Microsoft Takes a Beating, Gmail Takes a Nap

Microsoft CEO Steve Ballmer told a gathering of analysts that the company won’t be making any further layoffs, and once word got out, Wall Street proceeded to pummel the company mercilessly, sending its stock to an 11-year low.

Analyst Rob Enderle told us the no-more-layoffs decision made sense because there just aren’t a lot of unnecessary people on Redmond’s payroll, but Wall Street was having none of it. It probably didn’t help that Ballmer also told the analysts that Google’s Android mobile platform could threaten Windows, which, as we speak, is being trimmed down to netbook size.

It might have helped, however, if he had admitted that Microsoft just isn’t very good at laying people off. After doling out a recent round of pink slips, Microsoft screwed up some of the severance payments and then had the nerve to ask about 25 laid-off staffers to give back as much as US$5,000 each. Needless to say, an uproar ensued, and Microsoft ended up saying “never mind.”

Listen to the podcast (13:59 minutes).

You Snooze, You Lose

Gmail took a snooze in the wee hours Tuesday. It’s not supposed to do that.

Google’s online mail service soon got back on its feet, but not quickly enough to convince businesses that it’s enterprise-worthiness was not significantly undermined. Google has been pushing the for-pay premier edition of its online services for business use, and it’s even promised 99.9 percent uptime for premier Gmail.

That means it should take less than 45 minutes of vacation time per month, and this week’s several-hour outage put it way over that mark. It also means customers will get something of a payout, so it’s not all bad.

Here’s another layer to the silver lining: Considering that the outage occurred at around the time bars were closing in the Pacific Time Zone, it may have helped preserve the dignity of a few individuals intent on sending off the kinds of emails that are best kept as drafts.

Bartz Shakes It Up

It might have taken a purchase offer from Microsoft and a bunch of noisemaking by Carl Icahn to get Jerry Yang off his executive derriere, but his successor isn’t letting any dust gather on her watch.

Carol Bartz has kicked off her tenure as CEO with a series of bold moves, not the least of which is a corporate restructuring that could turn Yahoo into an entirely different animal than it is now. Although few specifics are known, one thing’s nearly certain — not many people will lose their jobs in the reshuffle, since a large portion of Yahoo’s best and brightest already have left.

What’s expected — in some quarters, hoped — is that Bartz will return Yahoo to its core strength in search and back away from content creation and other pursuits that aren’t really its main focus. It’s likely that Bartz will consolidate decision-making authority at the top, a departure from Yang’s preference for management by committee.

Yahoo’s New Tricks

Yahoo is adding some new tricks to its bag as it repositions itself. Its latest is running rich media ads with search results, which means you might get a commercial just like the ones you see — or avoid — on TV when you do a search.

Yahoo trotted out this example to illustrate how it works: Try doing a Yahoo search for the term “pedigree.” At the top of the list, you’ll see a sponsored result for Pedigree pet food, and a thumbnail of Pedigree’s most recent ad — the one that shows a rhinoceros traipsing through a woman’s house. OK, maybe “crashing” is a better term.

You click on the thumbnail, you see the whole ad. The response has been mixed. Video is eye-catching and could give advertisers a way to link searchers directly to an appropriate page on their Web site — in this case, the one that has information about Pedigree’s adoption drive. On the other hand, video can take a long time to watch and goes against the idea of search being the most direct and efficient way to find information on the Web.

Like it or not, at least Yahoo is making an effort to bring its doldrums to an end, and that counts for something.

Windows 7 Feature Peek

Microsoft invited the whole world to try out a beta of Windows 7 last month, and it got quite a lot of feedback for its efforts. Now it’s given us a few details about what Redmond engineers are going to spruce up between now and the operating system’s final release.

They’ll add better touchscreen functionality, tweak the control panel, and provide a better headphone experience, among other things. Hopefully, all this openness will save Windows 7 from a Vista-type disaster, but we’re still not exactly sure when Microsoft will be done with all its polishing.

Ray Chen, however, may know a little more than we do. At an investor’s meeting, the president of Compal Electronics reportedly let slip a comment that suggested Windows 7 could arrive as early as next September — just in time for back-to-school sales and the ramp-up to the holiday season.

Until then, Windows Vista remains the company’s official poster child, and they can’t abandon it completely, much as they might like to. A release candidate for Vista Service Pack 2 has gone out to select parties, and it should make its way to general availability soon.

Legal Drumming

Despite the fact that it’s a frequent target of lawsuits, Microsoft hardly ever starts legal fights. So when Redmond files patent infringement complaints in two different legal venues — as it just did against GPS gadget company TomTom — it makes the hair stand up on a lot of arms.

TomTom is no doubt squirming, but so are a lot of people in the open source community. That’s because three of the eight patents named in the case are based on Linux technology. Now, it’s true that Microsoft has been openly nice to open source for the last few years, but there have been more than a few stray hints that it’s not entirely sincere in its outpourings of affection.

