BY BILL RIGBY AND CHRISTIAN PLUMB

(Reuters) – Speculation over Microsoft Corp’s succession plans refocused on internal choices on Wednesday, a day after the leading outside candidate, Ford Motor Co CEO Alan Mulally, took himself off the list of potential CEOs at the world’s largest software maker.

A source close to the company said no appointment was likely until the last week of January or in February. The source asked not be identified because they were not authorized to speak publicly about the process to select a successor to long-time CEO Steve Ballmer, who in August announced his plan to retire.

In late January, many Microsoft executives will be focused on the company’s earnings, which are scheduled to be released on January 23. Also, chairman Bill Gates, a key member of the search committee, will be at the World Economic Forum in Davos.

For months, Microsoft watchers had pegged Mulally as the odds-on bet to succeed Ballmer as chief executive at the dominant producer of software for desktops and laptops, which has faltered in making the transition to the fast-growing mobile phone and tablet markets.

But Mulally formally pulled out of the running on Tuesday, telling the Associated Press he would remain at Ford through 2014.

It was unclear whether Mulally’s withdrawal from consideration was his decision or Microsoft’s. While the company’s intentions remained a guessing game, internal candidates now seemed the obvious ones, especially in light of comments by Microsoft about the importance of tech know-how for the top job.

Mulally appeared to be the front runner in the latter part of last year and seemed to be interested in the job, but Microsoft never made him an offer, suggesting that the prevailing mood on the company’s board was that he was not right for the job, two sources familiar with the process said.

The sources have also told Reuters that Microsoft is down to a “handful” of candidates, including insiders Satya Nadella, executive vice president of the Cloud & Enterprise group and Tony Bates, executive vice president of Business Development and Evangelism.

Former Nokia CEO Stephen Elop, a Microsoft veteran before moving to Nokia, whose mobile phone business Microsoft bought last year, has also been cited as a top candidate, as have one or more outsiders from the tech industry.

As a former Microsoft executive who will soon rejoin the company when the takeover is complete, Elop was mentioned as now “front and center” of the CEO race in a research note from FBR analyst Daniel Ives, who cited his “previous Microsoft experience and demonstrable expertise in the mobile space.”

Evercore analyst Kirk Materne saw it differently, naming Nadella and Bates as the leading internal candidates who “could potentially institute organizational change at a more rapid pace given their insider status.”

Microsoft shares, which have gained 36 percent over the past year, were down 1.2 percent, while Ford shares gained about the same amount.

‘DARK HORSE’ IN THE RUNNING?

Nomura’s Rick Sherlund labeled Mulally’s withdrawal as “disappointing” in a research note, echoing the sentiment of some other investors and analysts.

Sherlund said it was unclear who the board would turn to, saying he viewed Bates and Nadella as capable, but “more likely to take direction from Microsoft’s board rather than redirect the board and take the company in a different direction as we prefer.”

If the company does opt to go with an outsider, candidates could include Facebook Inc Chief Operator Officer Sheryl Sandberg, VMware Inc CEO Pat Gelsinger and Pivotal CEO Paul Maritz, Ives said.

Sherlund agreed that Microsoft could still look at a “dark horse” outsider but noted that some tech sector candidates, including Maritz, may have already declined to take the job.

In a blog post on the company’s website in December, Microsoft lead independent director John Thompson emphasized the need for a CEO with good tech bona fides and “an ability to lead a highly technical organization and work with top technical talent.”

Thompson, who leads the four-member CEO search committee, said at the time he expected the panel to reach a decision “in the early part of 2014.”

(Reuters) – France’s data protection watchdog has fined Google 150,000 euros after the U.S. search engine ignored a three-month ultimatum to bring its practices on tracking and storing user information in line with local law.

The privacy watchdog, known as CNIL, has also ordered Google to post the decision on its google.fr homepage for 48 hours within eight days of being officially notified of the ruling.

At issue was the new approach to user data that Google began in March 2012, in which it consolidated its 60 privacy policies into one and started combining data collected on individual users across its services, including YouTube, Gmail and social network Google+.

It gave users no means to opt out.

