Microsoft News Tracker

Google exceeds expectations in Q4:

Google beat Wall Street’s expectations for its fourth quarter, ended Dec. 31, 2006, as the company continues on a tear, selling search engine advertising much faster than its biggest rivals and than the industry average.

Google generated revenue of $3.21 billion, an increase of 67 percent compared to the fourth quarter of 2005, the company said Wednesday. Subtracting the commissions it pays to its advertising partners, revenue came in at $2.23 billion, topping the consensus expectation of $2.195 billion from analysts polled by Thomson Financial.

Net income was $1.03 billion, or $3.29 per share, compared with $372.2 million, or $1.22 per share, in 2005’s fourth quarter. On a pro forma basis, which excludes certain items, net income was $997 million, or $3.18 per share, topping analysts’ expectation of $2.92 per share.

With profit almost tripling and revenue increasing at blockbuster rates, Google executives were unsurprisingly ecstatic in a conference call about the quarter’s results and indicated that the company has many green fields to explore and keep growing.

However, the good news wasn’t good enough for the tough bunch on Wall Street:

The news pushed shares in the Web search leader down more than 3 percent in after-hours trading.

“The stock is down because they didn’t blow out the numbers. Expectations have come up recently,” said Martin Pyykkonen, an analyst at Global Crown Capital. “As expected they gained share relative to Yahoo in paid search but not by a wide margin.”

Note also that per the press release, 37% of Google ad revenue came from partner sites. While this has been dropping slightly over recent quarters it’s still a respectable chunk of change, but one that Microsoft so far refuses to sully its hands with.

Bryan Lee, Microsoft’s Corporate Vice President, Entertainment Business, who in December 2005 took over “as head of a new entertainment business charged with overseeing the company’s growing digital efforts in music, television and video,” has decided to move on:

A senior Microsoft executive who oversaw the launch of its Zune digital music player plans to leave the company, the world’s largest software maker said on Wednesday.

Bryan Lee, corporate vice president at Microsoft’s entertainment and devices division, also played a critical role in shaping the Xbox game console business and the introduction of its Internet Protocol television software.

Lee is a key deputy of Robbie Bach, head of Microsoft’s entertainment and devices division. J Allard, a rising star within Microsoft and one of the early Xbox leaders, will now take full responsibility for the Zune business.

Lee plans to leave the company in the next several weeks to pursue personal interests, Microsoft said.

It could be a variety of things of course, but the natural inclination is to view this as a rearrangement of the deck chairs after HMS Zune clipped the iPod iceberg.

Update: Speaking of which, here’s alarming news from Microsoft’s Zune Insider:

If you have a Zune that isn’t skipping (which, truth be told, is the majority of owners), move along, nothing to see here, move along. But if the content from ZMP is skipping on your device, I want to tell you that the team is aware, and is working on it.

Update 2/2: Antone Gonsalves at InformationWeek:

In other executive shuffling, Joe Belfiore, VP of Windows Media Center, and Enrique Rodriguez, VP of Microsoft’s TV Division, who both reported to Lee, will now report to Bach.

Vista

As anticipated, Jim Allchin retires from Microsoft as Vista ships. More here.

No surprise: Microsoft targets Vista sales in line with PC growth. The only question is whether Microsoft will be able to increase the per PC revenue.

Windows Live Messenger 8.1 for Vista has been released as has Windows PowerShell 1.0 for Windows Vista, but where is the final version of Windows Mobile Device Center for Windows Vista? (Yes, there is a beta so the mobile gadget users aren’t completely abandoned by nonsupport of ActiveSynch).

Microsoft Delivers First Windows Vista Ultimate “Extras.”

Vista Casts A Pall On PC Gaming due to restrictive security and parental controls according to an online game network developer. Microsoft denies.

Vista ‘Family Discount’ Bites Back with invalid installation keys. No date for a fix.

According to the EULA, you shouldn’t be running any Home editions of Vista in a virtual machine. I haven’t seen the results of any testing, but you may not have any choice since running in a VM is detectable.

Microsoft accused over software’s landfill impact. It’s a Green thing. 

Office 2007

The (Few) Ways Vista Makes Office 2007 Work Better.

