Microsoft

A long time ago, Bob Muglia worked on a Microsoft project designed to offer a variety of services in the cloud. That effort, known as Hailstorm, didn't exactly go gangbusters, and Muglia's career took a detour.

Bob Muglia

But both Muglia and Hailstorm are back. On Monday, Microsoft elevated Muglia to divisional president, a recognition of the success he has enjoyed as head of Microsoft's server software business.

As for Hailstorm, the name is gone, but many of the concepts are back, as part of the Windows Azure platform that Microsoft announced in October. Last month, I had a chance to talk with Muglia about Windows Azure, the cloud in general, as well as the economy. Here are some edited excepts from my conversation:

Is this supposed to be a slow-motion rollout with Azure?
Muglia: The way I sort of describe it is, it'll be phased--there's a whole broad set of services. You'll see some of those services go to production next year; exactly what and when, we're still working through. People are able to begin to develop right now, of course, on it, but it will happen over a period of time.

And the other thing right now is, people are still very much kicking the tires. We have quite a bit of tire kicking going on, a lot of people provisioned on the services right now, and so far, things have been going well.

What are the kinds of things that you think people will want to run in Azure?
Muglia: In terms of the classes of applications, I think you'll see two initial ones, though it's fair to say that people may have an interest in running in this environment any application they would want to run on-premises. But the initial ones I think would be your Web-style applications, which tend be Internet-connected and need geodistribution.

The other class that I think is really interesting is anything that involves working in partnership with others: supply chain sorts of applications, business-to-business, Electronic Data Interchange, those sorts of classes of applications in which you need to connect multiple organizations, and you need to deal with authentication, and you need to deal with network connectivity.

Today it's very complex with virtual private networks and password management, and a whole nasty set of problems to deal with, and Azure has some built-in services to simplify those things, including a service bus to go through firewalls and connect things over the Internet--again, any system to allow people to authenticate. Those are basics that are fundamental, that everyone will really need in this kind of environment.

So, I think you'll see those sorts of things emerge initially, but then you could just imagine all sorts of things. You could imagine people using it for (high-performance computing) applications. That's an area we're looking at, and we certainly are having conversations with a number of academic and other organizations.

In terms of the movement toward the Microsoft-hosted versions of its server products, are there some interesting things that you have come across, as you've had to do the work to get ready for that?
Muglia: There's a ton. I mean, one is, you need to move so that everything works across the Internet, which is just the right thing to do, anyway. Another thing you see is the need to have what we call multitenancy. So, to get scale on these things, you can't be dedicating even a virtual machine to a company. You need to be able to support many users, many organizations within a single instance of an application, and so that's an attribute.

There's a whole set of really interesting regulatory things that you hit when you go across the world attached to this. Turns out, some of our products, like unified communications, have VoIP (voice over Internet Protocol) capabilities. Well, you go and take that to many countries of the world, and the call those telephone companies. They call you a telco, and all of a sudden, there's a conversation about being regulated like a telco, you know, in some countries around the world. That may or not be pleasant.

There are issues about data and where data can reside and not reside, and so that's why when you spread geographically around the world, there's a wide variety of new issues that open up that are quite, you know, quite interesting--billing issues, because obviously, there are different issues with the way the banking systems in different countries work.

Let's talk about the economy. What are you seeing when you talk with customers?
Muglia: People are afraid. I mean, I think we're all a bit afraid, at some fundamental level, because we don't know--no one knows where this is going to land in the long run.

No one really is clear as to how far the contraction is going to go and how long it's going to happen, and then there's a lack of clarity also as to how we get through this. Are we going to be tight six months of the year, then boom!? Well, maybe. That would be kind of a good viewpoint of things right now. Or is it going to be a longer period of time, with a medium period of time with sort of a slow growth.

I sort of always come back to a belief that the fundamentals will drive all of these things, and ultimately, it means that people have to produce things that others value that helps to drive the overall society forward and, you know, generate something that is of sustainable long-term value. Ultimately, one of the key things is, how can we make companies and individuals more productive and able to work together better?

