Short Takes: May 2, 2014

Short Takes: May 2, 2014

An often irreverent look at this week's other news

An often irreverent look at this week's other news...

Because They Can Please No One, Microsoft Faces Fallout in Wake of Decision to Patch IE Flaw on Windows XP

Sometimes it's so stupid you just have to laugh. Microsoft this week issued an out of band security fix for all versions of Internet Explorer since IE 6, which as you know debuted in Windows XP in 2001. And in a fairly credible and unexpected move, the firm decided to fix this issue in all versions of Windows XP, despite the fact that this OS is no longer supported. Clearly, this was the right thing to do. And clearly, everyone is thanking Microsoft for taking the high road and doing the right thing. Right? Wrong. Instead, the firm is once again facing the sort of backlash that seems to attach itself both comically and magnetically to Microsoft anytime it does, well, anything. Critics are pontificating that Microsoft is sending the wrong message by fixing this vulnerability, and that it is setting up expectations that it will continue patching bugs on XP going forward. I actually think both of those assertions are wrong, and that the company did a decent job of explaining its decision to fix the vulnerability, especially given the timing of exploits so close to XP's fade into unsupported status. And if you don't want Microsoft fixing this bug, please. Feel free to ignore the fix.

Microsoft Surface Continues Tradition as a Financial Sink Hole

In a Securities & Exchange Commission filing that went public this week, Microsoft revealed that it lost $300 million on its Surface tablet lineup over the past nine months and $45 million in the most recent quarter alone. Those losses are derived from some figures Microsoft supplies: The revenues that Surface drove into the business minus the cost of revenue, which involves manufacturing, shipping, marketing and other costs. Because Microsoft loses money on every Surface it sells, it likewise loses more money when it sells more Surface tablets, and that's the dark side of this little tale: The firm actually did sell more Surfaces this past quarter, and over the previous nine months, than it did during comparable time periods a year ago. But that just means its losses are getting worse. With the firm set to deliver at least one more Surface model in the coming month—the long expected and delayed Surface mini—it's possible that this trend will just accelerate. At what point does an investment become a boondoggle?

Well at Least They Can Bank on Nokia's Lumia, Asha and Dumb Phone Devices

Oh, right. That business was losing money hand over fist as well. So how will Microsoft, which has only proven that it can't make money on hardware, turn around a business that was run by a company which, unlike Microsoft, very much understood how this was supposed to work? Well, we're going to find out, and if history is any guide, it should be messy: Where Microsoft farms out the manufacturing of its money-losing hardware, Nokia manufactured its own money-losing hardware at its own facilities. I wonder which of these losing ways of doing things will win out? Maybe it doesn't even matter: When it comes to hardware, about the only thing Microsoft can do better than Nokia is absorb huge financial losses.

And Why is Microsoft Making TV Shows?

And speaking of money-losing ventures, Microsoft's continued investments in consumer products that few are interested in confounds fans of the firm who believe it should simply focus on what it does best: the enterprise. And if you fall into that category, this one will boggle your mind: Not only is Microsoft pushing its $450 Xbox One console into a living room set top box market that is dominated by sub-$100 devices, but the firm is also backing the creation of a number of TV shows, documentaries and movies that will exclusively "air" on the console. The goal here, from what I can tell, is the same as it is for the gaming side of Xbox: use exclusive content to drive usage. But with entertainment already so heavily segregated, it's unclear how successful this strategy can be, especially when Xbox One, in particular, is in so few homes compared to mainstream offerings like cable TV or even less expensive tech options like Apple TV or Roku. But there they go again, chasing after the content fantasy. It's like "Mungo Park" all over again. (Look it up.)

"Remembering BASIC on its 50th birthday"


20 GOTO 10

Microsoft-Backed Documentarian Unearths Atari E.T. Cartridges and World Acts Surprised

One of the TV shows that Microsoft is backing should be of interest to video game fans: A documentary film crew visited a dump in Alamogordo, New Mexico this month in order to determine whether the story about Atari dumping E.T. and other video game cartridges in the desert was real or a myth. They found all kinds of cartridges and other related materials, which should surprise anyone because—and I want to be very clear about this—we knew the exact story about what happened here all along. This isn't an urban myth, it's not just a story, and yes, it was very well documented from the beginning. In fact, so many people were pillaging the site for free cartridges 20 years ago that the city had to cement it over to put a stop to it. Watching the tech world react with wonder to something that was never in fact a mystery is in some ways the best part of this story. It's like watching a fisherman celebrate a big catch in an artificially stocked pond. Just drop the hook, dufus. They're right there.

Oh, and By the Way

If ever a game deserved to be landfill, it's E.T. That game was a steaming pile of garbage.

Samsung Smartphone Sales Up, but Market Share Down

The world's largest maker of smartphones continues to outsell its nearest rival, Apple, by more than a 2-to-1 margin, and in the most recent quarter, it actually extended its lead against Apple yet again. But here's a curious little tidbit from Samsung's quarterly results: The firm actually lost market share in the smart phone market for the first time in years, thanks to strong showings from a handful of China-based hardware makers that are starting to pick up steam. Samsung delivered 89 million smartphones (up from 68 million in the same quarter a year ago) to customers in the first quarter of 2014, compared to 44 million units for Apple (down 14 percent). But that wasn't enough to stave off the Chinese: Samsung's share of the smart phone market actually fell, from 32.4 percent a year ago, to 31.2 percent. (Apple's share fell too, of course, from 17.5 percent to 15.3 percent.) The big winners here, apparently, are Lenovo (4.7 percent of the market, up from 3.9) and Huawei (also 4.7 percent). And with both firms eyeing big international expansion this year, the smartphone market could start looking quite different than the Samsung/Apple duopoly we've seen thus far.

Tablets Stumble for First Time in Q1

And speaking of surprising device results, IDC is reporting that tablet sales, overall, were basically flat year-over-year at 50 million units in the first quarter, and two of the more prominent companies in this market, Apple and Amazon, both sold fewer devices than they did in the same quarter a year earlier. So Apple was still the biggest tablet maker, with 32.5 percent of the market, but its share is down dramatically from the 40.5 percent it posted a year earlier. Meanwhile, number two Samsung continues to surge: it controlled 22.3 percent of the market in the quarter, up from 17.5 a year ago. But the big winner was Lenovo: The fourth largest maker of tablets saw its share rise a huge 224 percent to 4.1 percent overall. So what are the trends here? According to IDC, tablet sales are slowing, perhaps plateauing, because buyers are holding on to their existing devices for longer (just as they do with PCs), and thanks to a surge in large-screen "phablet" smartphones, which can perform the duties of a phone and a tablet in one device.

But Wait, There's More

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