that some tech bloggers said was the best in the market.

Yet some still worry Nokia may be arriving too late to the game, just as it starts to show signs of saturation. Smartphone leader Samsung last week estimated its second-quarter operating profit was 9.5 trillion won ($8.3 billion), missing the market consensus of 10.2 trillion.

“Overall the smartphone market has been quite underwhelming in the first half of the year,” said Pacific Crest analyst James Faucette.

Weak handset shipments could prompt a sell-off in Nokia shares, which have risen over 20 percent in the past quarter on hopes of a buyout and enthusiasm over new handsets. But any sign that Elop was open to a buyout could send them even higher.

(Editing by David Holmes)

By BRIAN X. CHEN

Samsung Electronics confirmed on Wednesday that it had acquired assets and talent from Boxee, a video start-up. The acquisition should help Samsung improve its software for its Internet-connected televisions.

An earlier report by The Marker, an Israeli Web site, said that Samsung purchased the start-up for $30 million. In a statement, a Samsung spokeswoman would confirm only that Samsung had acquired some employees and assets of Boxee but did not disclose how much it had paid.

“Samsung has acquired key talent and assets from Boxee,” the spokeswoman said in a statement. “This will help us continue to improve the overall user experience across our connected devices.”

Samsung has made a hard push into Internet-connected televisions, called smart TVs. Earlier this year, it said that the majority of sets it sells would be smart TVs. But, similar to Samsung’s smartphone software, its smart TV software has often been criticized as being impractical and difficult to use.

That’s where Boxee could come in handy. For a few years now, Boxee has been a hot start-up at the Consumer Electronics Show, one of the biggest technology trade shows in the world. Boxee originally offered computer software for watching any format of digital video. It later shifted to selling a set-top box that runs its software.