“The company does not sufficiently inform its users of the conditions in which their personal data are processed, nor of the purposes of this processing,” CNIL said in a statement.

A Google France spokesman told Reuters the company will take note of this decision and consider further action.

“Throughout our talks with CNIL, we have explained our privacy policy and how it allows us to create simpler and more efficient services,” he said.

Spain, Britain, Germany, Italy and the Netherlands have also opened similar cases against Google because the U.S.-based web giant’s privacy policy introduced in 2012 does not conform with local rules protecting consumers on how their personal data is processed and stored.

CNIL said the fine is the highest it has issued until now and is justified by the number and the seriousness of the breaches stated in the case.

But the penalties that France and most other EU countries can impose remain small compared with the $10.7 billion net profit that Google earned in 2012.

Spain can impose fines of up to 1 million euros, while the German Data Protection Act caps penalties at 300,000 euros.

There is no legal framework to levy European-wide fines.

In June, CNIL found Google to be in breach of privacy law on six counts, notably that it posted “insufficient” information for French users about how their private browsing data was collected and used.

Google has said that its privacy policy “respects European law”.

At CES, Ford shows a concept for increasing the amount of solar power a car can generate.

Putting solar panels on an electric car so that you don’t have to plug it in to charge it might sound like a good idea. But the amount of sunlight that hits the surface of a car isn’t enough to completely charge its battery in a day, even if the car is left out in the sun all day, and even if solar panels were far more efficient than they are now. Toyota offers solar panels on its Prius, but they only generate enough power to run a ventilation fan.

At the Consumer Electronics Show in Las Vegas, Ford is showing off an idea for how to get more power out of the solar panels, enough to completely charge the battery in its C-Max plug-in hybrid in 6 hours, providing 21 miles of range. That’s enough to cover the commute of about half of the people in the country. Technology used for automated parking is part of what makes it possible.

Instead of using only the sunlight that falls on the car, Ford suggests building tall carports whose roofs are made of a type of flat lens, called a Fresnel lens. These will gather sunlight over an area about 10 times larger than the surface of a car and focus it on solar panels on the roof of the car, greatly increasing the amount of solar energy those panels can generate.

The idea of concentrating sunlight to generate power is an old one. What’s new is Ford’s strategy for keeping down the cost of the system. As the sun moves across the sky, the point where the lens focuses the light moves. In conventional concentrating systems, the lens is mounted on a costly tracking system so that it can follow the sun throughout the day, keeping sunlight focused on the solar panels. Instead of moving the lens, Ford moves the car.

The car’s software keeps track of the path of the sun on any given day of the year to help determine how the car should move. It also monitors the amount of sunlight the solar panels are generating to make sure the car has moved to the right place.

Why not just put solar panels on the carport and use those to charge the car? In theory at least, Ford’s proposed system could be cheaper. The lens can be made of plastic and be cheaper than the dozens of solar panels you’d need to generate the same amount of power.

So far, the system is just a concept—Ford doesn’t have plans to sell them anytime soon. It has to work out, among other things, how to keep people and objects out of the the path of the concentrated sunlight when the car isn’t there (the beam could burn you).

The system isn’t exactly the ideal of the solar-powered car—which would be to allow you to keep your car charged wherever you go, giving you freedom like you have in a conventional car that can be refueled at ubiquitous gas stations. It’s hard to imagine Ford’s carports installed everywhere (they’re 5 meters tall and bigger than an ordinary carport), and they charge too slowly for road trips. They might be useful at workplaces, but providing outlets for plugging in would probably be cheaper, and it would work with electric cars that don’t have solar panels.

Tesla Motors has another approach to solar powered cars that might work better. It plans to use solar panels to charge batteries stored at its supercharging stations. Those batteries could then quickly charge electric cars, and get them back on the road. Such systems are expensive, but could still produce electricity cheaply enough to compete with powering a conventional car with gasoline, especially as the price of solar panels and batteries continues to fall.

3M’s new silver nanowire films could lead to large, interactive, and ultimately flexible displays.

