Microsoft's deal with AT&T shows the new path for cloud partnerships

Microsoft's newly announced joint venture with AT&T, in which AT&T customers get VPN access to Microsoft's Azure cloud platform, may be a sign of how the cloud giants are looking in novel places -- like telecom providers -- for partnerships and alliances.

Cloud vendors and telecom outfits have been slowly knitting together partnerships in which the telcos provide high-grade, high-speed data transports for customers looking to move their data into (or out of) the cloud.

AT&T teamed up with IBM late in 2012 for a similar initiative. There, customers could connect to IBM's cloud resources via AT&T's VPN, allowing protected movement of data between private and public clouds. Before that in 2011, VMware partnered with Softbank Telecom in Japan to allow customers to shuttle data between their own private cloud and Softbank's public cloud.

Most recently, enterprise cloud host Savvis -- a subsidiary of Internet provider CenturyLink -- partnered with VMware to provide vCloud-powered colocation, again to provide businesses with a protected channel to and from the cloud.

No discussion of this issue would be complete without some mention of Verizon purchasing cloud-service provider Terremark in 2011 -- with both Verizon and Terremark having been major VMware vCloud users.

Having cloud outfits reach out to carriers and network providers as partners only makes sense. The cloud lives and dies on its network links. Consequently, the more direct a route that can be provided into and out of the cloud, the easier it is for customers to get on board -- especially those with multiterabyte migrations that require a robust and secure network.

The release for the new Microsoft-AT&T joint venture boasts that their VPN solution will provide "as much as 50 percent lower latency than the public Internet." That said, it won't be possible to test claims like that until the first half of 2014, when the partnership finally goes online.

What also remains to be seen is how exclusive these deals could get. Right now, it's in the best interests of both parties to work with as many partners as possible, but it's not unforeseeable that we could see exclusive deals between cloud and network providers, perhaps for major discounts on both the cloud resources and the network access. Such a thing would inspire the ire of many an advocate for Net neutrality, and given how many resources are being moved into the cloud these days, they might not be wholly wrong.

This story, "Microsoft's deal with AT&T shows the new path for cloud partnerships," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

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Why Surface won't be submerged by Microsoft's Nokia acquisition

Don't let all the talk about service synergies and sales teams fool you: Microsoft gobbled up Nokia to ensure Windows Phone's ongoing survival and bolster the "devices" portion of its newly refocused "devices and services" business.

But wait! Hasn't Microsoft already spent more than $1 billion in resources on an in-house device brand? Indeed it has. And while the newly minted marriage between Nokia and Microsoft almost certainly crushes any hope for a Surface-branded phone—at least in the near future—it doesn't mean the end of the Surface line.

Let's get the low-hanging fruit out of the way first.

The Surface's VaporMg chamfers would've looked pretty sweet on a smartphone.

Microsoft has said in the past that it has no immediate plans to introduce a Surface phone. The Nokia purchase solidifies this position—and that's not necessarily a bad thing.

"I'm not even sure what the value of a Surface brand would be on smartphones," says Ross Rubin, the principal analyst at Reticle Research. "First of all, 'Surface' implies a larger area on which to do something and get things done. And of course, one of the things the Surface tablets struggle with is the focus on the add-on keyboard—which is without a doubt its signature feature. But if you don't need a virtually omnipresent keyboard, it's a double-edged sword… and we've seen significant dwindling of phones with mini-keyboards, like the BlackBerry Q10."

But beyond the Surface phone concept alone, Rubin's sage words drive home why the Surface won't be sucked into the abyss just yet.

While Microsoft touted "One brand, united voice" after announcing the Nokia acquisition, mashing everything together under a single brand simply doesn't make much sense yet.

It might make sense if Microsoft bought all of Nokia. Nokia's a much more recognizable name than the fledgling Surface hardware brand—but Microsoft bought Nokia's devices business, not the Nokia name itself. The Lumia brand (which Microsoft will presumably soon own) isn't as well-known as "Nokia." What's more, the Lumia brand's bold design and colorful exteriors target a whole different audience than the stark, VaporMg-clad Surface slates.

"It's targeting a very different audience," says Ben Bajarin, the director of consumer technology at Creative Strategies. "A product like a Surface, or even a PC or hybrid or two-in-one, targets a very different audience that what Lumia's been doing with the colors."

Lumia smartphones like this Lumia 920 are known for their attractive design, killer camera, and color explosion—none of which screams "productivity."

Simply put: The Surface is for work—despite what Microsoft's fast-cut, dubstep-tinged advertising blitz may have you believe—and the Lumia line is for consumers. And while the line is growing increasingly blurry thanks to BYOD, there is still a difference between the two.

"Microsoft may try to repurpose Surface to something that's more keyboard-focused, where Lumia becomes its brand for smaller tablets, where keyboards make increasingly less sense and there's perhaps even more synergy with the smartphone line," says Rubin. "Surface could evolve to become, basically, Microsoft's PC [and PC replacement] brand."

