Microsoft Yahoo Merger

The Chickens Come Home to Roost

Here is my theory, just based on personal experience, with no hard facts (but some rationales) to back it up:

Companies know more about their revenue sources than they are required to report. FASB rules require them to be consistent about how they report, but they are also allowed to change how they report from time to time. You can "book" revenue from a sale immediately, or spread it out over time, or put it off until all product is delivered if you want. I've worked for small, privately held companies where I knew the accounting people, and I know that while changing the way we booked revenue or merging or splitting of a part of the organization often had innocent (i.e. valid business) explanations, the real explanation was often to obscure failures at the executive level. Failures to sell new product, failures to manage cost of delivery, or (and this is especially true of small companies) failures to manage executive perks which often sapped company resources.

In the 2000 time frame I worked for a large organization that signed a volume purchase agreement (VPA) with Microsoft. I don't know when Microsoft started using these VPAs, but I do remember reading that they changed the way they "booked" them about that time too although that didn't strike me as interesting at the time. The process was heralded by people higher up in the organization as a major cost savings, but as time went on and as activities associated with the VPA either happened, or in some cases were just stated to have happened, I began to suspect that there was no actual cost saving and that we might actually be spending more on Microsoft products than we would have otherwise.

I remember us having to come up with a count, which was really an estimate, of how many Windows PCs we (the entire organization) had. I know the count was more of a wild ass guess than it was a count, and the count was rounded up to satisfy Microsoft and (theoretically) get a lower unit cost. This organization was big, very big. Very few of our machines were on the Internet, and most of the machines were only networked locally, in many hundreds of LANs with local administrators. Had some new inventory process been imposed on these people I would have heard about it, and I didn't hear about it. Furthermore, most of these machines were not typical desktops, but were in place to run a specific set of locally written applications. They did not need to run Microsoft Office, for example, but the counting process glossed over that fact and even included the rights to run Microsoft products that weren't in use at all. The whole thing seemed to be a publicity stunt for certain organization managers, sounding great for the customer, but was really a windfall for Microsoft.

We were running Windows 2000, and nowhere near ready to convert to XP since in fact there were stragglers still running Windows NT, so in effect, we were paying a second time for software we already had. No worry though, said Microsoft, the contract includes an upgrade to XP, whenever we decided to do it, that is, as long as it is within five years, after which you do another VPA (I remember out VPA being for five years, but I don't think all VPAs have that term, some are shorter, I don't know if they come in longer terms as well). Nominally in fact the VPA was for Windows XP, it's just that other than writing a big check to Microsoft, nobody cared when or if the upgrade actually occurred. Do I have to spell out the rest of the story?

My guess is that the number of deals such as this is large (the entire Federal government agency by agency for a start) and when Microsoft makes claims about the number of 2000, or XP, or Vista licenses out there it's a lot of accounting tricks, after all, we didn't get an actual copy of any Microsoft products for each machine we ran. Instead we installed off the net, or from copies of copies of copies of the original disks. No need to mess with those fancy laser printed product keys. A single key made all the installs work without contacting the mother ship.

Yes, there was a costs "savings" for these VPAs, but the savings failed to take into account that facts that: (1) the machines were purchased with Windows already installed, (2) previous licenses had paid for the software again, (3) VPA1 had paid again, and (4) a subsequent VPA2 paid yet a fourth time. The savings MIGHT materialize if there were more frequent product releases from Microsoft (but guess who controls that) and only then if the customer were able to upgrade almost immediately (something the technical people know wasn't going to happen, but then the company/government negotiators are not generally technical people).

So, when Microsoft does their quarterly reports on how many licenses of various products they have sold I figure they are about as accurate as a weather forecast for this day next month. This is not just because I don't trust Microsoft, but because I think a lot of companies play these games. Maybe all of them do.

The difference between these "booked" numbers and what Microsoft deposits into the bank every quarter gives them a lot of room to paint a rosy picture when things are dropping off. If that is the case, and they make subsequent cuts or change their business in some drastic way those ruts in income stream can be smoothed out and the problem resolved without stockholders ever noticing. The more other activities the company is involved with, the more room there is to spread the blame around, making it look like the sacred cash cows are still in good shape while only these new (and ultimately expendable) ventures are holding things back.

