Microsoft's 'spim' suit

One of the lawsuits announced by AOL yesterday is considered the most significant suit yet filed against alleged "spimmers" -- people who send spam via instant messages and chat rooms. But contrary to some reports, while it's AOL's first spim suit, it's actually not the first lawsuit in the industry to target the practice.

Microsoft filed a suit last year in King County Superior Court (download .pdf of complaint) against a Canadian man alleged to have sent spam over the MSN Messenger instant-messaging program, as well as MSN Hotmail. The case is still pending. The complaint also includes a screenshot showing what a spim looks like, in case you haven't had the pleasure.

Despite that suit, spim isn't a major problem on MSN Messenger, according to Aaron Kornblum, Microsoft's Internet safety enforcement attorney. As mentioned in our item about the suits this morning, that's in part because of a "reverse list" feature in MSN Messenger that lets people see when someone else puts them on a buddy list, and, if they want, lets them stop that person from sending them messages. That feature also extends to IM "presence," letting MSN Messenger users block another person from knowing whether or not they're online.

Research ... or marketing?

A keynote address by Microsoft Research head Rick Rashid this week at a computer programming conference, OOPSLA, apparently caused a bit of a stir among the attendees -- and not in a good way. Some in the audience reportedly walked out and complained in the hallway when a Microsoft product demonstration was inserted into the presentation, which had been billed as a visionary speech on the future of programming.

Afterward, Microsoft's Stuart Kent acknowledged that the demo "felt a bit like a 'commercial break' " in the middle of the speech. And Microsoft's Harry Pierson described the feedback as "brutal," with people complaining that "brazen marketing displays like product demos don't work in OOPSLA keynotes." Pierson took it as constructive criticism, an area for improvement, but he also noted that Microsoft wasn't the only one to insert a product demo into its keynote at the event.

Gates on IE, antivirus

Steven Levy's "Technologist" column in the latest Newsweek magazine includes comments from Bill Gates about spam, security and related issues. One passage in particular stands out:

I asked him about the recent drop in market share for Microsoft's Explorer browser -- though the downturn is slight, it's significant, since some prominent critics are advising people to use alternatives because of security concerns. His reaction was unyielding: "Internet Explorer is going to be the primary browser used on Windows, and anyone who suggests otherwise is just irresponsible." But he concedes that it's "a very fair question" to ask why Microsoft does not offer antivirus services, forcing users to seek other providers.

The "irresponsible" quote is notable, given the impending release of Firefox 1.0 and speculation about a possible Google browser. But the antivirus quote is also interesting in the context of the dilemma the company faces in deciding whether or not to bundle its planned antivirus product with Windows.

The Outlook on Bloomba

Mike Manuel, a PR person at an agency called Voce Communications in Palo Alto, did public-relations work for Stata Labs, a company recently acquired by Yahoo. Stata made a standalone, search-based e-mail program called Bloomba.

The acquisition by Yahoo means Stata is moving on from the PR firm, and in this entry on his weblog, Manuel offers an interesting and refreshingly candid post mortem from the perspective of someone involved in technology public relations. Among other things, he points out that Bloomba's fate in the market hinged in part on the relative ineffectiveness (Lookout notwithstanding) of Microsoft Outlook's built-in search tool:

"The [Stata Labs] technology was beautiful and they had a good blend of executive talent, but the company’s success was dependant, to some extent, on two very significant factors: First, that people would accept a search-based approach to email and second, that a little known company in Redmond would continue doing what it did best -- absolutely nothing."

Crashing Google's party

Google is opening a new office in Kirkland, just down the road from Microsoft's Redmond headquarters, and Microsoft employee Robert Scoble reports that he has been invited to the office-warming party. He writes: "My answer back to them was 'mind if I bring a few thousand of my friends?' So far I haven't heard an answer."

Ballmer on Linux

The periodic "executive e-mails" from Bill Gates and Microsoft CEO Steve Ballmer are particularly noteworthy as an indication of the issues the company considers most pressing -- or threatening. The topic of today's 2,500-word message from Ballmer: "Comparing Windows with Linux and Unix."

