Beyond Binary

SAN FRANCISCO--Although Microsoft would rather everyone ran out and bought a Windows Mobile phone, the software maker is aware of reality. And, since it wants people to use Bing on their phones, it knows it needs to have software that works on other devices.

"Everyone understands the popularity and the pervasiveness of the platform," said Microsoft principal group program manager David Raissipour, following a Bing event Wednesday. "We are actively working on it."

Raissipour confirmed Microsoft is working on a mobile Bing application that will combine a number of features--more than just mapping and search. However, he declined to say what all of those features are or when the software will be ready.

I probed as to whether some of the cool mapping technology Microsoft showed on Wednesday might make it onto phones. Raissipour said such mapping requires a rich platform, but could potentially be done without Silverlight, if necessary. So, what about the iPhone?

"It's certainly possible," Raissipour said. "That's a rich platform."

Microsoft already has native mobile applications for many Windows Mobile phones, BlackBerry devices, and a number of Verizon feature phones. The company is also exploring what it might be able to do on Android, particularly on non-Google branded Android devices. In the meantime, the company has its mobile m.bing.com Web site.

I also had a chance to catch up with overall search engineering chief Satya Nadella to ask some overall Bing questions.

In particular, I wanted to see just how many people are actively choosing to go to Bing.com, as opposed to just searching via MSN or a browser tool bar. With Bing's predecessor, Live Search, very few people actually went to the Live.com page.

"It's still a small percentage," Nadella said, but noted that it has succeeded in getting a fan base, which was a key early goal of the product.

When it comes to the data that Microsoft is including at the top of some search results, in general, Nadella said Microsoft is not paying for the content, nor are companies paying to get their information included.

The benefit to Microsoft is that it displays more useful results while content providers get a link high up in the results page. "It's kind of like SEO [Search Engine Optimization] for structured data," Nadella said. As for those new mapping abilities, I encourage you to check them out for yourself and read . In addition, though, here's a video I did with Microsoft's Blaise Aguera y Arcas, where he walks through the new features.

MISSION VIEJO, Calif.--On my way to last month's Professional Developers Conference in Los Angeles, I took a small detour to Orange County to check out the recently opened Microsoft Store there.

Although I had heard plenty about Microsoft's nascent retail effort, I wanted to get a firsthand look.

At a glance, it's easy to understand why the store draws so many comparisons to Apple's stores. The outside of the store features an expansive glass window with a stylized Microsoft logo at the top. Inside, products are sorted into themed sections, with a help desk and theater in the rear, and all around are T-shirted enthusiasts ready to answer any and all questions.

From that standpoint, it's nearly a carbon copy. But even as it mimics much of the Apple approach, Microsoft finds ways to customize its message to its different role in the world. When it comes to laptops, for example, Microsoft is eager to lay out dozens of choices to highlight the variety of prices, sizes, and options available to those buying Windows.

Peeking into Microsoft's retail store (photos)

The company is starting small--opening just two stores so far, this one and another in Scottsdale, Ariz. The goal, Microsoft said, is to better understand what customers want at retail and, ideally, persuade larger retail chains such as Best Buy and Office Depot to adapt some of the more successful techniques to their stores.

Apple, by contrast, has become its own most significant channel with its online and retail stores, even though its computers and iPods can also be found at places like Best Buy. From a dollars perspective, Apple's retail stores alone accounted for $1.87 billion of the company's $9.87 billion in total revenue during the most recent quarter. Next year alone the company plans to open 40 to 50 stores, with more than half of them overseas.

But if its scale is different than Apple's, its goal is largely the same: to offer the best possible experience when buying its flavor of PCs and accessories, as well as to be, well, cool.

To that end, Microsoft has pulled out every tool in its arsenal, from PCs to phones to the Xbox 360, as well as a huge "video wall" made up of dozens of 42-inch flat screens connected to form a single, though constantly changing, image or video display.

But by far the biggest draw is a product that isn't even for sale--the Surface tabletop computer.

During the several hours I spent at the store, it was that device, more than the laptops, that drew people in and captured their attention.

Josh Griffin stopped in at the store with his three kids, with all four quickly heading to the Surface.

"This is cool," said Griffin, who came into the store to check out Windows 7 among other things. "I've read about Surface before, but never been able to see it. It's actually a little cooler than I thought it would be."

The three kids began carving virtual pumpkins on the Surface while we chatted, but eventually Griffin turned his attention back to the tabletop computer.

"Can I do one?" Griffin asked his kids, trying only somewhat successfully to elbow his way in.

Surface, though, isn't the only thing worth pointing out.

