Beyond Binary

Microsoft made two enterprise moves on Monday, one expected and the other a bit of a surprise.

As promised, the company used its TechEd event in Berlin to release Exchange 2010, the latest version of its e-mail and calendar server software. Microsoft finalized the code for the product last month and had said it would launch at TechEd.

Microsoft VP Tami Reller talks about enterprise adoption of Windows 7 as part of a Webcast held after the first day of TechEd Europe.

(Credit: CNET News)

Meanwhile, the company also announced it is buying the Teamprise technology from SourceGear. Teamprise allows developers using Eclipse and those working on non-Windows operating systems to build applications using Microsoft's Visual Studio product.

"We know our customers face daily challenges with management, collaboration and development in heterogeneous environments. The industry must take steps to make interoperability a stronger business asset for our customers," senior vice president and developer unit head S. Somasegar said in a statement. "With the acquisition of the Teamprise assets, we're taking a step forward on this journey, providing customers with a viable cross-platform development solution that will help produce business results more quickly."

Microsoft didn't announce financial terms of the deal, but did say the Teamprise technology will be integrated into Visual Studio 2010.

At TechEd Europe, Microsoft also talked about enterprise adoption of Windows 7 and Windows Server 2008 R2, highlighting some early customers of the two products.

"We remain just pleased and humbled by the very warm reception we're seeing," Microsoft vice president Tami Reller said in a Webcast on Monday.

As part of the same Webcast, senior vice president Chris Capossela sounded off on Cisco's announcement of updated collaboration tools that could take on Exchange.

"Rather than stitching together acquired products and calling that a solution, we've built Exchange form the ground up," he said.

Microsoft is set to announce on Monday that it is ready with a second beta version of its Visual Studio 2010 and .Net Framework 4.0 developer tools. Both products are set for a final release on March 22, Microsoft said.

"Microsoft has reached the home stretch for Visual Studio 2010," said Dave Mendlen, a senior director in Microsoft's developer division. "This is probably the biggest release we've had in many years."

Among the product's features is a Tivo-like recording feature that Microsoft has now dubbed "IntelliTrace."

"That's our time machine," Mendlen said. "We're very proud of that."

Other features new to the 2010 release include support for Windows 7 and Windows Azure as well as tools for building on top of Microsoft's Sharepoint product.

With Visual Studio 2010, Microsoft is also taking the opportunity to scale back the number of different versions it sells, cutting the number of subscription options from seven to three. In a telephone interview, Microsoft Vice President S. "Soma" Somasegar said that move came from customer requests.

They told us "one place you can do better is making it simpler how you package your products," Somasegar said.

Under the new plan, myriad Visual Studio options will be consolidated into Professional, Premium, and Ultimate. Microsoft is planning an "ultimate offer" promotion that will give many current subscribers access to the next-higher version of Visual Studio as well as 750 Windows Azure compute hours per month. Next year, the company plans to change that to offer varying amounts of Azure compute time based on the level of the Visual Studio subscription.

Adobe said on Tuesday that it has reached a deal to acquire Web analytics firm Omniture for $1.8 billion, or $21.50 per share.

That represents a 45 percent premium to Omniture's average closing price for the last 30 days, Adobe noted in its press release. Omniture, which was started in 1996, has about 1,200 employees and took in just under $300 million in the 12 months ending Dec. 31.

Adobe CEO Shantanu Narayen called the move a "game changer" for the company.

"Adobe customers are looking to us for solutions to deliver engaging experiences and more effectively monetize their content and applications online," Narayen said in the press release announcing the deal.

The two companies said the deal is expected to close during Adobe's fourth quarter and is subject to government approvals. Omniture will become a new unit within Adobe, with Omniture CEO Josh James continuing to lead the business as an Adobe senior vice president. Adobe said the deal should add to earnings in fiscal 2010.

Update 1:45 p.m. PT: In an interview, Adobe senior vice president Paul Weiskopf said the deal will allow Adobe to merge the "art" of developing and delivering content with the "science" of measuring the impact of that content.

"Today that's a real pain point for customers," Weiskopf said. "We have the opportunity to integrate what is today a pretty disparate and not tightly integrated set of workflows."

The deal is the company's largest since its $3-billion-plus acquisition of Macromedia, announced in April 2005.

Weiskopf declined to discuss how long the deal had been in the works or whether there will be any job cuts once the deal goes through, although the company has a conference call slated to start at 2 p.m. PT and will also file additional details with the Securities and Exchange Commission as part of its tender offer to acquire Omniture's shares.

Update 2:15 p.m. PT: Adobe's executives are now on a conference call talking about the deal, as well as the company's most recent quarterly results.

However, there has been nothing too earth-shattering thus far.

