Steve Ballmer, CEO of Microsoft, on his recent trip to India confessed that it is not Linux but piracy that he is most worried about, especially in emerging markets such as India and China. There are indeed reasons for his worry. According to the eighth annual Business Software Alliance (BSA) global software study, China, along with countries such as Vietnam, Indonesia, Russia, Ukraine, and Pakistan top the list in terms of piracy rates. India, is in the 16th spot with 70% piracy rate. Recent advertisements by Microsoft to promote genuine Windows XP installation reflect Steve's sentiments.
Software has the distinctive characteristic of digital goods expensive to produce the first copy (fixed cost) and inexpensive to reproduce and distribute subsequent copies (near zero variable cost). Moreover, sharing the software with others much like other public goods, does not reduce its consumption utility. Researchers have found strong co-relations between the per capita GNP of countries and piracy rates. Lower the GNP, higher is the piracy rate.
However, Steve argues that software is used by organisations and individuals who have enough purchasing power and are relatively affluent. So why can't they pay the original licence fees? It is not exactly the purchasing power of the population but the reservation price the willingness to pay that determines whether the user is willing to shell out money to buy the original licensed copy or alternatively get the low-cost pirated version. Researchers have also found out that though software piracy is touted as the poor man's only avenue for participating in the new information economy, piracy is rampant even in some of the high-income economies such as Singapore - 48%, Korea - 50% and Hong Kong 56%. The most common form of piracy is that of legally obtaining an evaluation version and subsequently entering a copied license code or applying generic patch that undoes copy protection. Legally obtaining one copy and installing it on more computers, often referred to as softlifting is used by companies to reduce the cost of licensing. Mischanneling of licence meant for one purpose for another is also another form of piracy that is adopted by organisations.
Microsoft, as other software vendors, has been using different technologies for handling piracy. The most common software-based approach for piracy prevention is the use of token such as licence key, a licence file or activation code. However, illegal distribution of licence codes has proven to be very effective in cracking this mechanism. Internet provides a cost-effective channel for illegal duplication and distribution of copyrighted software.
However, the above technical measures of minimising piracy have met with only limited success. Though it is difficult to measure the reservation price for software, a solution could be to peg the software prices to per capita GDP of the country so that prices in low income economies are nearer to the reservation price of potential users. Though it is easier for arbitrage (that of buying goods at low prices in low income economies and smuggling it to countries where the prices are high) to take place in software compared to books, stricter enforcement of copyright laws and the cultural tradition of buying legitimate goods in richer countries will provide the necessary hindrance.
Microsoft announced in September, 2004 that it plans to release Windows XP Starter version in Hindi early next year. Steve unveiled plans for other Indian languages as well. Though the exact pricing scheme is still not yet known, it is expected that it will be cheaper. However, Microsoft and other vendors should consider releasing such no-frills products at substantially reduced prices in emerging markets to strengthen their presence. Microsoft should team up with Nasscom and other professional bodies to educate corporate users about the advantages of purchasing licensed software. If Microsoft wants to keep its hold on emerging markets such as India, it had better do some soul-searching along the above lines. If technical measures are enforced instead of bringing down prices, the users, especially corporate and governments in price sensitive markets such as India and other low income economies, might even be tempted to switch to open source software!
Monday, January 31, 2005
Microsoft's sleeping giant
Linux gets a good share of the headlines, but Windows server software is grabbing a good share of the dough.
In reporting its second-quarter financial results Thursday, Microsoft said revenue at its Server and Tools division, which caters to business customers, grew 18 percent year over year. Licenses sales of Windows server, which competes head-to-head with open-source software Linux and other server operating systems, grew 17 percent year over year.
Despite the threat posed by open-source products, Microsoft server software sales have been growing at double-digit rates for several quarters. Meanwhile, revenue from its current cash cows--its Windows desktop and Office products--have been flat or growing in the single digits, analysts noted.
Owing to the release of the "Halo 2" video game, Microsoft's Home and Entertainment division was also a strong performer in the second quarter. But server software offers the best prospect to recapture the rapid growth and fat profits Microsoft saw from Office and Windows in the past decade, said Greg DeMichillie, an analyst at researcher Directions on Microsoft.
"They're selling into a growing market, whereas the desktop client market is not growing much and there's not share to take from the competition," DeMichillie said. "In servers, historically they don't have a monopoly--they have under 50 percent market share."
Server and Tools, which brought in $2.8 billion last quarter, has begun to rival the size of Microsoft's other giant breadwinners. The Client segment had revenue of $3.2 billion, and Information Worker, which sells Office, pulled in $2.8 billion. Home and Entertainment, meanwhile, was at $1.4 billion.
The Server and Tools group sells Windows Server 2003, Microsoft's Exchange messaging server, SQL Server database, development tools and other server software. Competitors include Linux distributors Red Hat and Novell, as well as back-end Java software makers such as IBM, BEA Systems, Oracle and Sun Microsystems.
This summer, Microsoft plans to release SQL Server 2005, code-named Yukon, which analysts expect will give the company's server business another bump.
"We believe the market here represents a large opportunity both for installed base upgrades and new acquisitions, particularly as Microsoft benefits from a much-improved business intelligence suite with the Yukon release," noted a JP Morgan research report issued Friday.
Also, the release of Yukon will free up more software engineers to work on Longhorn, JP Morgan said.
But even the positive numbers from its Servers and Tools group do not hide the intense competition. Microsoft, in fact, consistently singles out open-source development as a challenge to its business model.
"Risks to our opinion and target price include a highly competitive software industry and a rapidly changing technology landscape, such as a more rapid adoption of the Linux operating system than we currently anticipate," Standard and Poor's analyst Jonathan Rudy wrote in a recent note on Microsoft.
Indeed, a key challenge for Microsoft remains its ability to convince business customers that the total cost of using Windows server and development tools is cheaper than Linux and open-source middleware tools, after the costs of licenses, support and maintenance are figured in, DeMichillie said.
"There's a lot of upside if they can execute and make the case that they're the lower cost solution," he said. "The question is, can they really make the claim that they are lower cost than what Linux and IBM can put together?"
In reporting its second-quarter financial results Thursday, Microsoft said revenue at its Server and Tools division, which caters to business customers, grew 18 percent year over year. Licenses sales of Windows server, which competes head-to-head with open-source software Linux and other server operating systems, grew 17 percent year over year.
Despite the threat posed by open-source products, Microsoft server software sales have been growing at double-digit rates for several quarters. Meanwhile, revenue from its current cash cows--its Windows desktop and Office products--have been flat or growing in the single digits, analysts noted.
Owing to the release of the "Halo 2" video game, Microsoft's Home and Entertainment division was also a strong performer in the second quarter. But server software offers the best prospect to recapture the rapid growth and fat profits Microsoft saw from Office and Windows in the past decade, said Greg DeMichillie, an analyst at researcher Directions on Microsoft.
"They're selling into a growing market, whereas the desktop client market is not growing much and there's not share to take from the competition," DeMichillie said. "In servers, historically they don't have a monopoly--they have under 50 percent market share."
Server and Tools, which brought in $2.8 billion last quarter, has begun to rival the size of Microsoft's other giant breadwinners. The Client segment had revenue of $3.2 billion, and Information Worker, which sells Office, pulled in $2.8 billion. Home and Entertainment, meanwhile, was at $1.4 billion.
The Server and Tools group sells Windows Server 2003, Microsoft's Exchange messaging server, SQL Server database, development tools and other server software. Competitors include Linux distributors Red Hat and Novell, as well as back-end Java software makers such as IBM, BEA Systems, Oracle and Sun Microsystems.
This summer, Microsoft plans to release SQL Server 2005, code-named Yukon, which analysts expect will give the company's server business another bump.
"We believe the market here represents a large opportunity both for installed base upgrades and new acquisitions, particularly as Microsoft benefits from a much-improved business intelligence suite with the Yukon release," noted a JP Morgan research report issued Friday.
Also, the release of Yukon will free up more software engineers to work on Longhorn, JP Morgan said.
But even the positive numbers from its Servers and Tools group do not hide the intense competition. Microsoft, in fact, consistently singles out open-source development as a challenge to its business model.
"Risks to our opinion and target price include a highly competitive software industry and a rapidly changing technology landscape, such as a more rapid adoption of the Linux operating system than we currently anticipate," Standard and Poor's analyst Jonathan Rudy wrote in a recent note on Microsoft.
Indeed, a key challenge for Microsoft remains its ability to convince business customers that the total cost of using Windows server and development tools is cheaper than Linux and open-source middleware tools, after the costs of licenses, support and maintenance are figured in, DeMichillie said.
"There's a lot of upside if they can execute and make the case that they're the lower cost solution," he said. "The question is, can they really make the claim that they are lower cost than what Linux and IBM can put together?"
Tuesday, January 25, 2005
Microsoft turns to Elixir for Office boost
Convincing businesses to upgrade to new versions of Office is a perennial challenge for Microsoft, but the company hopes a new Elixir might speed things up.
An effort, code-named Project Elixir, will take shape later this year as a way to promote Microsoft's Outlook e-mail and contact program, with some additional fields, as a tool for viewing customer relationship data. Eventually, the plan could help the software giant elbow its way further into the customer relationship management market, where Siebel Systems, Oracle and SAP dominate.
Microsoft started doing this internally last year, using Outlook as a means for its sales force to access a data warehouse linked to the company's Siebel CRM software.
Microsoft is currently in the process of trying to take that internal effort and transform it into a set of software tools that other companies can use. Although the company used Outlook internally with Siebel products, it could be linked to a variety of other customer relationship management programs. Interest from outside customers has been high, Charles Fitzgerald, Microsoft's general manager of platform strategies, told CNET News.com.
While Microsoft doesn't expect to generate revenue from offering Elixir, it does stand to benefit when companies tie Office deeper into their business processes. Since the Elixir code Microsoft has developed works only with Office 2003, the company sees the tool as a way to get customers to upgrade. Longer term, such tools may also spur sales of Windows Server and other software.
"It works with Outlook 2003, so it drives both revenue and deployment there," Fitzgerald said, noting that a demo of Elixir recently helped convince one reluctant chief information officer to upgrade to Office 2003.
Driving upgrades to the latest version of Office is important both because of the revenue it generates as well as the fact that the company has noted consistently higher customer satisfaction when businesses are using later versions of its products.
Microsoft's Information Worker unit, which is responsible for Office, contributed roughly 30 percent of Microsoft's revenue last year, so driving new sales and upgrades is an imperative for the software maker. The company is looking to drum up interest in Office by offering add-ons like Elixir, by hosting the first-ever Office developer conference next month, and through an emphasis on server software that links to Office.
There is also a longer-term benefit to Microsoft. When companies adopt things like Elixir, it makes them unlikely to even consider rival productivity software. And because Office doesn't run on Linux, it also gives Windows a boost among businesses and governments that might be eyeing the open-source operating system.
"The more Microsoft can get companies to integrate Office technology into the fabric of their businesses, the less of a commodity Office becomes and the harder it is for companies to replace it with something like OpenOffice.org," said Gartner analyst Michael Silver.
The company had hoped to have the tool ready to offer broadly to customers by the end of last year but found there's still a lot of custom
An effort, code-named Project Elixir, will take shape later this year as a way to promote Microsoft's Outlook e-mail and contact program, with some additional fields, as a tool for viewing customer relationship data. Eventually, the plan could help the software giant elbow its way further into the customer relationship management market, where Siebel Systems, Oracle and SAP dominate.
Microsoft started doing this internally last year, using Outlook as a means for its sales force to access a data warehouse linked to the company's Siebel CRM software.
Microsoft is currently in the process of trying to take that internal effort and transform it into a set of software tools that other companies can use. Although the company used Outlook internally with Siebel products, it could be linked to a variety of other customer relationship management programs. Interest from outside customers has been high, Charles Fitzgerald, Microsoft's general manager of platform strategies, told CNET News.com.
While Microsoft doesn't expect to generate revenue from offering Elixir, it does stand to benefit when companies tie Office deeper into their business processes. Since the Elixir code Microsoft has developed works only with Office 2003, the company sees the tool as a way to get customers to upgrade. Longer term, such tools may also spur sales of Windows Server and other software.
"It works with Outlook 2003, so it drives both revenue and deployment there," Fitzgerald said, noting that a demo of Elixir recently helped convince one reluctant chief information officer to upgrade to Office 2003.
Driving upgrades to the latest version of Office is important both because of the revenue it generates as well as the fact that the company has noted consistently higher customer satisfaction when businesses are using later versions of its products.
Microsoft's Information Worker unit, which is responsible for Office, contributed roughly 30 percent of Microsoft's revenue last year, so driving new sales and upgrades is an imperative for the software maker. The company is looking to drum up interest in Office by offering add-ons like Elixir, by hosting the first-ever Office developer conference next month, and through an emphasis on server software that links to Office.
There is also a longer-term benefit to Microsoft. When companies adopt things like Elixir, it makes them unlikely to even consider rival productivity software. And because Office doesn't run on Linux, it also gives Windows a boost among businesses and governments that might be eyeing the open-source operating system.
"The more Microsoft can get companies to integrate Office technology into the fabric of their businesses, the less of a commodity Office becomes and the harder it is for companies to replace it with something like OpenOffice.org," said Gartner analyst Michael Silver.
The company had hoped to have the tool ready to offer broadly to customers by the end of last year but found there's still a lot of custom
Satellite TV snubbing Microsoft
With the era of high-definition television drawing closer, Microsoft's bid to provide one of the market's core video technology standards is having trouble getting into orbit.
In recent weeks, announcements have come from major satellite television companies including DirecTV that they will be using a rival technology, developed through traditional standards organizations, instead of Microsoft's competing video format, for their upcoming high-definition services.
Even Voom, the satellite HDTV company Microsoft earlier touted as a supporter, recently said ( http://www.voom.com/util/press/press_112204_print.shtml ) it would use the rival MPEG-4 AVC video format, or "codec," beginning early in 2005.
The satellite companies' moves, triggered by an increasing need for greater bandwidth, by no means count Microsoft out in other potentially larger markets such as cable television and online video. But the decisions by DirecTV and others show that the familiarity of the MPEG standard could be a difficult hurdle to clear.
"They really needed to start looking at some advanced video formats, because they needed that efficiency," Yankee Group analyst Adi Kashar said. "But some of the telephone companies seem to be making the opposite choice."
Indeed, the satellite television companies have been among the first large media companies to settle as a group on which technology they will use as they begin to offer high-definition video. But cable television, telephone, Internet video and other companies are all ultimately moving toward replacing today's familiar video with a supercrisp digital successor, offering potentially high stakes for companies that can provide the technological foundations.
Microsoft is one of those companies, and it has veered sharply away from its traditional practices in hopes of capturing a piece of that market. Its Windows Media technology, like the MPEG AVC video standard, allows companies to shrink massive high-definition video files into smaller packages, so that more video can be sent over the same amount of wireless or broadband bandwidth.
In 2003, Microsoft submitted its Windows Media 9 video format to the Society of Motion Picture and Television Engineers standard-setting organization for ratification as a high-definition video standard. In anticipation of that, two separate DVD groups have included Microsoft's technology as part of their next-generation disc standards.
The overture to standards bodies was aimed in large part at reassuring broadcasters and large media companies, which are used to working with standard, instead of proprietary, formats.
But for now, a growing and influential portion of the satellite industry seems set on MPEG 4.
Voom, a relatively small player, announced late last year that it would use MPEG 4 for its broadcasts beginning in mid-2005. Echostar Communications said at the recent Consumer Electronics Show in Las Vegas that it would make a push into high-definition video with its Dish Network beginning this fall, also using MPEG 4. (Cablevision, Voom's parent, said late Thursday that it would sell Voom's Rainbow 1 satellite and some other assets to Echostar for $200 million. It plans to continue service through an unspecified transition period. Echostar said it is assessing how to use the satellite to augment its Dish service.)
The News Corp.-owned DirecTV announced at the same show that it was moving to MPEG 4, providing a demonstration of the technology over a satellite transmission. The company said it would ultimately replace the high-definition set-top boxes previously purchased by its customers, but it has not said whether it would pay part or all of those costs.
A low-orbit silver lining for Microsoft has come from Sirius Satellite Radio, which said earlier this month that it would use the company's video technology for its just-announced video service.
The picture looks somewhat different on the ground, although it remains fuzzy. Cable companies have yet to indicate which direction they're going, but at least one phone company--giant SBC Communications--is already working closely with Microsoft to develop video services over its high-speed Internet lines. That could tip the scales toward company's video codec, but an SBC representative said the phone company was still deciding between Microsoft and MPEG.
