Tag Archives: Twitter

In search of a social site that doesn’t lie

Facebook and OKCupid experiment on users. So what’s wrong with that?

Rudder’s post described a few of the experiments that the dating website had carried out. In one, OKCupid told people that they would be good matches with certain other people even though the site’s algorithms had determined that they would be bad matches. That’s right: The company deliberately lied to its users. OKCupid wanted to see if people liked each other because they have the capacity to make up their own minds about who they like, or if they like each other because OKCupid tells them they should like each other.

(The controversial post was Rudder’s first in several years; he had taken time off to write a book about experimenting on people. Due out next month, the book is called Dataclysm: Who We Are (When We Think No One’s Looking).)

The OKCupid post was in part a response to controversy over a recently discovered Facebook experiment, the results of which were published in an academic journal. Facebook wanted to see if people would post more negative posts if their own News Feeds had more negative posts from their friends. In the experiment, Facebook removed some posts by family and friends because they were positive. The experiment involved deliberately making people sadder by censoring friends’ more uplifting and positive posts.

Don’t like this kind of manipulation? Here’s Rudder’s response: “Guess what, everybody: if you use the Internet, you’re the subject of hundreds of experiments at any given time, on every site.

That’s how websites work.”

What’s wrong here

Rudder’s “everyone is doing it” rationalization for experimenting on users makes it clear that he doesn’t understand the difference between what OKCupid and Facebook are doing, and what other sites that conduct A/B tests of different options are doing.

The difference is that OKCupid and Facebook are potentially changing, damaging or affecting the real relationships of real people. They are manipulating the happiness of people on purpose.

These companies might argue that this damage to the mood and relationships of people is small to the point of being inconsequential. But what makes them think it’s OK to deliberately do any damage at all?

The other glaring problem with these social science experiments is that the subjects don’t know they’re participating.

Yes, I’m sure company lawyers can argue in court that the Terms of Service that everyone agreed to (but almost nobody read) gives OKCupid and Facebook the right to do everything they do. And I’m sure the sites believe that they’re working so hard and investing so much to provide free services that users owe them big time, and that makes it all OK.

Imagine a splash screen that pops up each month on these sites that says: “Hi. Just wanted to make sure you’re aware that we do experiments on people, and we might do experiments on you. We might lie to you, meddle in your relationships and make you feel bad, just to see what you’ll do.”

No, you can’t imagine it. The reason is that the business models of sites like OKCupid and Facebook are based on the assumption of user ignorance.
Why OKCupid and Facebook think it’s OK to mess with people’s relationships

The OKCupid admission and the revelations about the Facebook research were shocking to the public because we weren’t aware of the evolving mindset behind social websites. No doubt the OKCupid people and the Facebook people arrived at their coldly cynical view of users as lab rats via a long, evolutionary slippery slope.

Let’s imagine the process with Facebook. Zuckerberg drops out of Harvard, moves to Silicon Valley, gets funded and starts building Facebook into a social network. Zuck and the guys want to make Facebook super appealing, but they notice a disconnect in human reason, a bias that is leading heavy Facebook users to be unhappy.

You see, people want to follow and share and post a lot, and Facebook wants users to be active. But when everybody posts a lot, the incoming streams are overwhelming, and that makes Facebook users unhappy. What to do?

The solution is to use software algorithms to selectively choose which posts to let through and which to hold back. But what criteria do you use?

Facebook’s current algorithm, which is no longer called Edgerank (I guess if you get rid of the name, people won’t talk about it), is the product of thousands of social experiments — testing and tweaking and checking and refining until everyone is happy.

The result of those experiments is that Facebook changes your relationships. For example, let’s say you follow 20 friends from high school. You feel confident that by following them — and by them following you — that you have a reliable social connection to these people that replaces phone calls, emails and other forms of communication.

Let’s say you have a good friend named Brian who doesn’t post a lot of personal stuff. And you have another friend, Sophia, who is someone you don’t care about but who is very active and posts funny stuff every day. After a period of several months during which you barely interact with Brian but occasionally like and comment on Sophia’s posts, Facebook decides to cut Brian’s posts out of your News Feed while maintaining the steady stream of Sophia posts. Facebook boldly ends your relationship with Brian, someone you care about. When Brian posts an emotional item about the birth of his child, you don’t see it because Facebook has eliminated your connection to Brian.

And don’t get me started on OKCupid’s algorithms and how they could affect the outcome of people’s lives.

Not only do both companies experiment all the time; their experiments make huge changes to users’ relationships.

The real danger with these experiments
You might think that the real problem is that social networks that lie to people, manipulate their relationships and regularly perform experiments on their users are succeeding. For example, when Facebook issued its financial report last month, it said revenue rose 61% to $2.91 billion, up from $1.81 billion in the same quarter a year ago. The company’s stock soared after the report came out.