Suspicions are rampant that Redmond might be reversing itself and launching a stealth attack to the steady drumbeat of a TomTom. Or maybe it just wants to get the recalcitrant company back to the license negotiating table. Either way, it got our attention.

Antitrust Pile-On

The EU is hounding Microsoft again, but this time several U.S. competitors have joined in.

Google and Mozilla have signed on as third parties in a complaint originally brought by Norway-based browser maker Opera over the bundling of Internet Explorer with Windows. The European Commission has issued a preliminary finding that Microsoft is guilty of antitrust sin again, but it hasn’t heard Redmond’s side of the story yet.

As Microsoft attempts to defend itself, Google will be looking for tender spots in the hope of carving a little market space for Chrome, and Mozilla will be seizing the moment on behalf of Firefox, which has already done some serious nipping at Explorer’s heels. Opera will be singing for its supper too, of course, but it might be drowned out by its new friends.

Safari Boost

For a company that really didn’t have its own Web browser for a good long time, Apple has raised the bar for browsers across the board with the latest version of Safari.

It boasts performance well beyond that of Internet Explorer 7 or Firefox 3, thanks to the Nitro Javascript engine. It also claims compliance with the Acid3 standards-adherence test, though analyst Charles King told us that’s not really so important. Mozilla, as a matter of fact, dismisses Acid3 as a “puzzle game” and wants nothing to do with it.

Apple also has prettied up Safari a bit, adding its signature Cover Flow interface to the browser’s history and bookmarks functions. And, giving in to the standard set by the other browsers, Apple has relented and placed the tabs on top, just like everyone else.

So will all these new features win over more users? Nobody knows for sure, but one pattern has emerged since Firefox and Safari began chipping away at Explorer’s dominance: Users are migrating away from the use-what’s-included mentality and toward what works best for them. Ain’t choice grand?

Piece by Piece

Motorola, which has been gushing red ink, has decided to sell its push email, calendar and contacts unit to a small, private mobile email applications company called “Visto.”

It was only two years ago that Motorola established the unit after acquiring Good Technology. The idea then was to challenge BlackBerry maker Research In Motion for a larger share of the business customer market.

Is Motorola shying away from its aspirations to win business customers and settling for consumers instead? If that’s the plan, it better have one hell of an iPhone-killing smartphone up its sleeve. Or something better than nostalgic memories of Razr.

In any case, the deal looks like a win for California-based Visto. Once it’s concluded, the company will have doubled in size to more than 400 employees worldwide.

What Recession?

AT&T has apparently decided not to join the recession. While everyone else seems to be stuffing cash in their mattresses, the telecom giant has announced plans to spend a cool billion to expand its global network, adding greater capacity for businesses with large amounts of data traffic.

The expansion will focus on places like China, India, the Philippines, Thailand and Malaysia, where fast growth has overtaxed existing networks. In North America, Mexico and Puerto Rico will get increased network capacity.

AT&T’s move is definitely against the tide, but it’s not the only big tech company going out on a limb. Intel recently said it would pour $7 billion into expansion of its manufacturing facilities. They obviously want to be ready to do some serious business when the economy bounces back, and $8 billion worth of confidence might just help that day come a little sooner.

Plug and Play

Marvell has come out with a computer that’s about the size of the power block most laptops use to plug into the wall.

The so-called Plug Computer supports Linux distros like Fedora, Ubuntu, Debian and Gentoo. It goes right into the electrical socket, and its only ports are an Ethernet jack and a USB plug. It certainly looks intriguing but what it does isn’t crystal clear.

Marvell’s idea is to let other developers and manufacturers figure that out. Its offering a SheevaPlug development platform as well as some production-ready reference designs to help designers come up with network appliances and devices that can be used in homes and businesses. For example, Axentra has turned one into a home media server, and CTERA has used one as the basis of a cloud-attached storage appliance that converts any USB drive into a NAS device with integrated secure offsite backup. Don’t want to be stuck without one of those.

Netflix Breakthrough

A few months ago, Netflix broke a barrier in the entertainment world: It got the studios to agree to let it deliver movies to its customers over the Intertubes.

We’re not quite sure what kind of Jedi mind tricks the Netflix guys used, but it wasn’t really all that effective. The studios only relinquished their death grip on the crappiest of films, and only a relative handful at that. Now, Netflix has taken yet another step toward the bold new post-physical-media era, announcing it will sell subscriptions of the streaming-only variety.

The current selection is also crap — but as time passes, the studios are certain to allow the streaming of a few new releases, and then Netflix will be well-positioned to grab its share of the market. At that point, however, it’s going to have a real branding problem on its hands, as there won’t be millions of those distinctive red envelopes flying around.

Might want to hang onto a few to show your grandchildren how you got movies back in the day.

Also in this week’s podcast: Kyte helps artists build iPhone apps; Apple puts a shine on dull performance; cable companies see potential in this “Internet” thing.

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