Microsoft vs. iPod Photo

Apple's announcement today of a color-screen iPod that displays digital photos will prompt inevitable comparisons to Portable Media Centers running Microsoft software. So here goes. See the following comparison of two equally priced models of the two types of products. Which one would you buy?

Apple iPod Photo

• Price: $499
  
• Capacity: 40 GB
  
• Capabilities: Music, Photos
  
• Weight: 6.4 ounces
  
• Dimensions: 2.4 x 4.1 x .75 inches

Samsung YH-999 Portable Media Center

• Price: $499
  
• Capacity: 20 GB
  
• Capabilities: Music, Photos, Video
  
• Weight: 7.96 ounces
  
• Dimensions: 3.82 x 4.21 x .83 inches

Additional coverage:

• Reuters: Apple Computer Inc. rolled out on Tuesday a new iPod that allows users to view and share photos, a dramatic expansion that takes the popular digital music player into the multimedia realm, while spurring its rivalry with Microsoft Corp. and others.

• Joe Wilcox, Microsoft Monitor: I think Microsoft and some of its competitors could learn some lessons from Apple’s approach to the new product, most importantly from the name and broader marketing. I’ve harped on Microsoft nomenclature before. In the world of overly complex product names, Microsoft is only second to some of its partners.

• eWeek: The iPod Photo, which comes in 40 GB and 60 GB capacities and is the same size as the current full-sized iPod line, is compatible both with Apple's own computer lines and with Windows PCs. Through iTunes, users can automatically synchronize photo libraries—from iPhoto on Mac OS X, or from Windows' "My Pictures" folder, as well as with Adobe Photoshop Elements or Photoshop Album image libraries.

• CNet News.com: Apple CEO Steve Jobs acknowledged that the Mac maker continues to buck conventional wisdom, not having added video capabilities along with the photo playback. In order to keep the iPod small, Apple needed to keep to a small screen size--one that doesn't work for watching a movie, Jobs and [iPod unit head Jon] Rubinstein maintain.

  "No one has any video content to put on them, and even if they did, the screens are much too small," Jobs said, adding that the iPod is the "wrong place" for video.

Cost cuts paying off?

Are all those unlaundered towels and skimpy coffee bags starting to benefit Microsoft's bottom line? Crunching the numbers from the company's first-quarter earnings report last week suggests that Microsoft's widespread cost-cutting efforts, while unpopular among some employees, are helping its financial results.

When compared with the same quarter last year, Microsoft's operating expenses rose a miniscule 1.4 percent in the recent quarter. In contrast, in the first quarter of Microsoft's previous fiscal year, operating expenses rose 7.4 percent. Had they risen by that same percentage in the most recent quarter, operating expenses would have been $5.44 billion, compared with the $5.14 billion actually reported. That's a difference of about $300 million.

Revenue, meanwhile, was up 12 percent in the recent quarter. That, combined with the relatively small increase in operating expenses, resulted in a quarterly operating profit margin of nearly 45 percent. As reflected in the chart above, that's significantly better than in quarters past. (Operating profit margin expresses operating profit as a percentage of revenue, indicating how well a company controls expenses related to its business operations.)

Lots of things can influence costs, and the company's financial statements put operating expenses into relatively broad categories, so it's difficult to tell how much of the difference can be credited directly to the overarching "cost-efficacy initiative," as the company calls it. But given CEO Steve Ballmer's stated aim to achieve about $1 billion in cost savings and efficiencies this fiscal year, the company would seem to be well on its way toward that goal.

Much more than towels or coffee, the cost-saving efforts involve everything from transit passes to reductions in the stock purchase discount, prescription drug benefits and vacation time for employees.

