Microsoft

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.

Capossela

(Credit: Microsoft)

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."

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.

CHICAGO--On the outside, Microsoft's massive new data center resembles the other buildings in the industrial area.

Even the inside of the building doesn't look like that much. The ground floor looks like a large indoor parking lot filled with a few parked trailers.

It's what's inside those trailers, though, that is the key to Microsoft's cloud-computing efforts. Each of the shipping containers in the Chicago data center houses anywhere from 1,800 to 2,500 servers, each of which can be serving up e-mail, managing instant messages, or running applications for Microsoft's soon-to-be-launched cloud-based operating system--Windows Azure.

Upstairs, Microsoft has four traditional raised floor server rooms, each roughly 12,000 square feet and consuming, on average, 3 megawatts of power. It's all part of a data center that will eventually occupy 700,000 square feet, making it one of the world's largest.

"I think, I'm not 100 percent sure, but I think this could be the largest data center in the world," said Arne Josefsberg, general manager of infrastructure services for Microsoft's data center operations.

Even with only half the site ready for computers, the center has 30 megawatts of capacity--many times that found in a typical facility.

On a hot day, Microsoft would rely on 7.5 miles worth of chilled water piping to keep things cool, but general manager Kevin Timmons smiled as he walked in for the facility's grand opening in late September. It was around 55 degrees outside.

"When I stepped out, I said 'what good data center weather'," he said. "I knew the chillers were off."

Although Microsoft is open about many of the details of its data centers, there are others it likes to keep quiet, including the site's exact location, the names of its employees, and even which brand of servers fill its racks and containers.

The software maker also won't say exactly which services are running in each facility, but the many Bing posters inside the upstairs server rooms in Chicago offer a pretty good indication of what is going on there.

Microsoft originally intended to open the Chicago facility last year, but the company has slowed its data center pace some amid the weaker economy and an array of cutbacks companywide. Instead, the facility had its grand opening in late September.

Of Sidekick--and Azure
Within a month, though, Microsoft's data centers were attracting attention for a wholly different reason. A massive server failure at an older facility--one that Microsoft acquired as part of its Danger acquisition--left thousands of T-Mobile Sidekick owners without access to their data as part of an outage that is now stretching into its second month.

Although Sidekick uses an entirely different architecture, the failure represented a tangible example of the biggest fear of cloud computing--that one will wake up one day to find their data gone.

Photos: Inside a Microsoft data center

Microsoft is quick to highlight the differences between the Sidekick setup and what Microsoft is building in Chicago and elsewhere. "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 after the Sidekick failure.

As for Azure, Microsoft is expected to talk about its commercial launch at this month's Professional Developers Conference in Los Angeles, including offering more details on how the system will provide its redundancy. Microsoft has already announced some new Azure details, noting last week that it will begin charging for Azure as of February 1.

Microsoft is still trying to figure out just how much capacity at Chicago and elsewhere it needs to assign for Azure.

"Azure is incredibly hard to forecast," said Josefsberg. "We're probably erring toward having a little more capacity than we need in the short term."

What is clear is that, over time, Microsoft will need even more capacity. That's what has Josefsberg returning to a custom "heat map" that figures out the best place to build data centers based on factors including cheapness, greenness, and availability of power, political climate, weather, networking capacity, and other factors. Choosing the right spot is critical, Microsoft executives say, noting that 70 percent of a data center's economics are determined before a company ever breaks ground.

Josefsberg said he already has the next spot picked out.

"We know exactly where it is going to be but I can't tell you right now," he said.

But Microsoft has indicated how the next generation of data center will improve upon the Chicago design.

Moving to containers allows Microsoft to bring in computing capacity as needed, but still requires the company to build the physical building, power and cooling systems well ahead of time. The company's next generation of data center will allow those things to be built in a modular fashion as well.

"The beauty of that is two-fold," Josefsberg said. "We commit less capital upfront and we can then accommodate the latest in technology along the way."

Why would anything between Microsoft and Yahoo go quickly?

