Beyond Binary

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."

... Read more

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.

Microsoft confirmed late on Friday that store plans posted on Gizmodo are genuine, but represent the company's early thinking and that no final decisions have been made on how the company's retail stores will look when the first ones open this fall.

The designs, which include a giant video wall, Surface computers, and an "answer bar" were leaked to the gadget site, which wrote about them earlier Friday.

"As a part of our process in briefing creative agencies, we shared some early prototypes and concepts of our retail store plans," a Microsoft representative said in a statement to CNET News. "No final decisions have been made. As we previously announced, we are on track to open retail stores this fall.

As I noted last week, Microsoft plans to start with just a few stores this year with more to open in 2010. At least some of those locations will be in close proximity to Apple stores.

Microsoft first announced its plan to enter the retail arena in February, when it hired David Porter, a Wal-Mart veteran.

At last week's Worldwide Partner Conference in New Orleans, Microsoft Chief Operating Officer Kevin Turner (also a Wal-Mart veteran) said to "stay tuned" for more news on the retail front.

"We're going to have some retail stores opened up that are opened up right next door to Apple stores this fall," he said. "Stay tuned, just stay tuned."

PASADENA, Calif.--It's not realistic to believe AT&T will have an exclusive on the iPhone forever, CEO Randall Stephenson said Thursday.

"There will be a day when you are not exclusive with the iPhone," Stephenson said, speaking at Fortune's Brainstorm: Tech conference here. However, he declined to get into details on the company's negotiations with Apple.

AT&T CEO Randall Stephenson at the Fortune Brainstorm conference

(Credit: Fortune)

The issue of whether--and more likely when--AT&T loses the exclusive on the iPhone has become a major issue for the company and its investors.

"On balance, I think it works really, really well--maybe as well as any strategic partnership we have," Stephenson said.

Asked by Fortune's Stephanie Mehta whether he is completely satisfied with the nature of the relationship, Stephenson quipped: "I don't know if I could get my wife to say that about me, so I don't think I could say that about a business partner."

AT&T's earnings report early Thursday showed the company taking a hit from the expense of the new iPhone 3GS. "I'd like to pay less for the handset, go figure," he said.

But, he said, it's an investment that ultimately yields customers who spend more each month and who are much less likely to change cell phone service providers.

Stephenson again acknowledged issues with the quality of the company's wireless network but said that all carriers have areas with weak service.

"There's no greater cause of churn than network quality," he said, adding that "we have the lowest churn in the company's history."

Microsoft confirmed on Wednesday that it is planning to open its first stores this fall, with at least some of the locations likely to be right near an Apple store.

"As we progress on our retail strategy there will be scenarios where we have stores in proximity to Apple," a representative told CNET News. "We are on track to open stores in the fall time frame."

The fall timing is not surprising. One would assume Microsoft would want to have the stores open in time for Windows 7's October 22 retail launch and for the holiday selling season.

Turner

(Credit: Microsoft)

I'm hearing that Microsoft will open a few stores this fall, with more coming in 2010.

Microsoft first announced its plan to enter the retail arena in February, when it hired David Porter, a Wal-Mart veteran.

Speaking at the Worldwide Partner Conference in New Orleans on Wednesday, Microsoft Chief Operating Officer Kevin Turner told people to "stay tuned" for more news on the retail front.

"And stay tuned, because we're going to have some retail stores opened up that are opened up right next door to Apple stores this fall," he said. "Stay tuned, just stay tuned."

Turner promised partners that the company would share what it is learning with other stores.

"Every single thing we learn in those Microsoft stores that we put on the street we're going to share that openly and transparently with all of our retail partners so that they can do the exact same thing," Turner said. "And we're going to get that customer feedback directly. We're in the game for the long-term here."

Turner, himself a former Wal-Mart exec, noted he has some experience in this area. "And I know something about retail, and we've hired an incredible team to do an incredible job on retail."

The software maker has also opened an online software store that sells products directly to customers.

Last fall, Microsoft set up a "retail experience center" in Redmond. (See video below--Silverlight required, however.) However, at the time a Microsoft executive told the Seattle Post-Intelligencer that the company wasn't going to open its own stores.

In the beginning of the decade, Microsoft had one retail outlet--at the San Francisco Metreon mall. However, it closed that location in November 2001. It had been rumored to be eyeing a Times Square location back in 2005.