Beyond Binary

Perhaps the next time Brad Smith heads to Brussels, it will be for a vacation.

After years of wrangling with Microsoft, the European Commission announced an accord with the software giant Wednesday on several fronts that seems poised to put an end to its antitrust concerns with Redmond.

Brad Smith

(Credit: Microsoft)

In the wake of the announcement, I spoke to Smith, Microsoft's general counsel, about the decision, what it means for the future of Windows, and whether the company sees its spot on the antitrust hot seat now being taken up by other companies, including Google.

Here's an edited transcript of our conversation:

Q: Is this really it as far as Europe is concerned?
Smith: This is definitely a major milestone for Microsoft. Today's announcement reflects a broad set of agreements that really address a wide array of issues. At the same time, we obviously need to keep our eye on the ball. Antitrust issues will continue to be important for us, just as they are going to continue to be important for a number of other leaders in our industry. We're going to have to do an excellent job implementing these agreement. We are going to have to do an excellent job addressing any new issues that arise in the future. Having said all that, I also think it is fair to say, as Commissioner [Neelie] Kroes did when she spoke in Brussels, this does represent the closing of one chapter and gives us the opportunity to open a new chapter. We're definitely enthused about that opportunity and we're committed to ensuring the next chapter is a positive and constructive one.

One of the things that Steve Ballmer talks a lot about in terms of antitrust issues is getting legal clarity on what one can and can't do. Do you feel like you now have that understanding with the EU?
Smith: I think this gives us a great deal more clarity. I think it gives the industry as a whole more clarity. It's perhaps most helpful in the area of interoperability because it really implements a new framework. It applies to a broad array of Microsoft products--Windows, Windows Server, Exchange, SharePoint--and for all of these products it has certain principles that we have to adhere to. It addresses the way we implement file formats.

At the same time, no advance on any single day can ever answer all questions for all companies for all time.

Essentially the EU has said through its very objections that you can't put a media player in Windows and you can't put a browser in Windows. What do you feel Microsoft can include in future versions?
Smith: There are two things to think about. First is what gets included in Windows, and second, what's the right way to address something that is included.

Our basic approach is to include in Windows, software that has APIs (application programming interfaces) that will be beneficial for other applications to call on and use. The browser is definitely an example of that. It's quite probably even more important in that role today than it was, say, when the browser issues first arose in the 1990s. The media player plays a similar role in terms of some broad APIs that are used by a wide variety of other applications.

There are other things that we have put in Windows in the past that don't necessarily involve the same role. A good example of that is Windows Live Messenger. We had Windows Messenger in Windows XP. It's not in Windows Vista or Windows 7 We're trying to make thoughtful decisions about what is included.

Then the second question that arises is how do things get included. How do we document APIs that our browser is using so that other browsers can use them as well? That's part of the U.S. consent decree.

How do we ensure that [computer makers] have flexibility to offer competing choices? How do we ensure that consumers are aware of competing choices and can use them if they wish. That latter part is an area where different governments have chosen different approaches at different times. The U.S. Department of Justice chose one approach in its consent decree. The Korean Fair Trade Commission chose a second approach. The European Commission in the media player case in 2004 chose a third approach. Today's announcement on the browser reflects the European Commission choosing a fourth approach.

Some people have the opinion that as a result of these different antitrust issues, Microsoft really finds itself with one hand tied behind its back as it competes in the battles of today. Do you believe Microsoft in the current antitrust environment competes on an even footing with some of the other Internet giants?
Smith: I do believe it is very important for all technology leaders in our industry to follow the same laws and obey the same rules. The rules don't necessarily apply in the same way when a company has a small market share as it does when a company has a large market share. But there are a number of companies that have large market shares for very important products. We've taken a number of steps to get into line with new legal rules in this field. The law has evolved and we've needed to evolve to address these new obligations.

We do believe our competitors need to play by the same rules. They've often been at the forefront of asking regulators to evolve the law in new directions. Now that the regulators have done so, we believe they need to pay attention as well.

Do you anticipate a period of time over the next few years where Microsoft is more likely to be the subject of antitrust inquiries or the company on the other side of the table for a change?
Smith: I think that we have addressed a very wide array of issues. Perhaps, in part because we were the first company to have to go through these inquiries, at least since the dawn of the PC era. We've probably had to go farther and sooner than other companies have had to do. We're now in an era where a different company seems to be in the headlines for competition law issues, if not every day, at least every month.