So, I guess I have two questions somewhat related to that. One is, how about for you? As a business manager, obviously, you manage a fairly large business. What are the things that you might have done, had the economy continued, that you're not doing now? What are some of the things that remain priorities, and what are some of the things that you're going to let happen slower?
Muglia: Well, certainly, there's no question that Microsoft's not immune to the circumstances. There's no question about that. So we have slowed our growth. We are still growing as a company, and (the server and tools business) will grow overall this year, though I admit that we did most of our growth in Q1. We actually were incredibly successful in bringing a lot of folks on in Q1, so we would have had to slow (hiring) under any circumstances because we're outachieving our plan, but we've slowed considerably.

So if you take some of the areas in the database space, like some of these areas around business intelligence and data analysis, we're actually investing in some of those areas. But we're taking resources off some things that don't have the same kind of results and long-term potential for us to have returns, one of which was pretty public recently: OneCare, where we, you know, decided to refocus that effort into a much more narrowly focused free antimalware offering instead of providing a broader suite.

Are there other things about which you, as a business leader, are saying, this is going to have to wait a little or move slower?
Yeah. I mean, there certainly are. I think that we've looked inside, at what we're doing really in almost every one of our groups. If you look at almost every one of the things that we're doing and say, OK, there's a set of things we want to do in management, let's tighten the belt a little bit, as to where we're going. Yet we're continuing to invest in this whole virtualization and management space, coherence with Azure, all those sorts of things we're continuing to invest in.

So in each one of our business areas, we've looked at how we could reallocate and refocus, and then across the board, we've made some fairly fundamental shifts like we did with OneCare.

Microsoft started off its new-year executive shuffling by promoting longtime Server and Tools unit head Bob Muglia to president, a title he shares with entertainment boss Robbie Bach and business software chief Stephen Elop.

Bob Muglia

It's a title elevation for Muglia, whose responsibilities remain the same. It also reflects the growing importance of the server unit, which accounted for $13 billion in revenue in the most recent fiscal year, now making up fully a fifth of Microsoft's total sales.

"The core of our success at Microsoft has always been great people--people who combine talent, drive, vision, customer focus, and leadership," CEO Steve Ballmer said in an e-mail to employees. "Few people at Microsoft embody these qualities more fully than Bob Muglia, and few people have contributed more to the company's success."

The Wall Street Journal article on Muglia's promotion notes that it represents quite the comeback for Muglia, who found himself shuttled off to head management software in a post-Hailstorm reshuffling of the Internet unit. Of note, Muglia now heads the Azure Services Platform, components of which look a whole lot like Hailstorm.

I sat down with Muglia last month, just before my extended winter holiday break. In honor of his promotion, I'll post a fuller transcript of my interview on Tuesday, right before I head off to Las Vegas for the Consumer Electronics Show.

With Apple's last Macworld keynote speech just hours away, Microsoft is again talking up the idea of an "Apple tax" that people pay when they opt for a Mac over a Windows PC.

It's a concept that Microsoft started touting in the fall. While the words may be fairly new, the melody sounds familiar. Saying that customers pay an added cost when using a rival is a well-worn page from the Microsoft playbook. One need only look back to the anti-Linux "Get the Facts" campaign for another example.

In any case, it is a notion that is likely to stay around, says Windows marketing VP Brad Brooks. In addition to talking up the idea with reporters, Brooks said it may show up in online marketing and potentially even in Microsoft advertisements.

Microsoft did come up with some new charts trying to put hard numbers on the "Apple tax." On the desktop side, Microsoft argues you can save $100, or 16 percent, by going for a Dell Studio Hybrid or HP Pavilion Slimline over a low-end Mac Mini. Microsoft argues that at the mid-range, a buyer can save 25 percent by going for a Dell XPS One instead of a low-end iMac and that the Mac Pro is more than double the cost of a high-end HP desktop.

Microsoft says consumers are paying an Apple tax when they buy a Mac. Click chart for larger version.