If nothing else, Microsoft and Nokia are both said to be in the advanced stages of releasing new tablets, in the form of second-gen Surface slates and Nokia's first foray into tablets. Given how far along the companies are said to be on those products, both Rubin and Bajarin expect them to launch under their respective Surface/Lumia brands, rather than a possible newly formed line.

But even if Lumia and Surface stay separate yet equal, the Nokia acquisition will still pay dividends for the Surface line.

"The quality of the Nokia Windows Phone experience will give more incentive to the Surface team to double down on Microsoft-owned tablets," predicts Forrester analyst Ted Schadler.

The acquisition should have much more tangible benefits for Microsoft's new Devices division, as well.

"Nokia has some very smart hardware people," Bajarin says. "They have good hardware engineers. They have good hardware designers. They have people who are very good at those things. Microsoft does not have people who are good at those things. [Microsoft] has acquired quite a lot of hardware expertise to manage and integrate into their mobile device division."

And beyond that, Nokia's supply chain borders on legendary. Microsoft can lean on that to bolster its small Surface line, both for manufacturing and for expanding Surface to more countries and more retailers.

Yes, the phone is the key to everything, but the Nokia acquisition pays dividends far beyond simple smartphones. The manufacturing prowess that Nokia brings to the table, merged with Microsoft's deep pockets, opens up many doors for Lumia, Surface, and Microsoft's entire push into Devices.

"They have a lot of different paths they can take for hardware," says Bajarin, "And I can see them getting into all kinds of different hardware."

And with that, we can't help but ponder the plethora of hardware possibilities. Sure, a productivity-friendly mobile display would pretty obviously fall under the Surface brand, but like a Surface phone, the long-rumored Surface smartwatch could very well die an ignoble death at the hands of Lumia.

Brad Chacos spends the days jamming to Spotify, digging through desktop PCs and covering everything from BYOD tablets to DIY tesla coils.
More by Brad Chacos

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Microsoft's Nokia deal could benefit other Windows partners, analysts say

Microsoft’s plan to buy Nokia’s phone business and have a larger presence in hardware devices has so far brought little response from PC and smartphone vendors in Asia. But the deal could end up bringing dividends to Microsoft’s long-time partners in the region by revitalizing the Windows ecosystem, according to analysts.

Windows Phone licensee HTC is still assessing the impact of Microsoft’s $7 billion acquisition of Nokia’s mobile phone business, a spokeswoman said Tuesday.

Huawei Technologies, another licensee, said the acquisition deal would not affect its cooperation with Microsoft, while smartphone maker ZTE also said it would continue developing Windows Phone devices while there was demand for them—and as long as the OS remained fair and open, as with Google’s approach to buying Motorola Mobility, which makes phones running the Android OS that Google develops.

Other Windows Phone licensees such as Samsung Electronics declined to comment.

The U.S. software giant’s previous moves at competing in the hardware space have not always been welcomed by its partners.

Following last year’s unveiling of Microsoft’s Windows Surface tablet, Taiwanese PC maker Acer was vocal in its opposition to the product, stating that it would disrupt the PC ecosystem. Lenovo, while less worried about the Surface product, was also opposed to Microsoft supplying hardware.

The Suface's future will probably not be affected by Nokia's mobile business.

Although shipments of the Surface tablet have been weak, Microsoft’s plan to buy Nokia’s phone business signals the company doesn’t plan to let up in hardware. The deal, which is expected to close in next year’s first quarter, will give Microsoft access to Nokia’s design and sales teams, along with its manufacturing facilities across the world.

“The PC vendors are definitely concerned about Microsoft’s approach,” said Nicole Peng, an analyst with research firm Canalys. “Since Microsoft launched its Surface, PC vendors have been preparing for when Microsoft will have its own hardware team.”

But Microsoft’s acquisition of Nokia’s phone business may not necessarily clash with the direction of its partners, analysts said.

Outside of Nokia, smartphone vendors including HTC, Samsung, and Huawei have all been gradually moving away from Microsoft’s Windows Phone OS in favor of Android, said Melissa Chau, an analyst with research firm IDC. In Asia, over 90 percent of the Windows Phone devices on the market come from Nokia, she added.

“All the shipments we’ve seen have been very small,” Chau said. “I don’t think we are going to see any huge outrage on the smartphone side.”

Microsoft will likely steer clear of the PC space with its Nokia acquisition, mainly because the handset vendor has no history of building tablets or laptops.

The biggest fear PC vendors may have, however, is that Microsoft’s acquisition of Nokia will bring more Surface tablets to the market, intensifying the competition with partners. Many vendors including Acer, Asustek Computer and Lenovo are releasing new tablets and convertible PCs running Windows 8.

But analysts argue that Microsoft will likely steer clear of the PC space with its Nokia acquisition, mainly because the handset vendor has no history of building tablets or laptops.

