Category Archives: Microsoft

Even Microsoft stumbles

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“Somewhere down the road”, writes Good Morning Silicon Valley, “somebody should take a whack at calculating how much Vista has cost Microsoft — in lost or postponed sales, missed opportunities and damaged reputation — as an illustration of just how badly off track you can get when you find yourself moving at high speed in the wrong direction at the wrong moment”.

And an annus horribilis it was — the first since the company went public in 1986 that it saw a decline in annual revenue. For the quarter, Microsoft fell short of analysts’ revenue expectations by more than a billion dollars, and the bad news came from all directions. The online business, the Entertainment and Devices division, the unit that makes Office, even the server software group, all slid. And then there was the Client division, the one that makes Windows for PCs — revenue off 29 percent, operating profit down 33 percent. Microsoft blamed slumping PC sales, and while the recession was certainly the major culprit, it didn’t help that Vista gave customers few reasons to upgrade and more than a few to keep waiting. The company said it was also hurt by the growth in the netbook niche. Vista can’t play in that market, so those sales went to the lower-margin Windows XP.

Vista was a self-inflicted wound. But even without it Microsoft would have stumbled: the downside of its monopoly on business customers is that it is bound to be affected by a recession.

A Tale of Two Stores

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This morning’s Observer column.

The prospect of Microsoft and Apple stores side by side is rich in comic possibilities. For one thing, what will the Microsoft store sell? It's a software company: its hardware range consists of the Xbox games console, some keyboards and mice, and the Zune music player – which, compared with the iPod, looks like something produced by the Soviet Union in its heyday. But a retail store needs exciting hardware to attract people in off the street and create a buzz.

Stand by, then, for a new range of viral ads from Apple. A Tale of Two Stores, perhaps. One establishment is crowded with teenagers browsing Facebook and trying to get off with one another, watched by benevolently smiling, T-shirted geeks. The other is a deserted cavern, rather like one of those Sony outlets, in which dispirited chaps in ties try to interest passing tramps in the new features of Office 2009. YouTube here we come!

Bing making headway?

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The NYT thinks that it might be making an impact.

SAN FRANCISCO — In late May, Microsoft unveiled Bing, its new Internet search engine, in front of an audience of skeptics: technology executives and other digerati who had gathered near San Diego for an industry conference.

To that crowd, Microsoft’s efforts to take on Google and Yahoo in the search business had become something of a laughingstock, and for good reason. Microsoft’s repeated efforts to build a credible search engine had fallen flat, and the company’s market share was near its low.

Six weeks later, Bing has earned Microsoft something the company’s search efforts have lacked: respect.

As a result, analysts say, the once-dubious prospect that Microsoft could shake up the dynamics of the search business, which is worth $12 billion in the United States alone, has become just a bit more likely…

I hope this hunch is correct. The world needs some serious competition for Google.

Google takes on Netscape’s mission

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This morning’s Observer column.

The intriguing thing about the Google announcement is not that it is developing an OS, but that it is switching tack. For nearly two years the company has been developing a Linux-based OS for mobile phones under the Android label. Most of us who have used Android assumed it was only a matter of time before a version tailored for Netbooks was released.

But that is not what Google announced. There wasn’t much technical detail in the company’s blog post, but the one thing that is clear is that the new OS will be – in its words – “a natural extension of Google Chrome”. It is, they go on to say, “our attempt to rethink what operating systems should be”.

If true, we have reached a significant milestone because what the Google guys propose amounts to turning the world upside down…

Encarta RIP — the NYT’s belated obit

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This is odd — weeks after Microsoft announced that it was abandoning Encarta, the NYT publishes a piece by Randall Stross.

IN 1985, when Microsoft was turned down by Britannica, the conventional wisdom in the encyclopedia business held that a sales force that knocked on doors was indispensable, that encyclopedias were “sold, not bought.” Encarta showed that with a low-enough price — it was selling for $99 when Britannica introduced its own CD-ROM encyclopedia in 1994 for $995 — it could become the best-selling encyclopedia.

But the triumph was short-lived. Microsoft soon learned that the public would no longer pay for information once it was available free. Other information businesses, of course, are now confronting the same fact, but without the Windows and Office franchises to fall back upon.