Microsoft also has deals with BellSouth, Telecom Italia and a handful of other telecommunications providers around the world. But these deals largely focus on the ability to deliver video using Internet technology rather than the underlying video format. A smaller number of companies, including U.S. Digital Television, have said they would use the VC-1 video format.
Analysts say it will be easier for firms that don't have any historic investment or stake in the MPEG standards to adopt Microsoft's technology over time.
"Telephone companies going into the business of offering video seem to be very interested" in Microsoft's tools, said Forrester Research analyst Josh Bernoff.
Microsoft itself says the process is still barely under way, with its VC-1 technology still in the last stages of reaching official-standard status. Company executives say media and communications firms will increasingly want to do more than simply broadcast video--offering video on demand, or shows that can be watched just a few times or transferred to portable devices, for example.
The company also predicts that set-top box makers will begin building support for both formats into their products, giving media companies more flexibility to use both, or even to switch between the two for different applications.
"Our hope is that as time moves on, not just the satellite companies, but everyone, will begin looking at the future business models that VC-1 and Windows Media provide," said Jordi Ribas, director of technical strategy for Microsoft's Windows Digital Media Division. "We do not think they are closed doors."
In recent weeks, announcements have come from major satellite television companies including DirecTV that they will be using a rival technology, developed through traditional standards organizations, instead of Microsoft's competing video format, for their upcoming high-definition services.
Even Voom, the satellite HDTV company Microsoft earlier touted as a supporter, recently said ( http://www.voom.com/util/press/press_112204_print.shtml ) it would use the rival MPEG-4 AVC video format, or "codec," beginning early in 2005.
The satellite companies' moves, triggered by an increasing need for greater bandwidth, by no means count Microsoft out in other potentially larger markets such as cable television and online video. But the decisions by DirecTV and others show that the familiarity of the MPEG standard could be a difficult hurdle to clear.
"They really needed to start looking at some advanced video formats, because they needed that efficiency," Yankee Group analyst Adi Kashar said. "But some of the telephone companies seem to be making the opposite choice."
Indeed, the satellite television companies have been among the first large media companies to settle as a group on which technology they will use as they begin to offer high-definition video. But cable television, telephone, Internet video and other companies are all ultimately moving toward replacing today's familiar video with a supercrisp digital successor, offering potentially high stakes for companies that can provide the technological foundations.
Microsoft is one of those companies, and it has veered sharply away from its traditional practices in hopes of capturing a piece of that market. Its Windows Media technology, like the MPEG AVC video standard, allows companies to shrink massive high-definition video files into smaller packages, so that more video can be sent over the same amount of wireless or broadband bandwidth.
In 2003, Microsoft submitted its Windows Media 9 video format to the Society of Motion Picture and Television Engineers standard-setting organization for ratification as a high-definition video standard. In anticipation of that, two separate DVD groups have included Microsoft's technology as part of their next-generation disc standards.
The overture to standards bodies was aimed in large part at reassuring broadcasters and large media companies, which are used to working with standard, instead of proprietary, formats.
But for now, a growing and influential portion of the satellite industry seems set on MPEG 4.
Voom, a relatively small player, announced late last year that it would use MPEG 4 for its broadcasts beginning in mid-2005. Echostar Communications said at the recent Consumer Electronics Show in Las Vegas that it would make a push into high-definition video with its Dish Network beginning this fall, also using MPEG 4. (Cablevision, Voom's parent, said late Thursday that it would sell Voom's Rainbow 1 satellite and some other assets to Echostar for $200 million. It plans to continue service through an unspecified transition period. Echostar said it is assessing how to use the satellite to augment its Dish service.)
The News Corp.-owned DirecTV announced at the same show that it was moving to MPEG 4, providing a demonstration of the technology over a satellite transmission. The company said it would ultimately replace the high-definition set-top boxes previously purchased by its customers, but it has not said whether it would pay part or all of those costs.
A low-orbit silver lining for Microsoft has come from Sirius Satellite Radio, which said earlier this month that it would use the company's video technology for its just-announced video service.
The picture looks somewhat different on the ground, although it remains fuzzy. Cable companies have yet to indicate which direction they're going, but at least one phone company--giant SBC Communications--is already working closely with Microsoft to develop video services over its high-speed Internet lines. That could tip the scales toward company's video codec, but an SBC representative said the phone company was still deciding between Microsoft and MPEG.
Microsoft also has deals with BellSouth, Telecom Italia and a handful of other telecommunications providers around the world. But these deals largely focus on the ability to deliver video using Internet technology rather than the underlying video format. A smaller number of companies, including U.S. Digital Television, have said they would use the VC-1 video format.
Analysts say it will be easier for firms that don't have any historic investment or stake in the MPEG standards to adopt Microsoft's technology over time.
"Telephone companies going into the business of offering video seem to be very interested" in Microsoft's tools, said Forrester Research analyst Josh Bernoff.
Microsoft itself says the process is still barely under way, with its VC-1 technology still in the last stages of reaching official-standard status. Company executives say media and communications firms will increasingly want to do more than simply broadcast video--offering video on demand, or shows that can be watched just a few times or transferred to portable devices, for example.
The company also predicts that set-top box makers will begin building support for both formats into their products, giving media companies more flexibility to use both, or even to switch between the two for different applications.
"Our hope is that as time moves on, not just the satellite companies, but everyone, will begin looking at the future business models that VC-1 and Windows Media provide," said Jordi Ribas, director of technical strategy for Microsoft's Windows Digital Media Division. "We do not think they are closed doors."
Friday, January 21, 2005
Chilkat Email .NET Component Released
chilkat Email .NET is an email component for sending receiving, and managing email. It is packed with advanced features including: full S/MIME capability for sending and receiving signed and encrypted email, MHTML for sending HTML email with embedded images and style sheets, multipart/alternative, multipart/related, attachments, advanced AES encryption, automated international character encoding conversion, Outlook integration, progress monitoring, Outlook Express EML import, XML import and export, mail-merge, distribution lists, auto-Zip and Unzip attachments, Outlook contacts and distribution list integration, bad email address detection and collection, SMTP Windows Integrated Authorization, smart cards, SMTP and POP3 server diagnostics, full control over Cryptographic Service Providers for S/MIME, and more.
chilkat Email .NET Component for ASP.NET,VB.NET,VB.NET,C#,J#, and Visual C++.NET Released 4 December 2002
Chilkat Email .NET is a new Email component for sending receiving, and managing email. It is packed with the following advanced features:
Full S/MIME capability for sending and receiving signed and encrypted email.
MHTML for sending HTML email with embedded images and style sheets.
Multipart/alternative for HTML and plain-text email.
Attachments with Auto-Zip and Unzip features.
Advanced AES Encryption.
Outlook contact management integration.
International character encoding conversion.
Distribution lists.
Mail-Merge
Outlook Express EML import/export.
XML import/export.
Smart Card support.
Bad email address detection.
SMTP and POP3 server diagnostics.
SMTP Windows Integrated Authorization and secure SMTP authentication methods.
more...
chilkat Email .NET Component for ASP.NET,VB.NET,VB.NET,C#,J#, and Visual C++.NET Released 4 December 2002
Chilkat Email .NET is a new Email component for sending receiving, and managing email. It is packed with the following advanced features:
Full S/MIME capability for sending and receiving signed and encrypted email.
MHTML for sending HTML email with embedded images and style sheets.
Multipart/alternative for HTML and plain-text email.
Attachments with Auto-Zip and Unzip features.
Advanced AES Encryption.
Outlook contact management integration.
International character encoding conversion.
Distribution lists.
Mail-Merge
Outlook Express EML import/export.
XML import/export.
Smart Card support.
Bad email address detection.
SMTP and POP3 server diagnostics.
SMTP Windows Integrated Authorization and secure SMTP authentication methods.
more...
Microsoft offers subscription Outlook
Microsoft said Wednesday that it has started offering a paid-subscription version of its Outlook e-mail program, marking the first time the software giant has made a component of Office available as a subscription service.
Known as Microsoft Office Outlook Live, the service includes a subscription version of Outlook 2003 to connect with Hotmail or MSN e-mail accounts. For $59 a year, customers get an e-mail account with 2GB of storage and the ability to send individual messages with up to 20MB of attachments. Customers can also check multiple e-mail accounts, including corporate accounts that are managed through an Exchange server.
With Outlook Live, the software giant is trying to offer more to the power users among the Hotmail crowd--those that use Hotmail extensively but don't necessarily own a copy of Office, Microsoft lead product manager Brooke Richardson said.
"When it comes down to it, one size doesn't fit all," Richardson said.
Richardson said there is potential for more subscription versions of Office products down the road but that there are no immediate such plans.
"We think Outlook is really uniquely suited to it," she said. "We'll definitely be watching and learning."
The company began private testing for Outlook Live in December.
Among its features, the program will automatically synchronize changes made in Outlook with the Hotmail server. It also includes antispam and antivirus tools.
Through April 19, Microsoft is offering a discounted annual rate of $44.95.
Outlook Live will initially be available in the United States, Canada and the United Kingdom. Richardson said the company hopes to expand further, most likely to countries with a high percentage of homes with a broadband Internet connection.
The product is similar to the Outlook Connector feature that is a part of Microsoft's MSN Premium service, which costs $9.95 a month. However, the Outlook Connector, which works with Outlook 2002 or later, does not include a copy of Outlook.
Microsoft demonstrated an early version of Outlook Connector at a July 2003 meeting with financial analysts. The Connector feature shipped as part of MSN Premium in late 2003.
The Outlook Live program will also serve as a barometer to gauge whether customers are ready to accept an Office subscription plan.
Microsoft has been experimenting with subscription plans for years. The company launched a subscription trial program for Office XP several years ago in Australia and other countries.
However, Microsoft cancelled the trial, saying that customers weren't ready to adopt a subscription model.
Known as Microsoft Office Outlook Live, the service includes a subscription version of Outlook 2003 to connect with Hotmail or MSN e-mail accounts. For $59 a year, customers get an e-mail account with 2GB of storage and the ability to send individual messages with up to 20MB of attachments. Customers can also check multiple e-mail accounts, including corporate accounts that are managed through an Exchange server.
With Outlook Live, the software giant is trying to offer more to the power users among the Hotmail crowd--those that use Hotmail extensively but don't necessarily own a copy of Office, Microsoft lead product manager Brooke Richardson said.
"When it comes down to it, one size doesn't fit all," Richardson said.
Richardson said there is potential for more subscription versions of Office products down the road but that there are no immediate such plans.
"We think Outlook is really uniquely suited to it," she said. "We'll definitely be watching and learning."
The company began private testing for Outlook Live in December.
Among its features, the program will automatically synchronize changes made in Outlook with the Hotmail server. It also includes antispam and antivirus tools.
Through April 19, Microsoft is offering a discounted annual rate of $44.95.
Outlook Live will initially be available in the United States, Canada and the United Kingdom. Richardson said the company hopes to expand further, most likely to countries with a high percentage of homes with a broadband Internet connection.
The product is similar to the Outlook Connector feature that is a part of Microsoft's MSN Premium service, which costs $9.95 a month. However, the Outlook Connector, which works with Outlook 2002 or later, does not include a copy of Outlook.
Microsoft demonstrated an early version of Outlook Connector at a July 2003 meeting with financial analysts. The Connector feature shipped as part of MSN Premium in late 2003.
The Outlook Live program will also serve as a barometer to gauge whether customers are ready to accept an Office subscription plan.
Microsoft has been experimenting with subscription plans for years. The company launched a subscription trial program for Office XP several years ago in Australia and other countries.
However, Microsoft cancelled the trial, saying that customers weren't ready to adopt a subscription model.
Friday, January 14, 2005
'Critical' patches released for Windows, IE
Microsoft on Tuesday released two critical patches for its Windows operating system, but a patch for the underlying security problems with Internet Explorer 6 is not yet ready for prime time.
As part of its monthly update release ( http://www.microsoft.com/security/bulletins/200501_windows.mspx ), the company issued three patches--one rated important and two critical. That announcement reflects a more active month than December, when the software giant issued no critical patches for the period.
"Even though we did not rate any patches critical in December, the two we have in January are not indicative of a year more of this type of situation," said Stephen Toulouse( http://channel9.msdn.com/ShowPost.aspx?PostID=20237 ), a Microsoft security program manager.
One Critical Patch( http://www.microsoft.com/technet/security/bulletin/MS05-001.mspx ) is designed to resolve the security issues surrounding the HTML Help ActiveX control in Windows. Security experts had warned Microsoft about this problem and were pushing the vendor to take quick action, given that an exploit for the vulnerability existed.
The patch addresses the potential problem of attackers taking complete control over an affected system, such as placing and executing programs like spyware and pornography dialers without the users' knowledge.
The second critical patch addresses vulnerabilities in systems from Windows NT Servers to Windows XP( http://www.microsoft.com/technet/security/bulletin/MS05-002.mspx )involving the cursor and icon format handling. Attackers could exploit the vulnerabilities by creating a specially crafted Web page that would have malware.
"These first two patches address vulnerabilities that have proven exploits, and the third has the potential (for an exploit)," said Jimmy Kuo, a McAfee research fellow.
Microsoft also issued a third patch ( http://www.microsoft.com/technet/security/bulletin/MS05-003.mspx ) for Windows indexing service, with the threat level rated as important but not critical. That's because the indexing component is turned off by default, making it more difficult for an attacker to access index contents in Windows Media, for example, Toulouse said.
As part of its monthly update release ( http://www.microsoft.com/security/bulletins/200501_windows.mspx ), the company issued three patches--one rated important and two critical. That announcement reflects a more active month than December, when the software giant issued no critical patches for the period.
"Even though we did not rate any patches critical in December, the two we have in January are not indicative of a year more of this type of situation," said Stephen Toulouse( http://channel9.msdn.com/ShowPost.aspx?PostID=20237 ), a Microsoft security program manager.
One Critical Patch( http://www.microsoft.com/technet/security/bulletin/MS05-001.mspx ) is designed to resolve the security issues surrounding the HTML Help ActiveX control in Windows. Security experts had warned Microsoft about this problem and were pushing the vendor to take quick action, given that an exploit for the vulnerability existed.
The patch addresses the potential problem of attackers taking complete control over an affected system, such as placing and executing programs like spyware and pornography dialers without the users' knowledge.
The second critical patch addresses vulnerabilities in systems from Windows NT Servers to Windows XP( http://www.microsoft.com/technet/security/bulletin/MS05-002.mspx )involving the cursor and icon format handling. Attackers could exploit the vulnerabilities by creating a specially crafted Web page that would have malware.
"These first two patches address vulnerabilities that have proven exploits, and the third has the potential (for an exploit)," said Jimmy Kuo, a McAfee research fellow.
Microsoft also issued a third patch ( http://www.microsoft.com/technet/security/bulletin/MS05-003.mspx ) for Windows indexing service, with the threat level rated as important but not critical. That's because the indexing component is turned off by default, making it more difficult for an attacker to access index contents in Windows Media, for example, Toulouse said.
Microsoft Research India aims to impact villages
Microsoft is keen on doing pure research in India that would show how "computing could impact rural areas and benefit emerging markets", says a senior scientist-businessman who heads the company's main research centre in the United States.
In the bargain, more of its products could also get established in the country he says.
Microsoft Research's Bangalore centre is the third overseas research facility after one in Cambridge, started 1996, and another in Beijing started the next year. Half the 700 people at Microsoft Research work overseas, including now, those in Bangalore.
"A small group of outstanding people we have put together in Bangalore will focus on research that might have an impact on the lives of Indians in the villages... for this we are not only doing hardcore computer science, but also working with social scientists and ethnographers," Daniel T Ling, corporate vice president of Microsoft Research told.
Ling, one of the key people at Microsoft Research, is very clear that "while the 700-odd people of Microsoft Research do pure research," in Redmond, San Francisco, Cambridge, Beijing and now Bangalore, "we would very much want as much of this work to make the transition to commercial products."
So work that P Anandan, Microsoft Research India's, managing director and his small team will do in Bangalore, could for instance help build software programmes that will be available to Indians in their own languages.
That is where the social scientists and the ethnographers come in, helping with cultural nuances and finding local language equivalents to words that describe various functions on the computer screen, for instance.
Much of this is already reality through the local language initiatives the company is funding in its markets. What will be exciting in the days to come will be, say, the access a farmer will get to the results of the best university research on soil testing, crop patterns and other information immediately relevant to him, in his own language literally at the touch of a few buttons.
