Microsoft

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.

Microsoft said strong demand for Windows and Xbox buoyed the company's financial results in the past quarter.

The software maker said Friday that it earned $3.57 billion, or 40 cents per share, on revenue of $12.92 billion for its fiscal first quarter, which ended September 30. Microsoft also deferred $1.47 billion in revenue ahead of the launch of Windows 7. Adding that back in, revenue would have been $14.39 billion and per-share earnings would have been 52 cents.

Those results topped forecasts, although sales are still down from a year ago.

"We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows," Chief Financial Officer Chris Liddell said in a statement. "We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions."

Chris Lidell,
Microsoft CFO

(Credit: Microsoft)

On the Windows front, Microsoft saw the number of PCs shipping with Windows grow 6 percent in the quarter even though PC sales overall were anywhere from flat to up 2 percent. Microsoft cited, among other reasons, the fact that more Netbooks are using Windows compared with a year ago.

Overall demand for Windows was strong, the company said, with the software seeing its highest first-quarter unit sales ever and September being the strongest overall unit sales in the company's history.

The company sold 2.1 million Xbox consoles in the quarter, according to a PowerPoint chart posted on Microsoft's investor Web site. That's just slightly down from the 2.2 million units sold in the same quarter a year ago, but up from the 1.2 million consoles sold in the previous quarter.

In a conference call, Liddell said that the company sees the economy remaining tough during the current fiscal year, but noted some potential for improvement.

The earnings report came a day after Microsoft launched Windows 7 and followed the disappointing previous quarter when the company reported weaker-than-expected results.

The company said Friday it is continuing to cut costs. In the current fiscal year, which runs through the end of June, Microsoft said it now expects operating expenses of $26.2 billion, a drop of $300 million from its prior forecast.

Microsoft normally releases its earnings in the afternoons, but it moved the report from Thursday afternoon so it wouldn't step on the toes of the Windows 7 launch.

The company continued to lose a significant amount in its online business, with the operating loss growing to $480 million from $321 million a year ago. Revenue for its online business, which includes Bing and MSN, dropped to $490 million from $520 million a year ago. However, Microsoft said it has seen a mid-single-digit increase in U.S. search revenue.

Looking ahead, Liddell said that Microsoft sees some signs that more businesses will buy new PCs starting next year, though the upgrade cycle will probably stretch over several years.

For the current fiscal year, Microsoft said it expects Windows sales to roughly reflect the PC market, while Office unit sales will lag. It expects its server unit to slightly outpace the overall market, while entertainment unit sale should be roughly flat. For its online business, Microsoft said it expects to outperform the broader market, excluding its MSN Internet access business.

Liddell said Microsoft continues to be hopeful that its search deal with Yahoo will gain needed regulatory approvals and be completed early in calendar year 2010. Liddell said to expect $100 million to $200 million in costs related to that deal, if it closes.

Here's a chart of last quarter's segment-by-segment results, though keep in mind that the Windows numbers are affected by the amount that Microsoft deferred because of the coming launch of Windows 7.

(Credit: Microsoft)

Update at 6:45 a.m. PDT: More details added throughout.
Update at 7:55 a.m. PDT: Added details from conference call with analysts.

It was only a matter of time, but the T-Mobile Sidekick issue has now spilled over to the courthouse.

A number of lawsuits have been filed, including two filed in federal court in Northern California on Wednesday that allege both negligence and false claims on the part of Microsoft and T-Mobile.

T-Mobile Sidekick LX

(Credit: CNET)

The suits come amid a massive outage of the service that powers the Sidekick, which has hampered data service since early this month and left many users without access to their calendars, address books, and other information. At one point, Microsoft and T-Mobile indicated that any data not yet recovered was probably lost permanently, however the companies said Monday that they were more optimistic about being able to bring back users' information.

One suit, filed on behalf of a Bakersfield, Calif., man "and all others similarly situated" charges that, among other things, Microsoft and Danger failed to use reasonable care in handling Sidekick owners data and that the Sidekick was falsely advertised. That suit seeks monetary damages as well as an order requiring the companies to fix the Sidekicks and service or offer a full refund.

