An irreverent look at some of the week's other news...
Microsoft Earnings Stronger than Expected
Microsoft beats its lowered earnings expectations, pulling in $1.53 billion on revenues of $7.25 billion for the quarter ending June 30, up dramatically from the paltry $65 million it earned in the same quarter a year ago. The company credited strong sales of Windows XP, Office XP, and the Xbox game console for the results, and predicted modest financial gains over the next year. What's most interesting about the company's earnings, however, is that this is the first quarter affected by Microsoft's recent SEC settlement, in which the agency charged the company with massaging the books to present more controlled growth. The results of any bookkeeping changes, however, were imperceptible. Microsoft also noted that software sales rose 9 percent year-over-year, while enterprise sales were up 4 percent.
Apple Earnings: Not So Bad
The night before Steve Jobs' MacWorld keynote address, Apple Computer released its quarterly results, which saw a 50 percent drop in profits from the same quarter a year previously. The company posted a net profit of $32 million on revenues of $1.43 billion. Frankly, given the economy and the state of the PC industry, these numbers aren't too bad, though they sent the company's stock tumbling. Apple shipped 808,000 Macs in the quarter, down only 2 percent from a year ago.
Apple Vs. Microsoft, Part Deux
You might recall the little flap earlier this week when Microsoft's Mac Business Unit (MacBU) Chief Kevin Browne complained that Apple didn't do enough to push Mac OS X, thereby dooming sales of Microsoft's Office v. X, which is designed solely for Mac OS X but has sold poorly. Browne elaborated on the charges a few days later, after a little "did-not, did-too" action occurred between Apple and Microsoft executives. "'We are concerned that Apple is simply assuming their existing customers will move to OS X," Browne wrote in an email to MacWorld magazine. "We have empirical and anecdotal data that up to half of current Mac users just don't know what to think of X. There is investment required have concerns about the long-term because Apple has not focused on moving the Mac installed base to Mac OS X ... Since OS X was introduced, Apple has spent 20 \[times\] more advertising iPods than advertising OS X. They have a great product in OS X, but changing operating systems is a big undertaking for customers. It involves directs costs for hardware and software upgrades, you have to learn the new interface, etc. We would like to see Apple do a better job of explaining the benefits of OS X, so more people will feel the investment is worthwhile." While I've always felt that the key to Apple's growth is converting Windows users, I can't help but agree with Browne on this one: If Apple's existing user base doesn't adopt OS X first, it's game over.
But What About Adobe?
In my coverage of the Microsoft-Apple flap, a few Mac aficionados complained that I included information about developers, like Corel, who agreed with Microsoft, but neglected to mention that Adobe actually saw small OS X-based software sales growth. For those of you not familiar with the situation, Adobe is Apple's closest partner, and routinely optimizes its software for the Mac and the Mac's unique hardware components, allowing Apple to use Adobe products in Windows-Mac face-offs where the Mac, inexplicably, seems to win time after time. But saying that Adobe supports Apple is like saying that the Pope supports God: Obviously. The truth, however, is that even Adobe can't do anything to help Apple: Despite shipping the first OS X-compliant version of PhotoShop this past quarter, sales of Apple's pro machines--the PowerMac systems used to run PhotoShop--fell dramatically. Furthermore, Adobe's backing of Apple was made even more spurious by a little disclaimer, made by Adobe CEO Bruce Chizen, who noted that Adobe's "experience may not be representative, since Adobe customers tend to be early adopters of technology \[anyway\]." Funny no one thought to mention that quote in their arguments, eh?
Microsoft Removes Java from Web Site
Microsoft removed its Java software from the company Web site, causing conspiracy theorists to fire up their keyboards yet again. But the move was completed in anticipation of Windows XP Services Pack 1 (SP1), which will include the Java software. The problem is that Sun claims Microsoft doesn't have the right to distribute Java online because of their Java legal case settlement. Microsoft disagrees, but rather than face yet another court battle, the company decided to simply remove the software and just distribute it through SP1. So this begs the question: If Sun wants Microsoft to be forced to include Java is Windows, why would it complain that the company was offering the software, for free, to Windows customers from its Web site? This stuff makes my head spin.
