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September 27, 2002—In this issue:
1. SHORT TAKES
- Windows XP Gets Bluetooth Support
- Windows XP SP1 Hits 1 Million Downloads in Less Than 2 Weeks
- Microsoft to Support ICS in MSN 8
- Microsoft Previews the Office of the Future
- Microsoft's Big Office Bet
- Heads Up, Steve: MVPs Won't Help You Defeat Linux
- Ballmer Can't Get No Broadband Satisfaction
- Is Broadband Dead in the Water?
- It's Official: Microsoft Buys Rare
- Palm Loses Money, Introduces Confusing Product Lines
- Microsoft Software Pioneer Dead at 53
- AOL to Debut New "Two Towers" Trailer
- Maybe He Should Have Called It "Down"
- Apple Hits a New Low as Jobs Hits a New High
2. ANNOUNCEMENTS
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1. SHORT TAKES
(An irreverent look at some of the week's other stories, contributed by Paul Thurrott, [email protected])
Microsoft has released Bluetooth device support for Windows XP to manufacturing. "Companies such as Ericsson and Hewlett-Packard have built products on the Bluetooth format that let users benefit from Bluetooth wireless functionality such as establishing a connection between their Windows XP PC and other mobile computers, mobile phones, keyboards, printers, and mouse devices," the company told me last night. Industry research firm International Data Corporation (IDC) expects revenue from Bluetooth-enabled devices to grow from $76.6 million in 2001 to $2.6 billion by 2006, with widespread adoption expected next year. And with more than 46 million XP users, Bluetooth will finally have a popular, mainstream desktop OS with which to interact. Expect XP support from Bluetooth hardware makers in 3 to 6 months.
In a barely noticed milestone last week, XP Service Pack 1 (SP1) hit the 1 million download mark after just 10 days of availability. This milestone is interesting primarily because Microsoft now has a wide range of users with which to judge the success of the release, which is about as ho-hum as any service pack can or should be. Most users who install XP SP1 notice no change at all, and that's exactly what should happen. After weeks of using XP SP1 on all of my Windows machines at home, I have literally nothing to report—which is good news.
Microsoft's upcoming MSN 8 online service will boast many firsts, one of which is that MSN will become the first major ISP to document and support the creation of free home networks through a shared Internet connection (that is, Microsoft won't charge an extra monthly fee for shared Internet connections, as do many ISPs). The company is also offering customers as much as 20 percent off the Microsoft Broadband Networking Wireless Base Station, which will, of course, facilitate the Internet Connection Sharing (ICS) and home network creation that Microsoft will support in MSN 8. It's a nice synergy, if you will, of Microsoft's various product lines. Or integration. Or something.
And I bet it runs all-Microsoft software. The company unveiled its Center for Information Work (CIW), a Big Brotherish name for the work-oriented version of the Microsoft Home, which Microsoft has been using to show off future home technologies on-campus for several years. At the CIW, Microsoft is displaying such office-productivity enhancements as Dolby Digital 5.1-channel surround sound for email and other information notifications, pervasively wireless hardware, spoken email messages with video clips, Tablet PCs linked to office whiteboard displays, and wraparound 3-D displays with 180-degree views. These enhancements are all high on the concept chart and not so high on the reality chart. But that's what the future is all about: First plot it, then deliver it. If the CIW is anything like the Microsoft Home, which I visited a second time last month, it's probably a must-see and a good indication of where we're headed.
Speaking of the office of the future, here's a more concrete story about office productivity. Microsoft Group Vice President Jeff Raikes said this week that the company will invest more than $3 billion in its Microsoft Office product line over the next 3 years in an effort to boost Office sales to $20 billion per year by 2010. Office is, of course, Microsoft's other monopoly, accounting for almost 50 percent of the company's annual revenues. However, a string of disappointing releases and hefty price tags have recently dampened enthusiasm for the product line, and Raikes and company are going to try and do something about it. First up is Office 11, which will hit the streets in mid-2003 and offer new versions for small and midsized businesses, as well as for students and other individuals. This multimarket approach is intended to counter the perception that Office is too expensive, so we can expect some cheaper-than-usual Office versions next time around. Also due in Office 11 is a more pervasive toolset for communicating, collaborating, and connecting with coworkers using the same Office documents and data. XML is the magic behind this functionality, Raikes said, making Office 11 the most connected Office version yet. Time will tell: The Office 11.0 beta machine will roll any day.
The idea is so absurd it's almost laughable. Microsoft CEO Steve Ballmer told a crowd of Microsoft Most Valued Professionals (MVPs) in London this week that they would spearhead the company's efforts to create a community of users to rival the vocal group of Linux advocates who promote that OS and its open-source mantra. Apparently, Ballmer doesn't realize that the MVPs are basically just free product support for the company, and they number only 1200 strong because the primary qualification is that MVPs maintain a presence in Microsoft's USENET newsgroups. Like any other group, this group contains good members, who are honestly there to help others, and bad members, who are just in it for the perks—which include hundreds of dollars of free Microsoft software per year. True advocate communities develop naturally, not under the aegis of a company with a vested interest in keeping these people happy. If Microsoft is serious about creating a sense of community, it needs to look to the larger group of Windows advocates already on the Web and elsewhere. This group is already doing an amazing job of educating and helping a much wider range of users than is possible in the limited world of newsgroups and Microsoft Web sites. In other words, MVPs should be rated according to what they do and how they help people—not where they do it.
