Microsoft to rename media player-less Window

Microsoft will rename a product it was ordered by the European Commission to offer--a version of Windows with its media player removed.

The product, which Microsoft had wanted to be called Windows XP Reduced Media Edition, will now be known as either Windows XP Home Edition N or Windows XP Professional Edition N.

Earlier this year, Microsoft said it was working with the commission8 on naming options after antitrust regulators balked at the "reduced media" name. Microsoft said the name was selected by European regulators over nine other alternatives proposed by the software maker.

"We have some misgivings about the chosen name as we fear it may cause confusion," Microsoft spokeswoman Stacy Drake said on Monday. "We will adopt the commission's name in order to move forward and accelerate the pace of the implementation process."

Among other options Microsoft suggested were Windows XP Not Incorporating Windows Media Player, Windows XP/N and Windows XP/B.

In addition to challenging the name of the new Windows version, the commission has expressed concern about the degree to which Microsoft has complied with its order requiring the company to license Windows communications protocols to rivals.

Microsoft to rename media player-less Windows

Microsoft will rename a product it was ordered by the European Commission to offer--a version of Windows with its media player removed.

The product, which Microsoft had wanted to be called Windows XP Reduced Media Edition, will now be known as either Windows XP Home Edition N or Windows XP Professional Edition N.

Earlier this year, Microsoft said it was working with the commission8 on naming options after antitrust regulators balked at the "reduced media" name. Microsoft said the name was selected by European regulators over nine other alternatives proposed by the software maker.

"We have some misgivings about the chosen name as we fear it may cause confusion," Microsoft spokeswoman Stacy Drake said on Monday. "We will adopt the commission's name in order to move forward and accelerate the pace of the implementation process."

Among other options Microsoft suggested were Windows XP Not Incorporating Windows Media Player, Windows XP/N and Windows XP/B.

In addition to challenging the name of the new Windows version, the commission has expressed concern about the degree to which Microsoft has complied with its order requiring the company to license Windows communications protocols to rivals.

Microsoft tests new patch program

Microsoft on Tuesday began testing Microsoft Update, which it says will help users keep up with the latest versions of Windows, Office and other programs.

The free program, which is slated to be in final form later this year, lets users of the Windows XP, Windows 2000, and Windows Server 2003 operating systems download all updates automatically or manually choose which patches to get.

In a February speech at the RSA Conference 2005, Microsoft Chairman Bill Gates had promised that a beta version of the program would launch this month.

In its current form, Microsoft Update will capture updates to the SQL Server database program and Exchange e-mail and calendaring software, along with Windows and Office enhancements. Microsoft said it hopes to add support for more programs in the future.

Improving patch management has been a key goal for Microsoft, which often finds that computers get hit by security threats long after a security vulnerability has been addressed because the machines are using an unpatched version of the program.

Microsoft said it will continue to offer its separate Windows Update and Office Update utilities for customers who prefer those options.

Linux riskier than Windows?

Companies face greater risks if they run their Web sites on Linux rather than Windows, a Microsoft-funded study has concluded.

Last year, Web servers based on Windows Server 2003 had fewer flaws to fix than those based on Red Hat Enterprise Linux ES 3 in a standard open-source configuration, researchers said in a paper released on Tuesday.

Moreover, the study indicated that the Microsoft-based Web server had far fewer "days of risk"--a measure of the number of days that each vulnerability is known, but unpatched--than the open-source rival.

"All this study can do is give people pause, to say they shouldn't go with common wisdom over which platform has more security," said Herbert Thompson, one of the three authors of the paper and the director of research and training at Security Innovations, a security applications company. The common belief is that Linux is more secure that Windows.

The paper has already caused controversy, as some details were presented at the RSA Conference last month. Previous studies comparing measures of security in Windows and Linux have also caused heated discussion.

"We believe there to be inaccuracies," Mark Cox, the leader of Red Hat's security response team, wrote about the recent study in a blog posted to the software company's Web site on Tuesday. He said that the study did not separate "critical" vulnerabilities from less serious ones, a comparison that would favor Red Hat.

Red Hat did not otherwise comment on the paper and referred requests for comment to the blog.

Counting the holes
For the study, researchers counted the fixes published for flaws in each Web server setup in 2004. In addition, they tallied days of risk, the cumulative number of days between the time information on a flaw is publicly released and the time the software developer patches that vulnerability.

A server using Red Hat Enterprise Linux ES 3 had more than 12,000 days of risk, while a Microsoft configuration had about 1,600, they said.

As for flaws, a Red Hat-based Web server with open-source Apache Web server software, MySQL database and the PHP scripting language had to deal with 174 holes in its default configuration, the study found. A Web server based on Microsoft Server 2003, Internet Information Server 6, Microsoft SQL Server 2000 and ASP.Net had 52 vulnerabilities in the default configuration.

The researchers also studied Red Hat and Windows Web servers in minimal configurations, taking out of consideration applications that are not needed for serving Web pages. Even in that case, Microsoft still handily beat Red Hat, with only 52 flaws, compared with 132 for the Linux software.

Red Hat's Cox countered the findings in his blog posting.

"There were only eight flaws in Red Hat Enterprise Linux 3 that would be classed as 'critical' by either the Microsoft or the Red Hat severity scales," he wrote. "Of those, three-quarters were fixed in a day, and the average was eight days."

Critical flaws are generally those that allow an attacker to remotely take control of a computer system. The study did break vulnerabilities down into "high," "medium" and "low" severity ratings. Flaws graded as high severity include Red Hat and Microsoft's critical classifications and flaws that allow local users to gain access to system functions. Microsoft had far fewer high-severity flaws in both the default and minimal configurations, according to the paper.

Microsoft did fund the study, the researchers acknowledged. The software giant released a statement on Tuesday that indicated the report was part of Microsoft's "Get the Facts" campaign aimed at highlighting the benefits of Windows software.

"When Security Innovations submitted a proposal to Microsoft to research ways to measure vendor software security, we evaluated the proposal and determined that this type of analysis would be useful for our customers and funded their research," the company said in the statement. "We encourage customers to review and evaluate the data in the context of their own computing environments."

Richard Ford, a computer science professor at the Florida Institute of Technology, and Fabien Casteran, a security test engineer at Security Innovations, were the authors of the report alongside Thompson. The researchers hope to stave off criticism by publishing their methods as part of the report.

"The methodology was designed to allow others to validate it for themselves--it has to be quantitative and repeatable," Thompson said. "We didn't just want to hand people the cake; we wanted to give them a recipe as well."

While both days of risk and vulnerability counts aren't true measures of security, Thompson said that they wanted to focus on a metric that mattered to system administrators. The cumulative time they had to wait for patches is a reasonable measure, he argued.

Thompson admitted, however, that security largely depends on the expertise of the administrator.

"I think either (operating system) is infinitely securable by a skilled Jedi administrator," Thompson said. "If I have a Linux guru, then I want that guy to do the Linux web server. I am more of a Window guru, so I would use Windows."

Microsoft delays tool, database updates

Microsoft said new versions of its Visual Studio development tools and SQL Server database, expected this summer, have been delayed until later this year.

The software maker said Visual Studio 2005 and SQL Server 2005 will be delivered in the second half of the year. A company representative declined to say whether the company expects to ship the new software in the third or fourth quarter of this year.

Both products have been delayed previously. Microsoft delayed the expected release of its flagship database and development tools from the end of 2004 to the first half of 2005. Both products, which are used to build custom applications, will be shipped in tandem.

On Monday, the company revamped the product pricing scheme and developer subscription service for Visual Basic 2005. The changes are meant to simplify the purchase process and make the cost of the company's tools suites easier to compare to competitive products, said Prashant Sridharan, lead product manager in Microsoft's developer division.

With the release of Visual Studio 2005, Microsoft will introduce a significant addition to its line-up which will bring the company is direct competition with IBM, Borland and others for tool suites designed for building large and complicated business applications. These so-called lifecycle tools address different phases of the application development process, including up-front modeling, coding, testing and deployment of a program.

In the second of half of the year, Microsoft will introduce Visual Studio Team System, its entry into the lifecycle development tools arena. The product will have three client editions aimed at different job functionsarchitect, developer, and testeras well as an optional server component for managing source code and collaborating with other programmers.

Pricing for volume licenses starts at $3,191 per seat.

On the low end, Microsoft will be introducing a new product called Visual Studio 2005 Express, a simplified tool aimed at hobbyists, students and first-time developers. The list price will be $49. Microsoft is planning several promotional programs as well to lower the cost, said Sridharan.

The rest of the Visual Studio line up includes: Visual Studio 2005 Standard Edition, which will cost $299; Visual Studio 2005 Professional Edition for $799; and Visual Studio 2005 Tools for Microsoft Office System for $799.

With the release of these tools, Microsoft will introduce new MSDN subscription options. The changes are aimed at allowing smaller companies to buy one of Microsoft's low-end Visual Studio products in conjunction with a lower-cost developer subscription service, Sridharan said.

Customers can purchase Visual Studio 2005 Premium Edition with either a Premium subscription, priced at $2,499, or a Professional subscription for $1,199. Microsoft is also offering upgrade offers to current customers.