Twitter, which is currently a straightforward, honest, nonmanipulative social network, has apparently seen the error of its ways and is seriously considering the Facebook path to financial success. Twitter CEO Dick Costolo said in an interview this week that he “wouldn’t rule out any kind of experiment we might be running there around algorithmically curated experiences or otherwise.”

No, the real problem is that OKCupid and Facebook may take action based on the results of their research. In both cases, the companies say they’re experimenting in order to improve their service.

In the case of OKCupid, the company found that connecting people who are incompatible ends up working out better than it thought. So based on that result, in the future it may match up more people it has identified as incompatible.

In the case of Facebook, it did find that mood is contagious. So maybe it will “improve” Facebook in the future to build in a bias for positive, happy posts in order to make users happier with Facebook than they are with networks that don’t filter based on positivity.

What’s the solution?

While Twitter may follow Facebook down the rabbit hole of user manipulation, there is a category of “social network” where what you see is what you get — namely, messaging apps.

When you send a message via, say, WhatsApp or Snapchat or any of the dozens of new apps that have emerged recently, the other person gets it. WhatsApp and Snapchat don’t have algorithms that choose to not deliver most of your messages. They don’t try to make you happy or sad or connect you with incompatible people to see what happens. They just deliver your communication.

I suspect that’s one of the reasons younger users are increasingly embracing these alternatives to the big social networks. They’re straightforward and honest and do what they appear to do, rather than manipulating everything behind the scenes.

Still, I’d love to see at least one major social site embrace honesty and respect for users as a core principle. That would mean no lying to users, no doing experiments on them without their clear knowledge, and delivering by default all of the posts of the people they follow.

In other words, I’d love to see the founders of social sites write blog posts that brag: “We DON’T experiment on human beings.”

Wouldn’t that be nice?


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Googles Chrome OS starts to get real but still falls shy

The all-in-the-cloud OS gains polish as Google prepares for the first Chromebooks to ship, but apps remain awkward

If the rumors are right, Google will announce today at its Google I/O conference that Samsung (and perhaps others) are shipping laptops running Google’s Chrome OS this summer. There’s been a sharp increase in Chrome OS beta updates in the last few weeks, so something is up; Google may be on schedule to deliver the shipping Chrome OS this summer, giving reality to the old “Webtone” promise of Sun Microsystems in which the Web is the operating system and devices simply are portals to it — what we now call cloud computing.

Chrome OS is basically the Chrome 11 Web browser running by itself on a laptop, which InfoWorld.com has dubbed a “Chromebook.” There is no traditional OS like Windows, Linux, or Mac OS X underneath that can run other applications. Everything happens in Chrome OS, and most notions of what a computer provides, such as printer ports and removable storage, simply don’t apply.

 

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A Chromebook has solid-state memory to hold the OS, cache files for when you’re working, and stubs to the Web applications you run (essentially, glorified bookmarks), but everything else resides in the cloud, which is accessed via the Chromebooks’ built-in Wi-Fi or 3G cellular service. Google hopes a lot of that activity will be on its cloud, such as Google Docs, but a Chromebook works with any AJAX-based website (sorry, no ActiveX) or service.

In recent weeks, the updated Chrome OS beta on a prototype Chromebook has become much more responsive and smoother. The betas in December through March definitely had that beta feel and stuttery performance, but not the betas that have been coming since late April. If you use the Chrome browser, you know the Chrome OS experience: simple, spare, capable, and fast.

The Chromebook isn’t just a laptop with a new OS
But without a “real” OS underneath, you really are dependent on the cloud. Printing, for example, requires that you have an ePrint-capable printer (Hewlett-Packard makes a few models, which also work with iPhones and iPads) or route your print jobs through Google’s cloud print service, which basically means through a networked Windows PC or Mac. People print less and less, but the process is clunky and will be more complex than most will find acceptable. It’s probably a plus that fewer and fewer of us have items to print anymore.

Likewise, storage is delivered through the cloud, so you can’t transfer your photos directly via a USB cable or thumb drive to work on them in, say, Picasa. Instead, your camera will need its own wireless connection to transfer the images to a cloud photo service, and you’ll work on them over wireless from your Chromebook. When your’e not using a Wi-Fi connection, you should expect to quickly eat through 3G data plans. Of course, the advantage of cloud-based storage is that your files are available to any device compatible with that service: PCs, Macs, Chromebooks, iPhones, iPads, and Android devices. You don’t have to remember to bring the files once they’re uploaded.