MSFT vs. GOOG and AAPL

The anonymous Mini-Microsoft blogger compares the share prices of Microsoft, Google and Apple -- and comes away less than pleased about Microsoft's trend line:

I really don't like being the horizon here in both cases. Now then, of course we're bringing in billions $USD while Google is in the millions. But they have momentum and their stock is going in a direction I'm damn well envious of. And Apple? Well, they are All That right now, aren't they, grooving silhouettes and all. During a special meeting with BillG & SteveB a while back, one of the Microsofties posed a concerned question about Apple and what we're doing to compete against their cool iPod this and iTunes that. BillG did a great reality check by observing, "Well, I wouldn't want to swap places with Apple." True. But, still... return on investment is looking pretty sweet right now. I'd swap that!

Windows Mobile '05

Engadget reports on some of the improvements expected in the next version of Microsoft's operating system for Pocket PCs and smartphones: "At this point it’s all evolution rather than revolution."

Cash machine hummin'

Microsoft apparently hasn't lost its ability to produce huge amounts of cash. The company's quarterly results today included word that its balance of cash and short-term investments has reached nearly $64.5 billion, an increase of $4 billion from three months ago. Key figures such as revenue and earnings were also improved companywide. The upcoming $32 billion special dividend payout and a planned stock buyback of as much as $30 billion are expected to decrease the cash reserves significantly in the long run.

See the company's earnings release, plus coverage by the Associated Press, Bloomberg and Reuters.

Ballmer on security

Microsoft has posted the full transcript of CEO Steve Ballmer's appearance yesterday at the Gartner Symposium and ITxpo in Florida. The discussion covered lots of topics, from Linux to Halo 2, but one of the more interesting exchanges involved Ballmer's thoughts on security:

I think at this stage if I can say nothing else I can say I think we've learned a lot more about security than basically anybody else in the world -- that's kind of the good news and the bad news, being in the position we've been in with the kind of market share -- is we really need to focus in on a few things.

One, we do need to engineer in fewer vulnerabilities going forward. We have changed our development process. We have a whole new set of development tools, which we will productize also for our customers to help spot potential security vulnerabilities. We have trained our engineers in a different way. That training is available for third parties. And that does make a dramatic difference; we see it in Windows XP SP 2, we saw it in Windows Server 2003.

I can't say today all vulnerabilities will be eliminated, plan on it. I think it would be naïve for anybody to say that, partly because the hackers get smarter, too, and the threat models get more sophisticated, but we've made big progress.

Real's antitrust costs

How big a bet is RealNetworks placing on its Microsoft antitrust litigation? Announcing its quarterly earnings today, the Seattle digital media company reported nearly $3 million in "legal fees, personnel costs, public relations and other professional service fees ... related to antitrust complaints against Microsoft," including its private U.S. antitrust suit against the Redmond company and its intervention in the European Commission's Microsoft case.

If you're keeping score at home, that's more than 4 percent of RealNetworks' $68.3 million in revenue for the quarter.

A Microsoft Swatch watch

Will Bill Gates' Hollywood hobnobbing never end? Little more than a week after hangin' with Queen Latifah at the Shrine Auditorium, the Microsoft chairman was in New York today comparing wristwatch styles with Mischa Barton, star of "The OC" television show. They're both pictured here with Swatch Group CEO Nick Hayek, whose company today became the latest watchmaker to adopt Microsoft's MSN Direct "smart watch" technology for delivering news and information on the wrist via FM radio signals. The smart watch features will be available on Swatch's "Paparazzi" line of watches. See coverage by Engadget and Reuters.

New stock on the block

Depending on the specifics, Microsoft's quarterly earnings tend to be one of the bigger news items on Wall Street when they're announced. Tomorrow, however, barring some extraordinary news, the Redmond company's first-quarter earnings report is likely to be upstaged by another company that is making a habit of overshadowing Microsoft lately. Google will make its first-ever earnings report as a publicly traded company on Thursday afternoon -- holding its conference call with analysts an hour before Microsoft's call.

Issaquah campus map

Since it wasn't originally published with the story online, here's a reprint of the map that accompanied the print version of our Saturday story about Microsoft scaling back its long-term plans for a second Seattle-area campus, for anyone who might not have seen the actual newspaper. For more background on the issue, see this story and this story, both published in 2002, when the company was seeking approval for the campus.

