WinInfo Short Takes: Week of May 19

An often irreverent look at some of the week's other news...

Microsoft Earnings and Losses, By Division
Now that Microsoft has changed its accounting practices, we can see how its various divisions are doing, not just the overall picture. Not surprisingly, things haven't changed much: The Windows Client group earned $1.99 billion in the previous quarter (up from $1.88 billion in the same quarter the year before), and the Information Worker group, which is responsible for Microsoft Office, earned $1.94 billion, up from $1.61 billion a year ago. The company's other standout was the Server Platform group, which increased its quarterly profits to $421 million (from $343 million last year), thanks to increased server shipments. But the picture isn't all rosy: The Home and Entertainment division, which markets the Xbox, almost doubled its losses year over year, ending up $190 million in the red, compared to a loss of $97 million in the same quarter last year. Microsoft says most of the change happened because of slowing sales of the Xbox, which oddly seems to be doing pretty well regardless, at least compared with Nintendo's console.

XP Is Number One on the Web, and Then Some
According to Web usage researcher WebSideStory, more than one-third of Internet users worldwide now run Windows XP, making it by far the most popular OS on the Web. As of early May, XP had a global Web usage share of nearly 35 percent, about 10 percentage points higher than Windows 98, the next most popular OS, according to WebSideStory. However, the firm noted that Win98 reached this usage percentage in one-third the time when Microsoft released the product in 1998. "Windows XP's slower adoption rate on the Web may reflect a downshift in consumers' willingness to upgrade operating systems since the launch of Windows 98," said Geoff Johnston, vice president of product marketing for HitBox StatMarket.

Europe Examines Microsoft Software Sales
Recent revelations that Microsoft planned to supply schools, governments, and other institutions with heavily discounted or even free software to counter the Linux threat might seem like a good deal for those involved, but the revelations have raised eyebrows of regulators in the European Union (EU), which is currently investigating the software giant for antitrust violations. European law prohibits monopolies from using discounts to exclude competitors, and Microsoft's most recent tactic probably falls into that category. Of course, given the glacial pace of the EU investigation, I don't see that Microsoft has anything to worry about. By the time the Europeans rule that Microsoft violated its laws, we'll all be using transportation booths and holodecks.

Judge Orders Microsoft Compliance Reports
In US legal news, District Court Judge Colleen Kollar-Kotelly ruled Wednesday that the US Department of Justice (DOJ) and attorneys general for the settling states must file reports every 6 months that detail what Microsoft is doing to comply with its antitrust settlement. The ruling, which is the equivalent of being sent to detention every day despite making the honor role, requires that the DOJ and states detail compliance time lines, describe their efforts to monitor compliance, and perform a lot of other busy work that's too boring to report. Sounds like fun.

T-Mobile Abandons Smartphone for Now
T-Mobile, one of the world's largest mobile-phone operators, announced this week that it will postpone the launch of a new cell phone running Microsoft Smartphone software, another blow for Microsoft, which has struggled to gain acceptance for its phone platform. Interestingly, T-Mobile says the delay is because the software isn't the quality it expected, but Microsoft claims that the software is on track to hit stores later this year. If you think Microsoft is having problems in the video game market, the company isn't doing much better in the smart phone field either: Whereas market giant Nokia has shipped 57 percent of the 1.7 million smart phones available worldwide, Microsoft has shipped less than 10 percent, mostly in Europe.

Intel Preps New Desktop, Notebook Chips
At an analysts meeting this week in New York, Intel President Paul Otellini said that the company's next big desktop chip, code-named Prescott, and a faster version of the Pentium M mobile processor, code-named Dothan, will ship in the second half of 2003. Prescott, a new version of the Pentium 4, will feature a whopping 1MB of L2 cache and, eventually, speeds as fast as 5GHz. Dothan will ship at the same time as a new version of the Centrino chipset that will offer even more battery savings than the current version by including LCD backlight control. By the end of the year, Intel says that the Centrino will also support all the wireless standards, including 802.11b, 802.11a, and 802.11g. Good stuff.
Dell Stock Surges on 31 Percent Profit, 29 Percent Rise in PC Shipments
At this point, I can only presume that Dell CEO Michael Dell has consummated a deal with the devil. His company announced this week that its quarterly profits rose 31 percent to $598 million (up 15 percent) on revenues of $9.5 billion. Best of all, Dell's PC shipments are up a whopping 29 percent year over year, and the company's stock just hit a 52-week high of $32.45. And after seeing strong growth in non-PC areas such as servers, storage, and networking, the company asked shareholders to approve dropping the word Computer from its name. Powerhouse? Yep.

PC Shipments Up 6.4 Percent in Q2
And speaking of PC sales, worldwide shipments of PCs will likely rise 6.4 percent in this quarter to 30.7 million units, according to market researcher Gartner. The company says that certain factors could inhibit this growth, including the aftermath of the war in Iraq, the SARS outbreak, economic uncertainty and, of course, Frank Stallone. Looking at the entire year, Gartner says PC shipments will hit 136.9 million units, up 6.6 percent over 2002, with revenues reaching $170.6 billion, a 3.3 percent increase from 2002. Other predictions: The Intel Centrino will become the mobile standard, and Tablet PCs won't own much more than 1 percent of the market.

Gateway Subjected to Criminal Probe
Struggling PC maker Gateway said this week that the US government has launched a criminal investigation of the company's accounting practices, which the Securities and Exchange Commission (SEC) is already investigating. The probe into Gateway's finances began after the company adjusted its reported income for 1999, 2000, and 2001 to account for costs that a bundled service with AOL incurred. The news probably couldn't come at a worse time for Gateway, which has seen its market share, profits, and revenues nosedive during the several most recent quarters.

Microsoft Ships MSN 8 for the Mac
Microsoft has finally released MSN 8 for Mac OS X, the first time the company has shipped its Internet service software on a non-Windows platform. Why Microsoft would bother is unclear: OS X has few users, and not many of them like Microsoft. My tests of the software indicate that it's slightly behind MSN 8 for Windows and well behind the MSN 8.5 version I'm currently testing on Windows, with fewer features. But MSN 8's biggest problem on the Mac is that it doesn't integrate with the desktop--one of the features I like most about the software on Windows. Ah well.

E3 Winners and Losers
This week's Electronic Entertainment Expo (E3) 2003 trade show in Los Angeles brought out the gaming gods, and as the dust finally settles, the winners and losers are apparent. The winning team includes Sony with its powerhouse PlayStation 2 (PS2), Nintendo with its market-leading GameBoy Advance, and id Software, which rocked the house with DOOM 3. Valve's much-anticipated Half-Life 2, and Halo 2, the latter of which will be an Xbox exclusive, also looked good. The losers department includes Nintendo, whose GameCube developers are abandoning in droves, and game maker 3DO, which is laying off workers, lowering its financial forecasts, and looking for a buyer. But the biggest losers run Microsoft's Xbox division. Did you see these poor guys trying to look cool at the Xbox preview? Give it a rest, guys. You're nerds; deal with it.

Next Week: Germany
I'll be in Germany next week, starting Tuesday, so Keith Furman will be taking over the chair at WinInfo Daily UPDATE while I'm gone. I probably won't be available by email during this time, either, so forgive me if it takes a while to get back to you electronically. See you when I get back.


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