Category Archives: Microsoft

Einhorn on Microsoft: sell

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Interest comment by David Einhorn, legendary investor…

We wanted to share some thoughts on Microsoft, which we closed during the quarter. We believe that we purchased the shares at an attractive time, and for a good while the investment worked nicely. As has been our habit of late, we overstayed our welcome as the shares peaked after the company announced a very good September 2007 quarter.

Since then, management has acted in an overaggressive and almost panicky fashion regarding its online offering. First, it sought to acquire Yahoo! and then after that failed, it announced extremely high internal investment requirements to pursue this “huge” opportunity (read: “Google-envy”). We doubt the opportunity is what they say it is and wish MSFT focused on its core strength: software.

The CEO is a very smart and very wealthy man. Perhaps, he is so wealthy that he has bigger ideas and aspirations than making MSFT’s shareholders wealthier. We’ve given up on MSFT for now as we feel better investing in companies where management at least appears to be trying to work for shareholders.

Vista, the “unqualified success”

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Since (we updated it), I’d also refer to Vista as an unqualified success. It doesn’t mean that people aren’t still picking on it, but we’ve sold 180 million copies, something like that, of Vista. The quality, the compatibility (and) particularly from the consumer market, the level of acceptance — I’d call it an unqualified success, over the last six months or so.

Steve Ballmer, in an interview. But what we really want to know — and what Microsoft knows but won’t divulge, thought they know the number — is how many of those Vista copies have been actually activated. I know lots of people who bought laptops with Vista but who paid for the ‘downgrade’ to XP. Each laptop counts as a Vista ‘sale’, but not as a copy in actual use.

The aphrodisiac effect of power

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This morning’s Observer column…

Once upon a time, the ultimate put-down to a bright spark was to say, ‘well, if you’re so smart, how come you’re not so rich?’. Wall Street Crash 2.0 has rather undermined this ploy, by making it clear that an awful lot of very rich folks were anything but smart. It turns out that we were unduly dazzled by the Masters of the Universe, but we had to wait until they had vaporised the US economy before getting wise to the fact.

Actually, this was just a special case of a more general human weakness – our tendency to lose all capacity for critical thought when confronted by great wealth or power. This ‘aphrodisiac effect’ seems to be ubiquitous. One saw it, for example, in the way leggy females used to throw themselves at Henry Kissinger, a stumpy troglodyte who just happened to be US Secretary of State. And we see it in the way even hardened hacks go weak when offered an audience with Bill Gates, Warren Buffett or even, God help us, Steve Ballmer, chief of Microsoft…

Ten years on

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This morning’s Observer column…

In the old days, dates fell into one of two categories: BC and AD. Now the relevant categories are BG. and AG: Before and After Google. The critical date was 1998, when Larry Page and Sergey Brin launched their PageRank system for rating web pages. It was an epochal moment. No British child knows there was once a world without Google. In fact most would be astonished that people were able to get along without it.

Google is 10 years old today and it has celebrated by upsetting the world’s applecart – again…

Vital Statistics

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From the NYT’s Bits Blog celebration of Google’s 10th birthday.

Google’s age: 10
Microsoft’s age: 33

Google’s revenue in the last 4 quarters: $19.6 billion
Microsoft’s revenue in the last 4 quarters: $60.4 billion

Microsoft’s revenue at age 10: $140 million
($279 million in today’s dollars)

Google’s revenue per hour in the last 4 quarters: $2.2 million
Microsoft’s revenue per hour in the last 4 quarters: $6.9 million

Google net income in the last 4 quarters: $4.85 billion
Microsoft’s net income in the last 4 quarters: $17.6 billion

Google employees, as of June 30th: 19,604
Microsoft employees, as of May 31st: 89,809

Google’s revenue per employee: $1 million
Microsoft revenue per employee: $672,000

Market value of Google: $142 billion
Market value of Microsoft: $241 billion

Number of tech companies with a market value larger than Google’s: 3 (Microsoft, IBM and Apple, in that order)

Worldwide searches on Google in July: 48.7 billion
Worldwide searches on Microsoft in July: 2.3 billion

