Microsoft launches Remote Desktop app for Android and iOS

Microsoft has quietly rolled out its Remote Desktop app for Android and iOS, allowing PC users to access their Windows desktop from their phone or tablet.

The Remote Desktop app, which can be downloaded for free from Google Play and Apple’s App Store, lets users connect to a remote PC while on the move.

It is mainly aimed at business users who want to access their work resources from wherever they are, but could also be used to access personal files such as photos and documents stored on a Windows PC.

Both the iOS and Android apps offers multi-touch controls, a secure connection to your data, simple management tools and high quality video and sound streaming. The iOS version also offers easy connection to external monitors or projectors for presentations.

Microsoft has offered remote access to Windows PCs and Macs for years, but this is the first time the functionality has been made available to mobile devices that are not running one of its operating systems.

The apps have not been widely publicised. Microsoft made a one-line mention of the app in a press release issued last week, but the company had not publicly announced their availability at the time of writing.

It is likely that Microsoft is playing down the new apps in order to retain focus on its Windows Phone 8 platform, which offers tight integration with Windows 8 on the desktop and allows users to sync files and apps between their Windows Phone and their Windows tablet or desktop PC.

The company also announced the launch of Windows 8.1 yesterday, which includes a range of refinements and functional improvements including a more customisable Start screen, enhanced Bing search, and a range of new apps and services.

Microsoft releases Windows 8.1 upgrade

SAN FRANCISCO—Microsoft released Windows 8.1 on Thursday, after tweaking the operating system designed for various devices that had confused some users.

The update is free for those using Windows 8, released last year to help Microsoft navigate the transition from traditional personal computers to mobile devices such as tablets.

The revamped version brings back the “start” button, which disappeared last year and prompted protests from some PC users unaccustomed to the tiled menu adapted for touchscreens.

“Windows 8.1 demonstrates our commitment to continuously improving the product to create a richer customer experience,” Microsoft’s Brandon LeBlanc wrote on the company blog.

“We are excited to have customers start updating their devices today and getting to experience new Windows devices this holiday season.”

A public preview of Windows 8.1 was made available June 26. At the time, Microsoft said it had sold more than 100 million licenses for Windows 8 but that the update was planned after listening to customers.

Some analysts say Microsoft was forced to act because of slow adoption of Windows 8, which made some radical changes to the design of the desktop.

With Windows 8, Microsoft was trying to create a system that could be used on mobile touch screen devices while also serving the users of traditional PCs.

Microsoft launched Windows 8 last October, revamping its flagship system in an effort to make inroads in the fast-growing mobile segment. At the same time, it released its Surface tablet computer.

Starting Friday, Windows 8.1 will be delivered on new devices using the Microsoft operating system.

Microsoft investors push for Gates defenestration: report

No Chairman Bill, no Ballmer really would be a post-PC world 

Three Microsoft investors that collectively own more than five per cent of the company are lobbying to fire founder Bill Gates from his role as Chairman.

The Reuters< report containing the news doesn't name the investors but says they are worried that Gates' influence as Chairman is disproportionate to his current 4.5 per cent stake in the company.

The investors are also worried that Gates is helping to recruit ousted CEO Steve Ballmer.

That worry seems legitimate: when Gates stepped down from Microsoft he effectively replaced himself with Ray Ozzie, a chap no-one had a bad word for but who was born in the same year as Gates and therefore had many of the same formative computing experiences. Were Gates to lobby for a Ballmer replacement with similar heritage investors could feel nervous that Microsoft senior leadership is too rooted in the past.

If Reuters' report is correct, it suggests investors' desire for change at Microsoft weren't satisfied by Steve Ballmer stepping aside.

That attitude is perversely, good news for Microsoft. Any public company's primary duty is to enhance shareholder value. That investors want more change at the company suggests they believe current management is not capable of enhancing shareholder value … but that the value is there to be found.

The cold financial calculus behind such thinking means little for those feel that Gates contribution to the computing industry and to Microsoft are enormous.

Microsoft may have made many a mis-step but the company's audacious early goal of putting a PC into every home came to fruition, bringing with it incalculable change, most of it for the good.

Microsoft investors reportedly press for Bill Gates to step down

Unnamed investors said to be lobbying the board for the departure of the technology giant's co-founder

Three of the top 20 investors in Microsoft are lobbying the board to press for Bill Gates to step down as chairman of the software company he co-founded 38 years ago, according to people familiar with matter.

The outgoing Microsoft chief executive Steve Ballmer has been under pressure for years to improve the company's performance and share price, but this appears to be the first time that major shareholders are taking aim at Gates, who remains one of the most respected and influential figures in technology.

A representative for Microsoft declined to comment on Tuesday.

There is no indication that Microsoft's board would heed the wishes of the three investors, who collectively hold more than 5% of the company's stock, the sources say. They requested the identity of the investors be kept anonymous because the discussions are private.

Gates owns about 4.5% of the $277bn company and is its largest individual shareholder.

The three investors are concerned that Gates's presence on the board effectively blocks the adoption of new strategies and would limit the power of a new chief executive to make substantial changes. In particular, they point to Gates's role on the special committee searching for Ballmer's successor.

They are also worried that Gates – who spends most of his time on his philanthropic foundation – wields power out of proportion to his declining shareholding.

Gates, who owned 49% of Microsoft before it went public in 1986, sells about 80m Microsoft shares a year under a pre-set plan, which if continued would leave him with no financial stake in the company by 2018.

Gates lowered his profile at Microsoft after he handed the chief executive role to Ballmer in 2000, giving up his day-to-day work there in 2008 to focus on the $38bn Bill & Melinda Gates Foundation.

In August, Ballmer said he would retire within 12 months, amid pressure from activist fund manager ValueAct Capital Management.

Microsoft is now looking for a replacement, though its board has said Ballmer's strategy will go forward. He has focused on making devices, such as the Surface tablet and Xbox gaming console, and turning key software into services provided over the internet. Some investors say that a new chief should not be bound by that strategy.