Of course these book-cooking operations can't hide a monotonically decreasing income picture forever. The actions you have to take in the background get more and more drastic. Microsoft could use the billions they have in the bank to pay off any shortfalls they have, but that doesn't impress the stock market. If instead, you do something to drastically change the way you keep your books, say merge with another large company, spend most of your cash, stock swaps, redundancy layoffs... Some of these actions may actually improve your picture, but even if they don't you get an excellent opportunity to obscure the picture even further and a chance to promise shareholders that once the merger costs are absorbed, things will be wonderful again.

That's what I think is going on here, and because I think Yahoo has been playing similar games, no matter if the merger goes through or not, both companies are going to face dismal futures unless they make actual and substantive changes to their business models rather than superficial ones. (And did I mention the long term costs of ignoring your customers actual needs while you tinkered with your company spreadsheets?)

(This post revised and extended from an original Slashdot comment I made)

Three Dollars Too Much

To try and thwart Nicholas Negraponte's One Laptop Per Child effort Microsoft is making copies of Windows available to a competing Intel box for $3 as I understand it. They are also working to make a version of Windows that will run on the OLPC, presumably for a similar price.

I know a lot of people that use computers. Before I left the big city to head for the beach I might have had conversations about home computer use (leaving out work related use for the moment) with dozens of people. But having been in the boondocks for a while my circle of friends has grown smaller. Get this though, here is the percentage of my Windows using friends who are reporting significant problems with their home installations: 100.

It just struck me the other day that I don't know any Windows users, not one, who isn't having problems, and I don't mean minor problems, I mean major "lost everything" problems. To help convince you that I'm not making this up, here are their stories, names omitted to save them the embarrassment...

Case A is a retired technologist, programmer for the Apolo moon missions, inventor, and aspiring author. He doesn't want to tinker with computers any more, he just wants to write his books. For months he has been doing so on a laptop, without major incident, but having "normal" Windows users issues with pop-up ads, spy-ware, spam, and drivers mysteriously failing to do what they used to do. His reaction to these problems has been to remove almost everything except Microsoft Office from his machine. Having sent him either links, or actual files that require Adobe Acrobat or Real Player I find that he has uninstalled those things out of fear. Nevertheless he managed to get Internet Explorer outfitted with so many "helpful" tool-bar additions that there was little screen real-estate left over for anything else. His sound card stopped making sounds, pop-ups continued to pop-up and he complained that the machine was getting slower and slower. He didn't want to try Firefox though as Microsoft has succeeded in convincing him that his problems have nothing to do with Windows itself, but just that big-bad world that it has to live in on the Internet.

He recently called in a panic to tell me that his machine, a laptop, suddenly wouldn't boot at all. Long story short, he had installed yet another "security" package from his ISP that had caused the condition. A trip to the shop for an overnight stay and $65 later the machine was working again. Fortunately, the fact that he hadn't done a recent back-up didn't cost him anything as they were able to retain his existing file system. Fortunately or otherwise, he was so shaken by the experience he purchased another PC as a "back-up machine" on the rather safe assumption that a similar thing will soon happen again. If the medicine makes you sick, try taking more of it.

Case B is a dear little lady that I agreed to help with her e-mail problems. Now I've steadfastly refused to get involved with anyone's Windows issues other than offering generic advice such as "why are you still using that crapware?" but in this case the problems seemed to be mostly "older person trying to cope with new-fangled technology", so I stop by once in a while to get her unstuck with sending a reply, forwarding a message, or attaching a photo. Unfortunately this has turned into three machines so far. The last one I purchased myself, used, from a shop I trusted, with a clean install of Windows XP and little else. I put on anti-virus programs and such, and so far so good. I can't be sure that her earlier machines were hardware or software failures. At some point it gets hard to tell from a post-mortem point of view. Power supplies burn out, fans die and machine overheat, often after running at 100 percent CPU for days at a time doing no-telling what in the background. If she manages to kill this machine, her next one will run Linux. Enough is enough.

