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Google's Chrome OS: "It Just Works"

John Paczkowski — Thu, 19 Nov 2009 17:51:03 +0000

Speaking at Microsoft’s Worldwide Partner Conference in New Orleans this past July, Microsoft CEO Steve Ballmer said of Google’s forthcoming Chrome OS, “Who knows what this thing is?”

Today, he found out. The operating system, a direct challenge to Microsoft Windows, was on display at a media gathering at the Google HQ this morning.

Sundar Pichai, vice president of product management, and Matthew Papakipos, engineering director for Google Chrome OS, presided over the event, which the company described as a “technical announcement.”

That meant that Google (GOOG) was not releasing a beta of the operating system this week, as had been rumored.

That said, it was an overview of Chrome, as well as Google’s plans for its launch in 2010, so let the Chrome OS liveblogging begin:

There will be no beta today. Pichai says Google is still a year away from an official launch. However, the company is making the code available today.
Pichai says that a year after launch, the Chrome browser has some 40 millions users. He boasts about the browser’s speed, noting that it handles Javascript 39 times faster than Microsoft’s (MSFT) Internet Explorer. There will be three more big Chrome announcements sometime in the future: Chrome for Mac, Chrome for Linux and the debut of Chrome Extensions.
Google’s goal is to ensure that Web applications function as well as desktop apps. Pichai says that the company is figuring out a way for Web apps to safely take advantage of the operating system in the way desktop apps do. A few examples: Graphics, video/audio applications, real-time communication, notification and local storage.

“By 2010 we expect to have all these things built into Chrome,” Pichai adds.
The advent of Chrome coincides with a perfect storm of converging trends, Pichai says, noting the tremendous popularity of netbooks during the recession, the growing acceptance of cloud apps and the rapid innovation in mobile devices. Smartphones are becoming more like laptops, Pichai adds, and laptops are becoming more like smartphones. Is there a better level of computing available for these devices?

There is, according to Pichai, and Google believes it is Chrome OS.
Among Chrome OS’s advantages, Pichai says: Speed, simplicity and security. Every application will be a Web application. There will be no desktop apps. Chrome OS is essentially a browser with a few modifications. All data in the Chrome OS resides in the cloud. Pichai: “We want all of personal computing to work that way….If I lose my Chrome machine, I should be able to go out, buy a new [one] and re-create my previous computing experience easily.”

Chrome OS will run completely inside the browser security model, he adds, noting that security is one of Google’s top priorities along with speed. “Turning on a PC should be like turning on your TV,” he says.
Chrome OS is very similar in appearance to the Chrome browser. “Chrome OS is Chrome,” says Pichai. Google made it look like a browser, because the browser is familiar.
And indeed, Chrome OS does look quite a bit like a browser. Multiple apps load into tabs, for example. It also features “Panels,” which Pichai describes as persistent lightweight windows. “All Chrome data resides in the cloud. Anything you put in the machine is immediately available to you anywhere.”
As netbooks become more advanced and battery life improves, they will evolve into entertainment devices, says Pichai, who notes that via Google Books, a netbook can become an e-reader, and, through YouTube, a video device.
A quick demo of the user interface, which seems very simple and intuitive. “It just works,” says Pichai in an unintentional nod to Apple (AAPL).

An interesting remark: Anyone who writes an app for the Web has written an app for Chrome, says Pichai, joking that Microsoft is already developing for it.
Speed, simplicity and security, says Pichai. We’re trying to make the computing experience delightful.

With that, Pichai hands the stage over to Engineering Director Matt Papakipos.

Papakipos, too, offers the “we want to make computing delightful” sound byte and notes once again that turning on the PC should be like turning on the TV.
Chrome OS eliminates the bootloader, auto-launching the browser. The OS also auto-updates itself, making sure that it’s always current with security patches, etc. Everything from the firmware to the kernel is secured with a cryptographic signature to ensure a secure boot. In the event malware is detected, the system repairs itself automatically.
The basic application security protocol for current operating systems allows apps the same privileges as the user. This presents obvious security issues. Whenever you install a new app, you’re taking a risk, says Papakipos.

