The "Microsoft Doesn't Suck" Blog

The CFA Doesn't Suck

2008-05-28T07:29:00.000-07:00

Just wanted to let everyone know that I'll be posting more regularly as soon as I'm done taking the CFA Level 2 Exam. I've been preparing for this test for months, and after June 7th I'll be done and ready to relax. There's been lots of great news coming out of Microsoft recently, so I thought I post some links to some of the more interesting stories.

- Microsoft Shuts Down Live Search Books
- Microsoft Previews Windows Live 7
- No Xbox 360 Spring Update!

In addition to those stories, there is still buzz about on the potentially revived Microsoft-Yahoo deal. Apple will also have there Spring Developers Conference where they are sure to show off some interesting new products (including the sure-bet iPhone 3g). Have fun and I'll see you all on June 7th (or the 8th since I'll probably spend the night of the 7th celebrating).

Live Mesh and the Future of Organization

2008-05-12T20:38:00.000-07:00

It's quite possible that Live Mesh will mean less time dealing with schedule synchronization and more time being productive. Today I took the time to watch a Channel 9 interview of Ori Amiga, a lead member of the Live Platform Services Team. It's evident that the Live Mesh team has created a well thought out platform that can be easily extensible. I'm not going to cover the basics, for more information on Live Mesh you can visit the Live Mesh Blog here. I just want to lay out my vision for the kinds of programs and services I would like to see implemented.

On the consumer side of things, Live mesh could be a way to share files, as well as a great way to collaborate. During the interview, Ori demonstrated how a basic family tree WPF app was modified to enable synchronization across the mesh. He also discusses the various methods of implementing this functionality. With only a few lines of code, Mesh functionality could be added to the software. However, if the developer wanted to deeply integrate Mesh functionality he could do so and reap the benefits.

What I'd like to see is an app that would organize my media. For example, imagine an app that would automatically sync your video to the cloud, laptop, and media enabled phone. The fun part starts when you include information about the video, including metadata that would allow you to resume watching where you left off. Notes could be added to the video if it were to be shared with friends. I've tested sharing a video from the new Zune Video Marketplace. I was successfully able to sync the video to my laptop without much intervention. After setting Zune software to monitor the sync folder, the video was automatically added to my laptop library. I'm not sure how DRM would be handled, but that's a whole other discussion.

The business side of things gets a little complicated. The problem is that corporations don't like the idea of having files stored in the cloud (and rightly so). Corporations are very sensitive about their data. However, I don't think having schedules, contacts, calenders, and tasks pose as difficult a hurdle to corporate adoption. In fact I think that companies would love the ability to keep an employees schedule easily synced across all of his devices. Currently, I use my mobile as a go-between for my work and home computer. OTA, automatic synchronization of all of my data would be a god-sent!

Right now all of these synchronization scenarios are a pipe-dream, but I can see these types of scenarios and many more contributing to making organizing my personal and business life much more productive.

Windows Mobile 7 (AKA Photon)- The Sooner the Better

2008-05-05T21:47:00.000-07:00

Although no definitive details have been given regarding Windows Mobile 7, it has been suggested by many (Jason Dunn, Mary Foley) that it can be expected sometime early next year. Having devoured all info regarding the operating system, I can say that I'm very excited for it's release. I really prefer Windows Mobile as a platform where I can customize every piece of software exactly to my liking. Yes, I know that the iPhone is beautiful and functional, but the flexibility of Windows Mobile has me hooked (I'm sure old-school Palm users feel the same way). If you haven't taken a look at the supposed "leaked" documents, you should definitely take a look here.

Overall, I think the proposed interface (disregarding for the moment the authenticity of the leaked documents) looks great. Aside from the superfluous gesture based functionality, I think it could be just as functional/beautiful as the iPhone is now. And therein lies the problem. The iPhone interface is already great! By this time next year I'm sure the iPhone will have evolved to be an even better platform, and the Windows Mobile Platform will be forced to play catchup even more-so than it is now.