By Katherine Bourzac

3M will begin selling flexible transparent conductive films made of silver nanowires for use in touch screens. These nanomaterials could enable wider adoption of large touch screens for interactive signs, displays, and personal computers. And the flexible films may come to be used in future foldable, curvy personal electronics, too.

The St. Paul, Minnesota, company will make the films using silver nanowires produced by Cambrios, a Sunnyvale, California, startup founded in 2004 by two materials scientists: Evelyn Hu, now at Harvard University, and MIT’s Angela Belcher. The company’s silver nanowires are a few nanometers in diameter and a few micrometers long, and come suspended in inks. The inks can be spread out onto a surface to make sparse films. The silver wires are designed to spread in random networks, like nano pick-up sticks, so that they won’t cause a pattern that’s distracting to the eye—an irritating problem that plagued earlier metal-mesh touch screens.

The films are mostly empty space, so they’re transparent. But the nanowires and the ink are formulated so that these films are still highly conductive. The company claims that electrodes made from its ink are more conductive and transparent than the most commonly used touch screen material. Cambrios also says the material can be rolled and unrolled over 100,000 times without breaking.

That’s in contrast to today’s touch screens, which are made of brittle indium tin oxide films. These conventional touch screens have made new kinds of interfaces possible in small devices like smartphones and tablets. But touch screens using the current materials are limited in size and design. The electrical signal has to travel from the touch all the way to the edge of the display, where it’s picked up. If the signal has to go very far, it becomes too weak, and the screen isn’t responsive enough. To make indium tin oxide electrodes more conductive and boost that signal, manufacturers can lay on thicker films, but that makes the display less transparent.

The new nano films could also be beneficial for conventional rigid displays. Indium tin oxide is deposited onto sheets of glass in vacuum chambers; half the material lands not on the glass but on the inner surfaces of the chamber and must be recovered and reused. The nanowire inks can be coated more efficiently and can be made on thin, flexible sheets of plastic rather than glass. 3M uses PET, the same plastic found in many water bottles. Glass is getting thinner and lighter, and touch screens built on plastic should be thinner and lighter still—a selling point for cell phone makers.

3M is not the first company to start selling a touch screen product that uses Cambrios inks. In October 2012, Cambrios announced that its inks were being used in LG’s all-in-one computer and some displays; the Cambrios materials are also found in cell phones and tablets made by NEC in Japan and Huawei in China. Supplying nanowires to 3M, however, will enable the company to get into more devices. 3M is making the touch screen films for device makers but has not yet named customers.

A book-sized computer capable of driving a car could help the technology reach the mass market.

By Tom Simonite

Carmaker Audi showed off a book-sized circuit board capable of driving a car on Monday at the International Consumer Electronics Show (CES). Audi claims the computer, called zFAS, represents a significant advance in automation technology because it is compact enough to fit into existing vehicles without compromising design.

Several different Audi vehicles equipped with zFAS drove themselves onto the stage during the presentation, and a new concept car designed to showcase it was also introduced.

The car, called the Audi Sport Quattro Laserlight, is capable of what Ulrich calls “piloted driving” but betrays no outward sign of being different from a conventional vehicle.

“At CES one year ago, the trunk of the demo cars was still full of cables and electronics,” said Audi’s chief technical officer, Ulrich Hackenberg, about the company’s automated driving technology. “The prototype period is almost over. Now it’s time to get ready for serious production.”

Long and mid-range radar systems, several video cameras, a laser scanner, and ultrasonic distance sensors on the front and sides of the car are all small enough to be hidden from view. The best known self-driving cars, the modified Lexus SUVs used by Google, have a large laser scanner visible on top (see “Data Shows Google’s Robot Cars Are Smoother, Safer Drivers Than You or I”).

Audi talked at CES last year about its engineers’ progress in shrinking down laser scanners and other sensors used to monitor the car’s environment (see “Audi Shrinks the Autonomous Car”). Hackenberg said yesterday that his company got help from chipmaker Nvidia on shrinking the zFAS. It is powered by two processors from Nvidia more typically used in tablet computers.

Audi didn’t say when its Piloted Driving technology would be available commercially. No details were provided on the capabilities of a zFAS-enabled car, beyond saying it could drive in traffic and park on its own.

