An often irreverent look at some of the week's other news...
New Record: Microsoft Profits Double on Windows, Server Products Growth
Microsoft announced yet another record quarterly profit, doubling its profits year-over-year for the quarter ending December 31. The company made $3.46 billion on $10.82 billion in sales. And, amazingly, in a rare move, Microsoft actually raised its guidance for the coming year. The software giant expects to financially outperform previous expectations, an excellent indication that the PC business has indeed turned the corner. Check out this gung-ho quote from the usually taciturn company: "We expect corporate and IT spending to remain healthy for the rest of the fiscal year," Corporate Vice President Scott Di Valerio said. "Corporate profits are strong, and worldwide GDP growth is good. The world is buying a heck of a lot of servers." It sure is. Sales of Windows and Microsoft's server products grew in leaps and bounds during the quarter. Microsoft SQL Server sales were up 25 percent, and Microsoft Exchange Server 2003 is the fastest-selling server product Microsoft has ever shipped. Even the Xbox, the best-selling video game console of the holiday 2004 selling season, made money, thanks largely to the success of Halo 2. (Fear not, Xbox will be back in the tank by the end of this quarter as Halo 2 sales die down.)
Sorry, Mac Fanatics; Search Patent Doesn't Show Apple Head Start
The fan boys over at The Mac Observer gleefully reported this week that a patent just granted to Apple Computer reveals that the company had a "multiyear head start" on Microsoft for the desktop search technology that Apple is now adding to its next OS release, code-named Tiger. There's just one problem: The report isn't true. And you can do more research than a typical Macintosh fan site by simply taking 5 seconds to search Google for the term Storage+. Storage+ is an earlier code name for WinFS that dates back to the late 1990s. If you perform this search, you'll note that two of my articles about this technology, one from 1999 and one from 2000, appear on the first page of Google results. And those dates--go figure--are before Apple started its patent request and, not coincidentally, years after Microsoft actually started working on Storage+. However, to reiterate, I never meant to suggest that Microsoft "invented" instant desktop search. But I do believe that Apple decided to add instant desktop search to its own OS products only after Microsoft started talking it up (which first happened in the late 1990s, thus my reports from that time). And when Microsoft promised in late 2003 to add the functionality to Longhorn, Apple jumped on board to make it a Tiger feature, knowing that it could get its product to market faster than Microsoft. And that, folks, is exactly what's happening: Speed to market is one of Apple's key strengths. I know the realization that Apple isn't first with everything is painful for faithful Mac fans, but that doesn't dim the company's successes. Mac fanatics just need to get over the mentality that for Apple to win Microsoft has to lose. If I'm not mistaken, Steve Jobs first said that.
Apple Sells 250 Million Songs Online
Speaking of Apple, one area in which the company is clearly leading is digital music. This week, Apple announced that it has sold a whopping 250 million digital song downloads (or, in Apple's gushy wording, "a quarter of a billion!") through its Apple iTunes Music Store. That's more than one million songs (or, "one one-hundredth of a billion!") a day, putting Apple on track to sell a gajillion songs this year. That's a great accomplishment, even if you can play those songs only on Apple's locked-in iPod player. I'm interested in seeing what level of success Apple has to obtain before the US Department of Justice (DOJ) steps in.
Apple Launches Made for iPod Program
And speaking of the iPod, Apple revealed this month that the company is instituting a Made for iPod logo program that's designed to help consumers identify the iPod accessories that have earned Apple's seal of approval. The first qualification is that the product must be made mostly of bright white plastic, especially if it's a set of headphones. Second, the metal surface must be so easy to scratch that it will actually get marred simply by looking at it the wrong way. And, finally, if the accessory uses the iPod docking port in any way, Apple has to sell it. Otherwise, you have to pay a licensing fee. This inclusive strategy should appeal to the many companies that make iPod accessories. Oh, wait...
Microsoft Embroiled in Freedom of Speech Flap
Various Web logs (or blogs, as the kiddies call them) have received nastygrams from Microsoft in the past few weeks because they spilled the beans about Windows Mobile 2005, code-named Magneto. Due this spring, the next major version of the Windows Mobile platform will work with both Pocket PC devices and smart phones and will include ActiveSync 4.0, major new versions (finally) of the Pocket Office applications, and other new features. Microsoft's problem with the posts, apparently, is that many of the blogs included screen shots of the new software, which Microsoft says violates its intellectual property and trademark rights. That's an interesting interpretation of the law, but I'm not sure it supersedes your right to communicate a fact, especially if you didn't solicit the material in question. The big question for these blogs is whether they want to be on Microsoft's bad side. Typically, in a case like this, you're better off working with Goliath than taking out a pebble and assuming you'll pull a David. But in the "gotta have it first" mentality of Web pseudo-journalism, we'll probably see this kind of situation crop up more often. Indeed, even Apple is suing one of its many fan sites for a similar reason.
