Microsoft: 2007 China sales to rise 20 percent

Software giant Microsoft said on Tuesday it expects its China sales to rise more than 20 percent this year, boosted by new products and a national crackdown on software piracy.

Responding to complaints by Western governments and companies, as well as criticism from a growing field of domestic firms, China has been clamping down on piracy over the last two years to the benefit of software makers such as Microsoft.

As part of the campaign, most of the nation's top domestic PC sellers, including Lenovo and Founder, have pushed to boost their number of PCs sold with legal copies of Microsoft's Windows operating systems already installed.

Other major foreign players in the market, including global leaders Hewlett-Packard and Dell, are pushing similar policies in China.

Reflecting the trend, only about 30 percent of Lenovo PCs now being sold will ultimately contain pirated Windows systems, down sharply from 90 percent last year, said Timothy Chen, chief executive officer of Microsoft's greater China region.

"We've made great progress there," he told Reuters on the sidelines of an event in Taipei. China is the world's second-largest PC market by unit sales, with more than 20 million units shipped last year, according to data tracking firm IDC.

Following the implementation of China's crackdown starting in late 2005, IDC estimated the number of PCs sold with legal copies of Windows reached about 50 percent in last year's first quarter.

Rampant piracy there previously made the market a difficult one for software makers like Microsoft, with many industry watchers estimating that most computers in the country used pirated copies of Windows.

Chen added that growth was also coming from new product sales, including the company's newly introduced Vista operating system, the next-generation equivalent of Windows, which Microsoft rolled out at the beginning of this year.

The company plans to launch seven new products in China this year, and another six in 2008, Chen said.

"It is a great year for the region," he said. "Vista is selling very well." Microsoft founder Bill Gates said in February that Vista had been well received and that PC vendors had seen a nice lift in their sales.

Story Copyright © 2007 Reuters Limited. All rights reserved.

Windows zero-day flaw gets a fix

Microsoft on Tuesday issued five security bulletins with fixes for eight flaws, including a "critical" zero-day vulnerability in Windows that also affects Vista.

Four of the security bulletins released as part of Microsoft's monthly patch cycle address problems in Windows. Three are tagged "critical," Microsoft's highest severity rating, while the other is pegged "important," a notch lower. The most serious rating is for bugs that could cause a computer to be fully compromised with little, if any, user action.

Among the Windows patches is a fix for a zero-day vulnerability first disclosed in December. Security experts had initially deemed the flaw less serious, stating it could be exploited only by someone with access to a vulnerable computer.

The flaw lies in an essential Windows component called the Client/Server Run-time Subsystem and critically affects all current Windows releases, Microsoft said in security bulletin MS07-021. "If a user viewed a specially crafted Web site, an attacker who successfully exploited this vulnerability could take complete control of an affected system," the company said.

The MS07-021 update is the only patch released Tuesday that affects Vista. All of Tuesday's Windows fixes apply to its predecessor, Windows XP. This includes a critical hole in the Microsoft Agent, a help tool that succeeded the famous Clippy Office assistant. The Microsoft Agent flaw also affects Windows 2000 and Windows Server 2003.

The Microsoft Agent is flawed in the way it handles certain specifically crafted Web links. The vulnerability could be exploited through a malicious Web site, Microsoft said in security bulletin MS07-020. The Windows Agent has been patched up before.

The Client/Server Run-time Subsystem and Microsoft Agent bugs are the most serious in Microsoft's April patch pack, Vince Hwang, a group product manager at Symantec Security Response, said in an e-mailed statement.

"These patches are critical because there is an increased potential for exploitation since these vulnerabilities affect multiple versions of Windows," Hwang said.

Windows XP also has a critical vulnerability in the operating system's plug-and-play feature, which has been a patch target in the past and was exploited by the Zotob worm in 2005. The vulnerability could be exploited without any action by the user, but an attacker has to be on the same subnet as the target machine, Microsoft said in bulletin MS07-019. Attacks may also be blocked by a firewall, it said.

Despite the mitigation, miscreants are likely to jump on the plug-and-play flaw, said Tom Cross, a researcher at IBM Internet Security Systems. "Due to the ease of exploitation, we are taking the Universal Plug and Play flaw very seriously and expect to see an exploit by the end of the week," Cross said in an e-mailed statement.

Microsoft's fifth Patch Tuesday bulletin, MS07-018, addresses a pair of vulnerabilities in Content Management Server, including one deemed "critical." An attacker could gain control over Web sites maintained by the Microsoft software by exploiting the flaw, which lies in the way it handles certain requests.

Microsoft's Tuesday patches come a week after the company issued an early security update to repair seven other Windows vulnerabilities. Microsoft rushed out that update because cybercrooks were using a flaw in the way Windows handles animated cursors to attack PCs. Microsoft did not release any fixes in March.