Hackers reach beyond Windows, IE

Like cockroaches that you stop at a hole in the wall only to have them reappear under the door, criminal hackers are finding new and better ways to compromise your computer and electronic devices. So concludes a new Internet Security Threat report out today, based on data collected at Symantec's Security Response facilities worldwide. The report is one company's snapshot of malicious Internet activity during the last six months of 2004.

David Cole, director of product management for Symantec Security Response, to use the information uncovered in the report (more than 70 pages long) to talk about what he's already seeing in 2005. In our conversation, he covered trends such as the discovery and exploitation of flaws in non-Internet Explorer browsers and non-Windows operating systems and the recent reach by criminal hackers (crackers) into nondesktop computer systems such as handhelds and smart phone devices.

Overall, the news is mixed
The good news, says Cole, is that today, companies are much better at defending our network perimeters than they were a few years ago. Traditional Internet attacks are down. Unfortunately, attackers are opportunistic and are now going after end users--employees who log in from home or while on the road. Since companies are doing a good job protecting their e-mail systems--either at the gateway with corporate defenses or on desktops with antivirus apps--virus writers are frequently frustrated and have begun targeting instant-messaging apps, Internet Relay Chat (IRC), and peer-to-peer networks (P2P) in addition to e-mail. Symantec reported threats related to P2P, IM, IRC, and CIFS make up 50 percent of its top 50 threat submissions, up from 32 percent covering the same period one year earlier.

Browsers beware
But viruses and worms aren't the only Internet threats. Phishing scams, spyware, and now pharming attacks are becoming more common. By now, most of us know that Microsoft Internet Explorer harbors many security vulnerabilities. So as people move away from IE (now below 90 percent usage), attackers are turning their attention to Mozilla and other Internet browsers, according to Symantec.

An example might be what crackers have done with the vulnerability found in Internationalized Domain Names (IDN) that affects most non-IE browsers. IDN renders specialized character sets such as non-English domain names in a standardized way using Unicode characters, a standard that attempts to assign a unique computer number for every computer character, no matter the platform or the language set used. The IDN standard allows foreign companies to register domain names in different languages; however, criminal hackers have discovered that they can use this loophole to fool end users onto their phishing sites by substituting specific letters from alternative character sets.

Oddly, IE does not support IDN (although rumors suggest the upcoming Windows XP-only IE 7 will support IDN). Mozilla and Firefox have since patched their IDN flaw.

But if you thought that IE would be a safer browser as a result of recent attention to non-IE browsers, you'd be wrong. Cole said that while there were a greater number of vulnerabilities reported in Mozilla during the last half of 2004, Symantec found that the most severe vulnerabilities still reside within Internet Explorer. Of the 13 Internet Explorer vulnerabilities rated by Symantec from June to December 2004, 9 were considered high.

Other OSs under attack
The Symantec report also predicts that crackers will become more interested in Macs during 2005, specifically mentioning sales of low-priced mini Macs. As more casual, less tech-savvy users adopt Macs, expect to hear more about vulnerabilities exposed within the Mac OS, which is based on the Unix system. Other security companies are seeing an uptick in Mac flaws. For example, security company Secunia also saw an increase in reported Mac OS flaws during 2004.

Other electronic devices under attack
As more people leave their desktops and start accessing the Internet via mobile devices, so too do the crackers. Last summer, someone released the Cabir worm, designed to infect Symbian OS-equipped Nokia series 60 smart phones. These phones are popular in Europe, but have only recently started selling here in the United States. Since the first of this year, however, the Cabir worm has been reported in nearly two dozen countries, including the United States. Cole says these attacks will continue to grow as Bluetooth and smart phone adoption sets in. In fact, crackers recently launched CommWarrior, a smart phone-enabled virus that is able to infect either Bluetooth systems or those using Multimedia Messaging Service. Expect hybrid or multiplatform worms to remain the norm with mobile technology devices.

All is not lost
What's fueling the spread of Internet threats to other platforms? Money. As I wrote during the Sobig virus attacks in 2003, spammers and perhaps organized crime are now paying virus writers to push the limits and infect as many systems as they can. But that's good. We've moved from a strictly ego-fueled virus culture to one where the tools of law enforcement work best. Instead of finding a random, rogue programmer, law enforcement officials are following the money, and they're making some major busts against cybercrime.

As you adopt new technology, stop and think about the possible security pros and cons. Just because someone hasn't written a devastating worm to hit the Mac OS platform doesn't mean it won't happen. Same with your Nokia smart phone. Proceed with caution. If we've been successful in frustrating crackers by having antivirus and firewall solutions on our desktops, I think there's a chance we'll also prevail in these other areas as well.

Windows for beginners to be out by June

Microsoft Corporation, the global PC software major, said that OEM sales of the Windows XP Starter Edition OS should commence by June 2005 in India.

The Windows XP Starter Edition is part of a pilot project by Microsoft to make computing more affordable for first level users in developing markets.

Speaking on the sidelines of a conference, held here on Tuesday to announce the launch of Real Time Communication (RTC) products for India, Ranjivjit Singh, director, marketing and business operations, Microsoft India, said, "It was originally meant to be launched in the first quarter of this year. There has been a slight delay but it should be available through OEMs by June this year."

He declined to give a figure on how much cheaper the OS will be in comparision with other Windows versions, saying that there will be a 'significant difference' and that the price will also depend on the OEMs. He added that Microsoft would be willing to work with small vendors or assemblers, depending on interest expressed by them.

The Starter Edition project was announced by Microsoft in 2004 for pilot introduction in a few markets. It is already available in countries like Thailand, Malaysia and Indonesia.

Singh said that the launch in India would see the Starter Edition available in Hindi but Microsoft plans to make it available in nine more Indian languages as well eventually.

The company announced the launch of three RTC products for India. The Office Live Meeting 2005, a web conferencing service, Office Live Communicatin Server 2005, the company's enterprise instant messaging server and Office Communicator, an integrated real time communications front end to complement the other two offerings.

"The global web conferencing market is around $6.9 billion. The APAC market alone is expected to touch $700 million in the next two years. Today, around 20 per cent of enterprises use instant messaging. It is believed that soon around 80 per cent of enterprises will be using the same. Our products are meant to tap into these growing markets," said Ben Graetz, regional director, Real Time Collaboration, Microsoft.

The company said that they will target the FMCG and distribution sectors along with the IT and BPO sectors with these products.

Slow start for budget XP

Microsoft may have started shipping its cheaper version of Windows in Asia, but getting support for its low-cost computing vision is still very much a work in progress.

The software giant first launched Windows XP Starter Edition, a localized version of the full-fledged Windows operating system with reduced features, in Thailand last October. The cut-rate version debuted in Malaysia and Indonesia in February.

he product has received the initial backing of more than 15 local system builders and multinational computer makers in these three countries.

Unlike Microsoft's flagship Windows offerings, however, Starter Edition is not sold at retail. The company is banking on its partners to bundle and promote the software with their low-end PCs, a strategy that has so far received lukewarm response.

"We're not focused on Starter Edition," said Kharisma Shintara, director of Arta Computer Center, a computer assembler in Indonesia that has licensed Microsoft's scaled-down offering.

Shintara told CNETAsia that his primary product line will remain Pentium 4 PCs that are preloaded with Windows XP Home Edition--not the lower-end Intel Celeron machines, which Starter Edition is designed for.

"We've only used it in some projects for schools," he said, adding that the price of such Starter Edition-based PCs is around $320 (3 million Indonesian rupiah).

In Thailand, a number of Microsoft's Starter Edition partners, like Atec and Belta, are still promoting PCs that ship without any operating system.

Supreme Computer--one of the largest PC manufacturers in the country--is even selling a low-end Celeron PC preloaded with Linux for $404 (15,490 Thai baht).

The company also offers a similar system featuring Starter Edition that costs $443. Microsoft declined to provide sales figures for the new operating system in Thailand.

Besides Malaysia, Indonesia and Thailand, Starter Edition is also bound for Russia and India this year, although the Indian launch has been postponed from March until June.

"Starter Edition has not gained much interest from vendors, nor has it generated much interest from end users," said Martin Gilliland, principal analyst with research company Gartner Asia-Pacific.

Gilliland attributed the tepid response largely to high piracy rates. Smaller computer retailers in these emerging countries, he said, tend to buy their systems from large original equipment manufacturers, or OEMs, and then load them with cheaper, unlicensed versions of Windows.

In Malaysia, Microsoft has set the pricing of Starter Edition at $32 (120 ringgits). In contrast, bootleg copies of Windows XP Professional or Home Editions are sold at IT malls in Kuala Lumpur for less than $5.

According to Gilliland, PC makers in developing markets are mostly focused on driving hardware sales, not software margins. "They don't really make much profit from the OS (operating system) component of the PC. If they can sell more PCs to resellers by removing the OS, that's what they are going to do," he said.

To address this issue, he said, Microsoft will have to "create a different sales or go-to-market strategy."

"Their current standard vendor and channel relationships will need to be altered slightly to make this product succeed for them," Gilliland added.

