Trump, Gates biz models

eWeek's latest Spencer Katt cartoon, noting that a Microsoft employee is competing on this season's "Apprentice," takes the opportunity to put Bill Gates in Donald Trump's board room and have some fun at Microsoft's expense. (Thanks to Rick in an earlier comment for the link.)

Gates on search: 'We were stupid as hell'

Bill Gates talked about subjects including Microsoft's plans in the search business during an interview with Charlie Rose while at the World Economic Forum in Davos, Switzerland, late last week. Among other things, according to one report, he called existing search technology "a joke" compared with what will be possible in two or three years. Here's an excerpt from the Dow Jones Newswires story on the interview:

Asked if Microsoft had missed the boat on search, Gates noted that Microsoft had previously relied on a third party for its search technology. Microsoft is now weaning itself from search technology provided by Yahoo Inc.

"It's certainly our fault that we didn't recognize that that reliance was not going to get us a state of the art experience," Gates said.

How did that happen, given Microsoft's big research budget? "We were stupid as hell," Gates said, prompting a round of laughter from the audience.

The story points out that Google Chief Executive Eric Schmidt "was in the audience but didn't join in the discussion."

Interpreting the EU ruling

The European Commission's antitrust ruling against Microsoft doesn't include a provision specifically addressing the issue of the name for the stripped-down Windows version that the ruling requires the company to sell in Europe. As a result, despite agreeing last week to choose a name other than "Windows XP Reduced Media Edition," Microsoft still contends, as a matter of principle, that the name wouldn't have violated the explicit terms of the ruling.

Yet a broader provision of the ruling might have caused problems for the company if it had decided to persist with the "Reduced Media Edition" name. In reports on the subject, European Commission spokesman Jonathan Todd points out that the ruling, in his words, requires Microsoft to "refrain from taking commercial, technological or contractual steps that would make the unbundled version of Windows less attractive to consumers."

As a result, if Microsoft had wanted to continue using the "Reduced Media Edition" name, the situation probably would have come down to an argument over whether the name would have discouraged sales of the alternative Windows version. Although the company says the intent wasn't to discourage sales, many industry analysts disagree, and Microsoft apparently decided it wasn't worth a full-scale spat with the commission.

Meanwhile, there are ongoing reports that the commission isn't yet satisfied with Microsoft's compliance with the ruling, in terms of the stripped-down product's name, its availablility to computer makers, and other issues.

As a footnote, here's the provision of the commission's March ruling that deals broadly with issue of the way the stripped-down Windows version is to be designed and marketed:

Microsoft must refrain from using any technological, commercial, contractual or any other means which would have the equivalent effect of tying [Windows Media Player] to Windows. The unbundled version of Windows must in particular not be less performing than the version of Windows which comes bundled with WMP, regard being had to WMP's functionality which, by definition, will not be part of the unbundled version of Windows. Should it prove that Microsoft demotes the performance of the unbundled version of Windows, thus rendering the remedy ineffective, the Commission retains the possibility to review the present decision and impose an alternative remedy that will put an end to the abuse.

Gates in Europe

AP Photo/Michel Euler

As the signs behind them make clear, that photo of Bill Clinton and Bill Gates is from a session at the World Economic Forum this week in Davos, Switzerland. Dow Jones Newswires has an interesting report today on something Bill Gates will be doing in Europe after leaving the summit:

Microsoft Corp. founder Bill Gates will visit European Union officials Tuesday, one week after the company decided not to appeal an interim court ruling that ordered Microsoft to immediately comply with a March E.U. antitrust decision, officials said.

Microsoft confirmed the visit but refused to elaborate on whom Gates would meet during his one-day stopover in between the World Economic Forum in Davos, Switzerland, and a conference in the Czech capital of Prague. ...

The antitrust office is headed by Dutchwoman Neelie Kroes, but "there are no plans for a meeting with Mrs. Kroes," said E.U. spokesman Jonathan Todd.

MSFT 2Q 05

Microsoft normally waits a few weeks after reporting earnings to file its Form 10Q with the Securities and Exchange Commission, a document that gives much more detail than the company normally makes public on earnings day.

Yesterday, with the release of its second-quarter results, Microsoft broke with tradition and filed its 10Q on the same day. See the full document here.

Lots of information in there, including a summary of the company's major outstanding legal cases and a discussion of what drove the results for the recent quarter. (See our story this morning for more details on that.) Here's a table from the 10Q showing the company's quarterly and six month revenues and operating income broken down by division.

