Short Takes: August 8, 2014

Short Takes: August 8, 2014

An often irreverent look at this week's other news

An often irreverent look at this week's other news, including a side-trip to Africa, Surface losses and investments, Microsoft finally moves to secure Internet Explorer, Microsoft will finally open a store in New York, a disrespectful parting gift from a former Nokia factory in China, the USPTO shoots down yet another Apple patent claim, and Yahoo teams with Google on encrypted email.

The Thurrotts are going to Africa

Just a quick reminder that while I'm working for two of the three weeks we're gone during this home swap, I will be taking next week off. We usually do a road trip of some kind during the middle week of these trips, and this year's road trip should be interesting: We're going to spend a night in Tangier, Morocco, on the northwestern tip of Africa, and a couple of nights in Seville, Spain (presumably because it's not hot enough here in Barcelona). Long story short, I'll be out of touch next Monday through Friday. I assume the Internet will continue without me. –Paul

Surface "losses": Making news out of nothing at all

Anyone with a calculator and access to the Internet can read Microsoft's US Securities and Exchange Commission filings, do a few assumption-based calculations, and declare that Microsoft is losing hundreds of millions of dollars per quarter on its Surface business. And of course, that is exactly what people are doing: Computerworld, for example, figures that Microsoft "lost" $663 million on Surface in the most recent quarter, "the largest since its launch." These numbers are based on revenues (which Microsoft supplies in its quarterly earnings report) minus "cost of revenues" (which Microsoft provides in those SEC filings) and are of course completely bogus because they don't provide a bit of insight into actual sales or where the money is going. Yes, Microsoft is of course not making a profit on Surface, but this past quarter was marked by the development of two completely new Surface models, Surface Pro 3 and Surface mini, the latter of which was not ultimately sold to the public (though Microsoft did begin manufacturing them). What this boils down to is the old investment vs. loss thing, and how you view Surface will depend on how you view such long-running "investments" as Xbox ($12-$15 billion in losses in the past 10 years) or Bing ($17 billion or so in losses). If the firm can keep those dogs going for that long, it should give Surface a few more years at least, I think. After all, Surface is a big part of the "devices" bit in "devices and services."

Microsoft finally takes IE security seriously

Well, that only took about 12 years. Microsoft made two interesting and related announcements this week about Internet Explorer. First, the firm will finally take the long-overdue step of blocking out-of-date ActiveX controls, which is aimed quite explicitly at older versions of Java, which is apparently implemented in IE as an ActiveX control, something I consider a form of double jeopardy. (Please don't think about that one for too long.) And second, Microsoft is belatedly ending support for older versions of IE, though that won't happen until January (the ActiveX change starts this month, with a Patch Tuesday update next week). The way Microsoft is handling older IE versions is particularly aggressive: It will only support the most recent version of IE that is available for a supported platform. That means IE 9 in Vista/Server 2008 R2, IE 10 in Server 2012, and IE 11 in Windows 7 SP1/Server 2008 R2 SP1/Windows 8.1/Server 2012 R2. Ironically, I expect the pushback on both changes to be enormous: Despite the obvious security benefits of both moves, many business customers in particular have standardized on older Windows and IE versions, and IE has to date been one of the top blockers for Windows migrations. This one should be interesting.

Microsoft will finally open a store in New York

I'm looking outside to see whether pigs are flying or it's snowing in hell, but regardless it appears that the impossible is happening: Microsoft will finally open a retail store in New York City. And that store will be just a few blocks away from an "iconic" Apple Store that opened in the city back in 2006. Microsoft will occupy an 8700 square foot retail space formerly used by Fendi, and I'd imagine it will be up and running in time for the holidays. Actually, knowing Microsoft, it will open in January.

You're fired, now take this cheap phone and get the heck out of here

And you thought Stephen Elop's memo about 12,500 former Nokia employees losing their jobs was a bit insensitive. Microsoft is closing a former Nokia factory in China—shocker—and to convince employees there to leave voluntarily before that happens, it's offering them a free—free!—Nokia Lumia 630 as an incentive. To put the value of this gift in perspective, the 630 retails for about $100, so it probably costs Microsoft roughly 37 cents to build. And to clear, if you do want to accept this benevolent offer, you ned to move fast: The Lumia 630s are being offered on a "first come, first served basis" You just can't make this stuff up. And perhaps not surprisingly, hundreds of former Nokia factory workers have been picketing for the past week or so. Maybe they should have offered them a Lumia 1520.

Patent Office slaps down yet another Apple patent claim

Well, this could get interesting: The US Patent and Trademark Office this week on Tuesday rejected multiple claims in an Apple patent for text input auto-complete. Sounds boring, you say? But wait: This is one of the three patents that Apple used in its second successful court case against Samsung, a case that resulted in a $120 million damages ruling against the latter firm. So Samsung has told the judge about this inconvenient truth, and I think it's fair to say that two things are going to happen: One, the judgment against Samsung will be reconsidered and the damages reduced or removed. And two, Samsung will be pressuring the USPTO to continue examining the other Apple patents that were used against it in court. Common sense suggests that many of them are completely bogus. (And lest we forget, the USPTO previously invalidated Apple patents for iOS features like "pinch-to-zoom" and "rubber-banding.")

Yahoo is teaming up with Google on encrypted email service

And I'm sure Google is breathing a sigh of relief that they will finally have the technical acumen to make this project fly. Yahoo announced this week that it will join a Google effort to create an encrypted email system that will make it technically impossible for the firms to turn over messages to governments. But what Yahoo doesn't provide in the way of technical help, it does provide in raw numbers: It can add its ranks of 273 million Yahoo Mail users to the 366 million currently using Gmail. Yahoo chief information security officer Alex "John" Stamos says the only issue will be educating users: "We have to make it to clear to people that it is not a secret that you're emailing your priest," he said at the Black Hat security conference this week. "But the content of what you're emailing him is secret."

But Wait, There's More

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