But Web applications like those that Chrome OS use, are different. They are Web apps, so they don’t have system-level privileges. Additionally, all apps run in secured sandboxes that are separate from one other and from the OS. Finally, all apps must be signed and verified before each use.
In terms of file systems, Chrome’s is locked down. It’s a read-only root-file system, obviously quite different from other operating systems. All user data are encrypted and synched to the cloud. Essentially, Google uses the PC for caching. Again, if you should lose your machine, you buy a new one, fire it up and it synchs with the cloud, restoring your previous computing experience.
How will Google bring Chrome OS to market? The company is working with vendors to specify reference hardware. You cannot download and install Chrome on just any device, you will have to purchase a Chrome device. Google is looking at a launch window of late 2010, before the holidays.
Google sounds very concerned about the end-user Chrome OS experience. Pichai says the company wants to ensure that the displays, keyboard, etc., on the netbooks that run Chrome are robust and easy to use.
Pichai wraps things up, but before the Q&A, we’re shown a short explanatory video. “The first thing I want to do when I fire up my computer is browse the Internet….If there isn’t any Internet, I might not even use my computer….What if when you pressed on, your PC turned on, what if your operating system was more like a Web browser…what if it was a browser?…Chrome OS is a totally rethought computer that lets you focus on the Internet, which is what most of use our computers for these days anyway.”

Q&A

At this point, Pichai opens the event to questions:

If you’re specifying hardware components, do you must have an idea of what they’ll cost?

A: We expect Chrome netbooks to be in the price range of what people have come to expect….We are not specifying a price target. Price will be determined at the OEM level.

Will the APIs support W3C standards?

A: We’re working very closely with the W3C to standardize as much as we can….In general, we want to see everything standardized across multiple browsers.

Will there be an application store?

A: The Web offers hundreds of millions of applications. Our job is to make people aware of them.

What about desktop applications that are not available on the Web?

A: We expect most of our users to have a second machine at home….Chrome OS is about a delightful experience on the Web….If you’re a lawyer spending your entire day on contracts, etc., this is not the machine for you.

Will you support Microsoft Silverlight?

A: In the case of certain selection plug-ins, we are working to integrate them. No comment beyond that.

Since Chrome is open source, could people build their own variations?

A: Yes. We expect people will do many interesting things with it.

Do you see Chrome running on laptops or desktops?

A: We’re initially focused on netbook-like form factors–clamshells, etc. That said, the OS is being developed to work on other devices.

Is there any level of offline access? What happens when I’m on a plane and don’t want to pay for Wi-Fi?

A: Chrome devices are primarily intended to be Internet-connected. That said, it will have some caching abilities so, for example, you could play a game offline.

Virtualization?

A: Yes. You could run Chrome today on a virtual machine.

Are you working with outfits like Adobe to, say, build a Web-friendly version of Photoshop?

A: We’re very excited by things like Photoshop on the Web and we’re working hard to make that possible.

Will Android apps work on Chrome? Are there plans for third-party apps?

A: [Pichai dodges this one.] If it’s a Web app, it will work on Chrome. The Web works very, very well for our purposes.

Will Chrome work on both X86 and ARM?

A: Yes.

Is there a direct business model for Chrome OS or is this another variation of the-more-people-that-use-the-Web-the-better-for-Google?

A: We are working with partners. No plans for advertising. That said, Pichai notes again that anything that runs on the Web will run on Chrome. And of course, AdWords does, indeed, run on the Web.

[Sergey Brin joins the Q&A]

Do you want Android Apps to run on Chrome?

A: We are focused on creating the use case in which everything is a Web application, but hopefully we can do more in the future.

How does Chrome handle peripherals? Can it print?

A: Most keyboards, cameras, phones, etc., will work. In terms of printing…yes, Chrome OS will print and we’re working hard to make that possible.

What is Chrome’s strategic position for Google?

A: [Brin]: Call us dumb businessmen, but we really focus on user needs rather than focus on business strategies. We believe that the Web platform is a much simpler way of computing for individuals to use, and that’s a very important need in the market right now. That’s what we’re trying to fulfill.