I think that what we are going to see in the next decade is this field of law being applied to a wide number of technology leaders that have high market share. We're going to see that, not only in Washington and Brussels, but we're likely to see that in more countries around the world simply because the global economy has evolved.

Have you expressed concerns specifically to Europe or Washington, D.C., about some of Google's behaviors?
Smith: We were very transparent last year when Google entered into its agreement with Yahoo. We felt that that was an illegal agreement that Google had entered into for the sole purpose of preventing Microsoft from becoming a more successful competitor, together with Yahoo, in the search space.

It was only when the Department of Justice informed the parties that it was on the verge of filing suit that Google decided to drop that agreement. We have not been shy about raising concerns when we have them.

It was only a couple hours after you guys settled with Brussels that we heard from D.C. with regards to Intel. When you initially heard that the FTC was filing suit against Intel, did you have feelings of empathy toward what their lawyers are going through, or what were your initial reactions?
Smith: I obviously know from a lot of firsthand experience the challenges that arise when a company needs to address these kinds of issues. Our road was a long one and it had its share of difficult moments. Antitrust issues are never easy for company to address.

This isn't a case where Microsoft has taken a public stance or even voiced to the regulators a position, is it?
Smith: We have not taken any public or nonpublic positions on the issues.

Are you guys looking to reach an agreement with Plurk? You guys said that you used code you shouldn't have? I'm curious if you are trying to negotiate some sort of settlement with them?
Smith: I wouldn't want to say anything that goes beyond the public statement we put out.

It does seem when I look at any particular issue with regards to the Internet, Microsoft tends to have a much more cautious approach. It seems like it is tough to compete when others are bundling more than you.
Smith: I think our goal is to be thoughtful but also fast-moving. As we look at the Internet today, it is increasingly a regulated space. That wasn't the case a decade ago. I think a thoughtful company needs to really think through how its products and services are going to comply with the regulations that are going to be enforced or likely to be applied in many different countries around the world. At the same time, one cannot let that get in the way of moving forward quickly. I think it's striking that balance that is really quite important. One needs to move fast. One shouldn't move faster than speed of thought and yet one shouldn't be so thoughtful that one simply analyzes problems and fails to solve them.

Do you think Microsoft has erred a little too much on side of caution in recent years?
Smith: I don't know that we've erred too much on the side of caution, but I do think it's extremely important we move quickly. This is a very dynamic space it is certain to remain a very dynamic space. Customers are interested in deploying new products and services, whether it is on the client, on the server, or on the cloud. The real key is to develop the capability to be both thoughtful and fast moving.

Microsoft said on Tuesday that a blogging application posted to its MSN China site did in fact copy code from a rival.

Microblogging site Plurk lashed out at Microsoft on Monday saying that the Juku application stole its user interface and code. Microsoft said on Monday that it was investigating the matter and suspended the Juku service on Monday night.

Microsoft has said a third party and not it or its Chinese joint venture partner wrote the Juku program.

"The vendor has now acknowledged that a portion of the code they provided was indeed copied," Microsoft said in a statement. "This was in clear violation of the vendor's contract with the MSN China joint venture, and equally inconsistent with Microsoft's policies respecting intellectual property."

Microsoft said it is now suspending access to the Juku beta "indefinitely."

"We are obviously very disappointed, but we assume responsibility for this situation," Microsoft said. "We apologize to Plurk and we will be reaching out to them directly to explain what happened and the steps we have taken to resolve the situation."

Plurk has not said what, if any, action it will take against Microsoft. In a blog posting on Monday, it said it is still evaluating its options.

"We're still in shock asking why Microsoft would even stoop to this level of willfully plagiarizing a young and innovative upstart's work rather than reach out to us or innovate on their own terms," Plurk said in the blog.

It's the second time in recent weeks that Microsoft has been accused of lifting code. It was forced to pull a Windows 7 download tool after that product was found to contain open-source code. Microsoft blamed a third-party vendor in that case as well.

The company also said it and its Chinese joint venture "will be taking a look at our practices around applications code provided by third-party vendors."

Plurk accuses Microsoft China of ripping off its design and code to create its Juku microblogging service.

(Credit: Plurk)

It's been a busy year for Bob Muglia.

Microsoft's server and tools boss shipped an update to Windows Server, got promoted to division president, and prepared Microsoft's operating system in the clouds--Windows Azure--for its commercial launch.