(Credit: Microsoft)

I made the argument when Microsoft first brought up the concept that, if it is a tax, it is a tax that a growing number of buyers seem willing to pay.

Brooks said on Monday, though, that he expects the weakening economy will limit the number of people willing to pay more for a computer.

"More and more people are going to be scratching their head and say is that a tax I am really willing to pay," he said.

He noted that the tax isn't just about the higher sticker price, but also about the lack of choice that Mac users have. Certainly there are fewer hardware options and the Mac software aisles remain far narrower as well. Brooks also tried to position the Mac as less open, pointing to the iTunes App Store as an example of Apple forcing a "walled garden" on users. Were he to be comparing the iPhone and Windows Mobile, he might arguably have a point, but last I checked developers are free to write whatever program they want for the Mac.

Although I don't buy the idea that Mac users don't know there are cheaper PC options, I think the sorry state of the economy will pose challenges for all PC makers, including Apple. Consumers are clearly going to have to weigh any computer purchase against more basic needs, the prospect of not having a job, etc.

That said, it is unclear who will be hurt more by the economy. Apple is in many ways akin to BMW or another automaker that plays only at the high end of the market. I expect Apple will have a tough time keeping up with recent growth trends. But, as the car market shows, the Fords, GMs, and Hyundais of the world are also taking a huge hit.

I don't want to take this auto analogy too far, either. I don't see Microsoft running to Capitol Hill for a bailout anytime soon. Microsoft makes huge margins on its products. And while I hear layoffs may indeed be in the works, the company doesn't face anywhere near the structural issues of the auto industry (the Google threat notwithstanding).

Brooks would not specifically comment on whether Microsoft has trimmed its PC outlook for 2009, but did say that clearly the whole global economy is far weaker than it was in October, when Microsoft issued its last forecast.

"It continues to be a tough economic time for everybody," Brooks said. "We continue to see that our customers are suffering out there.

Click here for more Macworld Expo coverage from CNET News.

Eleven counterfeiters have been given jail sentences of between one and a half and six and a half years by a Chinese court after being found guilty of producing fake Microsoft software.

The "ringleaders of the world's largest software-counterfeiting syndicate," as Microsoft described them in a statement on Wednesday, were sentenced on New Year's Eve. According to Microsoft, theirs were the longest sentences given for this type of crime in China's history.

The syndicate was charged with making and distributing more than $2 billion worth of fake Microsoft software, which had ended up all over the world. Nineteen Microsoft products were counterfeited, in 11 languages. A Microsoft spokesperson told ZDNet UK on Friday that the products had included Windows Vista and XP, as well as Office 2007 and 2003, and Windows Server.

The conspirators were identified and arrested in July 2007, following an investigation by the FBI and China's Public Security Bureau (PSB). Microsoft said in its statement that "evidence provided by Microsoft customers through the Microsoft (Windows Genuine Advantage) piracy reporting tool proved to be essential in tracking down this criminal syndicate." More than 100 Microsoft resellers helped trace the software to its origins and provide evidence.

"Microsoft greatly appreciates the work of China's PSB and the FBI in taking strong enforcement action against this global software-counterfeiting syndicate," David Finn, Microsoft's associate general counsel for antipiracy at Microsoft, said in the statement. "Unfortunately, software counterfeiting is a global, illegal business without borders. Criminals may be on the other side of the globe and may not even speak the same language, but they prey upon customers and partners all over the world. This case is a testament to the importance of Microsoft's commitment to close collaboration with government bodies and local law-enforcement agencies around the world to bring these criminals to justice, wherever they may be."

Microsoft's vice president for the Greater China region, Fengming Liu, said in the company's statement that there had been "a significant improvement in the environment for intellectual property rights in China." The country has long been widely seen as a haven for software and media counterfeiters, with one perceived factor being official laxity over the issue. Microsoft, as a company with extremely popular software, has always been a significant victim of this situation.

"We will continue to work with the relevant authorities in China to ensure that counterfeit software does not undermine the development of China's knowledge economy," Fengming said.