Yahoo CEO: R-e-s-p-e-c-t, Find Out What It Means to Me

John Paczkowski — Wed, 28 Oct 2009 18:00:41 +0000

[ See post to watch video ]

Bartz: Yahoo Is the Largest Communications Engine in the World

John Paczkowski — Wed, 28 Oct 2009 14:42:06 +0000

Technical difficulties prevented me from liveblogging Yahoo CEO Carol Bartz’s appearance at of Yahoo’s investor day. Below is a summation of her remarks.

Much has changed at Yahoo since May 17, 2006, the last time the company held an investor day gathering. In May 2006, Yahoo’s shares traded at about $30 and the company claimed 28.98 percent of the U.S. search market. Today, its stock is worth a little over $16 and its share of the search market has fallen to 18.8 percent.

Ugly declines, both of them. Fitting then, that Yahoo CEO Carol Bartz, speaking at the company’s first investor day gathering in three-and-a-half years, would describe the company’s future as “a journey back to respect.” “We are not here to wow you today,” Bartz said “We are here to intrigue you.”

What follows is a brief historical overview of Yahoo (YHOO)–“Yahoo was the big shining star, then wasn’t”–and then a redefinition of the company as that more intriguing entity to which Bartz referred earlier. “We are not a search company, we are not a display company,” she said. “We are a broad-based Internet company….We are the largest communications engine in the world.”

Communications engine? Sounds like a sneaky way of avoiding comparisons with Google (GOOG). Not that anyone makes them anymore.

Anyway, Bartz continues, playing up Yahoo’s scale, diversity of content and technology. “We combine amazing editorial with very sophisticated machine-learning,” she says. But what makes Yahoo most unique, says Bartz, is the company’s ability to learn from its mistakes. “We have fallen and we really want to get back up. If you haven’t had good times and bad times, you don’t know what you’re doing. We prefer the good times. We have passion to get back there. Today is the start of that.”

New from RIM: The BlackBerry Somewhat More Bold

John Paczkowski — Wed, 21 Oct 2009 14:21:56 +0000

There’s a new BlackBerry Bold headed to market. This morning, Research in Motion (RIMM) uncrated the BlackBerry Bold 9700, a more refined version of its popular enterprise device, the BlackBerry Bold 9000.

Among the upgrades: A slimmer design, a 3.2-megapixel camera, sharper 360-by-480 display, 802.11b/g Wi-Fi support and an optical trackpad similar to that of the BlackBerry Curve 8520. The new handset is also outfitted with a 624MHz processor and 256 MB of flash memory.

Paired with BlackBerry OS 5.0, this should mean some decent performance gains. So an incremental update, but little more. Said RIM co-CEO Mike Lazaridis: “This is the Bold for those that wanted it just a little smaller, but still wanted the Bold look, feel, performance and materials.”

Apple Updates Mac Lineup, Announces Multitouch "Magic Mouse"

John Paczkowski — Tue, 20 Oct 2009 16:10:28 +0000

The Apple store went offline Tuesday morning and when it returned, it did so with a groaning board of new hardware, including a range of aluminum and edge-to-edge glass iMacs, Mac minis, a 13-inch unibody polycarbonate MacBook and a wireless, multitouch “Magic Mouse.”

The new iMacs boast LED-backlit 21.5- and 27-inch widescreen displays in an edge-to-edge glass design and all aluminum enclosure. They’re available with Intel (INTC) Core 2 Duo processors starting at 3.06 GHz, and Core i5 and i7 quad-core processors for even better performance. The low-end model is priced at $1,199, the same as the past generation, but its high-end sibling is now $200 cheaper, at $1,999.

The new MacBook features an 13.3-inch LED backlit display, a multitouch trackpad, and a $999 price tag. Though still housed in white polycarbonate plastic, it features an updated unibody design borrowed from the MacBook Pro.

The successor to the Mighty Mouse, Magic Mouse, eliminates mechanical buttons, instead, employing the same multitouch surface found on the iPhone, iPod touch, and Mac notebook trackpads, allowing users to navigate their desktops with simple gesture commands.

Accompanying the Magic Mouse is a a new Apple Remote. It’s got a new design and is, predictably, housed in aluminum.