Microsoft on Tuesday issued five critical Windows-related updates as part of its monthly Patch Tuesday release.

While the issues affect different versions of Windows differently, Microsoft said none of the issues apply to the final version of Windows 7, which Microsoft wrapped up in July.

The five bulletins address eight vulnerabilities. According to Symantec Security Response research manager Ben Greenbaum, the two vulnerabilities most likely to be used by attackers involve the way Windows handles ASF and MP3 media files. "We've seen similar exploits in the past and all a user would have to do is visit a compromised Web site hosting one of these malicious files, which could be an MP3, WMA or WMV file, and they could become infected."

McAfee Avert Labs director Dave Marcus said that two of the flaws, in particular, relate to serious security vulnerabilities in the networking components of Window Vista, Windows Server 2008 and Windows Server 2003 that could allow for malicious software to spread from one PC to another.

"These vulnerabilities are the most likely to be exploited by malicious code and are two of the best worm candidates that we've seen since Conficker," Marcus said in a statement. "That said, all of today's security bulletins address vulnerabilities that could allow an attacker to take complete control of a vulnerable PC."

In addition, Microsoft said it is re-releasing a bulletin from last month to address an additional control found to be vulnerable to an issue with the Microsoft Active Template Library.

Greenbaum noted that Microsoft has yet to issue a patch for a zero-day flaw in Internet Information Services that was made public last week. "Until a patch for this is issued, as a temporary workaround we suggest IT administrators using IIS 5.0 and 6.0 turn off anonymous write access immediately," Greenbaum said. "We also recommend using a firewall and restricting access to creating directories. Those using IIS 7.0 with FTP Service version 6.0 installed should upgrade to FTP Service version 7.5."

There are already some attacks being seen based on that flaw.

"While the company will not release an update this month, it will do so once it has reached an appropriate level of quality for broad distribution," Microsoft said.

Meanwhile, Microsoft said Tuesday that it is investigating another zero-day issue, this one a reported flaw in Windows Vista and Windows 7.

As for the patches Microsoft did release on Tuesday, Qualys CTO Wolfgang Kandek noted that some of the bulletins are interesting in that they either affect only newer operating systems or are more critical on later versions--the reverse of what is normally the case. Overall, he said, five Windows patches should keep IT workers busy.

"Due to the criticality of the patches and wide coverage of the operating system, this will be a busy day for IT administrators," Qualys CTO Wolfgang Kandek said in an e-mail.

Microsoft on Monday said it is looking into a report of a flaw in some versions of its Internet Information Services product that could allow an attacker to gain control of a system.

In a statement, a Microsoft representative said the company "is investigating new public claims of a possible vulnerability in IIS 5 and IIS 6 File Transfer Protocol (FTP)."

Microsoft said it is not aware of any attacks using the vulnerability. "We will take steps to determine how customers can protect themselves, should we confirm the vulnerability."

According to IDG News Service, code for exploiting the unpatched flaw was posted to the Milw0rm Web site. IDG said the exploit appears to affect primarily older versions of IIS--and only when the FTP function is enabled.

Once it is done with its investigation, Microsoft said, it will decide how to address the matter, which could include a security update as part of its monthly Patch Tuesday or an out-of-cycle update.

In a posting on Monday, the U.S. Computer Emergency Readiness Team (US-CERT) suggested IT administrators "disable anonymous write access to the FTP server to help mitigate the vulnerability" but added that "a proper impact analysis should be performed prior to taking defensive measures."

Oracle said on Thursday that the U.S. Department of Justice has approved its plan to buy Sun Microsystems.

With Sun's shareholders having given the $9.50 per share deal the nod last month, the remaining major hurdle is approval from European antitrust regulators. Oracle declined to comment beyond a statement confirming the Justice Department's move.

The Department of Justice had said in June it needed more time to look into the deal, but has now given its stamp of approval.

Oracle announced its $7.4 billion bid for Sun back in April, following Sun's rejection of overtures from IBM. IBM was said to be still interested in Sun and somewhat blindsided by Oracle's move, a source told CNET News at the time.

The acquisition is part of a change in thinking for Oracle, which at one time eschewed mergers but has gone on a buying spree in recent years, gobbling up PeopleSoft and many other software companies. Ellison at one time specifically rejected the notion of buying Sun.

The fact that many customers are shifting from running their own e-mail servers to getting mail as a hosted service doesn't have to spell doom for Microsoft, insists Rajesh Jha, the man who heads the Exchange business.

In an interview on Monday, Jha said that, although many see the rise of services as more of a benefit to companies like Google, he sees it as an opportunity for his business.

Microsoft's Rajesh Jha, shown here in his office earlier this year, says the shift from a world of servers to a world of services need not spell trouble for the Exchange business.