Google Snags Mozilla Developers
Although Google has tried to quell rumors that it's working on a Mozilla-based Web browser that will be branded with Google's corporate identity and feature integrated Google services, this week the company hired two Mozilla developers, Ben Goodger and Darrin Fisher. Goodger, in particular, is a high-profile acquisition; he's one of the key developers who works on the successful Firefox project. (Fisher, meanwhile, works on back-end technologies). Both men maintain that they'll continue their roles at The Mozilla Foundation. But questions remain: Is Google going to create a Web browser? And, if so, why? And if not, why bother hiring these guys?
Blog Maker Strikes Back Against Similarly Named MSN Spaces
A small Bay Area company named Edict has been selling a blog tool called Spaces for about 2 years, which explains why the company was a bit taken aback late last year when Microsoft announced its own blog tool called MSN Spaces. Edict's founders have attempted to contact Microsoft about the problem and have contacted lawyers but, so far, Edict hasn't heard back from the software giant. "We can't understand how they came up with the name Spaces," Edict Founder Tor Hough told "The Detroit Free Press." "Even a simple Google search on the Net would have shown there was another blogging company out there with the same name." Ironically, that comment actually explains the problem. Microsoft uses MSN Search, not Google, and when Microsoft developed MSN Spaces, MSN Search was still using a lackluster Yahoo!-based back end. I think Microsoft could find Edict Spaces now if it searched for the name Spaces using MSN Search.
Jobs Was Right: 2004 Was the Year of the Laptop--But Not for Apple
In January 2004, Apple CEO Steve Jobs declared that 2004 would be the "Year of the Laptop." And he was right, although Apple's 2004 notebook computer sales were nothing to write home about. In the overall PC industry, however, notebook sales jumped 24 percent during the 2004 holiday selling season, whereas desktop PC sales fell 7 percent. And Intel says that the number of notebook-oriented microprocessors it sells more than doubled between 2001 and 2004. Better yet, Intel expects the market to double yet again by 2008.
Napster to Move into Movie Downloads
Online music service Napster pioneered the subscription music model, and now the company wants to get into downloadable movies, a market that niche players such as CinemaNow and Movielink currently dominate. Napster hasn't revealed whether its movie plans include movies for sale--in which customers would own perpetual rights to downloaded films--or just a la carte rentals, like the existing services. Frankly, the days of media ownership are coming to a close. No one really needs to watch "Dude, Where's My Car?" more than a dozen times, anyway.
Nintendo Profits Surge on DS Demand
Video game maker Nintendo reported sharply increased profits during its most recent reporting period (curiously, the last 9 months of 2004). However, almost all those profits were due to the recently introduced Nintendo DS handheld gaming device, which has sold almost 3 million units since its late November 2004 release. In fact, DS sales are so strong that Nintendo raised its worldwide sales goal through March to 6 million units. Unfortunately, sales of all other Nintendo devices--including the much-maligned GameCube video game console--were down during the same period. Indeed, Nintendo expects to sell just 4 million GameCubes in its current fiscal year, far below the levels Microsoft's Xbox and Sony's PlayStation have achieved. As a result, Nintendo has lowered its overall sales forecast for the year. The company says it will announce its yearly results by April.
Ex-Microsoftie Pleads Guilty to Software Theft
Finally, let's start the weekend off right with a little petty larceny. The ringleader of a group of ex-Microsoft employees who stole almost $2 million worth of software from the company pleaded guilty this week to federal felony charges of conspiracy and money laundering. The 36-year-old man admitted his role in stealing almost 2700 pieces of Microsoft software between April 2001 and November 2002; he made about $2.3 million, apparently by selling the software in darkened Redmond-area parking lots after hours. But this criminal has a few excuses. First, although Microsoft values the wholesale price of the stolen software at $7.1 million, our little felon asserts that the theft actually cost the company less than $15,000. Second, he has agoraphobia (a fear of open places). How that translates into an excuse for theft is hard to imagine, but we're talking about the US legal system. My guess is he'll have his own talk show within 6 months.