'Apprentice' Verna update

Verna Felton, the Microsoft employee on "The Apprentice," was at the center of some drama on last night's episode. For a while it looked as if she wouldn't be back. Nathan Weinberg has another Verna-focused summary on the Inside Microsoft weblog. Also see NBC's comprehensive recap.

Redmond campus plan

The latest issue of Wired magazine, cataloging the perks of working at various corporate campuses, gives this list for Microsoft:

"Foosball, Ping-Pong, Xbox consoles stashed in alcoves, 2,800 original works of art, free beverages, whale-watching excursions, 25 cafeterias, Starbucks stands, private lake, baseball diamond, soccer field, volleyball courts, campus shuttle, office movie day."

The timing of that blurb was ironic, because Microsoft's redevelopment plan, details of which emerged this week, would include construction of buildings on the big softball and soccer fields at the center of Microsoft's main Redmond campus. However, the plans also would effectively replace the current fields with new ones on the opposite side of state Route 520, the highway that divides the east and west sides of Microsoft's campus.

That proposed change was a small piece of the overall plan shown by the company during open houses for employees and the public yesterday. (See our story in today's paper for more details on the public session.) To get a sense for the broader proposal, see this overview map and, from a different perspective, this three-dimensional rendering, in which the bright orange structures are new buildings and parking garages.

Microsoft says the overall plan would add a net total of 2.2 million square feet to the campus, which currently totals about 8 million square feet. It would be constructed over the next 10 to 20 years, creating room for an additional 10,000 to 12,000 employees. The Redmond City Council is slated to consider the plan in the next several weeks.

'Reduced Media' revisited

A report by Dow Jones Newswires, citing "people close to the company," says European antitrust officials have objected to Microsoft's plan to use the name "Windows XP Reduced Media Edition" for the stripped-down version of the operating system that the company is being forced to sell in Europe.

It isn't yet clear whether the name will be scrapped as a result. As noted in our earlier story on the subject, the ruling itself didn't explicitly address the issue of the product's name. However, a Microsoft spokesman acknowledged earlier this week that the name is subject to European Commission review.

Ballmer on being 'first'

USA Today published an extensive article and accompanying Q&A today focusing on Microsoft Chief Executive Steve Ballmer as he leads the company's mid-life charge. Among the more enlightening passages was a portion of the story recounting a discussion between Ballmer and reporter Kevin Maney:

While it's clear that Microsoft is changing, old behaviors die hard. When Ballmer gets talking about how Microsoft must be first with technology innovations — which, so far in Microsoft's history, has not often happened — the exchange is more like vintage pugilistic Microsoft.

Ballmer: "You've got to be not just first in an area; you've got to be first with important innovations even in areas that you've pioneered."

USA TODAY reporter: "Well, you guys have proved over and over again being first is not necessarily ..."

Ballmer: "We love to be first."

Reporter: "You love to be first but ..."

Ballmer: "We love to be first."

Reporter: "You certainly weren't the first — you know, I mean, here looking at your ..."

Ballmer: "We love to be first. Well, our big success is Windows. We were first. Windows, we were first — and then everybody faded out because there was a period during which the concept was — I mean, Apple stuck around with their concept of that, but everybody else faded out, basically."

Tech people must be scratching their heads. Windows wasn't the first graphical user interface — that was invented by Xerox and was first made popular by Apple Computer. Microsoft didn't have the first browser or video player or cell phone operating system. Time and again, the company has come in late and, in many cases, won the day with tenacity. It is a strength Microsoft could boast about but doesn't.

Antitrust status report

Microsoft, the Department of Justice and the states that took part in the company's antitrust settlement outlined the status of the company's compliance in a report today. Click here to download a copy of the pdf file.

Among other pieces of information in the filing, Microsoft reported that Unisys has agreed to a license under the antitrust settlement's communications protocol licensing program.

The program is designed to that let competing server software work more effectively with Windows, attempting to at least reduce Microsoft's edge in that area. The government has expressed concern in the past about a lack of interest from competitors, leading Microsoft to tweak the licensing terms. The Unisys deal and another one reported in the document bring the total number of licensees to 21, according to the filing.

Microsoft marketing and weblogs

Microsoft's Robert Scoble was the keynote speaker at the Blog Business Summit in Seattle this morning.

