WinInfo Daily UPDATE, April 16, 2004

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Short Takes

- Microsoft Won't Cut as Many Longhorn Features as Reported
- Monti: EU Sought the Minimum Fine
- Microsoft Simplifies Protocol Licensing
- April Patch Day Overwhelms Microsoft Servers
- Microsoft Opens Up Visio XML Schema
- LindowsOS Becomes Linspire
- Gosling Toes the Sun Company Line
- Microsoft Plans Massive Chinese Investment
- Settled, Settling, and To Be Settled
- Dell Back To Number-One Spot as PC Shipments Surge
- Apple Profits Triple on Strong iPod Sales
- Heading to Phoenix

==== Short Takes ====

An often-irreverent look at some of the week's other stories, by Paul Thurrott, [email protected]

Microsoft Won't Cut as Many Longhorn Features as Reported

According to Microsoft sources, a "BusinessWeek" report that detailed cutbacks in the Longhorn feature set was a bit exaggerated. Although Microsoft will indeed cut features as the product gets closer to fruition, the company is now saying that none of the features demonstrated at Microsoft Professional Developers Conference (PDC) 2003 in October will be cut, and that the product's three main pillars--the Avalon presentation layer, the WinFS storage engine, and the Indigo collaboration components--will appear in the next major Windows release as planned.

Monti: EU Sought the Minimum Fine

Defending the European Union (EU) antitrust case against Microsoft this week, European Competition Commissioner Mario Monti described the $612 million fine levied against the software giant as "the minimum necessary to allow effective competition. As a percentage of turnover, the fine is far from being the highest imposed by the \[European\] Commission, although in absolute terms it is high simply because of the enormous turnover of Microsoft in the EU." In other words, they went easy on you, Microsoft. That fact won't prevent the company from launching an appeal, of course.

Microsoft Simplifies Protocol Licensing

In response to complaints from regulators at the US Department of Justice (DOJ), this week Microsoft simplified the terms of the protocol licensing program that the company set up in the wake of its US antitrust settlement. The Microsoft Communications Protocol Program (MCPP) now covers additional Microsoft technologies for server-to-server communication and includes simplified technical documentation that competitors can use to create solutions that work with Microsoft's server products. Since January, three new licensees--GeoTrust, Sun Microsystems, and AOL Time Warner--have signed up for the program.

April Patch Day Overwhelms Microsoft Servers

Microsoft's controversial April 2004 monthly security patch--which fixed more than 20 security flaws, some of which were several months old--apparently caused quite a flutter among security-minded customers. Because of record demand, Microsoft Windows Update servers were almost overwhelmed for several hours Wednesday as almost four million simultaneous users caused the servers to reach a sustained download rate of more than 50GB a second. Microsoft says that the feeding frenzy lasted about 4 hours, which raises an interesting question. Perhaps the people who quietly receive Automatic Updates should get such security updates first--a day before Microsoft makes them available for manual download. That way, customers who take steps to automatically update their systems will be rewarded, and customers who make knee-jerk reactions to security alerts get what they deserve. I know that statement sounds harsh, but we need to start using our heads a bit more when it comes to security.

Microsoft Opens Up Visio XML Schema

Yesterday, Microsoft opened up the XML schema that Microsoft Office Visio 2003 uses, letting third parties more easily create solutions that interact with the diagramming software. Visio has changed dramatically since Microsoft purchased the product. Once a fairly basic static diagramming tool, the product can now visualize dynamic data that's stored on a back-end data source and which Web services can potentially access. This royalty-free release opens up the product significantly--a big step for a company that proudly wears its "proprietary" label.

LindowsOS Becomes Linspire

Giving in to worldwide legal pressure from Microsoft, has changed the name of its flagship Linux distribution to Linspire. Currently under attack in the United States and Europe because the name Lindows is so similar to Windows, the company decided it was best to change the name, if only temporarily, so it could continue to do business. "Despite our victories in the United States and overseas, a name change is still necessary to counter Microsoft's strategy to sue us in courts around the world," Lindows Founder and CEO Michael Robertson said. "We're hoping that this puts a halt to the international lawsuits." Microsoft pledged to pursue its case in the United States, just to keep things interesting.

