WinInfo Daily Update, January 30, 2006: EU Warned Microsoft

To ensure that future email messages you receive from WinInfo Daily UPDATE aren't mistakenly blocked by antispam software, be sure to add [email protected] to your list of allowed senders and contacts.

This email newsletter comes to you free and is supported by the following advertiser, which offers products and services in which you might be interested. Please take a moment to visit this advertiser's Web site and show your support for WinInfo Daily UPDATE.

Argent Software
http://www.argent.com/w/whitepapers_mom.html?Source=WNT

==== Sponsor: Argent Software ====

Argent Software

NETWORK TESTING LABS COMPARES ARGENT TO MOM 2005
Network Testing Labs, one of the world's leading independent research companies, concluded that "Argent's suite had a smaller footprint, was more scalable, supported more platforms, had a more responsive and intuitive user interface and gave us more useful reports," the report says. "Argent's suite of monitoring products emerged from our testing with flying colors."

Download this FREE Comparison Paper now:
http://www.argent.com/w/whitepapers_mom.html?Source=WNT

==== In the News ====

- EU Warned Microsoft That Source Code Release Wouldn't Suffice
- Microsoft Earnings: More of the Same

by Paul Thurrott, [email protected]

EU Warned Microsoft That Source Code Release Wouldn't Suffice

"The Wall Street Journal" has obtained a confidential document that European Union (EU) antitrust regulators sent to Microsoft last month, warning the software giant that a release of its Windows source code would not meet the EU's requirements. Last week, you might recall, Microsoft announced with great fanfare that it would release portions of its Windows source code in a bid to finally meet its EU antitrust requirements. Microsoft general counsel called the move "a bold stroke" when it was announced.

You might recall that EU antitrust commissioner, Neelie Kroes, said she was "surprised" that Microsoft made the source code offer last week. Given the revelation of this document, her comments can be put in perspective: She's surprised because the EU specifically told the company that a source code release would not meet its requirements.

Most of the confidential document cited by "The Wall Street Journal" concerns the EU's efforts to determine whether Microsoft had complied with the requirements of its antitrust ruling. Microsoft had previously turned over 12,000 pages of technical information describing software protocols that developers could use to interact with Windows Server products. But the EU says that its technical experts spent more than 42 hours working on very simple applications that interact with those protocols, and they couldn't get anything to work. The experts called Microsoft's documentation "totally unusable" and complained that it lacked an index, illustrations, or even section headings. Developers at IBM, Novell, Oracle, and Sun Microsystems also complained that the documentation was unusable, the report notes.

Microsoft now faces the possibility of fines of $2.4 million a day, retroactive to December 15, 2005, if it can't meet the EU requirements. Those requirements were made clear in its March 2005 ruling, the EU says.

Microsoft Earnings: More of the Same

When Microsoft issued its latest quarterly earnings last week, analysts were eager to see how sales of the Xbox 360 affected the software giant's results. The answer: Not much. Indeed, a quick look at Microsoft's earnings statement for the quarter ending December 31, 2005, reveals that the company's cash cows--Microsoft Windows, Microsoft Office, and its server offerings--continue to be responsible for most of the company's earnings. Meanwhile, its newer and highly visible initiatives, MSN and Xbox, continue to hemorrhage cash.

Microsoft posted net income of $4.66 billion in second quarter earnings for fiscal 2006, a 2 percent decline from the same quarter a year ago. The company blamed the slight downturn on expenses related to its high-profile Xbox 360 and SQL Server 2005 launch events. Revenues, however, reached a record level: $11.84 billion for the quarter.

The software giant was quick to credit some familiar businesses for its earnings. "The growth in our core businesses was healthy during the quarter driven by strength in Server and Tools and the success of our Windows Client products in a robust PC market," Microsoft CFO Chris Liddell reported. "The quarter also marked the beginning of an important product cycle for Microsoft with the launches of Xbox 360 \[and\] SQL Server 2005 ... which were extremely successful and well received by our customers."

It's unclear how successful Xbox 360 is. Though the highly desired product was arguably the number one item on holiday 2005 wish lists, few consumers could actually find Xbox 360 consoles. As I reported last week, in an earnings conference call, Microsoft reported that it had sold just 1.5 million Xbox 360 consoles in North America by the end of 2005, far fewer than the 3 million units the company had originally projected. Microsoft blames parts shortages for its woes and reports that it has added a third Xbox 360 manufacturer to meet demand. Meanwhile, the entertainment and devices division, which is responsible for the Xbox, lost $293 million during the most recent quarter.

However, Microsoft's traditional businesses are still reaping huge profits. Indeed, the business units responsible for Windows, Office, and the server products generated more than $5.8 billion in operating income. Microsoft's net income was lower than that figure because many other divisions lost money.

So is this situation a problem? The markets for its Windows client and Office solutions are mature at best, and both products' biggest competitors are earlier versions of the same software. The only way for Microsoft to grow these markets is to ensure that existing users keep upgrading and to find new markets for its software. The company has been looking into emerging markets in third world countries and places such as the Far East, where software piracy still runs rampant. It's unclear whether upcoming launches of Windows Vista and Office 12--both due in late 2006--will boost sales in what are increasingly saturated markets.

Of course, a company with Microsoft's financial resources and continued financial successes can afford to peddle unsuccessful products for years at a time. If any of its new initiatives--such as living room-based computing and entertainment platforms, Web search, video games, digital media, or mobile computing--take off, the software giant might discover its next cash cow. For now, however, it's business as usual. And business is good.

==== Events and Resources ====

SQL Server 2005 Up & Running Roadshows Coming to Europe!
SQL Server experts will present real-world information about administration, development, and business intelligence to help you put SQL Server 2005 into practice and learn how to use its new capabilities. Includes one-year PASS membership and subscription to SQL Server Magazine. Register now for London, UK, and Stockholm, Sweden.
http://www.windowsitpro.com/roadshows/sqlservereurope/index.cfm?code=0201emailannc

==== Featured White Paper ====

Use server and storage consolidation to optimize your existing Windows server infrastructure. Find out how!

http://www.windowsitpro.com/go/whitepapers/polyserve/serverconsolidation/?code=0201emailannc

==== Announcement ====

VIP Subscribers have it all!
Become a VIP subscriber and get continuous, inside access to ALL of the online resources published in Windows IT Pro, SQL Server Magazine, Exchange and Outlook Administrator newsletter, Windows Scripting Solutions newsletter, and Windows IT Security newsletter--that’s over 26,000 articles at your fingertips. You will also get a valuable one-year print subscription to Windows IT Pro and two VIP CD-ROMs (includes the entire article database on CD-ROM, delivered twice per year).
Don’t miss out--sign up now:
https://store.pentontech.com/index.cfm?s=1&promocode=eu2762uv

==== Contact Us ====

About the newsletter -- [email protected]
About technical questions -- http://www.windowsitpro.com/forums
About product news -- [email protected]
About your subscription -- [email protected]
About sponsoring an UPDATE -- [email protected]