Bob Muglia

(Credit: Microsoft)

In what has become a bit of a year-end ritual, Muglia sat down with CNET for a year-end interview. We hit on a range of topics, from the future of Windows Server, to why his bank won't be moving to Windows Azure any time soon, to the changing life of an IT manager, to Microsoft's consumer future. (Spoiler alert: Muglia thinks it is bright.)

Here's an edited transcript of our interview:

A few years out, how much does Windows Server, the server operating system, start to resemble Windows Azure?
Muglia: Well, making them as similar as possible is clearly the goal, and the goal is to take all the things that we do in Windows Server and make those capable to be done in Windows Azure, and then take the learning we have in Windows Azure and bring it back to Windows Server.

We just took the step of bringing the Windows Azure team, Amitabh (Srivastava) and his group, and putting that in my organization.

Now, what we also did as a part of that, is we merged the Windows Azure and Windows Server teams together. I just talked to Amitabh and he's really excited about the synergies that he can build across the organization and making these things as similar as possible.

In our own services, obviously we choose the hardware, and so there's a more limited set of things that work together. In some senses that gives us a bit of agility on the services side, because we can make something work in one very particular way, but what we've got a long term history of doing is understanding how to do that, and then abstracting that out to work in a much more general purpose way, to work with the hardware that our customers have.

One of the things we're looking at is how do we take the ideas that we're bringing to market in the form of Windows Azure service, and then build those into Windows Server and make them available to our on-premises customers and our hosters.

Do you expect there to be sort of an interim option? I wouldn't be surprised to see you guys do something in the intermediate term where you have the traditional Windows Server that runs on any hardware, you have Azure very customized for your data center, but then make a version of Windows Azure that they can write Azure apps for, but run in their own data centers.
Muglia: We're looking at those sorts of options. I think the trick to the thing is to understand what are the workloads that are most appropriate for doing that, and how would we structure that, and honestly we're still looking at that.

There are some interesting thoughts in that sense, and you can see how, for example, in a high-performance computing environment, where people could use hundreds or thousands of computers in one cluster, you know, Azure is really very, very helpful for something like that. But we're still looking at understanding exactly how we might bring some of those things to market.

I know you're the enterprise guy, but I thought I would give you the opportunity to come to the rescue of your consumer colleagues. One of the analysts pretty prominently said in The New York Times that it's kind of "game over" for Microsoft on the consumer side, particularly phones. I'm curious your thoughts on this.
Muglia: Well, I read your blog. You did, generally speaking, come to our defense. I mean, it's probably a fair thing to say that we understand the nerd. I think we understand more than the nerd, but it's certainly true that we do a good job with that audience, and that's actually my customer in a lot of senses, because I've got the developers and the IT pros.

You know, I feel like as a company we have a lot of focus on the consumer, and are doing a lot of great things that are quite revolutionary to consumers, and we're going to continue to do it. I mean, obviously if you look at what's happened even with Windows 7 and the success of Windows 7, most of the short term success has been in the consumer marketplace. The business marketplace is going to happen, but business moves slower than the consumer does.
Obviously we've had products like Xbox that have been very successful with consumer, and I think the new Zune work has been really fantastic, and obviously Bing has been really great.

I also think that people are going to be very pleasantly surprised to see the work we're doing in phones, and that will become visible next year. So, I think even in areas where there's been some concern, there is some really substantive, very, very innovative work coming down the line.

It seems a little weird to be saying this, but we're almost at 2010. Are there things in technology that you thought would have happened by now that haven't yet happened?
Muglia: Well, I certainly thought that the 787 would have flown by now. I hear it's supposed to fly Tuesday or Wednesday, though, so that's a good thing. I'm glad to hear that.

I think, if you had asked me in 2000, "Would we be further along on reading on devices than we are now?" I would have said we would be. And we're really starting to see that now with some very special purpose readers, but I would have thought it would have hit across more general purpose devices by now. So, that's probably been one thing.

You know, I think that that's related to how fast tablets or slates or whatever you might want to call them might have taken off. I might have thought that would have gone a little faster than it has. Those two are somewhat related with each other.

But those things always kind of come at different speeds, and I'm pretty confident both of them will become very important as we move forward.

If you could show the world as it is now to your 2000 self, what do you think would be most surprising?
Muglia: We've shifted to a world where all kinds of media are delivered digitally.