'Halo 2' hits 1.5 million

Illegal downloaders aren't the only ones with an intense interest in "Halo 2." Reflecting the crush of legitimate purchases expected upon the Nov. 9 launch, retailers have received pre-orders for more than 1.5 million copies of the video game, Microsoft announced today. Also see coverage from this morning's Wall Street Journal.

(Note: Language above corrected to make clear that the 1.5 million figure refers to individual orders placed by consumers with retailers.)

Browsing the midnight oil

The end of John Markoff's Google Desktop follow-up story in the New York Times supports the speculation that Google is working on its own Web browser:

"If you drive by the Google buildings in the evening," said a person who has detailed knowledge of the company's business, "the lights that are still on are the ones on the floor where they are working on the browser."

Behind scenes at launch

Sean Alexander, the primary Microsoft employee on stage with Bill Gates doing demos at the company's digital media launch last week, writes about the preparation, the experience and the behind-the-scenes technology in this post on his weblog. (Link via Matt Goyer)

Among other things, Alexander notes that one of the bigger laugh lines of the event, this on-stage exchange with Gates, was unscripted:

"And I don't know about you, Bill, but when I'm taking long flights, it's great for me to be able to take my Tablet, flip around the display, and be able to have a personal viewing experience while sitting in coach."

"Yes, Tablet's a -- " Gates stopped himself, catching the joke and grinning. "Wherever you want to sit," he said.

Google Desktop reaction

Google's release of a desktop search tool has prompted some interesting reaction and introspection among Microsoft employees, as reflected in some of their weblog posts:

• Jay Bazuzi: "I work for Microsoft. I own plenty of Microsoft stock. I want Microsoft to succeed. But right now Google is kicking our butt. We're so far behind everyone else on these things, and Google is so far ahead of everyone else. ... I say 'right now' because I think it'll change. Microsoft is working hard to change the picture. I think we can do it. Watch Microsoft pull all the peices together & produce a highly-integrated, high-performance, high-value story that is 10x better than Google."

• Jim Blizzard: "Google, you guys have a great search engine. It's fast. It really does find things. But your desktop search just doesn't cut it. You're looking at my desktop, so why do you do it in a lousy web browser user interface? What's up with that? If I want to search for stuff on the web, I expect to use a browser. Seems like a good fit. But if I'm searching for stuff that's on my computer, why don't you host it in a UI that takes advantage of the power of my computer?"

• Chris Sells: "Like everyone else in the blogespher, I installed Google Desktop Search last week. And, after using it a few times, I've uninstalled it. Jim [Blizzard]'s right; X1 kicks its butt."

• Sean Daniel: "... Naturally, I checked out the beta of Google's Desktop Search and quite frankly, I'm not impressed, I think this is the first time Google's dropped the ball. Sure the search is Google fast, but here's what I don't like about it ... " (See post for list).

Addendum: Forgot to mention the interesting point brought up last week by a Microsoft employee in a comment on the Mini-Microsoft blog. It read, in part: "I don't see why the fact Google is actually fixing our crappy OS search feature is taken as competition instead of symbiosis." The anonymous Mini-Microsoft blogger weighs in on that idea in this follow-up post.

More on digital media

Some follow-ups to Microsoft's digital media launch last week in Los Angeles:

• A wood-paneled Windows Media Center PC? CNet News.com has the story.

• Hollywood Reporter: Gates: Broadcast model faces irrelevancy. (See also Engadget's take on the Hollywood Reporter interview.)

• Mercury News: Microsoft boss gets down in Hollywood visit. Includes reference to an inadvertently racy remark by Bill Gates during his Shrine Auditorium speech.

• San Diego Union Tribune: Media Center PCs may have found their time.
  

Halo 2 leak

Microsoft's official statement on the Halo 2 leak, reported today:

"Microsoft has learned that a version of ‘Halo 2’ has been posted to various newsgroups and web sites. We consider downloading this code or making it available for others to download as theft. The launch of ‘Halo 2’ worldwide remains unaffected.

