Tech Beat - BusinessWeek

This Week, Microsoft Makes Its Case For Windows 7 and Office 2010

Peter Burrows — Mon, 13 Jul 2009 10:00:01 -0500

It's going to be a big week for Microsoft. Thousands of distributors, systems integrators and software developers, among others, have convened in New Orleans for the company's annual Worldwide Partners Conference. They'll have plenty of news to ponder. The company will unveil Office 2010, which may be the most radical release since the original Office suite in 1989 (not a particularly high-bar, some say. Rather than provide tools to enhance personal productivity, the new Office will offer features so that co-workers and others can simultaneously collaborate with each other--say, to write a sales proposal or nail down a sales forecast. See our cover story of a few weeks back for more details and analysis.

But the biggest near-term news will be around Windows 7, which is slated to ship on Oct. 22. In an interview last week, Windows marketing chief Bill Veghte listed some of reasons why investor bullishness about the release may be justified (FYI, I agreed to an embargo, that prevented me from posting the details until now, when he's about to deliver a keynote at the partners conference.). For starters, Windows 7 is the first major Windows release that doesn't require a more powerful PC than the preceding release, in this case Windows Vista. That means some 350 million PCs already owned by someone can be upgraded to run it, according to the company. And it plans to offer aggressive promotions to spark demand. For example, for the first six months the Professional version of Windows 7 will sell at a discount of at least 15% compared to the current business-class version of Vista.

Veghte says Microsoft has cleaned up its pricing strategy, while expanding its product portfolio to reflect the changing PC market. Now, it will offer clear "good, better, best" offerings, from $299 "netbooks" running the aged Windows XP or the "Starter" edition of Windows 7 "Starter, to $1500-plus screamers. "Value has become even more paramount in the economic environment were in right now," says Veghte. "We've never had this range of PCs before."

Certainly, the company is farther ahead in terms of having partners and compatible software ready to go at launch than it was with Vista, which was hampered by a lack of software drivers necessary to run peripherals such as printers and digital cameras. Veghte claims that more than 10,000 software developers are already creating products for Windows 7, versus less than 4,000 for Vista at this stage of its development.

By the way, Veghte will soon go on leave from Microsoft, news that broke on July 8 when it was announced that Windows engineering chief Steven Sinofsky--not Veghte--would be promoted to run the huge Windows client division. The official word is that Veghte will be back, but I'd expect him to jump ship to try his hand at being a CEO at a smaller tech firm.

Google's Chrome Operating System: We've Got It All Wrong

Rob Hof — Sat, 11 Jul 2009 15:30:07 -0500

"A real rival to Windows." "Google drops a nuclear bomb on Microsoft." It all sounds so dramatic and exciting, the kind of story we journalists love. But I can't help feeling most of the coverage of Google's announcement of its Chrome operating system missed the real point.

Most people seem to assume that the Chrome operating system is intended to replace Windows on personal computers, and that it will be a failure if it doesn't. Many people also believe that Google is either off its rocker in jumping into operating systems or doing it out of spite for Microsoft. Although Google may well be overreaching here, and it faces many challenges in creating and getting support for a new operating system, I think those assumptions are largely flawed.

It's an easy story to pit Google against Microsoft, partly because there's some truth to the increasing tension between the two tech titans. But they're each representative of a bigger battle going on, one that would happen regardless: the inexorable migration of computing (except for the interface to the computer you need to put your fingers on, of course) from the desktop and laptop to the Internet.

Essentially, Google is attempting to create an operating system tuned to the needs of the Post-PC Age, as my former colleague Richard Brandt, author of the book Inside Larry and Sergey's Brain, puts it. That age has not arrived yet, and it may not arrive completely for a long time, but the trend is apparent: People increasingly are doing more and more of their work online, for which they don't need or want the cost and performance overhead of a traditional PC operating system. That goes double for the vast majority of people around the world who have no PC at all--and something cheap beyond a cell phone that gives them the full experience of the Web would open up a vast new population of Web users.

And the bottom line is that anything that makes it easier for all those people to use Google services and view its advertising helps Google.

Happy Birthday, App Store!

Olga Kharif — Fri, 10 Jul 2009 13:48:24 -0500

On July 11, Apple's App Store hits another milestone: It turns one year old. In just 12 months, the store has managed to accumulate a catalogue of more than 50,000 applications, ranging from games to e-books. To date, consumers have downloaded more than one billion apps onto their iPhones and iPod touches. Along the way, Apple changed the way we use smartphones, and has forced companies like Research In Motion and Google to open their own, rival app stores, too.