Trial and error
Microsoft recognizes the problems with Starter Edition and plans to tailor its distribution and marketing efforts to suit individual countries as part of a 12-month pilot program, a senior company executive told CNETAsia.

"We'll be testing several go-to-market approaches," said Mike Wickstrand, Microsoft's director of Windows product management.

He said Redmond has decided on a "focused" approach in Malaysia by partnering with furniture and electronics megastore Courts Mammoth. On Tuesday, the retail giant announced it will start selling Starter Edition PCs made by local computer manufacturer FTEC in its 20 outlets.

According to Kelvin Wong, FTEC's executive director, the company hopes to sell 1,500 to 2,000 Starter Edition PCs per month. Besides the potential in rural areas, another market for these low-end machines could exist in schools and community projects, he added.

Microsoft CEO Steve Ballmer has proposed that the industry launch a $100 PC as a way both to stem piracy and to offer consumers in emerging countries an affordable computer.

Blue Dot Systems, another reseller of Microsoft's budget Windows package in Malaysia, plans to launch Starter Edition PCs at the end of this month. They will be priced between $342 (1,300 ringgits) and $395, a company representative said.

Wickstrand hinted that in Indonesia, Microsoft will partner with a local bank to offer financing schemes for Starter Edition computer buyers.

"To really address the affordability of a PC, what really helps is financing," he said. "If we're going to see a large uptake in PCs, consumer finance needs to be available for the segment we're targeting."

In Thailand, Microsoft is not tweaking its channels strategy but has instead chosen to increase the awareness of Starter Edition by embarking on a five-city tour and an advertising and promotions blitz, the company said.

A Gates reality check

In the business-software market, Microsoft is in an unaccustomed spot: It's a bit player in the shadow of much larger rivals.

If Gates & Co. have their way, Microsoft will become a force alongside Oracle and SAP in the multibillion-dollar business of selling human resources, financial planning and other software. The company has set lofty goals: Microsoft has said in the past that it hopes to rake in $10 billion per year in business software sales by 2010.

However, sales at the company's Business Solutions unit aren't growing as quickly as hoped. A new software platform intended to unify the company's disparate product lines won't be completed for at least three years. And there are questions about the overall demand for business software amid industry consolidation.

History shows that when it comes to new markets, Microsoft keeps trying until it gets it right--or it gets out. In this case, Gates is willing to bide his time. He spoke to CNET News.com about his strategy, ongoing efforts in security and how to get PCs into more hands across the globe.

Various Microsoft executives talked this week about how, long term, there are going to be four large players in the business-software arena: Oracle, SAP, IBM and you. How do you see that future?
Gates: I think it's an oversimplification to say there will just be the four players. You'll see some consolidation and you will see people who have built things from the ground up taking their special stuff and building it on top of, say, our platform. The more you have good tools and more extensibility hooks, then you will get people sharing what we already do for them so they don't have to try and duplicate that piece.

Year by year there will be consolidation. There will be people who decide to drop accounting or just do customization. This will always be a very complex market.

Are there customers that had built on top of Microsoft at the foundation level saying that, if Microsoft is a competitor on the application level, then they want to look at, say, Linux or Java?
Gates: There certainly has been a need to reach out to our ISVs (independent software vendors)...We're not going to do product bundles in a way that would be disadvantageous to them. We are not going to incent the sales force in some way that would be a big problem for them. We've needed to go out and talk that through. In most cases they already competed with the company we bought. It wasn't some new competitor but it was a competitor that would have the Microsoft name.

In our history as a company, on the Windows platform, we've always been both a platform provider and, in many of the key categories, a competitor of people building on Windows. That worked well for Windows. I don't think we've lost many, but boy, it means it's very important for Microsoft to be out there talking to people, explaining where we are going, what pieces go on the platform side, what pieces don't go on the platform side. I had a concern about that. So far it's turned out to be less of an issue than I expected.

Lots of people want Microsoft to do something on the antivirus front, and you guys have said you are going to do that. At the same time, the role of securing Windows as a platform is not something Microsoft wants to tackle on its own. The Symantecs of the world want partners, but that seems like a really tough relationship to balance as you enter those markets.
Gates: I don't think so. The history of Windows is that we do something in the platform and then there are some things missing that sell in high volume as add-ons. If a broad set of people want the thing, then in some future version (we add it). We're very clear; we show people, we tell them and then we build it in the system.

The history of Windows is that we do something in the platform and then there are some things missing that sell in high volume as add-ons.

People used to buy TCP/IP stacks. People used to buy basic backup software. People used to buy fonts. At least nominally, people paid for browsers...When you come into the world of software you know that if you are up at a higher level and you have something superimportant, it's going to move down, down, down and eventually be part of every copy of the operating system if it is something superimportant.

Security is a very broad topic. There are so many different pieces of security, which creates immense opportunity for people like Symantec--if they keep innovating. There will be some things that they do that will move into the platform. We're very open with those guys. We talk to them every day, massively....We will get the benefit of the platform getting better and those partners continuing to add value.

With Microsoft Business Solutions, you are making a big bet that in the midmarket, companies will want different things than they do today. How long do you think it will be before that pays off?
Gates: It's a great space for us in terms of the growth opportunity. You know, we are patient people. Everything we get into--even the Office software--took us a long, long time. We introduced a word processor that was not the No. 1 processor for about five years.

For the Macintosh first, if I recall.
Gates: We had a DOS word processor that was not a leading product. Mac Word was leading on the Mac. We didn't overpass WordPerfect on the PC for a long time after we'd become No. 1 on the Mac and a long time after we'd gotten into the word processing space.

There's not, like, some year we have in mind where things just explode. Every year we get more partners, every year we show the technical road map of what's common between the products and how it exploits the platform and Office in a better way.

Where should things be in the next couple of years?
Gates: Within the next--well, these releases are all pretty much in the next year--the idea of what we are doing with portal, business intelligence, roles and Web services, all that should become very, very clear. Some of the other stuff where we actually enhance the platform in some pretty deep ways...that takes several years after that before we get around to it.

With installed bases growing and testing taking longer, is it harder to do these big upgrades?
Gates: You have to be very agile in improving the software. If you look at the number of neat new things in Great Plains, Navision and Axapta...it is way faster than it's ever been. We've brought methodology to it. We are sharing across the three products. We are actually working at a level of the product where it is very easy to innovate. You are not changing the things that are harder to change.

Salesforce.com, which addresses a similar market, has been one of the more successful companies to come at it from the "software as a service" approach. Doug Burgum (a senior vice president at Microsoft) said earlier this week that Microsoft can solve that question of "How do you deliver software as a service?" Where are you with that?
Gates: Software as a service was a theme of a company meeting nine or 10 years ago where we heralded the idea that packaged software was done and now it was just all going to be shipped over the Internet. In fact, like many things around the Internet that were predicted to happen quickly, they are simply things that take more time.

Do you think it's still a couple of years before a lot of Microsoft products are offered in a hosted way?

You know, we are patient people. Everything we get into--even the Office software--took us a long, long time.

Gates: We actually have people offering Microsoft CRM (customer relationship management) in a hosted way. There are things we can do to make it even stronger in a hosted environment. We are doing those things. There are a lot of customers who still want on-premise. In terms of on-premise, we're growing faster than anybody and doing quite well. Clearly, we want to accommodate both models and give people even the flexibility if they want to switch from one approach to the other approach. We'll have more to say about that.


You have particular interest in emerging markets. There's a whole rest of the world that today doesn't buy a lot of software and doesn't have a lot of computers. Microsoft has been trying a lot of different things, such as Windows XP Starter Edition and some trials before that. What are you learning?
Gates: Computing is expensive, but when I say that, I don't really mean the hardware and the software. I mean the communications cost. In all these countries, communications costs wipe out the cost of the computer or the software. What do people do? They go to a sharing approach where you have a community center with a computer or an Internet cafe. The Internet cafe phenomenon is really quite unbelievable in some countries. In China, in particular, it's phenomenal.

Now we have a special version of Windows that when one user is on it, there is no problem for the next user. You can just come in with all your files on your USB drive. There are technical requirements from these community centers and these Internet cafes. We learned a lot about this when Microsoft put PCs in all the libraries in the United States...we reach out to these Internet cafes as a customer base.

Our India Research Center has a particular focus on low-cost computing, which basically means finding a way to use various wireless approaches to avoid having any communications costs....That really can make a difference, but we need some magical wireless approaches to get the communications costs out of there.

What are the things Microsoft sees as its opportunities?
Gates: The broad area is called mesh networking. It's a collaboration of actually every one of our research sites. The U.K. guys are, historically, the networking experts. Both China and India have a super interest in this rural low-cost computing stuff. It's going to be a few years before we can prove this stuff out. Having a lot of donated software, donated training and then helping to get the communications costs down a dramatic amount--those are the ways we really foster (computing) in the places we don't see PCs yet.

What about in the slightly more developed areas where there is a business opportunity for Microsoft?
Gates: Of this triumvirate--communications costs, hardware costs, software costs--the communications costs dominate. And then the hardware costs dominate. And then comes the software cost. We offer Works for like a buck or two bucks. We provide all the software you'd ever want in a consumer type activity space for super, super cheap. Sometimes we even do donations, mostly educational-related or community access type projects.