“I don’t think this will have an impact on PC vendors, because they are still selling PCs, and Nokia does phones,” said Tracy Tsai, an analyst with research firm Gartner. Instead, any tablet that Nokia developed would probably use the ARM-based Windows RT platform, and not the traditional Windows 8 OS, she added.

Already, PC vendors appear to be backing away from Windows RT. Acer has dropped plans to release a product using the OS, and Asus has called the platform “not very promising.”

“I don’t know if there will be a lot of competitors really upset about this,” Chau said. “Almost all of the PC players don’t seem to be upset about Windows RT nowadays.”

Microsoft’s new Windows 8 OS, however, has yet to take off. PC sales are instead partly declining due to the rise of tablets and smartphones. As a result, many PC vendors are releasing more mobile products using the rival Android OS as a way to continue growing.

It’s still too early to say how Microsoft’s plan to buy Nokia’s handset business will shake out in the end, analysts added. But Microsoft has said the acquisition will help build momentum for the Windows Phone OS, in an effort to expand the operating system’s presence. By 2018, Microsoft wants its Windows Phone OS to have a 15 percent market share, the company said in presentation slides posted on Tuesday.

A stronger Windows Phone OS, with better apps and developer support, could help make it a better alternative to Google’s Android OS, analysts said. At the same time, it may help convince consumers to stick with Windows PCs and tablets.

“If you bring on board more users to Windows Phones, they will want to have a similar experience on their tablet and PC,” Gartner’s Tracy Tsai said. “This will be very helpful. Once you increase the install base, you will have more developers and more apps, and have a rich eco-system.”

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Steve Ballmer on Microsoft's Nokia Devices & Services buy

Editor’s Note: On Monday evening, Microsoft announced it was buying Nokia’s Devices & Services division, giving Redmond an in-house hardware arm for its Windows Phone platform. Here’s the letter CEO Steve Ballmer sent to Microsoft employees announcing the move.

We announced some exciting news today: We have entered into an agreement to purchase Nokia’s Devices & Services business, which includes their smartphone and mobile phone businesses, their award-winning design team, manufacturing and assembly facilities around the world, and teams devoted to operations, sales, marketing and support.

For Microsoft, this is a bold step into the future and the next big phase of the transformation we announced on July 11.

We are very excited about the proposal to bring the best mobile device efforts of Microsoft and Nokia together. Our Windows Phone partnership over the past two and half years has yielded incredible work - the stunning Lumia 1020 is a great example. Our partnership has also yielded incredible growth. In fact, Nokia Windows Phones are the fastest-growing phones in the smartphone market.

Now is the time to build on this momentum and accelerate our share and profits in phones. Clearly, greater success with phones will strengthen the overall opportunity for us and our partners to deliver on our strategy to create a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most.

We have laid out Microsoft’s strategic rationale for this transaction in a presentation that I encourage you to read.

This is a smart acquisition for Microsoft, and a good deal for both companies. We are receiving incredible talent, technology and IP. We’ve all seen the amazing work that Nokia and Microsoft have done together.

Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we expect a smooth transition and great execution.

As is always the case with an acquisition, the first priority is to keep driving through close, which we expect in the first quarter of 2014, following approval by Nokia’s shareholders, regulatory approvals, and other closing conditions.

But I also know people will have some questions about what happens post-close. While details aren’t final, here is what we know, and how we’re generally approaching integration:

Stephen Elop will be coming back to Microsoft, and he will lead an expanded Devices team, which includes all of our current Devices and Studios work and most of the teams coming over from Nokia, reporting to me.Julie Larson-Green will continue to run the Devices and Studios team, and will be focused on the big launches this fall including Xbox One and our Surface enhancements. Julie will be joining Stephen’s team once the acquisition closes, and will work with him to shape the new organization.As part of the acquisition, a number of key engineering leaders will be joining Microsoft from Nokia, reporting to Stephen in his new capacity:
• Jo Harlow, who will continue to lead the Smart Devices team
• Timo Toikkanen, who will continue to lead the Mobile Phones team
• Stefan Pannenbecker, who will lead Design
• Juha Putkiranta, who will lead the integration effort on Nokia’s behalfRegarding the sales team, we plan to keep the Nokia field team, led by Chris Weber, intact and as the nexus of the devices sales effort, so that we can continue to build sales momentum. After the deal closes, Chris and his team will be placed under Kevin Turner. We will develop a single integrated team that is selling to operators, and there may be other integration opportunities that we can pursue. Kevin will work with Chris Weber and Chris Capossela to make those plans.Our operating system team under Terry Myerson will continue unchanged, with a mission of supporting both first-party and third-party hardware innovation. We are committed to working with partners, helping them build great products and great businesses on our platform, and we believe this deal will increase our partner value proposition over time. The established rhythms and ways of working between Terry and his team and the incoming Nokia team will serve us well to ensure that we do not disrupt our building momentum.We are planning to integrate all global marketing under Tami Reller and Mark Penn. It is very important that we pursue a unified brand and advertising strategy as soon as possible.Finance, Legal, HR, Communications, DX / Evangelism, Customer Care and Business Development will integrate functionally at Microsoft. Sourcing, customer logistics and supply chain will be part of Stephen’s Devices organization. ICM / IT will also integrate functionally for traditional IT roles. We will need to work through the implications for factory systems given the differing manufacturing processes and systems at both Nokia and Microsoft.We plan to pursue a single set of supporting services for our devices, and we will figure out how to combine the great Nokia efforts into our Microsoft services as we go through the integration process.There are no significant plans to shift where work is done in the world as we integrate, so we expect the Nokia teams to stay largely in place, geographically.Tom Gibbons will lead the integration work for Microsoft.

