November 11th, 2009

Microsoft delivers new Zune HD games; Twitter and Facebook still to come

Posted by Mary Jo Foley @ 6:54 am

Categories: Apple, Corporate strategy, Gaming, Windows Live, Windows Mobile, Xbox, Xbox Live, Zune

Tags: Facebook, Twitter Inc., Microsoft Zune, Microsoft Corp., Games, Personal Technology, Mary Jo Foley

On the heels of providing a new firmware update to the Zune HD that provided support for forthcoming games, Microsoft is rolling out those games starting on November 11.

The firmware update, version 4.3, enabled 3-D gaming on the new Zune HD. The new six games that are available for download from the Zune HD Marketplace today for free (but ad-supported — there’s an ad at start-up) are:

Audiosurf Tilt: Audiosurf creates a rollercoaster ride from any song.

Checkers: A classic checkers game that can be played against a computer or a buddy.

Lucky Lanes Bowling: Bowl in different game modes: exhibition, blackjack, golf — either against the computer or up to four friends.

Piano: Play your own tune, or play along with music.

Project Gotham Racing: Ferrari Edition: A racing game using multi touch controls and the built in accelerometer.

Vans Sk8: Pool Service: “Put these Vans skaters to the test with all the tricks in their bag and achieve hero status once you unlock their pro model skateboards.”

A spokesperson sent me the following update, as well:

“As we’ve said in the past, we will be delivering additional applications for Zune HD including Facebook and Twitter in the future.”

I bought a Zune HD a month or so ago and have been showing it off to some disbelieving Apple die-hards. “Are you sure this is a Microsoft product?” is often the reaction I’ve gotten. Being able to change the music I’ve got on it whenever the mood strikes (thanks to a $15 per month ZunePass subscription) has been a great way to sample lots of new content. If this device had been available a couple of years ago, when I was searching for any MP3 player as long as it wasn’t an Apple one, I’d have snapped it up long ago…

But, as I’ve noted before, Microsoft isn’t planning to put a ton of resources into developing apps for its dedicated Zune HD players. Microsoft officials have said the not-so-long-term plan for Zune is to turn it into a service. There will be “at least one more” player release coming, but after that, it sounds like Microsoft is planning to integrate the Zune music and video services into its Windows Mobile, Xbox and possibly other third-party platforms. (The new Xbox Live services including Zune video went into public beta on October 21. The go-live launch date is still to be announced. is November 17.)

Microsoft officials still won’t give a firm yes or no answer as to when or if the company will make the Zune HD available internationally. (I ask periodically but still can’t get an answer.)

October 23rd, 2009

Windows and Office cash cows take a hit in Microsoft's first quarter

Posted by Mary Jo Foley @ 7:17 am

Categories: Channel, Corporate strategy, Gaming, OEMs, Office, Office 2010/Office 14, Resellers, System builders, Vista, Windows 7, Windows XP, Windows client, Xbox, Xbox Live

Tags: Revenue, Microsoft Office, Microsoft Corp., EDD, Microsoft Windows, Operational Accounting, Microsoft Windows 7, Operating Systems, Software, Finance

A day after Microsoft launched Windows 7, its first quarter 2010 results are in. And both Windows and Office — Microsoft’s biggest cash cows — took a hit.

For the quarter, which ended on September 30, Microsoft’s net income was down 18 percent, to $3.57 billion, and revenues down 14 percent, to $12.92 billion — both compared to the first quarter earnings for fiscal 2009.

Because Microsoft beat analysts’ expectations for earnings-per-share and Microsoft has continued to prove it can cut costs, the company’s stock price was up this morning. And because of strong pre-orders for Windows 7 (which didn’t go on sale at retail until October 22, which is during Microsoft’s next quarter), Microsoft’s press release is highlighting “the strong consumer demand for Windows,” even though the Windows division’s revenues were down to $3.98 $2.62 billion from $4.28 billion from the comparable quarter a year ago.

Microsoft said the first quarter of 2010 was the biggest quarter for Windows sales ever. But the numbers aren’t reflecting that fact, primarily because of $1.5 billion worth of deferrals from programs it offered PC makers to convince customers to keep buying Vista PCs prior to the launch of Windows 7. Company officials also attributed the lower Windows earnings to more sales of netbooks and a decline in premium editions of Windows sold to business customers. Here’s what the company wrote in its 10-Q report, released on October 23:

“Windows Division revenue decreased primarily as a result of the deferral of approximately $1.5 billion of revenue related to the Windows 7 Upgrade Option and sales of Windows 7 to OEMs and retailers before general availability in the second quarter of fiscal year 2010. Including revenue and units associated with the Windows 7 Deferral, OEM revenue decreased $207 million or 6%, while OEM license units increased 6%. The decline in OEM revenue reflected the 8 percentage point decrease in the OEM premium mix to 63%, primarily driven by growth of licenses related to sales of netbook PCs, a decline in premium editions sold to business customers, and changes in geographic mix. Based on our estimates, total worldwide PC shipments from all sources grew approximately 0% to 2% through growth in both emerging and developed markets.”