Governments have done special tax deductions, or companies have for their employees, or unions have for their members. Mostly in Europe, there have been a ton of those things where we package the software up in a lower-cost way. There are people who don't have PCs where we'd like to help them get PCs and then there are people who have PCs, have our software and haven't paid for it. Those are really two different challenges.

You guys have been doing a lot in the last few months to address piracy, kind of carrot-and-stick stuff.
Gates: Yeah, Windows Genuine Advantage. The biggest place where there is a problem today is China. There are other places, but it's stark that the No. 2 PC market in the world is not in the top nine of Microsoft revenue. That has nothing to do with market share, believe me.

Not some zeal for Linux?
Gates: It's software being used without being paid for

Microsoft walks VB tight rope

Facing protests from legions of Visual Basic developers, Microsoft is not backing down. But it is taking steps to keep them on friendly terms.

Microsoft remains "firm" in its plans to end free support for Visual Basic 6 at the end of the month, S. "Soma" Somasegar, the corporate vice president of Microsoft's tools division, told CNET News.com.

That decision to end free support for Visual Basic 6, which was introduced in 1998, has caused an outcry among some of Microsoft's developer customers, even those with close affiliations with the software giant.

Somasegar said that Microsoft's intention is to ease the migration of customers to Visual Basic.Net, the current version of the product, which is is designed to quickly build Windows desktop applications that tap into databases.

To do that, the company will introduce enhancements in the forthcoming edition of its Visual Basic 2005 meant to "bring back" some ease-of-use features that appeal to Visual Basic developers, he said. For example, a popular feature called "edit and continue" will make its way into Visual Basic 2005, which is due around the middle of the year.

Also, by the end of the month, Microsoft plans to open the VB6 Upgrade Center, an area on its Microsoft Developer Network Web site, which will have technical information to help customers learn Visual Basic.Net.

"It's sort of like, 'Should I give you fish for dinner or teach you how to fish?'' Somasegar said. "We had this revelation 18 or 24 months ago, that maybe we should be expending our energies and efforts to make it easy to migrate (customers') skills to take advantage of the new world."

A break with the past
Despite Microsoft's stated aim to help its VB6 developers move to the .Net version of the tool, many developers said the company has not done enough.

On March 8, disgruntled users of Visual Basic 6, or "Classic VB," published a petition complaining about the planned end of free support.

Spearheaded by close Microsoft partners, called Most Valued Professionals (MVPs), the group urges Microsoft to continue the development of the older version of Visual Basic and help customers preserve their investment in existing applications. It called on Microsoft to make VB6 one of the languages in Visual Studio.Net, the company's flagship development tool.

The transition to Visual Basic.Net from VB6 is not as straightforward as most Microsoft product upgrades. When it introduced Visual Basic.Net in 2001, as part of the company's Visual Studio family of tools, Microsoft made significant changes to the underlying programming language.

Decided in the late 1990s, those changes--meant to make Visual Basic applications more industrial-strength--were in reaction to the rising popularity of Java, noted Greg DeMichillie, an analyst at Directions on Microsoft. It is estimated that there are about 3 million VB developers.

"Microsoft was seriously concerned about Java or Web development taking all those VB guys away," DeMichillie said. "Pure compatibility with Visual Basic 6 was not a key goal."

Because of the shift in the underlying language, migrating code written in older versions of Visual Basic is more difficult than a typical upgrade. Also, learning Visual Basic.Net is significant jump for developers because it represents a completely different language than VB6, critics say.

Surveys by Evans Data indicate that the number of VB6 developers outnumber the people who have learned VB.Net. Forty-four percent of developers report working with VB, while 34 percent work with VB.Net--a percentage that has remained constant since the introduction of VB.Net at the end of 2002, according to Joe McKendrick, a research consultant with Evans Data.

The petition protesting the shift, which was signed by more than 2,000 people, including 222 MVPs, has sparked a debate in the Microsoft development tool community.

Proponents of Classic VB argue that Microsoft is essentially stranding its older VB customers.

"Any organization with an investment in Visual Basic code--consultants, ISVs, IT departments, businesses, schools, governments--are forced to freeze development of their existing VB code base, or reinvest virtually all the time, effort, intellectual property and expense to rewrite their applications from scratch," wrote developer and author Rich Levin in a recent blog entry.

Others developers argue that those VB6 customers should make the move to newer Microsoft technologies.

Juval Lowy, founder and chief architect of consulting firm iDesign, said that current VB6 or older applications do not need to be "ported" to work with Visual Basic.Net. Instead, developers can leave older VB code essentially intact and find ways to share data between older VB applications and newer ones.

"The name of the game is not portability--it's interoperability," he said. "Porting applications is just a waste of engineering effort."

Carrot and stick
Responding to specific requests in the Classic VB petition, Somasegar said that Microsoft does not intend to release a new version of the "migration wizard" for moving VB6 code to Visual Basic.Net.

Also, the company will not make the changes to VB6 to allow it to run as another programming language in Visual Studio. That approach would be "technically implausible," Somasegar said.

In addition, Somasegar gave details of some of the company's efforts to keep existing customers of older versions of VB6 in the Microsoft fold. With Visual Studio 2005, which is code-named Whidbey, developers will be able to use prewritten components, called controls, that worked with VB6, he said.

"To be fair, we did lose a little bit of the VB experience when made transition from VB6 to VB.Net," Somasegar said. "Whidbey Visual Basic is going to provide the best RAD (rapid application development) experience that they have ever seen."

The VB6 Upgrade Center will provide information on how VB6 developers can continue to use their existing applications by using VB and VB.Net together, said Jay Roxe, product manager for Visual Basic.

Roxe noted that customers can purchase support on VB6 for three more years or use credits from an existing support contract for VB6-related incidents. Microsoft already added two years to its initial deadline for cutting off mainstream support, extending it to seven years.

Microsoft has little choice but to follow through on the decisions it made regarding the move to .Net several years ago, DeMichillie said.

The "carrot" Microsoft can use to entice VB6 developers to migrate are new features, such as the Avalon presentation system and Indigo communications being built into the Windows operating system, DeMichillie said. The "stick" is cutting off mainstream support, he said.

"There's not a huge difference between mainstream versus extended support," DeMichillie said. "But companies don't like it: It's a psychological milestone which says that the product is getting long in the tooth."

Microsoft yielding to IE standards pressure?

After a years-long drumbeat of developer complaints, Microsoft may finally be budging on its support for standards and on key missing features in its Internet Explorer browser.

Microsoft last month broke with a longstanding pledge and said it would release a new version of IE before its next major Windows upgrade. Security concerns catalyzed the shift in plans, and Microsoft has kept mum about any possible standards or feature upgrades that might accompany the security improvements.

But a source familiar with Microsoft's plans confirmed a Tuesday report on MicrosoftWatch that IE developers, who have code-named their project Rincon, are at work on non-security features and standards support, including tabbed browsing, support for IDN (Internationalized Domain Names), improved support for CSS 2 (Cascading Style Sheets) and PNG (Portable Network Graphics) transparencies.

MicrosoftWatch also reported that IE 7 will include a built-in news aggregator based on RSS, or Really Simple Syndication.

While Microsoft declined to answer any questions about IE 7, the company has repeatedly brought up the issue of IE 7 standards support on its developer-oriented blogs to solicit suggestions on what changes developers would like to see in the upcoming release of the browser. Without making any promises, leaders in the IE development team suggest that after years of inaction on World Wide Web Consortium (W3C) standards problems, Microsoft will finally clean up its act.

"Specific requests and descriptions of problems in the field help us tremendously in prioritizing what we need to do," Chris Wilson, Microsoft's lead program manager for the Web platform in IE, wrote in a March 9 blog titled "IE and Standards." "Microsoft does respond to customer demand; Web developers are our customers."

If the tenor of the comments posted in response to Wilson's blog item is any indication, Microsoft has a lot of angry customers.

"IE6 has stagnated since its release," wrote one of Wilson's more civil respondents. "More annoying than this stagnation has been the silence from Redmond regarding future releases and the support of standards. Aging documentation, no support forum, undocumented features--IE 6 has been a nightmare."

Developers' concerns about standards and feature support in the current version of IE are reflected in the browser team's current to-do list. Frequent complaints include IE's lack of tabbed browsing, which lets users keep multiple pages open within the same window; full support for CSS 2, a W3C recommendation that lets Web authors apply single style guides to multiple pages; and support for PNG transparencies, which provide a nonproprietary, unpatented way to create transparent images.

The Mozilla Foundation--whose highly successful Firefox browser many credit with lighting a fire under Microsoft's IE development work--hailed news of Microsoft's renewed attention to standards and features, but dismissed the idea that a souped-up IE could steal Firefox's fire.

"Let's remember that the reason for IE 7 is security," said Chris Hofmann, Mozilla's director of engineering. "That's what's driving people away from IE and focusing them on other browser solutions like Firefox. There's some tough work for Microsoft to do because content developers have come to rely on features that are insecure."