"Last year, Kentaro Toyama, who will be the assistant managing director of Microsoft Research India, made a whistle stop tour of key centres of research in India and also looked at initiatives such as the ITC's e-chaupals. The work that his and Anandan's team will do will definitely factor in such initiatives," Ling says.
In the US, a team in the company's San Francisco research lab has already done work on making huge databases available to a large number of people "on the web in a standardised manner". Maps from the US Geological Service or data on agricultural research can be accessed in an advanced pilot called Terra Server.
Work in the US was spread across a wide spectrum including many promising areas of computer science systems, networking, natural language, speech recognition, artificial intelligence, reasoning under uncertainty, databases and software tools.
Technologies these people are working on include ways to tackle spam (unwanted e-mail for intance), software programmes that will pull information from huge databases to help retail banks to grocery super chains to track customer behaviour, tools (software programmes that will help build other software applications) in areas such as computer security, re-directing people away from traffic gridlocks using signals captured from a network of sensors placed along different routes and software that will prioritise what in a web page is important, especially when viewed on a cell phone screen.
Another important technology is software that will 'decide' which messages or missed phone calls are important and route them accordingly to a mobile phone or a computer or fax. So if you are on a well deserved holiday away from everything, a call from your children could be directed to your cell phone but one from your boss could go to a computer at home.
In the future, just about everything will have a computer "buried in it" and the trick is to make them work well together, says Ling.
For instance, if you are watching a movie on your cell phone in the back of a taxi, once you reach home you should be able to switch to a television or a computer without missing any of the movie.
This means that the technology that runs your cell phone must talk to your television. This is happening, and sooner than one thinks, such cell phones and televisions will also emerge in the market, he says.
In the bargain, more of its products could also get established in the country he says.
Microsoft Research's Bangalore centre is the third overseas research facility after one in Cambridge, started 1996, and another in Beijing started the next year. Half the 700 people at Microsoft Research work overseas, including now, those in Bangalore.
"A small group of outstanding people we have put together in Bangalore will focus on research that might have an impact on the lives of Indians in the villages... for this we are not only doing hardcore computer science, but also working with social scientists and ethnographers," Daniel T Ling, corporate vice president of Microsoft Research told.
Ling, one of the key people at Microsoft Research, is very clear that "while the 700-odd people of Microsoft Research do pure research," in Redmond, San Francisco, Cambridge, Beijing and now Bangalore, "we would very much want as much of this work to make the transition to commercial products."
So work that P Anandan, Microsoft Research India's, managing director and his small team will do in Bangalore, could for instance help build software programmes that will be available to Indians in their own languages.
That is where the social scientists and the ethnographers come in, helping with cultural nuances and finding local language equivalents to words that describe various functions on the computer screen, for instance.
Much of this is already reality through the local language initiatives the company is funding in its markets. What will be exciting in the days to come will be, say, the access a farmer will get to the results of the best university research on soil testing, crop patterns and other information immediately relevant to him, in his own language literally at the touch of a few buttons.
"Last year, Kentaro Toyama, who will be the assistant managing director of Microsoft Research India, made a whistle stop tour of key centres of research in India and also looked at initiatives such as the ITC's e-chaupals. The work that his and Anandan's team will do will definitely factor in such initiatives," Ling says.
In the US, a team in the company's San Francisco research lab has already done work on making huge databases available to a large number of people "on the web in a standardised manner". Maps from the US Geological Service or data on agricultural research can be accessed in an advanced pilot called Terra Server.
Work in the US was spread across a wide spectrum including many promising areas of computer science systems, networking, natural language, speech recognition, artificial intelligence, reasoning under uncertainty, databases and software tools.
Technologies these people are working on include ways to tackle spam (unwanted e-mail for intance), software programmes that will pull information from huge databases to help retail banks to grocery super chains to track customer behaviour, tools (software programmes that will help build other software applications) in areas such as computer security, re-directing people away from traffic gridlocks using signals captured from a network of sensors placed along different routes and software that will prioritise what in a web page is important, especially when viewed on a cell phone screen.
Another important technology is software that will 'decide' which messages or missed phone calls are important and route them accordingly to a mobile phone or a computer or fax. So if you are on a well deserved holiday away from everything, a call from your children could be directed to your cell phone but one from your boss could go to a computer at home.
In the future, just about everything will have a computer "buried in it" and the trick is to make them work well together, says Ling.
For instance, if you are watching a movie on your cell phone in the back of a taxi, once you reach home you should be able to switch to a television or a computer without missing any of the movie.
This means that the technology that runs your cell phone must talk to your television. This is happening, and sooner than one thinks, such cell phones and televisions will also emerge in the market, he says.
Yahoo, Microsoft gaining ground on Google
Google remains the favorite of search consumers, but Yahoo and Microsoft are closing the gap, according to a new survey.
The survey of 2,000 consumers conducted by market researcher Keynote Systems ranked Ask Jeeves in the fourth place and Lycos in the fifth spot.
Keynote ranked search engines based on consumer opinion and brand affinity, as well as on qualitative and behavioral data monitored as people performed tasks on these Web sites.
However, Keynote said it found that actual search results returned by the five search engines do not differ significantly. Actual consumer success in doing complex searches showed that the performance of Lycos, Ask Jeeves and Microsoft's MSN was as good as Google and Yahoo.
The search market has become highly competitive, especially in the desktop search segment. Recently Yahoo joined MSN, Google and Ask Jeeves in announcing a search system that weeds through large amounts of personal data on computers.
Search engines are also diversifying into corporate intranet search.
"Google is the king of customer experience in the search engine industry, but Yahoo, MSN and Ask Jeeves are improving," Bonny Brown, director of research and public services for Keynote, said in a statement. "Given the open nature of the Web, as these sites continue to improve the user experience, they will undoubtedly begin to attract more users and improve user loyalty. Obviously this will impact the advertising side of the business."
Keynote said Yahoo and MSN have improved since the last study published in May 2004. Yahoo's better performance is attributed to its expanded local search service and a new search results page. Local search is considered a key indicator of consumer satisfaction, as nearly one in four searchers is not happy with the local results they get. Ask Jeeves also performed better due to changes in its local search service.
The credit for MSN's showing goes to separation of sponsored results from Web search results, Keynote said.
Yahoo, MSN and Ask Jeeves also improved their standing in the future usage index, which reflects chances of consumers using a specific search engine as their primary search tool and to return to the site in the future. Google retained its top position in this ranking.
The survey of 2,000 consumers conducted by market researcher Keynote Systems ranked Ask Jeeves in the fourth place and Lycos in the fifth spot.
Keynote ranked search engines based on consumer opinion and brand affinity, as well as on qualitative and behavioral data monitored as people performed tasks on these Web sites.
However, Keynote said it found that actual search results returned by the five search engines do not differ significantly. Actual consumer success in doing complex searches showed that the performance of Lycos, Ask Jeeves and Microsoft's MSN was as good as Google and Yahoo.
The search market has become highly competitive, especially in the desktop search segment. Recently Yahoo joined MSN, Google and Ask Jeeves in announcing a search system that weeds through large amounts of personal data on computers.
Search engines are also diversifying into corporate intranet search.
"Google is the king of customer experience in the search engine industry, but Yahoo, MSN and Ask Jeeves are improving," Bonny Brown, director of research and public services for Keynote, said in a statement. "Given the open nature of the Web, as these sites continue to improve the user experience, they will undoubtedly begin to attract more users and improve user loyalty. Obviously this will impact the advertising side of the business."
Keynote said Yahoo and MSN have improved since the last study published in May 2004. Yahoo's better performance is attributed to its expanded local search service and a new search results page. Local search is considered a key indicator of consumer satisfaction, as nearly one in four searchers is not happy with the local results they get. Ask Jeeves also performed better due to changes in its local search service.
The credit for MSN's showing goes to separation of sponsored results from Web search results, Keynote said.
Yahoo, MSN and Ask Jeeves also improved their standing in the future usage index, which reflects chances of consumers using a specific search engine as their primary search tool and to return to the site in the future. Google retained its top position in this ranking.
Microsoft, Siemens push to collaborate
Microsoft and Siemens Communications Group announced a partnership Tuesday to market and sell a suite of software tools for enhanced corporate Web conferencing and communication.
Under the multiyear agreement, Siemens will integrate its HiPath OpenScape Telephony Control Link with Microsoft's Office Live Communications Server 2005 and "Istanbul" instant messaging client.
The integration will allow Microsoft Office users to click their mouse to make a phone call through a PBX or Internet-PBX connected phone sold by Siemens or other phone vendors. The technologies are designed to work with a typical desk phone, alerting users when a call comes in, then routing the call to a recipient's cell phone or voice mailbox. The Istanbul client synchronizes with Outlook's calendar and scheduling information to provide further information on finding the recipient.
The OpenScape telephony control link and Istanbul client will be available in the first half of this year and will be added to existing product lines. Pricing has not yet been released.
Sales representatives from both companies will meet with customers jointly but will represent their own products respectively, said Adam Moise, a Siemens Communications business development manager. He noted that the companies have not entered into a reseller agreement.
The partnership will further bolster efforts by Microsoft and Siemens to enhance the ways workers communicate with each other.
Microsoft's Live Communications Server 2005 and Istanbul will work with the software giant's Web conferencing service, Office Live Meeting. Combined, the technologies will be able to integrate telephony, video, instant messaging and Web conferencing into a suite of software tools. Siemens' HiPath OpenScape, meanwhile, is a collaboration portal that allows workers using a variety of devices from work phones to cell phones to locate one another and communicate.
The package of tools is part of a push toward "presence," in which people's computers help others make smarter choices about how to reach them. Instead of filling up voice mail, for example, correspondents will see that someone is in a noncritical meeting and shoot him or her a discreet IM. Presence is moving closer to implementation, although it's still likely to be several years before it's widely used.
"Our customers tell us they need to find and communicate with people in real time, and they need to successfully work together without having to be in the same place," Anoop Gupta, vice president of Microsoft Real-Time Collaboration, said in a statement. "Microsoft and Siemens are dedicated to delivering to our customers the industry's most enhanced presence and collaboration solutions."
Under the multiyear agreement, Siemens will integrate its HiPath OpenScape Telephony Control Link with Microsoft's Office Live Communications Server 2005 and "Istanbul" instant messaging client.
The integration will allow Microsoft Office users to click their mouse to make a phone call through a PBX or Internet-PBX connected phone sold by Siemens or other phone vendors. The technologies are designed to work with a typical desk phone, alerting users when a call comes in, then routing the call to a recipient's cell phone or voice mailbox. The Istanbul client synchronizes with Outlook's calendar and scheduling information to provide further information on finding the recipient.
The OpenScape telephony control link and Istanbul client will be available in the first half of this year and will be added to existing product lines. Pricing has not yet been released.
Sales representatives from both companies will meet with customers jointly but will represent their own products respectively, said Adam Moise, a Siemens Communications business development manager. He noted that the companies have not entered into a reseller agreement.
The partnership will further bolster efforts by Microsoft and Siemens to enhance the ways workers communicate with each other.
Microsoft's Live Communications Server 2005 and Istanbul will work with the software giant's Web conferencing service, Office Live Meeting. Combined, the technologies will be able to integrate telephony, video, instant messaging and Web conferencing into a suite of software tools. Siemens' HiPath OpenScape, meanwhile, is a collaboration portal that allows workers using a variety of devices from work phones to cell phones to locate one another and communicate.
The package of tools is part of a push toward "presence," in which people's computers help others make smarter choices about how to reach them. Instead of filling up voice mail, for example, correspondents will see that someone is in a noncritical meeting and shoot him or her a discreet IM. Presence is moving closer to implementation, although it's still likely to be several years before it's widely used.
"Our customers tell us they need to find and communicate with people in real time, and they need to successfully work together without having to be in the same place," Anoop Gupta, vice president of Microsoft Real-Time Collaboration, said in a statement. "Microsoft and Siemens are dedicated to delivering to our customers the industry's most enhanced presence and collaboration solutions."
Hotmail goes mobile in India
Microsoft on Thursday signed deals with two Indian cell phone companies to deliver e-mail and instant messages via SMS.
BPL Mobile, owned by Indian electronics maker BPL, offers cell phone services in five Southern and Western Indian states, and has around 2.4 million subscribers. Airtel, which has a presence in 20 Indian states, has around 9.5 million subscribers.
The companies, together with mobile data services firm Mobile 365, on Thursday launched two new services--Mobile-mail and MSN Messenger over SMS. However, they did not say whether the service will carry a fee or be offered for free.
Using Mobile-mail, Hotmail users among BPL subscribers will have the option to receive and reply to e-mail sent to their accounts by SMS on their mobile phones.
Similarly, the MSN Messenger over SMS service is a two-way text messaging system that lets users communicate with MSN Messenger buddies via a mobile phone that supports the SMS (short message service) technology.
MSN is not the first to launch such an initiative in India. Yahoo already has similar arrangements with cell phone companies serving India, including Orange, Hutch and Airtel.
BPL Mobile, owned by Indian electronics maker BPL, offers cell phone services in five Southern and Western Indian states, and has around 2.4 million subscribers. Airtel, which has a presence in 20 Indian states, has around 9.5 million subscribers.
The companies, together with mobile data services firm Mobile 365, on Thursday launched two new services--Mobile-mail and MSN Messenger over SMS. However, they did not say whether the service will carry a fee or be offered for free.
Using Mobile-mail, Hotmail users among BPL subscribers will have the option to receive and reply to e-mail sent to their accounts by SMS on their mobile phones.
Similarly, the MSN Messenger over SMS service is a two-way text messaging system that lets users communicate with MSN Messenger buddies via a mobile phone that supports the SMS (short message service) technology.
MSN is not the first to launch such an initiative in India. Yahoo already has similar arrangements with cell phone companies serving India, including Orange, Hutch and Airtel.
Bill Gates' extreme makeover
Bill Gates is eating his competition for breakfast.
"Jeff, have you heard about the Lindbergh kidnapping?" you might ask, wondering if I'd just figured out that Microsoft owns the desktop.
No, that's not what I'm talking about: I'm referring to, of all things, public relations. That's right: Mr. Bill--arrogant, aloof and defiant during much of Microsoft's long-running antitrust trial--has become a media darling--well, sort of. Let's face it, Bill Gates is no Paris Hilton, but this is the world of bits and bytes, not "Entertainment Tonight"--yet.
Gates' rising star comes at the same time that his fellow corporate honchos--Sam Palmisano at IBM, Larry Ellison at Oracle, Steve Jobs at Apple Computer, Eric Schmidt at Google, Terry Semel at Yahoo, Jeff Bezos at Amazon (Time magazine's "Person of the Year" in 1999, no less) and others--might be asked, "Cat got your tongue?" We typically learn from them in "prepared statements."
While the world's richest man spent his time at the Computer Electronics Show in Las Vegas this week musing about blogging, Apple and Firefox and granting his first interview to a blogger, ( http://www.gizmodo.com/gadgets/gadgets/gates-interview-part-two-windows-postlonghorn-and-apples-office-suite-029272.php ) other tech bigwigs have been ducking "one-on-ones" left and right.
That's a switch from the "olden days"--at least throughout the '90s--when tech was booming and tech CEOs lined up to wax eloquent about their latest business plans or products and to jab the competition. It was fun to listen. Ellison talked up the Network Computer, Schmidt mapped out his plan to turn around Novell, and Bezos stressed "get big fast." Jobs was a magazine cover boy.
Gates, meanwhile, struggled to define his image and endured pies in the face when he showed up in public. While the media was making celebrities out of dot.com CEOs and other "Davids," Goliath Microsoft was portrayed as the "evil empire" and out of touch.
Gates himself was famously intolerant of interviewers who asked questions he deemed irrelevant or just plain stupid. In 1994, he took off his mike and walked off the set when news anchor Connie Chung likened his business tactics to knife Fighting(http://archive.salon.com/people/rewind/1999/07/10/chung/index1.html).
So what happened to make Bill Gates, of all people, more media friendly? To be sure, a "kinder, gentler" Gates has been rolled out before--typically when it suited Microsoft's interests in its antitrust battle. But this time around, he seems more genuine. Bill has lightened up, he's aged--and he's got other interests. There's nothing like fatherhood (Gates has three children now) to put the woes of the world in context.
But that's not all. Nowadays, with Microsoft's money pile growing nicely and Steve Ballmer running the show as CEO, Chairman Gates is granting Q&As with the "kids" at Gizmodo--a clever decision to reach a new, growing audience. Meanwhile, other tech honchos are taking a more prehistoric approach while juggling mergers, IPO hangovers, competition--even plugging media leaks.
