Microsoft $900M Write Down – Why is Everyone Surprised?

I mean… I’m not. This is what happens when you don’t sell the stuff you make.

wpI’ve been watching and reporting on the Microsoft space since 1997. I knew that there was a change coming to their business long before it was publically announced a few days ago. News of the nearly $1.0B write-off come on the heels of a huge Microsoft reorg. Given the wide press that Windows 8 adoption numbers have had, and the abysmal Surface RT sales and licensing figures that everyone suspects are accurate, All that’s happened to Microsoft in June and July of 2013 canNOT be a surprise to anyone.

However, one of the things that everyone IS asking is, how did this happen? My good friend, MaryJo Foley put it the best, and you can read about it in her article, linked above. It’s a good question, too; one that should have been asked in a different form long before the decision to take the write-off was made. Microsoft should have been asking itself and its pundits, “what should we do to keep this from happening?” (or some similarly formulated question…)

The write-off, or “inventory adjustment,” as Microsoft is calling it is a $900M charge for Surface RT, its parts and accessories, as announced on 18-Jul-2013. Unfortunately, the entire world is focusing on this specific development, with many people providing I told you so, arm-chair quarter back/Monday morning analysis of Microsoft’s reported financials.

While I’m not going to get into much of that, I can’t say I’m surprised. What specifics had been circulated – Microsoft hasn’t provided specific sales numbers to my knowledge – shouldn’t make this a big surprise to anyone. Microsoft has been trying to misdirect everyone to other issues, accomplishments and subjects for months.

MJF wants to know how it happened. I want to know why no one took the current actions – reducing prices of licenses, hardware and accessories – until now. I also want to know why there isn’t a (more) aggressive marketing push, and why Microsoft isn’t doing more to attract more 3rd party developers.

The problems here are 3 fold. All of these need to be addressed in order to turn the ship around.

  • Hardware pricing
  • Windows Store Issues
  • Windows 8/RT UI Duality

Microsoft-Surface-ad-multiple-devices-hands-001

Hardware Pricing

Simply put, Microsoft needs to sell these at a serious loss if it wants to get Windows RT and Surface RT tablets into the hands of the public. Pricing these at or near iPad/iPad mini pricing isn’t going to cut it. The right price is $199 to $249 regardless of features, manufacturer, or storage size.

Microsoft needs to price Surface RT at a level where it’s stupid NOT to buy one, if only just to have it, in case there’s a major breakthrough and we bump into a, “Hey, Mikey..! He likes it!” moment.

Windows Store Issues

A friend of mine is returning a Lumia 928 Windows Phone due to lack of app selection and maturity within the Windows [App] Store. Simply put, what little apps there are, suck; or don’t compare to the level of app quality in the iOS or Google Play App Stores.

The same can be said for Windows RT; but its problems are a bit more profound. There aren’t a lot of apps in the store, and what apps are there, aren’t great. Moreover, Windows RT devices can’t run Win32 apps. Despite the fact that it’s a “Windows machine,” Surface RT can’t run any of the ba-jillions of Windows apps out there.

The only way Microsoft is going to be able to address this, is to do its best to attract quality developers to its RT dev programs, and get them to start pumping out apps. However, tablet or mobile device apps tend to be less robust than, and priced well below, their desktop counterparts. Unfortunately for Microsoft, this is a long row to hoe, and is going to be a complex problem to solve. Unfortunately, the hardware is only as good as the software it runs.

Windows 8/RT UI Duality

Microsoft tried to build a hybrid OS to help the masses bridge themselves between the growing tablet trend and the public’s love for traditional computing.

Unfortunately, the results generally suck.

Windows 8.1 goes a ways to address this issue, but doesn’t resolve it. Bridging the gap between the computing trends in a single device isn’t working. Most people are used to the fact that their iPad or Android tablet doesn’t run the same kind of software as their Mac or Windows PC; and they’ve accepted it and they’re willing to live with it.

Microsoft needs to separate the UI’s and allow everyone to get back to work. Windows RT wouldn’t suck as an OS if MS would simply combine Windows Phone and Windows RT into a single effort, since they’re so close already. Leave MetroUI based apps to those devices and let the desktop folks get back to work with something that they’re more accustomed to…for now.

If we need to update the UI, let’s do it in an evolutionary, not revolutionary manner. The problem is that XP and its Start Menu have been around too long, and that paradigm of UI is available in Windows 7 as well. Windows XP is still used in the enterprise, and is slowly being phased out, not for Windows 8, but Windows 7. It could be 5 years or more before that UI paradigm is gone. One of the biggest reasons why it was so successful is because consumers were able to use the same UI at home and at work.