Dirty IT jobs: Partners in slime

Carcasses, garter belts, and anthrax — techs get nasty in the name of IT
You think your job is bad? You ain’t seen nothing until you’ve had to pick moldy food and cockroaches out of a dead PC or been asked to find out what your coworkers have been up to online when they were supposedly working. You definitely haven’t earned your IT creds until you’ve stood in two feet of water holding a plugged-in server while trying not to get electrocuted, found yourself inside a sniper’s crosshairs while you’re attempting to install a communications link, or had to worry about bombs going off while you’re futzing with network protocols.

 

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[ Also on InfoWorld: For more dirty IT jobs, see “The 7 dirtiest jobs in IT,” “Even dirtier IT jobs: The muck stops here,” and “The dirt locker: Dirty duty on the front lines of IT” | Find out which of our eight classic IT personality types best suit your temperament by taking the InfoWorld IT personality type quiz. ]

In our fourth installment of the Dirty Jobs series, we visit with the dedicated geeks who hold jobs like these and ask how they managed to survive or, in some cases, thrive under difficult conditions.

Next time you’re hating your job, remember: It could be worse.
Off the Record submissions

Dirty job No. 1: Systems sanitation engineer
Beer cans. Food wrappers. Cigarette butts. Moldy bread. Cockroaches. Things you’d typically find in the bottom of your average dumpster — only in this case, the dumpster is the shell of a discarded computer.

It’s all part of the job at Redemtech, an IT asset disposition firm that processes the aging hardware Fortune 500 companies no longer want. Somebody has to go through each piece and muck it out, decide what can be saved and what must be discarded, says Chomroeun “C-Ron” Sith, technical supervisor for Redemtech’s Grove City, Ohio, facility (and no relation to the Dark Lord).

Though it varies widely, Sith says approximately half of the systems he sees can be refurbished and resold. The other half gets recycled in an environmentally responsible way. Before that happens, they have to be inspected and cleaned  — and that’s where things can get nasty.

“Some of these things look like they’ve been sitting the back of a warehouse for years,” he says. “They come in covered in dust, with cobwebs, rat droppings, and roaches inside. Sometimes they’re so rusted that when you pick them up your hands turn orange. One of the systems we got in was covered in makeup. Every time my guys touched it, they got all glittery.”

Then there was the time they opened up a desktop CPU and found a dead animal.

“It may have been a rodent or a bird,” he says. “We couldn’t tell for sure. But it was definitely dead.”

Sith estimates less than 5 percent of the 6,000 to 10,000 items his facility processes each week arrive in such bad shape they have to be wrapped in plastic to avoid infecting his staff or causing allergic reactions. Still, that’s plenty.

“Every other week some associate comes to me and says, ‘I don’t want to touch that system, I can’t take these cockroaches any more, this is ridiculous.’ I get that complaint a lot.”

Dirty job survival tip: Don’t wear your Sunday best.

“I tell my guys, ‘You can wear whatever you want, but don’t get mad if you come home dirty,'” Sith says. “That happens about 99 percent of the time.”

Microsoft Office 2010 takes on all comers

OpenOffice.org, LibreOffice, IBM Lotus Symphony, SoftMaker Office, Corel WordPerfect, and Google Docs challenge the Microsoft juggernaut

Ask most people to name a productivity suite and chances are they’ll say Microsoft Office, but they might also name one of the numerous competitors that have sprung up. None have completely displaced the Microsoft monolith, but they’ve made inroads.

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Most of the competition has positioned itself as being better by being cheaper. SoftMaker Office has demonstrated you don’t always need to pay Microsoft’s prices to get some of the same quality, while OpenOffice.org proved you might not need to pay anything at all. Meanwhile, services like Google Docs are available for anyone with an Internet connection.

[ Also on InfoWorld: “10 great free desktop productivity tools that aren’t OpenOffice.org” | “Great Office 2010 features for business” | Follow the latest Windows developments in InfoWorld’s Technology: Microsoft newsletter. ]

Microsoft’s response has been to issue the newest version of Office (2010) in three retail editions with slightly less ornery pricing than before, as well as a free, ad-supported version (Microsoft Office Starter Edition) that comes preloaded on new PCs. Despite the budget-friendly competition, Office continues to sell, with Microsoft claiming back in January that one copy of Office 2010 is sold somewhere in the world every second. (Full disclosure: The author of this review recently bought a copy for his own use.)

How well do the alternatives shape up? And how practical is it to switch to them when you have an existing array of documents created in Microsoft Office? Those are the questions I had in mind when I sat down with both the new version of Microsoft Office and several other programs (and one cloud service) that have been positioned as low- or no-cost replacements.

