Beyond Binary

Microsoft said Monday that it's cutting by a third the subscription prices for the hosted versions of Exchange, Sharepoint, and Office Communications Server.

The software maker plans to cut the monthly per-user cost of licensing all three products from $15 to $10, while the cost of licensing individual products is also dropping by as much as 50 percent. The move comes as Microsoft faces continued pressure from rivals, including Google.

Last week, the city of Los Angeles voted to go ahead with a deal to shift many employees to Google Apps from Microsoft Office.

In an interview, Microsoft Vice President Chris Capossela said the move has less to do with competitive pressure than that "it's the price that customers are really excited to buy our suite at."

,p> "We're pretty excited about the price and not so much focused on free services or the price Google or others might charge," Capossela said.

In addition to the price drop, Microsoft is also touting several new customers and announced its plan to bring the year-old Microsoft Online services to more than a dozen new countries.

The company is announcing its commercial launch in Singapore, as well as trials in Brazil, Chile, Colombia, Czech Republic, Greece, Hong Kong, Hungary, Israel, Malaysia, Mexico, Puerto Rico, Poland, Romania, and Taiwan. Microsoft also expects to have commercial availability in India later this year.

Among the new customers are McDonalds, Aon, Lions Gate Entertainment, and Rexel Group. They join existing customers, such as Blockbuster, Coca-Cola and Autodesk as those paying Microsoft to run hosted versions of its products. Microsoft formally launched Microsoft Online at a San Francisco event a year ago.

Next week, Microsoft will also formally launch Exchange 2010 at its TechEd Berlin developer event. Microsoft said last month that it had finalized the product. Traditionally, Microsoft has developed products first as a server and only later, if at all, customized them to run in hosted form.

Exchange 2010, though, was designed first as an online service and then crafted into a product that businesses can run on their own servers.

The massive data failure at Microsoft's Danger subsidiary threatens to put a dark cloud over the company's broader "software plus services" strategy.

A key tenet of that approach is that businesses and consumers can trust Microsoft to reliably store valuable data on their servers.

A week ago, though, Microsoft's Danger unit experienced a huge outage that left many T-Mobile Sidekick users without access to their calendar, address book, and other key data. That's because the Sidekick keeps nearly all its data in the cloud as opposed to keeping the primary copy on the devices themselves.

Things got even worse on Saturday, as Microsoft said in a statement that data not recovered thus far may be permanently lost. It's not immediately clear how many people lost their data. The outage earlier in the week affected a broad swath of Sidekick users, though many had data return during the week.

While outages in the cloud computing world are common (one need only look at recent issues with Twitter or Gmail), data losses are another story. And this one stands as one of the more stunning ones in recent memory.

The Danger outage comes just a month before Microsoft is expected to launch its operating system in the cloud--Windows Azure. That announcement is expected at November's Professional Developer Conference. One of the characteristics of Azure is that programs written for it can be run only via Microsoft's data centers and not on a company's own servers.

It should be pointed out that the Azure setup is entirely different from what Danger uses: the Sidekick uses an architecture Microsoft inherited rather than built (Microsoft bought Danger last year). Still, the failure would seem to be enough to give any CIO pause.

Update, 2 p.m. PT, 10/11/2009: I asked Microsoft for comment Saturday when I was writing this, in particular as to how the rest of its cloud might differ from the Danger set up.

Microsoft said Sunday that its the fabric controller that manages the Azure service is built with redundancy in mind.

"We write multiple replicas of user data to multiple devices so that the data is available in a situation where a single or multiple physical nodes may fail," Windows Azure general manager Doug Hauger said in a statement to CNET News.

That doesn't mean Azure is immune from data loss, though I'm told an entire data center would have to be wiped out, as opposed to just a server or collection of servers. I'd be interested to know whether Microsoft will also offer multiple location options so that users that want to can have their data in more than one physical spot as well.

But that's just one of many questions raised by this spectacular failure. Among the other questions still looming large in my head are:

1. What backup procedures did Danger have?

2. Just how many of T-mobile's Sidekick customers lost their data? (Feel free to let me know, Sidekick users.)

3. What impact will this have on the Pink project, which was largely seen as the evolution of the Sidekick, and some say was already in trouble?

4. Will this hurt Microsoft's efforts to build a brand around the notion of Windows Phone even though that uses a different architecture (with its own challenges, to be sure)?

There's nothing like trashing the competition.

And that's exactly what the Free Software Foundation plans to do on Wednesday, staging a demonstration in Boston where it will encourage businesses to throw away Microsoft Windows in favor of free alternatives.

In addition to the public display, the foundation is sending letters to the CEOs of Fortune 500 companies, warning that Windows is a threat to their businesses' privacy, security, and freedom.

Although the demonstration and letter center around Microsoft's imminent release of Windows 7, Free Software Foundation Executive Director Peter Brown says the protest has to do with Microsoft's approach in general and not with the specifics of Windows 7.

"Any time Microsoft tries to push them to a new version, it's a good time to make that case," Brown said in a telephone interview on Tuesday.