Finally, Apple (AAPL) also updated the Mac mini. While its design is largely identical to that of its predecessor, it offers far more storage. Starting at $599, the entry-level Mac mini features a faster 2.26 GHz Intel Core 2 Duo processor and 2GB of DDR3 1066 MHz memory, a 160GB hard drive, five USB 2.0 ports, FireWire 800, Nvidia GeForce 9400M integrated graphics and a SuperDrive.

There’s also a new $999 Mac mini that’s specially configured with a Mac OS X Snow Leopard Server. It’s outfitted with two 500GB hard drives for a total of 1TB of server storage.

Quite a refresh and one analysts are already crowing about. In a bulletin released after the announcement, Piper Jaffray’s Gene Munster said Apple’s new machines will undoubtedly improve the company’s prospects for the December quarter.

“We expect the new iMacs, and to a lesser degree the new Mac minis, to help the desktop category rebound in the Dec. quarter,” Munster wrote. “In other words, the headwind that existed in the Sept. quarter due to aging Mac desktops has now turned into a tailwind for Mac units in the Dec. quarter….Bottom Line: Street Mac numbers may also be conservative if positive trends continue coupled with new Macs in the quarter.”

New From Google Labs: Google Plutocrat

John Paczkowski — Thu, 15 Oct 2009 20:00:30 +0000

The broader advertising recovery may take time, but search advertising is clearly beating a hasty path back toward normalcy. Or it is in Google’s case anyway.

Reporting third-quarter results after market close Thursday, Google (GOOG) topped estimates, posting net income that rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06 a share in the same period last year. Net revenue for the period ended in September rose nearly one percent to $4.38 billion. Excluding items, earnings for the quarter were $5.89 a share. Consensus estimates had been calling for $5.42 a share and $4.24 billion in net revenue. The chart below shows revenue sources within Google (click to enlarge).

Impressive. Seems paid clicks grew 14 percent compared to the same period last year, and four percent compared to the prior period. Cost per click was down six percent year over year, but up five percent sequentially.

“Google had a strong quarter–we saw seven percent year-over-year revenue growth despite the tough economic conditions,” said CEO Eric Schmidt. “While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future.”

Good to hear. Google’s shares, which have already risen more than 50 percent in the past six months, are on another upward tear. They rose 1.82 percent to $539.27 on the news in after-hours trading.

Earnings call highlights via The Wall Street Journal’s Andrew LaVallee:

4:32: Call starts. The cast is the same as last quarter: Mr. Schmidt, CEO; Patrick Pichette, CFO; Jonathan Rosenberg, SVP of product management; and for the first time, Nikesh Arora, president of global sales operations and business development. But there’s a twist–they’ll be using Google’s moderator to vet questions with voters. They vote on “the most relevant questions,” which go to the Google execs, the operator says.

4:35: “While there’s obviously a lot of uncertainty about the pace of the economic recovery, we believe the worst of the recession is behind us,” Schmidt says.

He adds that Google now has the confidence to invest “heavily” in its future. “It’s all good news from our perspective, at least in looking at the quarter.”

4:37: Says “we want to really get to the perfect search engine” and that many advertisers would like to spend more with Google if the company’s product allow them to do that.

4:38: Schmidt says “we’re open for business in making strategic acquisitions, both large and small.”

4:39: It’s Pichette’s turn. “At a high level, we’re very pleased with our Q3 results,” he says. The quarter benefited from growth in AdSense for content and display initiatives.

4:41: U.S. revenue up 4% to $2.8 billion. U.K. revenue decline affected by foreign exchange as well as ongoing macroeconomic weakness, Pichette says.

4:42: Operating expenses rose from the prior quarter, mostly due to payroll, equipment and facilities-related expenses.

“We believe the worst of the recession is behind us,” he says.

4:44: Brazil was a standout in Latin America, Arora says. We’re beginning to see signs of recovery in Europe and Africa, particularly Spain. In Asia, China performed strongly as an emerging market.

4:46: Looking at the display-advertising business, those have also shown strong results, he says.

On YouTube, new advertisers and partners are helping with monetization efforts. Ninety percent of the top 50 advertisers have run YouTube campaigns with successful results–recent examples include McDonald’s and Hewlett-Packard.