"T-Mobile and its service providers ought to have been more careful the use of backup technology and policies to prevent such data loss" said Ira P. Rothken, an attorney working on that case. "We are hopeful that T-Mobile and the rest of the defendants will do the right thing, use this as an opportunity to redesign the system as a new standard for cloud computing storage, and provide full compensation for the data loss."

Another suit, filed on behalf of Maureen Thompson "and all others similarly situated" seeks unspecified damages for Thompson and others who have lost data as a result of the recent Sidekick problems.

According to her lawyer, Thompson owns a Sidekick used primarily by her daughter, an aspiring model, singer, and songwriter who used her Sidekick to store personal and business contacts, appointments, and even irreplaceable song lyrics not stored anywhere else. The lawyer said that Thompson bought the device "primarily because T-Mobile promised that any data would be protected and available no matter what happened to the phone."

"T-Mobile's initial efforts to reimburse Sidekick users are a step in the right direction, but fail to sufficiently compensate Sidekick users for this disastrous loss of data," Thompson attorney Jay Edelson said in a statement. "T-Mobile and Microsoft promised to safeguard the most important data their customers possess and then apparently failed to follow even the most basic data protection principles. What they did is unthinkable in this day and age."

In that lawsuit, Thompson's lawyers argue why the outage of the Sidekick was particularly devastating, noting the device's cloud-based architecture in which the primary copy of the data is stored, not on the devices, but on servers operated by Microsoft's Danger unit.

"Further complicating the data loss is the fact that Sidekicks, unlike iPhones, BlackBerrys and other smartphones, are not designed to sync locally with a user's personal computer without additional software and hardware," the suit states. "This means that most users were not able to backup their data locally, but were encouraged and required to rely on Microsoft/Danger."

Microsoft declined to comment on the lawsuit, but, a representative said on Wednesday that the company is "obviously very sorry for the inconvenience that this situation has caused Sidekick users, and we are working around the clock in an effort to recover and restore the data for any affected users. While it is still too early to say for sure, we announced on Monday that our engineering teams were increasingly optimistic."

For its part, T-Mobile said in a statement that it "does not comment on pending litigation."

"We are focused on helping our Sidekick customers recover from this recent service disruption and are continuing to support Microsoft's ongoing efforts to address and resolve the Danger platform issues," the company said.

T-Mobile has halted sales of the Sidekick amid the ongoing issues.

(Credit: Screenshot by Ina Fried/CNET)

Wireless carrier T-Mobile USA has, at least temporarily, stopped selling all models of the Sidekick in the wake of a massive hardware failure that resulted in many customers losing their e-mail, contacts, and other data.

As of Sunday, all models of the Sidekick were listed as "temporarily out of stock" on T-Mobile's Web site. T-Mobile retail store workers also said on Monday that they have been instructed to halt new sales of the device as the company continues to investigate the recent problems that have plagued the handheld.

To recap, Sidekick customers started experiencing problems connecting to the data network more than a week ago. Microsoft, whose Danger subsidiary powers the Sidekick service, said it was investigating the problems.

On Saturday, Microsoft and T-Mobile posted an updated notice saying all data that was not currently on customers devices was likely lost permanently.

Microsoft and T-Mobile have not said how many of the roughly 800,000 Sidekick customers have lost data. Microsoft said a server failure impacted the main and back-up databases. One theory is that the problems cropped up as Hitachi was doing work on the storage network that manages the Sidekick data.

T-Mobile has promised an update for customers sometime Monday. For now, the carrier has advised customers not to reset their devices, remove the battery, or let them run out of power, as doing so could result in losing whatever data they do have.

Microsoft acquired Danger last year, saying it hoped to use its service architecture more broadly in its mobile strategy. The software maker has been working on a project code-named Pink that was to be essentially the future of the Sidekick. The company had not planned for any more versions of the current Java OS-based Sidekick.