Case C is a minister, on a dial-up connection, who really doesn't do much more than e-mail and print out church related materials from time to time. When I first saw his machine it had an obscure virus that was not removable by any of the major packages that are supposed to do such things. Fortunately I learned this through research, which was much quicker than trial and error. He too took it to a "competent" shop who managed to get rid of the virus and most of his applications software at the same time. I'll be installing Open Office for him and he is already using Firefox, thanks to some other kind soul he ran into. Should the need arise, he will already be over the hurdles that tie most people to Windows.

Case D is a couple of guys that run a small home business involving shared files with several other people working at home. Their Windows machines, although of relatively recent vintage are always bogged down doing something in the background that nobody can quite define. Opening a web page is a go-to-the-fridge-for-another-coke sort of operation at times, and while some of this problem is a slow ADSL connection and a care-less Verizon support system, my Apple laptop works pretty well on their network, even wirelessly, while their hardwired desktop systems continue to crawl.

Finally, the co-workers in this small business are always having trouble with their PCs too, except for the one Apple user of course. So those machines have to be regularly hauled over to "headquarters" for diagnosis and I dread even hearing about the long tortuous road to recovery, which is often followed by an almost immediate relapse.

So those are my sample points. All of them. Other people I know that are using Apple computers or Linux haven't been complaining much about slow systems or slow Internet or random crashes. Oh I know, there are Apple machines that are junk (I had one of those once too) and Windows machines that perform flawlessly, those just don't happen to be in my universe of users at the moment.

Worth three dollars? Hardly.

Theo de Raadt on 'Intel Core 2'

"- Basically the MMU simply does not operate as specified/implimented in previous generations of x86 hardware. It is not just buggy, but Intel has gone further and defined 'new ways to handle page tables' (see page 58).
- Some of these bugs are along the lines of 'buffer overflow'; where a write-protect or non-execute bit for a page table entry is ignored. Others are floating point instruction non-coherencies, or memory corruptions -- outside of the range of permitted writing for the process -- running common instruction sequences.
- All of this is just unbelievable to many of us."

also...

(While here, I would like to say that AMD is becoming less helpful day by day towards open source operating systems too, perhaps because their serious errata lists are growing rapidly too).

I guess I'll stick with my old "previously owned" P4 computer for a bit longer after all.

Memo: Microsoft threatened to shut down Mac Office

No surprise here:

March 05, 2007 (Computerworld) -- Microsoft Corp. threatened to dump the Macintosh version of Office 10 years ago during talks with Apple Inc. because the move would "do a great deal of harm" to its rival, according to a memo made public in a recently-settled antitrust case.

The 1997 memo from Ben Waldman, at the time the head of Microsoft's Macintosh development group, to then-CEO Bill Gates, urged Mac Office 97's release. The suite, which in June 1997 had not yet reached beta, was eventually released as Office 98 in March 1998.

But Waldman understood that the next Mac Office was a stick that could be used against Apple. "The threat to cancel Mac Office 97 is certainly the strongest bargaining point we have, as doing so will do a great deal of harm to Apple immediately. I also think that Apple is taking this threat pretty seriously," Waldman said in his e-mail to Gates.

VOTE! - Dell IdeaStorm

"CHOICE is what consumers want on their new PCs, not annoying surprise circus-ware (the typical smattering of confusing 3rd party popup-infested software found on most new Dell PCs). Quality free and open source software is well behaved, and may be legally pre-installed on PCs, and legally shared with friends and family, sharing is encouraged! Cast your vote for consumer CHOICE and public transparency at Dell. "

Dell to Linux users: Not so fast

Last Friday night, Dell posted a note on the IdeaStorm Web site saying it was listening to thousands of users who had posted messages asking for Linux on its machines by moving forward to certify three of its corporate hardware lines -- OptiPlex desktops, Latitude notebooks and Dell Precision workstations -- for use with Novell SUSE Linux.