With Windows 7 getting fairly positive reviews, Brown said he knows it could be tougher to garner public support than was the case with the oft-criticized Vista.

"There's kind of this attitude of 'Well, it's better than Vista,'" Brown said, "so we are kind of working against the grain."

But, he said, the stakes are high--and it's about more than just which operating system gains market share. Brown points to Amazon.com's recent deletion of e-books from the Kindle as an example of the kinds of action that could become commonplace if the world becomes more filled with digital rights management technologies.

"That's the kind of power that proprietary software gives to these corporations," he said. "When we give that power, sooner or later somebody comes knocking, whether it is the government or the corporations themselves. Free software is kind of the answer to that."

Although the letter focuses on Microsoft, he said the group is also concerned with other products, including the new Snow Leopard operating system from Apple, which goes on sale on Friday.

"It's not just Microsoft," Brown said. "It's a problem generally for society that we should accept proprietary software when there is an alternative."

Ray Ozzie is a big believer in the cloud. But he knows that large businesses don't yet share his confidence.

"Enterprises will not really trust the cloud until they get some experience with it," Ozzie said, during a speech at a J.P. Morgan investment conference in Boston on Wednesday. He said that large businesses are more likely to start by going with an online version of a familiar product like Microsoft Exchange than they are today to move a major piece of their business into the cloud. A Webcast of his speech is available on Microsoft's investor relations page.

In October, Microsoft announced Windows Azure, a set of tools that is somewhat akin to a Web-based operating system that developers can use to build software that can then run in Microsoft's data centers. The software is now in testing, with large businesses mostly just kicking the tires at this point.

"In the next year or two I believe that the biggest impact of cloud computing is going to be in things like Exchange and SharePoint for us or those comparable offerings from our competitors," Ozzie said. Using one of those services allows a company to know how much bandwidth they need to communicate with the cloud, understand how cloud services can be managed, as well as just build up a certain comfort level.

"It will work its way into other parts of the enterprise IT environment over time as they get their comfort level," he said.

One of the lighter moments came when Ozzie was asked what were the lessons Microsoft learned from Windows Vista.

"How much time do you have?" Ozzie quipped.

Ozzie then went on to discuss some of the problems with Vista, including the false starts that he said resulted from "overcommitment."

"We had a vision that was larger than what we could achieve within the period of time that we needed to bring (the product) to market," Ozzie said.

And by changing its timing and feature set, Ozzie noted that Microsoft's partners were both too early and too late when it came to deciding when to spend time on Vista.

"If we don't give very clear predictable signals to those partners...about dates," Ozzie said, "they don't know when to invest and when not to invest."

The result, he said, was that drivers weren't ready, leaving PC makers in a tough position and ultimately creating a less-than-satisfactory experience for consumers and businesses. Many of those issues, he said, were taken to heart when it came to planning and communicating around Windows 7, he said.

Some of Ozzie's more intriguing comments came when he talked about the need for partnership over time as Microsoft builds out its cloud. So far, Microsoft has built its own data centers, but they have largely been in the U.S. Because of varying regulations in different countries, though, Ozzie talked about the need for data centers "everywhere on earth."

"Every country will have data centers," he said, but added that Microsoft itself doesn't have the resources to build a cloud in each country. "We have to have partners."

A new, unpatched vulnerability exists in one of Microsoft's server products, the company warned late Monday.

In a technical bulletin, the company said it is looking into "public reports of a possible vulnerability in Microsoft Internet Information Services (IIS)."

The company said that a flaw exists in a certain type of Web serving operation.

"An elevation of privilege vulnerability exists in the way that the WebDAV extension for IIS handles HTTP requests," Microsoft said. "An attacker could exploit this vulnerability by creating a specially crafted anonymous HTTP request to gain access to a location that typically requires authentication."

Microsoft said it is not aware of attacks using the vulnerability. The company said it may provide an update as part of its monthly Patch Tuesday or, depending on the severity, could provide a fix outside of its monthly patching schedule.

In the meantime, the company listed on its Web site certain configuration settings that can help mitigate the impact of the flaw.

Finally, Microsoft and the Linux Foundation agree on something. Neither wants to stand behind their products. OK, OK, that's not fair.

However, the Linux group and software maker are both opposing a law group's proposal that would create an implied warranty that software products ship with no material defects.

The two joined forces on a letter to the American Law Institute taking issue with its proposal. Microsoft and the Linux Foundation believe the proposal could do more harm than good.

"While the principles reflect a lot of hard work and thought by the ALI, Microsoft and the Linux Foundation believe that certain provisions do not reflect existing law and could disrupt the well-functioning software market for businesses and consumers, as well as create uncertainty for software developers," Microsoft deputy general counsel Horacio Gutierrez said in a blog posting.

The ALI is meeting in Washington this week and is scheduled to take up the issue, noted ZDNet's Mary Jo Foley.

Microsoft and the Linux Foundation aren't the only ones against this. As Foley points out, the University of Houston's Raymond Nimmer also wrote a biting critique of the ALI proposal.