At one point after Scoble's speech, during a session featuring Chris Pirillo and Marc Canter, the discussion turned to the subject of weblogs vs. more traditional forms of corporate marketing. Someone in the audience asked, essentially, if anyone in marketing at Microsoft had lost their jobs under the assumption that weblogs like Scoble's were creating a more effective connection, or conversation, between the company and the outside world.

"Not yet," Scoble answered.

For a more comprehensive overview of the conference so far, Brian Chin wrote a good summary and analysis of the morning's sessions.

Microsoft's 'Apprentice'

Microsoft had a cameo at the conclusion of "The Apprentice" last season, when some remote Xbox installments were included in one of the show's culminating events. But this season, one of the actual job candidates competing to run one of Donald Trump's companies is a Microsoft employee.

Although the show is somewhat vague on the specific corporate backgrounds of the candidates, recent weblog posts by some of her Microsoft colleagues identified "Apprentice" candidate Verna as an employee of the Redmond company. (See also her own Web site.) One of her past bosses also roots for her in this post.

On the Inside Microsoft weblog, Nathan Weinberg offers a good recap of last week's first episode, focusing in part on how Verna did and what she said. Assessing her performance, he predicts that she will make it "at least halfway through the competition."

More on subscriptions

Putting together today's Microsoft Notebook on the notion of subscription software, I spoke with analysts including Joe Wilcox of Jupiter Research. In this post today on the Microsoft Monitor weblog, Joe adds some important points that we discussed but didn't fit into the story. Among other things, he touches on one of the additional reasons Microsoft might like to sell more software on a subscription basis: recurring subscription fees mean a steadier revenue stream.

The other 'Spaces'

Mike Wendland, Detroit Free Press: "When Microsoft's MSN announced, with much fanfare, a new application last December called Spaces for keeping blogs, it was sure news to a small Oakland County company called Edict. That's because, for two years now, the Rochester-based Web-development firm has been selling and distributing its own Web logging tool called -- you guessed it -- Spaces."

Wendland reports that Edict's founder "has written letters to Microsoft officials and legal advisers but hasn't had any substantive response. He's also talked to intellectual-property attorneys but has not filed suit."

No interim EU appeal

Microsoft this morning said it won't appeal the December court decision that put its European antitrust remedies into immediate effect. The decision doesn't affect the company's broader appeal of the ruling, but it does mean the remedies will take effect in the meantime. See coverage by the Associated Press, MarketWatch, Reuters, and Wired News.

In a statement this morning, the company said, in part:

Microsoft has decided to forego its right to appeal the Court of First Instance’s interim measures ruling of December 22, 2004. Rather than seeking to suspend the Commission’s remedies, Microsoft’s focus now is on working constructively with the Commission on their full and prompt implementation.

To that end, Microsoft has made available licensing information for communications protocols (the interoperability remedy) and has made available the first versions of Windows without media functionality to computer manufacturers (the media player remedy). This European edition of Windows will be available to retailers and other channels in the coming weeks.

Gates photo phenomenon

The fascination over the recently resurfaced photos of a young Bill Gates lounging on his office desk shows no signs of abating. Good Morning Silicon Valley's readers have been proposing captions (second-to-last item) such as, "It's not the Blue Screen of Death, it's The Blue Screen of Desire." In the meantime, the Photoshopping has begun in earnest.

Originally reported to be from a "Teen Beat" photo spread, the pictures were later identified as shots by celebrity photographer Deborah Feingold, with one site reporting that they were Microsoft publicity shots. The pictures are now part of the Corbis photo archive. "There's no evidence that they ever appeared in Teen Beat," Museum of Hoaxes reported.

As Ed Bott remarked when the photos first emerged, "If I were a billionaire, I would have bought the negatives for this photo shoot and burned them." No kidding. But connecting that comment with the subsequent reports on the status of the photos, the irony is that Gates himself is the founder and majority owner of Corbis.

Gates' spam promise

The annual World Economic Forum will be held next week in Davos, Switzerland, which means it has been almost a year since Bill Gates predicted at the 2004 WEF that the problem of spam would be "solved" two years from that point. If you take his comment literally, that means there's one year left. Salon assesses the situation in that context in this story: "How Microsoft is losing the war on spam." (Link via Brian Chin.)

Microsoft and Symantec

Security-software vendor Symantec's revenues and profits are up significantly, but its share price is down. Why the disconnect?

BusinessWeek points to "a combination of investor fears that Microsoft is about to jump into Symantec's security-software business and uneasiness with its planned $13.5 billion merger with storage-software maker Veritas Software."