Randall Stross is a good reporter, so my hunch is that this is a piece that’s been lying on the shelf for a while until a quiet news day arrived.

M$ falters

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Well, well. This has been a long time coming.

On Thursday, Microsoft set the wrong kind of record, as it reported the first year-over-year quarterly revenue decline since it first sold stock to the public in 1986. In its third quarter, which ended March 31, Microsoft said its revenue fell 6 percent, to $13.65 billion, from $14.45 billion. It reported net income of $2.98 billion, or 33 cents a share — a 32 percent drop from the $4.39 billion, or 47 cents a share, reported in the period last year….

Of course it’s not really a reflection on anything M$ is doing. It’s just that it’s so tied to the business PC market that it’s bound to be badly affected by the downturn. Nobody’s upgrading at the moment. And I guess lots of companies (and customers) are waiting for Windows 7.

Microsoft Encarta succumbs to Wikipedia

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Well, it was a long time coming, but here it is.

Do you remember what came in between printed encyclopedias and Wikipedia Wikipedia reviews? For many, the answer is Microsoft Encarta, which was distributed starting in the 90s via CD-ROM and more recently on the Web via MSN. Today, Microsoft announced that it’s discontinuing Encarta later this year, offering symbolic confirmation that Wikipedia is the world’s definitive reference guide.

Microsoft acknowledges as such in an FAQ they’ve setup explaining the move and what existing Encarta customers can expect. The company writes, “Encarta has been a popular product around the world for many years. However, the category of traditional encyclopedias and reference material has changed. People today seek and consume information in considerably different ways than in years past.”

That’s quite the understatement. As PaidContent points out, the crowd-edited Wikipedia boasts 2.7 million entries in English versus just 42,000 for Encarta. Need further confirmation of why Wikipedia is simply a better model? News of Encarta’s discontinuation has already reached the product’s entry on Wikipedia.

Obama’s antitrust nominee: “Microsoft is so last century”

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From Microsoft’s local paper.

According to Bloomberg News, Christine Varney, who President Barack Obama has nominated to be the next antitrust chief, is not so concerned about Microsoft’s market position.

“For me, Microsoft is so last century. They are not the problem,” Varney said at a panel discussion sponsored by the American Antitrust Institute in June, according to the Bloomberg report. The U.S. economy will “continually see a problem — potentially with Google” because it already “has acquired a monopoly in Internet online advertising,” she said.

“When all our enterprises move to computing in the clouds and there is a single firm that is offering a comprehensive solution,” Varney said, “you are going to see the same repeat of Microsoft.”

Varney’s view is clearly good news for Redmond, which already seemed to be in favor with the Bush Justice Department. Google and Yahoo abandoned their advertising deal last fall after the Department of Justice said it would file an antitrust lawsuit to block it. Microsoft had lobbied against the deal.

Thanks to Rex Hughes for spotting it.

Steve Ballmer’s Speech to the Democrats

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As some readers know (and others have probably guessed) there are lots of things about Microsoft that I dislike. But one thing I’ve always admired about the company is the fact that it’s never had any corporate debt. Bill Gates famously said once that he wanted Microsoft always to be able to run for an entire year without earning a cent in revenues. Until today, however, I didn’t know why he felt so strongly about that. Now, thanks to Mark Anderson, I do. He’s relayed the entire text of a speech Steve Ballmer gave the other day to the Democratic Caucus. Here’s the passage that made me sit up.

When I got to Microsoft and we were this tiny little company, we didn’t have the budget to put people up in hotels, so I lived with Bill. And every time I sat down, in every corner, nook and cranny of couches, tables, I’d find these little yellow pieces of paper with Bill’s writing that had a bunch of people’s names and companies’ names and numbers.

I think of myself as pretty good pattern matching… and I just couldn’t figure out what these numbers were.

So, finally I said to Bill, what is this? He says, Steve, I’m really always worried about whether we’re going to have enough cash to pay people. So, every night I write down everybody who works for us and how much we pay them, and every contract we have and how much it’s worth. I’ve got to count the pennies tightly and that’s why you’re here now.

It’s a great talk, which is essentially about how the US needs to reboot itself. And another interesting thing: he flew to the meeting on the red-eye scheduled flight, not in a corporate jet. A neat contrast to the automobile moguls, eh? And to the Citicorp execs.