In November, Microsoft announced that it had decided to spend, over the next three years, in excess of $1 billion on research and development in China.

David Meyer of ZDNet UK reported from London.

A leap-year issue with Microsoft's Zune music player is still leaving many users cold, despite the company's reassurance that all would be well by sometime on New Year's Day.

Postings on Zune message boards Thursday morning, as people tried out Microsoft's recommendations and fellow Zune users' suggestions, ranged from the hopeful...

"The wipe process should only take a minute or two. If it is hanging on this screen, disconnect it from power, let the battery drain, and then reconnect it to start the device again," user Raw Deluxe wrote on Zune Forums.

...to the melancholy:

"Mine never made it back. The battery drained ok, but it tried to start one time and is now good and dead. I talked to support and they agreed - its a brick," wrote brotherdiesel.

Scores of Zune users on Wednesday -- the last day of a 366-day leap year -- reported that their 30GB Zune devices were freezing up. Complaints rippled across message boards as people booted up the gadgets and found they could not get to their songs or pictures.

By the middle of the day, Microsoft had identified the root of the problem: the Zune's internal clock was stumbling as it tried to handle a leap year. (See Microsoft's Zune support site for more details.) Things would start to resolve themselves, the company said in its Zune 30 FAQ, by noon GMT (4 a.m. PT), and it advised users with frozen Zunes to follow these steps:

1. Disconnect your Zune from USB and AC power sources.
2. Because the player is frozen, its battery will drain--this is good. Wait until the battery is empty and the screen goes black. If the battery was fully charged, this might take a couple of hours.
3. Wait until after noon GMT on January 1, 2009 (that's 7 a.m. Eastern or 4 a.m. Pacific time).
4. Connect your Zune to either a USB port on the back or your computer or to AC power using the Zune AC Adapter and let it charge.

One ZuneBoards forum user claimed to have identified the actual trouble spot in the clock driver code. (A tip of the hat to Ars Technica for spotting the post.)

"The Zune's real-time clock stores the time in terms of days and seconds since January 1st, 1980," wrote user itsnotabigtruck. "The Zune frontend first accesses the clock toward the end of the boot sequence. Doing this triggers the code that reads the clock and converts it to a date and time." The post continues:

Under normal circumstances, this works just fine. The function keeps subtracting either 365 or 366 until it gets down to less than a year's worth of days, which it then turns into the month and day of month. Thing is, in the case of the last day of a leap year, it keeps going until it hits 366. Thanks to the if (days > 366), it stops subtracting anything if the loop happens to be on a leap year. But 366 is too large to break out of the main loop, meaning that the Zune keeps looping forever and doesn't do anything else.

For those who hadn't yet run into problems, Microsoft said to refrain from connecting the Zune to a PC before noon GMT on Thursday.

To disconnect the battery, or not to disconnect the battery
Microsoft strongly advised users to ignore advice from forum visitors who suggested disconnecting the Zune's battery to reset the device:

This is a bad idea and we do not recommend opening your Zune by yourself (for one thing, doing so will void your warranty). However, if you've already opened it, do one of the following:
• Wait 24 hours from the time that you reset the Zune and then sync with your computer to refresh the usage rights; or
• Delete the player's content using the Zune software (go to Settings, Device, Sync Options, Erase All Content), then re-sync it from your collection.

Judging from forum comments Thursday morning, however, a number of users had indeed disconnected the battery.

"I got tired of waiting.....opened it up and did a hard reset. Seems that 'triggered' it cause now its telling me to connect it to my PC and then open the Zune software and restore the firmware. It seems to be seeing it.....hopefully all is on the road to recovery," wrote floozuki.

By midday Pacific Time on Thursday, some users found life returning to normal for their Zunes: "Mine came back today just as advertised.... all songs intact...no worries.....," wrote DadGuy, though it wasn't clear which recovery method he had followed.

