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“Windows Azure is at an early stage,” he said, “It is real, but it is at an early stage.”

LOS ANGELES–With only a couple of examples shown Monday of programs running on Windows Azure, I started to wonder just how far along things are with the cloud OS.

In an interview, corporate VP Amitabh Srivastava tried to set me straight.

Microsoft also expects it will take some time for businesses to move major applications to Azure. For now, the company would be happy if developers just start learning about Azure and playing around with its software developer kit, senior VP Bob Muglia said in an interview.

In addition to the BlueHoo application shown on stage, Windows Azure was used to build Microsoft’s Live Mesh and is also being used to build the next generation of Live Meeting.

“Ultimately the goal is to move all our properties,” Srivastava said.

The version of Azure that Microsoft is rolling out now is a community technology preview that lacks a number of features that Microsoft is working to quickly add, he said.

In particular, only software written in managed code, essentially .Net, can currently run. Internally, the company has other types of native code running, with plans to offer that to outside customers sometime next year.

Srivastava also explained another question that was in my head. What was up with his bright red sneakers? I suspected, correctly, that it had to do with the fact that Azure was code-named “Red Dog.”

(Credit:
Ina Fried/CNET News)

In honor of announcing Windows Azure, which had been code-named Red Dog, corporate VP Amitabh Srivastava sported these red sneakers with his suit Monday.

“Realistically, companies won’t be deploying applications for a year or more but there is a lot to learn,” Muglia said. “There are new things they need to learn, to understand.”

Services also must be built on a set of pre-designed templates, he said, though Microsoft plans to add more templates and ideally, allow services that don’t follow any sort of template. Also, for now, Azure services will be running in a single Microsoft data center (the Quincy, Wash. facility). Sometime next year, Microsoft will expand that to other U.S. data centers and eventually move overseas, though that brings with it its own set of geopolitical issues that Srivastava said that the company would just as soon wait to tackle.

What is clear is that piracy rates remain a critical issue for Microsoft, which needs to continue growing its Windows revenue and profits to help fund its advertising battle against Google.

However, there are a couple of other factors to keep in mind. First, Windows XP is pirated far more than Vista (at least 2 to 1, according to Microsoft). Also, Microsoft did close several notable hacks to its Vista protection scheme with SP1. So while the price for piracy is arguably lower, Microsoft has closed a few loopholes that let pirates bypass the security features altogether.

Microsoft now expects its gains for the year to be just a percentage point or two, though it believes it can continue to see improvements next year as well.

“Piracy is a tough battle and an area where we will need to continue investing,” said Colleen Healy, Microsoft’s general manager of investor relations.

In the newly released Service Pack 1, however, Microsoft is softening its stance somewhat. The reduced functionality mode is gone, and in its place, a series of warnings and visual indications that a computer is not running a genuine copy of Windows.

When it comes to software piracy, Microsoft may just be aiding the enemy.

Microsoft has been counting on gains against unlicensed software to boost revenue from the Windows unit, which accounts for a huge chunk of overall profits and sales. However, one of the company’s own decisions could make its antipiracy battle more difficult.

I would argue, though, that having an unusable copy of Windows is a far greater deterrent than having one that simply labels its user a pirate. Microsoft has maintained that the new approach will be just as effective and is more palatable to customers and partners. Color me skeptical.

Microsoft had seemed to be making major headway against piracy, surprising analysts and itself in the September quarter by gaining 5 percentage points of growth through piracy reductions. Last quarter, though, Microsoft actually saw piracy rates head upward, reversing what had been a particularly positive trend for the company.

On its face, it would seem the answer would be a clear “yes.”

Time will tell whether Microsoft’s technical changes will have an impact on the broader piracy issue. Enforcement is also key, with Microsoft CFO Chris Liddell noting that a couple of legal actions can make a big difference in any given quarter, suggesting true gains (or losses) from piracy require looking at a longer time horizon.

But, will the changes automatically lead to an uptick in overall piracy rates? That’s a more complicated question.

With
Windows Vista, Microsoft took an extremely tough stand on piracy. Computers that were not properly activated within a short period of time went into a virtually unusable state known as “reduced functionality mode.”

Another misconception revealed by the survey is that cards can only be read by specific readers. That is not true, said McDiarmid. Thus, he wasn’t too surprised that only two individuals in his survey group knew to sheath their contact-less credit cards.

In a talk Monday at USENIX Usability, Psyschology and Security Conference (UPSEC) 2008 in San Francisco, Andrew McDiarmid of the University of California, Berkeley, shed light on how ordinary people perceive RFID-enabled cards in their day to day life. He said while novices and intermediates were familiar with times when RFID-enabled smart cards such as work access cards or transit cards didn’t work, they couldn’t explain it. On the other hand, advanced users knew enough to keep their RFID-enhanced credit cards sheathed in a mini “Faraday cage” so the cards could not be read by others.