Adopting RT in the enterprise currently isn’t possible, as the device integration isn’t there. Home, as well as corporate users, are rejecting Microsoft’s new Start Screen, so, so much for MetroUI.

This is just me; but Microsoft MUST address all three of these issues as part of its reorg or its going to find itself taking additional write-off’s in the immediate future. It can’t afford to do it, and I really don’t’ want to think about a world without a Microsoft… that’s scary, and something that I really don’t want to deal with.

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Origin is the place where all EA games come together

Eager to monetize each of their product in every possible way, EA launched a download platform similar to Steam but bearing only their homemade products. Known as Origin, the product is just another barrier for the player in his attempts of installing and playing a game.

We stumbled upon this manager when we wanted to get our hands on the Mass Effect 3 demo. It was required in order to run the free demo on our computer. I have nothing against exclusivity, but Origin is an annoying service.

If you wondered where EA Download Manager has disappeared to, you’ll be happy to know that it is now known as Origin. For any new EA release, Origin is the place where you should stop at, as it acts as a catalogue and store for their new titles. Sadly, older games are not always available, which is a bit of a missed mark on EAs part. If you are looking for deals you might want to go elsewhere, as pricing is usually the same as in retail stores, although there are occasionally bargains to be found.

In terms of functionality, the service is slower than Steam and it suffers from an unfinished interface which makes the user facing problems in browsing the service. One great feature is the ability to play some streaming demos in your web browser through the GaiKai service, so you can try before you buy. But forget the big titles.

If you only care about finding EA games then Origin is all you could wish for. While streaming demos are very convenient, Origin is far from a one-stop shop, even for EA’s catalogue, as older games are not always available. Origin is certainly good at what it does, but doesn’t do enough to be the only game manager you will ever need due to its forced exclusivity only on EA games.

read full review | download Origin

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Kindle Fire Lacks (even BASIC) Purchase Controls

Let’s face it, despite what Amazon has to say, the Kindle Fire really just isn’t kid friendly…

I bought my wife a Kindle Fire for Christmas. After a couple of days hesitation with the device, she really got into it, and now, really likes it. Small, easy to carry and for her AND the kids to use, it’s become a standard in her daily gadget line up. In fact, neither her nor the kids have it far from them during the day. Clearly, a sign of a good purchase and gift decision on my part.

However, the tablet, and subsequently Amazon’s ecosystem, have a major flaw in them; and it’s one that you won’t even bump into unless you either have kids that share your Fire or you lose/misplace the device – it has absolutely NO purchase controls.

If you order the device directly from Amazon, the device comes in a clearly MARKED box and comes preactivated with links directly to your credit card and your account. Anyone smart enough to intercept the shipment will have the ability to purchase away inside of Amazon’s online store, with YOU responsible for all of the purchases.

Strike one – Pre-activation

The device itself doesn’t have any method, or way of either excluding your purchasing credentials/credit card info or even password protecting all purchases with your Amazon.com site password. If you have the device, again, you have direct access to your account, and as long as you have money in your debit account, available credit on your card, etc., anyone possessing the device can make all the purchases they want.

Strike two – Have device, can purchase

When I confronted Amazon with this HUGE security (and frankly, clearly common sense) hole, they let me know that Amazon addressed this by putting a password on Wi-Fi access, so if you wanted to prevent purchases, you could password protect the device’s ability to get online.

This made me to a double take; and really ticked me off.

Strike three – Failure to address the specific issue: Purchase control

I think Amazon wants to differentiate themselves in the tablet market by giving their users the clear ability to purchase anything and everything they would want or need on the Kindle Fire without having to enter a password. Really..?! Am I the only one who sees this huge security hole? I give them points for wanting this to be easy, but talk about your advanced identity theft tools..! Apparently, all I need to steal someone’s credit is not their credit card number, their social security number or any of their personal, private information. All I really need is their Kindle Fire.

Nice.

Let’s forget the real world scenario that I bumped into with my 4 year old ordering an entire season’s worth of Olivia, and that I just want to gate purchases on the device with the linked account’s Amazon password (which you see on every Apple iDevice in town, including the iPad). According to Amazon, this is unreasonable. It’s also something they are NOT going to address.