Microsoft Office 2010
Despite all efforts to dethrone it, Microsoft Office remains the de facto standard for word processing, spreadsheets, presentations, and to a high degree, corporate email. Other programs may have individual features that are better implemented, but Microsoft has made the whole package work together, both across the different programs in the suite and in Windows itself, with increasing care and attention in each revision.

Test Center Scorecard

20%    20%    20%    15%    15%    10%
Microsoft Office 2010    10    10    10    8    9    9
9.5
Excellent
20%    20%    20%    15%    15%    10%
OpenOffice.org 3.3.0    7    7    7    7    7    7
7.0
Good
20%    20%    20%    15%    15%    10%
LibreOffice 3.3.1    7    7    7    7    7    7
7.0
Good
20%    20%    20%    15%    15%    10%
IBM Lotus Symphony 3.0    7    7    7    7    8    8
7.3
Good
20%    20%    20%    15%    15%    10%
SoftMaker Office 2010    9    9    9    7    7    9
8.4
Very Good
20%    20%    20%    15%    15%    10%
Corel WordPerfect Office X5    6    6    6    5    6    6
5.9
Poor
20%    20%    20%    15%    15%    10%
Google Docs    7    7    7    7    7    7
7.0
Good

If you avoided Office 2007 because of the radical changes to the interface — namely, the ribbon that replaced the conventional icon toolbars — three years’ time might change your mind. First, the ribbon’s no longer confined to Office only; it shows up in many other programs and isn’t as alien as before. Second, Microsoft addressed one major complaint about the ribbon — that it wasn’t customizable — and made it possible in Office 2010 for end-users to organize the ribbon as freely as they did their legacy toolbars. I’m irked Microsoft didn’t make this possible with the ribbon from the start, but at least it’s there now.

Finally, the ribbon is now implemented consistently in Office 2010. Whereas Outlook 2007 displayed the ribbon only when editing messages, Outlook 2010 uses the ribbon throughout. (The rest of Outlook has also been streamlined a great deal; the thicket of settings and submenus has been pruned down a bit and made easier to traverse.) One feature that would be hugely useful is a type-to-find function for the ribbon; there is an add-in that accomplishes this, but having it as a native feature would be great.

Aside from the interface changes, Office 2007’s other biggest alteration was a new XML-based document format. Office 2010 keeps the new format but expands backward- and cross-compatibility, as well as native handling of OpenDocument Format (ODF) documents — the .odt, .ods, and .odp formats used by OpenOffice.org. When you open a legacy Word .doc or .rtf file, for instance, the legend “[Compatibility Mode]” appears in the window title. This means any functions not native to that document format are disabled, so edits to the document can be reopened without problems in earlier versions of Office.

Note that ODF documents don’t trigger compatibility mode, since Office 2010 claims to have a high degree of compatibility between the two. The problem is “high degree” doesn’t always mean perfect compatibility. If you highlight a passage in an ODF document while in Word 2010, OpenOffice.org and LibreOffice recognize the highlighting. But if you highlight in OpenOffice.org or LibreOffice, Word 2010 interprets the highlighting as merely a background color assignment for the selected text.

Exporting to HTML is, sadly, still messy; Word has never been good at exporting simple HTML that preserves only basic markup. Also, exporting to PDF is available natively, but the range of options in Word’s PDF export module is very narrow compared to that of OpenOffice.org.

Many other little changes throughout Office 2010 ease daily work. I particularly like the way the “find” function works in Word now, where all the results in a given document are shown in a navigation pane. This makes it far easier to find that one occurrence of a phrase you’re looking for. Excel has some nifty new ways to represent and manipulate data: Sparklines, little in-cell charts that usefully display at-a-glance visualizations of data; and data slicers, multiple-choice selectors that help widen or narrow the scope of the data you’re looking at. PowerPoint lets you broadcast a presentation across the Web (via Microsoft’s PowerPoint Broadcast Service, the use of which comes free with a PowerPoint license) or save a presentation as a video.

One last feature is worth mentioning as a possible future direction for all products in this vein. Office users who also have a SharePoint server can now collaborate in real time on Word, PowerPoint, or Excel documents. Unfortunately, SharePoint is way out of the reach of most casual users. But given how many professional-level features in software generally have percolated down to the end-user level, I wouldn’t be surprised if Microsoft eventually adds real-time collaboration, perhaps through Windows Live Mesh, as a standard feature.

Among the many new touches in Office 2010 is a much more useful document-search function, which shows results in a separate pane.

Among the many new touches in Office 2010 is a much more useful document-search function, which shows results in a separate pane.

13 features that make each Web browser unique

Many cynical users assume Web browsers do little more than dutifully render HTML. The content is the most important part, they say, so it makes little difference which browser you use.