While today’s announcement is big news, we have to stay heavily focused on running the current business. We have a huge fall and holiday season ahead of us, so we need to execute flawlessly and continue to drive our business forward. I have no doubt we will.

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Microsoft's Surface slates get permanent price drops, cheaper Touch Covers

Not that Microsoft was fooling anyone before, but the Surface tablet discounts that the company previously advertised as “limited time” are now permanent.

The Surface RT will remain priced at $349 for 32 GB, and $449 for 64 GB, a discount of $150 in both cases. Microsoft is also offering a black Touch Cover bundle with both Surface RT models for an additional $50.

The Surface Pro retains its $100 discount on all models, bringing the price to $799 for 64 GB and $899 for 128 GB. No Touch Cover or Type Cover bundles are available with the Surface Pro.

Microsoft has also slashed the price of its standalone Touch Cover accessories by $40. Regular covers now cost $80, and Limited Edition covers are $90. Pricing for the Type Cover, which has actual mechanical keys compared to the Touch Cover's pressure-sensitive sensors, remains at $130.

Microsoft's struggles to sell the Surface are no secret. Last month, the company revealed that it would take a $900 million writedown on the Surface RT, as the company slashed prices in hopes of unloading excess inventory. It's unlikely that Surface Pro sales are much better, given that Microsoft spent more to advertise the tablet and Windows 8 than it actually earned in Surface revenue.

On the plus side, the price cuts have sent Surface RT usage skyrocketing over the past months.

Tech-savvy consumers, however, might want to stay away from these permanent price cuts, with the possibility of new Surface models around the corner. The Surface Pro, in particular, would greatly benefit from Intel's Haswell processors , which offer big improvements to battery life. It's unclear when Microsoft will launch new Surface tablets, but something timed around the October 18 launch of Windows 8.1 would make sense.

According to ZDNet, Microsoft will be rolling out the price adjustments in phases, “in order to meet customer demand and retailer expectations.” Check Microsoft's Surface Website for details.

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Ballmer departure could disrupt Microsoft's fragile transition plans

Microsoft would have you believe that it’s created a framework that bridges our work lives and social lives, linking together the PC, phone, tablet and console with a comprehensive suite of software and services. In fact, the company has created this framework—but the bolts and girders connecting everything together are more fragile than you might think, and the departure of Steve Ballmer will stress Microsoft’s ecosystem at precisely the wrong time.

Last Friday, Ballmer said he would step down in a year’s time, prompting examination of his leadership mistakes, predictions of who might replace him, and, well, silly GIFs. There are also reports that his exit from Microsoft might not have been entirely voluntary.

“My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company...”

But all this discussion is just background noise that’s drowning out a bigger issue: A company with Microsoft’s problems doesn’t easily embrace new leadership midstream. Ballmer himself awkwardly addressed the problem, saying in one breath that “now was the right time,” then in the next breath suggesting that it wasn’t:

”There is never a perfect time for this type of transition, but now is the right time,” he told Microsoft employees in a memo. “My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company focused on empowering customers in the activities they value most. We need a CEO who will be here longer term for this new direction.”

Ballmer’s right about the last point. And both Microsoft leadership transition and mission transformation need to be very carefully managed.

image: MicrosoftFrank X. Shaw, Microsoft communications director

In a blog post, Microsoft communications director Frank X. Shaw took aim at critics who either myopically focused on Microsoft’s consumer business, or else identified some product area that Microsoft had ignored to its detriment. After dipping his toe into hippy-dippy spiritualism (Microsoft is “unlocking human potential in all its forms”? Really?), Shaw began laying out the fundamental tenets of Microsoft’s new vision: bridging work and play; creating as well as watching, playing, and sharing content; and targeting the intersection of hardware, software, and the cloud.

Of course, Microsoft’s path toward facillitating work and play began many years ago: Customers could spend their day working on Office, then come home and play Microsoft Flight Simulator or the Xbox. Microsoft learned that by controlling an entire platform—both hardware or software—it could own your entire user experience.