Despite Google’s public cheerleading of automated vehicles, many established automakers have played down the idea that full automation is near, despite several having technology to match or beat Google’s (see “Driverless Cars Are Further Away Than You Think”). However, Audi chairman Rupert Stadler said that people will routinely let their car do the driving for them in the future, and a promotional video was shown in which a chauffeur sat in the passenger seat while the car did the driving. Stadler described Audi’s Piloted Driving technology as moving the company into new territory: “Today we see a period of major changes, in which we are moving from refining the automobile to redefining mobility.”

Audi also announced partnerships with mobile chipmaker Qualcomm, which will be providing 4G LTE wireless chips in some Audi vehicles, and also with Google. Audi is one of several carmakers that have teamed up with the company to develop a car-centric version of the Android mobile operating system, something Stadler said was already bearing fruit in a new interface for an upcoming concept car that customized itself to each driver. “Thanks to our joint efforts with Google, your interface will feel familiar because it is more intuitive than ever,” he said.

Smartphone battle moves from software to hardware with a crucial component to cut power consumption and allow faster data transmission.

By David Talbot

Beyond the glitz of the International Consumer Electronics Show, the wireless industry faces a fundamental problem: more features and faster data transmission are draining phones’ batteries faster than ever.

Fortunately, there’s room for improvement inside the devices, in parts known as power amplifiers that turn electricity into radio energy. In phones, they typically consumer more power than any other component but waste half of it along the way, as lots of people can attest if they’ve watched their battery die (and their phone get warm) after an hour of streaming video. The same problem bedevils wireless networks’ base stations, which send and receive signals to and from individual phones.

Now a major effort is under way to develop smarter power amplifiers that significantly reduce waste. Eta Devices, an MIT spinoff based in Cambridge, Massachusetts, is preparing a base station module and a chip that it says not only decrease battery drain but work well in high-bandwidth applications for 4G LTE and future ultrafast technologies.

The fundamental problem is that the power needed for radio output fluctuates rapidly when a device is transmitting data at high rates. Existing power amplifiers maintain their voltage at a fairly high level at all times to be prepared for peak needs—but this is wasteful. Newer approaches adjust that level on the fly, following the “envelope” of the actual radio signal.

Such “envelope tracking,” or ET, technologies are the hottest hardware development in the mobile-phone industry. Last fall Qualcomm became the first company to ship a chip with such technology, which it says is the industry’s first for 3G and 4G LTE mobile devices.

The company says the chip helps lower electricity consumption by 20 percent and helps reduce a related problem—heat generation—by up to 30 percent, “allowing for longer battery life for end users, as well as enabling manufacturers to shrink the size of their devices,” says Peter Carson, Qualcomm’s senior director of marketing.

The envelope tracker is already in 10 phones, including the Samsung Galaxy Note 3 and Nexus 5. Many other component makers are scrambling to catch up, including Mediatek, RF Micro Devices, Skyworks, Texas Instruments, Analog Devices, Nujira, and Eta Devices.

The difficulty with ET, though, is that its efficiency plunges at higher data rates. Envelope trackers often require a relatively large capacitor to store and release bursts of energy while maintaining smooth and continuous voltage changes.

Eta Devices takes a radically different approach, favoring fast, abrupt changes with a smaller capacitor. Using a smaller capacitor is more efficient; the downside is that the changes in energy cause more noise in a wireless signal. That problem is overcome by cutting-edge digital signal processing, says Joel Dawson, one of two MIT electrical engineering professors who cofounded the company.

Mattias Åström, the company president, reaches for an automotive analogy to compare the two approaches. “Envelope tracking is basically a continuous variable transmission, compared to our manual gearbox,” he says. “Fuel consumption is always better when you have a manual gearbox.”

The company’s work hasn’t been published and the chip is now being fabricated for the first time, but the concept has been built out for base stations and may be commercialized this year. The Eta module, a little smaller than a shoebox, is the first 4G LTE transmitter in the world to achieve average efficiency greater than 70 percent, a big jump from the 45 to 55 percent in currently available technology, says Dawson.