MSN 8 to Emulate Hotmail Strategy
If you're curious about Microsoft's decision to start charging non-MSN users to use MSN 8, formerly MSN Explorer, then consider that the strategy is obviously following in the successful Hotmail model. First, you give customers a wide range of functionality for free, and then you start dropping features and make them part of a subscription-only service. MSN 8 is to MSN Explorer as Hotmail Extra Storage is to Hotmail, methinks, and it's only going to get worse, unless of course you want to join the MSN family. And that, my friends, is exactly what Microsoft wants. Welcome home, guys.
Jobs: Apple To Consider Intel Chips After OS X Transition Done
Apple CEO Steve Jobs said this week that his company would consider moving to Intel chips, but that he would wait until at least 2003 because the transition to Mac OS X was more important. But with the speed of Power PC hardware increasingly falling behind Intel's chips--The Pentium 4 will hit 3 GHz this year--Apple would be wise to do a bit of research. I recommend AMD's upcoming 64-bit Opteron, which will give Apple a technological leg up on Windows and, perhaps, offer them Windows compatibility through the Opteron's full compatibility with 32-bit x86 code. Come on, Apple: Do the right thing.
Dude, You Just Got an Email from Bill Gates!
In an effort to appear more human, Bill Gates and Microsoft CEO Steve Ballmer will issue occasional email newsletter to the company's customers, discussing technology and the public policy. The first such email was just mailed out, and it's a real fireside chat, let me tell you. In it, Gates discusses Trustworthy Computing, naturally, and how Microsoft hopes to make people forget about the thousands of security problems the company's software has foisted on them over the past year alone. You know, I've often said that the proof was in the pudding: We will judge you on your deeds, and not your words, Mr. Gates. Now get back to work making better software, and we'll be sure to rally around you when the hack attacks stop working.
Xbox Sales Hit 3.9 Million
Despite constant news stories that the Xbox is a sales disaster, the truth is that it's selling very well in the USA especially. As part of its quarterly earnings report, the company said that it sold 3.9 million Xboxen through the end of June 2002, right on target with its reduced expectations of 3.5 to 4 million sales. Originally, Microsoft had expected to sell 4.5 to 6 million units, but the Xbox has fared poorly in Europe and the Far East.
Liberty Alliance: We're Not Anti-Microsoft. No, Seriously.
The Liberty Alliance issued specifications for its single signon technology early this week and then immediately had to fend of criticism that the organization was anti-Microsoft. Not so, says the Alliance. Indeed, it would welcome Microsoft with open arms if the company would just accept that Passport wasn't the answer, and that interoperability was key. "Microsoft, with its depth of experience in developing the .NET Framework, would be a welcome addition to the Liberty Alliance membership," an Alliance representative recently wrote. "However, their resources and expertise are not essential in delivering future technical specifications. With more than 65 members, the Liberty Alliance already has the necessary expertise to deliver open, platform-agnostic specifications for federated network identity."
OK, PC Sales are Down Again, But Recovery On the Way. No, Seriously.
Sales of personal computers declined for the 5th straight quarter, but IDC and Gartner Dataquest both maintain that the industry will recover this year. PC shipments have finally evened out, apparently, and will even rise slightly for the remainder of the year, the firms say, with IDC predicting 4.3 percent growth in 2002 and 11 percent in 2003. However, among the top PC vendors, only Dell saw year-over-year shipment growth, and its results are somewhat amazing: Dell shipped 4.6 million units in the last quarter alone, up 15.5 percent from the year before. Most top PC vendors experienced shortfalls of 4 to 16 percent in the same time period.
Steve Jobs and "Jag-Wire"
As noted yesterday in WinInfo Daily UPDATE, Apple CEO Steve Jobs kept pronouncing "Jaguar," which is the code name for the next Mac OS X version, as "Jag-wire," which I found a little odd and not a little amusing. When asked later why he couldn't pronounce the word correctly, Jobs said, "Because I'm weird. Everyone tells me I pronounce it wrong." LOL.