Things weren’t quite as bad for the Microsoft Business Division, which sells Office and Microsoft’s Dynamics ERP/CRM products. But sales were still down, even though the Office 2010 release is still quite a number of months away. (It is expected to ship in mid-2010.) The company attributed the revenue decrease to a decline in licenses sold for Office 2007 and to a shift to lower-priced products among consumers. The particulars, again, from the 10Q:

“MBD revenue decreased reflecting decreased consumer and business revenue, and included an unfavorable impact from foreign currency exchange rates of $88 million or two percentage points. Consumer revenue decreased $390 million or 34%, primarily as a result of pricing promotions in the first quarter of fiscal year 2009 that drove increased licensing in that period, a shift to lower-priced products, and a decline in licensing the 2007 Microsoft Office system. Business revenue decreased $161 million or 4%, primarily reflecting a decline in licensing the 2007 Microsoft Office system to transactional business customers and a 6% decrease in Microsoft Dynamics revenue, offset in part by growth in multi-year volume licensing agreement revenue. The growth in multi-year volume licensing agreement revenue primarily reflects recognition of deferred revenue from previously signed agreements.”

Microsoft’s Entertainment and Devices division’s revenues were flat for the quarter. EDD is responsible for Xbox, PC games, Zunes, keyboards/mice and other hardware, and Windows Mobile sales. EDD revenue was flat, with growth in Xbox 360 and games offsetting decreased revenue from other parts of the business. From the 10Q:

“Non-gaming revenue decreased $98 million or 14%, primarily reflecting decreased sales of PC hardware products, Zune digital music and entertainment devices and services, and embedded device platforms. Foreign currency exchange rates accounted for a $35 million or two percentage point decrease in revenue.”

Microsoft’s online services unit continued to lose money, and the Server division’s revenues were relatively flat for the quarter.

This quarter reflects changes by Microsoft in its reporting structure, with Windows Live now part of the Windows client unit, and mobile services moved to Entertainment and Devices.

September 14th, 2009

Gaming veteran Shane Kim to leave Microsoft

Posted by Mary Jo Foley @ 3:00 pm

Categories: Corporate strategy, Gaming

Tags: Vice President, Microsoft Corp., Strategic Planning, Strategy, Games, Recruitment & Selection, Management, Personal Technology, Human Resources, Workforce Management

Shane Kim — who, last year became the Corporate Vice President of Strategy and Business Development for Microsoft’s Interactive Entertainment Business (IEB) — is leaving the company, according to a September 15 post on Gamespot.

Phil Spencer took Kim’s job last June and became the head of Microsoft Game Studios. Now Spencer has been named the Corporate Vice President of that unit.

There have been rumors circulating for years that Kim was likely to be one of the victims of Microsoft’s Interactive Entertainment house cleaning. But Gamespot is reporting that Kim’s retirement, after 19 years with Microsoft, is completely voluntary and is because he wants to spend more time with his family.

Update: A Microsoft Xbox spokesperson told me Shane’s  responsibilities are “transitioning to a newly created role in IEB which is the COO position.” Dennis Durkin who is currently the Chief Financial Officer of IEB is taking on the COO role reporting to Don Mattrick, the Senior Vice President in charge of IEB.

Here is an excerpt from the internal email that was sent this morning…

“After 19 years with Microsoft, fourteen of which were in the IEB, Shane Kim has made the decision to retire at the end of the year. Shane’s been an instrumental leader in the evolution of Microsoft Game Studios and the Xbox business - from the early days of Flight Simulator and Golf to the launch of the original Xbox, to the successful launches for two of the biggest entertainment franchises in the industry - Halo and Gears of War. Shane’s passion for this business and industry runs deep and he will be dearly missed. Having dedicated the last two decades to Microsoft, Shane is eager to make up for lost time with his family and friends.”

September 9th, 2009

I don't want an MP3 player/camera/ebook reader/gaming device. Do you?

Posted by Mary Jo Foley @ 2:27 pm

Categories: Advertising, Apple, Corporate strategy, Gaming, Mobile services ("Pink"/"Rouge"), Speech, Telecommunications, VOIP, Windows Mobile, Xbox, Zune

Tags: Phone, MP3 Player, Microsoft Zune, MP3, Camera, Media Players, Digital Music, Digital Media, Telecom & Utilities, Consumer Electronics

Common wisdom says we’re hurtling toward a world where a single portable device will be all you need to handle a wide variety of consumerish tasks.