 

 


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This may be true for basic tasks, but for all their similarities, browsers differ in subtle and significant ways, thanks to the hard work of vendors looking to establish any edge that might attract more users to their stack of code. There are even some features that make each browser unique, and in the technology world, unique functionality often points the way forward.

[ Find out how to hack your browser in 7 easy steps | Also on InfoWorld: “HTML5 in the browser: Canvas, video, audio, and graphics” | “HTML5 in the browser: Local data storage | “HTML5 in the browser: HTML5 data communications” | “HTML5 in the browser: HTML5 forms” | “HTML in the browser: Geolocation, JavaScript, and HTML5 extras” ]

To get a better sense of the evolution of today’s browsers, we compiled the following list of promising features unique to one browser. Don’t think this was an easy task; many of the most important and competitive areas are hard to pin down. For instance, all browsers tap the power of multiple cores and make use of the video card, but each approaches this territory in a slightly different way.

Also note that while some of these features are found on only one browser, many can be imitated on other browsers by installing extra code. Some of these extensions even allow you to change the appearance of a browser so that it looks like another — you get the guts of one and the face of the other.

Given the pace of browser updates these days, don’t be surprised to find the best of the bunch being copied by competitors soon. After all, yesterday’s browser bells and whistles are today’s must-have features. Grab quickly.

Chrome: SPDY
When the HTTP protocol was designed, Web pages consisted of text and a few images. Today’s Web pages come packed with dozens of style sheets, JavaScript files, and an untold number of images. HTTP forces browsers to request each item individually, adding to the overhead.

Enter SPDY, an entirely new protocol Google has created to fight this sluggishness. Not many websites speak SPDY yet, but Google claims those that do can deliver their information about twice as quickly. Chrome is the only browser currently working with SPDY-enabled websites, many of which happen to sit in Google server farms.

Firefox: Deep extensions
All of the major browsers have plug-in architectures, but only Firefox offers a deep, sophisticated API. While other browsers allow you to write plug-ins in JavaScript, CSS, and HTML, essentially creating a Web page that wraps around the Web page, Firefox goes one level deeper, giving you access to an API that allows you to build full desktop applications out of browser parts. This is largely an accident of history because Firefox was one of the first with extensions, and the other browsers that came along afterward decided the world didn’t need these extra features.

Microsoft Q3 2011 by the numbers: Record $16.43B, Windows revenue declines

Today, after the closing bell, Microsoft answered an oft-asked question: What would the quarter be with no new major products in the pipeline? Would Windows 7 and Windows Server R2 (released October 2009) and Office 2010 (released May 2010) provide enough sales tailwinds?

For fiscal 2011 third quarter, ended March 31, Microsoft’s revenue rose 13 percent to $16.43 billion, year over year. Operating income: $5.71 billion, or 10 percent increase. Net income rose 31 percent to $5.23 billion, or 61 cents a share. Earnings per share rose by 36 percent year over year.

 

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Twenty-seven months ago, Microsoft stopped providing Wall Street analysts with quarterly and yearly guidance, in a move that is highly unusual for so large and so successful a public company. Microsoft’s refusal to give guidance creates unnecessary negative perceptions about its performance. As such, Wall Street analysts had to rely solely on their wits to call the quarter (again). Average consensus was $16.1 billion revenue and 56 cents earnings per share. Revenue estimates ranged from $15.83 billion to $17.17 billion, with estimated year-over-year growth of 11.7 percent. So Microsoft topped the Street.

“We delivered strong third quarter revenue from our business customers, driven by outstanding performance from Windows Server, SQL database, SharePoint, Exchange, Lync and increasingly our cloud services,” Microsoft COO Kevin Turner said in a statement. “Office had another huge quarter, again exceeding everyone’s expectations, and the addition of Office 365 will make our cloud productivity solutions even more compelling.”

The PC Shipments Quandary

For the second quarter in a row PC shipments hung like a shadow over Microsoft results. Fifteen days ago, Gartner and IDC reported weaker-than-expected demand during first calendar quarter, which coincides with Microsoft’s third fiscal quarter. Globally, PC shipments fell 3.2 percent year over year during first quarter, according to IDC, while Gartner put the decline at a less anemic 1.1 percent. Gartner had predicted 3 percent growth, while IDC expected 1.5 percent growth. Manufacturers shipped 84.3 million PCs in the quarter, according to Gartner, and 80.6 million by IDC’s estimate.

The reasons for the declines are worse for Windows PC manufacturers, which have played a fierce game of lowering prices. The gambit’s effectiveness is over. “Weak demand for consumer PCs was the biggest inhibitor of growth,” Mikako Kitagawa, Gartner principal analyst, said in a statement. “Low prices for consumer PCs, which had long stimulated growth, no longer attracted buyers.

