Short Takes: Week of May 19

Microsoft Earnings and Losses, By the Division
Now that Microsoft has changed its accounting practices, we're able to see how its various divisions are doing, and not just the overall picture. Not surprisingly, things haven't changed much: It's Windows Client group earned $1.99 billion in the previous third quarter (up from $1.88 billion the year before), and the Information Worker group, which is responsible for Microsoft Office, arned $1.94 billion, up from $1.61 billion a year ago. The other standout was the company's Server Platform group, which increased its quarterly profit to $421 million (from $343 million last year), thanks to increased server shipments. But it wasn't all orchids and roses for the software giant's divisions. The Home and Entertainment division, which markets the Xbox, almost doubled its losses year-over-year, ending up $190 million in the red, compared to a loss of $97 million in the same quarter last year. Microsoft says most of the change is due to slowing sales of the Xbox, which oddly seems to be doing pretty well regardless, at least compared to Nintendo's console.

XP Number One on the Web, and Then Some
According to Web usage researcher WebSideStory, Windows XP is now being used by more than one-third of Internet users worldwide, making it by far the most popular operating system in use on the Web. As of early May, Windows XP had a global Web usage share of nearly 35 percent, about 10 percentage points higher than the next most popular version, Windows 98, according to WebSideStory. However, the firm notes that Windows 98 reached this usage percentage in one-third the time, "Windows XP's slower adoption rate on the Web may reflect a downshift in consumer's willingness to upgrade operating systems since the launch of Windows 98," said Geoff Johnston, the vice president of product marketing for HitBox StatMarket.

Europe Examining Microsoft Software Sales
Recent revelations that Microsoft planned to supply schools, governments, and other institutions with heavily discounted or even free software to counter the Linux threat may seem like a good deal for those involved, but they've also raised eyebrows of regulators at the European Union (EU), which is currently investigating the software giant for antitrust violations. European law prohibits monopolies from using discounts to exclude competitors, and it's likely that Microsoft's latest tactic falls into that category. Of course, given the slugarific pace of the EU investigation, I don't see that Microsoft has anything to worry about: By the time the Europeans rule that Microsoft violated its laws with Windows Server and Windows Media Player, we'll all be using transportation booths and holodecs anyway.

Judge Orders Microsoft Compliance Reports
And in other legal news, District Court Judge Colleen Kollar-Kotelly ruled Wednesday that the US Department of Justice (DOJ) and attorneys generals for the settling states must file reports every six months detailing what Microsoft is doing to comply with its antitrust settlement in the US. The ruling, which is the equivalent of having to go to detention every day despite making the honor role, requires the DOJ and states to detail compliance timelines, describe their efforts to monitor compliance, and a lot of other busy work that's too boring to even report. Sounds like fun.

T-Mobile Abandons SmartPhone for Now
T-Mobile, one of the world's largest mobile phone operators, announced this week that it would postpone the launch of a new cell phone running Microsoft's SmartPhone software, another blow to the software giant, which has struggled to gain acceptance for its phone platform. Interestingly, T-Mobile says the delay is because the software isn't of the quality they expected, but Microsoft says it's still on track to hit stores later this year. If you think Microsoft has problems in the video game market, it's not doing much better in the smart phone field either: While market giant Nokia has shipped 57 percent of the 1.7 million smart phones available worldwide, Microsoft shipped less than 10 percent, mostly in Europe.

Intel Preps New Desktop, Notebook Chips
At an analysts meeting this week in New York, Intel President Paul Otellini said that the company's next big desktop chip, code-named Prescott, and Dothan, a faster version of the Pentium-M mobile processor, will ship in the second half of 2003. Prescott is a new version of the Pentium 4, and it will feature a whopping 1 MB of L2 cache and, eventually, speeds of up to 5 GHz. Dothan will ship alongside of a new version of the Centrino chipset, which will offer even more battery savings than the current version by including LCD backlight control. By the end of the year, Centrino will support all of the wireless standards, too, including 802.11b, 802.11a, and 802.11g, Intel says. Good stuff.

Dell Surges on 31 Percent Profit, 29 Percent Rise in PC Shipments
By this point, one can only presume that Michael Dell has indeed consummated the deal over his soul with the devil: Dell Computer announced this week that its quarterly profits rose 31 percent to $598 million on revenues (up 15 percent) of $9.5 billion. Best of all, Dell's PC shipments are up a whopping 29 percent year-over-year, and the company's stock just hit a 52-week high of $32.45. And after seeing strong growth in non-PC areas such as servers, storage, and networking, the company asked shareholders to approve dropping the word "Computer" from its name. Powerhouse? Yep.

PC Shipments Up 6.4 Percent in Q2
And speaking of PC sales, worldwide shipments of PCs will likely rise 6.4 percent in this quarter to 30.7 million units, according to market researcher Gartner. The company says that certain factors could inhibit this growth, including the aftermath of the war in Iraq, the SARS outbreak, economic uncertainty and, of course, Frank Stallone. Looking at the entire year, Gartner says PC shipments will hit 136.9 million units, up 6.6 percent over 2002, with revenues hitting $170.6 billion, a 3.3 percent increase from 2002. Other predictions: The Intel Centrino will become the mobile standard, and Tablet PCs won't take much more than 1 percent of the market.

Gateway Subjected to Criminal Probe
Struggling PC maker Gateway said this week that the US government has launched a criminal investigation of the company's accounting practices, which are already under investigation by the Securities and Exchange Commission (SEC). The probe into Gateway's finances came after the company adjusted its reported income for 1999, 2000, and 2001, to account for costs incurred with a bundled service with America Online (AOL). The news probably couldn't come at worse time for the company, which has seen its market share, profits, and revenues nosedive over the previous several quarters.

Microsoft Ships MSN 8 for the Mac
Microsoft has finally released MSN 8 for Mac OS X, the first time the company has shipped its Internet service software on a non-Windows platform. It's unclear why Microsoft would bother, frankly: There aren't many OS X users, and of those that do use the system, few like Microsoft very much. In tests of the software, it appears to be slightly behind MSN 8 for Windows, and well behind the MSN 8.5 version I'm currently testing on Windows, with fewer features. But MSN 8's biggest problem on the Mac is that it doesn't integrate with the Mac desktop, and this is the feature I like most about this software on Windows. Ah well.

E3 Winners and Losers
This week's E3 show in Los Angeles brought out the gaming gods, and with the dust finally settlin