One sad consequence: An increasing number of high-tech companies are being more "strategic" about letting their CEOs meet the press. Translated: Control the interview, stay on "message" and manage risks. For example, it's OK to talk to Mr. Ellison, but just don't ask questions about PeopleSoft. (Huh? Isn't that our job?)
Or, you can talk to Mr. Jobs or Mr. Semel, but it's all off the record. (But what good is that to our readers?) Or come meet Mr. Schmidt at Google's annual holiday gala and eat free food, but no formal interviews, please.
Jobs spoke at Macworld Expo this week but didn't mingle with reporters much. In fact, some reporters who showed up were forced to watch the speech on closed- circuit TV( http://news.com.com/2061-1003-5531870.html )because the conference room was full--like watching a baseball game on TV inside the park. These and other examples abound.
Jumping through hoops to interview a leading newsmaker is nothing new, but the runaround routine has been gaining momentum in business news, just like in politics and sports. The White House press corps complains about access to the president, and sports writers can't seem to hook up with Yankees slugger Jason Giambi in the wake of a steroid scandal.
The media itself must share the blame. In business, we have made celebrities out of CEOs, opening the door for companies to call the shots, just like Hollywood stars. (Do you think an "exclusive" interview with Ashlee Simpson comes without strings attached? Think again.) The media also digs itself a deeper hole when it agrees to one restriction after another.
Some of you might be wondering if this discussion is too "inside baseball," but it's not. CEOs of public companies ought to meet regularly with the press, explaining their plans and products--just like our nation's CEO, George Bush. (His record could be better, too.) Besides informing customers, stockholders and the rank and file, these interviews also can show that a CEO is a confident leader who can think quickly on his or her feet.
Look, I didn't fall off the turnip truck: Microsoft isn't being altruistic when it grants a no-holds-barred one on one with Bill Gates.
It's also being "strategic" about drumming up sales for its products. And besides, Microsoft has more to gain and less to lose than others because of Gates' past image problems, critics would argue.
But Microsoft knows what a growing number of CEOs and companies who compete against the software giant are forgetting: A chance to get your point across amid all the confusion is golden. Or as financial columnist Allen Sloan once quipped, a "no comment" just means "more space for me and less space for you."
"Jeff, have you heard about the Lindbergh kidnapping?" you might ask, wondering if I'd just figured out that Microsoft owns the desktop.
No, that's not what I'm talking about: I'm referring to, of all things, public relations. That's right: Mr. Bill--arrogant, aloof and defiant during much of Microsoft's long-running antitrust trial--has become a media darling--well, sort of. Let's face it, Bill Gates is no Paris Hilton, but this is the world of bits and bytes, not "Entertainment Tonight"--yet.
Gates' rising star comes at the same time that his fellow corporate honchos--Sam Palmisano at IBM, Larry Ellison at Oracle, Steve Jobs at Apple Computer, Eric Schmidt at Google, Terry Semel at Yahoo, Jeff Bezos at Amazon (Time magazine's "Person of the Year" in 1999, no less) and others--might be asked, "Cat got your tongue?" We typically learn from them in "prepared statements."
While the world's richest man spent his time at the Computer Electronics Show in Las Vegas this week musing about blogging, Apple and Firefox and granting his first interview to a blogger, ( http://www.gizmodo.com/gadgets/gadgets/gates-interview-part-two-windows-postlonghorn-and-apples-office-suite-029272.php ) other tech bigwigs have been ducking "one-on-ones" left and right.
That's a switch from the "olden days"--at least throughout the '90s--when tech was booming and tech CEOs lined up to wax eloquent about their latest business plans or products and to jab the competition. It was fun to listen. Ellison talked up the Network Computer, Schmidt mapped out his plan to turn around Novell, and Bezos stressed "get big fast." Jobs was a magazine cover boy.
Gates, meanwhile, struggled to define his image and endured pies in the face when he showed up in public. While the media was making celebrities out of dot.com CEOs and other "Davids," Goliath Microsoft was portrayed as the "evil empire" and out of touch.
Gates himself was famously intolerant of interviewers who asked questions he deemed irrelevant or just plain stupid. In 1994, he took off his mike and walked off the set when news anchor Connie Chung likened his business tactics to knife Fighting(http://archive.salon.com/people/rewind/1999/07/10/chung/index1.html).
So what happened to make Bill Gates, of all people, more media friendly? To be sure, a "kinder, gentler" Gates has been rolled out before--typically when it suited Microsoft's interests in its antitrust battle. But this time around, he seems more genuine. Bill has lightened up, he's aged--and he's got other interests. There's nothing like fatherhood (Gates has three children now) to put the woes of the world in context.
But that's not all. Nowadays, with Microsoft's money pile growing nicely and Steve Ballmer running the show as CEO, Chairman Gates is granting Q&As with the "kids" at Gizmodo--a clever decision to reach a new, growing audience. Meanwhile, other tech honchos are taking a more prehistoric approach while juggling mergers, IPO hangovers, competition--even plugging media leaks.
One sad consequence: An increasing number of high-tech companies are being more "strategic" about letting their CEOs meet the press. Translated: Control the interview, stay on "message" and manage risks. For example, it's OK to talk to Mr. Ellison, but just don't ask questions about PeopleSoft. (Huh? Isn't that our job?)
Or, you can talk to Mr. Jobs or Mr. Semel, but it's all off the record. (But what good is that to our readers?) Or come meet Mr. Schmidt at Google's annual holiday gala and eat free food, but no formal interviews, please.
Jobs spoke at Macworld Expo this week but didn't mingle with reporters much. In fact, some reporters who showed up were forced to watch the speech on closed- circuit TV( http://news.com.com/2061-1003-5531870.html )because the conference room was full--like watching a baseball game on TV inside the park. These and other examples abound.
Jumping through hoops to interview a leading newsmaker is nothing new, but the runaround routine has been gaining momentum in business news, just like in politics and sports. The White House press corps complains about access to the president, and sports writers can't seem to hook up with Yankees slugger Jason Giambi in the wake of a steroid scandal.
The media itself must share the blame. In business, we have made celebrities out of CEOs, opening the door for companies to call the shots, just like Hollywood stars. (Do you think an "exclusive" interview with Ashlee Simpson comes without strings attached? Think again.) The media also digs itself a deeper hole when it agrees to one restriction after another.
Some of you might be wondering if this discussion is too "inside baseball," but it's not. CEOs of public companies ought to meet regularly with the press, explaining their plans and products--just like our nation's CEO, George Bush. (His record could be better, too.) Besides informing customers, stockholders and the rank and file, these interviews also can show that a CEO is a confident leader who can think quickly on his or her feet.
Look, I didn't fall off the turnip truck: Microsoft isn't being altruistic when it grants a no-holds-barred one on one with Bill Gates.
It's also being "strategic" about drumming up sales for its products. And besides, Microsoft has more to gain and less to lose than others because of Gates' past image problems, critics would argue.
But Microsoft knows what a growing number of CEOs and companies who compete against the software giant are forgetting: A chance to get your point across amid all the confusion is golden. Or as financial columnist Allen Sloan once quipped, a "no comment" just means "more space for me and less space for you."
Five years of Ballmer--the effect on Microsoft
In the five years since Bill Gates surprised the technology world by announcing he would give up his title as chief executive at Microsoft, has the company changed?
Yes--and no. While CEO Steve Ballmer has clearly retooled some parts of Microsoft to more closely mesh with his hard-driving style, the world's largest software maker still faces many of the same challenges: Open source, legal skirmishes, and slowing growth in some of its core businesses.
The eventual shift of power to longtime friend and colleague Ballmer was expected, but the announcement itself, five years ago today, on Jan. 13, 2000, was something of a shock.
The ever-boisterous Ballmer presents a decidedly differant face for the company than that of Gates, the more introverted techie who had headed the company since founding it with Paul Allen in 1975.
Ballmer reorganized the company into separate business units, changed the way workers are compensated and moved toward a broad strategy to expand on Microsoft's core products by slicing and dicing them in new ways.
"It's clearly Ballmer's company from a business perspective," said Directions on Microsoft analyst Matt Rosoff. "The seven business units were largely his deal. It probably wouldn't have happened under Gates."
Another Ballmer-inspired change: Fostering a kinder, gentler image and greater trust among both customers and partners. Ballmer issues annual missives to his troops calling on them to build products that are more useful for customers and to be more responsive to customer needs.
Ballmer tackled Microsoft's image problems almost from day one. In one of his first public appearances after taking over the CEO reins, he talked about the company's dilemma. "Microsoft is a company that, in my opinion, is not very well-understood. For some people, we're the Windows company...we're known mostly by our stock market success. We're also, I think, to some extent viewed as the scourge of Silicon Valley.
Unfortunately...we're known as a legal defendant," he told the Commonwealth Club of California back in February of 2000.
Gates, meanwhile, has become the brain trust behind some of Microsoft's most complex--and risky--product strategies, such as the new Longhorn release of Windows and the company's move into home entertainment.
Trying to measure the success of the Ballmer era is tricky. Since the announcement, Microsoft has seen its fortunes fluctuate. Sales have grown from just less than $23 billion in fiscal 2000 to $36.8 billion in fiscal 2004, and the company's cash balance has more than tripled. At the same time, Microsoft' stock has foundered, dropping from $47.80 on the day Gates announced his plans to around $27 a share.
Many of the issues, though, that Microsoft has faced in recent years--security issues, slowing tech spending and the rising popularity of open-source software, are things that any Microsoft CEO would have had to face.
"It's a little hard to separate the changes that would have happened anyway from the changes that happened specifically from Ballmer becoming CEO," Rosoff said. "There's a lot of stuff that would have happened anyway that Microsoft would have had to react to regardless of who was CEO."
One of the busiest areas for Microsoft during the Ballmer tenure has been the legal front. When Gates first detailed his new career plans, Microsoft was dealing with news that the U.S. Department of Justice was considering a proposal to break up the software maker to resolve the antitrust case pending against it. A trial judge ordered such a breakup, but Microsoft had that overruled on appeal and eventually worked out a landmark settlement with the Department of Justice.
Since then, Ballmer and general counsel Brad Smith have been working to resolve many of the company's legal headaches, settling with rivals such as Sun Microsystems and AOL Time Warner and reaching deals to settle a number of consumer class-action lawsuits.
"It's sort of a way to minimize risk rather than fighting things to the end and ending up with some sort of catastrophic decision," Rosoff said.
Rosoff sees the settlements as part of a broader trend that has marked the Ballmer years. "Under Ballmer, the company has become a little more conservative," Rosoff said.
Back to its rootsIn the late 1990s, Microsoft was investing billions in cable and telecommunications companies and pouring its own development resources in a number of areas, including its MSN Internet service and a range of consumer Web services.
"They are again really focused on selling software," Rosoff said. "Part of that is Ballmer's legacy--he knows where the money is coming from."
At the same time, Microsoft has continued to diversify its technology portfolio and extend its reach into the IT market. It has moved into new areas such as enterprise software and has cast itself as a major player in the home entertainment industry via the launch of its Xbox video game console and other media-oriented products. The company is currently moving aggressively into the PC security software space; it launched a beta version of its first entry into the antispyware market earlier this month, and it detailed plans to introduce antivirus software applications later this year.
As for Gates, the shift gave him more time to spend on technical projects, but in some ways there has still not been enough Gates to go around.
In the early days, nearly all products went through a "Bill review," Rosoff said. Now only some projects find their way onto Gates' plate.
"It's harder to get in front of Gates than it used to be," Rosoff said. Gates has been most active in a few key projects, he said, including the Tablet PC and Longhorn, the company's next version of Windows. Even with all of Gates' attention, though, Longhorn fell behind schedule and had to be significantly scaled back.
On a personal level, Gates has continued to expand his considerable philanthropic efforts via the Bill and Melinda Gates Foundtaion,( http://www.gatesfoundation.org/default ) which holds claim to an endowment of about $27 billion and has contributed to everything from relief efforts surrounding last month's tsunami in South East Asia to efforts to improve the IT resources in the world's education systems. Recognized as the world's richest man, with a net worth of about $46.6 billion, Gates has also transformed his image from that of a sometimes arrogant and aloof individual to a kind of polished media darling.
Yes--and no. While CEO Steve Ballmer has clearly retooled some parts of Microsoft to more closely mesh with his hard-driving style, the world's largest software maker still faces many of the same challenges: Open source, legal skirmishes, and slowing growth in some of its core businesses.
The eventual shift of power to longtime friend and colleague Ballmer was expected, but the announcement itself, five years ago today, on Jan. 13, 2000, was something of a shock.
The ever-boisterous Ballmer presents a decidedly differant face for the company than that of Gates, the more introverted techie who had headed the company since founding it with Paul Allen in 1975.
Ballmer reorganized the company into separate business units, changed the way workers are compensated and moved toward a broad strategy to expand on Microsoft's core products by slicing and dicing them in new ways.
"It's clearly Ballmer's company from a business perspective," said Directions on Microsoft analyst Matt Rosoff. "The seven business units were largely his deal. It probably wouldn't have happened under Gates."
Another Ballmer-inspired change: Fostering a kinder, gentler image and greater trust among both customers and partners. Ballmer issues annual missives to his troops calling on them to build products that are more useful for customers and to be more responsive to customer needs.
Ballmer tackled Microsoft's image problems almost from day one. In one of his first public appearances after taking over the CEO reins, he talked about the company's dilemma. "Microsoft is a company that, in my opinion, is not very well-understood. For some people, we're the Windows company...we're known mostly by our stock market success. We're also, I think, to some extent viewed as the scourge of Silicon Valley.
Unfortunately...we're known as a legal defendant," he told the Commonwealth Club of California back in February of 2000.
Gates, meanwhile, has become the brain trust behind some of Microsoft's most complex--and risky--product strategies, such as the new Longhorn release of Windows and the company's move into home entertainment.
Trying to measure the success of the Ballmer era is tricky. Since the announcement, Microsoft has seen its fortunes fluctuate. Sales have grown from just less than $23 billion in fiscal 2000 to $36.8 billion in fiscal 2004, and the company's cash balance has more than tripled. At the same time, Microsoft' stock has foundered, dropping from $47.80 on the day Gates announced his plans to around $27 a share.
Many of the issues, though, that Microsoft has faced in recent years--security issues, slowing tech spending and the rising popularity of open-source software, are things that any Microsoft CEO would have had to face.
"It's a little hard to separate the changes that would have happened anyway from the changes that happened specifically from Ballmer becoming CEO," Rosoff said. "There's a lot of stuff that would have happened anyway that Microsoft would have had to react to regardless of who was CEO."
One of the busiest areas for Microsoft during the Ballmer tenure has been the legal front. When Gates first detailed his new career plans, Microsoft was dealing with news that the U.S. Department of Justice was considering a proposal to break up the software maker to resolve the antitrust case pending against it. A trial judge ordered such a breakup, but Microsoft had that overruled on appeal and eventually worked out a landmark settlement with the Department of Justice.
Since then, Ballmer and general counsel Brad Smith have been working to resolve many of the company's legal headaches, settling with rivals such as Sun Microsystems and AOL Time Warner and reaching deals to settle a number of consumer class-action lawsuits.
"It's sort of a way to minimize risk rather than fighting things to the end and ending up with some sort of catastrophic decision," Rosoff said.
Rosoff sees the settlements as part of a broader trend that has marked the Ballmer years. "Under Ballmer, the company has become a little more conservative," Rosoff said.
Back to its rootsIn the late 1990s, Microsoft was investing billions in cable and telecommunications companies and pouring its own development resources in a number of areas, including its MSN Internet service and a range of consumer Web services.
"They are again really focused on selling software," Rosoff said. "Part of that is Ballmer's legacy--he knows where the money is coming from."
At the same time, Microsoft has continued to diversify its technology portfolio and extend its reach into the IT market. It has moved into new areas such as enterprise software and has cast itself as a major player in the home entertainment industry via the launch of its Xbox video game console and other media-oriented products. The company is currently moving aggressively into the PC security software space; it launched a beta version of its first entry into the antispyware market earlier this month, and it detailed plans to introduce antivirus software applications later this year.
As for Gates, the shift gave him more time to spend on technical projects, but in some ways there has still not been enough Gates to go around.
In the early days, nearly all products went through a "Bill review," Rosoff said. Now only some projects find their way onto Gates' plate.
"It's harder to get in front of Gates than it used to be," Rosoff said. Gates has been most active in a few key projects, he said, including the Tablet PC and Longhorn, the company's next version of Windows. Even with all of Gates' attention, though, Longhorn fell behind schedule and had to be significantly scaled back.
