An often irreverent look at some of the week's other news...
Microsoft Announces Quarterly Earning. Yeah, They Still Rule the Earth
Microsoft's quarterly earnings announcements are becoming rote descriptions of a company dominating its industry. ("Destroyed Alderaan? Check. Sending scouts to Dantooine to search for rebel base? Check.") However, this month held a few surprises. The company reported revenues of $7.25 billion, an 11 percent gain, year-over-year, and operating income of $2.19 billion after a charge of $796 million for its settlement with AOL Time Warner; last year, it was $2.87 billion. In short, they make a lot of money but, interestingly, the company actually missed analysts' estimates by a small margin. But what's really interesting is that Microsoft now breaks down its earnings by product group. And sadly, for the company's detractors, all of those groups had higher-than-expected earnings. The server division, for example, saw revenues jump 17 percent thanks largely to Windows Server and SQL Server revenues. MSN had record revenues, growing 25 percent. And even the Home and Entertainment division, which handles the Xbox, experienced 8 percent growth, with Microsoft's game console reaching 9.4 users worldwide' the company now expects the Xbox to hit sales of about 15 million by next June. Business outlook, as usual, was predictable. ("Closing in on Yavin's fourth moon? Check.")
Sites Switching from Linux to Windows Server 2003
As was the case shortly after the release of Windows 2000 a few years back, the release of Windows Server 2003 this April has triggered a raft of defections to the new operating system, many of which are coming from an unexpected place: Linux. According to Web monitoring firm Netcraft, the number of active Web sites based on Windows Server 2003 has jumped 300 percent since its launch, and the OS now powers almost 90,000 Web sites. 42 percent of these sites are new sites, 43 were upgrades from other Windows Server versions (primarily Win2K), and 5 percent migrated from Linux. In the wake of Apple's Switch campaign failure (see below), it's nice to see someone actually switching. To something.
Fun Fact About Those Linux PCs in Munich
And speaking about Linux stories you don't hear much from the Linux-loving mainstream press, consider the following. Remember that story about the city of Munich choosing Linux to power 14,000 desktop computers? One aspect of this story that most people don't know about is that up to 80 percent of those Linux desktops will be equipped with VMWare, a virtual machine emulator, under which they will run Windows and Windows applications. That's right, folks: The majority of those "Linux desktops" will be used to run … Windows. I'm not a big fan of Gartner, but they've issued a report, correctly titled, "Munich's Choice Doesn't Prove Linux OK for General Desktop Use," that raises some interesting issues. First, many of the Windows desktops they're migrated are very old Windows versions like Windows 3.1, making the switch to Linux less painful (it would be equally painful to switch to XP). Gartner says the cost of switching to Linux will cost 30 million Euros, or 3 million Euros more than it would cost to switch to XP, not including any steep discounts Microsoft would have no doubt provided. And finally, because most of the Linux machines will use VMWare to run Windows anyway, Linux is really being used as a hosting environment, and not as a replacement. In other words, this isn't exactly a good business case on which other companies can base a decision to migrate to Windows desktops. And, not coincidentally, that's why we're not reading about a lot of other high-profile Linux switchers.
Glass Half Full Much?
You know, I'm always amazed by the ways in which people react to things. Consider this week's "embarrassing" revelation of a critical security flaw in Windows Server 2003, XP and other NT-based Windows products (incorrectly described as "virtually every version of Windows" in various other publications) as a good example. So how do we, as Windows customers, view this issue? Does it represent a complete breakdown in the way in which Microsoft develops software? Or, thanks to the fact that XP, Win2K SP4, and 2003 users have a convenient little tool called AutoUpdate, does it represent the fact that we've made a sane and safe choice in an OS that will automatically fix itself? Though I'm normally a pessimist, I choose the latter. And as far as finding a severe vulnerability in Windows 2003, goes: Eh. What did you think was going to happen? That it was going to be unhacked for its entire existence? I consider this "problem found, lesson learned." And I'm a little befuddled that anyone would see it differently, to be honest.