Update, 12:30 p.m. PT: T-Mobile confirmed that "Sidekick sales are temporarily on hold." A company representative told CNET News in an e-mail that the company doesn't have an exact number of customers who lost data but that "we believe it is a minority of customers."

Although there are reports that customers are being let out of their wireless contracts and being offered discounts on other T-Mobile phones, the company is officially offering only one month of Sidekick data service. "We are also considering additional measures for those who have lost their content to help reinforce how valuable they are as T-Mobile customers," the representative said.

As for why there weren't better backup mechanisms in place, T-Mobile referred that question to Microsoft.

Update, 2 p.m. PT: Even though T-Mobile has said it has temporarily halted sales of the Sidekick, retailers in New York were still selling the device Monday. At three different locations on the Upper West Side of Manhattan, sales representatives said the Sidekicks were still available, but they were warning any potential customers that mobile Web and e-mail services might not work until the server problem is resolved. They said the phone and the accompanying text-messaging service have not been affected, so customers buying a new Sidekick would be able to make calls, as well as send and receive SMS messages.

In an e-mail to retail sales managers dated October 10, T-Mobile instructed managers on how to deal with Sidekick customers. The message informed them that some personal information backed up by the Microsoft/Danger servers had been lost. This information included pictures, contacts, e-mails, text messages, calendar entries, and to-do lists.

"Our teams continue to work around the clock in hopes of discovering a means for a network recovery solution. However, the likelihood of a successful outcome is extremely low," the e-mail stated.

Sales representatives were told to direct customers with questions to T-Mobile Forums on its Web site for details and to get updated information.

As part of its "action steps," sales reps were also directed to tell customers not to reset their devices by removing the battery or letting their battery drain completely.

Sidekick's LX, the newest model

(Credit: CBSInteractive)

After suffering through a weeklong outage, T-Mobile Sidekick users got even worse news on Saturday, when the company advised them that any data not on their phone was likely gone forever due to a hardware failure.

Since then, Sidekick owners have been sharing their stories with me via e-mail. Here are some of those tales. Feel free to add your own in the comments section or e-mail me (ina dot fried at cnet dot com)

Bram Weiser, a sign language interpreter and computer specialist in New York, wrote on Monday:

Since the outage occurred on October 1st, I've not been able to receive (or, I presume, send) email to/from my Sidekick. (All along, though, I've had phone and text message capability.)

On Monday, October 5th, roughly 100 emails seemed to suddenly appear, leading me to think that the outage was FINALLY over, days(!) after it started. However, while I got notification of those new emails (e.g., italicized, boldface sender & subject line information), the actual bodies of those emails was painfully slow in arriving, if they were ever going to do so.

I THOUGHT I saw an advisory at tmobile.com not to try a "hard" reset as an attempt to retrieve data and/or "kickstart" (my word) my Sidekick, so I steered clear of that. So, thinking I saw it written that way (note: I later realized it didn't say "hard," but puzzlingly advised against ANY reset at all), I tried powering my Sidekick on and off, albeit to no avail, and then tried a "soft" reset in good faith by clicking the pinhole on the body of the device. In more "normal" circumstances (read: just about any other time in the years that I've owned a Sidekick and paid for service through T-Mobile), this would usually bring the device back to life with its information intact, because, as we now know, it would download it from the T-Mobile (read: Microsoft/Danger) servers after connecting to the network. Not this time, though...

After doing all of that, and letting my Sidekick power up again, I, as did many thousands of other users, suddenly lost saved emails, device settings in ALL applications, bookmarks for the Web Browser, my entire Address Book (188 or so entries, although three recent entries did reappear later), and all of the nearly 1,000 entries (past, present and future) for my Calendar. To date, all of these remain lost, though I CAN surf the Internet on my own, as well as define settings, add contacts to my Address Book, send/receive instant messages and, I presume, add Calendar entries on my own as well, though I've not tried much of that yet as I await the safe return of my data.

You're absolutely right when you ask how, for instance, a company like Microsoft/Danger (Microsoft!) didn't have sufficient backups of its servers in place, be they daily, weekly or whatever. This is beyond belief in this day and age!

