Tuesday, November 24, 2009, 8:06PM ET - U.S. Markets Closed.

Software and Services

The last few years for Microsoft have been tantamount to abject humiliation.

Windows Vista bombed, once-declared-dead Apple roared back to steal computer-and-mind-share, Windows Mobile disappeared, and a decade of futility on the Internet continued.

But now, for a day, Microsoft is king again.

Windows 7, an operating system that even Redmond skeptics describe as "great", launches with enormous fanfare. So eager are customers to get their hands on the thing that it's already the best pre-order selling product on Amazon.

And then there was yesterday's Twitter-Bing integration. Not only was Microsoft the first major search engine to take this obvious and important step, the announcement forced an embarrassingly lame response from search giant Google: A blog post promising that, someday, it would offer Twitter integration, too.

Will Bing's Twitter integration allow Bing to gain real share again Google?

Unlikely.

But this and Windows 7 demonstrate that, at least for a day, Microsoft's competitive mojo is finally back again.

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From All Things Digital, Oct. 19, 2009:

Apple’s September quarter saw, among other things, the release of Snow Leopard, the latest upgrade to its OS X operating system andthe first public appearance of CEO Steve Jobs, who’d been on a medical leave of absence for a liver transplant. It was also the first full period since the company launched the iPhone 3GS, in late June.

No wonder it was a blowout quarter.

After market close Monday, Apple reported a fiscal fourth-quarter profit of $1.67 billion, or $1.82 a share, on revenue of $9.87 billion. That topped the estimates of analysts surveyed by Thomson Reuters, who’d expected the company to earn $1.42 a share on revenue of $9.2 billion.

The company sold 3.05 million Macs during the quarter, a 17 percent increase over last year. It sold 10.2 million iPods, eight percent decline from a year-ago quarter.

And iPhones? It sold 7.4 million of those — seven percent more than it did during the same period last year. So much for those supply-chain issues that some analysts warned might undermine iPhone sales.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.” [Editor's Note: "...really great new products"--is that a euphemism for tablet?]

Apple shares, which closed at $189.86 today, are spiking as I write this. At $203.90 they’re up more than seven percent in extended trading as I write this...

More coverage from All Things Digital:

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From The Business Insider, Aug. 31, 2009:

Well, that didn't take long.

In a decade, Apple has gone from niche-market roadkill to a company whose growing dominance and competitive tactics in a booming market are thrilling investors, angering competitors, and drawing regulatory scrutiny. 

Unless Apple shows a quick change of attitude, the benefit of its market position--power, scrutiny, and tens of billions in profit--are only going to grow.

Apple is no longer the beloved underdog that Microsoft kept alive in the late 1990s to improve its own standing in the eyes of regulators (remember the investment and agreement to keep building Office for the Mac?).  Apple is now the wildly profitable owner of the dominant iPod platform and rapidly-becoming dominant iPhone platform, which are really one in the same. Unlike any other competitor in the industry, moreover--including the still PC-centric Microsoft--Apple has managed to link the two big personal computing platforms together, through its software and resurgent Mac business...

See also from The Business Insider:

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Turns out the official recipe for fun and the way to create an Internet sensation are the same: Start with a megacorporation, add in a group of Germans on a hillside, liberally take advantage of slick editing software and let the power of the Web do its thing.

If you spend any time online, have a TV or know anyone who does, you've probably heard about the latest craze blasting its way through cyberspace. In case you haven't, a recap: A guy in a neoprene suit goes barreling down a waterslide, flies off the end and through the air, traveling a great distance, and splashes down in a tiny pool. It's the Megawoosh. See?


MEGAWOOSH @ Yahoo! Video

Please understand. This is a hoax. It didn't happen. Ultimately, it's an ad for Microsoft Germany. Still, it is awfully clever. Heck, some commentators out there on the Net are suggesting it could be one of the greatest fakes in the history of the World Wide Web.

One big question is whether this will help to reposition Microsoft as a force to be reckoned with in the collective mind of the world's tech-obsessed masses. For the better part of this decade to date, that's been pretty much dominated by Apple. You know, the iMac, the iPod, the iPhone, etc. What, you think those "I'm a Mac, I'm a PC" commercials just happened one day by accident?

How this excellent production came together can be boiled down to something like this -- a stuntman starts down the slide, but a rope keeps him from going too far, the thing that's airborne isn't a person, but is instead animation, and the principal character ended up in the pool by dropping off a small ramp. Piece it seamlessly together, and there you go...

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From paidContent.org, July 9, 2009:

Microsoft still hasn’t commented on Google’s plans to introduce an operating system of its own. An official statement is coming later today and we’ll post it here when it comes out. (Update: Microsoft now says it will in fact not comment). But there are lots of reasons why Microsoft does not need to be too concerned about Google’s foray into its home turf. Here are five:

Windows 7 is not Vista: Google’s operating system, which is initially targeted for netbooks, will only be available starting in mid-2010. By then, Microsoft’s new operating system, Windows 7, will have been on the market for at least nine months. Unlike its predecessor Windows Vista, Windows 7 has received rave early reviews. Also unlike Vista, Microsoft has promised that Windows 7 will work as well on netbooks as on high-end gaming PCs. As one Microsoft employee wrote on his blog today, “If Win7 didn’t have a SKU for Netbooks, this might even be interesting.” Microsoft will therefore be in a strong position to defend its turf than when Chrome OS comes out

Microsoft is building its own browser optimized to run web apps:...