But we can also make the argument that Ballmer and Microsoft applied these lessons much later than they should have. For example, Microsoft launched the Zune as Apple was already transitioning from the iPod to the iPhone. And only recently has Microsoft launched a music and movie store for the Xbox. And, of course, Microsoft’s Windows and Windows Phone app environment is still woefully poor, as is its Windows 8 store.

Moving forward, the balancing act that Microsoft must walk is perhaps best summed up by this quote from a fund manager quoted by Bloomberg: “Someone starting near the first of the year would be able to make some decisions in time for the next holiday season,” Pat Becker Jr. said. “Then again maybe that’s too much to expect—expecting someone to turn around a company like this that quickly.”

Hey, at least Microsoft had the right idea (if not execution) with the Zune.

Now that Windows 8, the Xbox One, and new versions of Office and Windows Server have either been released or announced, Microsoft’s board of directors obviously feels that the company is steady enough to maintain its balance while a new head is put in place. But I disagree: While Microsoft’s enterprise businesses are on stable footing, Windows 8.1 and its follow-ups still need a steady hand guiding them forward (if not fixing their biggest mistakes).

And that’s just the tip of Microsoft’s problematic iceberg. Windows Phone apps are struggling. Windows 8 apps are struggling. The Xbox One isn’t even out yet, but it almost lost the battle of public opinion to Sony’s console. And if Microsoft is committed to all of these platforms, the teams working on them need to know they’re headed down the right path.

Meanwhile, Ballmer just flattened the entire company’s organization, orienting it around technologies, not products. Executives of key, strategic importance have been only been in their new roles on the order of weeks.

Ugh. What a mess. It’s hard not to look at how hard Ballmer shoved Microsoft in the direction of a cohesive, unfied experience, and then wonder, “OK, what now?” Either Microsoft continues down its path—and if it does, why isn’t Ballmer still running the ship?—or it heads off on a tangent, essentially writing off years of product development.

Chance are, someone on this org chart will be upset when he or she isn't named as Ballmer's successor.

It’s been a rough few months for Wintel: AMD, Intel, and now Microsoft have recently weathered CEO transitions. On the outside, at least, Intel has appeared to have negotiated those seas the smoothest. However, CTO Justin Rattner said he would retire, and processor chief Dadi Perlmutter moved into a specialist role. “They’re both gone,” one Intel exec commented this week. (Though it must be noted that an Intel spokesman says both are still employed by the company.)

Inevitably, someone at Microsoft who thinks he or she deserves the top job is going to be passed over. So who leaves then?

Microsoft may indeed have a bright future ahead of it, as Shaw opines. But looking back, it certainly seems like Microsoft could have paved the way for an orderly CEO transition during the Windows 7 years. Yeah, hindsight’s 20/20 and all that. Let’s just hope Microsoft’s board sees just as clearly, looking ahead.

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Who will be Microsoft's new CEO? Place your bets -- literally

Think you know who will replace Steve Ballmer as Microsoft’s new CEO? Put your money where your mouth is.

Sports book Ladbrokes continued the European tradition of betting on well, just about anything, by offering odds on who will serve as the next chief executive of Microsoft. The current favorite? Steven Elop of Nokia, who is topping the charts at 5-to-1 odds.

The bookmaker appears to have sampled liberally from the various analyses of who could replace Ballmer, due to leave the building in at most 12 months’ time. We’re flattered to see that Samsung’s Dale Lee, one of our outsider picks to lead the company, comes in at the middle of the pack at 20-to-1.

Who’s the smart money betting on? A raft of Microsoft insiders, according to Ladbrokes. Topping the charts is Elop, who left Microsoft to run Nokia and has since forged strong ties with Microsoft and Windows Phone. But right behind Elop is current Microsoft chief operating officer Kevin Turner and the man credited (or not) with Windows 8, current venture capitalist Steven Sinofsky. Turner and Sinofsky are listed as 6-to-1 and 8-to-1, respectively.

Here’s a look at some of the odds Ladbrokes is posting on Steve Ballmer’s successor at Microsoft.

If I were a betting man (and I’m not, so please don’t use this as gambling advice), I’d bump Turner and Sinofsky down the list a bit. While Turner clearly has the chops to run Microsoft, I’m not sure he has the vision the company needs. My gut tells me that Sinofsky isn’t quite the guy, either, although his Learning by Shipping blog reads like a high-level course on enterprise management, strategy, and business theory.

Julie Larson-Green, who oversees the devices and studios business, was still one of our favorites, although she lacks seasoning. Ladbrokes pegs her at 8-to-1 odds, while Qi Lu, next on our list, at 10-to-1.