People need to know about this and not give Microsoft a free pass. For us to be without important data that we paid for the privilege of entrusting to Microsoft/Danger for safekeeping only to have this happen 1-1/2 weeks ago, and continuing to this day, to potentially lose it all permanently(!), and (for now at least) to get a credit of only(!) one month's data service (honestly, is that REALLY satisfactory to anyone?!) boggles the mind.

Jeff McGaha, an electrical engineer in Indianapolis wrote that his wife has a Sidekick, was without access to the data network for four to five days, and has now lost all of her contacts:

She's dropping the Sidekick now, something she was on the fence about for a long time. T-Mobile is lucky we're staying with them. They can thank Google and Motorola for that. The Cliq is going to see bigger sales because of this sidekick outage. Long live Android.

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.

T-Mobile Sidekick Slide

(Credit: Corinne Schulze/CNET)

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)?

Update at 9:20 a.m. PDT: Comments from Lili Cheng added.

Ray Ozzie is getting more social.

No, the infrequent blogger and Microsoft's chief software architect has not decided to Twitter his every move. Rather, Ozzie has set up a new social computing lab at Microsoft, to be headed by Microsoft Research veteran Lili Cheng.

The Future Social Experiences (FUSE) group brings together three existing efforts: Cheng's creative systems group from Microsoft Research and two units that were already part of Ozzie's world--the Media Labs and Startup Labs group.

Ozzie sent an e-mail Thursday to Microsofties talking about the move and its importance.

Lili Cheng

(Credit: Microsoft)

"The three groups being combined have concrete skills and code in areas where 'social' meets sharing; where 'social' meets real-time; where 'social' meets media; where 'social' meets search; where 'social' meets the cloud plus three screens and a world of devices," Ozzie wrote in the memo, which was seen by CNET News.

"FUSE Labs will bring more coherence and capability to those advanced development projects where they're already actively collaborating with product groups to help them succeed with 'leapfrog' efforts. Working closely with (Microsoft Research) and across our divisions, the lab will prioritize efforts where its capabilities can be applied to areas where the company's extant missions, structures, tempo or risk might otherwise cause us to miss a material threat or opportunity."

In the memo, Ozzie also noted the changing nature of social computing.

"For many years, technology-based 'social' innovations have been most commonly viewed through the lenses of communications and collaboration: messaging, chat, calls, meetings, conferences, co-editing, document sharing, collaboration, multiplayer gaming and the like," Ozzie said.

"More recently, many factors have begun to transform all that which is 'social': the ever-present, high-bandwidth internet both wired and wireless; the ease of connecting people; the dramatic rise in digital cameras, camera phones and 'app-capable' phones; net-connected game consoles & TVs; and so on."

Cheng, who will head the new lab, has specialized in social computing but has also worked in other areas, including helping Microsoft's Jim Allchin with the design of Windows Vista.

The new group will consist of around 80 people initially, Cheng said in an interview Thursday.

She noted that social computing is becoming central to all types of computing tasks, from gaming to search to business.

"When you think of what people do on their PCs, so much of it is (to) connect to other people and view information shared with them by their friends," Cheng said. "That's what people do on their computers."

The challenge, she said, is that personal computers weren't really designed with that in mind. Even networking, she notes, was an afterthought.

"It just feels early to me," Cheng said. "It feels like nothing works really well."

Businesses in particular, are still trying to figure out how to adapt social computing into their world, which also has rules and boundaries.

Although Microsoft has been doing a lot of research in social networking, the company is often not thought of as a leader in the area--something Cheng hopes will change.

"I'd love when people think of those tools to think of Microsoft," she said.

Cheng, who spoke to me just after meeting with her new team in Cambridge, Mass., said she is still trying to get a handle on all of the projects now in her purview.

"I didn't even have a chance to tweet myself," Cheng said.