News that some investors were pushing for Gates's departure as chairman provoked mixed reactions from other shareholders.

"This is long overdue," said Todd Lowenstein, a portfolio manager at HighMark Capital Management, which owns Microsoft shares. "Replacing the old guard with some fresh eyes can provide the oxygen needed to properly evaluate their corporate strategy."

Kim Caughey Forrest, senior analyst at Fort Pitt Capital Group, suggested now was not the time for Microsoft to ditch Gates, and that he could even play a larger role.

"I've thought that the company has been missing a technology visionary," she said. "Bill [Gates] would fit the bill."

Microsoft is still one of the world's most valuable technology companies, making a net profit of $22bn last fiscal year. But its core Windows computing operating system, and to a lesser extent the Office software suite, are under pressure from the decline in personal computers as smartphones and tablets grow more popular.

Shares of Microsoft have been essentially static for a decade, and the company has lost ground to Apple and Google in the move toward mobile computing.

One of the sources said Gates was one of the technology industry's greatest pioneers, but the investors felt he was more effective as chief executive than as chairman.

WACKY Ballmer Dirty Dances off stage at mega Microsoft leaving do

Nobody puts outgoing Steve in the corner

A tearful Steve Ballmer bid official farewell to thousands of Microsofties at a stadium bash with a booming sound track.

Shy and (literally) retiring CEO Ballmer hosted the software giant's annual staff meeting at Seattle’s KeyArena yesterday, attended by 13,000 employees. This is the last mass gathering for Ballmer and his troops after the big man announced his retirement as chief executive in August.

During an hour-long talk to the emotionally charged masses, Ballmer promised them “we will deliver the next big thing … we will change the world again”.

“We have unbelievable potential in front of us, we have an unbelievable destiny," said a visibly moved Ballmer, reusing a quote from the very first Microsoft staff meeting in 1983.

"Only our company and a handful of others are poised to write the future," he continued. "We're going to think big, we're going to bet big," he is reported to have said.

He wisecracked about rivals he either failed to anticipate or beat, and whose success helped shove him towards the exit door.

Ballmer dismissed Apple as being “fashionable”, Amazon for being “cheap”, and Google for “knowing more” whereas Microsoft is about “doing more”.

But, as ever, it was Ballmer’s moves rather than his words that delighted. The CEO who gave us the Monkey Boy dance is reported to have jumped about the stage to Michael Jackson’s Wanna be startin’ somethin’ – the song he played at that fateful 1983 meeting – while screaming “the sound of Microsoft!”

Reports talk of tears streaming down Steve's face as he gave his final speech.

Ballmer closed on (I’ve had) the time of my life from Dirty Dancing, continuing to dance and run around the stage. Employees were shaking hands with Ballmer and screaming “we love you” through the routine, we're so reliably informed.

As the event finished, the question of who will succeed the chair-flinging CEO was once again in the headlines. The reason is that one report claimed that Ford CEO Alan Mulally is now in line to the throne. Other candidates are believed to include ex-Microsoft group president and soon-to-be-ex-Nokia chief executive Stephen Elop, currently fighting a rearguard action over the size of his package upon leaving the Finnish mobe-maker.

Company chairman Bill Gates, meanwhile, has denied he’s interested in the role. The billionaire software baron is actually one of the three members of a special committee tasked with selecting the new CEO.

We invite Reg readers to submit their own suggestions for suitable songs on Ballmer's time at Microsoft and on his exit in the comments section. 

Microsoft CEO Says Working to Keep PC ‘Device of Choice’

Microsoft Corp. (MSFT) Chief Executive Officer Steve Ballmer, who will be retiring within a year, said the company is still working to make sure that the personal computer remains relevant as “the device of choice.”

He made his comment as Windows, which dominated computing for more than two decades, now makes up 25 percent of revenue. The operating system slipped to become Microsoft’s third-largest business after Office, which generated 32 percent of sales, and Server and Tools, which garnered 26 percent for the latest fiscal year through June.

Ballmer’s remarks were being closely watched as he shakes up the world’s largest software maker amid a shift by consumers toward smartphones and tablets and away from PCs running Windows. The CEO overhauled Microsoft’s management and strategy to accelerate development of hardware and services, agreeing this month to buy Nokia Oyj (NOK1V)’s handset unit for $7.2 billion.

“We must do the work to ensure that the PC stays the device of choice when they’re trying to be productive in life,” Ballmer said at a meeting for analysts and institutional shareholders yesterday, the first in two years. Ballmer said the company will have to work hard to keep the industry “north of 300 million” units.

PC shipments will decline 9.7 percent this year to 315.4 million and won’t ever return to the peak levels it reached in 2011, according to researcher IDC. The market will shrink until 2015, it said. The slumping popularity of the devices is coming as consumers increasingly turn to smartphones and tablets, two markets where Microsoft and the PC industry have lagged.

Challenging Environment

Windows accounted for 3.7 percent of smartphone operating-system shipments in the second quarter, according to IDC. In the tablet market, that figure was 4.5 percent, IDC said. Microsoft’s first-ever computer hardware, the Surface tablet, sold so poorly the company had to write down $900 million of unsold inventory. Introduced in October, the handheld device was aimed at taking on Apple Inc.’s iPad, as well as touchscreen computers running Google Inc.’s Android software.

“The challenges are fairly obvious and the questions are about how to execute,” said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle. “They’ve laid out a strategy of being more of a devices- and services-focused company, and started to execute on that. Nokia is part of that. Investors can debate whether that’s the right approach, but regardless, the company is going to move on.”

Hardware Evolution

Some shareholders have been seeking more of a say in Microsoft’s strategy and finances. The company said earlier this week it will raise quarterly dividends by 22 percent to 28 cents a share, exceeding the average analyst estimate of 26 cents. Microsoft sought to head off shareholder dissent last month by reaching a cooperation agreement with ValueAct Holdings LP, which would let the activist investor claim a board seat starting next year.