Microsoft has taken an interesting approach to selling PC software--the category it is best known for. Although Microsoft stocks dozens of software products on its back shelves, hundreds more titles are available on-demand. Customers can browse on a touch screen through the various options and once they select a product, it can be burned to disc in the back of the store, complete with a professional-looking disc label, DVD case, and manual.

"We're like legal pirates," said Steven Precious, COO of Tribeka, the company whose system Microsoft uses in its stores. Precious just happened to be checking in on the Mission Viejo store while I was there.

The software maker also uses its position as retailer to influence what software is loaded onto the PCs it sells. While Microsoft the operating-system vendor is required by antitrust decrees to allow computer makers to install whatever software they wish, Microsoft the retailer is allowed far more say.

As a result, PCs sold at the Microsoft Store come with what Microsoft calls its "signature" software collection--a bundle that includes Windows Live products, Zune jukebox, Bing search engine and Microsoft Security Essentials antivirus software.

Having its own stores also allows Microsoft to try to match other areas in which Apple benefits from its direct contact with consumers, such as offering in-store support. Where as Apple has its "genius bar," Microsoft has an "answers desk." Both Apple and Microsoft offer a theater in the back for various trainings.

Microsoft is also trying to match Apple's passionate workforce. The retail store employees are made up of Windows enthusiasts, some of whom moved across the country to work at a Microsoft store. As evidenced by a recent YouTube video, the staff can be accused of many things, but a lack of passion is not one of them.

One of the key questions in my mind, though, is whether business will be brisk enough to allow Microsoft to profitably operate. The software maker has said it intends to run its stores as a business, meaning that to expand well beyond its current two locations, it will need to show an ability to not just look pretty, but also make money.

Correction: An earlier version of this story incorrectly reported the amount of revenue Apple gets from its retail and online stores. Apple got $1.87 billion in revenue last quarter from its retail stores alone; the company does not break out sales from its online Apple store.

Microsoft appears to be getting relatively strong early adoption of Windows 7 in the 10 days since its official launch.

According to Net Applications, more than 3 percent of PCs accessing the Web in the past two days have been doing so using the new operating system. Usage of the operating system has been growing strong in recent days, though Windows 7 already accounted for 2 percent of global Web traffic in the days ahead of its formal launch.

"The early adoption of Windows 7 looks very strong, and I don't believe Vista enjoyed the same early success," said Vince Vizzaccaro, an executive vice president at Net Applications. "Plus, we've seen surges the past two weekend days, and Windows has historically seen much higher usage market share on weekdays than on weekends."

However, weekends tend to see stronger usage by consumers. And consumers are more likely to move quickly to a new version of Windows than businesses, which tend to do extensive testing before adopting a new operating system.

The news is not all positive for Microsoft, though. As a whole, the Mac OS continues to gain on Windows. As of October, Windows had 92.5 percent of the worldwide operating system market, but Mac OS reached 5.27 percent, up from 5.12 percent in September. (Past numbers from Net Applications showed the Mac OS with significantly higher market share, though the market research firm says it has changed its methodology to better reflect the relative traffic of the countries from which it is getting data.)

Apple's recent anti-Windows 7 advertising has touted that if users are going to upgrade their Windows XP machines and have to transfer their data anyway, they might as well move to a Mac. Vizzaccaro said the early numbers suggest that the Mac might indeed be benefiting from such a trend but said it is too early to know for sure.

"We'll know much more in the months ahead," he said.

The "Microsoft Signature" PCs that are being sold at Microsoft's retail and online stores contain a bunch of extra Windows Live software, but also feature something rarely found on a PC--a clean desktop.

(Credit: Microsoft)

Although Microsoft isn't making its own PCs, the software maker is taking an active role in customizing just what goes on the computers it sells through its online and retail stores.

In its new role as PC retailer, Microsoft is loading computers with what it's calling its Microsoft Signature experience--a collection of Microsoft products, including the complete Windows Live suite, Security Essentials antivirus product, Zune jukebox, and Bing 3D Maps software, as well as Adobe's Flash and Acrobat Reader products. Internet Explorer 8 is the browser, with Bing as its default search provider.

(Credit: Graphic by Ina Fried/CNET News)

The computers are being sold at Microsoft's two retail stores--the Scottsdale, Ariz., store that opened last week and the Mission Viejo, Calif., outlet that is opening later on Thursday. The software giant is also selling PCs throughout the U.S. via its online Microsoft Store.

The goal of the Signature effort is to give customers what Microsoft feels is the best software experience they can have on a PC.

"Signature gives them a PC that is ready to run," Microsoft retail unit chief technology strategist Kevin Eagan said in an interview. "We think we're really unlocking the potential of Windows 7."