Vanu, a company that makes low-power wireless base stations (see “A Tiny Cell-Phone Transmitter Takes Root in Rural Africa”), is testing the technology and may become an early customer. “We think this can give us a ‘green’ benefit as well as an operating cost advantage,” says David Bither, direct of platform engineering at Vanu.

The result could be to expand connectivity and make it affordable to more people in the developing world, where expensive diesel fuel powers at least 640,000 remote base stations at a cost of $15 billion.

The Eta technology was first revealed as a lab-bench setup in late 2012 (see “Efficiency Breakthrough Promises Smartphones That Use Half the Power”). The company was funded by $6 million from Ray Stata, cofounder of Analog Devices, and his venture firm, Stata Venture Partners.

Hardware designed specifically to run complex neural networks could let personal devices make sense of the world.

By Tom Simonite

A powerful approach to artificial intelligence could be coming to smartphones.

Researchers from Purdue University are working to commercialize designs for a chip to help mobile processors make use of the AI method known as deep learning. Although the power of deep learning has inspired companies including Google, Facebook, and Baidu to invest in the technology, so far it has been limited to large clusters of high-powered computers. When Google developed software that learned to recognize cats from YouTube videos, the experiment required 16,000 processors (see “Self-Taught Software”).

Being able to implement deep learning in more compact and power-efficient ways could lead to smartphones and other mobile devices that can understand the content of images and video, saysEugenio Culurciello, a professor at Purdue working on the project. In December, at the Neural Information Processing Systems conference in Nevada, the group demonstrated that a co-processor connected to a conventional smartphone processor could help it run deep learning software. The software was able to detect faces or label parts of a street scene. The co-processor’s design was tested on an FPGA, a reconfigurable chip that can be programmed to test a new hardware design without the considerable expense of fabricating a completely new chip.

The prototype is much less powerful than systems like Google’s cat detector, but it shows how new forms of hardware could make it possible to use the power of deep learning more widely. “There’s a need for this,” says Culurciello. “You probably have a collection of several thousand images that you never look at again, and we don’t have a good technology to analyze all this content.”

Devices such as Google Glass could also benefit from the ability to understand the abundant pictures and videos they are capturing, he says. A person’s images and videos might be searchable using text—”red car” or “sunny day with Mom,” for example. Likewise, novel apps could be developed that take action when they recognize particular people, objects, or scenes.

Deep learning software works by filtering data through a hierarchical, multilayered network of simulated neurons that are individually simple but can exhibit complex behavior when linked together (see “Deep Learning”). Computers are inefficient at running those networks because they are very different from conventional software.

Purdue’s co-processor design is specialized to run multilayered neural networks above all else and to put them to work on streaming imagery. In tests, the prototype has proven about 15 times as efficient as using a graphics processor for the same task, and Culurciello believes that improvements to the system could make it 10 times more efficient than it is now.

Narayan Srinivasa, director of the center for neural and emergent systems at HRL Laboratories, a research lab jointly owned by Boeing and General Motors, says it makes sense to use a co-processor to help implement deep learning networks more efficiently. That’s because in conventional computers, a processor and its memory reside in separate chunks of hardware. By contrast, the operations of deep learning-style neural networks and the real neural networks they are inspired by intertwine memory and processing. Narayan’s own research focuses on addressing that problem with a more extreme solution – designing chips with silicon neurons and synapses that mimic those of real brains (see “Thinking in Silicon”).

The Purdue group’s solution doesn’t represent such a fundamental rethinking of how computer chips operate. That may limit how efficiently their designs can run deep learning neural networks but also make it easier to get them into real-world use. Culurciello has already started a company, called TeraDeep, to commercialize his designs.

“The idea is that we sell the IP to implement this so that a large manufacturer like Qualcomm or Samsung or Apple could add this functionality to their processor so they could process images,” says Culurciello. Yann LeCun, a pioneer of deep learning at New York University who recently started leading Facebook’s research in the area, is an advisor to the company.

Low-cost materials could make storing hours of power from a wind farm economically feasible.

By Kevin Bullis on January 8, 2014

Utilities would love to be able to store the power that wind farms generate at night—when no one wants it—and use it when demand is high during the day. But conventional battery technology is so expensive that it only makes economic sense to store a few minutes of electricity, enough to smooth out a few fluctuations from gusts of wind.