4:47: YouTube has signed deals with all four major record labels and several independent labels. Earlier today, Google announced a partnership with Channel 4 in the U.K., which will bring full-length programming to the video-sharing site.

4:48: Arora adds a personal shout-out to the sales team.

4:50: Rosenberg calls the new AdWords front-end one of the company’s biggest investments of the year. Advertisers have new reports, can run more efficient campaigns and can get new features faster thanks to the platform, he says.

The Motorola CLIQ: WINR or LOZR?

John Paczkowski — Thu, 10 Sep 2009 19:30:51 +0000

Motorola has finally announced its bet-the-company Android handset. At GigaOM’s Mobilize 09 event in San Francisco this morning, Sanjay Jha, Motorola’s co-CEO and CEO of the company’s handset division, uncrated the CLIQ, a device it describes unremarkably as the “first phone with social skills.”

Why? Well, the CLIQ, or DEXT as it will be confusingly branded in the U.K., incorporates Motorola’s new “MotoBlur” service, which essentially corrals Facebook, MySpace, Twitter, Picasa, GMail and MS Exchange activity into a single feed and presents them on your phone.

In form, the CLIQ is a sideways slider. Like the Palm (PALM) Pre, the device boasts a full touchscreen and QWERTY keyboard. It’s got a 320 x 480-pixel, 3.1-inch HVGA screen and a five-megapixel camera. The CLIQ is video-capable (play, stream and capture) and supports the broad spectrum of media formats. It runs Android 1.5 (Cupcake), and Motorola (MOT) claims a battery life of six hours.

Jha says the phone is not intended to be a single iconic device–like, say, Apple’s (AAPL) iPhone. Rather, it is the first of a broad line of handsets, all running Android and Motoblur, that will be targeted at different customer segments around the world.

A wise strategy in the current market? Who knows? But at least it’s a step in the right direction. Motorola clearly needs to do something to right itself after the past few disastrous years. Hard to believe the company controlled 16.1 percent of the global handset market just two years ago. It’s market share today? A modest 6.5 percent. The CLIQ will be sold through T-Mobile in the United States.

The device’s spec sheet below; click to enlarge.

And Lo, Jobs Appeared and Said "No, This Is the Best iPod Ever," and It Was, and There Was Much Rejoicing

John Paczkowski — Tue, 08 Sep 2009 13:37:09 +0000

When Steve Jobs described the iPhone at D5 as “the best iPod we’ve ever made,” he set the bar high for future iterations of the iconic device.

Now, in the run-up to tomorrow’s invitation-only Apple event, the question is: Will Apple (AAPL) reach the bar? And with what? The answer, if the latest rumors prove true, depends on your feelings about iPods with cameras. Because according to reports, when Apple refreshes its iPod touch and iPod nano players, both will feature cameras–the nano’s for still images, the touch’s for photos and video.

We may also see a new price point for entry-level touch models, one intended to undermine Microsoft’s (MSFT) forthcoming multitouch Zune with HD display and to really juice App Store sales. Perhaps the 16GB touch at $199 and the 8GB at $150.

Beyond this, the event might also include the announcement of iTunes 9, said to include some sort of social networking element; “Cocktail,” a new music format that bundles full-length albums with art, video and other bells and whistles; and perhaps even Blu-ray support (no Beatles, though). And after that? Well, it’s tough to say. Apple’s never an easy read when it comes to product announcements, even when there’s evidence floating around that would seem to suggest otherwise.

So join us tomorrow for live coverage of Apple’s event to see if the above rumors prove true or if Apple’s got something else entirely up its sleeve. The event kicks off at 10 am PDT.

Has AT&T Bailed on Motorola's Android Phones?

John Paczkowski — Thu, 27 Aug 2009 16:20:07 +0000

When Motorola announces its new Android handsets at a scheduled Sept. 10 event in San Francisco, AT&T isn’t likely to be among their carriers. Sources close to the company tell MKM Partners analyst Tero Kuittinen that AT&T (T) balked at Motorola’s Sawgrass and Heron handsets. Allegedly because of their dated display technology, the company has chosen not to carry them. That’s bad news for Motorola (MOT), which pinned its hopes of a turnaround on Google’s (GOOG) Android OS.