“Instead, consumers turned their attention to media tablets and other consumer electronics. With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs. We’re investigating whether this trend is likely to have a long-term effect on the PC market.”

The problem isn’t so much that tablets are replacing PCs as displacing some of their functions. People who might otherwise buy a new PC are getting other devices instead. According to a recent AdMob survey of tablet owners, seven out of 10 use their PC less. Nearly 30 percent of tablet owners use the device as their primary PC.

But while the consumer market goes gaga over tablets, businesses have been down to the business of upgrading aging Windows XP PCs. When Windows 7 launched in autumn 2009, about 80 percent of the install base was still on XP. The lengthy, and heady, transition has been good for Microsoft, which last week revealed 350 Windows 7 license sales during the operating system’s first 18 months of marketability. Yesterday, Gartner revealed that Windows accounts for 78.6 percent of all desktop and server OS revenues.

However, even with businesses continuing Windows 7 upgrades, revenue for the Windows & Windows Live division fell 4 percent year over year.

Q3 2011 Revenue by Division

* Windows & Windows Live: $4.445 billion, down from $4.650 billion a year earlier.
* Server & Tools: $4.104 billion, up from $3.706 billion a year earlier.
* Business: $5.252 billion, up from $4.341 billion a year earlier.
* Online Services Business: $648 million, up from $566 million a year earlier.
* Entertainment & Devices: $1.935 billion, up from $1.21 billion a year earlier.

The Mobile Conundrum

Microsoft’s most immediate, long-term competitive challenge remains mobile, where upstarts like Apple and Google body slammed Windows Mobile during 2009-10. There is the aforementioned competition from iPad, too. Apple shipped 4.69 million tablets during calendar Q1 for about 19.5 million total for the first four quarters of sales. Apple’s tablet generated nearly $12.4 billion in new revenue during the first 11 months of availability. Mobile devices running Apple’s iOS generated $43.79 billion during calendar 2010, or about 57 percent of Apple revenues.

By most every estimate, mobiles are the future of computing, something iPad’s negative impact on PC sales shows. Mobile applications are set to generate enormous revenues that may soon begin to cannibalize PC applications. Gartner predicts $15 billion revenue generated by mobile apps this year, up nearly three times from 2010.

But Microsoft isn’t rudderless in the cloud-conncted device seas. During the quarter, Microsoft and Nokia announced a definitive, non-exclusive agreement for Windows Phone 7. Nokia plans to ship Windows Phone as its primary operating system, starting in 2012. Nokia and Microsoft signed the deal — it’s official now — one week ago. Yesterday, the axe fell at Nokia: Symbian is being outsourced to Accenture and 7,000 Nokia employees will be transferred or sacked. Gartner and IDC both predict that the deal will propel Windows Phone to second in smartphone market share, behind Android, by 2015. Meanwhile, Microsoft plans Windows 7.5, codename “Mango,” for release before the holidays.

As for tablets, Microsoft is working on a new version of Windows for ARM processors. There categorization gets messy. Gartner and IDC classify Android, BlackBerry and iOS slates as “media tablets.” While tablets running Windows count as PCs. This has caused some confusion among bloggers and journalists about Microsoft having no tablet strategy.

I contend that Microsoft could still be a major player in the cloud-connected device market even without a tablet or tablet operating system, from back-end hosted applications and Azure.

Q3 2011 Income by Division

* Windows & Windows Live: $2.764 billion, down from $3.073 billion a year earlier.
* Server & Tools: $1.419 billion, up from $1.27 billion a year earlier.
* Business: $3.165 billion, up from $2.542 billion a year earlier.
* Online Services Business: Loss of $726 million, up from $709 million loss a year earlier.
* Entertainment & Devices: $225 million, up $150 million a year earlier.

Breakdown by Division

Microsoft reports revenue and earnings results for five divisons: Windows & Windows Live, Server & Tools, Business, Online Services and Entertainment & Devices.

Windows & Windows Live. Weaker than-expected PC demand hurt the division during fiscal third quarter, with revenue falling 4 percent year over year. Profits declined, too (see below). While Microsoft reported business PC sales up 9 percent year over year, consumer sales fell 8 percent. Netbook sales plummeted 40 percent, which is mixed blessing. According to analysts, many potential netbook buyers are choosing tablets, with major benefit going to Apple — that’s the bad. The good: Netbooks generally ship with lower-margin Windows versions, such as Starter Edition. The shift in mix to “Premium” Windows versions is better for Microsoft.