SQL Server "Yukon" Hits General Beta
Microsoft's oft-delayed public beta for SQL Server "Yukon" finally sprang to life this week with a small collection of testers getting their greedy little hands on the what they believe to be the first external build of the product. Actually, Microsoft handed out an even earlier build to an even smaller group of external testers months ago, but this beta release does mark the start of a widespread public beta, and other testers will be brought on board quickly. The Yukon pre-release (Beta 1 is due in early 2004) promises includes integrated support for .NET and stored procedures written in non-TSQL languages, an integrated development environment based on the next Visual Studio .NET version, and other new features. I'll have more on Yukon when I get the beta.
Microsoft Employee Pleads Guilty to Software Theft
A former Microsoft employee pled guilty this week to the theft of over $6 million in Microsoft software. He was the third former worker to be charged with taking advantage of Microsoft's internal software ordering system to order software and then sell it to outsiders, pocketing the cash. The employee was an administrative assistant in the Xbox group, according to police reports, and she now faces up to five years in prison and a fine of up to $250,000. You know, the irony of a Microsoft employee stealing software is so rich, you can cut it with a knife. But I'm struggling to find the proper words to express how lame this is. I think the most suitable punishment for these people would be public embarrassment, frankly. This kind of crime is just silly.
Microsoft Releases New TweakUI for XP SP1 and Windows 2003
Microsoft has released a new version of TweakUI, its excellent UI tweaking PowerToy, and this one now works with Windows XP SP1 and Windows Server 2003. TweakUI 188.8.131.52 includes additional Internet Explorer customizations, a new Access Control section for setting network access permissions, and other improvements. This must-have tool is curiously not referenced on the PowerToys Web site but you can download the new version directly from Microsoft.com.
Microsoft Updates Plus! Digital Media Edition
And speaking of updates, Microsoft has also posted a new update for Plus! Digital Media Edition users. Plus! Digital Media Edition Update 2 (July 2003) fixes minor issues with Plus! Audio Converter, Plus! Alarm Clock, Plus! Analog Recorder and Plus! Dancers discovered since the release of Plus! Digital Media Edition. You can find out more, and grab the free 2.25 MB download, from the Microsoft Web site.
Judge OK's Microsoft Settlement in California
A US judge will likely OK Microsoft's $1.1 billion class action lawsuit settlement with California, ending another chapter in the saga that is the software giant's antitrust case. The only remaining issue, apparently, was the wording of a notice that must be sent out to over 14 million California software buyers, alerting them to the settlement and asking them to file claims. Under terms of the settlement, these customers will receive vouchers worth $5 to $29, depending on which Microsoft product they purchased. These vouchers can be applied to other computer software or hardware products they purchase in the future. And if they're really the lemmings Windows users supposedly are, they'll probably just purchase Microsoft software, which of course will keep that whole Circle of Life (tm) thing working.
Intel Celebrates 35th Anniversary
Microprocessor giant Intel Corporation celebrated its 35th anniversary this week with executives and long-time employees burying a time capsule containing symbols of the company's progress and success. Started as a semiconductor company, Intel now powers about 98 percent of the over 1 billion personal computers currently in use world-wide. In other words, the company is a powerhouse and ever-present shadow over everything that happens in the PC industry. Unlike the other industry shadow (i.e. Microsoft, or as some may know it, the Red Eye of Sauron), however, Intel never garnered the type of bad press that has haunted Microsoft for the past decade, thanks largely to its willingness to work positively with law enforcement agencies. If anything, Intel's legacy will be as much about its ability to work with others as it is about the technology its created. Not a bad legacy, really.