Ballmer told analysts that the company will perform better in the future by having its business, consumer, software and device units work together.

“Hardware and software will kind of need to evolve together,” he said.

There are only a few companies making the investments in data centers and technology needed to provide future devices and services that consumers and companies will demand, Ballmer said. Microsoft won’t be “religious” about having its services work only with Microsoft hardware, and will continue offering them on smartphones and tablets from Apple and Google, he said.

Long Microsoft

Microsoft will continue to challenge Google, which has secured pole position in Internet search and is one of the few companies with the breadth to take on Microsoft, Ballmer said. Regulators should look at what he called Google’s “monopoly” in search, he said.

Microsoft said it’s still seeking a new CEO, and didn’t offer any updates on the process.

“The board continues on the process that we laid out in late August,” Chief Financial Officer Amy Hood said at yesterday’s conference, which was delayed by a power failure at the venue in Bellevue, Washington. “We’ll update you when appropriate.”

Hood said she’ll give more detailed information on the company’s new financial-reporting structure on a Sept. 26 conference call with analysts.

Microsoft shares rose 1 percent to $33.64 at the close in New York, leaving them up 26 percent this year. The stock rose 7.3 percent the day Ballmer announced his retirement, then declined 4.6 percent when Microsoft said it would buy Nokia.

“I’m long Microsoft,” said Ballmer, who owns about 4 percent of the company. “I treasure it as an investor, too.”

Microsoft sees phones as the future of Windows RT

The man in charge of Windows promises unified apps across all devices

One of the big changes in Microsoft's recent reorg is the merging of the traditional Windows business with Windows Phone. While Microsoft has long promised a "common app platform" between the two, the company has placed Terry Myerson, former Windows Phone chief, in charge of the newly formed operating systems group. Myerson took to the stage during Microsoft's financial analysts meeting yesterday to detail his thoughts on the future of Windows RT and a promise of common apps and developer tools across Windows and Windows Phone.

Myerson says Microsoft is organizing its OS groups around three key beliefs: commonality, the cloud, and tailored experiences for devices. "The first of those is that we really should have one silicon interface for all of our devices," says Myerson. "We should have one set of developer APIs on all of our devices. And all of the apps we bring to end users should be available on all of our devices." The promise of all apps available across all devices is one that Microsoft has merely hinted at previously, without committing to specifics. While Myerson didn't extend further, it's clear Microsoft is finally working on ensuring a Windows Phone app could run on a Windows 8 tablet in the same way that an iPhone app can run on an iPad.

"The second belief was that all of our devices are becoming more cloud-powered," explains Myerson. "So whether we're branding them Windows or Xbox, we really need one core service which is enabling all of our devices." This core service sounds like the same "service-enabled shell" that Steve Ballmer has discussed previously, and one that Bing will likely play a huge role in. The third belief is that while Microsoft using a common Live Tiles interface across Windows, Xbox, and Windows Phone, the experience needs to be tailored per device. "We want to facilitate the creation of a common, a familiar experience across all of those devices, but a fundamentally tailored and unique experience for each device," says Myerson.

While these are all promises for the future of Windows, Microsoft had big plans for its Windows RT operating system before it debuted last year. A "no compromise" experience across multiple manufacturers was promised, but a year on and there's little sign of any future Windows RT devices from manufacturers. Samsung has dropped out, Nvidia isn't impressed, and it looks like Nokia might be the only brave ally alongside Microsoft's upcoming Surface 2. While Microsoft has previously defended RT, Myerson didn't address the lack of Windows RT devices from PC manufacturers, but he did provide hints at Microsoft's vision for the future of ARM-powered Windows devices.

"The ARM devices in particular in phones have incredible share given their battery life and the connectivity options available with the system-on-a-chip ecosystem," says Myerson. "Windows RT was our first ARM tablet. And as phones extend into tablets, expect us to see many more ARM tablets, Windows ARM tablets in the future." Nokia's 6-inch Lumia 1520, expected to be unveiled next month, will likely be the first example of Windows Phone extending into larger devices. It appears that Microsoft sees the future of RT in phones, but it's not immediately clear how Windows Phone and Windows RT will merge, or when. On the subject of progression overall with Windows, Myerson notes that the company is focused on executing quickly. "We have a very clear vision of what we want to get done, and we're moving very fast."

Microsoft reports IE zero-day attacks

All versions of Internet Explorer are vulnerable to remote code execution through a memory corruption bug. Attacks are currently being conducted with exploits that work on IE8 and IE9.

Microsoft is reporting an unpatched vulnerability in all versions of Internet Explorer. All versions of IE, other than those running on Windows Server, are vulnerable. This includes Internet Explorer 11 on Windows 8.1 and RT.

The vulnerability comes from a memory corruption bug which could lead to remote code execution. Microsoft says that they are aware of targeted attacks exploiting this vulnerability on Internet Explorer 8 and 9. Exploits such as these are often version-specific, even if the vulnerability affects multiple versions.

Attacks may be blocked by running a Microsoft "Fix it" solution for an earlier vulnerability: CVE-2013-1347 MSHTML Shim Workaround.

The company has not decided how to respond to the vulnerability. Certainly they will write a patch, but whether they schedule it for a Patch Tuesday or go "out of band" is not yet clear.

Microsoft's advisory also says that EMET (the Enhanced Mitigation Experience Toolkit) may be used to mitigate against the vulnerability.

Microsoft Bing's New Look, Tools

Microsoft's search engine still ranks a distant second to Google, but the company calls Bing a key part of its reorg strategy.

Microsoft announced late Monday that it is revamping its Bing search engine with not only new features but also a redesigned logo.

In a blog post, Lawrence Ripsher, Bing general manager of user experiences, said the overhaul demonstrates why Bing is "no longer just a search engine on a web page." He also said Bing's new look "integrates" outgoing CEO Steve Ballmer's "One Microsoft" strategy, which sees the company's various products and services coalescing into a unified user experience, and which is the basis for the company's restructuring plan.