On a personal level, Gates has continued to expand his considerable philanthropic efforts via the Bill and Melinda Gates Foundtaion,( http://www.gatesfoundation.org/default ) which holds claim to an endowment of about $27 billion and has contributed to everything from relief efforts surrounding last month's tsunami in South East Asia to efforts to improve the IT resources in the world's education systems. Recognized as the world's richest man, with a net worth of about $46.6 billion, Gates has also transformed his image from that of a sometimes arrogant and aloof individual to a kind of polished media darling.
Tuesday, January 11, 2005
IE flaw threat hits the roof
Three unpatched flaws in Internet Explorer now pose a higher danger, a security company warned, after code to exploit one of the issues was published to the Internet.
Secunia said Friday that it had raised its rating of the vulnerabilities in Microsoft's browser to "extremely critical," its highest rating. The flaws, which affect IE 6, could enable attackers to place and execute programs such as spyware and pornography dialers on victims' computers without their knowledge, said Thomas Kristensen, Secunia's chief technology officer.
Exploit code for one of the vulnerabilities, a flaw in an HTML Help control, was published on the Internet on Dec. 21 in an advisory (http://www.greyhatsecurity.org/sp2rc-analysis.htm ) by GreyHats Security Group.
"In order for us to rate a vulnerability as extremely critical, there has to be a working exploit out there and one that doesn't require user interaction," Kristensen said. "This is our highest rating and is the last warning for users to fix their systems."
The exploit code can be used to attack computers running Windows XP even if Microsoft's Service Pack 2 patch has been installed, Secunia said. The company is advising people to disable IE's Active X support as a preventative measure, until Microsoft develops a patch for the problem. It also suggests using another browser product.
The Secunia advisory also warns of another HTML Help control vulnerability that, when used in combination with a drag-and-drop flaw, could be used to attack PCs--though in that case, it would have to be with the interaction of the victim. The company first issued an alert about the three security holes ( http://secunia.com/advisories/12889 ) in October.
"Microsoft knew of this back in October," Kristensen said. "In my opinion, it's not fair to have a vulnerability known for two months without having an available patch, especially when every little detail (of the vulnerability) is out there."
"Microsoft is now aware of all three issues, and I'm sure they're giving it an even higher priority," he added.
Microsoft said it was investigating the public reports of the exploit, adding that the delay in fixing the IE patch was related to the extensive work needed to produce an effective patch.
"It's important to note that security response requires a balance between time and testing, and Microsoft will only release an update that is as well engineered and thoroughly tested as possible--whether that is a day, week, month or longer," a Microsoft representative said. "In security response, an incomplete security update can be worse than no patch at all if it only serves to alert malicious hackers to a new issue."
The company is advising people to check its safe browsing( http://www.microsoft.com/security/incident/settings.mspx )guidelines and to set their Internet security zone settings to "high." It also suggests that people continue installing automatic security updates from Service Pack 2.
This latest discovery marks another setback in Microsoft's efforts to shore up its security. When Microsoft launched SP2 in August, Chair Bill Gates touted it as a significant step in fortifying systems against attacks.
Secunia also offers users the ability to conduct an online test of their systems( http://secunia.com/internet_explorer_command_execution_vulnerability_test/ )to see if they are vulnerable.
Secunia said Friday that it had raised its rating of the vulnerabilities in Microsoft's browser to "extremely critical," its highest rating. The flaws, which affect IE 6, could enable attackers to place and execute programs such as spyware and pornography dialers on victims' computers without their knowledge, said Thomas Kristensen, Secunia's chief technology officer.
Exploit code for one of the vulnerabilities, a flaw in an HTML Help control, was published on the Internet on Dec. 21 in an advisory (http://www.greyhatsecurity.org/sp2rc-analysis.htm ) by GreyHats Security Group.
"In order for us to rate a vulnerability as extremely critical, there has to be a working exploit out there and one that doesn't require user interaction," Kristensen said. "This is our highest rating and is the last warning for users to fix their systems."
The exploit code can be used to attack computers running Windows XP even if Microsoft's Service Pack 2 patch has been installed, Secunia said. The company is advising people to disable IE's Active X support as a preventative measure, until Microsoft develops a patch for the problem. It also suggests using another browser product.
The Secunia advisory also warns of another HTML Help control vulnerability that, when used in combination with a drag-and-drop flaw, could be used to attack PCs--though in that case, it would have to be with the interaction of the victim. The company first issued an alert about the three security holes ( http://secunia.com/advisories/12889 ) in October.
"Microsoft knew of this back in October," Kristensen said. "In my opinion, it's not fair to have a vulnerability known for two months without having an available patch, especially when every little detail (of the vulnerability) is out there."
"Microsoft is now aware of all three issues, and I'm sure they're giving it an even higher priority," he added.
Microsoft said it was investigating the public reports of the exploit, adding that the delay in fixing the IE patch was related to the extensive work needed to produce an effective patch.
"It's important to note that security response requires a balance between time and testing, and Microsoft will only release an update that is as well engineered and thoroughly tested as possible--whether that is a day, week, month or longer," a Microsoft representative said. "In security response, an incomplete security update can be worse than no patch at all if it only serves to alert malicious hackers to a new issue."
The company is advising people to check its safe browsing( http://www.microsoft.com/security/incident/settings.mspx )guidelines and to set their Internet security zone settings to "high." It also suggests that people continue installing automatic security updates from Service Pack 2.
This latest discovery marks another setback in Microsoft's efforts to shore up its security. When Microsoft launched SP2 in August, Chair Bill Gates touted it as a significant step in fortifying systems against attacks.
Secunia also offers users the ability to conduct an online test of their systems( http://secunia.com/internet_explorer_command_execution_vulnerability_test/ )to see if they are vulnerable.
Critical Windows fix on the wayMicrosoft has announced that it will release three patches for its Windows operating system next week.
Microsoft has announced that it will release three patches for its Windows operating system next week.
The fixes, which will carry a maximum threat rating of "critical," will be issued Tuesday, the company said. Under its two-month-old advance notification program, Microsoft typically gives the public early notice of the number of updates it plans to deliver and of the severity of the vulnerabilities the updates fix.
The only other detail the software giant revealed Thursday was that people may have to restart their Windows systems for the patches to take effect.
Microsoft did not say whether the patches will fix several three-month-old flaws in Internet Explorer. A security group released code at the end of December that demonstrates how to take advantage of the security holes and compromise a computer. That disclosure caused a security information company to raise the threat of those flaws to "extremely critical" on Friday.
Perceived security problems with Internet Explorer have resulted in the top browser shedding market share to its open-source rival Firefox.
The fixes, which will carry a maximum threat rating of "critical," will be issued Tuesday, the company said. Under its two-month-old advance notification program, Microsoft typically gives the public early notice of the number of updates it plans to deliver and of the severity of the vulnerabilities the updates fix.
The only other detail the software giant revealed Thursday was that people may have to restart their Windows systems for the patches to take effect.
Microsoft did not say whether the patches will fix several three-month-old flaws in Internet Explorer. A security group released code at the end of December that demonstrates how to take advantage of the security holes and compromise a computer. That disclosure caused a security information company to raise the threat of those flaws to "extremely critical" on Friday.
Perceived security problems with Internet Explorer have resulted in the top browser shedding market share to its open-source rival Firefox.
MSN debuts portable video downloads
Microsoft can't fit every entertainer in your pocket just yet, but would Paddington Bear do for starters?
That's the software giant's pitch as it unveiled a new video download service at this week's Consumer Electronics Show here. The service is meant to boost the slowly growing line of portable video players based on its nascent Portable Media Center software.
Microsoft's MSN Video Downloads will offer a daily changing selection of video clips from sources such as Fox Sports and IFilm. Portable Media Center users download clips to their PC and then dump them onto the portable gadget with a single click.
The service is meant to alleviate one of the most commonly cited headaches with the Portable Media Center software, which Microsoft introduced two years ago. While Portable Media Center devices can handle video from a variety of sources, all clips have to be encoded in the special-purpose media format Microsoft developed for the device, a time-consuming process that can thwart grab-and-go TV watching.
James Bernard, Microsoft product manager for Portable Media Center, said the encoding process comes with the territory.
"To optimize the video for a screen of this size and hardware like this, you really need to do some compression," Bernard said. "We've made it really easy to set that up to happen in the background, but it is more convenient if you have things ready to download in our format."
The MSN service will try to serve that function with what Bernard expects will be a rapidly growing menu of programming choices, as Microsoft works to recruit new partners.
"One of the first challenges we had was getting the devices out there," Bernard said. "Now we're really going to work over the next 12 to 24 months on getting more content. There are a lot of cool things we can do with content providers, and they're really seeing value in what Portable Media Center does."
Besides the MSN service, Microsoft announced a partnership with video recording pioneer TiVo that will allow owners of recent TiVo boxes to shift programs to any Windows XP PC and then to a Portable Media Center device.
Portable Media Center initially focused on Windows XP Media Center, Microsoft's operating system for entertainment-centered PCs, for grabbing TV programming using TiVo-like functions built into the OS. But the seamless entertainment Microsoft seeks with Portable Media Center means taking content from a variety of sources, Bernard said.
"The platform was never meant to only work with Media Center PCs," Bernard said. "We still think Media Center is kind of the premium experience for getting everything to work seamlessly, but we want to provide a number of ways for people to have access to content."
That's the software giant's pitch as it unveiled a new video download service at this week's Consumer Electronics Show here. The service is meant to boost the slowly growing line of portable video players based on its nascent Portable Media Center software.
Microsoft's MSN Video Downloads will offer a daily changing selection of video clips from sources such as Fox Sports and IFilm. Portable Media Center users download clips to their PC and then dump them onto the portable gadget with a single click.
The service is meant to alleviate one of the most commonly cited headaches with the Portable Media Center software, which Microsoft introduced two years ago. While Portable Media Center devices can handle video from a variety of sources, all clips have to be encoded in the special-purpose media format Microsoft developed for the device, a time-consuming process that can thwart grab-and-go TV watching.
James Bernard, Microsoft product manager for Portable Media Center, said the encoding process comes with the territory.
"To optimize the video for a screen of this size and hardware like this, you really need to do some compression," Bernard said. "We've made it really easy to set that up to happen in the background, but it is more convenient if you have things ready to download in our format."
The MSN service will try to serve that function with what Bernard expects will be a rapidly growing menu of programming choices, as Microsoft works to recruit new partners.
"One of the first challenges we had was getting the devices out there," Bernard said. "Now we're really going to work over the next 12 to 24 months on getting more content. There are a lot of cool things we can do with content providers, and they're really seeing value in what Portable Media Center does."
Besides the MSN service, Microsoft announced a partnership with video recording pioneer TiVo that will allow owners of recent TiVo boxes to shift programs to any Windows XP PC and then to a Portable Media Center device.
Portable Media Center initially focused on Windows XP Media Center, Microsoft's operating system for entertainment-centered PCs, for grabbing TV programming using TiVo-like functions built into the OS. But the seamless entertainment Microsoft seeks with Portable Media Center means taking content from a variety of sources, Bernard said.
"The platform was never meant to only work with Media Center PCs," Bernard said. "We still think Media Center is kind of the premium experience for getting everything to work seamlessly, but we want to provide a number of ways for people to have access to content."
Friday, January 07, 2005
Microsoft's Top 10 Milestones for 2005
It's time to polish up the crystal ball, gaze through the cloudy skies encircling Redmond and make some predictions for the new year.
Some folks seem to think Microsoft was humbled by its legal and technology challenges in 2004. But I disagree. I don't see a kinder or gentler Microsoft emerging in 2005.
After watching the Softies for two decades, I can tell you they are hardly ready to roll over. There's still a lot of plotting and scheming happening in Redmond's hallowed halls. And that will make the coming year anything but predictable. Nonetheless, predict, I will try.
I have a tough act to follow, given how surprisingly accurate I was in my 2004 predictions. Either I just made my guesstimates too obvious, or I was lucky (or both). I predicted no Yukon or Whidbey until 2005 (check); no Longhorn until 2006 (check); no Microsoft CRM 2.0 in 2004 (check); and that Microsoft would create a new program to undercut Linux in international markets (check — Windows Starter Edition).
(Pat, pat. Sound of Microsoft Watcher patting herself on the back.)
But what about 2005? In the past, it was as easy as taking candy from a baby to predict correctly that the Redmondians would miss many of their ship targets. But now that the company has moved to a new policy of publicly acknowledging feature cuts designed to get promised wares out the door, Microsoft ship dates are less likely to become slip dates.
With that aside, what will be the big Microsoft milestones in 2005? Here are my best guesses:
1. The European Union antitrust remedies will be ineffectual, and ultimately, overturned.
Who is going to want to buy a product known as "Windows XP Reduced Media Edition" that will cost the same as the full Windows XP release but not include as much functionality? This thing's going to make Windows Millennium Edition look like a runaway best seller. And that will be just the tip of the iceberg. Given its past track record in convincing authorities that Microsoft the Monopolist is not doing anything illegal, Microsoft will ultimately prevail in having the EU remedies stayed and, some time in the next five years or so, overturned.
2. Microsoft will pay off Novell and Real Networks, as part of Redmond's campaign to clean up its lingering lawsuits.
Novell must have considered Microsoft's $500-million-plus settlement with the company inadequate. Why else dredge up a lawsuit over incidents that occurred almost a decade ago? Real Networks must be holding out for more cash, too, as it has yet to settle its antitrust claims with Microsoft. Could Real's Rob Glaser be angling for a deal like the one cut by Computer and Communications Industry Association chief Ed "Take the Millions and Run" Black?
3. Microsoft will add a handful of new countries to its XP Starter Edition program, while continuing to insist that it is seeding international markets for humanitarian, not competitive, reasons.
So far, there are five stripped-down, cut-rate Starter Editions on the market: In India, Indonesia, Malaysia, Russia and Thailand. We expect to see a handful more in the coming year, but with fewer mentions of Linux and piracy attached to them. Microsoft says Starter Edition versions are for users who've never owned a PC before. But it's worth noting that the Starter Edition concept didn't get its start until Linux began making inroads into this entry-level market.
4. The Sun-Microsoft technology partnership won't advance much, and will show even more signs of unraveling at the seams.
Microsoft and Sun have postponed several times the announcement of the first fruits of their technology partnership, announced back in April 2004. It seems crazy that the pair can't manage to coauthor a press release outlining their intentions to collaborate on Web services and digital-identity standards. And you know that Sun CEO Scott McNealy won't be able to refrain from criticizing the Evil Empire for much longer. Watch for more increasingly public back-biting, rather than closer cooperation, between these two long-time adversaries in 2005.
5. There will be upheaval in Microsoft's mobile/embedded devices division, resulting in a change in strategy and management.
We predicted last year that something had to give in Microsoft's mobile division. After all, how long can the smallest of Microsoft's seven business units continue to promise that Microsoft is poised to become the leader in operating systems that power cell phones and PDAs? At Microsoft's financial analyst day this year, mobile chief Pieter Knook gave a lackluster performance. While there are lots of pretty devices powered by the Windows Mobile platform, it just doesn't seem like the mobile unit has a compelling and concrete strategy for growing its business.
6. Microsoft's biggest announcement of the year won't be Yukon (SQL Server 2005) or Whidbey (Visual Studio 2005). Instead, it will be an as-yet-unannounced anti-virus/anti-spyware subscription service for which Microsoft will charge.
Microsoft says it has yet to decide how it will package the anti-virus and anti-spyware technologies that it acquired from GeCAD and Giant Company Software, respectively. But we hear the decision has been made, as has the delivery mechanism. Watch for Redmond to roll out at least a beta of a combined anti-virus/anti-spyware subscription service in the coming year.
7. While it's the server and tools division that has the most announcements on its plate for 2005, MSN will continue to roll out new offerings at an equally rapid clip. MSN will roll out not only two new search services (Web and desktop), but a whole family of new subscription services aimed at consumers and small/mid-size businesses (SMBs).
Speaking of subscription services, the folks over at the MSN division will continue to roll out new offerings in the new year. Besides the aforementioned security service (see item 7), we're expecting a new MSN storage service to make its debut in the early part of 2005.
8. Microsoft officials will make a concerted effort not to use the "L" word (Longhorn) until September's Professional Developers Conference. But that still won't help Windows XP gain much traction.
No one in the Windows client division wants to talk Longhorn. And with good reason. Microsoft took a lot of flack for talking about Longhorn too early. Then, after releasing a preview of Longhorn client over a year ago, the Redmondians changed direction and exorcised the WinFS file system from the product. But just because the Windows team wants to focus on Windows XP (which still has two more years to live before Longhorn arrives) doesn't mean XP will gain new converts at an exponential pace. If XP does gain traction in 2005, we bet it will come from Microsoft's anti-piracy campaign, not from its moratorium on Longhorn PR.
