Microsoft News Tracker

Gary Gentile at the AP:

Time Warner Inc. is in discussions about finding a partner to boost advertising revenue at its America Online unit — but AOL is not for sale, Chief Executive Dick Parsons said Tuesday.

“We are not interested in selling AOL,” Parsons said at a press briefing before a speech in Los Angeles.

Time Warner is negotiating with different parties about a deal that could help AOL’s transition from a business that relies on paid subscriptions to one that makes money based on advertising revenue, Parsons said.

He declined to give further details.

This confirms the basic thesis of today’s earlier rumor, but still leaves us guessing as to the likeliest suitor. Microsoft and Google may be in the dark too.

Update: Rick Aristotle Munarriz works over the financial pemutations and combinations at the Motley Fool.

Microsoft’s Dean Hachamovitch at the IEBlog:

We’ll post an updated pre-release build of IE7 for Windows XP publicly – no MSDN membership required – during the first calendar quarter of 2006.

We want to make sure that everyone has an opportunity to try a pre-release version of IE7 and tell us how it works with their web sites, their applications, their add-ons, and how they use the web overall.

Update - Dec. 08: There is a body of opinion that Microsoft had promised the public beta in 2005. See also [1].

Windows Server 2003 R2 was released to manufacturing with some restrained launch-style fanfare and should be generally available within 60 days. This is the promised interim update in Microsoft’s Server Roadmap that fills the gap between the major releases in 2003 (Windows Server 2003) and Windows Server Longhorn (2007). Unfortunately, a lot of its thunder got stolen by Service Pack 1 (SP1) earlier in the year or by features pushed out to Longhorn, but here’s what’s new in R2:

Simplified Branch Server Management

Windows Server 2003 R2 allows you to maintain the performance, availability, and productivity benefits of a local branch office server while avoiding issues typically associated with branch office server solutions such as connectivity limitation and management overhead.
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Improved Identity and Access Management

Windows Server 2003 R2 includes Active Directory Federation Services, which is designed to help administrators address identity management challenges by making it possible for organizations to share a user’s identity information more securely across security boundaries. Windows Server 2003 R2 also provides UNIX password synchronization, which helps integrate servers running Windows and UNIX by simplifying the process of maintaining secure passwords.
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Reduced Storage Management Costs

Windows Server 2003 R2 includes new tools designed to provide a centralized view of storage; simplified storage planning, provisioning and maintenance; and improved monitoring and reporting.
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Rich Web Platform

Windows Server 2003 R2 enables businesses to extend their infrastructure over the Web while reducing development and management costs through enhancements delivered with Windows Server 2003 SP1, x64 Editions, Windows SharePoint Services, .NET Framework 2.0, and Internet Information Services 6.0.
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Cost Effective Server Virtualization

Windows Server 2003 R2 Enterprise Edition (EE) will allow you to run up to four virtual instances of Windows Server 2003 R2 EE on one licensed physical server or hardware partition, thereby decreasing the costs of server virtualization.

Also announced were the simultaneous RTM of Windows Storage Server 2003 R2 and the 2Q2006 release of Small Business Server 2003 R2 with a variety of enhancements, as well as a pricing deal on Virtual Server 2005 R2 Enterprise Edition. More details are in the press release.

Windows Server 2003 R2 always had the objective that there would be minimal qualification testing required by customers since the basic binaries weren’t changing, but new features were being added. That being said, I can’t imagine that most shops will be skipping all testing, but perhaps they can streamline it. It is important to note that Windows Server 2003 R2 is a paid upgrade, so unlike a service pack, it can be and likely will be avoided on existing systems unless some of the new features are desired. However, it is completely replacing Windows Server 2003 in the channel and therefore new acquisitions will likely involve it depending on existing licensing arrangements. ISVs, of course, will need to deal with it.

As we mentioned yesterday in connection with Bill Gates’ trip to India, he is, among many other activities, joining the 200 delegates at the Microsoft Government Leaders Forum (GLF) Asia today in New Delhi:

During the two-day forum, government, academia and industry leaders from around the Asia Pacific and other regions will explore how they can use information and communication technology (ICT) to help their industries and organizations remain competitive in an increasingly connected, technology-driven world.