To celebrate App Store's anniversary, let's make a list of the best iPhone apps. Here are some of Apple's favorite apps. What's your favorite app and why?

Also, what do you like about the App Store, and what would you like to see changed?

Hands-on with the BlackBerry Tour

Stephen Wildstrom — Fri, 10 Jul 2009 09:27:57 -0500

I've been using a BlackBerry Tour, Research In Motion's answer to the BlackBerry Bold for Verizon Wireless, Sprint, and other CDMA carriers. They a similar handsets, with some small but important differences. Personally, I prefer the Bold, which I have been using as my primary handheld for a while, but I can think of four main reasons to chose a Tour instead:

You have smaller hands and prefer the narrower design.The Tour is just a bit bigger than a Curve.
You really don't like AT&T (or Rogers, if you are in Canada.)
You'd rather pay $200, after rebates and signing up for a two-year contract, than $300.
You really hate Wi-Fi.

Why Is the Government Vulnerable to a Simple Cyber Attack?

Stephen Wildstrom — Thu, 09 Jul 2009 09:17:42 -0500

A wide-ranging attack on government and corporate Web sites that began last weekend and is continuing seems, at least so far, to be causing more confusion than damage. A denial of service (DoS) attach hit a number of government and business sites in the U.S. and South Korea. Some successfully fended it off, others were crippled to varying extents for varying periods of time. The attack is only designed to slow or block access to sites, not penetrate them, so there is no danger to data and the main effect is inconvenience for users.

Contrary to widespread reports that seem to have originated in the South Korean government, little evidence has come to light to suggest that North Korea is behind the attack. That's not to say the North Koreans don't have something to do with it, just that the evidence is lacking.

But whoever is behind this, it is disturbing to learn that a number of government agencies are still vulnerable even to a relatively unsophisticated attack, one that most Web-savvy businesses have long since learned to deal with.

AT&T: Wireless Industry "A Model" of Competitiveness

Olga Kharif — Wed, 08 Jul 2009 15:24:31 -0500

Today, AT&T fired back at allegations of anti-competitive conduct. As you'll recall, in a July 6 letter sent to the Department of Justice and the Federal Communications Commission, Sen. Herb Kohl (D-Wis.) expressed his concerns over the state of competition in the telecom marketplace. "It is vitally important that the FCC and the Justice Dept. take action to enhance competition in this market and to remove barriers to competition preventing the emergence of new competitors," he wrote.

In a July 8 response, AT&T's executive vice president James Cicconi explains why Kohl's allegations are off the mark. Many of his arguments are valid points; others, however, don't quite add up. An example: Kohl alleges that exclusive handset arrangements between carriers and device manufacturers may be endangering competition. Cicconi notes that, in the U.S., where exclusive handset agreements are common, consumers have access to 630 different handsets and mobile devices. U.K. consumers only have access to 147 mobile gadgets. From that, he draws this conclusion: "Prohibiting exclusive handset arrangements, then, would not engender competition; it would degrade it," the AT&T letter claims.

This argument has one flaw: U.K. carriers strike exclusive handset deals, also. The iPhone, for instance, is only available fromcarrier O2. It would have been much better to compare the U.S. to France or Germany, both of which, in effect, sidestep exclusive arrangements.

Chrome OS: What Is Google's Goal?

Stephen Wildstrom — Wed, 08 Jul 2009 09:09:42 -0500

Google's announcement that it is working on a lightweight, Web-based operating system for netbooks, to be called Chrome OS, is a surprise only in its timing. As I wrote last September, when Google released the Chrome browser and Sergey Brin denied that its ambitions went beyond building a fast, simple browser:

Don't believe it for a second. Although the first version of Chrome has a half-finished feel and runs only on Windows, a close look at its features and underlying design reveals a far more dramatic goal. Chrome aims to take on not just Internet Explorer's 75% share of the browser market but Windows' dominance of the desktop itself.

Chrome was designed less as a competitor to the feature-rich Internet Explorer and Firefox than as a container for running Web-based applications. That made it, in effect, the user interface for a Web-based OS. Add a kernel (Google, unsurprisingly, is using the Linux kernel as the core), a window manager, and assorted other pieces of OS infrastructure and you can have a simple, fast, and robust operating system without a massive development effort.

