Microsoft is still king of personal-computer software, which propelled it to legendary success since its founding 28 years ago. But to maintain the growth that made its stock attractive for years, Microsoft increasingly needs to look beyond the desktop PC.
The world's largest software company has piled up a $53.5 billion cash hoard thanks to profits from its two hugely successful franchises: the Windows operating system and the Office suite of productivity software. But those two product lines are now saturating the market.
Microsoft's chairman and chief software architect, Bill Gates, argues that information technology is just at the beginning of a long process of growth. That said, he warns that the coming recovery will be far quieter than the Internet bubble of the late '90s. He discussed the future of technology with BusinessWeek Seattle Bureau Chief Jay Greene. Edited excerpts of their conversation follow.
A federal court in Chicago has ruled that Microsoft must pay $521 million to a Web technology company and the University of California after finding that the software giant's Internet Explorer infringed on their patents.
The company, called Eolas Technologies, originally filed suit against Microsoft in 1999, alleging that the Redmond, Wash., giant infringed on its patents when enabling Internet Explorer to use plug-ins and applets into the software. The company's technology was first outlined in a patent application in the early 1990s.
Nvidia, the leading maker of graphics chips for PCs and other devices, reported modest sales gains and a sharp jump in quarterly profits Thursday, which it attributed to its deal to supply chips for Microsoft's Xbox game machine.
The company reported net income of $24.2 million, or 14 cents a share, for its second quarter, which ended July 27. That compares with income of $5.3 million, or 3 cents a share, in the same period a year ago and the consensus estimate of 11 cents a share from analysts polled by research firm First Call.
The head of Motorola's China subsidiary has resigned his post to lead Microsoft's operations in the country. Microsoft said Monday that it has tapped former Motorola China Electronics Chairman and President Tim Chen to take the newly created position of Corporate Vice President and Chief Executive Officer (CEO) of Microsoft Greater China.
In his new role, Chen will be responsible for overseeing the software maker's operations in the country, as well as honing regional strategy and dealing with governance issues. He will also establish and chair Microsoft's new China Leadership Team which will include executives from each of Microsoft's business units operating in China, the company said.
Even as Microsoft prepares to launch Office 2003 this fall, it is readying a new quality-first development process for Office 12. The company is stepping up its quality assurance, stressing a new goal, called Milestone Q, of getting code clean and solid earlier in the development process, according to a Microsoft internal memo examined by CRN. Toward that end, the company will use more automated quality-assurance and testing tools such as Big Button and Buddy Web. Office 12 is also known internally as the Longhorn version of Office.
Microsoft, the world's largest software maker, said its Asian sales would show growth of at least seven percent in coming quarters, thanks to the launch of a new suite of business computing tools and rising personal-computer sales.
"PC shipments have been increasing despite the Iraq war and SARS, and from an industry perspective, we're very optimistic about growth in shipments going forward," Hedy Ho, director of sales and marketing for Microsoft's desktop products, told Reuters in a recent interview.
U.S.-based Microsoft posted revenues of US$835 million for its Asia-Pacific and Japan region in the three months ended June, its fiscal fourth quarter, a 7.1 percent rise from a year earlier.
Microsoft is finalizing work on its Office System products, and an announcement on pricing and release to manufacturing (RTM) is imminent, sources familiar with the company's plans said.
The announcement could come as early as this week and will include most of the Office System applications, these sources said. RTM takes Microsoft to the final stage before commercial launch of the software scheduled later this quarter.
The Office System, a term introduced earlier this year, includes the 2003 editions of the Office Suite products Word, Excel, Outlook, PowerPoint, and Access, as well as the 2003 editions of FrontPage, OneNote, Publisher, Project, Visio, InfoPath, SharePoint Portal Server, Live Communications Server, and Live Meeting.
Microsoft is set to announce pricing and licensing details for its Office Live Communications Server 2003 on Monday, entering the final stretch for delivery of the enterprise instant messaging (IM) product by the end of the year.
The estimated retail price for Office Live Communications Server 2003, previously known as Office Real Time Communications Server 2003 and by its "Greenwich" code name, will be $929 for the server software and $34.95 per client access license, said Ed Simnett, lead product manager at Microsoft in an interview.
Microsoft on Thursday pegged Aug. 25 as the launch date for upgrades to its Xbox Live online video game service.On its Xbox Live Web site, Microsoft set the date for upgrades to the "Xbox Dashboard," which will include a list of the player's friends who are also online, as well as the ability to start a voice chat that does not require subscribers to actually be playing a game.
Those service enhancements were first announced in May, at the industry's annual E3 trade show. From Xbox Live's launch last November, Microsoft has emphasized the network's voice communication features, and the new game-independent voice chat was said to be one of users' most-requested features.