So what's the problem? How can Microsoft catch up? I propose that Microsoft take a similar approach as it did with the Zune. Release Windows Mobile 7 on select hardware (third party developed). The rumored HTC Diamond (which should be announced tomorrow would be great) would be my choice. Focus on perfecting the software for one particular model, and then release it to other manufacturers who could work out the kinks with the help of your programmers. The Windows Mobile team already took this route with the T-Mobile Shadow. It had a custom interface built specifically for HTC hardware. Why not do this again?

My basic point is that by waiting to release the operating system to all Manufacturers simultaneously, Microsoft is falling further and further behind. This is exactly what happened with Vista. Apple has had the luxury of designing their OS to work with only one set of hardware (including all the various Macs/iMacs etc.). The bottom line is that while trying to satisfy all hardware manufacturers at once, Microsoft is dooming itself to a late release that will ultimately hinder the potential success of the platform. The company needs to focus on regaining the speed/nimbleness they have long since forgotten.

Micro-hoo Who?

2008-05-03T17:49:00.000-07:00

And.....it's over! It looks like Microsoft has officially retracted its bid for Yahoo. Now that this is over I'd like to see Microsoft focus on its current projects. Some ideas:

1) Vista - Focus on further increasing speed and stability! Service Pack 1 did a lot to alleviate the problems users were having, but an increase in speed could finally move over the gamers from XP. This core group (much as they contribute in the gaming world) will do much to change the perception of Vista as a bad egg.

2) Live Services - I for one am a big fan of Windows Live Services. Windows Live Writer, Photo Gallery, Skydrive, and Mesh are awesome! Let's see those services expanded (functionality-wise) and woven together.

3) Zune - I'd love to see the next generation of the Zune (perhaps something to compete directly with the Ipod Touch).

4) Xbox 360 - Please give us more reasons why Xbox Live is worth the money. I have defended Xbox Live to non-believers time and time again, but it seems that the competitors are closing the gap feature wise.

There's so much more that Microsoft can be doing with it's resources! What do you think should be their priority???

Microsoft's Gaming Strategy Going Foward

2008-04-25T13:56:00.000-07:00

After many years of unchecked growth, it seems that the Microsoft momentum is finally starting to slow down. In the desktop space, Microsoft has found itself seemingly outclassed by Apple, and undercut by Linux (I personally think there is a place for Microsoft right in the middle). Much like GE before it, Microsoft has begun to reach out and participate in a wide variety of industries. Most recently, it has attempted to establish itself as a contender in the entertainment hardware business with the Xbox 360 and Zune.

With the 360, Microsoft has found a reasonable amount of success. It's core value offering, the promise a of stable (okay, mostly stable) online network has lured in more than 10 million subscribers. Hardcore gamers often consider the 360 the platform of choice because of its focus on this demographic. There are problems on the horizon though:

1) Will Microsoft begin to lose its focus on the core demographic? Does it need to? Nintendo, while enjoying a healthy lead in in hardware sales, is last in attach ratio (the number of games per year purchased). Many other journalists and bloggers have noted that even though Microsoft is trailing in hardware sales, it is raking in much more cash than its competitors. There have been rumors that Microsoft is working on a motion controller to attract the casual gamer, and a blu-ray add-on to enable it to match features with the PS3. Although a motion controller could be successful in attracting a new audience, it may water down the experience for hard core gamers, who are often regarded as the biggest software spenders of all. A internal/external blu-ray player sounds like a good idea, but not if the console price soars because of it.

2) Can Microsoft continue to secure platform exclusives? The bottom line is that many companies are choosing to develop games for multiple systems to maximize profits. With an installed base of ~19 million, Microsoft must continue to seek the big name exclusives that will keep consumers tied to the console. Then again, it is likely that GTA IV, will sell many consoles for Microsoft despite being offered on the PS3 as well as the 360.

3) Can Microsoft continue to charge for Xbox Live when competitors are making attractive options for free? Microsoft still offers a far superior online offering at the moment. But, as Sony continues to add features to it's network, including Playstation Home, it will be difficult to justify. Perhaps including some type of digital content (an allotment of videos/music) would appease the masses.

The bottom line is that the video game space is extremely competitive, and Microsoft will need to work hard to maintain its place in the market. As it stands, Microsoft revenues exceed those of its competitors, but momentum is definitely on the side of its competitors. This year's E3 will be interesting to say the least.