Here's what Symantec Chief Executive John Thompson said about the Microsoft situation yesterday in response to a question during the company's quarterly conference call with analysts:

"We have seen the Microsoft beta version of their spyware product. I think that product got a write-up in one of the popular press articles or periodicals recently. I’d ask you to kind of take a look at that for at least one unbiased view of the product’s current performance. We do intend to enter the market this quarter with an offering for both the consumer and the enterprise segment. We do believe that our product will be competitive. We’ve never believed that Microsoft will undermine or undercut our opportunity in the near term. Longer term, we are clearly prepared to not only partner with Microsoft but compete with Microsoft. And as their marketing machine continues to make noise in the marketplace, we’ll continue to generate revenues."

Thompson was apparently referring at the outset to a column last week by the Wall Street Journal's Walter Mossberg: "Free Microsoft Program To Battle Spyware Has Some Serious Flaws." But apart from critiquing the Microsoft AntiSpyware beta, that column also presented a view with which Symantec executives probably wouldn't agree quite so readily. Wrote Mossberg:

"Some critics argue that Microsoft should stay out of the security-software business so as not to use its Windows monopoly to unfairly compete with third-party security vendors. But I have never believed it was inherently wrong for Microsoft to add core functions to Windows, even if they competed with add-ons sold by other companies. And I regard security as a core function. To me, the need to protect Windows users, especially consumers and small businesses without IT staffs, trumps any antitrust considerations.

For more on that particular Microsoft dilemma, see this story from last year, based on remarks by Microsoft General Counsel Brad Smith. See background on Microsoft's broader anti-virus and anti-spyware plans in stories here and here.

Another Xbox 2 clue?

Video-game news site spong reports that it has seen an advance copy of a purported Electronic Arts news release that, if authentic, would put the release of the next-generation Xbox late this year. CNet News.com connects that report to Microsoft General Counsel Brad Smith's casual remark last week to the Seattle Rotary Club and sees a trend. CNet's David Becker also offers a theoretical Xbox 2 release schedule.

Windows and Mac stats

Here's the graphic that we published with today's Microsoft Notebook, breaking down iPod, Mac and Windows PC shipment numbers. Note the trend in Mac shipments, particularly the big increase in the most recent quarter. See the article itself for more on the subject.

Xbox 2 at ... Rotary Club?

Some video-game sites had been speculating that Microsoft would offer details about the next-generation Xbox at the recent Consumer Electronics Show. Since that didn't happen, the focus will no doubt turn to the upcoming Game Developers Conference or to the E3 video-game convention as possible venues for an announcement.

But for a moment last week, it almost seemed as if the company had made an announcement about one of the more closely guarded Xbox secrets -- the timing of the next console's release -- at a Seattle Rotary Club luncheon, of all places. It happened when Microsoft General Counsel Brad Smith was addressing the group. (See more on the actual topic of his speech here.) An item in today's Microsoft Notebook explains what Smith said about the next Xbox, both from the podium and when I asked him about it afterward. The item also includes some previous comments on the subject from Xbox executive Peter Moore:

"Certainly we're very excited about what we believe the year has to offer," Smith told the group. "Technologically, our developers are focused on a number of products you'll see come to market, ranging from search technologies online and on your desktop to things you'll see as we get to the next holiday season with the next generation of Xbox and holiday devices." ...

Afterward, however, Smith said his words shouldn't be taken as conveying anything about the timing of the next Xbox, one way or the other. "I did not mean to imply anything about when it comes out," he said. "I was just talking about all the energy that's going into working on it."

Smith pointed out that any news along those lines would come not from the company's general counsel but from Xbox executives.

As it happens, one of those Xbox executives was slightly forthcoming on the subject in a discussion behind the scenes at the recent Consumer Electronics Show in Las Vegas. Peter Moore, an Xbox corporate vice president, didn't say when the next-generation game console would be announced or launched, or what it would be like.

But Moore did say that more details will be made public this year about the company's next-generation game console plans. "That's as specific as I'm going to get," he said.

Grading Bill Gates

Charles Cooper, CNet News.com executive editor, assesses the performance of Bill Gates as the company's chief software architect in the five years since he turned over the chief executive's role to Steve Ballmer.