The new features include Page Zero, which is designed to help a user fine-tune a query before he's even submitted a search. Page Zero works like a more robust version of the auto-fill suggestions typical of most search engines. If a user begins to type a celebrity's name, for example, Page Zero displays not only recommended searches, but also a quick glance at the celebrity's biography, as well as other commonly searched-for content. Ripsher said the feature could allow someone typing "Jon Stewart" to more quickly differentiate results about the man from those about "The Daily Show."

"We think the time people will save using Page Zero instead of navigating a search results page will be significant," he wrote.

Whereas Page Zero is potentially useful for clarifying vague queries, Pole Position, another new feature, focuses on searches in which Bing has "a high confidence on a user's intent." When Bing detects an unambiguous query, such as one that asks the weather in a particular city, it will provide the answer in a large space at the top of the page. Links and other results will be listed less prominently below.

Bing will also merge its Snapshot and Sidebar functions into a single panel. Currently, Bing results populate three columns: one with the typical list of links; another with Snapshot, which includes facts and media relevant to the search, as well as tangential content; and a third with Sidebar, which includes related content drawn from the user's social media networks. By combining the second and third columns, Ripsher said Bing will give users "all the supporting context they'll need for any given query."

He said the new Bing "looks as beautiful on a Surface or iPad as [it does] on a PC or phone."

In another blog post, Microsoft senior director Scott Erickson said the new logo is meant to evoke clarity and energy, as well as the Microsoft logo, with which it shares colors, fonts and other design cues.

Some Microsoft shareholders have grown skeptical of Bing, which has lost billions of dollars over the years. According to comScore, Microsoft's search engine accounted for only 17.9% of U.S. Web searches in August, a distant second behind Google's dominant 66.9% share.

Despite criticism, Bing has persisted. Steve Ballmer suggested in his "One Microsoft" memo that Bing, in combination with Azure, will fuel a "magical" and personalized Windows experience that anticipates user needs and delivers useful information at exactly the right moment.

Bing has also become more than a search engine, as Ripsher said. It not only provides contextually relevant returns on Windows Phone, for instance, but also enables many of the Xbox's interactive functions. It also integrates images and maps into Office, and could one day be the basis for Cortana, Microsoft's rumored competitor to the iPhone's Siri. Earlier this summer, Microsoft also opened Bing as an app development platform. Time will tell if it all helps the "one Microsoft" vision come to fruition, let alone if Microsoft can challenge Google in the search engine business. But Microsoft appears committed to Bing's place in its portfolio of products and services.

Redesigned Bing results soon will begin appearing in U.S. search returns, but in the meantime, Microsoft has established a preview site for anyone who wants to check out the new look.

Microsoft pulls 'fly on the wall' anti-iPhone ads

Microsoft's online video ads that mocked Apple's latest crop of iPhones have been yanked, following what appears to be a poor reception by viewers.

Microsoft has removed a series of online video advertisements that were critical of Apple's latest iPhones, after they were up for just a few hours.

The videos, which began with the title "A fly on the wall in Cupertino?" depicted fictional meetings supposedly taking place at Apple's headquarters in Cupertino, Calif. They were posted from Microsoft's Windows Phone YouTube account, and at nearly two minutes were unlikely to be shown on TV.

The advertisements were ill-received, and even mocked, on numerous social networks. Some observers also suggested that similarities between one of the fictional executives -- seen only from behind -- and late Apple CEO Steve Jobs were in poor taste.

The campaign "was intended to be a lighthearted poke at our friends from Cupertino. But it was off the mark, and we've decided to pull it down," a Microsoft representative told CNET.

For those who missed it, here's a mirrored version of the main video:

The Apple Era begins as Microsoft, Google shift to a hardware centric model

The formerly universal consensus that widely licensed software (like Windows) would always win out over integrated hardware products (like the Macintosh) has finally reached a definitive end, years after being proved wrong. 

A long monopoly game finally ends

At some point in the 1990s, the supremacy of broadly licensed operating systems became an unquestionably held dogma. 

This began as a reaction to the success of Windows, but was reinforced with the failure of every integrated hardware product that failed in its wake, including the Acorn Archimedes, Atari ST, Commodore Amiga and BeBox. Apple's Macintosh was the only non-Windows PC to survive the decade, but the company was still labeled "beleaguered" for daring to remain in business.

The notion that an integrated PC wouldn't and couldn't sell without Windows even caused Apple's 1990s leadership to pursue Windows-like licensing programs, first with the Newton OS and then with the Mac OS in 1995. 

Other companies also tried to introduce broadly licensed Windows alternatives, most notably IBM's OS/2, but also Sun's Solaris and Steve Jobs' NeXTSTEP for Intel PCs. 

It seemed that nobody was willing to question the idea that the only way to sell an operating system was Microsoft's Windows Way, despite the fact that nobody was really able to successfully copy Microsoft either. 

In reality, Microsoft didn't happen upon the True Way to sell technology. It simply won by cheating, erecting a monopoly where nobody else could actually play. Software alternatives were locked out of the market by illegal tying agreements, while Microsoft's hardware "partners" were duped (for decades!) into funneling most of their profits to Microsoft. 

This continued for so long in large part because the tech media overwhelmingly refused to judge the PC game as impartial journalists and instead largely assumed the role of Microsoft flatterers, weaving rich tapestries of prose to glorify the Windows Empire's fine New Clothes. 

Technology shifts, but the world refuses to notice

The technology world was so thoroughly convinced that Microsoft's Windows was the One And Only Way to sell computing that nearly everyone refused to observe or consider the accumulating data conflicting with this "common sense" opinion. 

The first evidence that broadly licensed software wasn't necessarily a superior model for selling technology came from parallel efforts to be like Microsoft: IBM, Apple, Sun and NeXT all failed to replicate the Windows model with their own licensing programs. 