Harvard University researchers say they’ve developed a new type of battery that could make it economical to store a couple of days of electricity from wind farms. The new battery, which is described in the journal Nature, is based on an organic molecule—called a quinone—that’s found in plants such as rhubarb and can be cheaply synthesized from crude oil. The molecules could reduce, by two-thirds, the cost of energy storage materials in a type of battery called a flow battery, which is particularly well suited to storing large amounts of energy.

If it solves the problem of the intermittency of power sources like wind and solar, the technology will make it possible to rely far more heavily on renewable energy. Such batteries could also reduce the number of power plants needed on the grid by allowing them to operate more efficiently, much the way a battery in a hybrid vehicle improves fuel economy.

In a flow battery, energy is stored in liquid form in large tanks. Such batteries have been around for decades, and are used in places like Japan to help manage the power grid, but they’re expensive—about $700 per kilowatt-hour of storage capacity, according to one estimate. To make storing hours of energy from wind farms economical, batteries need to cost just $100 per kilowatt-hour, according to the U.S. Department of Energy.

The energy storage materials account for only a fraction of a flow battery’s total cost. Vanadium, the material typically used now, costs about $80 per kilowatt-hour. But that’s high enough to make hitting the $100 target for the whole system impossible. Michael Aziz, a professor of materials and energy technologies at Harvard University who led the work, says the quinones will cut the energy storage material costs down to just $27 per kilowatt-hour. Together with other recent advances in bringing down the cost of the rest of the system, he says, this could put the DOE target in reach.

The Harvard work is the first time that researchers have demonstrated high-performance flow batteries that use organic molecules instead of the metal ions usually used. The quinones can be easily modified, which might make it possible to improve their performance and reduce costs more. “The options for metal ions were pretty well worked through,” Aziz says. “We’ve now introduced a vast new set of materials.”

After identifying quinones as potential energy storage molecules, the Harvard researchers used high-throughput screening techniques to sort through 10,000 variants, searching for ones that had all the right properties for a battery, such as the right voltage levels, the ability to withstand charging and discharging, and the ability to be dissolved in water so they could be stored in liquid tanks.

So far the researchers are using quinones only for the negative side of the battery. The positive side uses bromine, a corrosive and toxic material. The researchers are developing new versions of the quinones that could replace the bromine.

The Harvard researchers are working with the startup Sustainable Innovationsto develop a horse-trailer sized battery that can be used to store power from solar panels on commercial buildings.

The Harvard researchers still need to demonstrate that the new materials are durable enough to last the 10 to 20 years that electric utilities would like batteries to last, says Robert Savinell, a professor of engineering and chemical engineering at Case Western Reserve University. Savinell wasn’t involved with the Harvard work. He says initial durability results for the quinones are promising, and says the new materials “without a doubt” can be cheap enough for batteries that store days of electricity from wind farms. And he says the materials “can probably be commercialized in a relatively short time”—within a few years.

The researchers face competition from other startups developing cheaper flow batteries, such as EnerVault and Sun Catalytix (see “Startup EnerVault Rethinks Flow Battery Chemistry” and “Sun Catalytix Seeks Second Act with Flow Battery”). Sun Catalytix is developing inorganic molecules to improve performance and lower cost, although it isn’t saying much about them. EnerVault uses iron and chromium as storage materials and is developing ways to reduce the cost of the overall system.

By Matt Egan

Tech stocks had a very strong 2013, with names like Netflix (NASDAQ:NFLX) and Facebook (NASDAQ:FB) leading the charge higher.

But as the Federal Reserve takes its foot off the stimulus pedal and the economy looks to ramp up growth, what tech names will sparkle in 2014?

These are the four tech stocks Jefferies predicts will do the best next year: Activision Blizzard (NASDAQ:ATVI), Intel (NASDAQ:INTC), Micron (NASDAQ:MU) and Microsoft (NASDAQ:MSFT).

Newly-independent Activision is known for its blockbuster video-game titles “World of Warcraft” and “Call of Duty.” The latter game shattered records earlier this year when it generated $1 billion of sales in just a one day.

