Iomega’s Rev drives compete with portable hard drives from Seagate and Western Digital; EMC hopes to buy the company and turbocharge the brand. Image: Iomega

What happened to Iomega (IOM)?

It was a gravity-defying technology stock during its best run a decade ago. At its peak in 1996, the company’s nearly $6 billion valuation meant many investors were betting it would be the future of digital storage.

Iomega seemed to be at the right place at the right time; broadband connections and music downloads were not yet common, and few tech companies recognized that storage would be a growth market. Meanwhile Iomega’s proprietary Zip disks and Zip drives provided the capacity of a computer hard drive and the portability of a floppy disk, making it a snap to move chunky files like digital images or huge spreadsheets from one PC to another.

Microsoft stock has crept higher since it sank three months ago on word of its Yahoo bid.

Can Microsoft do it again?

Late last year, investors and analysts were wringing their hands over a tech stock collapse. With the economy starting to slow, investors punished a slew of big techs including Microsoft (MSFT), IBM (IBM) and Hewlett-Packard (HPQ). Not even hot-growth companies like Apple (AAPL) and Research in Motion (RIMM) were spared.

Then Microsoft reported earnings in January, and the sun came out: $6.5 billion in profit for the holiday quarter on sales of $16.4 billion. And best of all, the forecast was bright. “We actually feel very optimistic,” said Microsoft Chief Financial Officer Chris Liddell. “The next six months we feel very good about.”

The MacBook Air was a top-seller for Apple last quarter, helping to deliver the equivalent of a second holiday season. Image: Apple

iPod growth has stalled. The iPhone is basically doing as expected. So in Apple’s financial results, the real surprise was the MacBook Air.

This time, gadgets didn’t save the day for Apple (AAPL). Even after adding a pink iPod nano to its lineup in time for Valentine’s Day, the company sold just 100,000 more iPods in the first three months of this year than it did a year before. iPhone sales came in 26 percent (or 600,000 units) lower than the holiday quarter, which isn’t a great sign.

Hard drives and flash memory are increasingly vying for share in the storage market. Image: Sandisk, Samsung

Hard drive maker Seagate (STX) filed a patent suit against flash drive maker STEC (STEC) in federal court on Monday, firing the first shot in a new intellectual property battle between hard drive makers and providers of flash storage technology.

Seagate, the world’s largest hard drive maker, claims that STEC has violated four of its patents covering the way a storage device communicates with a computer. The suit was filed in the Northern District of California.

STEC said it believes Seagate’s lawsuit is “completely without merit and primarily motivated by competitive concerns rather than a desire to protect its intellectual property.” The company said it began building flash drives before Seagate won its patents. (STEC’s full statement is below.)

The HP Mini laptop is aimed at the education market, but it could appeal to road warriors as well. Image: HP

Pick up HP’s new $500 mini-laptop, and the first thing you notice is the aluminum casing. Though the thing weighs only about 2.5 pounds, what’s striking is how its sleek skin makes it feel solid and professional – not at all what you’d expect from a budget PC.

I’m in a suite at the Palace Hotel in San Francisco getting a first look at Hewlett-Packard’s (HPQ) latest machine, which the company hopes will help it steal share from Dell (DELL) and Apple (AAPL) in the education market. (Each of the three companies has just under 20 percent of the worldwide market.) HP’s development team, I’m told, consulted educators as they designed the 2133 Mini-Note, and as I turn the laptop over in my hands that comes through in little details.

Apple CEO Steve Jobs addresses the Cupertino City Council on April 18, 2006. Image: City of Cupertino

According to city maps, the site of Apple’s new campus will be bounded by Interstate 280, Wolfe Road, Pruneridge Avenue and Tantau Avenue. Image: City of Cupertino

Steve Jobs’s plans for a new Apple campus in its hometown of Cupertino, Calif., are taking a little longer than expected to become reality.

Two years ago this month, the Apple (AAPL) CEO made a surprise visit to a Cupertino City Council meeting to deliver big news: Apple had been looking for an additional site for its growing workforce, and considered leaving its longtime home. But the company managed to cobble together nine pieces of land about a mile from Apple’s current digs, and decided to stay in Cupertino after all, using both locations.

“We haven’t started designing anything yet,” Jobs said at the April 18, 2006 meeting. “It’ll take us, you know, three or four years to design it, get all the approvals and get it built.”

Apple can easily afford any building project. With nearly $19 billion on hand, it has the third largest cash reserves in the tech world, behind Cisco (CSCO) and Microsoft (MSFT). Even so, Jobs said two years ago that Apple paid more for the Cupertino site than it would have paid in other Silicon Valley cities, though he expected it will be worth it once Apple builds a second campus in Cupertino to accommodate between 3,000 and 3,500 people. “It’s going to cost us more than we’d like,” he said, “but hopefully in five years we’ll have forgotten about that and we’ll just have a second nice campus in Cupertino.”

An Apple spokesman pointed out that Chief Financial Officer Peter Oppenheimer said in an earnings call that month that Apple hoped to break ground “in a few years.” He also said that Apple would “hopefully complete a second campus in around four years,” according to a transcript.

Those timelines might have been ambitious. Two years after the announcement, Apple has not applied for permits to build on the site, confirmed Ciddy Wordell, a project manager for the city of Cupertino who is in charge of the North Vallco development area where the new Apple land is located. “They must go through a planning approval process, get a use permit and an architectural review,” Wordell said. “It might even involve a general plan change.”

Once all of that is done, it often takes about two years for a major construction project to be completed. So unless Apple gets its campus plans moving more quickly, it looks like the whole ordeal could drag on a bit longer than Jobs had hoped.

Michael Dell is still struggling to reclaim his company’s former glory, and the latest cutbacks show he still has a long way to go.