Gosling Toes the Sun Company Line

Java inventor James Gosling hasn't had many friendly words for Microsoft during the past decade, but what a difference a $1.9 billion settlement makes. This week, Gosling (a Sun Microsystems vice president and fellow) defended Sun's settlement with Microsoft and addressed concerns that the settlement document rarely mentioned the Java programming language. "We didn't ... \[sell\] out the Java community," Gosling said. "We have not sold our soul to the Dark Side. We haven't overnight turned into mindless lap dogs. We've had a lot of experience with Microsoft over the years, and it has made us very cautious. We're not a bunch of moronic secret subversive Microsoft lapdogs. We've worked very hard over the years to fairly balance the needs of all the various communities. Relax. Have a little faith." But the problem is that after years of Sun's pretense of pursuing a more open route with Java, trust in the company is at all-time low. All we have right now is a little faith.

Microsoft Plans Massive Chinese Investment

Microsoft said this week that it will invest tens of millions of dollars in the fledgling Chinese software industry, hoping to erase the decades of software piracy that has almost made one of the world's largest potential markets financially useless to the company. It doesn't help that the Chinese government has cast a blind eye to the rampant software piracy in its country and has made clear its preference for homegrown products. And you thought Microsoft had problems with the US and European governments.

Settled, Settling, and To Be Settled

We seem to hear about a new Microsoft settlement every week. But don't worry; the company has plenty of legal battles left to fight. In addition to the high-profile EU and RealNetworks antitrust cases, Microsoft also faces an unresolved Eolas patent battle, a Minnesota class-action lawsuit, and a slew of other small cases that will head to trial--or will be settled--in the days ahead. With more $50 billion in the bank and a self-imposed July deadline to figure what to do with all that cash, Microsoft has money to burn and a short time in which to do so. So if you're looking for a handout, this is a great time to face down the company in court. Expect to see more settlements during the next few months.

Dell Back To Number-One Spot as PC Shipments Surge

Thanks to stronger-than-expected PC shipments, Dell returned to the number-one PC-maker spot last quarter. If you're following the Dell and HP rivalry, take note: Dell sold more than 1 million more PCs than HP sold in the quarter, widening the gap between the two companies. Dell sold 7.7 million PCs between January and March, giving it 18.6 percent of the worldwide PC market (the company commands more than 30 percent of the US market). IBM came in third. In good news for the wider industry, overall PC sales rose dramatically in the first quarter. IDC reported that more than 41.3 million units shipped in the quarter, up 17 percent year over year, beating analysts' projections. Gartner's figures were even higher. The firm reported that PC makers sold 45.3 million units worldwide, up 13.4 percent.

Apple Profits Triple on Strong iPod Sales

Thanks to strong sales of the Apple iPod (but not the iPod Mini, which is stuck in a parts-supply quagmire), Apple Computer posted a net profit of $46 million on revenues of $1.91 billion for the quarter that ended on March 31. The company's profits almost tripled when compared with the same quarter last year, and Apple shipped a whopping 807,000 iPods, making it the undisputed ruler of the portable digital-audio-device market. However, Apple's core business isn't doing so hot, especially when you consider the rate at which the wider PC market is growing. Apple sold just 749,000 Macintosh systems in the quarter, giving the company a sagging 1.7 percent of the market. Even struggling PC maker Gateway--which recently closed all its retail stores--owned 2.7 percent of the market during the quarter. And when you combine the market shares of Gateway and the recently acquired eMachines, the company owns almost 6 percent of the market. So what do these financials mean for Apple? Assuming that the company's computer business is dying and that its consumer-electronics business is growing, I think we'll see a smaller, consumer-electronics company emerge. The problem for Apple is that it's pursuing the same proprietary strategy with the iPod that hurt the Mac. Stay tuned.

Heading to Phoenix

I'll be on vacation next week visiting Phoenix with my wife and children, and Keith Furman will fill in for me again. Thanks in advance to Keith. I'll be back a week from Monday. Have a great week.

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