The company said today that the note was just about certifying the hardware for being ready to work with Novell SUSE Linux, not an announcement that the computers would be loaded and sold with the operating system in the near future.

McKesson Offers Health Care Apps On Red Hat Linux - Technology News by InformationWeek

"McKesson Corp. is selling its clinical applications for doctors' offices and hospitals based on Red Hat's Enterprise Linux operating system, offering what McKesson says is a less-expensive alternative to non-open source platforms."

I still love Xbox, TabletPCs, Media Center, Halo, etc. Scobleizer - Tech Geek Blogger

NEVER trust someone to be objective about their employers products vs alternatives. It's not human nature, it's certainly not smiled upon by most companies, and there are always more objective sources to go to.

It is useful to have an insiders perspective on a company, and for such insiders to establish their credibility they have to avoid statements that are verifiably false. But there is certainly no dearth of people willing and able to speak up on behalf of Microsoft, including people who have relatives on the payroll at the Washington Post.

View the comments for this article, written by Bill gates:

*here*

What you'll find is that among ordinary people, not technogeeks (well some of those in there too including mine) people's opinions about Microsoft are almost uniformly negative. Even when Bill Gates makes several statements that most people would agree with, we almost universally question his motives.

Actions speak louder than words. We all know that. What the world waits for is some indication, not an open letter or a press release, that the company has changed its attitude about how it competes, and how its products fit into the vast world of technology.

The insatiable, palpably pathological urge for a few top executives to dominate, rather than just contribute to the "technosphere" worries the average informed person, and with good reason. What is needed is for these tendencies to not just be curbed, but eliminated.

Still watching for signs of (real) change.

Bill Gates - How to Keep America Competitive - washingtonpost.com

"Innovation is the source of U.S. economic leadership and the foundation for our competitiveness in the global economy. Government investment in research, strong intellectual property laws and efficient capital markets are among the reasons that America has for decades been best at transforming new ideas into successful businesses."

And my comments which were FUBARed by WAPOs website:

Could we first pass a law that would prevent anyone else from Microsoft from using the word "innovation"? They have practically worn the word out and it only serves as a sick joke these days that one of America's most successful companies (in money terms at least) continues to use an attribute they lack to describe themselves.

Yes, innovation is important to America, and the world, but what does Bill Gates mean by "strong intellectual property laws and efficient capital markets"?

IP laws are intended to help get new ideas off the ground by promising an inventor, but more importantly a manufacturer, at least a chance on return of their investment in production of a new product. But software patents have turned this system on its head, with more patents issued than anyone can keep up with, and in some cases on almost trivial concepts, we have the opposite effect, namely that someone can invest significantly in a new product only too find out that the proceeds belong to Microsoft.

Efficient capital markets? Like one where hardware costs continue to go down while software costs continue to go up? Where Steve Balmer can suggest that the world needs a $100 PC, while omitting that he'd like to see $1000 worth of MS software running on it?

What Gates and Balmer want is a parody of "The Al Franken Decade", and we are living it too. These two men, and their company want to continue to rest on their accomplishments from the 80's (which were significant) while the rest of us struggle with software that doesn't work, old disks we can't read and laws that threaten to put us in jail if we code up anything that might work against their retirement programs. The MS decade is OVER! Long since in fact. Deal with it Mr. Gates, get back to your charity efforts.

Back to you, Steve

Meanwhile, Steve is now in deeper than ever. He no longer is being portrayed as ignorant, he apparently had a direct hand in backdating, and - worst of all - the company apparently faked a board meeting to justify the process.

Hoh boy...

Meanwhile

Sponging off the same title, I wonder what if anything Apple will have in response to the new Windows home server:

*link*

Gates even addresses the Apple weakness here:

*link*

From the video... the good news is that the home server (I wonder what it will cost?) doesn't exactly seem to require Windows, on the other hand the set-up demo all seemed to use a Windows client application, there were other bits (like accessing it remotely) that could be done with a web interface (surely they wouldn't require IE would they?). The Q&A about Apple and Linux compatibility went so fast I thought maybe they sped up that part of the video, but the answer seemed to be in the affirmative.