Microsoft isn't completely deciding what goes on the system. Computer makers can also add software that takes advantage of particular hardware features, but it's not allowing any trialware or "crapware."

"Much like other retailers would define (what goes on their PCs), we do the same working closely with our (computer maker) partners," Eagan said.

As part of the in-store experience, Microsoft staffers will also help customers install other software they might want--even competitor's products, such as Apple's iTunes. They can also change their browser or default search provider before they leave the store, Eagan said.

"We want to give customers what they are asking for, so they leave store 100 percent satisfied," Eagan said.

Eagan said Microsoft is just taking advantage of the customization options that other retailers also have available to them and said the company doesn't anticipate any regulatory concerns.

"We're absolutely confident that what we've done is added another choice for customers," he said. "We think expanded choice is good for customers."

Those who already have a PC, but live near one of Microsoft's stores, can bring in their PC and have the Microsoft Security Essentials software added at no charge.

While the number of Apple-owning households continues to grow, the vast majority of those Macs are sharing space with at least one Windows-based PC, according to a new study.

The NPD Group said Monday that its online survey found that 12 percent of households with a computer have at least one Mac, up from 9 percent a year ago. Nearly 85 percent of those with a Mac, though, also have at least one Windows-based PC.

(Credit: Apple)

Overall, Mac owners tend to have more computers and more electronic devices than non-Mac owners. Two-thirds of those with an Apple machine have three or more computers, compared with 29 percent of Windows-only houses.

Houses with Macs also tend to be home to twice as many gadgets, including more iPods and GPS systems than are present in non-Mac abodes.

That makes me feel a bit better about my own domicile, which is home to several Macs and PCs, not to mention more gadgets than I care to admit. There's another reason, though, why Apple owners tend to have more digital gear than their non-Mac-possessing counterparts.

"While Apple owners tend to own more computers and more electronics devices, there is also a high correlation among Apple owners and more affluent consumer households," NPD analyst Stephen Baker said in a statement. "Thirty-six percent of Apple computer owners reported household incomes greater than $100,000, compared to 21 percent of all consumers. With a higher household income, though, it's not a surprise that those consumers are making more electronics purchases."

NPD compiled its results from 2,300 responses to its online survey.

REDMOND, Wash.--Steve Ballmer is never at a loss for words, but that doesn't mean he always spills the beans.

Such was the case with the top-secret Courier dual-screen tablet that Microsoft is said to be working on.

As part of an interview for our new CNET Conversations program, Microsoft's chief executive said he had nothing to say about the product. "I really don't," he told me and CNET TV colleague Molly Wood. (My sources tell me the project is real and that Courier is one of many prototypes, though that's about all I've managed to learn so far.)

The video of our interview is embedded here. For the full interview in text form, check out the transcript on the CNET Conversations Web page.

Ballmer was not similarly tongue-tied when it came to talking about his optimism for technology, his thoughts on the economy, or his company's competition with Apple and Google.

As for the economy, Ballmer said that things aren't getting worse, but didn't want to go as far as Google CEO Eric Schmidt who recently declared the economy is improving.

"Well, I think any sort of forecast at this stage is probably a little bit premature," Ballmer said. "Thank goodness we haven't fallen off a second cliff, which certainly in some economic times we have, but unemployment rates are still high and growing, so it's a little hard for me to say the worst of the recession is behind us when there's still a lot of families both out of work and more families out of work every day."

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Although the conventional wisdom is that the rise of the Netbook is hurting the Windows business, a Microsoft executive said Tuesday that lower-cost laptops can actually be a good thing.

Speaking at an investor conference, general manager Charles Songhurst said that overall, most people buying Netbooks are either multiple PC owners in developed markets or first-time PC buyers in emerging markets.

"From what we see they are incremental," Songhurst said. "They are new scenarios."

Even if that is true, the fact is that Netbooks have been growing in numbers, while traditional PCs have slumped--a shift that has undeniably hurt the average amount of money Microsoft is getting for each copy of Windows.

One of the opportunities, Songhurst said, is if Microsoft can gain additional revenue on high-end PCs, noting that Microsoft has tended to get about $50 in Windows revenue for the standard $1,000 PC. (Microsoft tends not to talk about how much it charges PC makers for Windows, so it was interesting to hear him mention that figure a couple of times during his chat, which was available as a Webcast.)

Songhurst

(Credit: Microsoft)

Asked about Google's forthcoming Chrome OS, Songhurst said that while it could be a threat if it is demonstrably better, just being cheaper won't offer much of a threat, saying the quality of Windows 7 will help the company fend off new competition. Microsoft plans to launch Windows 7 on October 22, while Google's Chrome OS is not expected until next year.