Even more persuasive should have been the clearly observable inability of Microsoft to spread Windows Everywhere. A string of Windows failures that began early in the 1990s was carefully excused and ignored by the tech media in its collective refusal to be anything but an extension of Microsoft's PR department. 

From Windows for Pen to WinPad to Windows Handheld PC to Windows Palm-sized PC and Pocket PC to "Windows Powered" (and other Windows CE initiatives including Mira Smart Displays and Media2Go/PlaysForSure/Zune and Windows Mobile/Windows Phone) to Windows Tablets, Slate PC and UltraMobile PCs, Microsoft's every effort to duplicate its Windows PC model in new product segments or form factors simply fell flat on its face. 

Palm proves Windows doesn't work: 2003-2007

A third experiment testing the supremacy of broadly licensing a technology came in the early 2000s, when Palm's PDA business began to falter, much like Apple had a decade previously. Palm's situation was nearly identical to Apple's in the early 1990s: it had a popular integrated product saddled with aging system software and an increasingly obsolete CPU architecture. 

Everyone offered the company the same advice they'd offered Apple, invariably recommending that it split its hardware and software businesses, broadly license out its software like Microsoft, and perhaps even license Windows from Microsoft.

After briefly duplicating many aspects of Apple's turnaround strategy being accomplished in parallel under Steve Jobs (Palm even brought back its own founder, Jeff Hawkins, in a move to enter the new smartphone market being pioneered by Hawkins' Handspring Treos), the company then shifted to a Windows Enthusiast game plan.

That proved disastrous. Licensing Palm OS briefly appeared to work (Palm even signed up Sony as an enthusiastic partner) but soon failed; Sony backed out by 2004. Splitting the company into hardware (palmOne) and software (PalmSource) created confusion and support headaches for customers, with no clear benefits. 

Licensing Windows Mobile from Microsoft and selling that alongside its own Palm OS created even more confusion, and resulted in a slashing of Palm's own installed base. But it wasn't Microsoft's Windows licensing that finally killed Palm: it was an integrated device: Apple's iPhone. 

Apple proves integrated products can work: 1997-2007

A decade prior to the release of the iPhone, Apple began a turnaround under Jobs that refocused the company on doing the unthinkable: selling integrated products in a Windows-dominated world. Among Jobs' first decisions were the termination of Apple's Newton and Mac OS licensing programs. 

Jobs then focused Apple on doing something that nobody else in the PC business was doing: creating innovative, tightly integrated packages of hardware and software.

From the striking new iMac in 1998 (above) to strategic investments in PowerBooks and iBook notebooks, Jobs turned Apple from being a "non-Windows compatible PC" maker into a fashionable, innovative, trendsetting designer of a series of new computing products that began leading, rather than following, the rest of the PC industry.

In 2001, Apple entered a new market with iPod, leveraging internal assets (like Firewire) and external assets (like Toshiba's compact hard drive and Pixo's embedded OS) and integrating them all into a desirable, functional, valuable package it could sell at a profit.

Oddly, this is the basic strategy of nearly every product designed outside of the technology sector, but was not really being pursued by anyone else inside the tech world, and in particular not among the blind OEMs clinging to Microsoft for direction and vision.

By 2003, Apple's iPod was globally popular and monumentally profitable. Yet its primary competitor, in the minds of the tech media, was a broadly licensed technology platform being fronted by Microsoft: PlaysForSure. Read any of the tech punditry from that period for some hilarious mass delusion about how Microsoft was guaranteed to overtake and trounce Apple's iPod.

Instead, iPod stomped PlaysForSure into the horse manure. Microsoft had failed repeatedly before, but never in a way that mattered, and never to an integrated product (the closest experience being the short lived success of the Palm Pilot, which as noted above, was successfully hoodwinked into carrying Microsoft's water to the point of exhaustion).

Apple's thrashing of Microsoft's broadly licensed PlaysForSure platform with its own integrated product continued for years while the tech media refused to believe what it was observing, from 2003 to 2006. Meanwhile, Microsoft embarked on the unthinkable: it began copying Apple's integrated product strategy with its own Zune.

Unsurprisingly, Microsoft was as bad at playing in Apple's home court as Apple had been in trying to play by Microsoft's platform licensing game. The Zune was an embarrassing failure across its several generations.

Canalys U.S. smartphone figures

In 2007, Apple brought its integrated product savvy into direct competition with Microsoft's decade old experiment with Windows CE/Windows Mobile in the arena of smartphones. After its first full quarter of sales, Apple's iPhone had surpassed Microsoft's U.S. smartphone sales, despite Windows Mobile's half-decade head start in smartphones.

Microsoft enters integrated products: 2008-2013

In an effort to remain competitive with Apple's iPhone, Microsoft did something unpredictable: it acquired a mobile phone hardware company. No, it did not start with Nokia.

In 2008 Microsoft spent half a billion dollars to acquire Danger, Inc, a startup co-founded by Andy Rubin. Danger was essentially the predecessor of what became Android: a Linux/Java based integrated mobile product.

Rather than playing up Danger's strengths (Danger's Sidekick was at the time a popular, cloud-centric mobile texting device), Microsoft did to it what it had done with a series of other hardware-related acquisitions, including WebTV: it forcibly fed Windows down its throat like a unlucky duck being raised for foie gras.

After destroying Danger's credibility by bungling its existing cloud infrastructure, Microsoft converted Danger into an integrated product so terrible that it couldn't remain on the market for more than 48 days. This was KIN, a product so dreadful it made the Zune look like a resounding success in comparison.

While Microsoft diddled with KIN under the Pink Project, Apple had been developing its third major integrated product success with the iPad. To compete with this rumored tablet, Microsoft rushed to market "Slate PC" in a partnership with HP, its long time Windows PC licensee partner.

