Beyond Binary

Burlington Northern Santa Fe Railway is hoping that Microsoft's telephony software can help it replace its aging phone system. But it also hopes the software might help it replace another asset that's getting older: its workforce.

About 40 percent of the company's workers will become eligible for retirement in the next few years. BNSF is hoping that by adding tools like unified communications, it can help attract workers who have grown up with tools like instant messaging and video conferencing.

"We've got to attract and recruit that next generation of workers," said Gary Grissum, BNSF's assistant vice president of telecom. "That's the way they communicate. They expect that same type of communication in a business environment."

Just how much that helps recruitment remains to be seen.

In any case, it's a nice win for Microsoft, which was up against competing products from Cisco and IBM that had also been tested by BNSF. For several years now, Microsoft has been trying to expand its corporate presence from the desktop to the phone. The company took its corporate instant messaging product and transformed it into one that can handle phone calls as well.

BNSF has been piloting Microsoft's software with about 700 workers in its tech unit since December. Next month, it plans to expand to 1,000 workers, including its top executives, with plans to go to 15,000 workers by year's end.

Microsoft almost didn't get the railway deal. "We looked really hard at Cisco," Grissum said. "We are a Cisco shop from a network infrastructure side."

Cisco is still ahead when it comes to telephony features, Grissum said, but, in the end, it was the PC software experience that sealed the deal for Microsoft.

"Microsoft owns the desktop," Grissum said.

Heading into the project, Grissum imagined that the toughest part would be convincing the company's workers--many of whom have been at the company for 20, 30, or even 40 years--to embrace the technology.

"What we found was just the opposite," he said. "The biggest challenge has been managing demand."

Although the early pilot was supposed to focus on just those in the technology services unit, about 100 people outside that group have managed to get in on the trial.

BNSF isn't throwing away its desktop phones. For now, it will add Microsoft's PC-based "soft phones" as an option in addition to using standard handsets.

"At this point Microsoft doesn't have al the features we need," he said. "We're not replacing phones right now...As Microsoft moves to 'Wave 14' (the next version of Office), we'll look hard at the Microsoft solution."

Down the road, the company is also thinking about trying to expand into intra-company social networking using SharePoint. "We just have to get our head around how to incorporate that," Grissum said. "As soon as we get the first wave of unified communications out of the way we are going to take a hard look at that and what we do."

Microsoft's patent push is paying off.

The software maker, which stepped up its rush to the patent office five years ago, has reached a milestone, having received its 10,000th U.S. patent earlier this month.

The efforts have propelled Microsoft to the upper echelon among patent filers, though IBM still gets more patents issued than any other company. Last year, Big Blue became the first company to have 4,000 patents issued in a single year.

Microsoft, meanwhile, has risen to the top 5 among patent recipients and for the last two years has topped a key ranking of overall patent portfolio strength.

"Logging the 10,000th patent really is a testament to all of the innovation that has been taking place," Microsoft chief patent counsel Bart Eppenauer said in an interview.

But while its patent filings have been up, the company hasn't managed to stay out of the courtroom. The number of patent lawsuits against the company has actually increased pretty substantially in the last couple of years.

"That increase has come almost entirely from entities that do not produce products," Eppenauer said. Most of the suits have come not from other technology companies, he said, but rather from the firms whose primary business is acquiring and enforcing patents. In those cases, having a large patent arsenal of one's own is of little use, since there are no products that could be used to countersue over.

Microsoft's broader patent portfolio has come in handy in other ways, though, particularly as the company has looked to license its technology to other companies and even to do things like its deal with Novell around Linux.

"Patents really are the currency of innovation in our industry," Eppenauer said.

As for the 10,000th patent, it covers a technology used in computers like Microsoft's Surface that link a real-world object with a set of data or images stored on a computer.

Curtis Wong, one of the inventors listed on the patent, said the idea is a simple , but powerful one. Basically the idea is taking an object that might be familiar to a person, say a matchbook from their favorite bar, and having the surface computer associate that object with digital information, say one's favorite songs.

In an odd coincidence, Wong and a colleague were also on Microsoft's 5,000th patent, which covered an approach for linking together a virtual audience of online gaming fans.

Patents have become a bit of a status symbol within the corridors of Microsoft's campus in Redmond, Wash. The company gives workers up to $1,500 each time they apply for a patent as well as a cube with details on the invention. Once a patent is granted, Microsoft workers get a plaque that includes a copy of the first page of the patent application.