Anti-spyware reviews

PC Magazine reviews Microsoft's new antispyware offering:

In its current form, Microsoft AntiSpyware looks like a winner. It has an intuitive interface that will appeal to Microsoft loyalists. The program is broken down into three main tabs including Scanning, Real-Time Protection, and Advanced Tools, which includes privacy and security features. These features are identical to core features in Giant AntiSpyware.

But Microsoft skeptics will likely find plenty to criticize. For example, a browser- settings lockdown feature can only restore Internet Explorer browser settings to point back to MSN as your home page, IE as your default browser, and MSN Search as your default search engine. Another feature that erases your history files works primarily with Microsoft programs.

See also earlier reviews by eWeek and SearchWin2000, and Paul Thurrott's preview, based on his experience with the Giant Company Software technology on which the Microsoft offering is based.

Apple's stock projection

During his Macworld keynote earlier this week, Steve Jobs pointed out that Tiger, the next version of the Mac OS X operating system, will come out "long before Longhorn," referring to the next version of Microsoft Windows.

As it turns out, that wasn't the only lighthearted jab at Microsoft during the Apple CEO's presentation. But the other one was a little more subtle, and apparently not as grounded in reality. Demonstrating the stock-tracking "widget" that will be included in Tiger's Dashboard feature, the screen shot behind Jobs showed Microsoft stock down on the day, trading around $18 a share, and Apple stock up, trading around $124.

In fact, as was evident when Jobs showed a live version of the stock-trading widget later in the presentation, Apple stock was trading in the mid-$60s on the day of the keynote, prior to soaring later in the week on the company's strong earnings.

Some observers took the difference between the initial screen shot and the subsequent live version to reflect the difference between the time the keynote slide was prepared and the day it was presented. But in fact, while Microsoft's stock price has certainly been stagnant in recent years, you'd have to go back a very long time to find a day when it was trading in the teens.

Montana's John Connors

As noted in our story this morning, John Connors, Microsoft's departing chief financial officer, is a Montana native known for his folksy style. I included one anecdote in our story, recounting the time when Connors asked investors to be patient about the prospect of the company making a huge cash payout by reminding them of the refrain from the famous country song, "If you've got the money, honey, I've got the time." Bloomberg News added some extra tidbits in its story yesterday:

A rodeo enthusiast and grizzly-bear conservationist, Connors said last year he was shopping for a ranch in Montana. He tries to return home to Miles City, population 8,487, each spring for the Bucking Horse rodeo and horse sale.

Connors is expected to remain in the Seattle area in his new role with venture-capital firm Ignition Partners, a side of the story explained by the P-I's John Cook in this article today. See also today's Bloomberg story exploring the possibility that Microsoft could break with past tradition and bring in a CFO from outside the company.

Mac Mini and Windows PCs

Today's New York Times story on the low-price Mac Mini includes some analysis of the potential impact on the Windows PC market:

The new Apple strategy, which moves the company deeply into the consumer electronics market, positions the new Macintosh as an entertainment and communication device. It also promises to intensify Apple's battle with Microsoft in the personal computer market dominated by machines using Windows software.

However, the story adds later ...

Apple's introduction of a low-priced machine is not likely to cut significantly into Microsoft's dominance in personal computing; more than 90 percent of PC's are Windows machines. ... Gene Munster, an analyst at Piper Jaffray, said that Apple's consumers were probably not going to give up their Windows PC's but might buy a Macintosh as an additional computer for entertainment. "It's not about switching but adding," he said. "People may still need a PC because of work activities, but this is for doing multimedia activities and searching the Internet."

See also John Markoff's story on the subject in advance of the announcement.

TiVo-Microsoft reaction

How do TiVo customers feel about Microsoft's deal last week with TiVo? Apparently the reaction runs the gamut, depending on where the particular TiVo user is coming from.

Consider this weblog post by Michael Earls, a Microsoft Certified Professional: "Microsoft + Tivo + Portable Media Center? Oh YEAH!" And then consider this one, from a weblog on a Linux-related site: "Is TiVo Forsaking Us?"

Microsoft and Apple iWork

As widely rumored in advance, Apple today announced a new word processing program, Pages, to be packaged with the Keynote presentation software and sold as the iWork suite. Yesterday, I asked some of the folks from Microsoft's Mac Business Unit -- which makes Word, Excel and other Microsoft Office programs for Mac -- about what such a move would mean for their own strategy. Here's what Microsoft's Scott Erickson, Mac BU group product manager, said on the subject:

"We have no plans to change our commitment to customers on the Mac side. We’re already developing the next version of Office for Mac and Virtual PC. We’ve been in the business for over 20 years and making continual investmentments in the Mac space. Some of the news that we went through today just shows that regardless of what’s announced, we’ll be here."