When asked how RFID worked, a group of novices responded to a recent academic survey with “witchcraft” and “magic.”

Perhaps most surprising among the data was the assumption of audio or visual feedback among all three groups. McDiarmid said that the use of contact-less credit cards is impersonal; often there is no confirmation of a transaction, such as you had when a clerk handed your card back at the end of the purchase. “Customers want feedback,” he said.

Speaking before a room of about 45 fellow researchers, McDiarmid reported on exploratory research conducted in 2007 with Jennifer King, also at U.C. Berkeley. Based on feedback from this initial sample group, the two hope to open the survey to a much larger audience of novice, intermediate, and advanced users during 2008. They will also narrow the focus to two specific RFID-enhanced items: e-passports and contact-less credit cards.

In a paper released at the conference, McDiarmid and King expressed concern over how the government and commercial interests are assisting the typical end user with the new technology.

McDiarmid said on Monday that although the State Department provides a brochure describing the features of the ePassport, and companies like Visa offer videos describing the features of its PayWave contact-less credit cards, the general public still doesn’t understand the basic concepts behind RFID, and therefore do not understand the inherent risks.

Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision, and Bright House Networks have all agreed to develop the technology behind Tru2way.

Sony’s not the first consumer electronics company to announce a device based on the platform, however. At CES, Panasonic announced two high-definition televisions and a portable digital video recorder that use Tru2Way.

The Japanese electronics giant will make an LCD set based on the Tru2way cable platform introduced in January at CES by Comcast. Tru2way allows interactive cable services to be integrated directly into devices.

And last month Samsung, the world’s largest producer of HDTVs, announced its own Tru2way TV and high-definition DVR.

Sony signed an agreement with the country’s six largest cable companies Tuesday to develop a TV that will receive cable services without the need for a set-top box.

The bill would give the two sides until mid-December to cut a deal. Pandora and other Webcasters fiercely object to a decision by the Copyright Royalty Board–a three-judge panel that sets rates for copyright statutory licenses–to double the current $.0008 price per stream by 2010.

President George Bush indicated he might veto the proposed legislation on Tuesday. In a letter to the Senate Judiciary Committee this week, the Bush administration said it would oppose authorizing the U.S. Department of Justice to bring civil suits against file sharers. Since then, that part of the bill has been removed and it is once again working its way through the Senate.

A “Webcasting” bill was introduced in Congress on Thursday that would allow SoundExchange, the body that collects royalties on behalf of the music industry, to reach a settlement on royalty rates with the Digital Media Association (DiMA) after Congress adjourns.

The two sides need the government’s OK to reach an agreement because they’re after a statutory license. Such a license gives Web radio stations the right to stream any copyright songs they want, but also requires them to pay a negotiated rate.

Earlier this week, DiMA and the recording industry agreed to a deal that called for interactive music and limited download sites to pay 10.5 percent of annual revenue as a royalty rate. Interactive music sites are those that enable users to choose the music they want to listen to (such as iMeem). Limited downloads sites are those that deliver music to users as long as they continue to pay a fee. Music subscription services such as Napster and Rhapsody offer limited downloads.

Another tech-related issue Congress acted on Thursday was the Enforcement of Intellectual Property Rights Act, which passed the Senate Judiciary Committee in a 14-4 vote earlier this month.

With Congress due to adjourn Friday, lawmakers worked late Thursday evening to resolve a couple of high profile digital-entertainment issues.

SoundExchange and DiMA, which represents Web radio stations such as Pandora, have been at odds over the fees charged to stream music. Sources close to the talks say the introduction of the bill signals the two sides are close to cutting a deal. “They wouldn’t be seeking the government’s blessing unless they were close,” said one person with knowledge of the talks.

Music insiders say they are confident the bill will pass the Senate by early Friday and return to the House where it already passed once by a wide margin.

The board also set a $500-a-year fee for each channel a Webcaster broadcasts.

“And that brings us to today.”

“But that was just the preamble, leading to Whitten’s discussion of Monday’s announcements.

The rest of the letter was a basic rehash of the press conference’s news. Essentially, though, the letter was an attempt to get Microsoft’s version of what it talked about Monday directly to the Xbox Live community rather than having that news filtered through the game press.

“We also imagined that the Xbox experience would continuously improve over time, through the power of software.

roundup
Complete E3 coverage Expo is no longer a huge free-for-all,
but that doesn’t mean Microsoft
and others aren’t making noise.

“Over time, as we’ve delivered more and more content into the Xbox Live Marketplace, we’ve heard from many of you that it has become increasingly difficult to find the games and content you want.”

LOS ANGELES–Microsoft on Monday issued an open letter to members of its
Xbox Live community that attempted to explain some of the initiatives it unveiled in its morning press conference here at E3 and better lay out the larger Xbox Live roadmap.