One of the names that sites such as The Verge and ZDNet like, former Skype head Tony Bates, also comes in at 14-to-1. Bates, admittedly, is a name we left off our shortlist, although both publications make compelling arguments: Bates came up through the ranks developing enterprise hardware at Cisco, moved over to the consumer business, and shepherded Skype through the acquisition process. Whether the Microsoft board views Bates as someone who successfully monetized what most consider to be a free service may be one metric that he’s judged by; the other may be how Skype is slowly insinuating itself into most of Microsoft’s platforms. In all, Bates may be undervalued at the moment.

Who’s your pick for the next CEO of Microsoft? And how much would you be willing to put down on it? Unfortunately, if you live in the United States, it’s all academic; the US is one of the restricted territories that Ladbrokes prevents from opening accounts.

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Microsoft's next CEO: Let's handicap the candidates

Who will replace Microsoft chief executive Steve Ballmer? Microsoft’s executive committee has up to a year to decide and a pantheon of candidates from which to choose.

In many ways, identifying the next chief executive of Microsoft is a commentary on Microsoft’s current track record. Does Microsoft’s executive committee and board continue down the path that Ballmer began? Has the company failed to execute in some way? Or is a new direction required, perhaps with an emphasis on a particular business segment? All of these questions could guide Microsoft’s CEO search.

Ballmer’s announcement that he will step down in twelve months came as a welcome surprise to Wall Street, which promptly sent Microsoft’s share price up about 6 percent. Microsoft has struggled to convince the market that its vision for Windows has been the right one, and the planned Windows 8.1 update is seen as a do-over of sorts. Ballmer shook up its leadership team this summer,re-aligning the company with his vision of Microsoft as a devices and services provider. The problem? The “flat” structure of the reorganization left no obvious successor.

While Microsoft has not been averse to hiring from outside the company—chief operating officer Kevin Turner most recently served as chief executive of Wal-Mart division Sam’s Club—some of the company’s most senior staff have been long-time Microsoft employees. The executive committee that will find a replacement for Ballmer includes John Thompson, the board’s lead independent director, plus chairman Bill Gates, chairman of the audit committee Chuck Noski and chairman of the compensation committee Steve Luczo.

Who might be next in line to replace Ballmer? A few candidates:

MicrosoftJulie Larson-Green

Julie Larson-Green: On the surface, Larson-Green would probably have the inside track. As executive vice president in charge of devices and studios, Larson-Green oversees the company’s hardware businesses, including the Xbox and Surface; she also directs the content studios that run on them. She most recently led the product planning, design and delivery of Windows 7, Windows 8, and Windows 8.1, as well as the rapid release cadence that now characterizes the Windows environment. In addition, she’s a 20-year Microsoft veteran.

Gates is on record that Windows 8 is a “huge advance for Windows,” an important vote of confidence. But would Larson-Green do with a bit more seasoning before being named for the top spot? She hasn’t had that much time in her new role, having just assumed it as part of the recent reorganization.

MicrosoftQi Lu

Qi Lu: As the executive vice president of Microsoft’s Applications and Services Group, Lu is responsible for tying together Office, Bing, SharePoint, and a number of other services within Microsoft. As such, he’s the “services guy” that Microsoft could elevate to the top role. However, Lu was also promoted away from the Online Services Division, which seems to perpetually lose money.

MicrosoftTerry Myerson

Terry Myerson: Myerson’s job is to lead Microsoft’s OS vision as executive vice president of the Operating Systems Group. Myserson’s task has been to design in commonality within the Windows, Windows Phone, and Xbox operating systems. Although we’ve seen some elements of that—Internet Explorer in the Xbox One, some Xbox services in Windows Phone—it would seem that there’s still more work to do here. Promoting Myerson out of his current role would require an equally competent replacement.

Stephen Elop (Nokia) or Steve Sinofsky obvious choices for $MSFT CEO. I would go bold with @marissamayer @jack Dorsey, Marc Andreessen

— Don Dodge (@DonDodge) August 23, 2013

Stephen Elop

Stephen Elop: As former Microsoft evangelist Don Dodge notes, one possibility from outside the company to lead Microsoft would be Elop, now chief executive at Nokia. Elop formerly led Microsoft’s business division, the home of the seemingly perpetually profitable Microsoft. But Elop also jumped ship to join Nokia, after what some described as dissatisfaction with Microsoft. On the other hand, although Elop has forged a strong partnership with Microsoft in his current role, Nokia has still struggled. Elop could indeed come back to the fold, but Nokia’s recent performance may color his chances.

Steven Sinofsky

Steve Sinofsky: Sinofsky, who was recently named a partner at Andreessen Horowitz, abruptly exited Microsoft after the Windows 8 launch and has not spoken publicly of his departure—or of Microsoft, apparently bound by a non-disclosure clause in his contract. Although Larson-Green is credited with the rollout of Windows 8, Sinofsky designed it—and again, how the board sees the OS may affect whether or not Sinofsky is invited back. Does Sinofsky see himself as a Silicon Valley power player, or as a leader of one of the titans of the technology world?