More info:

http://www.ps3fanboy.com/2008/04/25/npd-releases-home-console-attach-rate-ratios-ps3-not-so-hot/

http://vgchartz.com/ ( not the best source but useful)

Microsoft Earnings Dissappoints Investors

2008-04-24T20:37:00.000-07:00

In after-hours trading, Microsoft shares are down 5.0%. This drop comes as a result of disappointing earnings and guidance for the next quarter, and the next fiscal year. A summary of the earnings report is included below along with comments and my opinion regarding the results.

From Yahoo Finance:

Revenue of $14.45 billion is slightly short of consensus.

EPS strong: $0.47, above guidance, consensus, and whispers due to stronger than expected operating income (EU fine and tax benefit canceled each other out).

Free Cash Flow: Actually down year over year on lower cash from operations (lower deferred revenue) and higher capital expenditures.

Outlook: June revenue guidance is fine--range of $15.5-$15.8 billion, modestly above consensus of $15.6 billion. June EPS guidance, however, is below the current consensus: $0.45-$0.48, versus the current consensus of $0.48.

2009 Guidance: FY2009 revenue guidance is good--range of $66.9-$68.0 billion, above current consensus of $66.5 billion. 2009 EPS guidance is very good: $2.13-$2.19, above consensus of $2.10.

Segments: Only division that exceeded consensus was Entertainment and Devices.
Windows and Office both lagged.

First of all, it is important to note that even without any adjustments, the earnings of .47 cents per share were above analysts estimates. The disappointing part in my view is that 1) revenues were down and 2) sales of windows and office products were down. Revenues for the windows division are down 24% yoy. While this is expected due to lower consumer spending in general, it is a blow to the company, and puts a drain on cash reserves (FCFF is down YOY as well). The drop in Windows sales may be indicative of slow business up-take, and may be remedied with the release of Sp1 (or maybe not). An increase in consumer spending as the economy comes out of its collective coma couldn't hurt either.

The increase in capital expenditures isn't unusual for the firm, but this also contributes to the decrease of free cash flow to the firm (the Danger acquisition certainly had something do with this.

The only rosy part of the equation is that the entertainment division continues to turn a profit, but unfortunately this profit is so insubstantial that it might as well not be there.

So where does Microsoft go from here? It's clear that investors expected more from the mega-corporation. It seems that after years of exceeding estimates, even the general malaise in the economy is not enough to forgive Microsoft for its transgressions. Fortunately for Microsoft, this new quarter has begun with a bang, and many of the major economic indicators are beginning to show improvement. Whether or not this will have an impact on computer/software sales remains to be seen. Thoughts?

Yahoo Reports Earnings, Is it Enough to get Microsoft to Budge?

2008-04-23T19:44:00.000-07:00

Yesterday, Yahoo reported earnings. This was a significant event not only because of its impact on market sentiment of the tech sector, but also because of the potential effect it could have on the Microsoft takeover (which has been covered extensively) (you can read a re-cap here: http://www.liveside.net/content/MSFTYHOOtimeline.aspx).

Here are the highlights of the earnings report (pasted from the Yahoo Tech Ticker):

Revenue (Net) $1.35 billion, above consensus of $1.32 billion, upper end of range, but not a blow-out (ie, in line with Yahoo pre-release through NY Post this morning). Revenue could certainly have been stronger: Owned and operated properties decelerated again, to 18% (from 22% last quarter). Overall, revenue growth only accelerated from 8% to 9% Y/Y--not what one would call impressive (bar so low they could have fallen over it--as they appear to have)--but revenue ex-TAC up a better 14% (no acceleration). US Growth good. International horrible.

Adjusted EPS: $0.11, versus $0.09 consensus, in line with whispers. Operating income in line with guidance range (high end). EBITDA down year-over-year, especially in U.S. This will be called "investment," but it's ghastly.

Free Cash Flow: Looks impressive at $647 million, but, sadly, this includes $350 one-time payment from AT&T (presumably buy-out of access contract). Adjusted cash flow down 20% year over year: Expected, but lousy. AT&T payment will be recognized will be recognized as fee revenue over four years ($22 million a quarter).