Google Announces Plans for PC Operating System

Rob Hof — Wed, 08 Jul 2009 01:30:16 -0500

Google announced plans late Tuesday night to develop operating software for personal computers, initially the downsized PCs called Netbooks. An outgrowth of the Internet search giant's Chrome Web browser, Chrome OS is also Google's most direct challenge yet to Microsoft, whose Windows operating system dominates the PC world. Chrome OS is expected to be available in the second half of next year.

Predictably, and understandably, blogs and other publications are making the case that this is a new, major assault on Google's archrival. Perhaps that's true, but I'm betting that taking on Microsoft isn't Google's main aim here. Instead, I think it's logical to accept its longstanding claim that, with projects like this as well as the Chrome browser itself and its Android mobile operating software, it's chiefly trying to simply make the Web work better.

This isn't altruism on Google's part. If the Web works better, people will search more and Google will benefit. Of course, Google doesn't seem above throwing a monkeywrench into Microsoft's finely tuned machinery, and maybe that's part of the point, as it sometimes seems with Google's software applications business. But Google surely knows it's not going to knock Microsoft aside anytime soon, if ever. The logic that a better Web helps Google is compelling enough that I think that is indeed the key reason for Google's seemingly quixotic announcement.

That sentiment is apparent throughout the post (full version after the jump) on the official Google blog by by Sundar Pichai, VP of product management, and Linus Upson, an engineering director. Here's the gist:

The operating systems that browsers run on were designed in an era where there was no web. So today, we're announcing a new project that's a natural extension of Google Chrome — the Google Chrome Operating System. It's our attempt to re-think what operating systems should be. ...

Speed, simplicity and security are the key aspects of Google Chrome OS. We're designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds. The user interface is minimal to stay out of your way, and most of the user experience takes place on the web. And as we did for the Google Chrome browser, we are going back to the basics and completely redesigning the underlying security architecture of the OS so that users don't have to deal with viruses, malware and security updates. It should just work.

At the same time, it's hard not to detect a shot at Microsoft as well:

We hear a lot from our users and their message is clear — computers need to get better. People want to get to their email instantly, without wasting time waiting for their computers to boot and browsers to start up. They want their computers to always run as fast as when they first bought them. They want their data to be accessible to them wherever they are and not have to worry about losing their computer or forgetting to back up files. Even more importantly, they don't want to spend hours configuring their computers to work with every new piece of hardware, or have to worry about constant software updates. And any time our users have a better computing experience, Google benefits as well by having happier users who are more likely to spend time on the Internet.

It's commendable that Google is trying to advance the state of the art in computing and the Web. The Chrome browser set new standards for speed that no doubt will force others such as Firefox and Microsoft's Internet Explorer to catch up. But an operating system by nature isn't nearly as simple to pull off, because it must work with so many variations of PCs and run a wide variety of software without major problems. So here's another statement from the Google executives that I'll accept at face value: "We have a lot of work to do."

Now For Something Completely Different: Cisco John Chambers Shows Off His Duck-Calling Skills

Peter Burrows — Tue, 07 Jul 2009 19:29:49 -0500

I'm told Cisco PR staffer John Earnhardt heard laughter coming from Chambers' office, grabbed his Flip video camera and set out to check it out. Here's what he saw:

Made Men: Why Venture Capitalists Sponsor Other VCs

Spencer Ante — Tue, 07 Jul 2009 10:52:14 -0500

The big news out this week in the venture capital market is the launch of Andreessen Horowitz, a new $300 million venture capital fund co-founded by Marc Andreeseen, a tech visionary who founded Netscape Communications, the startup that triggered the Internet tsunami.

Raising $300 million for a first time fund is an incredible achievement in today's depressed capital-starved economy. How did Andreessen and his long-time business partner and co-investor Ben Horowitz pull it off? Well, tops on the list is the stellar reputation and track record of this pair. Andreessen has been at the forefront of the three major technology trends of the last 20 years: The Web, cloud computing and social networking.

After Andreessen launched Netscape, he and Horowitz founded tech service provider Opsware, which Hewlett-Packard bought in 2007 for $1.6 billion. Andreessen also co-founded Ning, a social networking company that is growing fast and generating revenue. "Marc understands technology on a deeper level than 99% of the public," says Todd Chaffee, partner with Institutional Venture Partners.