Microsoft exec insists companies won’t need ‘big sophisticated training plan’ to roll out Office 2007.

Update: Also apparently AWOL is SQL Server 2005 SP2 which provides Vista support for SQL Server Express, the successor to MSDE which is unsupported on Vista and the desktop database for a number of applications including some from Microsoft.

After yesterday’s preparatory hoopla, news reports indicate that today’s actual appearance of Windows Vista on store shelves wasn’t greeted by consumers with much enthusiasm. Some showed up at midnight sales events to see the sports stars or for the free food, others because of separate hardware sales, and a few to actually buy preloaded Vista systems or even boxed copies of Vista. It makes no real difference of course, since Vista is as inevitable as death and taxes. Very shortly consumers will be hard pressed to buy a new PC without Vista and the cash registers will keep ringing in Redmond regardless of any first day languor.

This lack of excitement is likely why the first day punditry was mostly devoted to Microsoft’s $500 million Vista Marketing blitz. Yesterday, I was unaccountably pacific at the prospect, but that was before Microsoft unleashed their stable of clueless viral marketers:

DUDE! MAKE THEM STOP! SERIOUSLY, THESE ARE EMBARASSINGLY BAD. I HAVE NO CHOICE BUT TO USE MY CAPS LOCK KEY TO CONVEY JUST HOW MUCH OF A WASTE OF MONEY THIS WAS.

They’ve even resuscitated the useless and annoying Clearification.com. Avant garde thinking in the ad world undoubtedly eschews actually showing the product, much more what it does, but it’s hard to believe that this kind of thing does anything more than befuddle consumers.

Oh well, at least Microsoft marketing has amazingly always had the good sense to avoid the goofiness of Second Life. Oops, I spoke too soon. Pictures of the venues (not the habitues) here.

Update 1/31: Ashlee Vance weighs in on the Second Life initiative in inimitable Register style.

At long last Microsoft held the consumer launch of Windows Vista and Office 2007 today and Ad Age’s Beth Snyder Bulik asks the obvious question about all the accompanying festivities:

There won’t be a PC sold anywhere in the world that doesn’t have Vista within six months,” said Endpoint Technology Associates analyst Roger Kay, a fact that might leave ad watchers wondering why Microsoft is about to launch the product with one of the biggest marketing blitzes of all time.

This will be the company’s “most aggressive launch ever,” resulting in an injection, across 20 countries, of an estimated $500 million into agency and media-owner coffers — which seems excessive for a product that will walk out of the stores on more or less every PC sold from here on in.

But that’s not the point, according to Microsoft — which goes so far as to borrow from images such as a child discovering a snowfall, the fall of the Berlin Wall and Woodstock to persuade consumers that Vista is not just an operating system, but a potentially life-changing event. “Awareness is not enough,” said John B. Williams, general manager-Windows global communications. “The goal for this campaign [is to] get at the heart of excitement.”

Not to mention humor too, apparently. Actually, there are a number of sensible reasons for the marketing campaign not the least of which are co-op commitments to hardware and software partners as well as hopes for general corporate image buffing after the protracted Vista slippage nightmare. Anyhow, today’s launch events are summarized here along with some slips along the way:

But the event was short on corporate substance and long on glitz. And Office 2007, which was released to consumers alongside Vista on Tuesday, was scarcely mentioned as entertainment was more of a focus of the event than software. The rock band Angels & Airwaves performed to kick off the presentation, taking the stage after a three-man drumming outfit warmed up the crowd with a sweaty performance. Following the executives’ remarks, Angels & Airwaves took the stage again and performed a concert for attendees, which included press and beta testers as well as Microsoft employees.

Perhaps Microsoft focused on entertainment because many of those attending the launch waited a long time in below-freezing temperatures to get in. An hour and a half before the official presentation was set to begin, the line to enter the event stretched more than a block down Broadway in midtown Manhattan.

When the plight of attendees was mentioned to a high-ranking executive at Microsoft’s main public relations firm, Waggener Edstrom, he remarked dryly, “We didn’t do this event.” Indeed, it was Microsoft’s other agency, Edelman, that planned and hosted the Vista launch event Monday.

Nice.