Hofmann specifically cited Microsoft's proprietary ActiveX API (application programming interface) for running Web-based programs on client computers; Microsoft's implementation of the DOM (Document Object Model), which lets scripts act on discrete elements of a Web page; and IE's security zone model.

"It's not about the features," Hofmann said. "But if they're going to do this major upgrade, they're not going to leave the feature set three years behind the other browsers."

Windows for beginners to be out by June

Microsoft Corporation, the global PC software major, said that OEM sales of the Windows XP Starter Edition OS should commence by June 2005 in India.

The Windows XP Starter Edition is part of a pilot project by Microsoft to make computing more affordable for first level users in developing markets.

Speaking on the sidelines of a conference, held here on Tuesday to announce the launch of Real Time Communication (RTC) products for India, Ranjivjit Singh, director, marketing and business operations, Microsoft India, said, "It was originally meant to be launched in the first quarter of this year. There has been a slight delay but it should be available through OEMs by June this year."

He declined to give a figure on how much cheaper the OS will be in comparision with other Windows versions, saying that there will be a 'significant difference' and that the price will also depend on the OEMs. He added that Microsoft would be willing to work with small vendors or assemblers, depending on interest expressed by them.

The Starter Edition project was announced by Microsoft in 2004 for pilot introduction in a few markets. It is already available in countries like Thailand, Malaysia and Indonesia.

Singh said that the launch in India would see the Starter Edition available in Hindi but Microsoft plans to make it available in nine more Indian languages as well eventually.

The company announced the launch of three RTC products for India. The Office Live Meeting 2005, a web conferencing service, Office Live Communicatin Server 2005, the company's enterprise instant messaging server and Office Communicator, an integrated real time communications front end to complement the other two offerings.

"The global web conferencing market is around $6.9 billion. The APAC market alone is expected to touch $700 million in the next two years. Today, around 20 per cent of enterprises use instant messaging. It is believed that soon around 80 per cent of enterprises will be using the same. Our products are meant to tap into these growing markets," said Ben Graetz, regional director, Real Time Collaboration, Microsoft.

The company said that they will target the FMCG and distribution sectors along with the IT and BPO sectors with these products.

Microsoft gets outside the box with software

A decade ago, Bill Gates and other executives at Microsoft decided that traditional packaged software was dead--all software would eventually be delivered via the Internet.

Microsoft's thinking was premature, but not necessarily incorrect, Gates told CNET News.com last week.

"Like many things around the Internet that were predicted to happen quickly, they're not wrong, they're simply things that take more time," Gates said in a recent interview.

Now, Microsoft is quietly working on the technological innards that will one day let the company offer corporate customers what is known in the industry as "software as a service." Some of Microsoft's competitors in the business software market, such as Salesforce.com and NetSuite, have been offering software as a service products for years.

For Microsoft, the transformation is substantial, and will involve two key changes: subscription pricing, and software that's stored remotely, or "hosted," rather than installed directly on a business' own servers.

"You'll see us do more hosted things with our business and professional offerings," Gates said, adding that Microsoft is already in the game on the consumer side with Hotmail and other MSN services.

Although the company is not talking in detail about its plans, one definite area of interest is the Microsoft Business Solutions unit, which specializes in business management applications for small and medium-size business.

Gates said Microsoft definitely considers Salesforce a rival and looks "intensely" at where that company is seeing success.

The head of Microsoft Business Solutions, Doug Burgum, said last week that his unit is planning for a day when it delivers its software as a hosted service, but the division doesn't plan to create the infrastructure for that itself. Rather than try to develop something unique to his unit, Burgum said, he intends to work off of a broader Microsoft-developed platform.

Without offering specifics, Gates confirmed that plan.

"You'll see us do more things like hosted SharePoint (portals) and hosted environments that the MBS applications can then sit on top of," Gates said.

An unsmooth transition?
The problem is that many of Microsoft's applications, particularly the MBS products, are not very well suited to the changeover, Summit Strategies analyst Paul Wainewright said. Microsoft is making some moves through Project Green--an effort to modernize and unify several different business applications--but that project is taking longer than planned. "The delay of Green shows just how difficult it is," Wainewright said.

Indeed, Microsoft still releases and updates most of its products in the traditional way. Software is developed in cycles, with enhancements delivered in large measure by way of paid upgrades and, to a lesser extent, via smaller patches.

In recent months, though, Microsoft has shown that it's willing to experiment.

In January, for example, it debuted Microsoft Office Outlook Live, which takes the company's Outlook software and offers it to consumers along with storage space as part of a monthly or annual subscription.

Sheryl Kingstone, an industry analyst with the Yankee Group, points out that just because Microsoft hasn't offered many products this way doesn't mean the company is opposed to the idea. In fact, she gives Microsoft credit for spotting back in the mid-1990s that the Internet could be used as a mechanism to deliver games and other software.

As for the business side, she says, it's "just not something that they have put a stake in the ground yet and said that they want to go after."

Ultimately, though, analysts say, the trend is headed toward a greater use of hosted software, particularly for small and midsize businesses that are looking to avoid the complexities and upgrade hassles that come with running their own software. What such customers really want is software that's functional, easy to use and has a low total cost--needs, Kingstone said, that the hosted software approach is well-suited to meet.

Such a move, though, presents more than technical hurdles for the world's largest software seller. One of the key issues is how Microsoft will price such offerings.

Gates agreed that pricing remains a big challenge. It's relatively straightforward for truly generic applications, but it quickly grows thorny as companies want to run their own unique business processes. Meeting the business needs of one customer could ultimately interrupt or slow work for another company.

"It's very hard to do service-level agreements and resource pricing when things get arbitrary," Gates said.

For Microsoft and other traditional software vendors, though, service-based pricing requires a broader shift in economics. Such companies are used to getting paid up front for licensing and then again for either consulting or ongoing support services. In a service-based model, all of those costs must be factored in to the monthly fee.

In addition, there's a shift in expectations, Wainewright said. With traditional software, companies like Microsoft are offering a set of capabilities that customers must either work into their businesses themselves or pay consultants to do. With a service, customers expect the product to work immediately and contain enough connectors to hook up with other business applications.

Another key question is how Microsoft might deliver future software-as-a-service products. Although Office Live and some other Microsoft products are delivered directly, the company has traditionally relied heavily on partners to sell and tailor its software.

But Gates and the analysts agreed that as there are definitely challenges, so too are there benefits.

One of the benefits for companies such as Microsoft is a consistent revenue stream. Since the late 1990s, Microsoft has been trying to get more of its sales to come from subscriptionlike contracts rather than through one-time licenses.

"I don't think there is any question that Microsoft would love to get there," said Paul DeGroot, an analyst with market researcher Directions on Microsoft. "It's quite evident, particularly as product release cycles get longer."

DeGroot said Microsoft's historical method of getting paid for a one-time license worked pretty well when major releases came every two to three years and customers moved comparatively quickly to update their software.

However, he said, many products are now getting updated more slowly, such as the company's SQL Server database and Windows operating system, which will have gone five years between major paid updates by the time the next versions are released.

"You may have a long dry spell there," DeGroot said. Microsoft has tried to fill that gap with various types of annuity pricing, such as its Software Assurance program. In such programs, Microsoft charges a portion of its original license fee each year in exchange for enhanced support and the right to receive any upgrades that are released.

In a sense, Microsoft has been moving to servicelike pricing even though it's been delivering its software in pretty much the same old way.

The response, analysts say, has been lukewarm. DeGroot said many companies have been less than enthusiastic about renewing such support pacts when they find there's not been a significant upgrade during the term of the contract.

Though Wainewright said Internet-based software services are a challenge for parts of Microsoft's business, such as MBS, he sees a potentially expanded role coming for the company's mainstay Office program.

"Office has an opportunity to be a rich client for these applications," he said. Because Office is so widely employed, companies can use it as a familiar interface to connect to these online applications. Wainewright pointed specifically to one way Microsoft is already doing that internally. In the company's Project Elixir, Microsoft is using Outlook as a means to view data from its third-party customer relationship management software.

Perhaps equally important, Microsoft is reshaping the overall Windows environment to better work in a world in which software resides both on a company's PCs and at remote servers hosted by another company. In particular, Wainewright points to the Indigo communications system that Microsoft plans to debut next year, alongside the Longhorn upgrade to Windows. Indigo will be a layer within Windows that makes it easier for separate programs to exchange data using Web services protocols.

Such efforts are particularly important to counter the growing threat of browser-based applications, Wainewright said, highlighting Google's Gmail as an example of "quite a powerful browser-based interface."

In the end, Gates sees a world in which there is a mix of both hosted software and that which is run from company-owned PCs and servers.

"Clearly we want to accommodate both models and give people even the flexibility if they want to switch from one approach to the other approach," he said. "But we'll have more to say about that."

Communtiy Meet With IE Team

Microsoft MVPs move to save Visual Basic

More than 100 Microsoft Most Valuable Professional (MVP) developers have signed a petition demanding the software company reconsider plans to end support for Visual Basic in its "classic" form.