Slate PC beat iPad to market, but it was so battered against the ground by iPad that only a few thousand of the devices were even built. That didn't stop the tech media from inventing excuses for it or trying to explain how Microsoft was really only trying to achieve failure in tablets because it didn't need to compete, being seated on top of the Windows Monopoly and all.

This myopic, willful ignorance and excuse-centric, platitude-barfing flattery of Microsoft's every misstep might have made sense in the 1990s, but by 2010 the kowtowing tech media's fawning over Microsoft was as unnecessary as the lickspittle sycophants of the royal court after the revolution had beheaded their monarchs.

Three years later, all Microsoft has done is port its desktop Windows to ARM under the "RT" brand and deliver two versions of a new Surface Tablet PC hybrid that nobody even wants one of. Even Microsoft's licensees don't want Windows RT, and they aren't that enthused about the Zune/Windows Phone/Surface inspired version of Windows 8, either.

All that's left for Microsoft to do now is acquire the remains of Nokia and complete the foie gras hardware-husbandry that last produced the stillborn KIN. If it weren't for Android, the broadly-licensed enthusiast media wouldn't have anything at all to breathlessly fawn over.

Google enters broadly licensed platforms: 2006-2013

Given that Microsoft's one hit Windows wonder was running into clear troubles with Longhorn/Vista by 2006, it's hard to explain in retrospect why the tech media was so completely unaware of the transformation taking place in its own industry.

The tech media was so willfully blind to the overwhelming sales success of millions of iPods and a similar erosion of the mobile industry (then dominated by the broadly licensed Symbian and JavaME) by iPhone that it applauded Google's Android project as a successor and heir apparent to Windows Mobile.

Android was (and still is!) broadly viewed as fated to inherit a divine right to the Microsoft Windows crown in a post-revolution world where that crown remains firmly attached to a beheaded head still gasping for relevance and obeisance (although Steve Ballmer isn't expected to survive the year).

What started out as simply grading Android on a curve as a scrappy underdog turned into a deifying worship of a clownish green mascot and a reverence of Google's every move, regardless of its eventual failure, from the company's flag waving support for the doomed Adobe Flash to the Google Wallet/NFC fiasco to its ineffectual WebM shenanigans.

Google's Android began running into the same integration and fragmentation problems that had previously complicated Windows PCs, Apple's Mac Clone program, Palm's licensing initiatives and Sun's JavaME. From vendor bloatware to device and app incompatibles, things got so bad in Android land that Google resolved in 2010 to solve them the same way Microsoft had with the Zune just a few years earlier.

Google enters integrated devices: 2010-2013


Google hailed its HTC-built Nexus One as its first experiment in "pure Android." After that experiment flopped, it teamed up with Samsung to introduce two more flops: the Nexus S and Galaxy Nexus, then partnered with LG to deliver the Nexus 4, a fourth Nexus to not sell very well.

But no criticism, please! The broadly licensed platform monarch demands your groveling support. Viva lèse-majesté!

At the same time, like Microsoft, Google also wanted Apple's iPad business. So in 2011 it stopped development of Android smartphones and dedicated Android 3.0 entirely to the launch of a new broadly licensed platform for Android tablets: Honeycomb. That ended up a spectacular failure that maintained a brilliant fireball of free fall disaster throughout 2011.

One year later, the latest edition fixed some of its problems but introduced a crop of jittery, laggy, dysfunctional new ones.

Google didn't just copy Microsoft's broadly licensed platform fixation, its Zune fiasco, and its self-stabbing tablet missteps. It also did something else Microsoft does when it runs out of runway: it made a spectacularly expensive acquisition.

In late 2011, Google dropped an incredible $12.5 billion on Motorola Mobility, which the tech media celebrated as a way for Google to become as savvy as Apple in smartphones and tablets, as "protected" from patent attacks as any mature mobile device vendor, and emboldened in its Google TV initiatives thanks to Motorola's existing set top box business.

They were wrong across the board. Motorola's device savvy was actually so terrible that Google's executives described the company's 18 month product pipeline as something it needed to "drain" as if it were an impacted sewage pipe.

"We've inherited 18 months of pipeline that we actually have to drain right now, while we're actually building the next wave of innovation and product lines," Google's Chief Financial Officer Patrick Pichette told The Verge.

Motorola's patents have turned out to be so worthless that it's costing Google $14.5 million in additional damages for its role in pursing unscrupulous patent abuse tactics, on top of the $1.7 billion in operating losses Motorola has generated as a rotting albatross around the search giant's neck. And its set top box business was barely worth selling off as scrap.

At least we can agree that Microsoft and Google are trying

It's not common within the tech media to point out the clearly discernible absurdity of what Google and Microsoft are doing as they desperately seek to transition themselves from broadly licensed platform vendors to mobile device companies.

However, it goes without saying why they are trying to do so.

The age of broadly licensed platforms is over. The primary vendors of the world's broadly licensed platforms are all shoveling billions at efforts to turn themselves into an Apple, Inc.

The most interesting takeaway is that the entire world clearly shared a false delusion regarding broadly licensed platforms. That's important to recognize when considering the legitimacy of our remaining dogma. Perhaps we are wrong in other areas as well.

Microsoft to Buy Nokia Mobile Business in $7 Billion Deal

Microsoft Corp. MSFT -6.14% struck a $7 billion deal to acquire Nokia Corp.'s NOK1V.HE +34.52% struggling cellphone business, a bold move to try to catch up in a fast-growing mobile market that is now dominated by Samsung Electronics Co. 005930.SE -1.04% and Apple Inc. AAPL +1.43%

The deal comes on the heels of Microsoft's announcement that Chief Executive Steve Ballmer will retire as soon as a successor is found. As part of the deal for Nokia's devices-and-services business, Microsoft will bring aboard 32,000 Nokia employees including CEO Stephen Elop, who is believed to be among the contenders for Mr. Ballmer's job.

The companies said late Monday that Microsoft will pay €3.79 billion to buy "substantially all" of the Nokia business, which includes its smartphone operations. The Redmond, Wash., company will also pay €1.65 billion to license Nokia's patents, the companies said, bringing the deal to €5.44 billion, or $7.18 billion.