But one other big reason that the two were able to attract so much money, a key detail that I broke in my story for BusinessWeek, was the duo gained the support of three of Silicon Valley's most established and successful venture capital firms: Kleiner Perkins Caufield & Byers, Accel Partners and Greylock Partners.

The lead partners of these three firms (Kleiner's John Doerr, Accel's Jim Breyer and Greylock's Aneel Bushri) sponsored Andreessen Horowitz, say several sources. Being sponsored is sort of like being a made man in the mob. You are tapped on the shoulder and invited into an elite club.

Concretely, this means that these sponsors made personal introductions to several of their limited partner investors to help Andreessen raise money. No doubt, that sponsorship gave the investors more comfort to invest their dwindling capital with a group of first-time VCs. "Those are great anchor tenants that will give them more credibility," says Roger Lee, partner with Battery Ventures.

In fact, there's a long tradition of sponsorship in the venture business. Thomas J. Davis, the co-founder of Davis & Rock, one of the pioneering firms of the venture capital industry, helped Kleiner, Perkins raise money by introducing them to a few investors.

Similarly, the Mayfield Fund helped Don Valentine launch Sequoia Capital in the early 1970s. Gib Myers, one of the first partners of Mayfield, said that the firm set up Valentine with some free office space on Sand Hill Road in a building owned by Wally Davis, the co-founder of Mayfield Fund. "We helped Don get his start," Myers told me during an interview for my book. "He and Tommy and Wally were really good friends." Valentine repaid the favor by inviting Mayfield to invest in a little company called Atari.

Back in the early days of venture capital, sponsorship reflected the collegial milieu of what was then a cottage industry. These days, the practice is driven more by practical considerations. Venture firms occasionally help a newcomer this way to forge ties that could prove valuable later on. The new firms, for example, could give the established firms a window into a different area or the ability to get preferred access to co-invest on new deals. "You'd like to get plugged into that network," says Robert Ackerman, co-founder of Allegis Capital, which was sponsored by AVI Capital when it got started.

More recently, in 2007, Greylock sponsored life sciences investor Third Rock Ventures, investing some of its own money and introducing the founding team to several investors.

I was not able to find out if Kleiner, Accel or Greylock invested in Andreessen Horowitz. But I would not be surprised if they did. And why not? Increasingly, big firms are looking for ways to continue investing in early stage deals without all the time and energy it requires. In March, Sequoia Capital announced a small investment in the angel fund of Y Combinator. Investing in venture funds that focus on early stage deals could give the big guys a way efficiently scale their early stage investments.

- Spencer Ante also publishes the Creative Capital blog. Click here to see more.

Facebook Flight? No, Graduation Season

Douglas MacMillan — Tue, 07 Jul 2009 09:43:32 -0500

As more baby boomers take to the world's most popular social network, the average age of Facebook users has risen steadily. But the site's bread and butter, kids in college and high school, haven't gone anywhere. Have they?

On Monday, iStrategyLabs posted numbers Facebook supplies to advertisers which show a decline in members identified as high school and college students from January to July. The 16.5% drop in high schoolers and 21.7% drop in college students appear particularly surprising, because they coincide with a 513.7% rise in users age 55 and older.

But before everyone goes searching for the new cool site where all these young people are flocking, I suggest looking at what these numbers really represent. They are not survey-based -- no one asked Facebook users whether they're in school. Rather, the data is based on which Facebook users choose to identify the school they attend on their profile pages.

And what happened between January and July? Millions of young people graduated from school, giving them reason to drop online affiliations with their alma maters accordingly.

Graduation alone might not explain the drop. Perhaps because of increased concern over privacy issues in the past year, many users may simply be choosing not to identify themselves with specific schools. These "networks" which were so instrumental to the site in its early days (when you had to belong to a particular to school to even join) are losing relevance as more of the general public enters Facebook and people cross-pollinate with many different groups. The company itself decided to place less emphasis on networks in June, when it announced it would be eliminating geographic networks from the site altogether.

Why DoJ Won't Get You a Verizon iPhone

Stephen Wildstrom — Tue, 07 Jul 2009 09:40:50 -0500

News (subscription required for full article) that the Justice Dept. has launched an antitrust investigation into wireless phone carriers probing, among other things, whether handset exclusivity arrangements violate antitrust laws, has again raised hope that AT&T's exclusive grip on the iPhone may soon be broken. It's not going to happen, nor will T-Mobile have to share the Android G1 and myTouch handsets or Sprint the Palm Pre.