They’ve given users the ability to limit the use of Wi-Fi instead. You need Wi-Fi to make purchases. With Wi-Fi password protected, you can’t purchase new content. That’s true; but it also fails to address the problem. The Kindle Fire is a content streaming device.

Amazon Prime’s streaming service requires an internet connection. The Fire is a Wi-Fi only device, and in order to view/stream content that I’ve already purchased, Wi-Fi must be on. Effectively want Amazon is telling me is that I have to unlock Wi-Fi every time my child wants to view content that’s already been purchased…and once they are streaming content, I have to watch them watch it so that they don’t go looking for something else.

But, as I said, let’s forget this and the fact that its backwards.

The unlocked device represents a huge security hole. Amazon needs to address this with a software update and needs to require the account holder’s Amazon password for all purchases and not for Wi-Fi access. Until it does, Kindle Fire, and really ALL Kindle owners, need to be careful about where they store their Kindle, who has access to the device, and who is using it. You could find yourself the recipient of a HUGE content bill if your kids, or worse, a thief, happen to get a hold of your device and make unauthorized purchases.

NOTHING you can do, either on the web site or on the device, aside from crippling it, can prevent unauthorized purchases; and this is clearly documented by a number of different complaints and posts in Amazon’s own forums.

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Google Music Service will bypass the music labels

Google Music has publicly launched after lengthy beta testing, and inevitably some are already dubbing it the iTunes killer. That seems a little premature, but it does appear the service stands the best chance yet of being firmly established as a rival to Apple.

For the moment the service is US only, with expansion at the mercy of country-by-country licensing restrictions. While there’s no word on the schedule for adding more customers, there’s a good chance the UK will be among the first added markets to get the service.

The service is both similar to and different from the iTunes store. It stands out because users can automatically listen to their purchased music on any computer through a web browser. Users can also download mp3 files at 320kbps: that means comparatively good sound quality, though file sizes are larger. There are no technological restrictions on downloading purchased music, burning the songs to a CD, or copying to a portable device. However, there is a legal restriction, namely that the music is only for your own non-commercial use.

As well as purchased music, users can upload up to 20,000 tracks from their own computer and then access them over the web. However, unlike a similar service from Apple, every song must be individually uploaded, which could be an extremely lengthy process.

Google Music does allow a form of sharing, though it’s not unrestricted. It’s only available to members of the Google+ social networking service. The system is set up so that once a member buys a song, his or her online contacts each have the right to listed to that song once without charge.

It’s on mobile devices where Google Music may make the biggest splash. There’s not only a dedicated Android application, but the music catalogue is built directly into the Android Market, meaning you can buy with a simple click in the same way as buying an app. The idea seems to be to make music more of an impulse purchase with as little hassle as possible. Intriguingly one mobile phone network in the US has added an option to buy music and have the cost added to your monthly phone bill.

The music catalogue is the biggest weakness against iTunes at the moment. Warner Music, one of the three remaining major labels, has not yet agreed to have its music on the service. Between that and the fact that Google is only part of the way through signing up independent labels, the service “only” has 13 million tracks available, compared with around 18 million on iTunes.

There are a few exclusives though, with bands such as Coldplay, Pearl Jam and the Rolling Stones providing live albums that can’t be bought elsewhere. The service also offers a free Song of the Day.

Unsigned artists have the ability to add music to the service. To do so they pay a $25 (£16) fee to set up a dedicated page in the “New Music Hub.” They can then set their own prices for downloads, with Google taking 30 percent of the revenue.

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Take your Windows PC into the cloud with Joli OS

Joli OS is a free and easy way to turn any computer up to 10 years old into a cool new cloud device. Get on the Web and instantly connect to all your Web apps (for example Google Docs or Photoshop Express Editor), files and services using the computer you already own. You may never need to buy a new computer again. It’s easy. Just download Joli OS. It installs in just 10 minutes.

Joli OS comes in two packages: a windows installer which can be run on any computer using the Windows OS, or as an ISO image that can be burned on a disc and installed on any computer without another operating system pre-installed.

Joli OS is actually a part of your Jolicloud account. It replicates everything on your desktop  that you have installed in the Jolicloud account. This means that any installed application through this service will be synced to any other computer that has this OS installed and the content of your computer can be accessed from any web browser. The difference between the online service and its sibling OS is that with Joli OS you can also install traditional desktop apps. The best way to do so is to search the Jolicloud App Store and select any wanted program in order to be downloaded silently in background.

Take a video tour…

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