Dell (DELL) said Monday that it will close an Austin, Texas plant that makes desktop PCs. It’s just the latest step in a plan management laid out nearly a year ago, in which the company plans to shed 8,300 workers and save $3 billion in costs. The remarkable thing about Dell’s announcement isn’t the simple shuttering of a U.S. manufacturing facility – that sort of thing is happening across the country every day. It’s how precipitously Dell has fallen.

Devices like the Razr2 V8 haven’t done enough to raise Motorola’s profile and its revenues. Image: Motorola

CEO Greg Brown says splitting the company will improve Motorola’s focus. Image: Motorola

The year is 2010, and the Motorola brand is hot again. By aggressively retooling its design and manufacturing processes, the independent cell phone business has returned to profitability, grabbed back market share from Samsung and Sony Ericsson, and gained on Nokia (NOK) with low-cost handsets in developing markets like India and China.

Meanwhile, in its separate wireless equipment business, Motorola has outmaneuvered tech titan Cisco (CSCO) in the corporate market, and out-innovated both Cisco and Apple (AAPL) by reinventing set-top boxes that bring the Internet to the TV. Investors are thrilled, and they trace it all back to Motorola’s (MOT) breakup announcement in March 2008.

Sound like a fantasy?

Odds are, that’s all it is – and that’s the downside to the Schamburg, Ill., company’s announcement Wednesday that it will split itself in half in 2009. Though the news is probably music to the ears of activist investor Carl Icahn, who has been agitating for a breakup to boost Motorola’s flagging stock price, it’s difficult to see how two mini-Motos will be better positioned to compete with some of the best-managed competitors in the technology world.

Motorola CEO Greg Brown sees the spin-off differently. “I think it provides a clear sense of our intentions and direction,” Brown tells Fortune. “The independence, improved focus and alignment of individual organizations will facilitate and enable stronger performances.”

We’ve been here before, however. In previous slumps, Moto management hocked heirlooms like the automotive and semiconductor divisions in the name of raising money and gaining focus. Did it work? Well, if trimming divisions were the recipe for its success, Motorola would be thriving by now. Instead the firm has swung from a $3.6 billion profit in 2006 to a $49 million loss in 2007, and the stock is flirting with five-year lows. Motorola’s problem isn’t size – it’s discipline. “Every time they go back to the drawing board, they start talking about selling off businesses, splitting up the company,” says Shawn Campbell, of Campbell Asset Management, who has followed Motorola for years. “They’re running out of things to sell.”

Microsoft Surface is a tabletop computer that’s controlled by physical touch instead of a mouse or keyboard. Image: Microsoft

Microsoft’s tabletop computer could appear in homes in three years or less, the executive in charge of its development said this week.

Since unveiling the Microsoft Surface product last year, the company has gotten plenty of feedback from businesses and enthusiasts who want to get their hands on the technology, said Tom Gibbons, corporate vice president of Microsoft’s (MSFT) Specialized Devices and Applications business. And Gibbons said he feels confident that the touch-based computer could be affordable enough for consumers in three years or less. “In the three-year time window, we absolutely see how to get there,” Gibbons said. “If we can beat that, we’ll try to beat that.”

Surface is a computer built into a coffee table, and its 30-inch screen is controlled by touch rather than by a mouse or keyboard. (The complex manufacturing, of course, makes it expensive — the commercial version will be priced between $5,000 and $10,000) Though the concept is similar to Apple’s (AAPL) touchscreen iPhone, the implementation of the technology is quite different. Surface works using digital cameras under the glass, which track movements above.

Microsoft has a profitable business building software for the Mac; now it has an eye on the iPhone, too. Image: Apple

Tom Gibbons, head of Microsoft’s Specialized Devices and Applications Group, said the focus would be on extending Office functions onto the iPhone and iPod touch. Image: Microsoft

Don’t think for a minute that Microsoft is ignoring the iPhone. In fact, the software giant is probing the gadget for profit opportunities.

For a little more than a week, a team of the company’s Silicon Valley software engineers has been examining the iPhone software development kit (SDK for short), a set of tools Apple (AAPL) released this month that let outsiders build software for the iPhone and the iPod touch. Microsoft (MSFT) executives aren’t sure yet whether they’ll find worthwhile opportunities to sell iPhone software – but they seem eager to find out.

“It’s really important for us to understand what we can bring to the iPhone,” Tom Gibbons, corporate vice president of Microsoft’s Specialized Devices and Applications Group, told Fortune on Monday. “To the extent that Mac Office customers have functionality that they need in that environment, we’re actually in the process of trying to understand that now.”

Though it’s typical to think of Apple and Microsoft as pure software rivals, their relationship is actually more complicated. For more than a decade, Microsoft has maintained a group of engineers whose sole job is to develop software for Apple’s Macintosh operating systems. Most of the engineers in Microsoft’s Mac Business Unit are based in Mountain View, Calif., a few miles from Apple’s headquarters. (They also happen to be quite close to the headquarters of archrival Google (GOOG).)

The Mac unit’s work certainly isn’t charity – it delivers millions of dollars in profit for the company with its Mac version of the Office productivity suite. Microsoft doesn’t break out exact numbers, but we can extrapolate: Gibbons said the Mac Business Unit provides about a third of the revenue for the Specialized Devices and Applications Group, which also includes Windows Embedded, Microsoft Hardware, the Automotive Business Unit and Microsoft Surface Computing; the whole group did more than $1 billion in sales last year. So it’s reasonable to guess that the Mac unit provided about $350 million – and since Gibbons said the Mac group was one of the group’s more profitable units, it’s possible that Microsoft made somewhere in the neighborhood of $200 million in profit from Mac software.