But others griped that the New Year's freeze was just the latest in a series of problems they'd been facing. Said emilysuz:

I tried the button combo, it's currently stuck on 'Connect Zune to your PC' but it is currently plugged in to my PC. I have had trouble with this thing fopr days, before the widespread crash and I'm beginning to think this thing is just your garden variety piece of crap. I loved my Zune until the battery wouldn't charge. Maybe my Zune troiuble is not the same. It refuses to charge, it only charges long enough to tell me my battery is low and then it dies again, even if it's plugged up. It won't sync, wired or wireless. Again, I love my Zune, but if it's dead it's no good to me.

User JediFarfy sought to mollify emilysuz about the Zune's failure to sync:

Mine wouldn't at first, so I kept disconnecting it and reconnecting it on both ends (comp and Zune). Took about 4 times and it finally connected. Your Zune had a rough, confusing day, give it some love and it'll be fine.

See also:
• I want to believe: Reflections on my Zune year
• The new Zunes in action

Mark January 15 in your calendar: Rumors of layoffs at Microsoft peg that as the day the bad news will come.

The latest to report on the possibility of layoffs at the software giant is the blog Fudzilla, which puts the number of job cuts at 15,000, or nearly 17 percent of Microsoft's worldwide operations. The January 15 date is a week before Microsoft's second-quarter earnings report, scheduled for January 22.

Microsoft also has a briefing for financial analysts planned for January 8 at the Consumer Electronics Show in Las Vegas, with the headliner listed as Robbie Bach, president of the entertainment and devices division.

(Credit: Microsoft)

Those purported layoff numbers are up from earlier rumors, which suggested that 10 percent of the company's employees would lose their jobs.

Fudzilla sees the biggest hit coming for the MSN unit, where Yusuf Mehdi recently took over as marketing chief while the company continued to look for an executive to run its overall online services group:

So far, we haven't managed to confirm what departments or regions will be hit the worst, but we're hearing that MSN might be carrying the brunt of the layoffs. We're also hearing rumors about the possibility of somewhat larger staff cuts at Microsoft EMEA (Europe, Middle East and Africa).

It's unlikely that Microsoft will be laying off a lot of people in departments and regions that are doing well, and considering the recent upturn in console sales, we have a feeling that at least most of the people working in the Xbox 360 departments will be pretty safe.

Wall Street veteran Henry Blodget says the target areas mentioned by Fudzilla make sense, but not the high volume of job cuts:

Unless Microsoft's business has been absolutely crushed in the past two months, there is no reason for the company to suddenly cut this much cost. Microsoft's margins are still fine, and much of its revenue is generated from multi-year contracts (and is therefore unlikely to see a massive intra-quarter hit).

In October, word leaked out of Microsoft that it would be closing its MSN Groups service on February 21, to be replaced with Windows Live Groups.

Blodget sees potential for a restructuring in Redmond that would fit into the long-running, on-again-off-again Microhoo saga:

The only way we could see Microsoft laying off this many people is if the company decided to eliminate business units. And if Microsoft did decide to restructure its business, it would likely sell rather than shut down divisions, including MSN (If Microsoft wants to get out of the consumer Internet business, which it should, the best way to do it is to spin its online operations into Yahoo in exchange for a big piece of the company.)

Looks like the Midwest isn't the only thing that's freezing up this holiday season: many people are reporting that their 30GB Zunes are spontaneously going on the fritz as well.

Microsoft's Zune MP3 player.

(Credit: Microsoft)

The symptom is being reported widely on discussion boards about Microsoft's music player, including Zune.net, Zune User Community Forums, and ZuneScene. With the problem, people's Zunes reboot but freeze when the startup status bar reaches 100 percent.

Some users reported the problem happened at exactly midnight PST, at the very beginning of the last day of the year. That timing led some wags to call the problem Z2K after the Y2K problem that was widely feared to cripple the computing industry when computer clocks moved from 1999 to 2000.

"It reset itself. I don't know why," said one owner who posted an account of his Zune problem on YouTube after reporting it on the Zune.net forum.

Microsoft didn't immediately respond to requests for comment Wednesday morning, but issued a statement later in the day (see below).