You think about what's happened with newspapers and magazines and things, I guess I wouldn't have predicted that shift would happen as dramatically. Not that it's delivered digitally, I think we would have expected that, but the kind of reporting and the real-time nature associated with it.

And I guess, similarly, some of the way social networks have developed, and the impact that they have had on the way people communicate. I find it so fascinating as an example to see the impact that Facebook has on what's happening in other countries like Iran, and getting information out, those sorts of things. You know, I'm not surprised by them, but I certainly wouldn't have predicted them back then.

So, probably your 2000 self might be surprised that in 2009 you're in touch with more people from your high school than you were in 2000?
Muglia: Right, exactly, things like that, exactly. That's a perfect way to say it.

Obviously, your focus is the IT world, and I'm curious, how different is the life of an IT manager? How much has changed in the last decade for what they do on a day-to-day basis?
Muglia: I actually think it's quite different for an IT manager. I think IT managers used to be expected to build the systems and do everything, and now I think they're much more focused on providing the infrastructure for the business teams and the people within business to do things.

One other thing that's missing at least from Microsoft at the end of this decade, as compared to the beginning is Bill Gates at least in a full-time sense. As one of the people kind of at the top of the technical ranks, I'm curious how have you noticed his absence in the last 18 months since he's left full-time work?
Muglia: I watched while Bill was here how his role shifted over a period of time. There was a period of time when the company was at a size and scope where Bill really was able to do the direction, the technical direction of very large parts of the company.

During the 1990s, we grew to a point where that was just not possible for a human being to do, although Bill's capacity is far beyond most. And so over time, Bill shifted into much more of an advisor role, and he provided advice and guidance.

While Bill's advice was always incredibly useful, he did a great job of also building a lot of people within the company that could also think in a similar sort of way to him. I mean, I'd like to think that I learned a lot from Bill and I'm able to do some of the things that Bill would have done.

I view part of my job is to take up and do many of the things that Bill did, and to do it in my area. My area of scope is broad but it's to a level that I think I can still do that effectively.

But I think what's happened is we now have a hierarchy of people. You've got Ray doing some significant cross-group things, and then you've got people like myself or Steven Sinofsky or folks in Stephen Elop's world, J Allard, all playing subset roles of what Bill used to do.

For a long time, Microsoft and you talked about this notion of autonomic computing. One of the things that conveyed was the sense that the IT would just sort of manage itself. Now you guys talk more about Dynamic IT. It seems like some of the idea that it's just going to magically happen has been moved from the notion.
Muglia: Let's just sort of kind of go back and talk about the time from where all those things sort of emerged in the 2002, 2003 sort of time. People sometimes called things autonomic computing, they sometimes called it utility computing. You know, our name for it was always Dynamic IT. It actually started out as the Dynamic Systems Initiative, and we sort of broadened it a bit with Dynamic IT a few years ago.

And the idea being that operational resources should be largely self-managing, and the process, the lifecycle of developing an application should be connected from the point of requirements, definition, through development, all the way to operations. That vision has not changed. We said it was a 10-year vision in 2003, and it will probably take us 10 years to really fully fulfill it. I think every year, as we release new products, we take substantive steps forward.

Now, the thing I didn't understand back then is that all of this would lead so naturally to the cloud application model, and that's what we've kind of put in place over the last year or two. I would very clearly say that is the next thing.

When you think about some of the biggest trends in the coming few years, I imagine cloud computing is a big one?
Muglia: Yeah. The thing that to me is so exciting about that is the impact I think it's going to have on business, most importantly allowing people to write applications more rapidly that really meet the needs of tier one enterprise apps, and do so at a fraction of the cost, both from a hardware perspective and from an operational perspective.

So, the kinds of things that would have required a mainframe in the past.
Muglia: Absolutely. Obviously we built software for very high-end systems. I mean, being straight and honest, that's not the main thing that our software is used for. We have a fairly small number of our systems running on these big $100,000 plus machines. But it's an important segment of the market, and clearly UNIX has a significant segment there, and the mainframe is a significant segment there.

When I talk to the Windows Azure guys, and I talk the software architecture that they've put in place in terms of having isolation units and understanding how to contain failures, and then I look at the way we are building the next generation data center systems, built inside these containers, I recognize that a container is essentially the mainframe of the future. The difference is that it's thousands of times more powerful than a mainframe at a fraction of the cost.