Speaking of bad boy Ballmer, the Microsoft CEO might be one of the richest men in the world, but even he can't get broadband Internet access at his palatial Seattle-area mansion. "I can't get cable or DSL to my house," he said in London this week. "I live in an affluent neighborhood, 6 minutes from downtown Seattle, and I can't get it." I've had cable Internet access since the first day it became available in Phoenix in early 1997 (if I recall the date correctly), when I was still living in an apartment, and I haven't looked back since. Of course, Ballmer could buy and sell me like a cheap plastic toy if he wanted to. I guess it's all a matter of perspective.
Speaking of broadband, apparently Ballmer isn't the only person without high-speed Internet access. A recent US Department of Commerce study reveals that although nearly all US families live in an area in which broadband cable, DSL, or satellite Internet access is available, few families see the benefits in the additional cost. These people, naturally, scare me to death because I couldn't imagine moving to an area that didn't have at least three broadband choices. And yet I'm obviously in the minority: More than 90 percent of the United States still gets by on dial-up modem access to the Internet. That figure puts countries such as Canada, South Korea, and Taiwan well ahead of the United States in broadband adoption. Perhaps even scarier is the way people use broadband when they're online. The study notes that most broadband adoption is occurring so that people can use music-swapping services such as KaZaA and the now-dead Napster—a sad state of affairs. I can only hope that similar studies about the telephone and television once appeared in the nascent days of those industries.
After weeks of speculation, Microsoft revealed that it has paid $375 million to purchase the remaining 49 percent (the software giant already owned 51 percent) of British video game maker Rare. Interestingly, that 49 percent formerly belonged to video game giant Nintendo, and Rare was responsible for some of Nintendo's biggest recent hits, including "Donkey Kong Country" and "Goldeneye," a first-person shooter game based on the James Bond movies. And although Rare's share of the Nintendo market has fallen a bit in recent years, Rare has sold more than 90 million cartridges since 1994, which isn't too shabby.
You just posted a $259 million loss: What do you do? Well, if you're PDA maker Palm, you launch confusing new product lines, composed mostly of preexisting products with confusing new names. The product lines sport the awful names Tungsten, for corporate products, and Zire (yes, Zire), for consumer-oriented products. The company will launch a sub-$100 PDA in the Zire line soon (think Palm m105 with a new name) and various wireless-enabled models under the Tungsten subbrand next month. Yes, the new product lines are part of a grand strategy to rejuvenate stalled sales, but here's some advice for Palm: If you don't bag the silly and confusing names, we're going to be seeing a "Zire sale" of the company by this time next year. Why doesn't Palm just make innovative and exciting PDAs, like Sony, and skip the marketing baloney?
Bob Wallace, one of Microsoft's original 11 employees, died unexpectedly this week of natural causes at the age of 53. Wallace was most interesting for his approach to computers and drugs, both of which he said could "expand the mind." But Wallace also invented the term "shareware," wrote an early word processor, and owned a cat named Microsoft that was reportedly the origin of the company's name. (According to Wallace's wife, the cat was simply small and soft, thus the name, and was named after the company, not before.) A true pioneer, Wallace will be fondly remembered for his early contributions to the software industry.
AOL Time Warner announced this week that it will exclusively debut the most recent trailer for "The Two Towers," the upcoming "Lord of the Rings" movie, on its AOL online service. The trailer will become available on AOL Monday, the company said. But wait, I thought movie trailers were the only reason people visited Apple.com.
Peter Gabriel's new album "UP" was recently made available exclusively in Windows Media Audio (WMA) 9 format this week. Or was it? Apparently, few people were able to download the digital album, thanks to a server glitch that kept customers from making the purchase. One thing about the "UP" download and other Digital Rights Management (DRM) technologies that Microsoft is offering needs clarification: DRM doesn't necessarily prevent users from copying songs to other devices or to CD-ROM. In the case of Gabriel’s album, customers can, in fact, transfer the music to portable digital audio players and make two CD copies. The point to remember is that DRM is a feature designed to prevent intellectual-property theft—not to limit your fair-use rights. I see so much misinformation about DRM that it's scary. DRM isn't a bogeyman, and it isn't designed to harm end users.
The master of public relations knew that his supposed $1-per-year salary would generate good press for Apple Computer, but CEO Steve Jobs has a little trick up his sleeve to make things right financially. As reported previously in WinInfo UPDATE, Jobs actually makes tens of millions of dollars per year, thanks to generous bonuses, and in mid-2002 those bonuses made him the highest paid CEO in the world. Jobs took home more than $43 million in second quarter 2002 alone—a time period when the average cash-grab by CEOs at America's largest companies declined by 1.9 percent. Not bad for a guy making only $1 per year, running a company whose market share has consistently sunk under his tutelage. Also, consider a recent report in "Business Week" magazine that named Apple's board of directors one of the 10 worst in America because of hefty compensation for a "flailing" CEO, too many company insiders as board members, and the board's failure to notice or stop abuses occurring under its nose. Jobs's best friend, Larry Ellison, CEO of Oracle, abruptly left his position on Apple's board earlier this week. Coincidence?
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