"We are currently investigating the source of this leak with the appropriate authorities. Microsoft takes the integrity of its intellectual property extremely seriously, and we are aggressively pursuing the source of this illegal act.

"We're asking anyone with information on the source of this leak to contact Microsoft at 1-800-RULEGIT or send email to piracy@microsoft.com. Pending the result of our investigation, we do not have further comment."

Additional coverage: CNet News.com, Eurogamer, Gamespot, BBC News.

Update, Thursday evening: Here's a link to a separate statement on the Bungie Studios site, from earlier today. It reads, in part:

"Needless to say we think this really sucks. Aside from years of hard work being stolen from us, we've gone to great lengths to ensure that the details of the Halo 2 campaign remain a mystery for players to experience for themselves on November 9th. Microsoft is currently engaged in a full scale investigation and to those foolish enough to partake in this piracy, you will soon witness the firepower of this fully operational battle station."

How Gates, Jobs agree

In one portion of a Q&A yesterday with Bill Gates, reporters for the Wall Street Journal observed that Apple has been getting a lot of attention for its digital media initiatives. They asked Gates if that frustrated him. Here's what he said:

"It's great for Apple to get attention. I was there when the Macintosh was launched in 1984 creating the template for graphical user interface. We believe in the PC. We actually agree with Apple that the PC in its general-purpose richness will play a strong role in the home vision. Now we're doing more with that than they are, but that's actually a common view. The more attention that's paid to this digital-media space, the better it is."

Google Desktop Search

Lots of buzz around Google's release today of a free tool for searching your computer's hard drive. Here are a few links and excerpts focusing on the implications for Microsoft:

• John Battelle's Searchblog: "[T]his provides Google a major new platform to build upon -- a client application that integrates with the web. Can I imagine upgrades to that app that include spiffy new features like -- oh -- a lightweight word processor so you can take notes on your searching, or a calendar? Better yet, can I imagine Google opens this platform up to third party developers, to do what they do best? Yes, I sure can."

• Microsoft Monitor: "On the surface, Google’s desktop search utility appears to be about the desktop PC. It’s much bigger, because Google brings the desktop search capability into the same browser where people search the Web -- and provides information simultaneously from both locales. Google essentially is blurring the informational divide between desktop and Web information, which is a smart approach that should concern Microsoft."

• Search Engine Watch: "Searching your desktop can be done by opening the special Google Desktop home page, as described above. However, I suspect many people will simply end up searching via the regular Google home page. I've certainly been doing that, in my testing so far. ... That's part of the elegance of the tool. Once installed, the Google home page will show a new "Desktop" link. This effectively integrates your desktop into Google itself."

• Search Engine Lowdown: "While you can use Google Desktop immediately, it takes an hour or two to index your hard drive and all of your files. However, once the index is complete, Google Desktop is very fast and easy to use. In fact, Google Desktop updates "on the fly" -- read a new email in Outlook and that email is added to your index immediately!"

• CNet News.com: "Rumored for months, Google's unveiling of desktop search trumps rivals Yahoo, Microsoft and America Online in the race to integrate Web navigation with PC search and stay on the cutting edge of search technology in people's minds. Desktop search has been earmarked a priority by all the major search engines, but among investors and analysts Microsoft has posed the biggest threat to Google's reign because of its dominance with the Windows operating system."

Explaining Sender ID

Glenn Fleishman offers a good primer on the history and current status of the Sender ID e-mail initiative, including an explanation of how Microsoft's patent strategy helped stall the effort. Lots of links to related information. Good for catching up if you haven't been following this particular issue.

'Extender' reality check

Our story this morning on Microsoft's digital media launch included comments from Forrester Research analyst Ted Schadler, explaining why he thinks the first wave of Media Center Extender products will be too expensive (about $300 for set-top boxes) for the basic types of uses most consumers are likely to value, such as transmitting and displaying photos and home movies, as opposed to television content. These are the devices that send content over a home network, from a PC, for viewing on a television.