Worldwide searches per hour on Google in July: 65 million
Worldwide searches per hour on Microsoft in July: 3.1 million

Google pokes a sharp stick in Microsoft’s eye

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You may have seen the news that Google is launching its own (open source) browser, codenamed Chrome. According to the company blog,

Under the hood, we were able to build the foundation of a browser that runs today’s complex web applications much better. By keeping each tab in an isolated “sandbox”, we were able to prevent one tab from crashing another and provide improved protection from rogue sites. We improved speed and responsiveness across the board. We also built a more powerful JavaScript engine, V8, to power the next generation of web applications that aren’t even possible in today’s browsers.

In reality, this takes us back to the original threat/promise of Netscape — the thing that threatened Microsoft so much that it set out to destroy Netscape. This was the idea that the browser was destined to become the key piece of software — almost an operating system in its own right.

Google Chrome takes up that idea, and holds out the promise of making it a reality. As Nick Carr puts it, Chrome

promises a similar leap in the capacity of the cloud to run applications speedily, securely, and simultaneously. Indeed, it is the first browser built from the ground up with the idea of running applications rather than displaying pages. It takes the browser’s file-tab metaphor, a metaphor reflecting the old idea of the web as a collection of pages, and repurposes it for application multitasking. Chrome is the first cloud browser.

See the exposition in Google’s Comic Book for an outline of the thinking that went into Chrome. It’s basically the first multi-threaded browser.

This is an important strategic move by Google. To quote Carr again,

Google is motivated by something much larger than its congenital hatred of Microsoft. It knows that its future, both as a business and as an idea (and Google’s always been both), hinges on the continued rapid expansion of the usefulness of the Internet, which in turn hinges on the continued rapid expansion of the capabilities of web apps, which in turn hinges on rapid improvements in the workings of web browsers.

To Google, the browser has become a weak link in the cloud system – the needle’s eye through which the outputs of the company’s massive data centers usually have to pass to reach the user – and as a result the browser has to be rethought, revamped, retooled, modernized…

I’ve no doubt that this development will be presented in the mainstream media as Google’s “attempt to capture the browser market”. That would be a misconception IMHO. By making Chrome open source Google is ensuring that any browser that seeks to stay competitive has to take up the multi-threading idea. Which will make cloud computing even more pervasive. Which will further increase Google’s importance. As a strategy, it’s fiendishly clever.

And just in case the folks in Cupertino are sniggering, this is a harbinger of things to come on the mobile phone front too. Google has sussed that the (closed) iPhone will be difficult to beat, so its attack is based on an open platform (Android). Smart.

Many thanks to Gerard for the original link (even though he hates the Comic Book!)

LATER: I can’t run Chrome because the first beta release only runs under Windows Vista (if you please), but TechCrunch has been using it and likes it a lot.

STILL LATER: Kate Greene has a useful overview in Tech Review. And the Register published a perceptive piece by Tim Anderson.

Microsoft goes into drinks business

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From BBC NEWS…

Microsoft has kicked off a research project to create software that will take over when it retires Windows.

Called Midori, the cut-down operating system is radically different to Microsoft’s older programs.

It is centred on the internet and does away with the dependencies that tie Windows to a single PC.

It is seen as Microsoft’s answer to rivals’ use of “virtualisation” as a way to solve many of the problems of modern-day computing…

Hmmm… Some people think that midori is a “beautiful green color liqueur with refreshing and fruity taste of melon” which “can be used to mix a wide range of juices, spirits”.

Vista woes fuel Mac sales surge?

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Interesting Register Hardware report.

According to US investment house BMO Capital Markets, cited by AppleInsider, Apple will have shipped up to 2.5m Macs between April and June inclusive – enough for a 39 per cent year-on-year growth rate.

More to the point, that rate of increase is more than three times the industry average of 12.2 per cent.

BMO analyst Keith Bachman told investors that it’s largely the result of Windows Vista: “Thus far, user satisfaction ratings for Vista have been weak, and start-up times for Vista have been known to be much slower than the Mac OS X. Thus, more than 50 per cent of recent customers buying Macs in Apple retail stores are first-time buyers.”