WinInfo Short Takes: Week of July 23

An often irreverent look at some of the week's other news, including a live episode of Windows Weekly, Vista SP1 rumor-mocking, Microsoft and Google earnings, PC market share, Firefox gains, EU silliness, Xbox 360 flaws, Windows Media DRM and so much more...

WinInfo Blog

Leo and I recorded a marathon episode of the Windows Weekly ( podcast this week, due to our week off last week and an unusually large number of topics to cover. Next week, we'll be recording a live episode of the podcast. If you'd like to join, we'll be on TalkShow ( next Thursday, July 26, 2007 at 4:00 pm EST. Jump on in if you can and would like to chat.

Short Takes

Laughing in the Face of Vista SP1 Stupidity
I mean, seriously, people. I think I've made a sane and measured argument for why Microsoft should divulge its plans for Vista Service Pack 1 (SP1): After all, Microsoft's big-business customers need this information to plan deployments. But the people that don't need this information--you, me, and every Microsoft sycophant and enthusiast on the planet--have been for some time now pushing what can only be described as a laughable series of Vista SP1 non-stories. First was the "news" that Microsoft would ship the final version of SP1 before the end of 2007, contrary to the company's recent public comments about shipping only a public beta by that time. This story, naturally, turned out to be complete baloney, though it was republished all over the Web. Too bad, since Microsoft says it has no plans for a Vista SP1 beta any time soon. Then came reports of a "Windows Vista SP1 WDK" being posted on the Microsoft Connect site, which spawned an astonishing number of "SP1 is imminent!" stories online. Wrong again, guys: That WDK release was for Windows Server 2008, not Vista SP1. Look, no one is more interested in the future of Windows than I am (evidence: SuperSite for Windows). But this is a service pack we're talking about here. Aren't we all disappointed enough by Vista not to get so hot and heavy over a collection of bug fixes? Must you believe every foolish rumor you believe online? It's not true just because someone publishes it on the Internet.

Microsoft Earnings Up 13 Percent on Strong Vista, Office 2007 Sales
While the details of this are likely to be poured over and examined like a recently exhumed Egyptian pharaoh, Microsoft yesterday announced strong quarterly earnings, despite a charge of over $1 billion to address widespread Xbox 360 reliability problems. The company reported a profit of $3 billion (up 7.3 percent, year over year) on revenues of $13.37 billion (up 13 percent). This was a bit better than analysts had expected, and Microsoft credited "brisk" sales of Windows Vista and Office 2007 for the gains. Windows sales, for example, were up 14 percent to $4.63 billion, while Office sales surged 19 percent to $3.81 billion. Meanwhile, Microsoft's non-core businesses continued their slide: the online services division lost $239 million, while the video game division saw revenues fall by 10 percent, due to slowing sales.

Microsoft Sets Annual Earnings Record
The most recent quarter was also the end of Microsoft's fiscal year, and in addition to reporting its quarterly earnings, the company also posted its yearly numbers. The company posted revenues over $50 billion for the first time, hitting $51.1 billion for fiscal 2007, a 15 percent gain over the previous year. In case it's not obvious, Microsoft is a big, big company. It currently has almost 77,000 employees worldwide, almost 50 percent of which work in the Seattle area.

Microsoft Details Xbox 360 Flaws, Sort of
With its one-time $1.1 billion Xbox 360 warranty charge out of the way, Microsoft is beginning to detail, sort of, the problems that led to this fiasco in the first place. According to Microsoft regional VP Chris Lewis, there isn't any one problem that causes the Xbox 360 to display the infamous "red ring of death" and cease working. Instead, it is a number of issues, working in concert, which turns the console into a $300 doorstop. "There are a number of issues that are related to this problem. It is not a single flaw," he says. "The three red lights come from not just one problem, but the manifestation of a number of issues. It is only when a number of issues collaborate that the fault occurs." I'm going to go out on a limb and say that every single one of those issues is caused by heat. Call me crazy.

Microsoft Faces EU Silliness Over Word, Excel
Just when you thought EU regulators were going to turn to more pressing issues, I don't know, like Google or global warming, they instead revealed this week that they are investigating whether Microsoft is abusing its dominance in word processing and spreadsheets. Apparently, they're upset that Microsoft was able to ship such innovative upgrades in Office 2007. Or maybe it's that they released their new Office documents to international standards bodies. Or perhaps it was when they helped the open source community develop an add-on for Office that lets it work seamlessly with Open Document Format (ODF). It's hard to say which of these seemingly anti-competitive acts touched off this investigation, but my fervent hope is that the EU wastes years of time and tax payer dollars to figure it out. Certainly, they have a lot of figuring out to do, from what I can see.