9. Microsoft won't let the EU antitrust case or Longhorn-PR lockdown stop the company from continuing to integrate more currently separate products and technologies into Windows.
Just because the company's trying to clamp down on over-hyping futures doesn't mean Microsoft will stop "innovatively integrating" more technologies into Windows client and server. Windows Server R2, due out in the latter half of 2005, is all about bundling; it's a collection of various features and functionality released as downloads and feature packs that Microsoft is bundling into a single release. And we're expecting Microsoft to bundle at least a piece of its anti-virus/anti-spyware technology (see item 6) right into the Windows client, with regular updates provided via subscription. For a while I was thinking Microsoft might have a secret interim release of its Internet Explorer browser ready to launch in 2005, but now I don't think so. Even at the risk of losing market share, the company is going to stick to the party line that IE is an inextricable part of Windows.
10. Microsoft will increasingly play the patent card when competing with Linux. Although company officials have downplayed the extent to which Microsoft is threatening customers and partners with the risk of patent-infringement lawsuits if they go with Linux, we hear this is an increasingly key piece of Microsoft's competitive strategy. With Microsoft vowing to file 3,000 patent applications during fiscal 2005 alone, we expect the company to rattle the patent sabers even more in 2005.
Some folks seem to think Microsoft was humbled by its legal and technology challenges in 2004. But I disagree. I don't see a kinder or gentler Microsoft emerging in 2005.
After watching the Softies for two decades, I can tell you they are hardly ready to roll over. There's still a lot of plotting and scheming happening in Redmond's hallowed halls. And that will make the coming year anything but predictable. Nonetheless, predict, I will try.
I have a tough act to follow, given how surprisingly accurate I was in my 2004 predictions. Either I just made my guesstimates too obvious, or I was lucky (or both). I predicted no Yukon or Whidbey until 2005 (check); no Longhorn until 2006 (check); no Microsoft CRM 2.0 in 2004 (check); and that Microsoft would create a new program to undercut Linux in international markets (check — Windows Starter Edition).
(Pat, pat. Sound of Microsoft Watcher patting herself on the back.)
But what about 2005? In the past, it was as easy as taking candy from a baby to predict correctly that the Redmondians would miss many of their ship targets. But now that the company has moved to a new policy of publicly acknowledging feature cuts designed to get promised wares out the door, Microsoft ship dates are less likely to become slip dates.
With that aside, what will be the big Microsoft milestones in 2005? Here are my best guesses:
1. The European Union antitrust remedies will be ineffectual, and ultimately, overturned.
Who is going to want to buy a product known as "Windows XP Reduced Media Edition" that will cost the same as the full Windows XP release but not include as much functionality? This thing's going to make Windows Millennium Edition look like a runaway best seller. And that will be just the tip of the iceberg. Given its past track record in convincing authorities that Microsoft the Monopolist is not doing anything illegal, Microsoft will ultimately prevail in having the EU remedies stayed and, some time in the next five years or so, overturned.
2. Microsoft will pay off Novell and Real Networks, as part of Redmond's campaign to clean up its lingering lawsuits.
Novell must have considered Microsoft's $500-million-plus settlement with the company inadequate. Why else dredge up a lawsuit over incidents that occurred almost a decade ago? Real Networks must be holding out for more cash, too, as it has yet to settle its antitrust claims with Microsoft. Could Real's Rob Glaser be angling for a deal like the one cut by Computer and Communications Industry Association chief Ed "Take the Millions and Run" Black?
3. Microsoft will add a handful of new countries to its XP Starter Edition program, while continuing to insist that it is seeding international markets for humanitarian, not competitive, reasons.
So far, there are five stripped-down, cut-rate Starter Editions on the market: In India, Indonesia, Malaysia, Russia and Thailand. We expect to see a handful more in the coming year, but with fewer mentions of Linux and piracy attached to them. Microsoft says Starter Edition versions are for users who've never owned a PC before. But it's worth noting that the Starter Edition concept didn't get its start until Linux began making inroads into this entry-level market.
4. The Sun-Microsoft technology partnership won't advance much, and will show even more signs of unraveling at the seams.
Microsoft and Sun have postponed several times the announcement of the first fruits of their technology partnership, announced back in April 2004. It seems crazy that the pair can't manage to coauthor a press release outlining their intentions to collaborate on Web services and digital-identity standards. And you know that Sun CEO Scott McNealy won't be able to refrain from criticizing the Evil Empire for much longer. Watch for more increasingly public back-biting, rather than closer cooperation, between these two long-time adversaries in 2005.
5. There will be upheaval in Microsoft's mobile/embedded devices division, resulting in a change in strategy and management.
We predicted last year that something had to give in Microsoft's mobile division. After all, how long can the smallest of Microsoft's seven business units continue to promise that Microsoft is poised to become the leader in operating systems that power cell phones and PDAs? At Microsoft's financial analyst day this year, mobile chief Pieter Knook gave a lackluster performance. While there are lots of pretty devices powered by the Windows Mobile platform, it just doesn't seem like the mobile unit has a compelling and concrete strategy for growing its business.
6. Microsoft's biggest announcement of the year won't be Yukon (SQL Server 2005) or Whidbey (Visual Studio 2005). Instead, it will be an as-yet-unannounced anti-virus/anti-spyware subscription service for which Microsoft will charge.
Microsoft says it has yet to decide how it will package the anti-virus and anti-spyware technologies that it acquired from GeCAD and Giant Company Software, respectively. But we hear the decision has been made, as has the delivery mechanism. Watch for Redmond to roll out at least a beta of a combined anti-virus/anti-spyware subscription service in the coming year.
7. While it's the server and tools division that has the most announcements on its plate for 2005, MSN will continue to roll out new offerings at an equally rapid clip. MSN will roll out not only two new search services (Web and desktop), but a whole family of new subscription services aimed at consumers and small/mid-size businesses (SMBs).
Speaking of subscription services, the folks over at the MSN division will continue to roll out new offerings in the new year. Besides the aforementioned security service (see item 7), we're expecting a new MSN storage service to make its debut in the early part of 2005.
8. Microsoft officials will make a concerted effort not to use the "L" word (Longhorn) until September's Professional Developers Conference. But that still won't help Windows XP gain much traction.
No one in the Windows client division wants to talk Longhorn. And with good reason. Microsoft took a lot of flack for talking about Longhorn too early. Then, after releasing a preview of Longhorn client over a year ago, the Redmondians changed direction and exorcised the WinFS file system from the product. But just because the Windows team wants to focus on Windows XP (which still has two more years to live before Longhorn arrives) doesn't mean XP will gain new converts at an exponential pace. If XP does gain traction in 2005, we bet it will come from Microsoft's anti-piracy campaign, not from its moratorium on Longhorn PR.
9. Microsoft won't let the EU antitrust case or Longhorn-PR lockdown stop the company from continuing to integrate more currently separate products and technologies into Windows.
Just because the company's trying to clamp down on over-hyping futures doesn't mean Microsoft will stop "innovatively integrating" more technologies into Windows client and server. Windows Server R2, due out in the latter half of 2005, is all about bundling; it's a collection of various features and functionality released as downloads and feature packs that Microsoft is bundling into a single release. And we're expecting Microsoft to bundle at least a piece of its anti-virus/anti-spyware technology (see item 6) right into the Windows client, with regular updates provided via subscription. For a while I was thinking Microsoft might have a secret interim release of its Internet Explorer browser ready to launch in 2005, but now I don't think so. Even at the risk of losing market share, the company is going to stick to the party line that IE is an inextricable part of Windows.
10. Microsoft will increasingly play the patent card when competing with Linux. Although company officials have downplayed the extent to which Microsoft is threatening customers and partners with the risk of patent-infringement lawsuits if they go with Linux, we hear this is an increasingly key piece of Microsoft's competitive strategy. With Microsoft vowing to file 3,000 patent applications during fiscal 2005 alone, we expect the company to rattle the patent sabers even more in 2005.
Microsoft Anti-Spyware Beta Takes Familiar Shape
The first drop of Microsoft Corp.'s "A1" security sauce has been spilled internally and it's all systems go for a full-scale beta launch of an anti-spyware application within the next month.
A spokesperson for the software giant confirmed that a repackaged—and rebranded—version of the Giant AntiSpyware tool was released to employees for testing ahead of a public beta later this month.
"As part of its testing process, it is customary for Microsoft to first release the beta version of its product internally in order to gather further feedback before releasing publicly," the spokesperson told eWEEK.com.
According to Windows enthusiast site Neowin, the anti-spyware tool is code-named "Atlanta" and is an exact replica of the Giant Software product that was acquired by Microsoft last month.
"As we stated when we acquired Giant Company Software on December 16, we planned to issue a public beta of an anti-spyware solution within the month. We're still on target to reach that timeframe, but beyond that, we aren't commenting on an exact release date or functionality at this point," the spokesperson added.
According to the Neowin screenshots, Microsoft has retained such Giant AntiSpyware features as RealTime Detection, AutoUpdater, Spyware Scan and the widely hailed SpyNet Community network.
SpyNet is styled as a network of computer users who agree to forward information about spyware to help create and update spyware detection signatures. When the software's Security Agents are breached by unknown programs, the SpyNet servers are immediately updated to report the activity and check whether it is part of a spyware outbreak.
The program also includes a System Inoculation Wizard that suggests and enforces security levels, and a Tracks Eraser privacy tool, which deletes Internet history logs and 50 different activity trails from a user's Web-browsing history or Windows temporary folders.
As Microsoft's bundled anti-spyware/anti-virus plans begin to take shape, experts warn that a dependence on a single company for bundled services could lull PC users into a false sense of security.
"It's an interesting approach to integrate the two into a single offering. Whenever the 'Big Buy' puts its muscle behind something, it will obviously have an impact on the market," said Rick Fleming, chief technical officer of San Antonio, Texas-based Digital Defense Inc.
"The challenge with anti-virus and anti-spyware products is that they're only going to detect what [they know] about. When Microsoft puts out a product promising security, it inevitably leads to complacency from the user base because they expect it to detect everything," Fleming said.
Microsoft's "A1" is expected to field its anti-spyware/anti-virus bundle in the form of a renewable subscription service, but Fleming said it is very likely the two services will be kept separate even if the marketing message speaks to a single offering.
"While I might pay for a single license, I could be getting 17 different programs running on a machine. One subscription doesn't necessarily mean one program," he said.
Analysts expect Microsoft to compete aggressively on pricing to put the squeeze on entrenched players such as Computer Associates International Inc., McAfee Inc., Symantec Corp. and Webroot Software Inc.
In the past, Microsoft has directed Windows users to free spyware removal such as Lavasoft Ad-Aware and Spybot Search & Destroy (S&D), but once the software giant's own service hits the market, it's likely those referrals will disappear.
Microsoft's public beta is expected to be free for Windows 2000, Windows XP and Windows Server 2003 users.
A spokesperson for the software giant confirmed that a repackaged—and rebranded—version of the Giant AntiSpyware tool was released to employees for testing ahead of a public beta later this month.
"As part of its testing process, it is customary for Microsoft to first release the beta version of its product internally in order to gather further feedback before releasing publicly," the spokesperson told eWEEK.com.
According to Windows enthusiast site Neowin, the anti-spyware tool is code-named "Atlanta" and is an exact replica of the Giant Software product that was acquired by Microsoft last month.
"As we stated when we acquired Giant Company Software on December 16, we planned to issue a public beta of an anti-spyware solution within the month. We're still on target to reach that timeframe, but beyond that, we aren't commenting on an exact release date or functionality at this point," the spokesperson added.
According to the Neowin screenshots, Microsoft has retained such Giant AntiSpyware features as RealTime Detection, AutoUpdater, Spyware Scan and the widely hailed SpyNet Community network.
SpyNet is styled as a network of computer users who agree to forward information about spyware to help create and update spyware detection signatures. When the software's Security Agents are breached by unknown programs, the SpyNet servers are immediately updated to report the activity and check whether it is part of a spyware outbreak.
The program also includes a System Inoculation Wizard that suggests and enforces security levels, and a Tracks Eraser privacy tool, which deletes Internet history logs and 50 different activity trails from a user's Web-browsing history or Windows temporary folders.
As Microsoft's bundled anti-spyware/anti-virus plans begin to take shape, experts warn that a dependence on a single company for bundled services could lull PC users into a false sense of security.
"It's an interesting approach to integrate the two into a single offering. Whenever the 'Big Buy' puts its muscle behind something, it will obviously have an impact on the market," said Rick Fleming, chief technical officer of San Antonio, Texas-based Digital Defense Inc.
"The challenge with anti-virus and anti-spyware products is that they're only going to detect what [they know] about. When Microsoft puts out a product promising security, it inevitably leads to complacency from the user base because they expect it to detect everything," Fleming said.
Microsoft's "A1" is expected to field its anti-spyware/anti-virus bundle in the form of a renewable subscription service, but Fleming said it is very likely the two services will be kept separate even if the marketing message speaks to a single offering.
"While I might pay for a single license, I could be getting 17 different programs running on a machine. One subscription doesn't necessarily mean one program," he said.
Analysts expect Microsoft to compete aggressively on pricing to put the squeeze on entrenched players such as Computer Associates International Inc., McAfee Inc., Symantec Corp. and Webroot Software Inc.
In the past, Microsoft has directed Windows users to free spyware removal such as Lavasoft Ad-Aware and Spybot Search & Destroy (S&D), but once the software giant's own service hits the market, it's likely those referrals will disappear.
Microsoft's public beta is expected to be free for Windows 2000, Windows XP and Windows Server 2003 users.
Microsoft Readies 'A1' Security Subscription Service
Microsoft's anti-virus/anti-spyware strategy is taking shape. Sources say Redmond's prepping a fee-based bundle, which could go beta soon.
Publicly, Microsoft continues to be cagey about packaging and pricing plans for its anti-spyware and anti-virus solutions. But privately, Microsoft has begun informing partners of its plans for a security subscription service code-named "A1," according to developers who requested anonymity.
Microsoft bought anti-virus vendor GeCAD in the summer of 2003, and anti-spyware maker Giant Company Software last month. As to how it plans to deliver these technologies, Microsoft has declined to give specifics. How/when/if it will repackage GeCAD's technology remains uncertain. Ditto for Giant's — although according to the Windows enthusiast site Neowin, Microsoft is expected to field its first anti-spyware beta based on Giant's technology this week. Neowin said the anti-spyware beta is code-named "ATLANTA".( http://www.eweek.com/article2/0,1759,1747960,00.asp ).
Publicly, Microsoft continues to be cagey about packaging and pricing plans for its anti-spyware and anti-virus solutions. But privately, Microsoft has begun informing partners of its plans for a security subscription service code-named "A1," according to developers who requested anonymity.
Microsoft bought anti-virus vendor GeCAD in the summer of 2003, and anti-spyware maker Giant Company Software last month. As to how it plans to deliver these technologies, Microsoft has declined to give specifics. How/when/if it will repackage GeCAD's technology remains uncertain. Ditto for Giant's — although according to the Windows enthusiast site Neowin, Microsoft is expected to field its first anti-spyware beta based on Giant's technology this week. Neowin said the anti-spyware beta is code-named "ATLANTA".( http://www.eweek.com/article2/0,1759,1747960,00.asp ).
Microsoft, CinemaNow expand Net movie alliance
Microsoft and video-on-demand service CinemaNow have expanded a partnership to stream films from the Web to the television.
In October, the software maker's TV division introduced the set-top box MSN TV 2, which fuses Web access with TV viewing for dial-up and broadband users. In the spring, Microsoft TV will update the broadband service to support CinemaNow's movie-rental site, along with other providers of Web video, so that people can rent films online and watch them in the living room.
"This is another entertainment resource for the living room beyond the cable and satellite providers," said Andy Sheldon, MSN TV's director of product management.
Still, MSN has labored for many years to sell a simple Web TV consumer device without success.
Microsoft made the update possible by adding support for Windows Media digital rights management technology, which secures rights holders' content from Internet theft. Companies including National Public Radio and video on-demand sites AtomFilms and MovieLink--current partners of Microsoft--could also reformat their Web video for availability on MSN TV 2 by its launch.
Microsoft, which holds roughly a 10 percent stake in CinemaNow, partnered with the on-demand movie site more than a year ago to allow customers of its Media Center PC to stream movies to the television. While the companies have not disclosed usage of the Web-to-TV service to date, they both say demand is growing for such applications and that the MSN TV 2 will open consumers up to a lower-priced product.
