Microsoft News Tracker

Ina Fried at CNET:

Microsoft on Thursday reported first quarter earnings just ahead of Wall Street estimates, though the company’s sales and current quarter forecast fell short of expectations.

More by following the link and in the press release:

Revenue and operating income growth for the quarter were driven by healthy demand for Microsoft’s core platform software and by growth in PC and server shipments. Server and Tools posted double-digit year-over-year revenue growth for the quarter, propelled by strength in its flagship products Microsoft® SQL Server, Exchange Server and Windows® Server. SQL Server showed particular strength, posting greater than 15% revenue growth over the comparable quarter in the previous year. Mobile and Embedded Devices revenue was up more than 50% due to continued adoption of Windows Mobile® software.

The Microsoft Investor Relations Home Page has more details including segment information:

The 10-Q provides explanations and I have some selected quotes below. As usual, the three cash cows (Client, Server and Tools, and Office) lead the way although Client did not keep up with PC shipments:

Client revenue increase for the first quarter of fiscal year 2006 was driven by an 18% growth in OEM license units and $319 million or 13% growth in OEM revenue from increased PC unit shipments partially offset by a $106 million or 19% decrease in revenue from commercial and retail licensing of Windows operating systems. This channel mix reflects our customers’ continued preference for upgrading their PC operating systems through the OEM channel when they replace their PCs versus the purchase of a multiyear licensing agreement.

and Office (Information Worker) was flat. Among the others, MSN was surprisingly flat until you read the details:

MSN revenue remained almost flat for the first quarter of fiscal year 2006 primarily due to a decline of $62 million or 30% in Internet Access revenue, as subscribers migrate to broadband or other competitively priced Internet service providers. Advertising revenue increased $60 million or 20% from the previous year due primarily to strong growth in display advertising on our portals, channels, email, and messaging services throughout the world.
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At the end of the first quarter of fiscal year 2006, MSN had 2.6 million internet access subscribers compared with 3.8 million at September 30, 2004 and 9.4 million total subscribers compared to 9.1 million at the end of the first quarter of prior year.
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MSN operating income increased slightly for the three months ended September 30, 2005 due to lower operational costs related to Internet Access and lower customer-acquisition-related spending, partially offset by an increase in sales and marketing and research and development costs.

Finally, the drop at Home & Entertainment was due to the Xbox 360 ramp:

Home and Entertainment operating loss in first quarter of fiscal year 2006 increased primarily due to an increase in Xbox 360 product design, development and sales and marketing expenses related to launch marketing and a reduction in Xbox game revenue. The increase in operating loss was partially offset by lower console volumes and lower console costs. Historically, Xbox consoles have negative gross margins.

The console business is a funny business.

Ina Fried at CNET:

The software maker said server unit executive Bob Muglia will now head the Server and Tools unit, a role previously filled by Eric Rudder, who now works closely with Chairman Bill Gates. Muglia will report to Jim Allchin, who is co-president of the platform, products and services division, along with Kevin Johnson.

The company also announced that Sanjay Parthasarathy, head of the Developer & Platform Evangelism Group, will now report to Johnson.
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In one other change, the enterprise and partner group headed by Simon Witts will now have a direct reporting relationship to Kevin Turner, the recently named chief operating officer.

Details by following the link.

Update: Press release.

S. “Soma” Somasegar announces it at his weblog:

Earlier today, we shipped Visual Studio 2005 and .NET Framework 2.0!

This is by far the best Visual Studio and .NET Framework release that we have ever done. I am very proud to be a part of the team that did a phenomenal job of delivering this fantastic product. I also want to take this opportunity to thank the community and early adopter customers for their incredible help and invaluable contributions in helping us ship the right product.

Later in the day, the final bits will be up on MSDN for our MSDN subscribers around the world to get access to the product.

The same for SQL Server 2005 as Adam Wiener reports:

This is my first blog post here and it couldn’t be anything I’m more excited about! Today it is just announced that SQL Server 2005 is ready for primetime and has been released to manufacturing.

I’m already seeing notices that VS 2005 and SQL Server 2005 are on MSDN which is probably being swarmed by downloaders about now. They should be generally available sometime in the next few weeks depending on the channel. The big launch event is November 7.

Update: .NET Framework 2.0 is, of course, publicly available and ActiveWin reports that the distributables are now avalable on regular, public Microsoft Downloads.

The Server Message Block protocol has a venerable history rooted in the early days of IBM PC LANs and it is getting an update in Longhorn Server. Ward Ralston explains at the Windows Server Division WebLog:

We have listened to our customers on the limitations that were present with the original SMB protocol and have removed the restrictive constants in the protocol so we never need to worry about the protocol itself being the limiting factor for scalability. This includes increasing the number of concurrent open file handles on the server, the number of shares that a server can share out amongst other key enhacements which include:

- SMB2 will have transaction support, i.e. full two-phase commit transactional semantics are available over the new SMB protocol. This takes advantage of the new Transactional File System (TxF) feature in NTFS in Longhorn Server

- Client Side Encryption. This allows over the wire encryption of data, i.e. a file is encrypted on the client and sent out to the server where previously the file would have been sent in the clear over the wire and encrypted on the server

- Support for symbolic links over the new protocol

- Supports an arbitrary extensible way of compounding operations to reduce round trips. This is what will primarily enable less chattiness which has often been a major pain point

- The new protocol supports larger buffer sizes than previously allowed

All of this sounds great, but I would be remiss if I didn’t mention that the SMB protocol and Microsoft proprietary extensions to it played an important part in the various antitrust trials and there will undoubtedly be similar scrutiny of SMB2.

Eric Lawrence provides the details at the Microsoft Internet Explorer Weblog:

In the past, we’ve called upon website operators to ensure they are using HTTPS securely. This time, I’d like to tell you about the changes IE7 has made to improve the security and user experience for HTTPS connections.
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HTTPS uses encryption to secure your Internet traffic to protect it from snooping or tampering by others on the network. HTTPS uses either the Secure Sockets Layer (SSL) or the Transport Layer Security (TLS) protocols to protect data.

For Internet Explorer 7, the default HTTPS protocol settings will be changed to disable the weaker SSLv2 protocol and to enable the stronger TLSv1 protocol.
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Generally, IE users will not notice any difference in the user-experience due to this change; it’s a silent improvement in security. Our research indicates that there are only a handful of sites left on the Internet that require SSLv2.

There are also user experience changes when a user hits a site with a problematic certificate (e.g. blocking navigation when the certificate is out of date or has the wrong hostname) and then there’s the old favorite:

In addition, users will no longer see the so-called Mixed-Content prompt, which read: This page contains both secure and nonsecure items. Do you want to see the nonsecure items? IE7 renders only the secure content and offers the user the opportunity to unblock the nonsecure content using the Information Bar. This is an important change because very few users (or web developers) fully understand the security risks of rendering HTTP-delivered content within a HTTPS page.

And thereby they understandably consider the prompt merely an annoyance. Eric also details a number of Vista-only changes including support for Server Name Indication (SNI) to resolve a problem with virtual hosting.

If these all seem a trifle esoteric, the net is that Eric issues a call to action on 3 items that webmasters will need to check to avoid problems with the more secure https implementation in IE7.