But the further we approach that end goal, the less I want to end up there. Today’s Apple music announcements reminded me of that fact.

I am not an iPod/iPhone/iMac user. I have a Sony Walkman MP3 player, an LG (non Windows Mobile) phone and a Windows PC. I also have an Amazon Kindle and a Panasonic camera. I carry a big bag which usually contains at least two or three of these devices at any given time.

I’m willing to cart all this stuff around because I want my phone to be a good phone. I don’t care if it can browse the Web or hold hundreds of pictures that I can flick through at a moment’s notice. If it’s not good at making and receiving calls, it’s not worth having. I want my camera to be a decent camera. I don’t care about capturing video clips on it. I want my ebook reader to allow me to purchase and read books. Even though it has built-in wireless and a browser, I have used it to check the Web once in four months or so.

I thought I might be in the minority in my views about device convergence — until I asked folks on Twitter if they were fans of the single device ideal. Most who replied were not. Some cited battery-life issues as the reason they weren’t keen on the single-device-does-all idea. Others said they weren’t interested in devices that were OK at lots of tasks but great at none of them. I don’t need a camera that posts to Twitter, one of my Tweet-buddies quipped.

I’ve been playing lately with the Zune subscription service. (Hey, I never claimed to be an early adopter; in fact, I’m typically a “wait for at least the third version” one.) With the Zune Pass, for $15 a month, you can download a lot of music and keep 10 tracks a month. The Zune Pass service works nicely with my Sony player — not surprising given Microsoft’s growing emphasis on Zune as software and a service and deemphasis of it as a standalone MP3 player. Yes, there are new and much improved Zune players coming on September 15, but I’m far more interested in the non-hardware-specific components than the Zune HDs themselves, especially given my Sony MP3 player is still working well two years after I bought it.

Maybe those of us who would feel more affinity with a portable rotary phone (thanks for the link, Jake) than an all-in-one multi-touch phone/videocam/ebook reader/gaming/photo display/browsing  pedometer/voice-recording device should stop focusing so much on the next cool gadget and pay more attention to the software/services that make them tick.

(Update: As one reader noted, an all-in-one MP3 player/camera/ebook reader/gaming device also could be called a PC. In fact, Apple almost seemed to be repositioning the iPod Touch as a rival to a full-fledged PC as part of its September 9 announcements.)

May 21st, 2009

Microsoft struggles with Xbox vs. Windows Media Center positioning

Posted by Mary Jo Foley @ 8:13 am

Categories: Channel, Corporate strategy, Fiji, Gaming, OEMs, Resellers, System builders, Vista, Windows 7, Windows client, Xbox, Xbox Live

Tags: NetFlix Inc., Windows Media, Media Center PC, Positioning, Microsoft Windows, Microsoft Corp., Microsoft Windows Media Center, Microsoft Xbox, Media Center PCs, Personal Technology

The introduction of Netflix’s “Watch Now” service for Windows Media Center is a prime example of Microsoft trying to carve up markets in artificial ways.

The new service — which works on Vista Media Center Edition only (Microsoft officials won’t say if and when it will be part of Windows 7 Media Center) — seemed like good news when Microsoft announced it earlier this week. But in short order, it became clear that the Netflix Media Center service was crippled intentionally.

The Netflix Media Center service won’t work with Microsoft’s Media Center Extenders. That means Netflix movies and TV shows can’t be streamed to other consumer devices that include built-in Extenders. From Most Valuable Professional Chris Lanier’s blog:

“I’ve been testing the Netflix application for a few weeks now. Upon downloading the first beta I read  the release notes which talked about Extender’s not being supported. I figured this was something that would change. Sadly, it didn’t and was planned at all. I didn’t think I’d get to post this part because it was told to me under NDA, but TechFlash actually posted it so I’m in the clear. Part of the reason Extender’s are not supported is because Microsoft wants to make sure they don’t compete with the Xbox 360 Dashboard.

“Leaving the technical aspects of getting Silverlight to an Extender aside, this represents a huge problem and once again confirms to me that Microsoft will continue to push and promote the Xbox 360 Dashboard over that of the Extender platform.”

Lanier isn’t the only Microsoft tech enthusiast who is upset over the lack of Extender support for Netflix on Media Center. From a blog post by Zoomr CEO Thomas Hawk:

“The great promise of Media Center extender technology was that it would bring anything you could do on a PC to quieter, easier devices connected to your television set in the networked and connected home. By crippling this important technology and restricting it from Media Center extender devices, this is a step backwards. Heck, I’d even pay Microsoft the same $50 a year to have this on my extender than I pay for the lame XBox Live Gold Membership that I’ve got now.”

