Month: July 2013

Somebody’s head must’ve rolled on this one!

Microsoft’s $900 million Surface RT write-down: How did this happen?

By: Mary Jo Foley for ZDnet – Microsoft announced a $900 million ‘inventory adjustment’ charge for its Surface RTs, parts and accessories on July 18. That write-down completely overshadowed the performance of the rest of the products and services that contributed to the company’s Q4 2013 earnings.

(Among those overshadowed was Office 365 — the Microsoft subscription service via which it provides Office client and hosted Office server apps. Office 365 is now on a $1.5 billion run rate, up from the $1 billion run rate it hit in Q3 FY2013. Another that got eclipsed: Windows Phone — plus Android patent licensing — increased $222 million for the quarter.)

The biggest question, to my mind, about today’s unexpected Surface RT write-down is how did Microsoft find itself in this predicament in the first place? How did officials seemingly misestimate the number of Surface RTs they should have made and how much they should have charged for them?

I had a chance to ask Brian Hall, the General Manager of Surface Marketing, that very question. Unsurprisingly, he wouldn’t address this. But he did say that Microsoft is 100 percent committed to Surface RT and Windows RT going forward and has no plans to drop work on either product.

At the now-reduced $350 price (plus another $100-plus per keyboard), Microsoft believes it is righly positioned for success with the product, its officials said today. Hall elaborated, by saying that Microsoft officials believe that by getting more Surface RTs into more users’ hands, demand will accelerate for the product.

‘We know we need a lot of Surface users to start the fly wheel of people recommending it,’ Hall said.

In addition to cutting the price, Microsoft also has slowly expanded Surface RT’s distribution, most recently adding a handful of resellers to the mix.

But many of the factors beyond price that have contributed to the lackluster demand for the Surface RT haven’t changed all that much.

There are still few, if any, ‘killer’ Windows Store apps that might push someone to choose a Surface RT over an iPad or an Android tablet. In fact, the total number of Surface RT apps is still quite low (around 100,000), nine months after the product launched.

The performance of the Surface RT still feels sluggish, thanks to the Tegra ARM processor powering the device — though it’s somewhat better after putting Windows 8.1 preview on the device.

There are still relatively few physical stores where potential Surface RT customers can try out a device to see if they’re interested in buying one. Microsoft’s Surface ads are nothing to write home about, though they have started to get better — especially the Siri-centric ones.

But again, why did Microsoft make so many Surface RTs? If some back-of-the-napkin calculations are right, Microsoft may be sitting on an inventory of 6 million unsold Surface RTs. (Microsoft won’t say how many devices they made or sold.)

Isn’t this a company whose officials have prided themselves on telemetry data and visibility? Yes, it was the first time Microsoft was making its own PCs, but the company has made its own gaming console, mice and keyboards in the past, so there were people at the company who knew a considerable amount about supply chains.

Would a different operating system have made much, if any difference in the success of the Surface RT? Microsoft spent years porting Windows to ARM and finally launched it in the form of Windows RT. Would acceptance of the Surface RT have been better if Microsoft had just used the Windows Phone OS to power Surface RT instead? (I recall hearing that the relative newness of the Windows Phone OS was at least one of the reasons Microsoft decided against using it.) I asked Hall if Microsoft is or might consider putting the Windows Phone OS on a future Surface RT model and was told no comment.

Would opting to wait for a more powerful ARM chip have boosted Surface RT sales, even if it meant Microsoft missed holiday 2012 with the devices? Would launching the Surface Pro ahead of the Surface RT have primed the market any better for a device that couldn’t run almost any Win32 apps?

I saw a couple of folks tweet that they now fear that Microsoft will end up discontinuing Surface RT, the same way the company dropped the Zune after finally getting it relatively right with the Zune HD. The damage to the brand and lack of a true competitive product was done by the time Microsoft finally got the mix right. I’d expect the old ‘we can’t hear you’ Microsoft to persist with the Surface RT’s successors regardless of what the market said/did. The new Microsoft may be less likely to do so, I’d think.