Other possibilities: Jeff Raikes, who currently serves as chief executive of the Bill and Melinda Gates Foundation, would have to be willing to give up his post—and Gates would also have to be willing to let him go. But there’s no question that Gates could vet him for the role. And then there’s the wild card angle: the committee could hunt down a fresh face from outside the company.

“I don’t think Microsoft will fill the CEO spot from within,” said Patrick Moorhead of Moor Insights and Strategy. “They need to show that they are thinking differently, and to fulfill those optics, they will go outside.  If not, it could be portrayed as the ‘same old – same old’.”

That’s actually a viable possibility when you consider the fact that Microsoft is shifting away from what it has been—an OS company, centered on the PC—to a more nimble services company straddling a multitude of devices. Could someone like Dale Lee, recently promoted out of a role as president of Samsung Telecommunications America to a special advisor post, be an option? Lee drove Samsung’s phones and tablets to the top spot in the U.S. market.

Forget Bill Gates, though—even though some hope he’ll return.

The only one who can turn around Microsoft's disastrous situation is @BillGates---he is a true visionary and leader.

— Marc Benioff (@Benioff) August 23, 2013

What seems clear is that Microsoft won’t wait the full 12 months to name a replacement. Every quarter that goes by without such a name raises questions; establishing a successor early allows an informal or formal transition team to take place. But the Ballmer era will come to a close as Microsoft tries to remain relevant in a post-PC world. And that’s Job One for the new recruit.

Updated at 12:04 PM with comment from Patrick Moorhead.

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Microsoft's next CEO: Let's handicap the candidates

Who will replace Microsoft chief executive Steve Ballmer? Microsoft’s executive committee has up to a year to decide and a pantheon of candidates from which to choose.

In many ways, identifying the next chief executive of Microsoft is a commentary on Microsoft’s current track record. Does Microsoft’s executive committee and board continue down the path that Ballmer began? Has the company failed to execute in some way? Or is a new direction required, perhaps with an emphasis on a particular business segment? All of these questions could guide Microsoft’s CEO search.

Ballmer’s announcement that he will step down in twelve months came as a welcome surprise to Wall Street, which promptly sent Microsoft’s share price up about 6 percent. Microsoft has struggled to convince the market that its vision for Windows has been the right one, and the planned Windows 8.1 update is seen as a do-over of sorts. Ballmer shook up its leadership team this summer,re-aligning the company with his vision of Microsoft as a devices and services provider. The problem? The “flat” structure of the reorganization left no obvious successor.

While Microsoft has not been averse to hiring from outside the company—chief operating officer Kevin Turner most recently served as chief executive of Wal-Mart division Sam’s Club—some of the company’s most senior staff have been long-time Microsoft employees. The executive committee that will find a replacement for Ballmer includes John Thompson, the board’s lead independent director, plus chairman Bill Gates, chairman of the audit committee Chuck Noski and chairman of the compensation committee Steve Luczo.

Who might be next in line to replace Ballmer? A few candidates:

MicrosoftJulie Larson-Green

Julie Larson-Green: On the surface, Larson-Green would probably have the inside track. As executive vice president in charge of devices and studios, Larson-Green oversees the company’s hardware businesses, including the Xbox and Surface; she also directs the content studios that run on them. She most recently led the product planning, design and delivery of Windows 7, Windows 8, and Windows 8.1, as well as the rapid release cadence that now characterizes the Windows environment. In addition, she’s a 20-year Microsoft veteran.

Gates is on record that Windows 8 is a “huge advance for Windows,” an important vote of confidence. But would Larson-Green do with a bit more seasoning before being named for the top spot? She hasn’t had that much time in her new role, having just assumed it as part of the recent reorganization.

MicrosoftQi Lu

Qi Lu: As the executive vice president of Microsoft’s Applications and Services Group, Lu is responsible for tying together Office, Bing, SharePoint, and a number of other services within Microsoft. As such, he’s the “services guy” that Microsoft could elevate to the top role. However, Lu was also promoted away from the Online Services Division, which seems to perpetually lose money.

MicrosoftTerry Myerson

Terry Myerson: Myerson’s job is to lead Microsoft’s OS vision as executive vice president of the Operating Systems Group. Myserson’s task has been to design in commonality within the Windows, Windows Phone, and Xbox operating systems. Although we’ve seen some elements of that—Internet Explorer in the Xbox One, some Xbox services in Windows Phone—it would seem that there’s still more work to do here. Promoting Myerson out of his current role would require an equally competent replacement.

Stephen Elop (Nokia) or Steve Sinofsky obvious choices for $MSFT CEO. I would go bold with @marissamayer @jack Dorsey, Marc Andreessen

— Don Dodge (@DonDodge) August 23, 2013

Stephen Elop

Stephen Elop: As former Microsoft evangelist Don Dodge notes, one possibility from outside the company to lead Microsoft would be Elop, now chief executive at Nokia. Elop formerly led Microsoft’s business division, the home of the seemingly perpetually profitable Microsoft. But Elop also jumped ship to join Nokia, after what some described as dissatisfaction with Microsoft. On the other hand, although Elop has forged a strong partnership with Microsoft in his current role, Nokia has still struggled. Elop could indeed come back to the fold, but Nokia’s recent performance may color his chances.