Linux Foundation chief Jim Zemlin noted in a blog that its partnership with Microsoft makes for strange bedfellows. But, he said, the proposed legal standard would hurt open source and commercial software makers alike.

"The principles outlined by the ALI interfere with the natural operation of open source licenses and commercial licenses as well by creating implied warranties that could result in a tremendous amount of unnecessary litigation, which would undermine the sharing of technology," Zemlin wrote.

Gutierrez also noted that Microsoft and its partner in this effort don't necessarily see eye to eye on everything.

"The mere fact that the Linux Foundation and Microsoft are joining forces may be viewed by some as remarkable, given that our differences receive far more public attention than when our interests converge," Gutierrez said. "Our industry is diverse and sometimes contentious, but if nothing else unites us it is that we all believe in the power of software."

Gutierrez held out an olive branch, of sorts. "I hope that this represents just one of many opportunities to collaborate with the Linux Foundation and others going forward," he said. "We have a lot more we can do together."

The joint letter comes just a couple short months after Microsoft, for the first time, sued a company over its implementation of the Linux kernel. The company eventually settled with TomTom, but the move has created uncertainty over whether Microsoft intends to take legal action against Linux vendors that refuse to take a license to Microsoft's patents.

Microsoft on Monday said that Hewlett-Packard's EDS unit and other partners have agreed to help sell its collection of hosted online services.

EDS, Accenture, and others will help sell what Microsoft calls its Business Productivity Online Suite--a collection of products that Microsoft hosts in its data centers. The products include Exchange, SharePoint, Office Communications Server, and Live Meeting.

Microsoft launched the collection of services last November, but has been saying it also wants partners to help sell the services.

Dutch system integrator Wortell said it likes Microsoft's services because they offer both the opportunity for higher sales plus a way to reach customers that don't have a lot of money to invest in building their computing infrastructure. Microsoft's online services allow those businesses to offer features like full corporate e-mail at a lower upfront cost.

"For us, (it) means that we don't have to worry about infrastructure," Burlage said in an e-mail interview. "It allows us to focus on what's really important." Wortell CTO Danny Burlage said in an e-mail interview.

Microsoft on Tuesday confirmed that the next version of Office, code-named Office 14, will come in both 32-bit and 64-bit versions.

The 64-bit version is a first for both Office and for Microsoft's mainstream desktop applications, though a number of its server products, such as SQL Server, are already available in 64-bit versions.

Office 14, which is expected to be called Office 2010, is slated to ship next year. Among its other notable features is the fact that Microsoft will offer browser-based versions of Excel, PowerPoint, Word, and OneNote, in addition to the traditional Windows-based desktop programs.

By extending the browser support to Firefox and Safari, in addition to Internet Explorer, Microsoft has said it will have the effect of also bringing Office to the iPhone and to Linux-based computers for the first time.

The existence of the 32-bit and 64-bit versions was noted on Tuesday by Ars Technica and in March by ZDNet blogger Ed Bott.

Software designed for a 32-bit processor can still run on a 64-bit machine, but likely, the 64-bit version of Office will have some performance advantages over its 32-bit sibling when running on a 64-bit machine.

Computers with 64-bit processors have been shipping for years, but it is only in the last year or so that most new PCs have started to be sold with a 64-bit operating system--required for running a 64-bit application.

While most desktop applications still run only in 32-bit mode, the server side has switched over more quickly. Some of Microsoft's server products, such as Exchange 2007 the upcoming Windows Server 2008 R2, come only in the 64-bit variety.

The big selling point of 64-bit software is its ability to directly accommodate more than 4GB of physical memory.

Microsoft plans on Tuesday to announce "Global Anti-Piracy Day," an effort to gain attention for the steps the company undertakes in order to thwart those who would profit from illegitimate software.

As part of the event, Microsoft is highlighting recent antipiracy efforts in 49 countries, ranging from the filing of lawsuits in the U.S. to a seminar for journalists in Pakistan.

It's the kind of thing that Microsoft does all the time, although the company is aiming for some added ink by grouping together so many actions at once.

"One of the things we want to illustrate with this announcement is the diverse nature of the work," associate general counsel David Finn said in an interview from Singapore.

The third pillar of Microsoft's efforts is its engineering work, adding programs like Windows Genuine Advantage that are designed to make it harder--and less rewarding--to copy Microsoft's products.

Whether it's a testament to tougher engineering or the lukewarm response to Vista, or some combination, Windows XP continues to be copied far more than its successor.

"We continue to see much more counterfeit Windows XP," said Finn, who actually says the company is predicting a rise in XP pirating as the last legitimate copies of the OS wind their way off retail shelves.

Overall, Finn said Microsoft and the software industry are making progress in some areas. He noted that the piracy rate in Western Europe has dropped to about 34 percent from the 78 percent level in 1991.

At the same time, however, rates still top 90 percent in some emerging markets. And even in the U.S., where rates are a relatively low 20 percent, that still means 1 in 5 software installations are illegitimate.

"It thwarts innovation," he said.