I've written before about the problem of technological exclusivity, which can make contractual exclusives largely irrelevant. Pressure, or a suit, from Justice might force the mega-carriers to play more nicely with an assortment of small rural carriers who get frozen out by exclusivity deals, but it's not going to do much to affect relations among the majors, unless the government plans to take the dubious and unlikely step of getting into the business of engineering handsets.

Sirius XM's iPhone App Surpasses 1 Million Downloads

Olga Kharif — Mon, 06 Jul 2009 11:46:42 -0500

Today, Sirius XM announced that, in two weeks of availability, its iPhone app has surpassed 1 million downloads on iTunes. That's quite impressive, considering that Sirius only has 18.6 million subscribers, and that shock jock Howard Stern's talks shows haven't even been made available through the app.

Back at launch, the lack of Stern content was considered to be the kiss of death for this app. Of more than 57,316 users who've so far reviewed the app, most give it a one-star rating. Of nearly 5,000 reviews published on iTunes, the overwhelming majority are negative. "No Stern No Good!!!" writes one reviewer.

And yet, the Sirius XM application is the seventh most popular free app on iTunes today. It's more popular than social network Facebook, and that's saying something. Clearly, the app is a wild success.

Perhaps Howard Stern isn't as important to the iPhone- and iPod touch-carrying public as he is to some of Sirius XM's traditional users. Most iPhone owners are quite content just listening to Sirius's music, comedy shows and sports talk.

Mobile Media Mergers Jump 46%

Olga Kharif — Thu, 02 Jul 2009 17:01:20 -0500

According to a new report from investment banker JEGI, mobile media and technology sector had seen a 46% increase in mergers and acquisitions in the second quarter of 2009. In the first half of the year, the mobile industry had struck 16 deals valued at a total of $146 million. That's up from 11 deals valued at $107 million in the first half of 2008. Impressive.

What is going on? Clearly, activity in this sector has nothing to do with distress. Use of mobile content and applications is exploding. And companies large and small are in a land grab mode, acquiring small and promising start-ups in hopes of increasing their mobile presence. IAC and Amazon made investments in iPhone applications recently. Amazon also acquired mobile app maker SnapTell and mobile payments player Boku. "Mobile social networking and mobile content are other key areas of investment," according to the report. Yes, times are good if you are a mobile entrepreneur.

Microsoft Adds Some Twitter Updates to Bing Search

Rob Hof — Wed, 01 Jul 2009 18:54:46 -0500

In a nod to the increasing importance of real-time search, Microsoft has started adding Twitter updates to its Bing search engine. For now, the Twitter-related results are limited only to searches on prominent Twitterers themselves, not nearly all tweets, according to a blog post by Sean Suchter, general manager of Microsoft's Silicon Valley Search Technology Center:

There has been much discussion of real-time search and the premium on immediacy of data that has been created primarily by Twitter. We’ve been watching this phenomenon with great interest, and listening carefully to what consumers really want in this space. Today we’re unveiling an initial foray into integrating more real time data into our search results, starting with some of the more prominent and prolific Twitterers from a variety of spheres. This includes Tweets from folks from our own search technology and business sphere like Danny Sullivan or Kara Swisher as well as those from spheres of more general consumer appeal like Al Gore or Ryan Seacrest.

Starting later today, when you search for these folks names in association with Twitter, you’ll see their latest Tweets come up in real time on Bing’s search results. ... (Note this feature will be rolling out gradually over the course of the next few hours so you may not see it right away.)

The answer will include that person’s latest Tweets, along with an easy link to “See more tweets” from that individual.

We’re not indexing all of Twitter at this time… just a small set of prominent and prolific Twitterers to start. We picked a few thousand people to start, based primarily on their follower count and volume of tweets. We think this is an interesting first step toward using Twitter’s public API to surface Tweets in people search. We’d love to hear your feedback as we think through future possibilities in real time search.

If you're a bit of a geek, and use the Firefox browser, you can already add Twitter search results to both Bing and Google via a software add-on called Greasemonkey. But it's pretty rudimentary, just a list of the five most recent Twitter search results for that particular query pasted atop the regular results.

A plethora of other real-time search engines is vying to become the one place to go for results on what people are talking about and sharing right now. And I suspect Google, which does offer near-real-time results for some news-oriented queries, won't wait long to add some kind of Twitter-related results in some way or another. But for now, Bing's Twitter results are one thing Google doesn't offer, and that's likely to help maintain the recent positive buzz about Bing.