Developers claim the move could kill development on millions of Visual Basic 6 (VB6) applications and "strand" programmers that have not trained in newer languages.

Microsoft said it will end standard support for Visual Basic 6 at the end of this month, ending free incident support and critical updates. Both services will be available for a fee for another three years.

But MVPs hope Microsoft will reconsider not just VB6's support options, but will continue to develop the language alongside its newer Visual Basic.Net.

"By providing a new version of a COM-based Visual Basic within the Visual Studio IDE, Microsoft will help maintain the value of its clients' existing code, demonstrate its ongoing commitment to the core Visual Basic language, and greatly simplify the adoption of VB.NET by those that wish to do so," the petition says. "The decisions of if, how, and when to migrate code to .NET should lie with the customer."

The problem, say the dissenting developers, is that when Microsoft made Visual Basic.Net (or Visual Basic 7) the successor to VB6, it actually killed one language and replaced it with a fundamentally different one. It's effectively impossible to migrate VB6 applications to VB.Net, and for VB6 developers, learning VB.Net is as complex as learning a completely new programming language, critics say.

"The .Net version of Visual Basic is Visual Basic in name only," wrote developer and author Rich Levin in a recent blog entry. "Any organization with an investment in Visual Basic code--consultants, ISVs, IT departments, businesses, schools, governments--are forced to freeze development of their existing VB code base, or reinvest virtually all the time, effort, intellectual property, and expense to rewrite their applications from scratch."

Microsoft continues to develop C++ alongside C#, the language's .NET counterpart, and the company should do the same with "classic" Visual Basic and VB.Net, the petition argues. Microsoft introduced VB.Net in 2000, and since then, developer use of VB6 and older versions has declined steadily. Many of those leaving the language behind are migrating not to VB.Net but to non-Microsoft languages such as Java, according to some surveys. For example, a November 2004 survey of EMEA developers by Evans Data found that Visual Basic had lost 25 percent of its EMEA developer base since 2003.

VB.Net grew from 16 percent of EMEA developers in the autumn of 2002 to 32 percent in late 2004, with 43 percent of EMEA developers using some form of Visual Basic, the survey found. About half of the developers who had used VB6 or earlier did not migrate to VB.Net Evans Data said.

In North America most Visual Basic developers continued to use VB6 and older versions--45 percent of all North American developers, compared with 34 percent for Visual Basic.Net. Fifty-four percent of North American developers used some sort of Visual Basic.

"One of the main issues keeping VB6 and earlier developers from making the migration to VB.Net is the steepness of the learning curve," said Albion Butters, Evans Data9s international analyst, in a statement. "The difficulty in moving existing VB6 apps to VB.Net is, in some cases, insurmountable.2

While the rebels' argument may make sense, it is probably a moot point, as Microsoft is unlikely to change its stance on VB6, say some industry observers.

"All software--desktop apps, languages, databases, whatever--gets 'end-of-lifed' eventually, some unfortunately, some fortunately," said Jez Higgins, a Birmingham-based developer. "The fundamental programming disciplines aren't tied to any one language or any one way or working. They won't disappear out the side of your head. I suggest these blokes buck up and get on."

"The future of programming is clear, and object-oriented languages designed from the get-go for Web and Internet-enabled functionality are the future," wrote one developer in response to Levin's post. "No amount of romanticizing VB6 is going to change that."

Microsoft to kill MSN for the Mac

Microsoft plans to all but end its stint as an Internet service provider to Mac users, discontinuing its MSN for Mac OS X software.

The company plans to notify customers this month and discontinue the service as of May 31, a Microsoft representative said in an e-mail. Microsoft announced plans to get into the market in 2002 and began offering the service in the United States the following year.

"Beginning May 31, Microsoft will make changes and no longer support the MSN for Mac OS X Internet Software client," the representative said. A Microsoft representative declined to say how many people subscribe to MSN for the Mac, but said it is "a small number."

Under a deal from years ago with Qwest, Microsoft is required to offer Internet access to Mac users. Therefore, customers will still be able to buy $22-a-month Internet access from Microsoft. However, the company will not offer any local software and customers will have to log on using the Mac's built-in Internet Connect dialer.

"Microsoft will be in regular communication with its MSN for Mac customers to ensure options are clearly communicated and the transition is as smooth as possible," the company said.

The company will also still allow those with their own Internet access to pay for a collection of browser-based MyMSN services, including 2GB of Hotmail storage, Encarta Premium and Money Plus. In theory, customers can continue to pay Microsoft between $10 and $27 a month for that option.

MSN has broadly shifted much of its attention away from its dial-up Internet access business and into Internet services and content that can be accessed via any Internet connection, and high-speed broadband in particular.

Following Apple's introduction of the Safari browser, Microsoft discontinued its Internet Explorer browser for the Mac, but the company continues to make other products for the Mac, most notably a Mac version of Office. The company reiterated on Friday that it is not abandoning the Mac.

"Microsoft's Mac BU remains committed to the Mac platform and its customers," Microsoft said, noting recent updates to Office and the introduction of a new version of MSN Messenger for Mac.

MSN first got in the Mac business when it agreed to take over dial-up and high-speed Internet access for customers of Qwest. Initially the company offered only a Mac OS 9-compatible dialer program for Qwest customers, but later decided to expand the service and pitch it broadly to Mac users in the United States.

Gates talks business

In the business-software market, Microsoft is in an unaccustomed spot: It's a bit player in the shadow of much larger rivals.

If Gates & Co. have their way, Microsoft will become a force alongside Oracle and SAP in the multibillion-dollar business of selling human resources, financial planning and other software. The company has set lofty goals: Microsoft has said in the past that it hopes to rake in $10 billion per year in business software sales by 2010.

However, sales at the company's Business Solutions unit aren't growing as quickly as hoped. A new software platform intended to unify the company's disparate product lines won't be completed for at least three years. And there are questions about the overall demand for business software amid industry consolidation.

History shows that when it comes to new markets, Microsoft keeps trying until it gets it right--or it gets out. In this case, Gates is willing to bide his time. He spoke to CNET News.com about his strategy, ongoing efforts in security and how to get PCs into more hands across the globe.

Various Microsoft executives talked this week about how, long term, there are going to be four large players in the business-software arena: Oracle, SAP, IBM and you. How do you see that future?
Gates: I think it's an oversimplification to say there will just be the four players. You'll see some consolidation and you will see people who have built things from the ground up taking their special stuff and building it on top of, say, our platform. The more you have good tools and more extensibility hooks, then you will get people sharing what we already do for them so they don't have to try and duplicate that piece.

Year by year there will be consolidation. There will be people who decide to drop accounting or just do customization. This will always be a very complex market.

Are there customers that had built on top of Microsoft at the foundation level saying that, if Microsoft is a competitor on the application level, then they want to look at, say, Linux or Java?
Gates: There certainly has been a need to reach out to our ISVs (independent software vendors)...We're not going to do product bundles in a way that would be disadvantageous to them. We are not going to incent the sales force in some way that would be a big problem for them. We've needed to go out and talk that through. In most cases they already competed with the company we bought. It wasn't some new competitor but it was a competitor that would have the Microsoft name.

In our history as a company, on the Windows platform, we've always been both a platform provider and, in many of the key categories, a competitor of people building on Windows. That worked well for Windows. I don't think we've lost many, but boy, it means it's very important for Microsoft to be out there talking to people, explaining where we are going, what pieces go on the platform side, what pieces don't go on the platform side. I had a concern about that. So far it's turned out to be less of an issue than I expected.

Lots of people want Microsoft to do something on the antivirus front, and you guys have said you are going to do that. At the same time, the role of securing Windows as a platform is not something Microsoft wants to tackle on its own. The Symantecs of the world want partners, but that seems like a really tough relationship to balance as you enter those markets.
Gates: I don't think so. The history of Windows is that we do something in the platform and then there are some things missing that sell in high volume as add-ons. If a broad set of people want the thing, then in some future version (we add it). We're very clear; we show people, we tell them and then we build it in the system.

People used to buy TCP/IP stacks. People used to buy basic backup software. People used to buy fonts. At least nominally, people paid for browsers...When you come into the world of software you know that if you are up at a higher level and you have something superimportant, it's going to move down, down, down and eventually be part of every copy of the operating system if it is something superimportant.

Security is a very broad topic. There are so many different pieces of security, which creates immense opportunity for people like Symantec--if they keep innovating. There will be some things that they do that will move into the platform. We're very open with those guys. We talk to them every day, massively....We will get the benefit of the platform getting better and those partners continuing to add value.

With Microsoft Business Solutions, you are making a big bet that in the midmarket, companies will want different things than they do today. How long do you think it will be before that pays off?
Gates: It's a great space for us in terms of the growth opportunity. You know, we are patient people. Everything we get into--even the Office software--took us a long, long time. We introduced a word processor that was not the No. 1 processor for about five years.

For the Macintosh first, if I recall.
Gates: We had a DOS word processor that was not a leading product. Mac Word was leading on the Mac. We didn't overpass WordPerfect on the PC for a long time after we'd become No. 1 on the Mac and a long time after we'd gotten into the word processing space.