Schadler explains his thinking further in this CNet News commentary. He writes:

Microsoft is promoting its Windows Media Center Extender devices as the easiest way to get music, photos and video from a Media Center PC to a stereo or TV.

However, consumers won't care much today, since they can find cheaper music distribution solutions, and their TVs work just fine without a PC, thank you very much. But pay attention, anyway: Media Center Extender is Microsoft's first step in creating a universal "personal media server" for running digital home applications. In future versions, content owners may find it attractive to target this platform as an alternate path to consumers' TVs and stereos.

A familiar tune?

This was one of the signs that greeted attendees at Microsoft's digital media launch event today. (See additional photos here and here.) All of them featured various people leaping and dancing while listening to portable music players. Just imagine them in silhouette, with a bold pink or orange background behind them. Remind you of anything?

Gates tries out his rap

Microsoft's digital media launch event at the Shrine Auditorium in Los Angeles today featured a surprise appearance by actor/rapper/singer Queen Latifah, on stage with Bill Gates. (She joins the likes of Jenny McCarthy, Jay Leno, and The Rock as one of the celebrities who have made cameos at Microsoft events.) Queen Latifah and Gates were an unusual pairing, to say the least. Consider this exchange, as Queen Latifah sat next to Gates on the couch.

"So what are you up to?" Gates asked, as smooth as Leno himself.

"Just hanging, you know," Queen Latifah answered before talking about her latest movie and music projects.

Later, Gates later told her that her new music sounded "super."

Then, after Queen Latifah had left the stage, there was this groan-eliciting segue by Gates to the next subject: "Well, Queen Latifah's not the only one we're working with. We're also working with the king of microprocessors, Intel."

Update: Here's the official transcript, complete with the Gates/Latifah banter. Also see our full story on the Media Center 2005 launch.

(AP Photo/Reed Saxon)

Train Simulator update

One of the more offbeat questions asked of Bill Gates during his recent UC Berkeley appearance was about the status of plans for another version of Microsoft's Train Simulator software, and the possibility of making it an open-source project if Microsoft doesn't make another. Answered Gates:

"Well, I always try to be prepared for whatever questions might come up but I have to admit I have not met with the Train Simulator group, but if you can get me your card I'll let you know what new versions of that we're going to do. I know it was a cool product, I remember when it was released, but I have to say I don't even know how well it sold."

In other words, Train Simulator isn't quite up there with Windows and Office on the Microsoft chairman's list of priorities.

But knowing from experience that Train Simulator fans are an especially devoted group, I thought it was worth taking the opportunity to check on the status myself. Here's the response I received from a Microsoft representative:

"Train Simulator" is still a part of Microsoft Game Studios' development portfolio, however there is currently no plan to bring out additional titles in the franchise. MGS is hoping to bring a sharper focus to its development strategies in order to deliver the best games to its consumers. This has resulted in some games receiving increased support while others have been put on hiatus.

MSN Music critique

The Washington Post offers an extensive review of Microsoft's MSN Music service as the finished release draws near: "MSN Music Falls Just Short of iTunes' High Marks." (free reg. required.)

Media Center introduction

One of the challenges Microsoft and computer makers face in marketing Media Center PCs is persuading consumers that it's worth putting them in their living room, supplanting the normal setup of TV, VCR, DVD player and/or personal video recorder. Some of the announcements at the company's digital media event in Los Angeles Tuesday morning are expected to address that issue.

In the meantime, there were some telling tidbits in a story recently told by Jupiter Research analyst Joe Wilcox in a post on the Microsoft Monitor weblog, recounting his experience putting a Media Center PC in his living room. This part was especially interesting for what it suggested about the effectiveness of the marketing efforts for Media Center PCs since the debut of the computers two years ago.

On Saturday, the mother of my daughter's best friend stopped in and asked about the new living room setup. She repeated, "wow" and "amazing" as she explored Media Center's features. "You could just get rid of everything else," she exclaimed. But when she said, "These are new, right?," I stopped startled. She had never seen a Media Center PC before.