“Gamers continue to overlook anything but the biggest, baddest titles” and Activision has a “small portfolio of mega-hit games,” Jefferies analyst Brian Pitz wrote to clients this week. He set a price target of $23 on Santa Monica, Calif.-based Activision.

One of the biggest catalysts behind the bullish bet on Activision is the company’s $8.2 billion move to gain independence from France’s Vivendi.Pitz believes Activision has set conservative guidance around the transaction.

At the same time, Activision should stand to gain from the first console cycle in seven years as Sony (NYSE:SNE) and Microsoft have rolled out their PlayStation 4 and Xbox One devices.

Pitz also pointed out a little-noticed policy change in “World of Warcraft” that allows gamers to pay to boost their characters to a required level to play the new game. He said the move removes an obstacle that turned off subscribers.

If sales of next-generation consoles and Activision beat forecasts, Jefferies sees the stock climbing to as high as $25. The firm also set a downside target of $19 if there are console supply constraints and “Call of Duty” fatigue.

As the world’s largest chip maker, Intel continues to show off its ability to innovate better than competitors.

In fact, Jefferies analyst Mark Lipacis believes Intel is one of just two semiconductor makers that is “able to sustain a leading edge manufacturing capability in the Moore Stress era.” Moore’s Law, coined by an Intel co-founder, says the number of transistors that fit on an integrated circuit doubles roughly every two years.

This innovation has allowed Intel to drive transistor costs down, while mobile rival Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is bracing for costs to rise.

“As a result, we expect Intel to have advantages in cost, performance, and power for the first time in mobile in 2014, which should translate to share gains in tablets and handsets,” Lipacis wrote to clients.

Jefferies notes that Intel shelled out around $60 billion on research and development and capital expenditures between 2011 and 2013, roughly doubling the spending of TSMC.

If Intel’s tablet market share ramps up quicker than expected and other factors go the company’s way, Jefferies believes the stock could rise to $38. The downside scenario’s price target of just $17 would come into play if tablet cannibalization of PC accelerates and Intel’s gross margins compress.

The inclusion of this Flash memory maker on the Jefferies list is noteworthy given Micron’s incredible surge in 2013. The stock is up more than 230%, making it one of the best performers on the Nasdaq 100 year-to-date.

But Jefferies believes the gross margin expansion that Micron has enjoyed over the past 12 months is “permanent, not cyclical, in nature.” Analyst Sundeep Bajikar sees the company’s non-GAAP gross margins surging by 2,000 basis points over the next 12 to 18 months after jumping 1,400 basis points through the first three quarters of 2013.

Jefferies cited structural changes in the Dynamic random-access memory, or DRAM, market which has consolidated from 24 companies in 1987 to just three that have over 90% of the market now.

The firm also cited Micron’s $2.5 billion acquisition of Elpida, which should help contribute to the company’s margin expansion.

If PC unit demand recovers, Jefferies sees Micron’s stock hitting $35, while the downside scenario calls for the Elipida effects being delayed and a price target of just $14.

After frustrating shareholders for years with subpar gains, Mr. Softee had a stellar 2013 with a 38% rally. The tech titan has also undergone a transformation by announcing the departure of longtime CEO Steve Ballmer, streamlining its organization through a sweeping reorganizationand acquiring the devices division from Nokia (NYSE:NOK) for $7.2 billion.

Jefferies analyst Ross MacMillan believes the reorganization “helps to highlight the value in the commercial business,” which sports higher revenue and gross margins than the consumer side of the business. For example, the firm notes that about 85% of the value of Office resides on the commercial side.

MacMillan also cited the move to cloud-based Office 365, which he said will allow Microsoft lower costs for consumers and small businesses and drive recurring revenue.

“MS Office continues to be one of the stickiest apps in the market and serves as the personal productivity standard for enterprises and consumers,” MacMillan wrote.

Jefferies set an upside price target of $48 on Microsoft and said this is attainable if PC market share improves and Windows gains more traction in the tablet and smartphone market.