There's not, like, some year we have in mind where things just explode. Every year we get more partners, every year we show the technical road map of what's common between the products and how it exploits the platform and Office in a better way.

Where should things be in the next couple of years?
Gates: Within the next--well, these releases are all pretty much in the next year--the idea of what we are doing with portal, business intelligence, roles and Web services, all that should become very, very clear. Some of the other stuff where we actually enhance the platform in some pretty deep ways...that takes several years after that before we get around to it.

With installed bases growing and testing taking longer, is it harder to do these big upgrades?
Gates: You have to be very agile in improving the software. If you look at the number of neat new things in Great Plains, Navision and Axapta...it is way faster than it's ever been. We've brought methodology to it. We are sharing across the three products. We are actually working at a level of the product where it is very easy to innovate. You are not changing the things that are harder to change.

Salesforce.com, which addresses a similar market, has been one of the more successful companies to come at it from the "software as a service" approach. Burgum (a senior vice president at Microsoft) said earlier this week that Microsoft can solve that question of "How do you deliver software as a service?" Where are you with that?
Gates: Software as a service was a theme of a company meeting nine or 10 years ago where we heralded the idea that packaged software was done and now it was just all going to be shipped over the Internet. In fact, like many things around the Internet that were predicted to happen quickly, they are simply things that take more time.

Do you think it's still a couple of years before a lot of Microsoft products are offered in a hosted way?
Gates: We actually have people offering Microsoft CRM (customer relationship management) in a hosted way. There are things we can do to make it even stronger in a hosted environment. We are doing those things. There are a lot of customers who still want on-premise. In terms of on-premise, we're growing faster than anybody and doing quite well. Clearly, we want to accommodate both models and give people even the flexibility if they want to switch from one approach to the other approach. We'll have more to say about that.

You have particular interest in emerging markets. There's a whole rest of the world that today doesn't buy a lot of software and doesn't have a lot of computers. Microsoft has been trying a lot of different things, such as Windows XP Starter Edition and some trials before that. What are you learning?
Gates: Computing is expensive, but when I say that, I don't really mean the hardware and the software. I mean the communications cost. In all these countries, communications costs wipe out the cost of the computer or the software. What do people do? They go to a sharing approach where you have a community center with a computer or an Internet cafe. The Internet cafe phenomenon is really quite unbelievable in some countries. In China, in particular, it's phenomenal.

Now we have a special version of Windows that when one user is on it, there is no problem for the next user. You can just come in with all your files on your USB drive. There are technical requirements from these community centers and these Internet cafes. We learned a lot about this when Microsoft put PCs in all the libraries in the United States...we reach out to these Internet cafes as a customer base.

Our India Research Center has a particular focus on low-cost computing, which basically means finding a way to use various wireless approaches to avoid having any communications costs....That really can make a difference, but we need some magical wireless approaches to get the communications costs out of there.

What are the things Microsoft sees as its opportunities?
Gates: The broad area is called mesh networking. It's a collaboration of actually every one of our research sites. The U.K. guys are, historically, the networking experts. Both China and India have a super interest in this rural low-cost computing stuff. It's going to be a few years before we can prove this stuff out. Having a lot of donated software, donated training and then helping to get the communications costs down a dramatic amount--those are the ways we really foster (computing) in the places we don't see PCs yet.

What about in the slightly more developed areas where there is a business opportunity for Microsoft?
Gates: Of this triumvirate--communications costs, hardware costs, software costs--the communications costs dominate. And then the hardware costs dominate. And then comes the software cost. We offer Works for like a buck or two bucks. We provide all the software you'd ever want in a consumer type activity space for super, super cheap. Sometimes we even do donations, mostly educational-related or community access type projects.

Governments have done special tax deductions, or companies have for their employees, or unions have for their members. Mostly in Europe, there have been a ton of those things where we package the software up in a lower-cost way. There are people who don't have PCs where we'd like to help them get PCs and then there are people who have PCs, have our software and haven't paid for it. Those are really two different challenges.

You guys have been doing a lot in the last few months to address piracy, kind of carrot-and-stick stuff.
Gates: Yeah, Windows Genuine Advantage. The biggest place where there is a problem today is China. There are other places, but it's stark that the No. 2 PC market in the world is not in the top nine of Microsoft revenue. That has nothing to do with market share, believe me.

Not some zeal for Linux?
Gates: It's software being used without being paid for.

Gates: Consumers are getting tech first

A faster pace of innovation for consumers has given individuals access to technology and communication breakthroughs, but the same advances have been slower to reach many businesses, Microsoft Chairman Bill Gates said Wednesday.

In the consumer arena, where Microsoft faces competition from companies like Google, Nokia and Apple Computer, products are being updated rapidly, as often as every six months.

"In the business space, it's more stair step," Gates said, noting that business programs tend to get larger updates, but only every two to three years. The result is that many of the communication breakthroughs have come through consumer technologies such as instant messaging.

Another challenge Gates highlighted is the need to move information between two different realms--the unstructured world of e-mail and Office documents, and the highly structured world of business applications.

"We need to take Excel and make sure it understands rich, structured data much more than it does today," Gates said.

He showed off a few of the ways Microsoft hopes to bridge the gaps with its next generation of products, offering a demo of the next version of Microsoft CRM.

Gates' speech came at the conclusion of the Convergence 2005 show for Microsoft's business applications unit, which makes accounting and enterprise resource management software.

Microsoft strengthens its commitment to the Indian ISV community

Microsoft Corporation India Pvt. Ltd. has kicked off a four city event aimed at the Indian ISV community.

"ISV Community Days" is a day long conference aimed at developers and business decision makers from Indian product development companies, and will enable them to build cutting edge products on the Microsoft platform. At the event, local and international speakers will provide attendees with an insight into best practices for product development, updates on the Microsoft platform, and advice on how to leverage venture capital for growth. Microsoft will also provide them with a sneak preview of its upcoming products and technologies. The first leg of the event recently concluded in Hyderabad and Chennai. The event will be held in Bangalore on March 9th and 10th, and in Mumbai on March 15th.

ISV Community Days is part of a broader Microsoft initiative to empower the Indian ISV community. Microsoft is focused on building a robust software product ecosystem in India by enabling ISV's to build world class products. It is engaging with ISVs and the industry at large (Government, Venture Capitalists and Incubators) to increase local software demand, build stronger IPR laws and address issues faced by software product vendors emerging from India. Microsoft has an array of programs and initiatives to assist ISVs in various stages of their lifecycle - to get products out to market faster, reduce development costs and create demand with focused go-to-market initiatives.

Commenting on ISV Community Days Ms. Sheila Gulati, Director, Developer and Platform Evangelism, Microsoft India said "Microsoft strongly believes that software product development presents a huge opportunity for Indian companies. ISV Community Days is a platform for Indian IT companies to connect with Microsoft and learn how they can use next generation technologies to build globally competitive products." She further added, "As an ISV ourselves, we understand the challenges faced by such companies, and are committed to helping them acquire the skills and resources required to be successful. Our aim is to work with the ISV community and build an ecosystem which fosters more product initiatives from India and growth in local software demand."

Microsoft ISV Community Days is focused on equipping ISVs with both the technical and business skills required to become a strong products company. The event comprises both a technical track and a business track. While the technical track will focus on how to develop data centric smart client applications using Windows Server 2003 and Office 2003, the business track will include a session on how to become a globally competitive and successful organization. The business sessions are targeted at senior executives from ISVs, and provide them with an opportunity to gain industry perspectives on how they can grow faster and manage their business better. Microsoft plans to host ISV community days across the country, once every quarter.

In Bangalore on 10th March at The Leela Palace, ISV Community Days will include a special track wherein, Microsoft along with representatives from NASSCOM, TiE and venture capitalists such as Westbridge Capital Partners, Jumpstartup and Silicon Valley Bank , will take part in two panel discussions on the issues affecting ISVs in India. The topics for the panel discussions are - 'What is the state of the Indian venture capital industry' and 'How Indian product companies can succeed in local and global markets'.

For registrations go to the following link:
http://www.microsoft.com/india/msdn/isvcommunitydays/register.aspx

WinForms "contest"

Microsoft MSDN Windows Forms 2.0 Bug Reporting Challenge

How to Enter
Calling all smart client developers! Want to win a cool Visual Studio .NET branded backpack or T-shirt? Want to help the Windows Forms team ship an amazing product? If so, come enter the Bug Reporting Challenge Contest. Its super simple—you find a bug in Windows Forms or ClickOnce, then you file the bug you found using the Microsoft Product Feedback Center. If it's a bug that the Windows Forms or ClickOnce teams fix for Whidbey, or it's a bug we'd like to fix but have to postpone for some reason, then you get 1 credit. Each month we will hand out 1 backpack and 3 T-shirts for the top 4 bug finders. Come back and enter as often as you have a bug.

Why are we doing this, you ask? When we looked at the bug stats filed by the community through the Feedback Center, we found that over 30% of code defect bugs submitted were being fixed in the product. This is a really high number when you remember that the builds the community have are not the most up-to-date ones that the team has (for example, another 30% are not repro by our team—meaning that we already fixed it by the time that the bug came in). We wanted a way to say "thank you" to all the people who have been finding the great bugs in the product that we are fixing, so we came up with this contest.