After months of awkward teenage romance, the two companies finally announced that they had reached a deal in July.

Microsoft and Yahoo reached a "binding letter agreement" on their search deal in July, but ironing out the full pact is taking the two sides longer than anticipated, they said Wednesday.

(Credit: Microsoft/Yahoo)

However, the two sides are apparently still working out the terms of what they agreed to in the "binding letter agreement" reached in July. In a regulatory filing on Wednesday, Yahoo said it and Microsoft need more time to iron out a definitive accord.

"The Letter Agreement specified that the parties would execute definitive agreements by October 27, 2009, but given the complex nature of the transaction, there remain some details to be finalized," Yahoo said in a filing with the U.S. Securities and Exchange Commission.

They have time, as regulators are still pouring over the deal.

In a statement, Microsoft said the two companies remain committed to their arrangement.

"Given the complex nature of this transaction, there remain some issues that need some additional clarity and definitive details," a Microsoft representative said in a statement. "So the teams at Yahoo and Microsoft are continuing to work on the remaining details, and we have mutually agreed to extend the period to negotiate and execute the agreement."

Microsoft said "both companies are optimistic that we will be able to close this deal by early 2010."

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)?

Microsoft's Chicago data center offers a merge of old and new techniques. The ground floor features sealed containers with tightly packed racks of servers, while the second floor houses more traditional server rooms.

(Credit: Microsoft)

CHICAGO--On most days it takes the right access badge and a biometric scan to make it inside the doors of Microsoft's massive data center. But on Wednesday, the company allowed a group of reporters, customers, and partners to tour the 700,000 square foot facility.

The data center, along with another just-opened facility in Dublin, Ireland and existing centers in San Antonio and Quincy, Wash., serve as the guts behind Microsoft's online ambitions, from Bing to Hotmail to Windows Azure.

But, for all its strategic import, the ground floor of the Chicago plant looks more like a truck parking lot than a traditional data center. In each parking spot, though, Microsoft can drop off a container packed with up to 2,000 servers.

Right now, only about a dozen of the 56 container spots are filled, but Microsoft executives said they expect that to change quickly. The software maker expects to eventually spend up to $500 million filling up the Chicago site with gear.

The site was originally slated to open months earlier, but Microsoft delayed things due to the economy. Eventually, though, it decided to move forward.

"Investing in these uncertain economic times is always a tough choice," said Arne Josefsberg, general manager of infrastructure services Microsoft's data center operations. But, he added, "We take a very long-term approach to the business.

The data center itself is housed in an unmarked warehouse in one of the Chicago area's many industrial districts. (The software maker didn't want the exact location disclosed.)

Microsoft picked the spot because of its convenient spot close to cheap and abundant power as well as the fact it sits atop a major Internet connection point that houses major east-west and north-south fiber routes.

"It's a lot about location, location, location," Josefsberg said.

I'll have a ton more to say in a follow-up post, including a bunch more pictures and some video interviews, but I wanted to share a few initial thoughts before hopping a plane to the Seattle area, where I will be working for the rest of the week.

Microsoft says that rather than struggle to fix their own PC problems, computer owners have proved themselves more than willing to just click a "Fix it" button and let the computer take care of itself.

Since about January, Microsoft has been adding the automated fixes for an array of PC problems for which there is a single known solution. In the past six months, it has added more than 300 "Fix its" to automate the steps needed to solve problems, change settings, and even protect against viruses.

Recently, Microsoft used the approach to help people defend against a serious unpatched flaw.

"If we know what those 15 steps are, why shouldn't we just script it," Lori Brownell, Microsoft's general manager of product quality and online support, said in a February interview.

The effort is working, Microsoft said this week, noting that more than 7 million people have used the automated fixes and in 95 percent of cases, the "Fix it" button completely solved the issue.

Microsoft said the fixes are now available in 23 languages and have shown up in the company's advertising. There's even a "Fix it" page on Facebook and a feed on Twitter.

CVS Caremark announced Tuesday that it has broadened its pharmacy partnership with Microsoft to let customers download their prescription histories to their Microsoft HealthVault accounts.