“When we launched Xbox 360 in November 2005, Xbox Live was integrated directly into the console,” wrote Xbox Live General Manager Marc Whitten. “Back then, Xbox 360 was the first system to deliver access to experiences beyond just the disc in the tray. With the Xbox guide and dashboard, you had access to everything on your console as well as your community.

It’s an odd approach, especially since there are literally hundreds of game journalists in L.A. today reporting on the news, but it seems the company wanted to be sure to get its say in without the journalists’ interpretation.

He suggested that the ability to play games directly from the Xbox’s hard drive–after downloading them from the game discs–would make for a smoother, faster experience. As well, he wrote that being able to access the Xbox Live Marketplace on the Web will broaden the community’s ability to get what they want when they want it. Any downloads done via the Web would synch with users’ accounts when they return to Xbox Live.

“Since launch, you’ve always pushed us to continuously innovate. It is because you spoke with one loud voice that we added new features like background downloading, 1080p support, movies and TV shows, video chat, a Marketplace blade and instant messaging.”

In part, that’s likely because some of the news was a little abstract and the company probably thought that it would be good to reach out directly–especially because of the major redesign of the Xbox Live interface that is coming.

Whitten continued by adding that Microsoft has attempted to address many of the community’s requests and concerns.

Whitten suggested it was because of continuous community feedback that Microsoft decided on the complete redesign of Xbox Live that the company announced at its press conference. The idea, he continued, is that the company felt it could both make a better experience for its existing community and build a system that would be attractive to a new, more mainstream audience.

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For Microsoft to do that credibly, it would have to go where Linux is strongest and has the highest earning potential: servers. There, Microsoft will encounter IBM and others with bigger patent portfolios than its own. Microsoft has shown little appetite for that fight.

Glyn Moody wonders whether Microsoft has taken the first step in an all-out patent offensive against Linux. After talking with Gutierrez earlier this week, I highly doubt that.

It’s not a system I like, but let’s not get carried away. The GPS community doesn’t seem to be wringing its hands over the fact that most of the claims in Microsoft’s case relate to TomTom’s alleged infringement of Microsoft’s GPS technologies.

This hardly sounds like a sneaky launch of the spiffy new patent product line at Microsoft. It sounds more like what Gutierrez claims it is: “This is just a normal course-of-business dispute between two companies. (Linux) is not the focal point of the action.” Ironically, it could have been obviated had Microsoft bought TomTom back in 2006, as it was then rumored to be interesting in doing.

For all the bluster in the open-source press right now, it’s important to keep in mind that TomTom has been battling patent lawsuits for years, some of which may relate to its use of Linux. In 2005, its CEO said at the ICT2008 conference that TomTom spent more that year on patent litigation than on anything else combined. Microsoft’s eight-part lawsuit is par for the TomTom course, it would seem.

As CNET News’ Ina Fried reports, Microsoft on Wednesday launched a patent infringement lawsuit against TomTom, maker of GPS systems. TomTom, for its part, summarily rejects the claims and says it will “vigorously defend” itself. Lawsuits are filed all the time, but this one is of particular interest to the open-source community because it includes three claims of patent infringement related to Linux file management technologies.

In some ways, we should be grateful for how Microsoft has carried itself in this TomTom infringement claim. There are no broad pronouncements of Linux violations, as in the past. There are no white papers being circulated, decrying open source as anti-American and cancerous. There is just a reasoned, FUD-free patent infringement claim.

This is not Microsoft’s opening salvo in a war against open source. That “war” has been ongoing for years, has taken many forms, and seems to want to change open source’s $0.00 price tag to something higher. Something, in other words, with which Microsoft can compete.

Even so, I think that Microsoft has resigned itself to coexistence with open source, even if it’s not always a peaceful coexistence. On the same day that Microsoft announced the TomTom lawsuit, Microsoft Windows chief Bob Muglia also acknowledged that eventually, “almost all our product(s) will have open source in (them).” Microsoft has taken a reality check, and open source is part of reality.

But part of that reality will absolutely be infringement of Microsoft’s patents, and Microsoft’s own violation of Linux-related patents (held by IBM, Hewlett-Packard, and others). That’s the patent minefield in which the software industry operates.

Maybe we, in the open-source world, need to settle down a little. We have an allergic reaction to patent infringement suits–and for good reason–but one company-specific lawsuit does not a war campaign make.

This speaks ill of the patent minefield that awaits any technology company, a problem called out recently by Red Hat associate general counsel Rob Tiller. But it doesn’t necessarily mean that Microsoft has declared war on Linux.

It’s also important to remember, as TechFlash reminds us, that Microsoft has never been a litigious company. While I despise the FUD that Microsoft has promulgated around open source and Linux, specifically, over the past few years, the reality is that Microsoft has sued only three times in its company history over patent claims.