But Hall reiterated that Microsoft has no plans to stop work on Windows RT or Surface RT. He wouldn’t drop any hints about what’s next for Surface RT, but recently officials said to expect new Surface accessories and a Surface RT update of some unspecified kind to arrive in fiscal 2014, which ends on June 30, 2014. When I asked if a 4G LTE-enabled Surfce RT device was in the pipeline, Hall would only say ‘we see lots of tablets sold with LTE.’

Microsoft plans to push the Surface RT as an iPad competitor, emphasizing its role as a ‘productivity tablet’ running Office — plus its relatively lower price — as its main differentiators, Hall said.”

Linux or Windows is apparently not the question anymore… check this out!

In Case You Don’t Appreciate How Fast The ‘Windows Monopoly’ Is Getting Destroyed…

Henry Blodget in Business Insider: “In the late 1990s, a single technology company became so unfathomably rich and powerful — and so hellbent on dominating not just its own industry but a massive and rapidly growing new one — that the U.S. government dragged the company into court and threatened to break it up over anti-trust violations.

The case was settled, and the company, Microsoft, agreed to play nicer.

But it turned out that the world had nothing to worry about. As often happens in the technology industry, what has really destroyed Microsoft’s choke hold on the global personal computing market over the past 15 years hasn’t been a legal threat but a market shift.

Just when it looked like Microsoft’s vision of the PC as the center of the tech world would lead to the creation of the world’s first trillion-dollar company, the Internet came along.

And it washed over the PC industry like a tidal wave swallowing a pond.

In terms of market value, Microsoft’s loss of power has long been visible: The stock is still trading at about half the level it hit at the peak of the tech boom 13 years ago. The effects on the actual PC industry fundamentals have taken longer to develop, but they are also now crystal clear.

Microsoft’s ‘Windows monopoly’ hasn’t been so much destroyed as rendered irrelevant. Thanks to the explosion of Internet-based cloud computing and smartphones, tablets, and other mobile gadgets, the once all-powerful platform of the desktop operating system has now been reduced to little more than a device driver. As long as your gadget can connect to the Internet and run some apps, it doesn’t matter what operating system you use.

Three charts really bring home the challenges that Microsoft and other PC-powered giants like Intel, Dell, and Hewlett-Packard face in adapting to this new Internet-driven world.

First, look at global device shipments. For the two decades through 2005, the personal computer was the only game in town, selling about 200 million units a year. But then smartphones and tablets came along. And now they dwarf the PC market.

This shift in personal computing device adoption, meanwhile, has radically diminished the power of the Windows operating system platform. As recently as three years ago, Microsoft’s Windows was still totally dominant — the platform ran 70% of personal computing devices.

Now, thanks to the rise of Google’s Android and Apple’s iOS, Windows’ global share has been cut in half, to about 30%. More remarkably, Android is now a bigger platform than Windows.

…the PC business is no longer just getting dwarfed by the explosion of smartphone and tablet sales … it has now actually begun to shrink.

Now that people have a choice of devices, it turns out that a full-blown personal computer is often not the most cost-effective, convenient, or simplest way to do what a user wants to do. Instead of being the center of the personal computing world, in other words, the PC is becoming a specialized office-productivity device.”

Talk about the ultimate perk, “Work here and live longer?” Can Google really pull it off?

Google exec hints at ultimate recruitment perk for top engineers: Life extension

“Competition for software engineers is incredibly intense and Silicon Valley firms are pulling out all the stops to recruit and retain top talent. A great software engineer is a very scalable asset.

Every company can offer perks of free food and high salaries but where can an employer get ahead of the pack and offer something no one else can, what is the ultimate perk? How about life extension.

That’s where Google is headed.

Earlier this week, at a Commonwealth Club Inforum event on the topic of HR and what Silicon Valley companies such as Twitter, and Cisco Systems are doing to attract the best people, panel member Todd Carlisle, Director of Staffing at Google, had the last word, by teasing a possible future scenario.

He asked, what if a perk of working at a company was that it extended your life? He said that people would likely never leave, they would be incredibly loyal.