Net income for the first quarter of 2008 was $542 million or $0.37 per diluted share compared to $142 million or $0.10 per diluted share for the same period of 2007.
Net income for the first quarter of 2008 includes the Company's net non-cash gain of $401 million related to Alibaba Group's initial public offering of Alibaba.com, net of tax, which is included in earnings in equity interests.

The important adjustments to make are to remove the one-time cash flow from AT&T as well as the one-time gain from their investment in Alibaba. Some investors say that this is not fair, that these are substantial gains/cash flows. The problem is that these are non-recurring cash flows, and therefore should not be considered when forecasting future earnings, which allows investors to estimate current worth.

Overall, even considering the fact that Yahoo's adjusted returns exceed analyst's estimates, Yahoo did not report earnings that would intimidate Microsoft into raising its bid. In fact, Ballmer today mentioned to the media that he was willing to walk away from the bid. As an investor in Yahoo, I would not be happy with this potential for loss. Many investors are betting that this deal will go through. If it doesn't, be sure that the response from the market will be quick and severe.

Xbox 360 Media Center Wows My Friends!

2008-04-21T22:33:00.000-07:00

This past weekend I hosted a poker game at my place. I don't often get to play host but I was fully prepared to do so when the ocassion arose. One of the highlights of my get together was that I got to showcase some of the great intergration between my Vista PC and my Xbox 360.

Throughout the night there were multiple comments on how cool it was that I had access to my entire library of music, movies, and live TV from my PC. Now, this wasn't the most technical crowd, and there are plenty of people who will say there are plenty of ways to accomplish this without MSFT, but I have to say this is one of the best mini-ecosystems Microsoft has created, and I hope they continue to expand in this direction. The bottom line is that features and set-ups like this one are more likely to cause a "Wow" reaction than bitlocker or Aero.

After surrendering my m0ney to my friends (it was a bad beat I tell ya) we fired up some Rock Band which was enjoyed by all. Overall I was happy with using my Xbox 360 as a Media Center, and really enjoy the ability to stream Xvid and Divx videos. My one major complaint is that this streaming ability isn't built directly into Media Center. For those with Vista Media Center (or WMCE 2005) firing up the integrated Media Center extender software on the 360 allows users to essentially use the 360 as a DVR (with all the tv watching/pausing/recording) that comes with it. But instead of adding codec support to Media Center, Microsoft mysteriously decided to add support for these codecs only through the 360 blade interface (another way of accessing your computer's media). Oh well, almost a perfect implementation. Maybe next time????

I've included some great links for setting up your 360 as a Media Center extender. Remember, you'll need an Xbox 360 (the best Media Center for the buck at the moment), Vista Home Premium or Ultimate, and a home network to get this setup. Good luck and have fun.

http://www.xbox.com/en-US/hardware/windowsmediacenter.htm?WT.svl=nav

http://www.microsoft.com/windows/products/winfamily/mediacenter/features/extender.mspx

This Blog

2008-04-21T21:53:00.000-07:00

I'm not a complete Microsoft shill. I'm just a tech geek who appreciates Microsoft products. I'm also a finance student (MBA/CFA candidate) that finds the company an interesting case study in the challenges a gigantic company can face it reaches such an enormous size.

Over the years I've worked with both Linux and Apple products and software, but ultimately I settled with Microsoft for a number of reasons that I'll discuss in upcoming posts. As with any blog, I've decided to gear content to covering news regarding Microsoft hardware/software/events. I'll also write ocassional commentaries, but I'll try to keep these to a minimum as I know that I'm not exactly Hemmingway.

The main reason for starting this blog is because I suppose I've become a sort of self-created Microsoft evangelist. I really enjoy some Microsoft projects such as Vista, Zune, Office, One Note, Windows Mobile and of course my trusty Xbox 360 with Xbox Live.

The fact is that Microsoft is not perfect, there are in fact many problems that I feel are largely related to its explosive growth. The bottom line is that I don't think Microsoft sucks, and I'll hopefully be giving a lot of reasons why in the future.

Thanks for stopping by and visit often as I hope to have frequent updates to the site.