Yes, it is just SMB, disappointing, but what else could they have done? Well, other than fully documenting it, eliminating any secret back-doors, nailing down some things about timestamp handling, you know... that sort of thing.

I still prefer the idea of some sort of generic box to do this sort of thing, but hey, if it will make life easier for all the Windows users I know who can't spell the word "backup" then I'm all for it.

Microsoft chief totes/touts a server for every home from CES 2007

Video from CNet who misspells touts:

Microsoft Chairman Bill Gates speaks with CNET News.com's Ina Fried and discusses his vision of each home having a server that will host files for multiple PCs.

Almost contradicting the video though, the Yahoo/AP article quotes Gate's presentation thusly:

But more work remains, Gates said.
"There's still a lot to be done there, especially when you get into rights-oriented content and how simple that can be made so the creative people are happy with it and yet the flexibility (for consumers) is there," he said.

Yahoo also gets the prize for spelling.

Shouldn't "independent" sources at least pick their own headlines?

Ooops. Never mind that idea!

So, the question is: Isn't this so very yesterday?

Is a Windows file server in the home a rescue mission for mass-consumer client/server architecture?

If it makes sense for me to house all my files on a central machine that can be easily accessed by all the other machines in the house (and haven't quite a few of us done this already?) then why doesn't it make more sense to house all my files at Google/MSN/Yahoo/etc?

Wouldn't a good first step toward the "computer is the network" paradigm be a final discarding the SMB file sharing? Buggy, undocumented, exploit prone, it has nothing going for it other than being lowest common denominator technology.

Will the Gates version of what many of us are already doing only work if everything in the house is running Windows or some other product from Microsoft?

Raise your hand if you are not interested in such a solution.

Audi's new luxury cars engineered on Linux

For several years, German automobile manufacturer Audi AG, a subsidiary of the Volkswagen Group, has been steadily migrating its engineering systems over to Linux. The company hopes to finish the job in 2007 and have the bulk of its servers and workstations running 64-bit Linux by the end of the year.

Recently Audi, whose longstanding motto is "Vorsprung durch Technik" ("Progress through technology"), has been upgrading to 64-bit Linux in deploying its automotive CAE (Computer-Aided Engineering) servers, where simulation software is used in the design of casts, frames, and components, as well as for crash-test simulations and other 3-D visualization problems, as part of the greater migration to Linux.

"2003 and 2004 saw an explosion in the use of x86 systems using Linux," says Audi spokesman Florian Kienast. "These systems are now being replaced by x86_64-based systems."

Kienast says that most CAE applications that the company uses perform well on the x86_64 architecture. "The systems have enough memory and I/O bandwidth to cope with the requirements of the applications," he says. "The notable exceptions are MSC Nastran and ABAQUS -- these products are extremely power-hungry. Here, the large cache available on the Itanium 2 has proved to be extremely valuable."

The move to Linux is occurring not only on the server side; the company is using Linux for workstations, too.

Librarians stake their future on open source

"Our Sirsi system ran on a great big Sun server that was quite expensive. We poured a lot of money into that over the years to continue to upgrade it, plus the housing of it was very expensive. [Evergreen] runs on a Linux cluster, which is a lot less expensive. Also, we're not paying licensing fees anymore. When you're talking 252 libraries, which is what we are today, that's the great big savings."

According to a study that PINES conducted in 2002, Walker says that if all of their libraries would have to buy a new system, it would cost more than $15 million dollars, plus about $5 million dollars a year for maintenance. They run PINES for a lean $1.6 million a year.

It Takes a Monopoly

Those who are trying to figure out if Vista will be successful haven't yet grasped the concept that Vista will be forced on the market, and in time it will be the only operating system you can buy from Microsoft. Of course it will be successful. Will people upgrade their existing systems? Of course not. Microsoft operating systems are always designed for future PC's, not for the installed base. Part of the plan is to make Vista work poorly on current computers so we'll all have to buy new ones. This strategy has been around for years and there is no reason to believe we won't fall for it again. Sure, some percentage of people and firms will upgrade, but most of the upgrades will come with whole new computers.