To Raise Search Share, Microsoft Bribes Gamers
First, Microsoft offered to pay corporations who would force their users to use for Internet searches. Now, the company is turning toward consumers, and again, they're offering a deal that's tough to refuse. Rather than actually improve its search engine Microsoft has instead unleashed a free online puzzle game, Chicktionary, which introduces users to features of search. And due to the popularity of the game, the strategy has worked: Microsoft's share of the search market rose a dramatic 3 percentage points last month to 13.2 percent of the market. And those gains came at the expense of Google and Yahoo!, both of whom are outperforming Microsoft in this market. Microsoft refers to these efforts as "viral marketing," which I suppose makes sense. And certainly, the game appears to be pretty addictive, with the company offering a point system for winning gamers, who can then trade in points for product prizes. But there's something about this that just rubs me the wrong way. I'll play Chicktionary all weekend to figure out what that is.

Microsoft DRM Cracked Again ... And Is Still Cracked, a Week Later
Microsoft's Windows Media Digital Rights Management (DRM) scheme was cracked last week by the hackers behind the FairUse4M tool. What's most amazing is that the crack is still working a week later. I have to think Microsoft's many Windows Media licensees--especially the subscription music stores--aren't too happy about that. Basically, FairUse4M lets you remove the copy protection technology from one or more Windows Media DRM-encoded files, making them freely distributable. Fair use advocates argue that tools like FairUse4M are only allowing consumers to more easily use the content they've purchased, since they will no longer need to worry about the bizarre usage rules that burden such files. Microsoft, its service partners, and the content makers, however, have a different opinion. Well, the race is on: It's one week and counting, Microsoft.

Firefox Turns Up the Heat in Europe
Though to be fair, I recall the phrase "hey, we're successful in Europe" as being a euphemism for defeat in the days of the Commodore Amiga. Anyway, while Mozilla's popular Firefox Web browser has recorded decent usage share around the world, a new report suggests that it is particularly popular in Europe. There, Firefox commands 27.8 percent of the Web browser market, a gain of over 7 percentage points in the last year alone. (In North America, meanwhile, Firefox accounts for 18.9 percent of all Web browser usage.) Some countries report even stronger Firefox numbers. In Finland, 45.5 percent of users use Firefox, compared to 40.4 percent in Slovakia, and 39.6 percent in Poland. Microsoft's IE browser still represents 66.5 percent of Web browsers in Europe, down from 73.3 percent a year earlier.

PC Sales Up Higher than Expected in Second Quarter
Analysts from both Gartner and IDC report that PC sales grew much faster worldwide in the second quarter of 2007 than expected, though the companies differ, of course, on the actual numbers. Gartner says that PC sales rose 11.7 percent year over year to 61.1 million units, while IDC reported 12.5 percent growth with 58.8 million PCs sold in the quarter. HP has retained and even expanded its number one position in the market, with 19.3 percent market share worldwide, compared to 16.1 percent for Dell. Acer and Lenovo tied for third place, while Toshiba came in fourth.

Intel Says Desktop PC Sales Are Not Contracting
Take that, self-appointed industry seer Steve Jobs. According to chipmaker Intel, demand for processors aimed at the desktop PC market is not slowing, despite speculation that desktop PC sales would contract as more and more users moved to notebook machines. What's actually happening is that both notebook and desktop sales are increasing over time, though mobile growth is outpacing desktop growth. Will desktop PC sales ever fall year over year? Possibly. But it's certainly not happening yet.

Google Profits Soar, But Wall Street Disappointed
Online search giant Google posted profits of $925.1 million on revenues of $3.87 billion in the most recent quarter. Sounds great, right? Well, the profits were apparently lower than expected, while Google's expenses were up dramatically, and Wall Street responded with an aggressive sell-off of Google stock. Fear not, investors: Google stock is still worth almost $550 a share. But there's concern that Google might finally be slowing down, a natural consequence of growth and maturity. What's interesting is that Google, like Microsoft, makes virtually all of its money from a core product base (advertising in this case) and almost nothing from everything else it does. This "throw it against the wall and see if it sticks" strategy is the type of thing only large, cash-rich companies can do. And Google is certainly such a company.

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