As Gutierrez told CNET News, Microsoft’s lawsuit is very specific to how TomTom uses the Linux kernel: “(It’s the) TomTom implementation of the Linux kernel that infringes these claims. There are many flavors of Linux (and) many implementations of the Linux kernel. Cases such as these are very fact-specific.”

Last week, Microsoft promoted Horacio Gutierrez, formerly vice president of intellectual property, to corporate vice president. This week, Gutierrez polished his new business cards and sent them TomTom’s way, with a patent infringement lawsuit.

It may turn out to be specious, but it’s very welcome to see it made without the sound and fury of past Microsoft public pronouncements about open source.

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This TomTom suit, in other words, may well be the opening shot in a broader battle, but for now, it’s the action of a sniper, not a broad fusillade.

It’s a homecoming of sorts for Bishop, who covered commercial real estate at the Business Journal from 2000-2002. However, Bishop said his focus will be decidedly online, though the weekly paper will run some of his content.

The site is expected to launch in the next few weeks, with name and URL still to be decided. The pair promises guest columnists and interactive features to help create a “gathering place” for those interested in Seattle-area tech goings-on.

Bishop, who covered Microsoft, and Cook, who covered venture capital, will continue to blog about those areas and also help guide the site, which is backed by the Puget Sound Business Journal.

John Cook

(Credit:
P-I )

Longtime Seattle Post-Intelligencer Microsoft reporters Todd Bishop and John Cook have left the paper to launch a new technology news site focused on the Seattle area.

Todd Bishop

It’s the latest big shift for a Microsoft beat reporter. Peter Galli, who covered the beat for eWeek, has joined Microsoft as a communications manager in its open source strategy unit.

“It really was just an opportunity to build something from scratch that really appealed to me,” Bishop said in a telephone interview. “John and I have worked closely together for a long time.”

(Credit:
P-I )

CNET News is providing full-on coverage of both TechCrunch50, taking place in San Francisco, and the dueling, simultaneous DemoFall event, located downstate in San Diego. You can find it all on our comprehensive Launch Week page.

One day down, and two more to go, as the TechCrunch50 gives start-ups a chance to show off their nifty new goods and services.

• Alfabetic (Presented by Oded Broshi and Arik Kopelman)
• DropBox (Presented by Drew Houston and Arash Ferdowsi)
• Emerginvest (Presented by Andrew Waterman and Eugene Kim)
• ExchangeP (Presented by Saul Kato and Charles Katz)
• FitBit (Presented by James Park and Eric Friedman)
• icharts (Presented by Seymour Duncker and Tyron Montgomery)
• Imindi (Presented by Adam Lindemann and Galen Kaufman)
• Me-trics (Presented by Christian Dodd and Jame Vreelan)
• MIXTT (Presented by Eve Peters and Diana Agraz)
• Mobclix (Presented by Sunil Verma and Krishna Subramanian)
• Mytopia (Presented by Guy Ben-Artzi and Galia Ben-Artzi)
• Popego (Presented by Santiago Siri and Emiliano Kargieman)
• PostBox (Presented by Sherman Dickman and Scott MacGregor)
• Swype (Presented by Mike McSherry and Cliff Kushler)
• Tingz (Presented by Patrick Hunt and Richard Benson)
• TonchiDot (Presented by Takahito Iguchi and Peter Anshin)
• Personalria (Presented by Guy Hirsch)

Herewith the list of Tuesday’s TechCrunch50 presenters:

The joint venture did $10.3 billion in sales last year, but Siemens CEO Peter Loscher apparently isn’t pleased overall with the performance of FSC, which never found a real foothold in the U.S. in the face of competition with Hewlett-Packard and Dell.

“We have said that we want to focus on the three sectors–industry, energy, health care–and that we want to concentrate on them,” a spokesman for Siemens told Forbes Wednesday.

The Journal
quotes a banker who said the nine-year-old joint venture could be valued at between $3.12 billion and $4.65 billion.

German conglomerate Siemens AG is looking to end its participation in Fujitsu Siemens Computer, according to The Wall Street Journal, citing “people familiar with the matter.”

Following a bribery scandal last year, Siemens is looking to increase its profitability and has recently shed several assets, and announced plans to lay off 4 percent of its workforce.

But Japan-based Fujitsu may not be all that disappointed. In a Tuesday news conference, Fujitsu President Kuniaki Nozoe said that mobile phones are going to be a more profitable business than PCs. That could mean it may not be interested in acquiring Siemens’ 50 percent stake in the venture, for which it has right of first refusal.

FSC, which was founded in 1999, wasn’t able to take advantage collectively of the companies’ individual strengths in Europe and Asia, respectively, and subsequently “foundered on the shoals of a capricious and rapidly evolving IT market,” said analyst Charles King of Pund-IT in a research note Wednesday.