The news he was referring to, detailed in this Microsoft news release, includes Microsoft working to make Mac Office take advantage of some of the new features to be included in Tiger, the upcoming version of Mac's OS X operating system.

For coverage of Apple's other news -- including a $499 Mac and a $99 iPod -- see reports by CNet News.com, Reuters, and the archive of Engadget's live coverage of the Steve Jobs keynote.

CES wrap-up

Here's a round-up of the stories filed from the Consumer Electronics Show for the P-I this past week. Also see related highlights from other publications and weblogs below that. I'll be posting some remaining items from CES on this weblog in the coming days. Also look for a Microsoft Notebook, as written from the show in Las Vegas, in Monday's newspaper.

• Microsoft consumer initiatives reflect need for revenue growth
  
• The story behind the Portable Media Center
  
• TiVo chief unworried about Microsoft rivalry
  
• Gates announces surprise TiVo deal

Coverage elsewhere:

• Gizmodo interview with Bill Gates, parts one and two.

• Joe Wilcox, Microsoft Monitor: "Microsoft's challenge is drawing a clear roadmap for partners and consumers about how all the living room pieces -- TV Foundation, IPTV, Media Center, Windows Media Connect, Windows Media Extender, Portable Media Player and even stand-alone DVRs -- can fit together."

• Chris Seper, Cleveland Plain Dealer weblog: "This year's Consumer Electronics Show is packed with companies ready to pump HD television, music, movie rentals and just about everything else through a high-speed Internet connection and into your home. And almost all of them are asking Microsoft to do the heavy lifting."

• GameSpot's CES Q&A with Xbox Live's Cameron Ferroni

• CNet News.com: "Microsoft has made significant inroads with the latest version of its Windows Media Center, but the entertainment-oriented software has yet to find a permanent seat in the living room."

• Boston Herald: Eye on iPod, Microsoft reboots

• USA Today: "One key plotline at this week's Consumer Electronics Show boils down to this: Can Microsoft, after three years of marshaling its forces, overtake Apple, brush aside Sony and carry out its ambitious plan to make Windows the center of the digital entertainment universe?"

• Michael Gartenberg, Jupiter Research: "The deal makes good sense for both Microsoft and for TiVo. It's a good deal for Microsoft as it provides another needed venue for consumers to get legal DVR content to their devices (although even if every TiVo owner bought one, the product would still have a long way to go for mass adoption)."

• Microsoft's Sean Alexander, who gave an on-stage demo of the Windows Media Center PC software during the Bill Gates/Conan O'Brien event, wrote afterward about what went on behind the scenes, including the technical glitches. (Via Robert Scoble) The anonymous Mini-Microsoft blogger also weighs in on the various snafus.

On the SPOT

Walking around the Consumer Electronics Show this week, it was hard to miss people wearing these buttons with flashing red lights embedded in them. Microsoft passed them out at the beginning of the show and then, over the course of the event, selected button-wearers at random to receive special edition Swatch smart watches. The watches are part of Microsoft's smart personal objects technology initiative, which delivers information to devices via FM radio signals.

Redmond expansion plans

See this story for details on Microsoft's plans to redevelop portions of its Redmond campus to add room for as many as 12,000 additional employees over the next two decades, as reported for Saturday's paper by my colleagues Dan Richman and John Cook back in Seattle.

Clarifying Mr. Gates

It looks like a video-game crash and problems with a remote control weren't the only glitches during the Bill Gates keynote address. Here's what Gates said to Conan O'Brien when they were talking about Nikon's addition of wi-fi capabilities to its digital cameras:

Yeah, that's a very high-end camera, incredible resolution, and that's the Nikon D2X. Nikon will be putting this ability to send the photos down automatically, building that into every one of their cameras, so this is more of a consumer item, pretty impressive but maybe a little better.

Well, not really, at least for the foreseeable future, as USA Today reporter Jefferson Graham pointed out in this story today. Nikon is planning one wi-fi enabled consumer camera this year. "Bill went a little far," a Nikon marketing executive told Graham.