(Credit: Ina Fried/CNET)

"I feel we will grow our share overall with the move to services," Jha said. In particular, Jha said that Microsoft has a better option for small and midsize businesses than it did when its only option was for those companies to run their own Exchange servers. "I think we have a huge opportunity for growth. I don't think we are in a defensive position at all."

In a year in which many software businesses--including a number within Microsoft--took a hit, the Exchange business continued to grow last year, Jha said, saying that revenue for the product nearly hit $2 billion and has 70 percent market share among corporate users.

Jha acknowledged, though, that competition for the in-box is definitely heating up.

"It is where people spend more of their hours," Jha said. "It's become a real critical part of the day. Our competitors are smart. They see it too."

In addition to Google, IBM continues to push its Lotus Domino/Notes combination while Cisco has said it will have a Linux-based e-mail offering based on last year's Postpath acquisition.

Sounding a familiar refrain, Jha said that he expects customers to warm to Microsoft's strategy, which lets them have the option of running Exchange themselves or purchasing it as a subscription hosted service.

"With Exchange, we don't give them any kind of technology ultimatum," Jha said. "We don't say 'Thou shalt move to the cloud.' "

Microsoft has shifted its priorities, though. Unlike past versions of Exchange, Microsoft developed Exchange 2010 as a service first, and only later has it done the work on the server product. That server product, which has been in testing for some time and reached the beta stage in April, is now ready in a near-final "release candidate" form.

Among its features is one that lets users "mute" an e-mail thread that they are no longer interested in being part of.

Jha reiterated that the final version of Exchange 2010 should be done later this year.

"I feel pretty good about how we are tracking," he said, noting that half of Microsoft's in-boxes--some 80,000--are now on the new version of Exchange. " We'll definitely be ready this year."

The overall market for enterprise spending may be weak, but Novell and Microsoft insist they are signing plenty of joint customers.

Novell CEO Ron Hovsepian (left) shakes hands with Microsoft CEO Steve Ballmer after signing a 2006 accord.

(Credit: Microsoft)

In a statement, the software makers say they have signed more than 100 joint customers in the past six months. That's twice the rate at which they had been signing folks as part of an 2006 accord, the two companies said. In total, the two companies say they have sold $200 million worth of Novell support and maintenance certificates to more than 300 customers.

Microsoft says the economy is helping this piece of its business. "In today's economic environment, when customers are looking to derive the greatest value from their IT investments, we are seeing an increased rate of demand for the interoperability solutions and IP peace of mind benefits provided by our collaboration," Microsoft general manager of strategic partnerships Ted MacLean said in a statement.

Among the better known North American names signed since November are Honeywell Aerospace, Procter & Gamble, SC Johnson and Sony Pictures Entertainment. The companies also named several other U.S. firms as well as a number of companies in Asia and Europe.

The Microsoft-Novell deal is often held up by Microsoft as an example of how open source and proprietary software makers can work together. Striking that deal, though, was not easy, as noted in a book earlier this year co-authored by Microsoft's Marshall Phelps.

The arrangement has also led to technical cooperation between the two, including a plug-in for Microsoft's System Center Operations Manager software which lets IT workers monitor their Linux and Windows system environments all within Microsoft's management software. That module is due out later this month, the companies said.

In a statement, 451 Group analyst Jay Lyman said that "the partnership has substantially benefited Microsoft's Linux integration story and has driven Linux revenue for Novell.

"The development and work by the two companies to improve Linux and Windows interoperability addresses the reality of mixed enterprise environments for customers, who were largely the impetus for this collaboration and are now benefiting from the resulting technology and support," Lyman said.

Microsoft, which already had a business selling its software licensing technology to other companies, now plans to spin that out into a separate company, known as InishTech.

(Credit: Microsoft)

Microsoft said on Tuesday that it is spinning out as a separate business a two year-old effort that licenses its software protection technologies to other companies.

In the past two years, Microsoft has signed up 120 companies to use the software activation and licensing technologies, including its own eHome unit. But it decided creating an independent company was the way to go.

The new venture, dubbed InishTech, will be based in Ireland. Microsoft will retain a stake in the company as well as an observer seat on its board of directors. Microsoft also plans to be a customer of the company.

The effort is the latest example of Microsoft spinning out its technology to a start-up. A number of past efforts, such as Inrix and Zumobi (formerly ZenZui), have come from technologies developed within Microsoft's research labs, while others have come from various product teams.

It's part of a broader effort at the company to , a push that dates back to late 2003.

Not all of the start-ups have continued with their original business plans, however. Microsoft spun out a social-networking technology, known as Wallop, in 2006. A start-up by that name hoped to launch its own social network based on the technology, but ultimately decided to join, rather than try to beat the likes of Facebook and Bebo. The company now develops applications for social networks.