On the downside, Microsoft’s stock could drop to $30 if its Surface tablet struggles and Windows 8 adoption misses the mark.

By Jennifer Booton

In the next few years researchers envision a topsy-turvy future, where classrooms learn from their students rather than other way around and brick-and-mortar stores make a comeback after years of suppression.

Driving this thought is a wave of soon-to-be released supercomputers that will be designed with cognitive function, meaning they’ll be able to think, learn, even reason.

The revelations were unveiled this week in IBM’s (IBM) “5 in 5” list, or five technologies it believes will drastically alter humanity over the next five years.

The list is based on the emergence of hyper-personalized technologies deriving from big data analytics, cloud computing and so-called “learning technologies.”

“IBM researchers are exploring the idea that everything will learn,” the company said.

These technological breakthroughs, it adds, will amplify human ability, assist in making good decisions and offer protection. In essence, they’ll help people navigate the complex world in new powerful ways.

Smart Classrooms

The idea is that in five years cloud-based learning systems will enable classrooms to create personalized lesson plans for systems based on their vastly different learning styles.

“Imagine a system that knows you’re a visual learner with a math phobia,” IBM says. “Not only will the classroom create a lesson plan to help you master algebra, it will preempt difficulties in calculus.”

In time, it says, teachers will be able to reach more students in more meaningful ways, ending the era of one-size-fits-all education and instead creating personalized, experiential learning.

Buying Local

With online sales reaching $1.0 trillion globally last year, local stores have been struggling to compete with the likes of Amazon.com (AMZN). But IBM believes that will all change within five years.

Smart mobile devices, from wearable technology to tablets, that tap cloud-based cognitive systems, will be able to learn about shopper’s personal preferences, it says.

The technology would enable customers to have personalized shopping experiences while still achieving the instant gratification of receiving purchased items instantaneously.

“Local shops will make online-only stores looking downright quaint,” Big Blue said. “As consumers share more personal information, they’ll see retail stores transform into immersive shopping destinations personalized just for them.”

Doctor DNA

From robots that can now conduct surgery to online medical records, technological advancements have already helped to modernize healthcare. But IBM believes doctors will soon be able to do much more using their patient’s DNA.

“In five years cancer will be treated down to a DNA level with treatment plans that will be more personalized and accurate,” it said.

Today, it may take several months to crunch a patient’s full DNA and formulate a targeted treatment. But soon sequencing DNA may take just hours or seconds, becoming the standard for treatment, IBM says.

Meanwhile, the cloud will enable smarter healthcare, helping doctors to access more information, faster, with fewer resources. That will enable them to create DNA-specific treatments for anything from strokes to heart disease.

Futuristic Cities

With predictive analytics, crowdsourcing and other emerging technologies, cities will be able to actually adapt to the wants and needs of its citizens.

“As we speak to our cities, they will listen and become a direct reflection of all of us who live there,” the computer maker said.

Instead of fixed bus schedules, for example, monitoring systems that predict storms during rush hour will be able to dispatch more buses to meet an expected influx in demand.

Traffic, accidents and potholes would be reported immediately through traveler’s mobile devices — something already seen through the app Waze, which Google (GOOG) acquired this year for about $1.0 billion.

“Systems will connect billions of events in real time to anticipate movement and react to human preferences, patterns and demand,” IBM said. “By engaging citizens, city leaders will be able to respond directly to our needs and dynamically allocate resources.”

Digital Guardians

With cyber security becoming an unflinching threat (just take a look at the Black Friday Target (TGT) debacle), advanced security systems will be able to use powerful cloud-based analytics to create personalized defense systems.

With 12.6 million victims of identity fraud in the U.S. last year alone, this so-called guardian will be able to spot unusual patterns that could be precursors to cyber attacks, fraud or identity theft.

“Security is evolving from being based on rules like passwords to being automatic and based on who we are,” IBM said. “In time, security will be less a barrier than an enabler, made stronger by us just being us.”

This comes as many security experts begin questioning the traditional username/password mechanism, with hackers and fraudsters increasingly advancing their tactics.

Other solutions to this are biometrics, such as using a person’s physical body — eyeball scans, for instance — or voices to unlock data.