Microsoft announced a number of programs to that end, including a Worldwide Network of Software Innovation Centers:

Microsoft Corp. will create a global network of 90 Microsoft® Innovation Centers (MICs) designed to foster strong, self-sustaining local software economies. Microsoft will operate the centers in alliance with local governments, academic institutions, industry organizations and software vendors, with the ultimate goal of fueling long-term economic growth in regions where the centers are located.

These seem to be typical vendor “customer centers” and in fact many of them existed previously under different names - they merely have been renamed and “repurposed.” Microsoft Corporate VP’s Sanjay Parthasarathy and Tim Chen explain more in the press Q&A:

PressPass: What is Microsoft announcing this week?

Parthasarathy: We are teaming up with software venders, governments and academic institutions around the world to create a network of roughly 90 Microsoft Innovation Centers. Sixty are open today. Another 30 are slated to open in 2006. These centers will help build the infrastructure and market for commercial software by offering training, product testing facilities, networking and partnership opportunities and other resources.
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Parthasarathy: Right now, many of these facilities are known as XML Centers, .NET Centers or Solutions Centers. Their resources are loosely but not formally aligned. This has lead to partners in some countries requesting resources offered at centers in other countries.

From now on, the centers will not only have a consistent name; they will also offer consistent resources. We’ve leveled the playing field and plan to provide the same experience at all of these centers, while maintaining the flexibility to meet the different needs of different countries.
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Parthasarathy: All will offer content and services in three specific areas. One area, intellectual capital, will include software development courses, training in the areas of business skills and market development and employment programs for students. Another area will foster industry partnerships by helping create industry clusters and software quality and certification programs. The other area is innovation; we plan to promote advances in 64-bit computing architecture, Microsoft Windows Vista development and other technologies through hands-on labs and other resources.

It’ll be an AOL and Microsoft alliance according to the Wall Street Journal, but see below for an alternative view. Reuters:

Time Warner Inc is closing in on a deal with Microsoft Corp. to team up on an online advertising service to compete with Google Inc, the Wall Street Journal reported on Tuesday, citing people familiar with the talks.

The paper said the two companies were now focusing on a deal that would combine their advertising-related assets, with little or no money changing hands.
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The Journal said that, under negotiations between Time Warner and Microsoft, AOL would drop Google as its main Internet search provider and switch to Microsoft’s MSN service.

Under their current agreement, Google derived about 11 percent of its first-half revenue from AOL, which also generates substantial revenue from the contract.

The Journal said Microsoft and Time Warner are also negotiating to create a joint advertising sales force to sell online ads across both the AOL unit and Microsoft’s MSN. Both services would remain under the control of their current owners, according to the report.

A deal with Google is still a possibility according to the report, but if all goes well, the Microsoft/AOL agreement would be announced in the 3rd week of December. This deal would certainly be significant, but it’s quite a bit less than the AOL acquisition rumors that had been floating around a month ago. One reason for that:

Billionaire investor Carl Icahn, who has been critical of Time Warner’s strategy, has also said that he would hold Time Warner board members personally responsible if they forged a deal for AOL that valued the Internet provider too cheaply.

Saul Hansell at the New York Times has some background and presents a different view of the likely outcome:

By this account, Google, which values its neutrality, is making proposals that do not involve an investment in AOL at all. It would offer to give AOL an even greater share of the revenue - currently about 80 percent - from search-based advertising placed on AOL sites. Google would also find ways to drive traffic from its sites to AOL.com.
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Microsoft’s bid to AOL is in flux, one executive briefed on the negotiations said, but most of its proposals no longer involve its taking an ownership stake in America Online.

In addition to Microsoft’s search technology, some options involve a joint venture between AOL and Microsoft in advertising sales. The companies are also said to be discussing linking their instant-messaging systems, but since these systems are seen as critical drivers of customer loyalty, it is a delicate area.
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Jordan Rohan, an analyst with RBC Capital Markets, said he felt that Mr. Parsons had always preferred to keep substantial control of America Online and was mainly seeking the best terms for the right to provide search on AOL.

“Parsons has done a masterful job of making it look like AOL was for sale when I don’t think it was,” he said. “The most likely outcome is simply an improvement in the terms AOL gets from Google.”