Microsoft made other changes on Wednesday in its engineering ranks, shifting several projects under the auspices of Peter Loforte, general manager of Engineering Excellence and Technical Strategy & Community. Loforte will now head a team that includes the company's engineering "excellence," technical community, strategic technical recruiting, distributed development strategy, as well as the technical strategy team responsible for ThinkWeek--Microsoft's brainstorming process that used to be headed by Bill Gates, who would amass technical papers from across the company and review them twice a year.

European Union regulators said Wednesday that Microsoft can go ahead and start using its latest proposed "ballot screen," which will let new users of Windows choose which browser--or browsers--they wish to use.

The decision to let Microsoft "market test" the latest version would seem to mark the wrapping up of the latest antitrust skirmish with Brussels.

More than a decade after Microsoft first started including a browser with Windows, regulators said earlier this year that they had reached the preliminary view that such an inclusion violated European antitrust law.

In response, Microsoft initially said it would ship Windows 7 in Europe without a browser at all, seemingly challenging the logic of the decision by the European Commission, the executive arm of the EU. However, amid indications that such a move would not fly, Microsoft in July offered a proposal that more closely matched what regulators and competitors wanted--a ballot screen that lets users choose which browser or browsers they wish to install.

Since then Microsoft, regulators, and competitors have been going back and forth about how that screen would look and operate.

"The improvements that Microsoft has made to its proposal since July would ensure that consumers could make a free and fully informed choice of web browser," Europe's antitrust authority said in a statement. Among the changes since Microsoft's July proposal is the agreement by Microsoft to add more information before users select a browser. Microsoft will now first present users with a screen explaining what a browser is and will then offer "Tell me more" buttons for each browser.

Under the revised proposal, Microsoft would, through Windows Update, make available for five years in the European Economic Area a screen allowing users of Windows XP, Windows Vista, and Windows 7 to choose which Web browsers they want to install. PC makers will also be able to install competing Web browsers and, if they choose, set those as the default browser and disable Microsoft's Internet Explorer.

"The Commission's preliminary view is that Microsoft's commitments would address these competition concerns and is market testing Microsoft's proposal in light of these requirements," The EC said in its statement.

For its part, Microsoft said it welcomed the European Commission's decision.

"For Microsoft, today's decision is a significant step toward closing a decade-long chapter of competition law concerns in Europe," general counsel Brad Smith said in a statement.

Update: Smith also spoke to CNET about the deal and its potential impact on others in the industry. Click here to read that interview.

Mozilla and Opera are both unhappy with Microsoft's proposed "ballot screen" to let Windows users in Europe select their default browser, according to a report in The Wall Street Journal.

Microsoft's proposed browser ballot screen is its attempt to satisfy the antitrust investigation from the European Union over Internet Explorer's dominance in Windows. The screen would present the user with a menu to install other browsers, including Firefox, Opera, Google Chrome, and Safari, and let the user pick one as the default.

Microsoft became open to the concept over the summer as an alternative to removing IE from Windows for the European market.

At the time, the idea appealed to Opera CEO Hakon Wium Lie, who declared, "It's a happy day for us. We certainly think the ballot is good news and think it will give users a genuine choice." But Mozilla Corp. CEO John Lilly adopted a more wait-and-see approach, saying he wanted to see the specifics before reacting.

EU officials asked rival browser makers among others for their input on Microsoft's proposal, sending them questionnaires over the summer, according to the report.

After checking out the ballot screen and the proposal from Microsoft, the European Union for Interoperable Systems (ECIS), which includes Opera Software ASA as one of its members, said it presents too many hurdles for the average user.

According to Sunday's Wall Street Journal (subscription required), ECIS and Opera attorney Thomas Vinje said that selecting another browser requires "the user to confirm and answer threatening and confusing warnings and questions. Microsoft has cunningly found a way to accept the Commission's suggestion of a ballot screen, but to do so in a way that will be entirely ineffective."

In response to an e-mail from CNET, Vinje said that Microsoft's current ballot screen falls short of having any effect on competition since it fails to offer users a seamless and unbiased choice of browser. However, he felt the problem could be fixed with some trivial changes.