Microsoft, the EU and Facebook

Software maker ends appeals of European orders to share information with competitors. Separately, Microsoft is buying a small interest in social site Facebook, which it values at $15 billion. Transcript of radio broadcast:
25 October 2007

This is the VOA Special English Economics Report.

This week, Microsoft agreed to end its fight against European Union competition officials. The world's largest software company withdrew its remaining appeals at a European court.

European Commissioner for Competition Neelie Kroes negotiated the agreement with Microsoft

Microsoft has faced record European Union fines and may still owe more. But it says it wants to put its energies into meeting its legal duties and strengthening its relationship with the European Commission.

In two thousand four, the commission ordered Microsoft to share information with competitors. This information would help them develop software for server computers to "interoperate," or work easily, with Windows.

Windows is the Microsoft operating system found on more than ninety percent of personal computers. The company argued that it needed to protect trade secrets.

But now, Microsoft has agreed to share secret information with developers for a one-time payment of ten thousand euros. That is about fourteen thousand dollars at current exchange rates.

Microsoft also wanted to charge competitors almost six percent of the sales from products that use its information. But in the end it agreed to charge less than half a percent for worldwide use.

The European Union began to investigate Microsoft in nineteen ninety-eight after Sun Microsystems accused the company of being anti-competitive. Microsoft, based in Redmond, Washington, fought back. But last month, it lost a big ruling. The second-highest court in the European Union agreed that Microsoft abused its market position.

In a separate case, Microsoft decided last week not to appeal a thirty-four million dollar fine by the Fair Trade Commission in South Korea.

But Microsoft could at least claim a victory in one of its efforts to expand its Internet business. This week it won the right to invest in Facebook and to expand an advertising partnership with the social networking site. Facebook chose Microsoft over Google, the leading Internet search company.

Microsoft will invest two hundred forty million dollars to buy a one and one-half percent interest. Microsoft values Facebook at fifteen billion dollars. Facebook reportedly expects about one hundred fifty million dollars in revenue this year. The company will be four years old in February and says the site has almost fifty million active users.

And that's the VOA Special English Economics Report, written by Mario Ritter. Our reports are online with transcripts at voaspecialenglish.com. I'm Jim Tedder.

Exciting Times for "Sharing and Social Networking"

The past few months have been busy for me and for my team. I took a long vacation back to Istanbul, giving me an opportunity to disconnect from my work and my blog for a while, and then came back to a new organization, a launch, and a very active Seattle.

As Moz recently summarized in an entry, we went through some reorganizations and the changes they brought. We seem to have settled into a new structure for now: product management and marketing roles have been more clearly delineated, while lines around our products have blurred. As most of you know, I have been working on the Spaces and Writer products for the past two years. In an effort to bring more seamless experiences to our customers in our next waves of planning, I will now be heading a new team focused on Sharing and Social Networking. Product management for a lot of the services you are familiar with, such as Spaces, Events, Writer, Photo Gallery, will now be run from my team, giving us a better view of your end-to-end sharing scenarios. Chris and Charlotte will be the managers on my team, as well as JP, a new product manager joining us to bring you better Memories experiences. My marketing leads like Marty, Marianna, and Pooja will continue to work on marketing, moving to the organizations running US and international execution.

In addition to the organizational changes, we have been busy building software. You probably saw the launch of Windows Live Events and a set of new features last week, especially the improved "What's New" section. Windows Live Photo Gallery also raised the bar with Flickr integration. I am excited with the stuff coming out but am painfully aware of how much we still have to do, in order to bring great experiences together.

I have been receiving a lot of questions lately about "Spaces' social networking" plans. Speculation around our partnerships have also led to the questions "isn't Spaces Microsoft's competitor to Facebook? What social scenarios are you thinking about?" While I cannot divulge any long term plans here, let me clarify one thing: "social networking" for us refers to the set of online experiences that allow users to feel connected with the people they care about. You did not see "Spaces" anywhere in there, did you? That is because I do not equate it with Microsoft's "social network." A lot of players have done a good job building profile networks --MySpace and Facebook most notably. I am a Facebook user (and Twitter, and MySpace, and a bunch of other things) and have a lot of respect for what they are doing. However, I do think that social scenarios will extend well beyond a "profile network," and defining social networking as a "website where I have a profile, friends, FoF, and some communities I share with" may be short sighted. Windows Live Messenger and Hotmail should become amazing social experiences. Our memories experience should tie in. Events and others

should become great social experiences, not to forget MSN. And all these things will be part of our "social networking" plans. Do not equate "what is Spaces doing" to "what is Microsoft doing" so quickly --and I do not think Facebook is thinking so narrowly either. We will continue to develop and improve Spaces of course, but we are trying to think broader to address your needs.