Apple's Financial Struggles Continue as Profits Decline 41 Percent
Apple Computer sold just over 2 percent of all computers in the quarter ending June 30, as year-over-year Mac shipments fell yet again for the company. Apple sold 770,000 Macintosh computers in the quarter, down from 880,000 in the same quarter a year ago, a decline of 12.4 percent. But from a financial perspective, the situation is even more serious: Apple's profits nosedived 41 percent year-over-year to just $19 million on sales of $1.545 billion; the last time the company's revenues were that high, its profit was over $40 million, or more than double. But wait, it gets worse: Most of Apple's profit didn't come from selling computers, software, or accessories, but from "interest income \[on its\] $4.5 billion in idle cash and short-term investments," according to the Motley Fool. Apple's CFO admitted in a conference call this week that sales of the company's recently announced PowerMac G5 will not improve matters much, as Apple's customers are increasingly turning to notebook systems, making the next quarter another financial wash; he also noted that total G5 sales should top out at just 200,000 units per quarter. On the other hand, at an average selling price of over $2500, not including a display, the G5 should probably do pretty well per-machine. Also, Apple's iTunes Music Store (6.5 million song downloads and counting, though the service lost money in the quarter), iPod (304,000 sold in the quarter, largely due to a major model change, but up significantly from 54,000 in the same quarter last year), and the PowerMac G5 continue to provide the company with positive press, a situation that, hopefully, will eventually lead to more sales and higher profits.
PC Sales Are Booming
Meanwhile, on the PC side of the fence, the PC market experienced 7.6 percent shipment growth in the quarter ending June 30, with PC shipments hitting 33.2 million units. This growth rate is the highest since 2000, which isn't bad given the recent tech recession. Sales in the US were particularly good, and up 8.1 percent year-over-year. What's really amazing is that the top three PC makers all experienced growth as well. Market leader Dell Computer grew its market share to 17.9 percent, up from 14.9 percent a year earlier. Number two Hewlett-Packard (HP) jumped to 16.2 percent of the market, up from 15.8 percent last year. And number three IBM jumped from 6.5 percent of the market last year to 6.7 percent.
Orbitz Blames Oracle for Site Outage
I knew the "Unbreakable" ad tag-line was going to come back to haunt them, but no one could have predicted the major embarrassment Oracle now faces, with a major customer blaming the company for downtime. Online travel site Orbitz charged this week that Oracle's database failed during the crucial summer travel booking season, costing the company millions of dollars. Oracle is working with Orbitz to fix the problem, of course, but I think the damage has been done.
Report: Embedded XP, CE .NET is Cheaper Than Embedded Linux
Thanks to Mark Lomas for the tip: It's unclear why Microsoft bothers to fund these things, as they always generate a slew of hate mail from conspiracy-minded open source advocates, but here goes: According to a recent report by the Embedded Market Forecasters, "embedded system manufacturers on average take 76 percent longer and spend over 300 percent more to develop and bring to market embedded systems using Embedded Linux as compared to Microsoft Windows Embedded." OK, so I'm throwing this one out there. Do with it what you will.
"Switch" One Year Later: No One Switched
A year after Apple launched its high-profile "Switch" ad campaign, the company has nothing but lost market share, fewer users, a dwindling third-party developer pool, and, of course, the lovely Janie Porche, who saved Christmas. But as companies like Dell, HP, and IBM continue to distance themselves, sales-wise, from Apple, it's become increasingly clear than nothing the company does--ad campaigns, cool portable MP3 players, a rock-solid operating system, and even the debatably fastest PC on earth--is going to reverse its eroding usage share. With over 1 billion people using PCs vs. just 25 million using Macs, the numbers sort of speak for themselves. I think the big question now is whether Apple can remain viable as a niche player in the market. My gut feeling is that they can, but then I was an Amiga fan years ago, so maybe I'm not the right person to ask.
Download MSN Messenger 6.0
I mentioned the impending release of MSN Messenger 6.0 earlier this week, and it's out now. You can download this free upgrade, which includes text, audio and video chat capabilities, and nice new customizable user interface, from the Microsoft Web site.