Overall, Microsoft said that global PC sales declined 2 percent year over year, which is in line with aforementioned analyst data. OEM revenue fell by 3 percent, which is to be expected given the macro-PC economics. Enterprise Windows 7 deployments doubled over six months, Microsoft Peter Klein said during Microsoft’s earnings conference call today.

Server & Tools. Revenue rose about 11 percent year over year. The division is insulated against economic maladies, because about 50 percent of revenues come from contractual volume-licensing agreements; annuity revenue grew by 11 percent year over year. Additionally, enterprise services revenue grew by 12 percent, or $90 million.

“Product revenue increased $308 million or 10%, driven primarily by growth in Windows Server, SQL Server, and Enterprise Client Access License (“CAL”) Suites, reflecting continued adoption of Windows platform applications,” according to Microsoft financial statements.

Business. The division was the quarter’s big overall performer, with revenue up 21 percent year over year. Business non-annuity revenue grew by 28 percent, which isn’t ideal. Microsoft benefits more when businesses buy annuity contracts, which revenue grew by just 5 percent. Consumer revenue rose 26 percent, or $220 million, surprising considering Microsoft’s cited attach rate to PCs, which sales were down for the quarter.

Starting with the 2003 release cycle, Microsoft repositioned Office as the front end to the larger stack of server applications. During fiscal 2011, Microsoft has started to reap substantial sales from the strategy. Klein described Office 2010 as the fastest-growing version of the suite — deployments are five times Office 2007. But this isn’t happening in a vacuum. Enterprises are “purchasing our entire productivity suite platform,” he said. Klein’s comment puts context behind Turner’s canned statement about server software.

It’s my assessment that fiscal 2011 marks a turning point for Microsoft’s two cash cow products — the ascension of Office as the stronger product and one with greater sales longevity. Some of that relates to the aforementioned competition from cloud-connected devices but also the success of the Office-as-front-end to back-end business processes running Microsoft server software.

Like, Server & Tools, contractual volume-licensing agreements are high — 60 percent, which directly derives from the Office-to-server applications stack strategy. This largely insulates the division from slowdowns in the PC market. By comparison, only about 20 percent of Windows sales come from contractual licenses. Most customers by the operating system with new PCs.

Online Services Business. Search and display ads drove up online advertising revenue by 17 percent — $84 million to $586 million. Despite revenue gains, the division’s losses increased from fiscal Q3 2010.

Entertainment & Devices. The division’s revenue increased a whopping 60 percent year over year. Microsoft shipped 2.3 million Kinects during the quarter days, adding to the 8 million units from the sequential launch quarter. Xbox console sales rose 79 percent — that’s 2.7 million units. “Xbox 360 platform revenue grew $712 million or 69 percent, led by sales of Kinect sensors, increased volumes of Xbox 360 consoles, and higher Xbox Live revenues,” according to Microsoft financial statements.

Regarding Windows Phone, Microsoft claims 90 percent customer satisfaction. However, the company didn’t release sales figures.

Windows Thin PC: because budgets are shifting to tablets

When Microsoft announced the release of Windows 7 SP1 in early February, the company also released some information about a couple of upcoming products: Windows Thin PC (WinTPC) and Microsoft BitLocker Administration and Monitoring (MBAM.)

 

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Monday, Microsoft shared the first round of information about WinTPC, how it will fit in with volume licensing somewhere between Windows Virtual Desktop access (VDA), and Microsoft Software Assurance (SA), and why it is coming out in the first place.

“Depending on the device and the capability, a thin client could cost as much as a low-end PC,” Microsoft’s Karri Alexion-Tiernan said on Monday. “Many of you told us that budgets for buying new devices have been reduced, and that you prefer allocating funds towards devices that offer more functionality and flexibility, such as new Windows 7 PCs, tablets, or slates.”

So WinTPC will help businesses turn their aging PCs into thin clients without incurring the VDA licensing charge for Virtual Desktop Infrastructure (VDI) typically ascribed to Windows Embedded thin clients or old PCs running Windows Fundamentals.

WinTPC instead will be a benefit of the Software Assurance (SA) program, and businesses enrolled in the program will be able to turn their hardware into WinTPC clients with no additional VDA licensing costs. Businesses that don’t have SA on their Windows PCs will still be able to purchase a VDA license for each device to get access to WinTPC, but Microsoft hasn’t outlined how much this will cost yet.

Microsoft will be disclosing more information about WinTPC at an event this Thursday March 10, and we’ll be looking for more information at that time.

PlayBook security: How RIM aims to keep work and play separate

One of Research in Motion’s biggest challenges in a world of the iPhone and Android has been how to keep its products fun and fresh while maintaining the high level of security its corporate users have come to rely on.