Nokia was already Microsoft's closest partner in smartphones, with the ailing Finnish company one of the biggest supporters of Microsoft's phone software.

The deal with Nokia is an apparent acknowledgment that Microsoft needs a stronger hand to play in the mobile-phone business, where it is playing catch-up to Apple and Google Inc. Microsoft's lagging position in mobile is one of the most serious threats Mr. Ballmer's successor will need to tackle.

For Nokia, the onetime leader of the mobile-phone business, the deal is a capitulation to the harsh realities of its deteriorating position—a sign that management concluded it is unable to take on rivals like Apple and Samsung on its own.

Mr. Elop has been hacking costs out of Nokia in the three years since the Finnish company agreed to tether itself exclusively to Microsoft's Windows Phone smartphone system. But while Mr. Elop has promised that Nokia's operating expenditures for its phone business will be cut to half the 2010 levels by the end of this year, analysts say Nokia's phone sales have fallen even faster.

Nokia said the deal with Microsoft will improve its financial position and "provide a solid basis for future investment in its continuing businesses."

Microsoft, meanwhile, said it expects the deal to accelerate the growth of its market share and profit in mobile devices. This deal "builds on the phenomenal partnership we've built with Nokia," Mr. Ballmer said during a joint interview with Nokia Chairman Risto Siilasmaa. He said that because Nokia and Microsoft already work so closely together, it should be a "smooth transition" to integrate Nokia's mobile business into Microsoft.

The workers being added from Nokia will pad Microsoft's employee count by about one-third.

"This is definitely major news for Nokia, Nokia employees and Finland," Mr. Siilasmaa added.

The Wall Street Journal reported in June that Microsoft and Nokia had discussed a sale of Nokia's mobile-phone business but the talks fell apart over the price of the transaction.

Deal negotiations were sparked by a phone call from Mr. Ballmer to Mr. Siilasmaa just before a February mobile-industry conference in Barcelona. Mr. Ballmer sought to see whether Microsoft could be more than just a partner to Nokia, Messrs. Ballmer and Siilasmaa said in the telephone interview.

The Nokia board met more than 50 times to discuss the possibility of a deal with Microsoft, Mr. Siilasmaa said. As for his part in the deal, Mr. Ballmer said: "This has been a high priority for me."

Mr. Ballmer didn't say whether the Nokia deal timing and the announcement of his retirement just over a week ago was a coincidence. The Microsoft CEO did say he called two people, Messrs. Siilasmaa and Elop, just before his retirement was made public, as the two companies were in the final stage of acquisition talks.

The companies said Microsoft is expected to use its stockpile of overseas cash to pay for the Nokia purchase and licensing pact. Microsoft and Nokia said the transaction is expected to close in the first three months of 2014, subject to approval by Nokia shareholders and other conditions.

Microsoft's market share in smartphones is about 3% in the U.S., according to comScore.

"For Microsoft, this is a bold step into the future," Mr. Ballmer said in a note to employees. Mr. Ballmer has been reworking Microsoft around what he calls a "devices and services" strategy—a vision of Microsoft not only producing the software underlying many computing devices, but being more responsible for the personal computers, smartphones and other hardware on which people and businesses rely.

Mr. Ballmer's strategy, however, has been hamstrung by Microsoft's weak position in smartphones, a vast and fast-growing business that is reshaping the technology battleground and minting new winners. As once-dominant tech companies—including Microsoft and Nokia—have slipped behind the smartphone leaders, their future growth prospects have become clouded.

Nokia's market share and market value have tumbled during the tenure of Mr. Elop, who took over in 2010. Last year, Nokia generated nearly half of its €30.2 billion in revenue from its mobile-phone segment.

One of Mr. Elop's key moves was cutting a broad alliance with Microsoft in 2011, agreeing to use the software giant's mobile operating system at a time many smartphone makers were adopting Google's Android software. So far, the alliance has failed to bear much fruit, with Android powering its way to a dominant share of the market.

With the new deal for Nokia, Microsoft will for the first time control both the smartphone hardware and software teams—matching advantages that companies like Apple have leveraged for years, including easier planning of features and complete control of the customer's experience, said Van Baker, an analyst at Gartner Inc. But there will also be a smaller group of Windows Phone devices as well, he added, putting further pressure on Microsoft to succeed.

"It's an all-or-nothing bet," Mr. Baker said. "They have to be successful in the marketplace because there won't be anyone else to fall back on."

Al Hilwa, an analyst at IDC, noted the price was almost too good to pass up for Microsoft, which ended up paying less for Nokia's smartphone business than the $8.5 billion it did for the communications service Skype in 2011.

The analyst doesn't expect Mr. Elop's return to Microsoft to change his standing within the company's CEO search, which is expected to review both internal and external candidates. Mr. Hilwa argues that the company would be best served by a new leader in the mold of Louis Gerstner, who helped revive International Business Machines Inc. "They need someone who can get all the pieces to work together," he said.

If the Nokia transactions go through, Mr. Elop will be put in charge of Microsoft's computing devices business, in the process pushing down a rung the Microsoft executive recently put in the post.

Asked whether Mr. Elop is now the front-runner for the Microsoft CEO job, Mr. Ballmer said "you shouldn't read anything into it."

Microsoft reaches $7.2B deal for Nokia handset business

Microsoft late Monday announced it is buying Nokia's smartphone and cellular handset business in a deal worth $7.2 billion.

The deal sent Finnish firm Nokia's Helsinki-listed shares higher by as much as 48% on Tuesday, a move reported by Bloomberg as a record advance. Microsoft's shares added 0.3% in pre-market activity.

As part of the deal, Microsoft will own the company which has been a leader in creating the Lumia line of smartphones that run Microsoft's Windows Phone operating system. Microsoft is paying $5 billion to buy Nokia's Devices & Services unit and an additional $2.2 billion to license Nokia's patents for $2.2 billion.