Um, about that format ...

Microsoft, the Justice Department and the states that participated in the U.S. antitrust settlement filed the latest in their series of joint status reports today, updating the company's compliance with the agreement. You can download a copy of the .pdf here.

This was one of the more interesting passages, referring to the technical documentation that Microsoft is required to make available to competitors to let their server software work more effectively with Windows for PCs.

Plaintiffs have described to Microsoft three general areas of concern surrounding the current state of the documentation. First, Microsoft proposes to offer the revised technical documentation to licensees in a file format that is a rights-protected derivative of HTML. Plaintiffs are concerned that this format significantly limits the practical usability of the documentation. For example, a licensee cannot annotate the documentation or use bookmarks to facilitate collaboration with other authorized users of the documentation and the licensee. This format also does not support sophisticated search techniques that would make the documentation easier to navigate and use. Finally, the documentation in its current form can only be used with Microsoft’s own Internet Explorer browser. Microsoft has agreed to meet with the TC to discuss this matter and has promised to provide a report within 60 days on additional measures that it would be willing to take to improve the usability of the documentation.

The irony, of course, is that one of the major sticking points in the U.S. antitrust case was Microsoft's use of its Windows PC monopoly to favor Internet Explorer over competing browsers. For more on today's filing, see this Associated Press story, which includes the company's response on the issue: "Microsoft's lawyers contend that the protected document format, known as "MHT," could be viewed through rival Web browser software designed to support it; the company acknowledged, however, there are no non-Microsoft browsers that currently can view such files."

The other Bill Gates

With election season in full swing, I thought it would be an appropriate moment to share a photo of my favorite Microsoft-related artifact. (Click the thumbnail for a larger image.) It's one of the items at my desk at work. (For people outside the region who might not know, Federal Way is a city about a half-hour south of Seattle.) As you might suspect, the sign doesn't refer to the Bill Gates we're all familiar with. See this item from the Puget Sound Business Journal a few years ago for the full story behind the other Bill Gates.

Challenging Mr. Gates

Microsoft has posted the full transcript of Bill Gates' appearance last week at UC Berkeley. It was one of the three stops he made in the area last week. The transcript includes the question-and-answer period, which means we get to read the full text of the exchange, mentioned in some of the press coverage, where one of the students asked Gates about Microsoft's "illegal business practices." Here it is:

QUESTION: You mentioned earlier, Mr. Gates, that universities are a really important source of great innovators, and so I expect that you consider being able to recruit from that source of great innovators pretty important to you. (Laughter.) So I'd like to find out if I could have a show of hands in the audience, I'd like to find out how many people in this audience might have concerns about working for a company that's been found guilty of illegal business practices, that limits the choice that its customers have to choose a product they want to use and the type of media they want to watch, and that has also been found guilty by the Federal Trade Commission of misleading the public?

A. RICHARD NEWTON: I think we get your point.

QUESTION: Could I have a show of hands from the audience, please?

A. RICHARD NEWTON: I think we get the point. Thank you. Thank you.

BILL GATES: But what's the question?

QUESTION: Do you think you might do better at recruiting students from universities if you improve the business practices of your company?

BILL GATES: Sure.

Digital media previews

Some of the details are starting to emerge in advance of Microsoft's big digital media event next week at the Shrine Auditorium in Los Angeles. Chris Connolly of GamePC reviews the new edition of the Windows XP Media Center, and Ina Fried of CNet News.com puts things in context.

Microsoft and PalmOne

Back in May, a Microsoft executive said it would be "perfectly feasible" for Microsoft's Windows Mobile software to run on a PalmOne handheld device or smartphone, now that the company formerly known as Palm is separated into two companies, one for hardware and another for software. While Microsoft still competes with the software company, PalmSource, it doesn't compete directly with the hardware company, PalmOne.

Well, they didn't go quite that far, but Microsoft and PalmOne did announce a licensing deal today that, in the words of the Associated Press, "will allow the next generation of palmOne's Treo smart phones to work directly with Microsoft's Exchange e-mail system." It's an interesting deal between two former rivals. See additional coverage by CNet News.com and Reuters.