Divide and Conquer: The Microsoft/Novell deal is more about disruption than cooperation.

We saw this happen before when 3Com tied its fortunes to Microsoft in the late 1980s with the lamented 3Com-Microsoft LAN Manager network operating system, which was ironically Microsoft's answer to Novell at that time. Then 3Com CEO Bill Krause felt the only way to compete with Novell was through an alliance with Microsoft. So 3Com bought its way into the relationship, ended up doing all the work (MORE THAN all the work if you count recoding Microsoft blunders), then had to BUY ITS WAY BACK OUT when the product failed.

After that deal was over and the blood had dried, 3Com founder Bob Metcalfe claims that a Microsoft exec told him, "You made a fatal error, you trusted us."

Gates: Rivals wanted to 'castrate' Vista

Windows Vista will make it to market largely unscathed, despite attempts by Microsoft's rivals to take it to pieces, Microsoft Chairman Bill Gates said Thursday.

Huh?

I thought most of the new features were removed two years ago to get it out "on time".

Munich Linux scales desktop management

LiMux developers have automated installation via Debian's FAI (fully automatic installation) system, according to McIntyre, with configuration information stored in LDAP and the database administration program GOsa as a front-end. "They've integrated these to enable some very clever management features so that all aspects of the city-wide system can be maintained from one central point," McIntyre said.

As new machines are introduced to the system, administrators can choose to configure them as clients or "depot" servers, used as seeds for further clients, McIntyre said. Individual user profiles can be adjusted to, for instance, give access to new applications as needed.

Shared resources such as network storage and printers are set up automatically from the LDAP database, and the system can control access to USB storage devices on a per-device, per-user basis, for security purposes.

EXCLUSIVE: PlayStation 3 to run Yellow Dog Linux

Exclusive? Well, it's not really news either. Here is the blurb:

Sony's PlayStation 3 set to move in on personal computers with the release of the Linux operating system for the device.

Linux developer Terra Soft Solutions will today announce the launch of its Yellow Dog Linux operating system for the PlayStation 3 games console.

But it (or at least a placeholder for it) has been on the TSS website for a while I think:

YDL for PS3

Note that what's there now is a cut and paste from the Apple information, or at least it sure looks that way to me.

Clearly this is going to be an interesting Linux box though. That is, unless Sony does something stupid. Now that couldn't happen could it?

Idiots or Pathological Liars?

We report, you decide:
(if short on time read the last one first)

October 11

October 13

October 16

Get this information to every Windows user you know who might have occasion to reinstall the OS.

Gartner predicts biggest change in PCs for a generation

Gartner research vice president Stephen Kleynhans said: "Vista is the largest and, potentially, the most disruptive change in operating system space since Windows 2000. Organisations will discover that Vista cannot be adopted without a careful examination of its impact..."

Dem guys smokin' some kinda pow'ful weed fer sure.

Um... so, sheep who have been on the Microsoft treadmill for all of their careers are going to suddenly hop off and buy Apple computers now? Wake me up early the day that starts OK?

Or maybe they think THIS is the year of Linux on the desktop. (Wasn't that 2003?)

Well, I'll settle for at least a few more people experimenting with alternatives. Further gains by Firefox would be a good start. This is my first posting using the pre-release Firefox 2.0 and my many spelling errors and typos are being underlined on the fly, with a right click to correct them right in the browser. No need to us the Blogger spell check (which I don't care for) or cut and paste from the KDE version of Notepad (Kedit) as I usually do.

A few organization may be tempted to try Open Office once they see the new "ribbon" interface that MS is forcing on them. I've tried OO 2.0 a bit and the built-in database capability is nice and unlike Access creates an actual relational database that can be offloaded to a server once it gets past the prototype stage. The real rebellion will be in other countries first, and as I've predicted for several years now, IT managers here will suffer embarrassment over their cluelessness of anything outside the MS coral. It couldn't happen to more deserving people.