"I hate to say it but I believe this is the end of the road for the Zune and I. Just as I was happy with the last update and things were fine, we get another major meltdown. I was always supportive and had good things to say about my Zune to those that would ask, however this is the nail in the coffin," griped user Redinight on a ZuneScene discussion board. "I can't take it anymore. I can't sit here all the time and wonder what Microsoft does right or wrong anymore, I just want to get up and go listen to my music. Listening to music is about the last thing I do with my Zune. I always have to reinstall, download new firmware, or wait for the slow software to catch up. Now this? I want to throw it away and never look back."

A screen shot purported to be from Windows 7 beta 1.

(Credit: ZDNet.com)

The first beta of Microsoft's next operating system has apparently been spotted in the wild.

Windows 7, which is expected to hit retailer shelves in time for the 2009 holiday shopping season, has reportedly popped up on torrent trackers as an ISO file. ZDNet's Adrian Kingsley-Hughes also reports having a copy and has posted his first impressions of the beta.

Overall, Kingsley-Hughes wrote that he likes Windows 7, calling it "solid and fast." But he does take issue with a few new features:

The new revamped taskbar is visually very interesting (and certainly a lot easier to use at higher screen resolutions that the Vista or XP taskbar), but it tries to do too much and as such comes across as kludgey and counter-intuitive. One failure is that it's hard to tell the difference between apps that are running and shortcuts that have been pinned to the taskbar.

Microsoft demoed the forthcoming operating system at the Professional Developers Conference in Los Angeles last month, but apparently the differences between Windows 7 and Vista were so subtle that they can go unnoticed. Attendees to PDC 2008 received pre-beta copies of Windows 7 on DVD, as well as a 160GB Western Digital portable hard drive packed with code.

Microsoft CEO Steve Ballmer is expected to talk up Windows 7 from a consumer perspective during his keynote speech at the Consumer Electronics next week. Microsoft is expected to officially distribute the first beta to beta testers in early January.

Windows 7 will hit store shelves sometime next year. And if I had to guess exactly when it would happen, November 2 would be my answer.

Yes, I know that Microsoft has said that it plans on releasing Windows 7 by early 2010 and there has been no confirmation on the part of the software giant that would indicate a 2009 release. But when we consider that Vista is still in trouble, Microsoft extended the XP deadline even further into 2009, and there's no end to Vista troubles in sight, I simply don't see any other option for Ballmer and Company.

Microsoft knows all too well that it made a slew of mistakes with Vista. Intent on turning things around and putting this mess behind it, I think the company will make a major announcement in the next couple months detailing the future of Windows and the exact release date of Windows 7. In fact, it wouldn't surprise me if we hear about it at CES when Microsoft CEO Steve Ballmer takes the stage to deliver his keynote address.

Microsoft is investigating reports of a flaw that could allow someone to remotely execute code on a system running certain versions of SQL Server.

"Microsoft is aware that exploit code has been published on the Internet for the vulnerability addressed by this advisory," the company wrote in a security advisory published on Monday. "Our investigation of this exploit code has verified that it does not affect systems that have had the workarounds listed below applied. Currently, Microsoft is not aware of active attacks that use this exploit code or of customer impact at this time."

Affected systems are: Microsoft SQL Server 2000, Microsoft SQL Server 2005, Microsoft SQL Server 2005 Express Edition, Microsoft SQL Server 2000 Desktop Engine (MSDE 2000), Microsoft SQL Server 2000 Desktop Engine (WMSDE), and Windows Internal Database (WYukon). Systems with Microsoft SQL Server 7.0 Service Pack 4, Microsoft SQL Server 2005 Service Pack 3, and Microsoft SQL Server 2008 are not affected, the advisory says.

Microsoft said that once it completes its investigation, it will "take the appropriate action to protect our customers," which could include issuing a security patch through a service pack, in the monthly security update, or via an out-of-cycle security update.

The vulnerability was disclosed December 4 by Bernhard Mueller of SEC Consult Vulnerability Lab.