RELATED: RIM not sitting still with PlayBook

RIM has employed many methods to meet this challenge with its PlayBook tablet, none more obvious than the BlackBerry Balance technology that it introduced at BlackBerry World this week. Essentially, BlackBerry Balance allows users and IT departments to erect a firewall between personal and corporate data on devices so that end users have more personal freedom to run their own apps while ensuring that corporate data doesn’t get compromised.

 

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Among other things, BlackBerry Balance forbids users from copying and pasting information from an enterprise application into a personal application and restricts corporate data access for social networking applications. Additionally, if an employee is leaving their current company with a device that they personally own that contains corporate data, IT departments can perform remote wipes of enterprise data on the device without affecting users’ personal data.

RIM is also keeping PlayBook secure through its BlackBerry Bridge system that allows the PlayBook to get access to corporate data by connecting it to BlackBerry smartphones over Bluetooth. RIM touts this as a simple way for IT departments to manage PlayBook because Bridge has a lot of features that automatically protect data wiith minimal intervention from IT.

This is largely because RIM has designed Bridge to provide PlayBook with a “window” into a BlackBerry smartphone’s data without actually syncing that data onto the tablet itself. This means that when the PlayBook loses its Bluetooth connection with a BlackBerry device, it also loses access to corporate data. Furthermore, a remote wipe of a BlackBerry device will automatically lock down its cache of PlayBook data to ensure that it cannot be decrypted. Additionally, implementing a password reset on any BlackBerry device will automatically require a new password for Bridge, meaning that a PlayBook will not be able to view data from a reset device until both the smartphone and the tablet have a new password to connect to one another.

Bridge is also convenient for IT departments because it creates a list of applications on PlayBook that can function solely using Bridge, including BlackBerry Messenger, email, contacts, calendar and a special “Bridge Browser” that lets users surf the web securely through the data connection on their smartphone. To sum up, if an IT department wants to manage PlayBooks the easy way, they can simply mandate that employees can only access key corporate applications if they use Bridge to connect to their current IT-supported smartphone.

Of course, this won’t be enough for some users who will want email and calendar information on their PlayBook even if they don’t have their smartphone handy. For these users, who will be able to access corporate email once RIM pushes out a software upgrade to its tablet operating system later this year, RIM has developed the PlayBook Administration Service, a Web-based administration console that has the same core features as the BlackBerry Administration Service currently used to manage smartphones.

Amazon Thinks Every Penny Counts

All those loose coins sitting around your house are music to Amazon’s ears. The popular e-commerce site announced on Tuesday a program that will allow users of Coinstar counting machines to cash in their extra change for Amazon.com gift certificates.

 

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Coinstar normally charges an 8.9 percent convenience fee for use of its machines. However, by selecting the option to receive an Amazon gift certificate, users would be able to bypass the charge.

While Coinstar is not making money through convenience fees, it is making money off of each gift certificate sold, as Amazon is selling them to the company at a discount.

Both companies feel that such a deal will help expand their reach. Amazon’s customer base is largely made up of those with credit cards, and Coinstar’s growth has been limited by reluctance by consumers to pay the fee. With the deal, Amazon could now target cash-carrying consumers and Coinstar may be able to broaden its user base.

The program will initially be made available on 3,500 machines, with up to 5,000 machines offering the service by the end of the year, according to Coinstar. Since some machines also accept bills, a user could also load up a gift certificate by inserting bills into the machine.

Amazon is not the first company to sell gift certificates through Coinstar. Popular coffee store chain Starbucks last year successfully ran a pilot program that worked much in the same way. The Starbucks program now is offered on most Coinstar machines, along with gift cards from Hollywood Video and Pier 1 Imports.

AMD Xilleon processors to receive DivX certification

DivX announced it is working with AMD toward certifying certain Xilleon processors, which could add native DivX functionality to next-generation digital TVs or set-top boxes.

 

 



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Xilleon is a system-on-a-chip MIPS processor found in set-top boxes and digital TVs. It was formerly a project of ATI, but when AMD recently acquired ATI, it absorbed the Xilleon brand as well. DivX and AMD have not come to a decision yet as to which of the growing Xilleon line will be certified.

Recently, AMD announced a new line of Xilleon panel processors, promising advanced motion compensation and frame rate conversion for future LCD digital TVs. Using the processor should amount to an even clearer picture for displays, or what AMD called “20/20 television.”

The new AMD Xilleon 410, 411, 420 and 421 will support video processing for 100 Hz/120 Hz TVs all the way up to full HD resolution. Mitsubishi MZW series LCD TVs already use the processor and are based on Samsung’s McFi (Motion Compensated Frame Interpolation) solution. More TV manufacturers are expected to use AMD’s chips later this year.