Do you have a sense of how many people are actually doing real cloud computing today, what percentage of businesses, and what that might look like in the next two or three years?
Muglia: I think Forrester has done some work that it's a really small number of people, like 4 percent of folks that are actually deploying things right now. So, it's still very nascent. But we expect a really large number of folks to start to (use cloud computing) over the next 12 to 18 months.

We're right at that inflection point where people are going to begin to start building real applications and begin deploying those applications into their environment, both for internal use and for their external customers. Certainly if you go out three to five years, we expect it to become very mainstream.

One of the constant debates is when people ask how much work will be done in a company's own data centers as compared to some sort of public cloud like Microsoft is running with Azure. Do you have a sense of where that mix might be a couple years from now or five years from now?
Muglia: I think certainly over the next five years we'll still see more work done in-house than in a public cloud. I mean, you'd have to move an awful lot of work out in order to shift that.

The question will be what is the cost and the effect, and at one level how much can this be done for people in a public cloud environment at a lower cost, and what level of security and trust can be established so that people feel comfortable moving their workloads to the cloud. I don't expect my bank will be moving their core financial systems to a public cloud environment in a five-year horizon, and that's probably a fine decision on their part.

I want to make, enable, and build the technology infrastructure to allow people to move their most sensitive data into the cloud so that some day it will become possible for a bank to do that, but I think it will take a little while for it to actually happen.

Last week, Microsoft bought a company called Opalis that specializes in software to manage data centers. Is this a big company? What made you interested in them?
Muglia: It's a moderate sized company. I'm really excited about this acquisition. I mean, what they do is something that's called "run book automation," and what they've done is they've built a very strong base of understanding of how to automate tasks that are happening within the data center.

And by the way, that's quite heterogeneous in its nature. Although they run fully on Windows, they're not limited and restricted to data center tasks that happen simply in Windows, but they can reach out and work with Linux and UNIX systems, et cetera.

Being able to automate a set of tasks is one of the key things that's going to be necessary to simplify the operations of any of these data center environments, and Opalis is a fantastic acquisition for us because they bring a ton of expertise and real world customer experience in that space. We think our customers will see value from this literally from day one.

Microsoft said late Monday that is suspending access to an MSN China microblogging site amid allegations the service is based on code swiped from a rival.

Canadian start-up Plurk lashed out at Microsoft earlier on Monday, saying that 80 percent of the code for Juku appeared to be lifted directly from its service.

Microsoft reiterated late Monday that it is investigating the matter but issued a statement saying it was pulling down the Juku feature while it looks into things.

"Earlier today, questions arose over a feature developed by a third-party vendor for our MSN China joint venture," Microsoft said in a statement. "Because questions have been raised about the code base comprising the service, MSN China will be suspending access to the Juku beta feature temporarily while we investigate the matter fully."

Microsoft added that the investigation was slowed by the fact that when questions were first raised it was the middle of the night in China.

"Now that the day has begun in China, our teams are working hard to track down the information," Microsoft said.

The company also confirmed what a source previously told CNET, namely that Microsoft's MSN China joint venture "contracted with an independent vendor" to create the MSN Juku feature, which debuted last month and is still in beta.

Earlier on Monday, Microsoft said it was investigating the issue.

For its part, Plurk said it is still trying to decide how to handle things.

"We're not entirely sure but we are exploring our options," Plurk said in its blog posting. "We have been seeking advice from respected colleagues, responding to press inquiries and gathering facts on the timeline of events and parties involved here to understand why and how this took place."

It's the second time in recent weeks that Microsoft has been accused of lifting other's work in its products. Last month, the company was forced to pull down a tool for loading Windows 7 onto Netbooks after allegations that the product improperly included open-source code. Microsoft later apologized and last week re-released the tool under the GPL open-source license. Microsoft also blamed a third-party vendor in that case.

Plurk accuses Microsoft China of ripping off its design and code to create its Juku microblogging service.

(Credit: Plurk)

Microsoft said on Monday afternoon that it's investigating allegations that a recently launched microblogging site in China lifts the code and interface of a start-up's rival service.

"Microsoft takes intellectual property seriously, and we are currently investigating these allegations," company spokesman Mark Murray said in a statement. "It may take some time due to the time zone differences with Beijing."

Earlier on Monday, Canada's Plurk went public with charges that Microsoft's Juku service "rips off" the look and feel of its microblogging service and also appears to use more than 80 percent of the same code, all without permission.

"Imitation may be the sincerest form of flattery, but blatant theft of code, design, and UI elements is just not cool, especially when the infringing party is the biggest software company in the world," Plurk said on its blog.