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From The Business Insider, July 8, 2009:

Google will launch its own operating system in the second half of next year, finally launching a direct assault on Microsoft's crown jewel.

(It has been headed here in all but name for the past two years.  But last night it finally declared war.)

The OS will initially be targeted to netbooks, then broadened to all PCs.  It will be a combination of a Google Chrome browser and a Linux kernel.  It will be a different project than Android.  It will be designed to be simple and fast.  It will also, presumably, be free.

Google's blog post announcing the browser is below.  A few points:

A year of development is a long time, and it shows how complex an undertaking this will be.  Announcing the product a year early is also a major break with Google tradition and shows how much Google needs help from partners in this endeavor to be successful.  (An OS that is distributed only by downloads won't work.  It needs to come loaded on the machine.  This has been the big problem with Chrome so far, and Google needs to address it.)

Success is far from guaranteed.  Google's browser initiative, Chrome, has been a fun little science project, but as a product it has been a flop.  The same can be said for almost all of Google's non-search products.  If Google wants to have a chance at success in this business, it needs to focus on it with the same intensity it once put into search.  This will be challenging for Google, which, for the last several years, has had the luxury of dabbling in whatever it pleases.

Assuming the OS is free to both users and OEM PC makers, Microsoft will need to soup up the free version of its own Windows 7 OS for netbooks (right now, Microsoft's plan is to ship a crappy free version of 7 and try to get users to upgrade.  Eventually, if Google starts to gain traction, Microsoft may need to panic.)

This is classic disruption...

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From All Things Digital, June 19, 2009: 

Apple Inc.’s iPhone has been a smashing success, redefining the smart-phone market and creating a new hand-held computing platform that has attracted over 50,000 third-party apps, or software programs, in less than a year. With its nearly identical sibling, the iPod Touch, it has sold a combined 40 million units since June 2007, when the computer maker plunged into the phone business.

But the iPhone is drawing increasing competition from entrenched smart-phone makers anxious to emulate the upstart. The most significant of these is Palm’s (PALM) impressive new Pre, which is off to a good start with an estimated 100,000 or so units sold since it launched on June 6.

So, like a shark, Apple (AAPL) must keep moving. This week, it is introducing two new products designed to consolidate and increase its position as the leader in this new generation of hand-held computers. I’ve been testing both and I like them a lot, with some minor caveats.

One of the new products is a refreshed model of the iPhone itself, called the iPhone 3G S. It looks the same, but offers more speed, more memory, more battery life, and a few new features, including video recording and a better camera for still photos.

The second is OS 3.0, the third version of the iPhone’s operating system, which comes on the 3G S and also can be installed on all prior iPhones and Touches. It includes a much longer list of added features, some innovative and some long overdue catch-ups to other phones. These include such widely requested capabilities as cut, copy and paste; systemwide searching; a wider virtual keyboard; and a feature called MMS that allows users to send photos and videos directly to other phones without using email.

Apple last week also made a bold business move to complement these new products. It decided to keep making the current model, the iPhone 3G, and to slash its price by 50%, to $99. That’s an unheard-of price tag for a pocket computer of this power and versatility, and gives millions of additional consumers a reason to choose the iPhone instead of a competitor...

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Investment by venture capital funds is going to shrink by as much as 50% from 2007's $25 billion, according to a recent report by the Kauffman Foundation, entitled: "Right-Sizing the U.S. Venture Capital Industry."

As Paul Kedrosky, a senior fellow at the foundation, explains the in accompanying video, the VC industry is about to suffer a major comedown.

With the last of the bubble-era IPOs (or "exits" in VC speak) coming out of the performance figures, the industry's 10-year average return is set to turn "dramatically negative," Kedrosky says. He predicts 10-year returns will go from up 25% or 30% to negative 7%, which is going to have a major impact on investors' willingness to put money in the VC sector, certainly not those investors who fueled the industry's surge at the end of the dot.com era.

The key here is VC funds have high barriers to exit...

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Shai Agassi started programming when he was seven. He finished school early and started building companies with his dad in Israel. Finally he knew he’d hit on a winner when he sold TopTier Software to industry titan SAP in 2001. Only SAP wasn’t just interested in the software—they wanted Agassi.

People thought the brash 30-something would last six months inside the stodgy German giant. Six years later, he was poised to be the company’s next CEO. Well, co-CEO technically, but still, he was a role model for Israeli techies and about to be one of the most important men in the tech world.

That’s when he decided to quit. In the third segment of our sit-down with Agassi opens up about the life-changing decision to go from software executive to an entrepreneur, building a company so ambitious many people call it crazy.

Earlier:

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From paidContent.org, June 2, 2009: 

Google is beating Microsoft at search, and Apple is pummeling Microsoft on the music front—but with the popularity of the Xbox 360 and Xbox Live, Microsoft has a major edge on all of its challengers when it comes to controlling the living room. And the company made it clear that it’s in this fight for the long haul at E3, with news that Xbox Live would be getting much more digital content soon, including music from Last.fm, connections from Twitter and Facebook, and more streaming movies from Netflix.

Microsoft is already far ahead of Sony in terms of console volume; the same goes for Apple’s AppleTV flop or startups like Boxee, Roku and ZillionTV. (And there isn’t even any premium third-party content available on the Wii yet.) Meanwhile, Microsoft said Xbox 360 owners had watched over 25 million hours worth of movies in the three months after it partnered with Netflix for streaming video—so there’s clearly a hunger for non-game content on the console. John Schappert, Microsoft’s corporate VP of LIVE laid out just how much more of that content people would get...

For more coverage, see paidContent.org:

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