Bumping into TiVo chief

Leaving the Bill Gates keynote address Wednesday night here at the Consumer Electronics Show, I turned around and realized that the person behind me was none other than Mike Ramsay, TiVo's chief executive officer. I took the opportunity to introduce myself and ask him a few questions about the partnership Microsoft had just announced with his company, and another new Microsoft initiative that could create more competition for TiVo. His responses led to this story in today's paper.

Microsoft, Sony and Apple

Among this morning's news from the Consumer Electronics Show, the Wall Street Journal reports on the prospect of Microsoft and Sony teaming up in digital media initiatives as a means of countering Apple's success:

"[Bill] Gates suggested that both Microsoft and Sony could benefit from a broad partnership in digital entertainment. Specifically, Mr. Gates said that both companies 'have a lot of incentive to work together' in digital-music 'infrastructure,' including online-music services and protection against improper music copying."

See also this CNet News interview with Gates, which touches on some related topics, including the Microsoft chairman's take on Apple's approach to the market.

Microsoft anti-spyware

The preview version of Microsoft's anti-spyware software, largely the result of its acquisition of Giant Company Software last month, was released this morning. Here's the main site for the Windows AntiSpyware Beta. The company also said it will release a malicious software removal tool, "which complements traditional antivirus technologies by removing prevalent viruses and worms from a PC."

See initial coverage by CNet News.com and the Associated Press.

'Late Night with Bill Gates'

AP Photo/Joe Cavaretta

Conan O'Brien won't replace Jay Leno as host of the Tonight Show until 2009, but he's already filling Leno's traditional role in another capacity. O'Brien was the "guest host" for Bill Gates' keynote address Wednesday night at the Consumer Electronics Show in Las Vegas. (Microsoft has turned to Leno to star in past events, most notably the Windows 95 launch.) Last night's event was structured as a pseudo version of O'Brien's show, complete with a reproduction of his set. The Microsoft chairman discussed the company's announcements in the course of bantering with the late-night host for an hour or so. (See our story for more details on those announcements, including a deal between Microsoft and TiVo.)

This Microsoft page has a transcript and links to online video of the event, including O'Brien's opening monologue. There were some prominent glitches during the evening, including a computer crash during a demonstration of the Forza Motorsports video game, and trouble with a remote control when Gates attempted to display photos on a screen. (The Associated Press has more details on the glitches in this story.)

"I don't know who's running things here," O'Brien joked when the remote control wouldn't work. "Who's in charge of Microsoft?" he asked, looking at Gates. "Oh."

The photo above was part of a spoof slide show purporting to depict O'Brien and Gates carousing around Las Vegas. Explained O'Brien: "Bill and I hit the bar, had a good time. And then we got so drunk that we actually went out and we got ourselves matching tattoos, which is always good. And, in fact, I got so drunk that I woke up with a hooker, Bill got so drunk he woke up with an Apple computer."

See this Yahoo slide show for more images from the keynote and the show.

Update: Looks like Microsoft has taken down the video of the event. I'll try to find out if they plan to repost it anywhere.

Headed to Las Vegas ...

I'll be at the Consumer Electronics Show starting Wednesday, writing stories for the paper and posting to this weblog. This Microsoft news release outlines some of the company's plans for the show. In the meantime, some of the advance coverage in online publications notes that one piece of news is unlikely to emerge from the show: Contrary to earlier speculation, it doesn't look like Bill Gates will unveil the next Xbox tomorrow night.

Microsoft's 'secret sauce'

Microsoft Watch's Mary Jo Foley: Microsoft Readies 'A1' Security Subscription Service: "Publicly, Microsoft continues to be cagey about packaging and pricing plans for its anti-spyware and anti-virus solutions. But privately, Microsoft has begun informing partners of its plans for a security subscription service code-named 'A1,' according to developers who requested anonymity."

Also see this Neowin report, with screenshots, from earlier in the week.

McNealy on Microsoft

Sun Microsystems CEO Scott McNealy in a New York Times Q&A: "Sun and Microsoft shaking hands is a little like two boxers tapping gloves just before they beat the living daylights out of each other."

Gates' 2004 stock sales

Bloomberg News (via International Herald Tribune): "Bill Gates, Larry Ellison and Michael Dell led U.S. company executives and directors in selling $51.3 billion in shares in their companies in 2004, the largest amount since 2000, when shares of Internet companies plunged. ... Gates, the world's richest man, sold 81.8 million Microsoft shares for $2.21 billion. Gates has a program in which he periodically sells shares to diversify his investments, a spokeswoman said. Microsoft shares fell 2.2 percent in 2004."