The set-top box costs $199, with a monthly service fee of $9.95, without broadband access. In contrast, a Media Center PC can cost from several hundred dollars to more than $1,000.
"The cost (of the new service) is much easier for the masses, and it's easy to use to find the Internet," said Bruce Eisen, executive vice president at CinemaNow.
CinemaNow lets people rent from a library of more than 1,500 movies for about $3 a film. The company has similar deals to distribute its films through Creative Arts' handheld devices and KISS' network DVD device.
In October, the software maker's TV division introduced the set-top box MSN TV 2, which fuses Web access with TV viewing for dial-up and broadband users. In the spring, Microsoft TV will update the broadband service to support CinemaNow's movie-rental site, along with other providers of Web video, so that people can rent films online and watch them in the living room.
"This is another entertainment resource for the living room beyond the cable and satellite providers," said Andy Sheldon, MSN TV's director of product management.
Still, MSN has labored for many years to sell a simple Web TV consumer device without success.
Microsoft made the update possible by adding support for Windows Media digital rights management technology, which secures rights holders' content from Internet theft. Companies including National Public Radio and video on-demand sites AtomFilms and MovieLink--current partners of Microsoft--could also reformat their Web video for availability on MSN TV 2 by its launch.
Microsoft, which holds roughly a 10 percent stake in CinemaNow, partnered with the on-demand movie site more than a year ago to allow customers of its Media Center PC to stream movies to the television. While the companies have not disclosed usage of the Web-to-TV service to date, they both say demand is growing for such applications and that the MSN TV 2 will open consumers up to a lower-priced product.
The set-top box costs $199, with a monthly service fee of $9.95, without broadband access. In contrast, a Media Center PC can cost from several hundred dollars to more than $1,000.
"The cost (of the new service) is much easier for the masses, and it's easy to use to find the Internet," said Bruce Eisen, executive vice president at CinemaNow.
CinemaNow lets people rent from a library of more than 1,500 movies for about $3 a film. The company has similar deals to distribute its films through Creative Arts' handheld devices and KISS' network DVD device.
Gates taking a seat in your den
LAS VEGAS--Bill Gates is coming to your living room, whether you like it or not.
Microsoft's chairman is setting the company on a course to provide software and tools that will allow different forms of entertainment to blend. Messaging will become a crucial part of Xenon, the code name for the next Xbox. Microsoft will also work with television outlets like the Discovery Channel and MTV Networks to create tools for delivering content, as well as advertising, into the home.
Its eyes ever set on the competition, Microsoft will continue to raise the stakes against Apple Computer in the music industry and against Google and Yahoo in search.
Meanwhile, Microsoft Research is working on ways to reduce the cost of getting people in emerging nations hooked on the Internet. One idea: Mesh networks that will let several families share connections.
Gates spoke with CNET News.com on the eve of his keynote speech at the Consumer Electronics Show in Las Vegas about Microsoft's consumer plans, the convergence of entertainment technologies--and why he hasn't done a blog yet.
Q: The industry's been talking about convergence for years. The first products have come out, so what's next? Interoperability--is that the next challenge?
A: Well, there's a lot of that going on. For us, the key convergence product is the Media Center PC, which is the idea of that single remote control giving you the best TV experience, music and photos but also the full power of the PC, and we've got lots of partners who keep signing on to Media Center and doing neat things. We'll show some Discovery Channel stuff in the keynote. We have a new relationship with MTV where they're using our rights management and formats, and we're connecting it to the Media Center.
And so there is growing momentum with partners, growing momentum with the hardware. The price of Media Center PCs came down a lot, which is partly why we were able to double our sales this holiday. We've got some new remote controls from Philips and others.
And so you fill out the ecosystem, you get the people who install these systems to understand how they do the customization, you get the word of mouth going, and so I'd say we feel great about where sort of the centerpiece convergence device is and the peripheral things happening around it.
Q: How are the different entertainment and media industries going to be affected by these changes. For instance, it seems like advertisers are really impacted.
Well, there's a thing that we can do for the advertisers that is critical for them, which is to allow the advertising to be targeted. That's what you've seen with our IPTV (Internet Protocol television) effort--companies like SBC Communications signing up for that--and we've got BellSouth as a new partner there. With that infrastructure, even for people watching the same show, you can insert just in a perfect way an ad targeted to that individual.
And the value of targeted advertising is really twofold. First, it means that the person is less likely to want to skip the ad, and second of all, it means the chance that they'll actually do something--buy something.
And so the new TV infrastructure will be about very targeted advertising. Advertising is taking on new forms. Obviously, in the search space, we're doing neat things with advertisers. No doubt, it's not going to stay the same as it is today.
Q: What changes does this mean for Microsoft? Do you see yourself becoming, let's say, more of a seller of content?
Well, the most explosive piece of content this holiday season was "Halo 2." We sold 6.3 million copies, we've had 69 million hours of online game play. And so is Microsoft a content company? Well, I'd say "Master and Commander" is good--people have talked about how the story made them cry--that's content, but it's also software.
The boundary there has always been a bit gray. Our main role is to provide the platforms and the tools, and simply partner with the content companies like MTV and let them do what they're good at. It's mainly in this interactive realm that we need to come in and do some complete content ourselves.
One of the big phenomena of the year has been Web logging. Has the growth surprised you?
Well, actually I think the biggest blogging statistic I know, which really blew me away, is that we've got close to a million people setting up blogs with the Spaces capability that's connected up to Messenger.
Now, with blogs, you always have to be careful. The decay rate of "I started and I stopped" or "I started and nobody visited" is fairly high, but as RSS (Really Simple Syndication) has gotten more sophisticated and value-added search capabilities have come along, this thing is really maturing.
And we've done some things in Japan and Korea that are unique blog experiments. The Spaces thing is a worldwide effort. It's a great phenomena, and it's sort of built on e-mail, and so we need to integrate more blogging capability into the e-mail world--and as we do the next generation of Outlook, you'll see that. We need to integrate it more into our SharePoint, which is our collaboration Office platform, and then, as I discussed, MSN is embracing it so that instead of thinking about, "OK, I go to one community to do photos, one community to do social networking, one community to do this," we say, "Hey," off of Messenger, which has got your buddy list already, then, "Let's let you do the photos and the social networking and everything--but starting in an integrated way off of Messenger."
Q: Which ones do you read, if any?
Well, it's interesting, I get a lot of people--and this is very typical for me--I get people who are forwarding things on to me, so I sort of have human search engines that will say, "Hey, there's a particular thing that's hot and that's interesting."
I just type in various keywords. We have a lot of blogs that are just internal to Microsoft where people are completely open about what's going on with this, what's going on with that.
I've toyed with doing one myself, but I don't want to be one of those people who start and then don't finish it, and again I'm thinking maybe I could do one a month or one every six weeks--something like that. I'd kind of like to, but I've got to be sure I can keep going for at least a year to make it worth doing.
Will there be much of a push at Microsoft to sell third-party content like music, or is it always going to be a smaller part of you?
We've said that having the music platform there is just part of the overall online relationship that we want to have with these customers.
In and of itself, it's not going to be a big source of a profit because there will be lots of people with stores out there, but then in terms of making it simple, having it work on all the devices, work with all the stores--that is important to us. The Windows ecosystem provides variety.
Apple is doing things the way Apple does--where it's the Apple hardware and the Apple store, that's great for them. We're doing it the Windows way, where you've got things like this Creative Zen Micro, which sold out this holiday season. This brings the photo capability in, and it's a very attractively priced device. So the variety story is an important one for us; it uses our rights management format and supports a subscription approach that we think can be a significant part of online music sales.
Q: What do you think of Apple's success so far? I mean, they clearly have had a hit with the iPod.
Absolutely. They had a hit with the Apple II, they had a hit with the Macintosh, and they have a hit with the iPod, so this is a company that's had three hits, and that's very impressive. There are a lot of companies that don't have three hits. And in the same way that Macintosh helped get people exposed to the graphical user interface, the iPod is doing a great job getting people to think about digital music.
In the long run, there will be a lot of people making digital music players, and we think that there will be a very different market share with dozens and dozens of companies. And other than Apple, all those player makers are signing up to work inside the Windows PlaysForSure ecosystem.
Q: There's a big debate over whether games will surpass movies and TV as a bigger portion of revenue in the entertainment industry. What do you think will happen?
Well, there are a couple things to look at. Instant messaging will go from just being a text thing to also being voice and video and music, so instant messaging, particularly for young people but in general, is very, very explosive.
And Xbox Live is really talking to your friends, doing things with your friends. And as we bring in new game titles that are more approachable, appeal to different demographics, the boundary between what's game playing, what's socialization and what's communication--you will have really broken down the barriers there.
We can make these hot, super great graphics games something that are easy for people to use. That's a big initiative we have as we move to the next generation of Xbox. Likewise, the connection between the Xbox Live and our Messenger will be really simple so people can say, "Hey, come and play," "Oh, okay, I'm finishing my homework, I'm almost done, I'll get on and play with you." And so even as they're connected up to each other, they don't think of, "Oh no, now I'm gaming, now I'm communicating."
Q: What are some of the primary goals with Xbox 2?
Broadening the market, having media capabilities that when there's a PC, we connect up to that. This whole story of the Windows Media Connect and how all the formats and rights management and that simple Media Center menu that's just got TV, photos, music right there--those are common elements we're bringing to all the home devices.
We didn't do Xbox just to do a video game; we did it to be part of our vision of the digital lifestyle, and with the next generation, we really get to go there. In the first generation, we had one simple goal, which was to establish credibility as a great video game platform. We've done that. Actually, the last few months in the United States, we outsold Sony with the PlayStation. So even though they have the biggest installed base, we are a very strong, credible No. 2 in that. As we go into this next generation, it's much broader.
Yes, great video gaming but videogaming for a broader set of people, more communications, more media, more connectivity. And at the same time, we move up to things like high-definition graphics and wireless that the chip breakthroughs allow us to get to.
So just for the games alone you'd go, wow, but the concept now of bringing in your music, your media, connecting to the PC, connecting Xbox Live to Messenger--that just makes it a very big deal.
Q: It's a full entertainment center, basically.
That's right. So Media Center PC and Xbox become totally complementary. You've seen a bit of that, where we let you take music from PCs and put it into game titles, and we have this extender concept where the Media Center can project through the Xbox, but that's just the start of what we can do there.
Q: One thing that's kind of intriguing in Xbox 2 is you're participating a little more on the design of the silicon.
Well, we have some key partners that we've announced. ATI and IBM are the key chip partners, and there are some others. But I'd say our sophistication is much higher in this second generation. So every level, what we're doing in tools, what we're doing in Live, the way we're working with the publishers, the way that we've gotten involved in the hardware design--we're being very coy about when and all that, but I'm certainly excited when it comes time to show at how much smarter we are getting to do it a second time with the team that's been built there.
Q :Any interest in handhelds?
We are not in the handheld space. We watch the intense competition of Sony, Nintendo, Nokia--whoever comes along with interest. Our portable gaming will be focused on things like getting onto the phones, getting onto portable PCs, but our Xbox team is focused on the TV-connected console. And the fact that Sony's a little distracted with that may let us do all the better in the next generation.
Q :Other browsers are making market share gains. When does this become a problem or an issue for you guys?
Well, people get confused about browsers. You can have as many browsers as you want on your PC, just like you can have tons of music players and things like that.
So when people say Firefox is being downloaded onto people's systems, that's true, but IE is also on those systems. Firefox is new, and people are trying it out. There's a certain percentage of people who do that--it's very easy to download.
We need to keep IE the best. We need to innovate in IE, do more add-ons, do improvements. We have some very exciting plans there. Some percentage of users are going to try Firefox and IE side by side, and use the one that's best.
So no big problem; it's not that people have stopped using IE, it's just we've got lots of good ideas that can match and move ahead.
In terms of our agility to do things on the browser, people who underestimated us there in the past lived to regret that.
Q : But some people have left because of security issues.
Well, no one invests more in security of their browser than what we do on IE. The key message we have for people is they should turn on auto update because if you turn on auto update, without you having to think about it and go through a bunch of user interface or know about this or that or the other thing, you can know that there are hundreds of very smart people who are constantly improving your browser and making sure that you're safe. And so with auto update and IE, you're getting the top security team and the quickest response team that there is anywhere.
Q : Now onto the Google question. Why do you want to compete, or does Microsoft want to compete against them? Does Microsoft want to build up MSN to be a general search engine?
Absolutely. We've been in the search business even before Google was around. The commitment we made is to build unique search technology across the board. And if you look at the Microsoft Research things that we've had breakthroughs in--natural language, document analysis, personalization, image analysis, language translation--our research agenda will allow us to take today's search from ourselves and Google, and make what we have today look like a joke. And a lot of that will be built into applications like Office or the Windows shell. I see our desktop search offering--I think every review I've seen has rated it far better than what Google is coming out with.
When you get to Longhorn, it will even have deeper integration, and we'll have the same index format. So anybody who wants a smooth transition to Longhorn where you don't have dual indexers and everything--the commitment we're making at our desktop search is that same indexing, same format, and we'll make that very smooth for people.
So we want to compete on the desktop because that's a key innovation area for Windows. We want to compete in the cloud because we think the competition between ourselves and Google and Yahoo will improve things.
If we thought somebody was doing the best possible job that could ever be done in search and there wasn't some big revenue out there, maybe we wouldn't do it, but quite to the contrary. Whether it's understanding maps or virtual worlds or document analysis, today's search is nothing, and we've got the software technology that will drive it to those new levels, as well as being a very significant business.
Q: It sounds like the next step in search might be audio and video.
Oh, sure, everybody is working on those things, but just take the idea of finding your local pizza place and doing that right; search doesn't do that well today. Search is really crummy today--it's just that it used to be really crummy, and now it's better, and there never was anything like this before. So most of the results people get back today are irrelevant results. Deep analysis can take us much further, and that's why we're investing a lot, and you'll see us more very rapidly.
Q :This year, there is a big push to make cheap computers for emerging markets. How is that going to have to evolve? A $300 computer is still going to be too expensive for many, probably, in Russia, India and other places.
Well, that's not really true. The expensive thing is the connectivity. Getting Internet connectivity is expensive. If all they had to do was pay for the computer--$300--and the communications were free, then we'd see that PC usage would be very, very big. Ironically, communications costs tend to be highest in developing countries.
So you need to do shared PCs through cafes or community centers. We're doing a lot of so-called mesh networking research that could use wireless spectrum to try to bring those connectivity costs way, way down, and that's where you really see widespread computing breakthroughs.
The hardest thing, by far, is communications, then the hardware costs. We can make sure the software cost is never really holding things back--that it's a small-enough percentage. In educational things, we do a lot of software giveaways. We've been very generous to make sure that when people first come into computing, software doesn't hold them back.
Q :That's interesting--the mesh--because that way, people can actually share a connection.
Yeah, the hard thing is the back haul of the Internet out of the village. Within the village, sure, you can mesh that up, but if people are going to be streaming video, you need quite a bit of capacity there. So it's not a simple problem to solve; we've got actually multiple research locations at Microsoft working together on this mesh thing, and we've had a lot of conferences working with third parties, so we're optimistic that that's the thing that can solve the thing that holds back developing-world computing.
Q :In recent years, there's been a lot of people clamoring to reform and restrict intellectual-property rights. It started out with just a few people, but now there are a bunch of advocates saying, "We've got to look at patents, we've got to look at copyrights." What's driving this, and do you think intellectual-property laws need to be reformed?
No, I'd say that of the world's economies, there's more that believe in intellectual property today than ever. There are fewer communists in the world today than there were. There are some new modern-day sort of communists who want to get rid of the incentive for musicians and moviemakers and software makers under various guises. They don't think that those incentives should exist.
And this debate will always be there. I'd be the first to say that the patent system can always be tuned--including the U.S. patent system. There are some goals to cap some reform elements. But the idea that the United States has led in creating companies, creating jobs, because we've had the best intellectual-property system--there's no doubt about that in my mind, and when people say they want to be the most competitive economy, they've got to have the incentive system. Intellectual property is the incentive system for the products of the future.
Q : I'm wondering, too, as you look forward 10, 20 years from now--what are the big problems that technology industry really needs to focus on?
Well, the technology business provides tools of empowerment, tools to let people be creative, to communicate, and there's no end in sight and certainly a decade's worth of work to make the ease of use and the power of these tools better. If you just think about meetings and the ability to record the video and the audio of the meeting--create a transcript, notify people, have them see the parts they care about--it's crummy today, and that's solvable.
