Microsoft's week included a peek at a Nokia Windows Phone, a cloud-services outage and the beginnings of Skype's absorption into Microsoft.
Microsoft's week started off and ended with a promise of big
future things to come.
The U.S. Department of Justice approved Microsoft's $8.5
billion acquisition of Skype. That means Redmond now faces the singular
challenge of digesting Skype's assets into its various products, including the
Lync unified communications platform and
Outlook, while preserving Skype's enormous brand equity. Moreover, Microsoft
has to monetize Skype in such a way that its sizable built-in audience, so used
to paying little-or-nothing for VOIP (voice over IP) and video calling, doesn't flee to
a competing platform.
According to a June
19 Bloomberg report
, itself citing unnamed "people familiar with the
matter," Skype has already started firing senior executives ahead of the
acquisition's final closing. And surely Microsoft's own managers and engineers
are already working at how to best digest this sizable prize.
Skype had been a belle at the acquisition dance before. In
2005, eBay paid some $2.6 billion in cash and stock for the communications
company. Four years later, the auction Website sold the majority of its Skype
holdings to a team of private investors (including Silver Lake Partners and
Andreessen Horowitz) for $1.9 billion in cash. While Microsoft's $8.5 billion
represents a substantial markup, CEO Steve Ballmer and his executive team
evidently felt the price was right.
"While it's true that Skype has been slow to make money off
its service, the potential is there," Forrester analyst Ted Schadler wrote
in a May 10 blog posting
, soon after the deal was announced. "Local phone
numbers, three-way video conferencing, business administration, and making
calls to real phone numbers are all things that people will pay for." It could
also boost the consumer appeal of Microsoft's more business-centric products,
It remains to be seen, though, how exactly Microsoft will
weave Skype into those products, particularly the cloud-based ones on which
Redmond is betting so much of its future.
Speaking of the cloud, Microsoft wrestled with another BPOS
outage this week, with some North American users of the messaging and
collaboration service reporting network connectivity issues starting the
morning of June 22. "Source of network issue identified and hardware components
replaced. Next update within 30 mins," read the Official
Microsoft Online Twitter feed
at around 1 p.m. EST June 22.
Around 50 minutes later, a follow-up Tweet read: "Service
restored for Sign In app. Health Dashboard still showing intermittent access
issues. Next update within 30 mins."
On May 10, malformed email traffic sparked a growing message
backlog that impacted some BPOS customers for up to six to nine hours. The
issue occurred again May 12, compounded by a separate but related problem that
led to consumer delays as long as three hours. In the wake of both those
outages and this most recent one, Microsoft executives have been insisting the
issues affecting BPOS won't come into play with Office 365, Microsoft's
upcoming cloud-based productivity platform (and a BPOS rebranding). Currently
in beta, that service is expected to officially launch next week.
"O365 should provide more stable service," read a June 22
on the Official Microsoft Twitter feed. "It is built from the ground
up new and reports and expectations are very good."
Microsoft fully restored BPOS service later on June 22,
eventually blaming network equipment issues in the data center.
The past few days have also offered (possible) glimpses of
two upcoming Microsoft products: the next version of Windows (widely referred
to by its internal codename, "Windows 8"), and the first Nokia smartphone
running Windows Phone.
"A new build of Windows 8, build 7989, has surfaced," the
blog Redmond Pie reported
. "Slowly but surely, it's finding its way onto file-sharing sites,
and some Windows enthusiasts have already dug deep into it."
Features discovered in the build supposedly include SMS
(Short Message Service) support and per-feature licensing. In theory, the
latter could allow Microsoft to offer users a "bare bones" version of Windows
8, with the ability to unlock additional features for a fee. Microsoft tried
something similar with Office 2010, offering a free,
stripped-down, ad-supported version
of its latest productivity suite
pre-installed on certain PCs; a single-use license on a plastic card, purchased
from a retailer such as Best Buy, would unlock the functional version.
Other Microsoft-centric blogs such as Winrumors
posted notes and video about the Windows 8 build's virtual keyboard, which
would be necessary for tablets. The keyboard, which is capable of deploying in
an ergonomic, "thumbs optimized" configuration, has been glimpsed before. The
next version of Windows will support SoC (system-on-a-chip) architecture, in particular ARM-based systems
from partners such as Qualcomm, Nvidia and Texas Instruments, which in turn
will give Microsoft the ability to port it onto tablets and other mobile
Near the end of the week, Nokia CEO Stephen Elop offered an
audience a glimpse of what looked like a Nokia N9 smartphone running Windows
Phone, Microsoft's mobile operating system. The N9, which runs a MeeGo
operating system slated for mothballing by Nokia, marries a curved 3.9-inch
AMOLED (active-matrix organic LED) screen to a body engineered from a single
piece of polycarbonate. Nokia plans to transition wholly to Windows Phone as
the software platform for its smartphones, with the first devices scheduled to
make their debut at the end of 2011.
By then, Microsoft will be even further underway with its
cloud projects, Windows 8 development, and Windows Phone rollout. Each of those
efforts, of course, will face their own unique challenges.
Nicholas Kolakowski on Twitter