Microsoft's patent filings have become so prolific that it now requires a small army to handle the 2,500 to 3,000 U.S. patent applications that the company files each year. It now has more than 100 people in its patent group including more than 40 attorneys, along with analysts, business folks as well as paralegals and support staff. For Wong, though, all the patents have started to become a bit of a distraction, literally.

"The cubes are blocking my window," said Wong, who is listed on about four dozen patent applications.

Editor's note: This is part of a series of stories about the recession's effect on the tech industry.

After nine months of searching for work, Ben Klausner thought he'd finally caught a break when he landed a contract gig in September doing security work for Microsoft's cloud computing project.

Just a month after he started, though, he learned his contract was ending. Now Klausner, a 55-year-old former IBM worker finds himself again out of work. And the prospects for employment look even dimmer than they were before the Microsoft job.

"It was frustrating," he said of his brief Microsoft experience. "You go in and you expect to be there for a year or more and after a month they tell you you have another 30 days."

Klausner's story is the kind that unemployment statistics and headlines don't often take into account. Unlike companies that have had widespread cuts, Microsoft hasn't announced broad layoffs. However, that doesn't mean the ranks of those doing work for Microsoft are as robust as they once were.

Microsoft has sharply slowed hiring and cut a significant--but unspecified--number of contractors. The company has also said it is looking to reduce its bills from its vendors, an action that could also trim the ranks of those who do business on Microsoft's behalf.

"I don't think many people are aware that Microsoft has cut back a lot of projects," Klausner said.

Klausner said he tried to find another job either within Microsoft or at the consulting company through which he got the Microsoft work, but he came up empty. "They talked about finding other things, but they didn't have anything," he said.

Things haven't worked out the way Klausner planned when he left his IBM job in Texas nearly a decade ago. Klausner, a ham radio enthusiast and science fiction fan, had grown tired of Texas and wasn't enjoying his latest assignment at IBM. He headed to Seattle at the peak of the dot-com boom because of its low unemployment rate and fast-growing technology sector.

"It was the height of the boom, so I figured I could make a move," said Klausner, whose resume includes work as a systems and network architect in addition to his security work. He found jobs at a couple of Seattle-area start-ups, but after the dot-com bust, he found steady work harder to come by.

Eventually, he settled on finding work as a contractor--one of the legions of tech workers that companies hire for specific projects. "I've been doing contract work for about four years; not so much by choice but by circumstance. It's what was available."

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But now, Klausner said he doesn't find very many jobs even for contractors. He said he applies for several jobs each day but that there's a huge amount of competition, noting that the recent failure of Washington Mutual has put even more technical folks in competition for the slots that do come open. "There just aren't that many coming up either," he said.

For now, Klausner is also curtailing spending as best he can. "I'm going into what I think of as hermit mode," he said. "I don't go out much. I don't buy much. I was on the verge of replacing my car and that went on hold."

Instead, he is relying on his 12-year-old Ford Explorer as he searches for new work. That, he hopes, will make his savings last longer.

"Of course, investments have gone in the toilet so it's not as big a cushion as I would have liked," Klausner said. "I've got some savings for a couple of months, but it could be a real problem if this goes on."

Next in the series: For Net consultant, a crisis, then a silver lining

Transitive, the company best known for powering the emulation layer that helped ease Apple's transition to Intel chips, announced Tuesday that it is being bought by IBM.

In addition to helping Apple create Rosetta, Transitive eased a number of different architecture transitions in the tech world, including SGI's move from MIPS to Itanium processors as well as an effort by Intel to woo Sun Microsystems customers. IBM was also a customer, using Transitive's tech to allow x86 workloads to run on Big Blue's Power processor-based servers.

IBM didn't say how much it would pay to acquire Transitive, which is headquartered in Los Gatos, Calif., and also has development efforts in Manchester, England. Transitive has about 100 employees. The deal is expected to close in early December.

"Transitive is a leader in cross-platform virtualization and a pioneer in developing technologies that allow applications written for one type of microprocessor and operating system to run on multiple platforms--with little or no modification," IBM said in a statement. "As a result, the technology will enable customers to consolidate their Linux-based applications onto the IBM systems that make the most sense for their business needs."

IBM plans to continue to offer its PowerVM LX 86 product, which is based on Transitive technology. IBM is evaluating Transitive's other products as part of its overall Systems product strategy.

With Microsoft having, at the very least a "hiring chill," we decided to check in with other big tech giants on their hiring plans.

It's a little hard to get a clear picture of what other companies are doing--in part because so many have already announced plans to cut jobs. Intel's workforce is down thousands from where it was a couple years ago. Hewlett-Packard has already said it plans to shave 24,000 jobs as part of its EDS purchase, while Dell and others have also been cutting back.