If you connect the dots that’s exactly where Google is headed.

Late last year it hired Ray Kurzweil (above) a vocal proponent of an idea called the Singularity, which predicts life extension technologies will eventually extend people’s lives indefinitely. This will start happening in earnest within this decade.

Here’s Google’s recruitment slogan from the future: ‘Come work at Google and live longer. It’s a Singular Experience!’

How can other companies compete?!

Google can make sure its engineers have a seat on the Singularity bus. It already has the driver of the idea in Mr Kurzweil, and the Singularity will require the world’s largest, most powerful computer system, which is exactly what Google is building.

It’s an incredibly compelling scenario and software engineers would probably accept lower salaries for the chance to be among the first to benefit from the Singularity. It’s also a message that doesn’t need to be directly stated, but can be implied, as Todd Carlisle clearly did earlier this week.

What could competitors come up with? There is no amount of salary, free food and beer, that could rival Google’s leadership in lifespan extension technologies.

Rivals may have to resort to this recruiting slogan: ‘Come work here — the work is so dull that it’ll seem as if you are living longer!’

[It’s cribbed from Joseph Heller’s novel ‘Catch-22’ where one of the World War II bomber pilots seeks out the most boring things to do in his free time, so that it will feel as if he is living a long life, rather than the reality of the shockingly short life expectancy of bomber crews — just six weeks.]”

Well… it was for me! Somehow, some way, my master password got hacked for my hosting service. And, no, it wasn’t a simple, easy password. The upshot? They deleted EVERY web site I host! And, my hosting provider had stopped doing backups (I spoke with them at length on that point, believe me!) So, I have been scrambling to restore all my web sites this week, and it has made it hard to stay current on blogging. Sigh. A long, tiring week. So, if you see images missing… that’s why. I will be fixing that as I can.

And, speaking of old style analog, film-based cameras. how about a 3D, Open Sourced, free camera?

Gizmodo reported this week on this cool project: “Despite the fact that many camera manufacturers have stopped producing non-digital SLRs, fans of film-based photography should be happy to hear that they’ll be able to 3D-print a replacement should their beloved hardware ever fail. The OpenReflex camera was created by Léo Marius, a recent design graduate who’s posted the plans and everything you’ll need to make your own over on Instructables — well, everything except a 3D printer.

The OpenReflex accepts standard 35mm film and should work with any lens, but since the camera’s plans are provided, ambitious photographers can modify it in any way they see fit. Material costs come to about $30, including the plastic, the internal mirror, and enough Sugru to ensure the entire housing is lightproof. And the camera’s various components only require about 15 hours to print, so even if you don’t have a 3D printer of your own, renting one for the task shouldn’t be too expensive.

Photos taken with the OpenReflex have a look and feel similar to what you’d get from one of Lomography’s cameras, but over time as the design is refined and perfected, the image quality and results can only get better and better. So thanks to Marius’ creation SLRs could endure forever, but only if we find a way to way to 3D-print cheap film stock too.”

Here’s the link: 3D-Printed SLR Makes Us Also Wish For 3D-Printed Film

A lot of you may not know this, but I wasn’t always just a computer geek. I actually started out in technology as a photographer. I shot high school newspaper and yearbook photographs as a “staff” photographer for the school that I attended, Central Davidson Senior High. So, it made sense that I would go to the University of North Carolina at Greensboro and get a Bachelor of Fine Arts degree in Painting, Printmaking, and Photography. After I got out of college I opened my own photography business called Bailey Photographic Arts. As you might expect, I had my own fully equipped darkroom, and I had a series of Nikon professional cameras. And, I thoroughly enjoyed photography. However, I discovered that while photography was a great hobby, it really wasn’t what I wanted to do in terms of a career. So, over time I ended up getting into computers, at a time when personal computers were in their infancy, the late 70’s and early 80’s, and the rest, as they say, is history!