This isn’t the first time in recent memory that tech enthusiasts and testers have expressed public displeasure with the directions Microsoft is taking with Media Center. Last summer, testers were up-in-arms over the way Microsoft handled its “Fiji” TV Pack update for Vista Media Center

October 15th, 2008

Microsoft plays up 'less is more' as its holiday retail message

Posted by Mary Jo Foley @ 1:15 pm

Categories: Advertising, Channel, Gaming, OEMs, Resellers, Search, System builders, Vista, Windows Live, Windows Mobile, Windows client, Xbox, Xbox Live, Zune

Tags: Microsoft Corp., Tools & Techniques, Management, Mary Jo Foley, Phone, Hewlett-Packard Co., Microsoft Windows Vista, Microsoft Windows Live, Microsoft Windows, Microsoft Windows Vista (Longhorn)

With consumers hunkering down, how is Microsoft hoping to get them to spend on technology toys and software this holiday season?

The theme at the company’s Holiday 2008 “In the (K)now” showcase in New York City this week is less is more. (A theme which fits nicely with Microsoft’s campaign to encourage its PC partners to de-crapify their Vista PCs in the name of improving Windows systems’ out-of-the-box experience. More on that below.)

Microsoft officials hosting the showcase for local press acknowledged that two-thirds of Americans are going to spend less this holiday season. They claimed 50 percent of Americans are looking to pool their resources to buy one, larger gift, rather than many smaller ones. And three quarters of holiday shoppers are looking at entertainment gifts to be used at home. (All of these stats and more are from a “national random digit dialing phone study conducted by StrategyOne Research, September 2008.”)

The Softies are playing up accessories, under-$1,000 Vista laptops, Windows Mobile phones (both budget $100-and-less models, as well as new, premium phones like the Samsung Omnia and HTC Touch Pro), and games like the RockBand 2 for the Xbox 360 and LEGO Batman for Windows PCs as potential holiday gifts.

They’re also touting freebies, like Windows Live services — showing off the new, single-click black-and-white effects capability in the new beta version of Windows Live Photo Gallery, for example, which can be used to create frameable photos for giving.  Live Search Cashback (Microsoft’s paid-search promotional program) and Live Search Farecast travel-search services can save holiday shoppers and travelers money they can use elsewhere, Microsoft officials emphasized.

Read the rest of this entry »

June 29th, 2008

J Allard gets a new job

Posted by Mary Jo Foley @ 6:15 pm

Categories: Corporate strategy, Gaming, Windows Live, Windows Mobile, Xbox, Zune

Tags: Job, Microsoft Corp., Entertainment, J Allard, Advertising & Promotion, Marketing, Mary Jo Foley

J Allard has been in limbo — at least title-wise — for the past few months.

After Rick Thompson became Corporate Vice President of Zune last fall, more than a few Microsoft watchers were wondering what Allard would do for an encore. Would he become yet another Softie who would take a “sabbatical,” never to return to Microsoft? (It wouldn’t make a whole lot of sense to say Allard was “retiring to spend more time with his family,” since his wife, Rebecca Norlander, is Chief Software Architet Ray Ozzie’s Technical Assistant….)

It looks like Allard has a new mission and new title to prove it. As of June 24, according to the Microsoft executive bio site, Allard is now “Chief Experience Officer” at Microsoft, as well as as yet another in a line of Microsoft’s Chief Technology Officers. (Microsoft Chief Software Architect Ray Ozzie, Chief Research and Strategy Officer Craig Mundie and Senior Vice President David Vaskevitch all have held CTO titles in the past few years.)

From Allard’s updated bio:

“As Chief Experience Officer (CXO) and Chief Technology Officer (CTO), J Allard is responsible for the technical architecture and user experiences related to products and services of the Entertainment and Devices (E&D) division. Allard works closely with technical leaders across the company to align E&D product teams with Microsoft’s overall services strategy and product architecture, and drives the technical and design agenda to deliver Connected Entertainment experiences for consumers.”

There have been a lot of shake-ups in the Entertainment and Devices division in the past couple of weeks, mostly on the Entertainment side. Under Senior Vice President of Interactive Entertainment Don Mattrick’s organization Shane Kim was replaced as head of Microsoft Game Studios by Phil Spencer; and Michael Delman ended up replacing Jeff Bell, the head of marketing.

Perhaps Allard is going to be overseeing — or at least participating in a major way — in the mysterious Microsoft “eLive” initative. What do you think he’ll be doing?