Available since June 2008, the CVS offering has allowed customers to save and manage their pharmaceutical history online via Microsoft's HealthCare Web site. Now people can also add their prescription history by visiting CVS.com and logging into their HealthVault record.

Microsoft HealthVault is a free service that lets consumers store and maintain their health information in one single electronic spot. The site also provides health-related advice on losing weight, staying in shape, and managing health records for an emergency.

The service has been open to people who fill their prescriptions at CVS and those who use CVS's MinuteClinic, small health clinics where consumers can receive medical attention from nurse practitioners at select CVS stores. Customers who use the clinic can now also store their lab tests and other results into HealthVault.

"The expansion of the HealthVault and CVS Caremark partnership allows a greater number of people to easily manage prescription information for themselves and their families," said David Cerino, general manager of consumer health in Microsoft's Health Solutions Group. "This not only helps consumers take better control of their medication plans, but also enables individuals to provide their physicians with visibility to their prescription history for better coordination of care."

Microsoft isn't CVS' only health care partner. In April, CVS expanded its joint venture with Google to let customers store their health records online through Google Health.

With the push toward health care reform, other tech companies have also gotten into the act.

In May, Intuit, Microsoft, Dell, Intel, and other firms formed the EHR Stimulus Alliance, designed to push doctors and hospitals toward digital record keeping.

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.

Microsoft on Thursday lashed out against Google Chrome Frame--an Internet Explorer plug-in that supplants IE's rendering engine with Google's.

The software maker, in a statement, said users are better off moving to a later version of Internet Explorer if they want the latest technology as opposed to using Chrome Frame.

Google plans to use Chrome Frame to, among other things, allow people to run Google Wave from within Internet Explorer.

(Credit: Google)

"With Internet Explorer 8, we made significant advancements and updates to make the browser safer for our customers," Microsoft said. "Given the security issues with plug-ins in general and Google Chrome in particular, Google Chrome Frame running as a plug-in has doubled the attach area for malware and malicious scripts. This is not a risk we would recommend our friends and families take."

However, some took Microsoft to task for criticizing plug-ins, noting that Redmond itself has more than a few.

"Microsoft scared of security of plug-ins. Uninstall Silverlight now," Mozilla's Dion Almaer wrote in a Twitter posting.

Google announced Chrome Frame on Tuesday, saying it can be used with Internet Explorer 6, IE7, or IE8 to use Chrome to render Web pages and execute their JavaScript programs. To work, users have to install the plug-in and Web developers must insert a line of code onto their Web sites that engages Chrome Frame when a person visits the site.

Update, 12:35 p.m. PT: I had a chance to chat with Amy Barzdukas, general manager for IE.

In addition to reiterating the security risks associated with running what she called "a browser within a browser," Barzdukas said that using Chrome Frame also interferes with the private-browsing and clear-browser-history features within Internet Explorer 8.

"That is not made clear," Barzdukas said. "That is a trade-off that customers would really want to make with eyes wide open."

Barzdukas also rejected the notion that it offers a good option for those still using Internet Explorer 6.

"If you are a user of IE6, you should get off IE6, not install another add-on," she said. "It just compounds your problem."

Update 3:20 p.m. PT: Google offered up a statement on its own, explaining its thinking behind Chrome Frame.

"Google Chrome Frame is an open source plug-in that is currently in an early developer release and was designed with security in mind from the beginning," Google said. "While we encourage users to use a more modern and standards compliant browser such as Firefox, Safari, Opera or Google Chrome rather than a plug-in, for those who don't, Google Chrome Frame is designed to provide better performance, strong security features, and more choice to both developers and users, across all versions of Internet Explorer."

Although it does increase the surface area, Google notes it brings some security features of its own, particularly for those running IE6. "Accessing sites using Google Chrome Frame brings Google Chrome's security features to Internet Explorer users, providing strong phishing and malware protection (absent in IE6), robust sandboxing technology, and defenses from emerging online threats that are available in days rather than months," Google said.