The deal formally puts the two companies together after collaborating closely since Feb. 2011 to create handsets that compete with those from Apple and Samsung. The companies have made in-roads in many parts of the world, including Europe, but are still facing headwinds in the U.S. Windows Phone has already surpassed BlackBerry as the third largest smartphone platform according to some analysts.

The move is one of the boldest yet by CEO Steve Ballmer, who stated last month he plans to retire in 12 months. By buying Nokia's handset business, Microsoft is showing it's committed to turning itself into more of a devices company than a software company. The deal's total value makes it the second largest ever done by Microsoft, just behind the $9.3 billion buy of Internet phone service Skype in May 2011, says S&P Capital IQ.

"Nokia and Microsoft have always dreamed big," said Ballmer and Nokia chief Stephen Elop in an "open letter" blog post.

"We dreamed of putting a computer on every desk, and a mobile phone in every pocket, and we've come a long way toward realizing those dreams. Today marks a moment of reinvention."

Elop, a former Microsoft executive who took the helm of Nokia, will become Nokia Executive Vice President of Devices & Services.

The deal is expected to close in the first quarter of 2014 subject to shareholder and regulatory approval.

Microsoft Seeks to Reassure Workers Spooked by CEO Search

Microsoft Corp. (MSFT:US) is telling employees that a reorganization plan by departing Chief Executive Officer Steve Ballmer will go ahead, seeking to reassure senior managers who are concerned that the search for a successor will throw turnaround efforts into disarray.

Some members of Microsoft’s senior leadership team e-mailed their staff on Aug. 23 to say they remain committed to Ballmer’s vision and the reorganization, said three people with knowledge of the matter. Some Microsoft executives have seen an increase in outside job offers since the July restructuring plan and others may be tempted to leave after stock grants and bonuses are awarded in late August, said the people, who asked not to be identified because the communications were private.

Even as it hunts for a CEO who may change tack, Microsoft’s board needs managers to stay focused on the reorganization plan, the biggest shift in more than a decade. Ballmer is emphasizing hardware and Internet-based services, shifting away from software for the declining personal-computer industry and putting Microsoft on better footing to compete with Google Inc. (GOOG:US), Facebook Inc. (FB:US) and Apple Inc. (AAPL:US) in mobile devices and online advertising.

“They need to change everything, everything,” said Ivan Feinseth, chief investment officer of Tigress Financial Partners LLC in New York. “They need to be better in social, mobile, analytics and cloud, and they really have very little to offer in those areas.”

Ballmer Departs

Ballmer said on Aug. 23 that he intends to retire within 12 months after leading Microsoft since January 2000. During the CEO’s tenure, Microsoft has battled to stay relevant as consumers have shifted from using its core Windows software for PCs toward mobile devices from Apple and others. Facebook and Google have also pushed ahead in social networking and online advertising, areas where Microsoft remains weak.

Tony Imperati, a spokesman for Redmond, Washington-based Microsoft, declined to comment.

Microsoft can ill afford to wait and see if a new CEO alters the Ballmer plan. With the company behind in mobile and tablets and as core revenue from its flagship Windows product shrinks, the stock is down about 37 percent under Ballmer’s watch. Last month, Microsoft also reported sales and profit that missed analysts’ estimates.

While embarking on a new CEO search, Microsoft will also have to contend with retaining employees and tamping down unease that for some began with the July reorganization.

More Uncertainty

“There’s going to be more confusion near-term,” said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle. “It just seems like now there’s the question of how’s the new person going to look at these changes. From an employee perspective, they are at a point of ‘OK, now what do we do here?’”

Microsoft executives and workers in the process of moving into new divisions and roles don’t know if they will be asked to shift again under new management, said one of the people with knowledge of the matter. Some executives unhappy with their new roles may leave after the stock grants and bonuses at the end of August, said another person.

Some Microsoft executives are also getting more feelers from recruiters and companies to leave since the reorganization and expect that to accelerate as the next CEO remains to be chosen, said another person with knowledge of the matter.

Calming Nerves

Ballmer’s reorganization, which put all of Microsoft’s hardware into one unit and shifted the Windows and Windows Phone operating systems under the same executive, was undertaken with the knowledge that a new CEO might end up at the company’s helm, said another person with knowledge of the matter. It didn’t make sense to put the changes on hold for as long as a year until a new CEO was in place, the person said.

The same day as Ballmer’s retirement announcement, Microsoft’s leadership team held a previously planned meeting, after which some senior executives e-mailed their staff to say they are committed to the restructuring, said the people with knowledge of the matter. Microsoft’s board also stressed in statements that day that a new CEO will execute Ballmer’s strategy.

Microsoft had already been coping with a string of executive departures before Ballmer announced retirement plans. In July, Xbox chief Don Mattrick left to take the CEO job at Zynga Inc. (ZNGA:US) Steven Sinofsky, former head of the Windows division, exited the company last year after clashes with executives including Ballmer, people familiar with the situation said at the time. Office division chief Kurt DelBene is retiring as a part of the reorganization. Chief Financial Officer Peter Klein left on June 30.

The turnover has left Microsoft with senior leaders who haven’t been senior for very long. Of the four executives running the engineering units created in the reorganization, three have less than three years’ experience at the helm of a Microsoft division.

Given that Ballmer spurred the new management structure, his departure is intensifying concerns of employees who were just coming to grips with the reorganization, said a person with knowledge of the matter.

The board can minimize disruption by replacing Ballmer in four to six months, rather than the full year, said Pat Becker Jr., a fund manager at Becker Capital Management Inc. in Portland, Oregon, which owns Microsoft shares. That may enable a new CEO to get a more successful product lineup ready for Christmas 2014.

“Someone starting near the first of the year would be able to make some decisions in time for the next holiday season,” he said. “Then again maybe that’s too much to expect -- expecting someone to turn around a company like this that quickly.”

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net