As for whether Apple might gain ground inside corporations, Songhurst said that Apple isn't winning over the key executives that make technology purchases, such as chief information officers.

"If they are not compelling to the CIO, they are not going to make inroads in the enterprise," he said.

On the Bing front, Songhurst acknowledged that even if Bing is getting good results in the U.S., the company faces an even larger hurdle in the global market, where Google has nearly 70 percent share. Songhurst said that although Bing's engine is available globally, it has yet to put the same kind of marketing dollars overseas as it has in the U.S.

"That marketing push makes a (big) difference," Songhurst said.

One of the other things Microsoft has done is sign deals with companies such as Hewlett-Packard and Lenovo to make Bing the default search engine on new PCs. Asked if Microsoft is eying more such pacts, Songhurst said yes.

"Always we'll do distribution deals for Bing," Songhurst said. "We're quite active in getting out and competing for those."

Microsoft on Thursday said the next version of Office for Mac will arrive by the 2010 holiday buying season, and it added that the new version will include a version of Outlook.

Outlook for Mac will replace Entourage, the current e-mail and calendar program in the Mac Office suite. Although it will still differ from the Windows version of Outlook, it will add support for more Exchange features, such as public folders and rights management features.

Office for Mac had a version of Outlook in its pre-Mac OS X days, but Microsoft switched to the Entourage program with Office for Mac version X because that version lacked a good connection with Exchange.

The software maker has worked over the past several years to add better Exchange capabilities to the e-mail software.

Apple, too, has worked to support Exchange within its own mail program and has said it will add improved Exchange capabilities from within Mail as part of its forthcoming Snow Leopard operating system. Eric Wilfrid, general manager of Microsoft's Macintosh business unit, said on a conference call that he couldn't really talk about how Outlook for Mac will compare to Snow Leopard, in terms of Exchange support, since Apple hasn't yet released the new operating system or detailed how the Exchange support will work.

Wilfrid also said he had nothing to say about rumors that Microsoft might be working on mobile versions of Office for the iPhone.

"That's been a popular question," he said. "No, there is no news today about any iPhone work."

On Wednesday, Microsoft announced a partnership with Nokia that will see it creating mobile versions of the Office applications for Symbian phones.

Microsoft also plans to bring Visual Basic support back in the next version of Office for Mac, but it didn't share more about the features that will be part of Office for Mac. In addition, it said it will launch a new "business edition" of its Office for Mac product that adds improved connections to SharePoint and Exchange Server.

The new product is slated to join the existing Home and Student edition on retail shelves on September 15, reducing the number of versions Microsoft sells from three to two. The new business edition, which will sell for the same $399 as the standard edition of Office.

Microsoft plans to open two of its first retail locations in Scottsdale, Ariz., and Mission Viejo, Calif., CNET News has learned.

The software maker confirmed on Tuesday that it has signed leases in both spots as part of an effort to launch its first retail outlets this fall.

"Over a billion people use our products every day yet we don't always have a way to directly connect with them," said Microsoft spokeswoman Kim Stocks. "We see the physical stores, as well as a consistent online experience, helping that."

The Orange County, Calif., store is in a mall that already houses an Apple retail store. Microsoft Chief Operating Officer Kevin Turner said at this month's Worldwide Partner Conference that some of the locations would be right near Apple stores.

The first stores' fall opening comes at an opportune time for Microsoft, which is launching Windows 7 on October 22.

"We're all very excited at Microsoft that we have a huge wave of innovation on the horizon," Stocks said. "The stores are an opportunity absolutely to share with customers those technologies."

Stocks said that Microsoft heard from customers that they wanted a simpler way to buy PCs.

"Our customers have told us three things--they want a more simplified buying option for PCs and devices, great technology, and competitive prices and a knowledgeable staff."

Over time, Microsoft plans to open stores outside the U.S., but the company hasn't said when that will occur. "The goal is to go global," Stocks said. "We are not sharing specific locations beyond the two we are announcing today."

As for products, Stocks said there will be products "in the areas of laptops, mobility gaming, and software." That will include Microsoft software and hardware, of course, as well as brand-name PCs and software from other companies.

On Friday, some of Microsoft's early store plans were leaked onto the Web. In February, Microsoft confirmed it had hired Wal-Mart veteran David Porter to lead up an effort to open up Microsoft-branded retail stores.

Microsoft declined to confirm the details of what will be in the stores--including a rumored "answer bar"--although Stocks did say that the stores would have both sales and support staff.