Short Takes: May 9, 2014

Short Takes: May 9, 2014

An often irreverent look at this week's other news

An often irreverent look at this week's other news...

Yes, a second device is coming at May 20 Surface launch

Various reports are claiming that Microsoft will launch a second, Intel-based Surface device at its Surface mini launch event on May 20. So I can now confirm those reports: Microsoft will indeed launch a bigger, Intel-based Surface Pro device at the event. I'm not 100 percent sure what form it will take—I'd like to see an Ultrabook-like model, but given the makeup of current Surface devices it will almost certainly be a tablet—but it will indeed use a high-end Haswell chip and not a low-end Atom-based chip. I speculated a bit about what I'd like to see, and what I expect to see, in "Surface Family Grows: Mini, Sure, But How About Maxi Too?."

Spin off the Xbox business? "Absolutely."

Or not. In a widely published comment, Bill Gate is alleged to have said during a Fox interview that he would "absolutely" support the spinning off of Microsoft's Xbox business, leading some to believe that Gates wants to be done with the money-losing product line. But that's not what he really said, not if you're paying attention to the context. Gates was asked whether he would support CEO Satya Nadella if Mr. Nadella chose to spin-off Xbox, and that was when Gates said, "absolutely." So he was really just saying that he would support Nadella, not that he wanted Xbox gone. And it came after a discussion in which Gates was asked whether Nadella was "truly free" to run Microsoft as he saw fit. To which Gates replied—wait for it—"absolutely."

About what about Bing?

The aforementioned Xbox comments came in response to a question from a University of Chicago Booth School of Business student who wondered whether Microsoft shouldn't split into a number of smaller companies, and more specifically by spinning off Bing and Xbox. This is a salient question, because both businesses have been money losers—excuse me, "investments"—to the tune of tens of billions of dollars each over the past decade.

Although Gates said both were long-term investments for Microsoft, he actually made a much more cogent argument for keeping Bing, noting that Bing has been "key" to Microsoft learning how to build large-scale data centers and in keeping Microsoft as a whole up to date with what's happening on the Internet.

"I see that as a fundamental technology," he said of Bing, "even for the Office business, which is a very core business [for Microsoft]." He noted that Microsoft has done spinoffs in the past, including Expedia and Slate, and that Microsoft is thinking about pieces of the company that might be "separable." But he doesn't think it makes sense to break off Bing.

And then there's Surface       

And, really, this one is weird. Noting that many analysts had left Surface "for dead," Fox host Liz Clarman said that Microsoft had recently surprised everyone with some "very hot numbers," which I have to say, I don't recall in the slightest. (In last week's Short Takes, for example, I noted that Surface was very much still a "money pit," and that Microsoft continues to lose money on every device sold.)

"You're spending a lot, you're selling a lot, and the revenues aren't quite there," Claman said, coming back somewhat to reality. When will Surface be profitable? Gates mentioned the write-off Microsoft took last year on Surface RT, and that the "high end version" (i.e. Surface Pro) has better margins and is gaining share. "You're never going to have the kind of profitability in the hardware business that you have in the software business," he said. "Analysts are going to have to watch that much more carefully than they did when we were just a software licensing company." For some reason, that response was acceptable to Ms. Claman, though it in no way answered her actual question. With Surface (and soon with Nokia's phone business), we ultimately come back to the same "investment" conversation that we still have about Xbox and used to have about Zune: How long does Microsoft accept losses in order to build share?

Sometimes the firm sticks it out (Xbox) and sometimes (Zune) it does not. So there's no real way to know how long this can last.

"Bill Gates Would 'Absolutely' Support Xbox Spin-Off"

He didn't say that. See above.

Nokia Lumia camera guru heads to Apple

Every time I write about how much better the cameras are in modern Nokia Lumia handsets like the Lumia 1020, 1520 and Icon, I hear from disgruntled iPhone fans who aren't used to being told that their favorite device isn't the best at something. Well, take heart, iSheep: Apple has just hired Ari Partinen, the senior engineer who served as Lumia Photography Lead at Nokia.

That firm debuted its PureView camera technology in the Nokia 808 PureView, but more recent devices—like the Lumia 1020, 1520 and Icon noted above—have pushed it out to the mainstream. I use a Lumia instead of a camera now and with 41 or 20 megapixel sensors, depending on the model, these devices have, by far, the best cameras out there. I'm very curious to see what Partinen can do to possibly put Apple over the top again, but let's face it, Apple will never allow a camera bump on an iPhone, so his impact could be minimal.

So much for "Titanfall"

Titanfall, the game that was supposed to save Xbox One and give the console at least a month or two atop the sales charts, did not. And now we find out that not only Titanfall hasn't turned things around for Xbox One, but it's also not even the best-selling game on that platform.

Instead, Call of Duty: Ghosts is the best-selling Xbox One title, as it is on PlayStation 4. I would just point out that this rendition of COD is the first in at least three years in which Activision hasn't announced sales figures—the previous two were both billed, at the time, as the biggest entertainment launches in history—which I find telling.

Activision now has three studios (up from two) working on new COD titles, so it can maintain its torrid once-a-year pace, and the next entry, "Call of Duty: Advanced Warfare," does look impressive and will, for the first time in years, utilize a modern new game engine.

Apple rumored to be buying Beats for $3.2 billion

Former Apple CEO Steve Jobs wasn't a big fan of spending big on corporate acquisitions or streaming music services, so this latest rumor—which is a pretty sure bet—would surely rankle his biggest fans if they weren't so good at rewriting history to fit the storyline. Apple is rumored to be spending $3.2 billion for Beats, a company that basically makes two things: Expensive, bass-heavy headphones that are popular with the younger set, and a subscription music service called Beats Music.

It's not clear Apple needs the former, though even those aforementioned Apple fans would agree that Apple's bundled ear buds are crap. (And the margins on these headphones are positively Apple-esque.) But it absolutely needs the latter: Though the firm has insisted for years that music fans want to own music, the reality is that subscription music services were always going to blow that system out of the water, and now that they're really taking off, Apple is falling behind. The firm launched the lackluster iTunes Radio last year, but no one is listening. And so I'm curious to see how it integrates Beats Music into what I hope will be a single iTunes app on various platforms. Of course, Beats also runs on Android and even (gasp!) Windows Phone, so this should be interesting.

And you were worried about NSA backdoors in Windows...

A reported published this week in Al Jazeera America reveals the close relationship that online giant Google had with its equally voracious anti-privacy partners at the National Security Agency (NSA), at least until the Edward Snowden disclosures. This is interesting when you consider that Google has repeatedly denied this relationship ever existed. But email messages between Google and the NSA show a much cozier interaction between the two entities than one might imagine given that Google has more recently tried to distance itself from the NSA and has criticized the agency's spying activities. Frankly, I think Google is a bigger privacy risk than the NSA.

But Wait, There's More

Don't forget to follow me on Twitter and Paul Thurrott's SuperSite for Windows.

I'm trying to change the book publishing model, and would appreciate your support: Windows 8.1 Field Guide is now complete and available for only $2 in PDF, MOBI and EPUB formats, and it will be in the Kindle and Nook e-book stores soon. But I have other free e-books available too, including Windows Phone 8 Field Guide and the in-progress Xbox Music Field Guide. Coming soon: Windows Phone 8.1 Field Guide.

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