See below for official contest rules and details...

Official Rules

1. Eligibility:

No purchase necessary. The Challenge is open to any technology enthusiast who has a .NET Passport account and Beta 1 or any later pre-release version of Visual Studio 2005 or any of the Visual Studio Express Edition products ( Visual Basic 2005 Express Edition, Visual C# 2005 Express Edition, Visual C++ 2005 Express Edition or Visual J# 2005 Express Edition). However, residents of the following countries are ineligible to participate: Cuba, Iran, Libya, North Korea, Sudan and Syria. Void where prohibited by law. Employees of Microsoft Corporation, their affiliates, parent company, participating vendors, subsidiaries and advertising and promotion agencies, and anyone working directly on this program, product and promotion and the immediate family members or those living in the same household of each are not eligible. The promotion begins at 12:01 a.m. (PT) on November 15, 2004 and ends at 11:59 p.m. (PT) on May 31, 2005 (the "Entry Period").

2. How to Enter:

Entrants are judged based on the number of eligible* bugs they submit using the Microsoft Product Feedback Center web site during the Entry Period. Results are measured in one category:

Greatest number submitted each month: The grand prize winner for each month will receive a WindowsForms branded back pack (Estimated Retail Value, ERV US $50), and the next three highest scoring winners will receive a WindowsForms branded t-shirt (Estimated Retail Value, ERV US $10).

* To qualify as eligible, a bug must be unique and reproducible, must relate to WindowsForms, WindowsForms controls or "ClickOnce" deployment and must be fixed or postponed in this release. The first entrant to report each unique bug will receive reporting credit for the purposes of this contest. In the event of a tie for the Grand Prize, the winner will be the entrant who submitted the greater amount of "fixed" bugs. In the event of a tie for the next three places, all tied contestants will receive a prize. The decisions of the Microsoft beta team are final and binding in all matters related to this contest.

Microsoft is not responsible for lost, late, misdirected, or illegible entries, interrupted or unavailable network, server or other connections, miscommunications, failed phone or computer hardware or software or telephone transmissions or technical failures, garbled transmissions or other errors of any kind, whether human, technical or electronic. No copies, facsimiles or mechanical reproductions will be accepted. All entries become the property of Microsoft Corporation and will not be returned.

3. Prize Conditions:

All contest prizes will be awarded, provided a qualified number of entries are received in each category. Winners will be notified by e-mail within thirty (30) days. No substitution, transfer, or assignment of prizes permitted, except that Microsoft reserves the right to substitute a prize of equal or greater value if the prize is unavailable. All taxes on a prize, (including but not limited to duties, VAT, withholding taxes) if any, are solely the responsibility of the winner.

4. General Conditions:

Entrants agree to abide by the terms of these official rules and by the decisions of Microsoft, which are final and binding on all matters pertaining to the Challenge. The Challenge is governed by the laws of the United States. All federal, state and local laws and regulations apply. All prize claims are subject to verification. Prize winners may be required to execute an affidavit of eligibility and liability/publicity release within fourteen (14) days following attempted notification and non-US winners may be required to complete and return a W8-BEN form.

In case of non-compliance or, if a selected potential winner cannot be contacted, is ineligible, fails to claim a prize, or fails to return the completed and executed Affidavits and Releases, as required, or if the prize notification or prize is returned as undeliverable, an alternate winner will be selected. Acceptance of a prize constitutes permission for Microsoft to use winner's name and likeness for advertising and promotional purposes without compensation, unless otherwise prohibited by law. By entering, participants release and hold harmless Microsoft, their respective parents, subsidiaries, affiliates, directors, officers, employees and agents from any and all liability or any injuries, loss or damage of any kind arising from or in connection with this game or any prize won.

5. Internet:

If for any reason the Internet portion of the program is not capable of running as planned, including infection by computer virus, bugs, tampering, unauthorized intervention, fraud, technical failures, or any other causes beyond the control of Microsoft which corrupt or affect the administration, security, fairness, integrity, or proper conduct of this Challenge, Microsoft reserves the right at its sole discretion, to disqualify any individual who tampers with the entry process, and to cancel, terminate, modify or suspend the Challenge. All prizes will then be awarded, in a random drawing from all entries received prior to such a suspension. Microsoft assumes no responsibility for any error, omission, interruption, deletion, defect, delay in operation or transmission, communications line failure, theft or destruction or unauthorized access to, or alteration of, entries. Microsoft is not responsible for any problems or technical malfunction of any telephone network or lines, computer on line systems, servers, or providers, computer equipment, software, failure or any e-mail or entry to be received by Microsoft on account of technical problems or traffic congestion on the Internet or at any web site, or any combination thereof, including any injury or damage to participant's or any other person's computer related to or resulting from participation or downloading any materials in this Challenge. CAUTION: ANY ATTEMPT BY AN ENTRANT TO DELIBERATELY DAMAGE ANY WEB SITE OR UNDERMINE THE LEGITIMATE OPERATION OF THE GAME IS A VIOLATION OF CRIMINAL AND CIVIL LAWS AND SHOULD SUCH AN ATTEMPT BE MADE, SPONSOR RESERVES THE RIGHT TO SEEK DAMAGES FROM ANY SUCH SWEEPSTAKES ENTRANT TO THE FULLEST EXTENT PERMITTED BY LAW.

6. Winner's List:

The names of the winners will be posted on the Internet at http://msdn.microsoft.com/smartclient/challenge approximately 10 days after each monthly prize period.

7. Sponsor:

This Sweepstakes is sponsored by Microsoft, One Microsoft Way, Redmond, WA 98052.

For Further Queries visit :-

http://msdn.microsoft.com/smartclient/challenge/default.aspx


All the best

Worms on the prowl, traveling via MSN Messenger

New worms that use Microsoft's instant-messaging software to spread are tunneling their way across the Web.

Antivirus companies on Tuesday flagged a variation of an existing threat and a new worm, both targeting MSN Messenger.

Researchers at both Aladdin Knowledge Systems and F-Secure discovered the appearance of Win32.Kelvir.a, a new twist on the previously identified Kelvir threat. Each company also identified a new worm in the wild; Aladdin is calling it Win32.Serflog.a., while F-Secure is calling the same threat Sumom. Aladdin is rating both Win32.Kelvir.a and Win32.Serflog.a as medium-to-high risks.

The appearance of the new worms underscores the growing popularity of malicious software that relies on instant messaging, or IM, to spread. It follows a similar attack last month by another program meant to use Messenger to spread itself. In early February, researchers at Trend Micro detailed a variant of the Bropia worm that used Messenger. The Bropia.f worm was packaged with a second, more damaging worm that tried to exploit computers with improperly patched software.

While Microsoft spokesmen were quick to point out that the Messenger attacks do not take advantage of any flaw in the software, the company said it recommends that customers exercise "extreme caution" when accepting file transfers from both known and unknown sources on IM.

According to Aladdin, Win32.Kelvir.a spreads via a URL sent in an IM that contains an infected file. After clicking on the link, a person's computer becomes infected by the worm. When the program is executed it attempts to drop multiple copies of itself onto the person's PC. The worm also executes itself with every subsequent startup of the IM software by modifying registry entries, and it forwards itself to all of an individual's IM contacts. The threat presents itself hidden in a message that reads "omg this is funny!", followed by the URL.

Aladdin said that Win32.Serflog.a, or Sumom, presents itself as an attachment in an instant message. The worm attempts to spread by dropping copies of itself into folders typically shared by peer-to-peer software clients. The infected message reads "????omg click this!", followed by an attachment that harbors the worm. The company said Win32.Serflog.a also drops several hidden files into infected machines and attempts to cancel security functions of Messenger, while blocking access to several related Web sites.

In the first six weeks of 2005, 10 instant-messaging worms and their variants spread over America Online, ICQ and MSN networks, according to researchers at Akonix Systems. That's more than three times the number of worms that spread over public IM networks over the same period last year, and Akonix expects the trend to continue to climb.

Shimon Gruper, vice president of technology at Aladdin, said that the Kelvir variant probably poses a greater risk to IM users, because people are far more likely to click on a Web link than they might be to open an attachment. However, because both of the worms are designed to appear as if they've been sent by a known contact, he believes that either could do serious damage.

"Most people still do not expect to get viruses via IM," Gruper said. "They know about viruses sent in e-mail, but they're not as informed about IM threats, which pop up on your desktop and look like they come from someone you already talk to. IM worms are a growing threat because the hackers have tried to exploit almost every opening they can find in e-mail software, and IM is a new way to bypass existing security methods and get into PCs."

The latest round of worms targeting Messenger also bear some signs that the individuals writing the malicious programs have begun to use the threats to communicate with one another, possibly in a manner similar to street gangs' use of graffiti tags to mark their territory. A text file deposited on infected machines by Win32.Serflog.a features a message to "Larissa," the name for the hacker thought to be responsible for a worm known as Assiral.a, which attempted to disable the malicious Bropia worm.