When people want to manage a project with many companies involved--keeping data confidential, tracking and knowing what's going on--that's very crummy today compared to what it can be.
We, with our Office franchise, are committed to making workers far, far more productive than they are today. And believe me, we're not running out of ideas. The phone is inefficient today with phone tag and busy signals. E-mail is inefficient today with seeing stuff that's less relevant and how you organize it--bringing in the blog-type capabilities is very important there.
There's plenty of room to do dramatic horizontal innovation that will drive productivity in every sector of the economy. Whether it's scientific discovery, health care, engineering, marketing, sales--you name it--the tools around Windows and Office are not even half of what they will be.
If you take that and map that into the home, that's where you get the idea of movies, music, games. There, again, we're not even halfway to what we can deliver in that digital lifestyle.
Microsoft's chairman is setting the company on a course to provide software and tools that will allow different forms of entertainment to blend. Messaging will become a crucial part of Xenon, the code name for the next Xbox. Microsoft will also work with television outlets like the Discovery Channel and MTV Networks to create tools for delivering content, as well as advertising, into the home.
Its eyes ever set on the competition, Microsoft will continue to raise the stakes against Apple Computer in the music industry and against Google and Yahoo in search.
Meanwhile, Microsoft Research is working on ways to reduce the cost of getting people in emerging nations hooked on the Internet. One idea: Mesh networks that will let several families share connections.
Gates spoke with CNET News.com on the eve of his keynote speech at the Consumer Electronics Show in Las Vegas about Microsoft's consumer plans, the convergence of entertainment technologies--and why he hasn't done a blog yet.
Q: The industry's been talking about convergence for years. The first products have come out, so what's next? Interoperability--is that the next challenge?
A: Well, there's a lot of that going on. For us, the key convergence product is the Media Center PC, which is the idea of that single remote control giving you the best TV experience, music and photos but also the full power of the PC, and we've got lots of partners who keep signing on to Media Center and doing neat things. We'll show some Discovery Channel stuff in the keynote. We have a new relationship with MTV where they're using our rights management and formats, and we're connecting it to the Media Center.
And so there is growing momentum with partners, growing momentum with the hardware. The price of Media Center PCs came down a lot, which is partly why we were able to double our sales this holiday. We've got some new remote controls from Philips and others.
And so you fill out the ecosystem, you get the people who install these systems to understand how they do the customization, you get the word of mouth going, and so I'd say we feel great about where sort of the centerpiece convergence device is and the peripheral things happening around it.
Q: How are the different entertainment and media industries going to be affected by these changes. For instance, it seems like advertisers are really impacted.
Well, there's a thing that we can do for the advertisers that is critical for them, which is to allow the advertising to be targeted. That's what you've seen with our IPTV (Internet Protocol television) effort--companies like SBC Communications signing up for that--and we've got BellSouth as a new partner there. With that infrastructure, even for people watching the same show, you can insert just in a perfect way an ad targeted to that individual.
And the value of targeted advertising is really twofold. First, it means that the person is less likely to want to skip the ad, and second of all, it means the chance that they'll actually do something--buy something.
And so the new TV infrastructure will be about very targeted advertising. Advertising is taking on new forms. Obviously, in the search space, we're doing neat things with advertisers. No doubt, it's not going to stay the same as it is today.
Q: What changes does this mean for Microsoft? Do you see yourself becoming, let's say, more of a seller of content?
Well, the most explosive piece of content this holiday season was "Halo 2." We sold 6.3 million copies, we've had 69 million hours of online game play. And so is Microsoft a content company? Well, I'd say "Master and Commander" is good--people have talked about how the story made them cry--that's content, but it's also software.
The boundary there has always been a bit gray. Our main role is to provide the platforms and the tools, and simply partner with the content companies like MTV and let them do what they're good at. It's mainly in this interactive realm that we need to come in and do some complete content ourselves.
One of the big phenomena of the year has been Web logging. Has the growth surprised you?
Well, actually I think the biggest blogging statistic I know, which really blew me away, is that we've got close to a million people setting up blogs with the Spaces capability that's connected up to Messenger.
Now, with blogs, you always have to be careful. The decay rate of "I started and I stopped" or "I started and nobody visited" is fairly high, but as RSS (Really Simple Syndication) has gotten more sophisticated and value-added search capabilities have come along, this thing is really maturing.
And we've done some things in Japan and Korea that are unique blog experiments. The Spaces thing is a worldwide effort. It's a great phenomena, and it's sort of built on e-mail, and so we need to integrate more blogging capability into the e-mail world--and as we do the next generation of Outlook, you'll see that. We need to integrate it more into our SharePoint, which is our collaboration Office platform, and then, as I discussed, MSN is embracing it so that instead of thinking about, "OK, I go to one community to do photos, one community to do social networking, one community to do this," we say, "Hey," off of Messenger, which has got your buddy list already, then, "Let's let you do the photos and the social networking and everything--but starting in an integrated way off of Messenger."
Q: Which ones do you read, if any?
Well, it's interesting, I get a lot of people--and this is very typical for me--I get people who are forwarding things on to me, so I sort of have human search engines that will say, "Hey, there's a particular thing that's hot and that's interesting."
I just type in various keywords. We have a lot of blogs that are just internal to Microsoft where people are completely open about what's going on with this, what's going on with that.
I've toyed with doing one myself, but I don't want to be one of those people who start and then don't finish it, and again I'm thinking maybe I could do one a month or one every six weeks--something like that. I'd kind of like to, but I've got to be sure I can keep going for at least a year to make it worth doing.
Will there be much of a push at Microsoft to sell third-party content like music, or is it always going to be a smaller part of you?
We've said that having the music platform there is just part of the overall online relationship that we want to have with these customers.
In and of itself, it's not going to be a big source of a profit because there will be lots of people with stores out there, but then in terms of making it simple, having it work on all the devices, work with all the stores--that is important to us. The Windows ecosystem provides variety.
Apple is doing things the way Apple does--where it's the Apple hardware and the Apple store, that's great for them. We're doing it the Windows way, where you've got things like this Creative Zen Micro, which sold out this holiday season. This brings the photo capability in, and it's a very attractively priced device. So the variety story is an important one for us; it uses our rights management format and supports a subscription approach that we think can be a significant part of online music sales.
Q: What do you think of Apple's success so far? I mean, they clearly have had a hit with the iPod.
Absolutely. They had a hit with the Apple II, they had a hit with the Macintosh, and they have a hit with the iPod, so this is a company that's had three hits, and that's very impressive. There are a lot of companies that don't have three hits. And in the same way that Macintosh helped get people exposed to the graphical user interface, the iPod is doing a great job getting people to think about digital music.
In the long run, there will be a lot of people making digital music players, and we think that there will be a very different market share with dozens and dozens of companies. And other than Apple, all those player makers are signing up to work inside the Windows PlaysForSure ecosystem.
Q: There's a big debate over whether games will surpass movies and TV as a bigger portion of revenue in the entertainment industry. What do you think will happen?
Well, there are a couple things to look at. Instant messaging will go from just being a text thing to also being voice and video and music, so instant messaging, particularly for young people but in general, is very, very explosive.
And Xbox Live is really talking to your friends, doing things with your friends. And as we bring in new game titles that are more approachable, appeal to different demographics, the boundary between what's game playing, what's socialization and what's communication--you will have really broken down the barriers there.
We can make these hot, super great graphics games something that are easy for people to use. That's a big initiative we have as we move to the next generation of Xbox. Likewise, the connection between the Xbox Live and our Messenger will be really simple so people can say, "Hey, come and play," "Oh, okay, I'm finishing my homework, I'm almost done, I'll get on and play with you." And so even as they're connected up to each other, they don't think of, "Oh no, now I'm gaming, now I'm communicating."
Q: What are some of the primary goals with Xbox 2?
Broadening the market, having media capabilities that when there's a PC, we connect up to that. This whole story of the Windows Media Connect and how all the formats and rights management and that simple Media Center menu that's just got TV, photos, music right there--those are common elements we're bringing to all the home devices.
We didn't do Xbox just to do a video game; we did it to be part of our vision of the digital lifestyle, and with the next generation, we really get to go there. In the first generation, we had one simple goal, which was to establish credibility as a great video game platform. We've done that. Actually, the last few months in the United States, we outsold Sony with the PlayStation. So even though they have the biggest installed base, we are a very strong, credible No. 2 in that. As we go into this next generation, it's much broader.
Yes, great video gaming but videogaming for a broader set of people, more communications, more media, more connectivity. And at the same time, we move up to things like high-definition graphics and wireless that the chip breakthroughs allow us to get to.
So just for the games alone you'd go, wow, but the concept now of bringing in your music, your media, connecting to the PC, connecting Xbox Live to Messenger--that just makes it a very big deal.
Q: It's a full entertainment center, basically.
That's right. So Media Center PC and Xbox become totally complementary. You've seen a bit of that, where we let you take music from PCs and put it into game titles, and we have this extender concept where the Media Center can project through the Xbox, but that's just the start of what we can do there.
Q: One thing that's kind of intriguing in Xbox 2 is you're participating a little more on the design of the silicon.
Well, we have some key partners that we've announced. ATI and IBM are the key chip partners, and there are some others. But I'd say our sophistication is much higher in this second generation. So every level, what we're doing in tools, what we're doing in Live, the way we're working with the publishers, the way that we've gotten involved in the hardware design--we're being very coy about when and all that, but I'm certainly excited when it comes time to show at how much smarter we are getting to do it a second time with the team that's been built there.
Q :Any interest in handhelds?
We are not in the handheld space. We watch the intense competition of Sony, Nintendo, Nokia--whoever comes along with interest. Our portable gaming will be focused on things like getting onto the phones, getting onto portable PCs, but our Xbox team is focused on the TV-connected console. And the fact that Sony's a little distracted with that may let us do all the better in the next generation.
Q :Other browsers are making market share gains. When does this become a problem or an issue for you guys?
Well, people get confused about browsers. You can have as many browsers as you want on your PC, just like you can have tons of music players and things like that.
So when people say Firefox is being downloaded onto people's systems, that's true, but IE is also on those systems. Firefox is new, and people are trying it out. There's a certain percentage of people who do that--it's very easy to download.
We need to keep IE the best. We need to innovate in IE, do more add-ons, do improvements. We have some very exciting plans there. Some percentage of users are going to try Firefox and IE side by side, and use the one that's best.
So no big problem; it's not that people have stopped using IE, it's just we've got lots of good ideas that can match and move ahead.
In terms of our agility to do things on the browser, people who underestimated us there in the past lived to regret that.
Q : But some people have left because of security issues.
Well, no one invests more in security of their browser than what we do on IE. The key message we have for people is they should turn on auto update because if you turn on auto update, without you having to think about it and go through a bunch of user interface or know about this or that or the other thing, you can know that there are hundreds of very smart people who are constantly improving your browser and making sure that you're safe. And so with auto update and IE, you're getting the top security team and the quickest response team that there is anywhere.
Q : Now onto the Google question. Why do you want to compete, or does Microsoft want to compete against them? Does Microsoft want to build up MSN to be a general search engine?
Absolutely. We've been in the search business even before Google was around. The commitment we made is to build unique search technology across the board. And if you look at the Microsoft Research things that we've had breakthroughs in--natural language, document analysis, personalization, image analysis, language translation--our research agenda will allow us to take today's search from ourselves and Google, and make what we have today look like a joke. And a lot of that will be built into applications like Office or the Windows shell. I see our desktop search offering--I think every review I've seen has rated it far better than what Google is coming out with.
When you get to Longhorn, it will even have deeper integration, and we'll have the same index format. So anybody who wants a smooth transition to Longhorn where you don't have dual indexers and everything--the commitment we're making at our desktop search is that same indexing, same format, and we'll make that very smooth for people.
So we want to compete on the desktop because that's a key innovation area for Windows. We want to compete in the cloud because we think the competition between ourselves and Google and Yahoo will improve things.
If we thought somebody was doing the best possible job that could ever be done in search and there wasn't some big revenue out there, maybe we wouldn't do it, but quite to the contrary. Whether it's understanding maps or virtual worlds or document analysis, today's search is nothing, and we've got the software technology that will drive it to those new levels, as well as being a very significant business.
Q: It sounds like the next step in search might be audio and video.
Oh, sure, everybody is working on those things, but just take the idea of finding your local pizza place and doing that right; search doesn't do that well today. Search is really crummy today--it's just that it used to be really crummy, and now it's better, and there never was anything like this before. So most of the results people get back today are irrelevant results. Deep analysis can take us much further, and that's why we're investing a lot, and you'll see us more very rapidly.
Q :This year, there is a big push to make cheap computers for emerging markets. How is that going to have to evolve? A $300 computer is still going to be too expensive for many, probably, in Russia, India and other places.
Well, that's not really true. The expensive thing is the connectivity. Getting Internet connectivity is expensive. If all they had to do was pay for the computer--$300--and the communications were free, then we'd see that PC usage would be very, very big. Ironically, communications costs tend to be highest in developing countries.
So you need to do shared PCs through cafes or community centers. We're doing a lot of so-called mesh networking research that could use wireless spectrum to try to bring those connectivity costs way, way down, and that's where you really see widespread computing breakthroughs.
The hardest thing, by far, is communications, then the hardware costs. We can make sure the software cost is never really holding things back--that it's a small-enough percentage. In educational things, we do a lot of software giveaways. We've been very generous to make sure that when people first come into computing, software doesn't hold them back.
Q :That's interesting--the mesh--because that way, people can actually share a connection.
Yeah, the hard thing is the back haul of the Internet out of the village. Within the village, sure, you can mesh that up, but if people are going to be streaming video, you need quite a bit of capacity there. So it's not a simple problem to solve; we've got actually multiple research locations at Microsoft working together on this mesh thing, and we've had a lot of conferences working with third parties, so we're optimistic that that's the thing that can solve the thing that holds back developing-world computing.
Q :In recent years, there's been a lot of people clamoring to reform and restrict intellectual-property rights. It started out with just a few people, but now there are a bunch of advocates saying, "We've got to look at patents, we've got to look at copyrights." What's driving this, and do you think intellectual-property laws need to be reformed?
No, I'd say that of the world's economies, there's more that believe in intellectual property today than ever. There are fewer communists in the world today than there were. There are some new modern-day sort of communists who want to get rid of the incentive for musicians and moviemakers and software makers under various guises. They don't think that those incentives should exist.
And this debate will always be there. I'd be the first to say that the patent system can always be tuned--including the U.S. patent system. There are some goals to cap some reform elements. But the idea that the United States has led in creating companies, creating jobs, because we've had the best intellectual-property system--there's no doubt about that in my mind, and when people say they want to be the most competitive economy, they've got to have the incentive system. Intellectual property is the incentive system for the products of the future.
Q : I'm wondering, too, as you look forward 10, 20 years from now--what are the big problems that technology industry really needs to focus on?
Well, the technology business provides tools of empowerment, tools to let people be creative, to communicate, and there's no end in sight and certainly a decade's worth of work to make the ease of use and the power of these tools better. If you just think about meetings and the ability to record the video and the audio of the meeting--create a transcript, notify people, have them see the parts they care about--it's crummy today, and that's solvable.
When people want to manage a project with many companies involved--keeping data confidential, tracking and knowing what's going on--that's very crummy today compared to what it can be.
We, with our Office franchise, are committed to making workers far, far more productive than they are today. And believe me, we're not running out of ideas. The phone is inefficient today with phone tag and busy signals. E-mail is inefficient today with seeing stuff that's less relevant and how you organize it--bringing in the blog-type capabilities is very important there.
There's plenty of room to do dramatic horizontal innovation that will drive productivity in every sector of the economy. Whether it's scientific discovery, health care, engineering, marketing, sales--you name it--the tools around Windows and Office are not even half of what they will be.
If you take that and map that into the home, that's where you get the idea of movies, music, games. There, again, we're not even halfway to what we can deliver in that digital lifestyle.
'Xenon' the code name for Xbox 2
'Xenon' the code name for Xbox 2'
The game console is expected to appeal to a wider variety of consumers and contain a wider variety of features, including music playback. The future console will also differ from the current Xbox in that the key chips inside the system will come from IBM, ATI Technologies and SIS, rather than Intel and Nvidia.
Some game sites reported the code-name, but the company has not publicly touted the name, the representative said.
The game console is expected to appeal to a wider variety of consumers and contain a wider variety of features, including music playback. The future console will also differ from the current Xbox in that the key chips inside the system will come from IBM, ATI Technologies and SIS, rather than Intel and Nvidia.
Some game sites reported the code-name, but the company has not publicly touted the name, the representative said.
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