He said that despite choosing an alternate browser through the ballot, Internet Explorer would remain turned on and that only an additional procedure would allow the user to deactivate IE. So the ballot screen is simply installing another browser in addition to IE rather than offering users a choice of a single browser.

Adding an alternative browser is unnecessarily complex, according to Vinje. The ballot screen, set up as a Web page in IE, requires many unnecessary clicks, displays threatening warnings, and poses confusing questions before another browser can be downloaded and set up. He believes users will be discouraged from selecting an alternative browser.

The ECIS feels that a powerful, yet trivial change to Microsoft's proposal is needed: the ballot screen must be designed to offer users a seamless choice in which a single click for an alternative browser is sufficient to download and install that browser, without warnings or questions, and without leaving Internet Explorer active and visible.

"Choosing an alternative browser must not be more cumbersome than choosing Internet Explorer," said Vinje, "which can only be accomplished in a real ballot screen application--not in a Web page."

Countering with suggestions
Mozilla has said that a ballot screen is a good step, but as currently proposed, it's not good enough. A blog written August 18 by Mozilla's general counsel, Harvey Anderson, examined Microsoft's specific language and functionality in the ballot screen proposals. Anderson addressed several concerns and countered with his own suggestions.

Anderson praised Microsoft's effort to not include links or shortcuts to IE inside Office 2007 but said it should be expanded to include all Microsoft software. "If Microsoft applications need to launch a browser, they should only launch the user's default browser," he wrote. "The proposal should be modified such that this provision applies to all Microsoft desktop software, and certainly to the already announced Office 2010."

Anderson also expressed concerns about the ballot screen itself, saying IE could automatically become the default browser in a number of scenarios. It could end up as the default if the user ignores the ballot or can't figure out how to use it. It could also wind up the default if the user runs into problems trying to install one of the other browsers. But in this case, his only suggestion was that the ballot require the user to make a choice.

Finally, Anderson said that the ballot doesn't educate the user as to what a Web browser is or how each browser differs. "The ballot should introduce the user to at least a simple definition of what a browser is before offering the user a choice in browsers," he wrote. "It should probably go one step further and explain that the different browsers compete for superiority in the areas of ease of use, security, and customizability. "

Other voices have chimed in to criticize the ballot screen. Mitchell Baker, chair of the nonprofit Mozilla Foundation, detailed her concerns in a blog on August 17. Despite the user's ability to choose a different default browser, Baker said she believes IE would still have the upper hand with a prominent position on the Windows desktop and Taskbar.

"Choosing another browser as a 'default' does NOT mean that the other browser takes the place of IE," stated Baker in her blog. "For example, the IE logo ("shortcut") still remains unchanged on the desktop. The shortcut/logo of the browser the user has selected does not replace this, it is added elsewhere. As a result, the familiar location remains IE, not the user's choice."

Baker also expressed concern that the average nontechnical user may have trouble navigating the different screens required to choose a different browser. She said she believes the ballot screen only helps users download alternative browsers and should be designed to help them install, open, and make other browsers the default. "As proposed, we expect to see many people who want other browsers get lost in the process before they actually succeed in making an alternative browser their main browsing tool," she wrote.

The EU had hoped to wrap up this final phase of its investigation into IE, especially since all parties have agreed at least in principal to the idea of a ballot screen. But the competition could stall final approval if Microsoft is forced to wrestle with the finer points of the complaints.

Vinje believes that Microsoft only superficially accepted the EU's suggested remedy and that the ballot screen as designed does not restore competition. He said the EU will be careful to make sure that any proposed solution would be effective. And in this case, the ECIS would be surprised if Microsoft's proposal were accepted without "significant modifications."

On Tuesday, Microsoft spokesman Kevin Kutz said: "In July, we made a new proposal to address EU competition law issues related to Internet Explorer and interoperability. The Commission welcomed our proposal and announced it would assess its effectiveness. We continue to look forward to the next steps in this process."

Requests for comments from Opera and Mozilla were not immediately returned.

Update 12:15 p.m. PDT: Added comments from attorney Thomas Vinje.