Why tell you all this? Well, I read many articles recently online that are predicting the death of the DSLR that is, the Digital Single Lens Reflex camera. Now you might say, “But wait, Dr. Bill, DSLR’s are fairly recent technologies!” That’s true, but this article from NBC News says it pretty well; dedicated cameras seem to be on their way out! Why? Because so many people are using their smartphones as cameras! As you know, there are a lot of photographs being posted to Facebook, Twitter, and lots of other web sites! It’s certainly not that photography is dead! It’s a matter of convenience. And the fact that smartphones have gotten better and better at taking pictures, resolutions are higher, tools are easier to use, and they’re getting better all the time! For instance. The Samsung Galaxy S4 smartphone has the ability, within the phone, to shoot pictures and eliminate elements within the image, like the commercial that they have showing someone graduating from school and some knucklehead stepping in front of the people in the photo that the parents are taking, and then allowing you to eliminate that person from the shot! That’s pretty cool for camera in a smartphone, you have to admit!

So what does this mean for the future of Nikon and Canon the two best-known, high end, camera makers? As this NBC News article reports the president of Nikon, Makoto Kimura, said in an interview with Bloomberg recently that the company might have to “change the concept of cameras” in order to survive! That could be very interesting!

Here’s a link to the NBC News article: We’re taking more pictures than ever … so why are cameras dying off?

And, speaking of Apple, they are apparently guilty, at least according to a judge, of conspiring to “fix” e-book prices!

Judge: Apple conspired to raise e-book prices

USA Today reported: “SAN FRANCISCO — Apple conspired with five major publishers to illegally raise consumer prices for electronic books in 2010 and will next face a trial to decide how much it owes in damages, a federal judge ruled Wednesday.

The decision was a blow to Apple, which had refused to settle the Justice Department’s antitrust lawsuit even after all five publishers negotiated settlements with the government and state attorneys general.

The company said it would appeal the decision. While states are seeking money damages from Apple, the Justice Department wants the court to bar Apple for two years from entering into any similar agreements that let publishers rather than retailers set prices or discriminating against competing e-reader apps.

‘This result is a victory for millions of consumers who choose to read books electronically,’ Assistant Attorney General Bill Baer said in a statement.

Apple shares fell $1.62 to $420.73 in regular trading Wednesday.

The Justice Department claimed Apple forged agreements with the publishers that permitted higher pricing on best sellers and new releases, effectively nudging e-books and best sellers to $12.99 and $14.99, respectively. That helped publishers who were unhappy with Amazon selling e-books for $9.99, a price they thought was too low.

Apple conspired to create an environment that enabled the company and publishers to eliminate all retail price competition for their e-books, Cote said.

Apple denied any wrongdoing.

‘Apple did not conspire to fix e-book pricing, and we will continue to fight against these false accusations,’ Apple spokesman Tom Neumayr said in a statement. ‘When we introduced the iBookstore in 2010, we gave customers more choice, injecting much-needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong, and we will appeal the judge’s decision.’

Cote’s ruling followed a three-week trial that ended June 20. Witnesses included executives from Amazon, the publishers and Apple, including Eddy Cue, a longtime digital-rights dealmaker and a lieutenant of Apple co-founder Steve Jobs, who died in 2011.

Apple backed what’s known as an agency model. That positioned publishers, rather than retailers, to set prices when Apple entered the e-books market in 2010 with its iPad and iBookstore. The deal allowed Apple to grab its 30% commission on books and the publishers had to match lower prices of any other retailers, such as Amazon.

Legal experts remained mixed on whether Apple’s actions were defensible or ran afoul of antitrust concerns.

‘The most explosive thing that may come out of this is the court’s imposing … restrictions on the way Apple operates its e-book and App Store platform. Apple may be forced to open up access,’ says Bob Kohn, a technology and media attorney.

‘Apple has good arguments to raise on appeal. But the new problem Apple faces is that the judge’s massive opinion relies so heavily on facts and inferences that an appellate court is unlikely to have room to modify the decision substantially,’ says Keith Hylton, a professor at Boston University School of Law.

Last year, Apple settled with the European Commission on an antitrust case over e-book pricing without admitting wrongdoing.”