Yahoo, already under pressure from competitor Google and the ugly saga of Microsoft's attempt to acquire the company, said Friday that it is bracing itself for a weaker advertising market.

"We believe it's imperative we align our cost structure with today's economic realities," said Yahoo spokesman Brad Williams. "We've been looking at ways to streamline our processes and bring more efficiencies to how we work as an organization," he said, and the company hired Bain & Co. to "help us identify opportunities for improvement."

He wouldn't confirm that layoffs are part of the plan, but payroll is a major expense, and most employees know how to read the tea leaves when they hear the word "streamline."

Though Yahoo is under pressure itself, Williams said the economy and the advertising market led to the current analysis. "The collapse of the credit markets...accelerated what had been a pretty uncertain market," he said.

For its part, Google said "We continue to hire talented people across functions for our offices worldwide." Of course, the real question is at what pace they continue that hiring.

In a meeting with reporters Wednesday, Chief Executive Eric Schmidt supplied a big dose of caution about whether there might be effects from the broader economic issues.

"It's a very dynamic situation. There is evidence credit is a problem for certain sectors. We have not yet seen any impact from it," Schmidt said. But, he added, "We might. All bets are off. Nobody knows."

Many expect TV and print advertising to be hit harder, but that doesn't mean online ads are immune. Even if individual ads or campaigns are profitable, the ad market can be hurt when customers tighten their purse strings and advertisers reduce spending.

Most other companies didn't have much new to say on a Friday afternoon, but it's fair to say that every company has got to be taking a second look at those 2009 numbers. Anyway, here's what several big names did have to say on the matter.

Dell: Dell spokesman David Frink said the company is certainly monitoring things, but had nothing new to announce. "But as you know, we've got a well publicized effort under way to reduce costs," Frink said. Dell has cut 8,500 workers from its ranks in the last four quarters. That said, Frink said Dell "will selectively hire in areas that are important."

HP: "Workforce rebalancing is a continual activity across our businesses and geographies to ensure that resources are aligned with the opportunities in the market," HP said in a statement. "We expect that our overhead costs, which include IT, real estate and shared support functions, will decline more from (fiscal 2007 to fiscal 2009) than they did from (fiscal 2005 to fiscal 2006)."

IBM: "We haven't announced any freeze," an IBM representative said. As of right now, nothing has changed at IBM. We continue to hire in key skills areas."

McAfee: "McAfee has not changed its hiring process and continues to make strategic investments in its personnel," A company representative told CNET News. "We continue to add to our headcount. McAfee has grown significantly over the past quarters."

Microsoft: "Microsoft will continue to grow and add thousands of new jobs this year, but given the current economic environment, we are taking the prudent step of reviewing our hiring plans and will make some adjustments as appropriate," spokesman Lou Gellos said in a statement. "We are optimistic about our prospects for growth and will continue hiring the talent we need to ensure our ongoing success."

Intel: Declined to comment, citing a pre-earnings announcement quiet period.

Apple: Declined to comment, also citing a pre-earnings quiet period.

Oracle: Declined to comment.

CNET News' Charles Cooper, Stephen Shankland, and Robert Vamosi contributed to this report.

Lotus Notes is one of Microsoft's favorite punching bags.

It's a frequent target at Microsoft's partner conferences and sales meetings. Want more sales, go after Notes.

The effort appears to be paying off. Microsoft says that in the last six months of 2007, more than 300 big companies, representing 2.8 million people, began switching from IBM software onto Exchange Server, Office and SharePoint Server.

The company said it expects an even greater number to switch in the next six months. That's despite the fact that the number of Notes customers has been shrinking.

"The number is getting smaller every year," said Clint Patterson, a director in Microsoft's unified communications group.

Gartner analyst Matt Cain says that among enterprises with more than 100 users, Microsoft holds about 62 percent share, compared with about 26 percent for IBM.

"Microsoft has been picking up a percentage point or two of e-mail market share based on seats for the past few years, and we expect that to continue," Cain said in an e-mail interview.

Microsoft is set to announce an updated set of tools on Monday aimed at helping even larger businesses--those with hundreds of thousands of mailboxes--move away from IBM's software and onto the Microsoft products.

That's important, Cain says, because while moving e-mail and calendar functions to Exchange is rather straightforward, "the complexity lies in migrating things like groups, archives, and contacts, and of course, Domino applications." Microsoft's tools, he said, help fill in some gaps and offer an alternative to fee-based tools from vendors such as Binary Tree and Quest.