Gates, five years later

The cover story of the newly named Redmond magazine (formerly the Microsoft Certified Professional Magazine) assesses the performance of Bill Gates since handing over the chief executive post to Steve Ballmer to focus on Microsoft technology. (January will mark the five-year anniversary of that transition.) Areas of scrutiny in the article include Longhorn and the Tablet PC.

Gates in Silicon Valley

Bill Gates made three public appearances during a trip to California late last week. Some of the more interesting moments, as captured in the media coverage:

• San Francisco Chronicle: "Gates took questions from the UC Berkeley students, who were deferential and friendly, apart from one who said that Microsoft's 'illegal business practices' were a turnoff to potential recruits."

• OS News: "Gates also mentioned that Linux is taking over Unix, not Windows. The problem with Unix is that the OS companies involved (SGI, Sun, IBM, HP, SCO) never managed to get together and adhere to common standards and direction, he said. When a Unix brand would get a bit better than the other on a particular thing, the others would "conspire" behind its back to bring it down. It's this fragmentation and lack of business relationships that has destroyed Unix to the rival Linux."

• Mercury News: "After warming his audiences around the Bay Area on Friday with stories that softened his hard-core corporate reputation, Gates grew serious about the future of the computer industry, innovation and global competition. He told students at the University of California-Berkeley that Microsoft should get paid for most of its software, while only some of it should be available for inspection and free use." (free reg. req.)

• Information Week: "Gates advocated some types of open-source software licenses as good teaching tools -- he reminisced about rooting through a Dumpster with Microsoft co-founder Paul Allen to find discarded printouts of the operating system code for Digital Equipment's PDP-10 minicomputer in order to better find bugs in the code."

• Reuters: The United States has nothing to fear from rapidly growing technology markets in China and India, Bill Gates ... said on Friday. 'China and India are the big change agents for the years ahead,' Gates told students at the University of California Berkeley. 'We have to go into the risky new areas. That's what's going to allow the United States to stay at the forefront.' "

Microsoft in Albuquerque

The image at right is Microsoft co-founder Paul Allen's business card from his mid-'70s stint at MITS, the company that made the groundbreaking Altair personal computer. It's a small example of an artifact that could end up in the microcomputer history gallery at the New Mexico Museum of Natural History & Science in Albuquerque. Plans for the gallery, to be funded primarily by Allen, were announced this morning. See this story in our paper today for more information. See also the press release from Allen and the museum.

The gallery is expected to include a large number of artifacts and exhibits, including an Altair 8800, historical magazines from the 1970s, photographs, business papers, video footage, oral histories from early Microsoft employees, an Osborne 1 computer and even a Hasbro "Thinkatron," one of the earliest computer toys. Many of the items will come from Allen's personal collection. The museum is slated to open in 2006.

Dueling views in EU case

The Los Angeles Times published an especially vivid account (free reg. required) of yesterday's proceedings at the European Court of First Instance in Luxembourg, on the first day of the hearing in which Microsoft is seeking to suspend key portions of the European Commission's antitrust ruling while the company's appeal proceeds.

One scene perfectly captured the deep conflict between Microsoft's viewpoint and that of its competitors, not just in the EU case but in the entire antitrust situation, going back years. It started with an analogy used by Ian Forrester, a lawyer representing Microsoft, to support the company's assertion that it would suffer irreparable harm if required to disclose technical information to competitors in the computer-server market to let their products work more effectively with Windows:

Forrester elaborated during his closing argument, comparing Microsoft to an ingenious architect who manages to build 100-story skyscrapers while rivals can reach only 40 stories. Once given away, the secret to the extra 60 floors could not be erased from the rest of the industry, and the architect's future advances might be much less dramatic. ...

James Flynn, a lawyer for the Computer & Communications Industry Assn., retorted that a better parallel would be a major airport owner who also controls a fleet of jumbo jets. He said his clients build small planes, and "they want to know what the landing lights mean."