I will save writing about Istanbul to another day. I am excited to be back in Seattle, but I already miss home. Perhaps a good skiing season will lessen that feeling!

Bill Gates on Web Apps

If you’ve read any tech news in the past 24 hours, you’ll now be familiar with the meeting Bill Gates held among influential bloggers, ahead of next year’s Mix conference. Aside from learning what’s on Bill’s Zune, we get to hear his views on the future of web apps, thanks to a question from Liz Gannes. She asked him which apps should live in the browser and which should not, one of the key questions in Ajax and one we have touched on in the past.

He replied that the distinction would come to be silly from a technical standpoint, but that the necessary movement toward web APIs does present challenges on the business side. “One of the things that’s actually held the industry back on this is, if you have an advertising business model, then you don’t want to expose your capabilities as a web service, because somebody would use that web service without plastering your ad up next to the thing.”

His solution wasn’t very specific: "It’s ideal if you get business models that don’t force someone to say ‘no, we won’t give you that service unless you display something right there on that home page.”

Then for the tease: “And, you know, [inside the browser and outside the browser are] moving towards each other, but there’s still a bit of a barrier there, and new technology, things we’re working on, really will change that.”

HP vs. Apple vs. RIM and Microsoft/Cisco Convergence: Battle for the Corporate Phone

I first started in tech with a PBX vendor, arguably the most advanced of its time. One of my positions there was as competitive analyst for phones, and I was able to use prototype devices that were vastly more advanced than anything anyone had ever seen.

Since then, I’ve been in major withdrawal, as these features and phones never made it to most desktops. Most folks are lucky if they can figure out how to do things like conference in a co-worker or transfer a call successfully.

This is a long way of saying the telephony industry doesn’t operate at “Internet speeds.” In fact, changes still seem to take decades — or at least did. That is about to change dramatically.

There are two types of convergence going on. The first is being largely driven by Microsoft, which is the only vendor possibly strong enough (and note I said possibly) to drive common standards across the telephony industry for user features. If it weren’t for Cisco, I’d lay odds it would fail, but Cisco is also a game-changer representing the greatest threat the legacy PBX vendors have faced since IBM, before it failed in this industry. And, unlike IBM, Cisco isn’t learning on the job and has what I believe to be the strongest enterprise VoIP solution in the segment.

The second is the convergence of cell and land-line phones. Northern Telecom tried and failed to do this more than a decade ago, but the technology wasn’t ready, and Northern didn’t have the breadth to make it work. With the surge on smartphones driven by RIM and Apple, coupled with the capability of HP, which just entered the segment with the strongest enterprise cell-phone line, the next step of converging PBX and cell services is closer than it has ever been.

Microsoft Background:

This is the fourth time Microsoft has made a run at phones. In the early ’90s there was a joke phone created by Microsoft Europe that floated around for a while. A consumer phone followed, one that depended on Windows 95 for features and was probably the worst telephone I’d ever seen in my life. After NT came out, a number of small PBX vendors used that platform in an embedded-like form and created what were the most reliable Windows Servers of their time (something that surprised most of us).

This is only to show that Microsoft’s experience here tracks back over a decade into both devices and switches, and while the results have been mixed, the company has an established knowledge base.

It’s also interesting that Microsoft itself used the cheapest and most limited phone systems in the market for much of its existence, and that likely motivated the company to create a solution that it could use that wasn’t so incredibly out-of-date. Sometimes self-interest is the best motivator.

It should be noted that Microsoft is hedging its bets by bringing out its own converged product in the SMB market, where technology change could happen more quickly. This is because systems in that market, called key systems, are even more antiquated than what many PBX enterprises use

Yahoo Messenger For Vista

I got a demo of the new Yahoo Messenger for Vista, which has been redesigned to take advantage of Vista-specific features. Since it was the first time I was seeing Vista, I must admit that I was operating at a disadvantage, but what I saw suggests that Yahoo is continuing its Messenger strategy of developing the Messenger client that best takes advantage of the specific operating system, like Vista's transparent windows.

Yahoo has introduced tabbed windows for IM in this version, which means you can drag one independent chat window onto another, and wind up with one chat window with two tabs. Or you can drag a tab off to create a new window.

Yahoo is also trying to integrate other services more closely with Messenger. For example, Fantasy Football is supported by the automatic creation of a group in the Messenger contact list.

The product is not in beta yet, but Yahoo plans to roll that out as soon as possible, and to continuously be rolling out new functionality as more user roll onto Vista.

My sense is that the adoption of Vista will be much slower than Microsoft would have us believe, but Yahoo is being sensible, building a Vista version of Messenger with basic functionality immediately. I just hope that Yahoo continues the push on the Mac client as diligently, since that client is woefully behind the curve relative to the Windows client.