Plurk said it is still evaluating what to do in the case.

"We're not entirely sure but we are exploring our options," Plurk said. We have been seeking advice from respected colleagues, responding to press inquiries and gathering facts on the timeline of events and parties involved here to understand why and how this took place.

It's the second time in recent weeks that Microsoft has been accused of lifting other's work in its products. Last month, the company was forced to pull down a tool for loading Windows 7 onto Netbooks after allegations that the product improperly included open-source code. Microsoft later apologized and last week re-released the tool under the GPL open-source license.

Update, 5:50 p.m. PT: A few more details are starting to trickle in.

According to a source familiar with the situation, the Juku application was created for MSN China, which is a joint venture between Microsoft and a Chinese company. However, the source says the application was not designed by Microsoft or the joint venture, but rather by a third-party Chinese vendor hired for the task.

If that sounds a bit familiar, Microsoft also blamed a vendor for the Windows 7 download tool that contained GPL code. Contracting with vendors is typical, and Microsoft typically requires that the third party provide legal guarantees that the code is free of any intellectual property infringement.

As of this point, the Juku program continues to run on the MSN China site.

Plurk accuses Microsoft China of ripping off its design and code to create its Juku microblogging service.

(Credit: Plurk)

A start-up says that a microblogging service recently launched by Microsoft in China "rips off" its user interface and also contains a huge percentage of similar code.

Plurk, which runs a microblogging service of its own, says more than 80 percent of the code for Microsoft's Juku service appears to be lifted from its service.

"Imitation may be the sincerest form of flattery, but blatant theft of code, design, and UI elements is just not cool, especially when the infringing party is the biggest software company in the world," Plurk said on its company blog.

A Microsoft representative in the U.S. said the company was looking into the matter. Microsoft launched the Twitter-like Juku service over the past couple of weeks in China, but told various media outlets, including PaidContent.org, that it had no current plans to introduce it in other markets.

Plurk said that as a young start-up, it was "shocked" and "stunned" and said the company isn't sure what to do next.

"So what next? We're not entirely sure but we are exploring our options," Plurk said on its blog, adding that the company was tipped off by bloggers and Taiwanese users of the Plurk service of the similarities between its service and Microsoft's Juku.

"Needless to say we were absolutely shocked and outraged when we first saw with our own eyes the cosmetic similarities Microsoft's new offering had with Plurk. From the filter tabs, emoticons, qualifier/verb placement, Karma scoring system, media support, new user walkthroughs to pretty much everything else that gives Plurk its trademark appeal, Microsoft China's offering ripped off our service."

On its blog, Plurk posted screenshots of both its service and the Juku site.

Plurk said that Microsoft China's recently launched microblogging site "rips off" both code and design from Plurk.

(Credit: Plurk)

Plurk also posted two examples of code similarities between its service and Microsoft's.

The similarities were so great, Plurk said, that many people thought Microsoft had struck a partnership with the startup.

"Let's clear the air around this," Plurk said. "While many reputable internet companies have forged solid partnerships with Plurk, valuing our innovation and market leadership in Asia, Microsoft was absolutely not one of them. We were never contacted by any party at (Microsoft) to collaborate on such a venture nor did we give any prior written or verbal permission to anyone on their side to take our code, take our CSS, and copy the essence and ethos of our service."

Microsoft says it has a fix for a bug that was keeping Office 2003 users from being able to access some rights-managed files.

The bug, which cropped up on Friday, meant that users of Office 2003 were unable to access files protected using Microsoft's rights management service (RMS) technology.

Microsoft posted a software download known as a "hotfix" on Saturday that it says resolves the issue.

"The issue of the inability to open Office 2003 documents protected with RMS has now been resolved with a hotfix," Microsoft said in a short statement on its Office sustained engineering blog.

I'm still trying to get more details on what caused the bug and will update things if I hear more.

Update, 11:22 a.m. PT: Microsoft said the problem was due to an Office 2003 certificate that expired. "This resulted in Office 2003 customers not being able to open Office 2003 documents protected with the Active Directory Rights Management Service (AD RMS) or Rights Management Services (RMS)," a representative said, adding that Microsoft first learned of the issue on Thursday night and had the fix up by Mid-day Saturday.