Steven Sinofsky

Steve Sinofsky: Sinofsky, who was recently named a partner at Andreessen Horowitz, abruptly exited Microsoft after the Windows 8 launch and has not spoken publicly of his departure—or of Microsoft, apparently bound by a non-disclosure clause in his contract. Although Larson-Green is credited with the rollout of Windows 8, Sinofsky designed it—and again, how the board sees the OS may affect whether or not Sinofsky is invited back. Does Sinofsky see himself as a Silicon Valley power player, or as a leader of one of the titans of the technology world?

Other possibilities: Jeff Raikes, who currently serves as chief executive of the Bill and Melinda Gates Foundation, would have to be willing to give up his post—and Gates would also have to be willing to let him go. But there’s no question that Gates could vet him for the role. And then there’s the wild card angle: the committee could hunt down a fresh face from outside the company.

“I don’t think Microsoft will fill the CEO spot from within,” said Patrick Moorhead of Moor Insights and Strategy. “They need to show that they are thinking differently, and to fulfill those optics, they will go outside.  If not, it could be portrayed as the ‘same old – same old’.”

That’s actually a viable possibility when you consider the fact that Microsoft is shifting away from what it has been—an OS company, centered on the PC—to a more nimble services company straddling a multitude of devices. Could someone like Dale Lee, recently promoted out of a role as president of Samsung Telecommunications America to a special advisor post, be an option? Lee drove Samsung’s phones and tablets to the top spot in the U.S. market.

Forget Bill Gates, though—even though some hope he’ll return.

The only one who can turn around Microsoft's disastrous situation is @BillGates---he is a true visionary and leader.

— Marc Benioff (@Benioff) August 23, 2013

What seems clear is that Microsoft won’t wait the full 12 months to name a replacement. Every quarter that goes by without such a name raises questions; establishing a successor early allows an informal or formal transition team to take place. But the Ballmer era will come to a close as Microsoft tries to remain relevant in a post-PC world. And that’s Job One for the new recruit.

Updated at 12:04 PM with comment from Patrick Moorhead.

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Google blocks Microsoft's YouTube app for Windows Phone (again)

Sometimes, it just ain’t easy being a Windows Phone owner.

A mere two days after a revamped, Microsoft-made YouTube app landed on the platform , bringing sweet relief to the poor Windows Phone users long saddled with an old and crappy port of the service, the new app has stopped working whatsoever. Why, you ask? Because Google blocked Microsoft’s access. Again.

“Microsoft has not made the browser upgrades necessary to enable a fully-featured YouTube experience, and has instead re-released a YouTube app that violates our Terms of Service,” YouTube spokespeople told bothThe Verge and TechCrunch. “It has been disabled. We value our broad developer community and therefore ask everyone to adhere to the same guidelines.”

Microsoft The Windows 8 YouTube app that Google objects to.

While the situation stinks for Windows Phone owners, it’s pretty ironic for several reasons. Google has long refused to release an official YouTube app, so Microsoft has been forced to homebrew a band-aid of its own to keep Windows Phoners placated.

“YouTube is consistently one of the top apps downloaded by smartphone users on all platforms, but Google has refused to work with us to develop an app on par with other platforms,” Microsoft told TechHive when Microsoft first published a new YouTube app all the way back in May.

That release rankled Google for several reasons, most notably that the app allowed users to easily download videos—and it cut all the ads out of YouTube completely.

“We’d be more than happy to include advertising, but need Google to provide us access to the necessary APIs,” Microsoft said at the time. Clever, clever!

Barely a week later, Google took Microsoft up on the offer, and the companies announced that they were working together to create a YouTube app that “enable compliance with YouTube’s API terms of service, including enabling ads, in the coming weeks.”

The Windows Phone YouTube app released earlier this week was assumed to be the result of that temporary union, but something must have revived the bad blood between the two to coax Google into cracking down so swiftly. Sources tell both The Verge and Engadget that the YouTube app released earlier this week was not, in fact, the joint effort touted months ago. Instead, the sources claim, the Windows Phone release was a native app that Microsoft built by reverse-engineering Google’s advertising network, rather than the HTML5-based app that Google wanted made.

No matter what caused the banhammer, one thing is certain: Windows Phone users are the ones suffering from this petty cat fight, and both Google and Microsoft have been left looking absolutely terrible.

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Brad Chacos spends the days jamming to Spotify, digging through desktop PCs and covering everything from BYOD tablets to DIY tesla coils.
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Microsoft's Kinect and $150 software transforms ordinary surfaces into touchscreens

Sorry, I could not read the content fromt this page.

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