Short Takes: October 4, 2013

Short Takes: October 4, 2013

An often irreverent look at this week's other news

An often irreverent look at this week's other news, including Bill Gates and Steve Ballmer attempting to keep their seats on Microsoft's board, Steve Ballmer gets a lower bonus because of Windows 8 and Surface RT shortfalls, Panos Panay promises new Surface devices and form factors in 2014, Microsoft considers giving away Windows Phone OS for free or next-to-nothing, Windows 8 usage grows more slowly than that of Windows 7, Samsung soars, and HTC stumbles.

Gates and Ballmer seek reelection to Microsoft board of directors

Anyone who thought that proto-nerd Bill Gates was just going to roll over and let others take the reins at the company he cofounded will be dismayed to discover that he, along with outgoing Microsoft CEO Steve Ballmer, are in fact now in line to be reelected to their posts on the firm's board of directors. Their fate, such as it is—come on, like they won't be reelected easily—will unfold at a November annual meeting of shareholders. And speaking of foregone conclusions—not to mention deals with the devil—that November meeting is also sure to be when ValueAct president Mason Morfit gets his own seat on the board.

Ballmer's bonus dinged for Windows decline and Surface RT debacle

Microsoft CEO Steve Ballmer received a smaller bonus than last year, and far less than he could have received if the company he leads had simply performed better. But no worries for Mr. Ballmer, who is one of the world's richest men and still made out quite nicely with this year's $550,000 bonus, which is more than 10 times the average annual salary in the United States. This bonus, which came on top of his base salary of $700,000 was calculated in an interesting way: it represents 79 percent of his base salary, or just 39.5 percent of his possible bonus, which is based on performance. It's also less than the $620,000 bonus he received last year. Why so low? Operating income in Windows, which was once Microsoft's biggest business—it's now only third—dropped 18 percent over the past year due to the lackluster reception of Windows 8. And Surface RT was an absolute debacle, responsible for a $900 million charge related to unsold inventory. Of course, Ballmer's finances have little to do with this kind of pay, which is like pocket change for a man who owns $11.3 billion worth of Microsoft stock.

Surface chief promises new devices and form factors

WinInfo readers already know that Microsoft is plotting an 8-inch Surface "mini," though that Qualcomm-based device was recently delayed from the fourth quarter of 2013 until the first half of 2014 for unspecified reasons. (Maybe they just wanted to avoid all the demand during the holiday selling season.) But Surface mini isn't the only new Surface device type that Microsoft will deliver in the coming year. Microsoft vice president Panos Panay, who runs the firm's Surface business, told Geekwire this week that "there are multiple aspect ratios and sizes and awesome things" coming. He also confirmed that LTE versions of Surface 2 (but not Surface Pro 2) would ship in early 2014, though these versions will be limited to AT&T in the US and Vodaphone in Europe at first.

Microsoft courting Nokia, yes, but also begging HTC

This one is interesting if only because I had openly asked for HTC to do exactly the same thing: According to a Bloomberg report, Microsoft's new OS chief Terry Myerson has allegedly asked ailing smart phone maker HTC (see below) to put the Windows Phone OS on its most popular Android handsets. And to sweeten the deal, he's even offering a deal that I've also openly asked Microsoft to do: He will give the firm Windows Phone OS at little or no cost. These talks are preliminary, but as I've argued before, it's hard for Windows Phone to compete in a market in which handset makers get the Android OS for free. Doing so for Windows Phone could lead to an excellent avalanche of support from device makers.

Windows 8 usage grows, but it's outpaced by Windows 7 usage growth

Yikes. You know, at some point, you really need to just start admitting that there is a problem. The (sort of) good news: Windows 8 usage grew 0.61 percent in September and now accounts for 8.02 percent of all PC usage, according to Net Applications. The bad? Usage in Windows 7 grew 0.80 percent in the month, outpacing Windows 8, and now accounts for 46.43 percent of all usage. This is the first time Windows 7 has out-grown Windows 8, and that it happened in the month before the release of Windows 8.1 (and new 8.1-based PCs and devices) is perhaps not coincidental. And that is the other (sort of) good news, I guess. By the way, 8.02 percent of the total active Windows user base (1.5 billion, according to Microsoft) is 120 million. So there are roughly 120 million people using Windows 8 right now.

Samsung soars once again

The world's biggest maker of smart phones just got a lot bigger: Samsung announced this week that it expects to post a record operating profit of $9.2 billion to $9.5 billion for the third quarter, a huge increase over the $7.5 billion it posted in the same quarter a year earlier. Unlike Apple, which relies on a big bump once a year when it releases a new iPhone model—or, this year, two iPhone models—Samsung releases numerous phones at various price points throughout the year. So even though sales of its current flagship phone, the Galaxy S4, have apparently slowed, the company is just surging forward financially as always. It's worth mentioning, too, that Samsung also has other successful products that contribute to its results, including memory chips. And, you know, washing machines.

HTC stumbles to its first-ever loss

In sharp contrast to Samsung, HTC posted it's first-ever loss for the most recent quarter, about $101 million, more than was expected. HTC says that its own flagship phone, the HTC One, has sold poorly, which is strange because it's a beautiful device and has received very positive reviews. But HTC, unlike Samsung, doesn't have a broad product portfolio, and it has focused too much on the high-end at a time when the volume part of the smart phone market is switching, as it must, to cheaper, low-end devices. But here's a bit of unintended comedy amidst all the turmoil at HTC: A former HTC design chief, Thomas Chien was recently arrested and charged with stealing trade secrets from the firm. "We, as managers are very sad, because we look at our employees as our children," HTC chairwoman Cher Wang said of the incident. "But we did not hesitate to turn [him] in to the authorities." I feel the same way about my own kids sometimes, Cher.

Adobe is hacked, customer data and source code stolen

This one reads like the plot of a Daniel Suarez novel, but Adobe admitted this week that hackers had infiltrated its computer systems and stolen a heck of a lot of sensitive information which includes credit card information, encrypted passwords and other personal data from 2.9 million of its customers. As alarming (and embarrassing), the hackers also stole the source code for "numerous" Adobe's products, including Adobe Acrobat, ColdFusion, ColdFusion Builder, and other unnamed products. Adobe is doing all of the usual handwringing and warning customers and so on. But this kind of breech is always unfortunate, and I'm curious to discover how it really happened. This much is clear: Adobe didn't even know it had been hacked and only found out after the fact when a security researcher found Adobe source code on servers used in previous electronic attacks against other companies. Way to go, Adobe.

But Wait, There's More

Don't forget to follow me on Twitterand the Paul Thurrott's SuperSite for Windows. And check out my free e-books, Paul Thurrott’s Windows Phone 8and Paul Thurrott’s Xbox Music, both of which were recently updated with eBook reader-friendly MOBI and EPUB versions. The next book, "Windows 8.1 Book," is now underway!

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