Encryption certificates were first introduced with Office 2003. "At that time, Microsoft believed it was important to establish short-term expiration dates for these certificates to allow us to re-evaluate and update (rights management) capabilities based on new, more sophisticated encryption technology," Microsoft said.

"The original intent was to refresh and strengthen the certificate over time to keep up with newer technology," the representative said. "We have not done a thorough post-mortem on this incident since we were very focused on fixing the problem. Looking ahead, we are exploring long-term solutions that will prevent something like this from happening again in the future."

Some users of an older version of Microsoft Office may find that their protected documents are now not only protected, but completely inaccessible.

Microsoft warned on Friday that a glitch is causing users of Office 2003 to be unable to access files protected using Microsoft's Rights Management Service.

The software maker acknowledged the bug on its Office Sustained Engineering blog and said it is working to fix the issue.

Starting on December 11, 2009, customers using Office 2003 will not be able to open Office 2003 documents protected with the Rights Management Service (RMS) or save Office 2003 documents protected with RMS. The following error message may be displayed when attempting to Open RMS Documents using Office 2003:

"Unexpected error occurred. Please try again later or contact your system administrator"

This symptom affects Office 2003 products used in conjunction with RMS, including Word 2003, Excel 2003, PowerPoint 2003, and Outlook 2003. It does not affect Office 2007.

We are working to resolve this issue as quickly as possible and we will provide customers a solution as soon as we can. Any new updates and we will post the information here.

The issue was noted earlier on Friday by the Technologizer blog.

With Microsoft's Windows Mobile unit having run in slow motion for the past several years, it doesn't surprise me that there are calls for the company to get out of the phone business.

The more interesting question raised in this New York Times blog, to me, is whether Microsoft flat out just doesn't get the consumer.

That, to me, is a much broader issue for Microsoft, given the fact that more and more parts of computing--even enterprise software--are taking their lead from consumer trends--think Facebook, Gmail and Twitter.

Microsoft certainly has its challenges on this front, and no business illustrates those challenges more clearly than the phone business, where Microsoft has squandered an early position in smartphones and now faces a massive task to catch up to Apple, Research In Motion, and even upstart Google, which has not been at the game nearly as long.

Luckily for Redmond, I don't think it is that they don't get the consumer at all. Products like Surface and Windows 7 and Zune HD show that Microsoft is thinking about the consumer experience and does have some sense of what appeals to the average user.

So it's not that Microsoft totally doesn't get the consumer. Rather, I would argue, the consumer it understands best is the nerd, as opposed to the mainstream user. That's why, from my way of thinking, its products tend to start as niche products for gearheads and work their way toward the average consumer.

And Microsoft's nerd focus isn't always a bad thing, particularly in the enterprise where it is nerds who tend to be making the decision. Windows has fared pretty well against the Mac, although the PC's lower cost also has a hand in that.

What's happened on the mobile side, though, shows that the focus of power is shifting. It's only a matter of time before similar trends more deeply affect the corporate desktop, whether it is e-mail, collaboration, or social networking.

The consumer business also represents a huge opportunity on its own for Microsoft. When it comes to connected entertainment, for example, Microsoft has what should be a big advantage. Because of its size and breadth, Microsoft's software powers multiple living room devices (Xbox, Windows Media Center, and Mediaroom digital TV) as well as devices that delver media onto phones, cars, and other portable devices.

And of course, a huge part of the battle has moved off of the PC or any single device and onto the Internet. That explains Microsoft's huge investment in Bing, but also its other online moves, including offering Office via the browser, and projects like Live Mesh that aim to bring together our myriad gadgets.

There is still a huge win to be had for the first company to allow people access to their media seamlessly in all these places. The best experience right now, I would argue, is taking one's iPod or iPhone with them into all of these different locations. That's a good experience, but not as good as being able to buy content once and have it automatically show up, on-demand in all of these places.

The company has shown glimmers of hope in some areas, though clearly there is more change that needs to happen. Its new retail stores, though similar to Apple, show Microsoft knowing how to highlight its coolest side. There are more products coming out with memorable names like Silverlight and fewer with mouthfuls like Windows XP 64-bit Edition for 64-bit Extended Systems.

There are pockets of understanding, particularly in the entertainment unit, which is developing things like the eminently cool Project Natal. But, then, as The New York Times blog points out, there is the Windows Mobile unit where it seems the phone has been ringing for years and Microsoft has yet to answer the call.

What's your take. Is it game over? Or does Microsoft have enough quarters in its pockets to learn how to play the table after all?