“We expect Motorola’s 2010 performance to hinge largely on the success of Android models debuting in 4Q09. Just months ago, the expected launches were ‘Morrison’ for T‐Mobile, ‘Sawgrass’ and ‘Heron’ for AT&T, and ‘Sholes’ and possibly ‘Calgary’ for Verizon” (VZ), Kuittinen said in a note to clients. “We believe the AT&T models have been canceled, and Verizon has pushed ‘Calgary’ into 2010.”

According to Kuttinen, “The loss of AT&T’s support for 4Q09 changes the winter outlook for Motorola dramatically. It is likely that the success of the $99 iPhone, combined with the possible November launch of the $99 Palm Eos could put AT&T in a situation where its $100 smartphone range for the Christmas quarter is already full of models featuring very advanced software and display technology.”

A worrisome turn of events and one that will weigh heavy on Motorola’s financials if it proves true. Said Kuittinen: “The narrowing of Motorola’s Android plans may have a substantial impact on the winter performance of the company’s handset division precisely because Motorola needs a rapid roll‐out of a wide range of follow‐up models for its ailing RAZR, Q and Z series models.”

Google: The World's First $100 Billion Brand

John Paczkowski — Thu, 06 Aug 2009 22:03:37 +0000

Google began using billboard advertising for the first time earlier this month, though it may not have needed to. Because according to Millward Brown Optimor, the Google brand is the most well-known and valuable brand in the world.

The brand and marketing analytics firm released its BrandZ Top 100 report (PDF) today, pronouncing Google (GOOG) the number one brand for the third consecutive year. The company’s brand equity: $100 billion, a first for the study.

While Google dominated the study’s rankings, it wasn’t the only tech company to make it into the top 100 or the top 10, for that matter. Microsoft (MSFT), IBM (IBM), Apple (AAPL), China Mobile and Vodafone (VOD) topped the list as well, ranking second, fourth, sixth, seventh and ninth respectively.

“Five of the top 10 in the BrandZ Top 100 are technology brands,” Millward Brown Optimor said in its report. “The rapid ascent of these brands and their high values reflect the strength and velocity of the technology category, which grew by 2 percent last year,” the report reads. “The rising popularity of online search advertising, which is cheaper than display, is benefiting Google which owns 73 percent market share in this area.”

Below, Millward Brown Optimor’s top tech brands (click to enlarge):

OS X 10.5.8 Kills Bugs Dead

John Paczkowski — Wed, 05 Aug 2009 23:17:58 +0000

Apple (AAPL) on Wednesday released OS X 10.5.8, the latest point release to Mac OS X Leopard, even as Amazon (AMZN) takes pre-orders for its next iteration, Snow Leopard (OS X 10.6).

10.5.8 is largely a maintenance update, though it does patch a number of security vulnerabilities (18 to be exact), some of them fairly old.

Among 10.5.8’s improvements:

• Upgrades Safari to version 4.0.2
• Improves the accuracy of full history search in Safari 4
• Resolves an issue in which certain resolutions might not appear in the Display pane in System Preferences.
• Dragging an Aperture image into Automator now invokes an Aperture action instead of incorrectly invoking an iPhoto action.
• Resolves an issue that could prevent importing of large photo and movie files from digital cameras.
• Improves overall Bluetooth reliability with external devices, USB webcams and printers.
• Addresses an issue that could cause extended startup times.
• Improves iCal reliability with MobileMe Sync and CalDav.
• Addresses data reliability issues with iDisk and MobileMe.
• Improves overall reliability with AFP.
• Improves overall reliability with Managed Client.
• Improves compatibility and reliability for joining AirPort networks.
• Improves Sync Service reliability.
• Includes additional RAW image support for several third-party cameras.
• Improves compatibility with some external USB hard drives.
• Includes latest security fixes.

Yahoo Investors on Microsoft Deal: Do Not Want

John Paczkowski — Wed, 29 Jul 2009 12:31:53 +0000

Yahoo CEO Carol Bartz says the company’s newly inked search advertising pact “comes with boatloads of value for Yahoo (YHOO),” but you wouldn’t know it to look at the company’s share price. Yahoo’s shares slipped into the mud on the deal’s announcement, declining nearly seven percent to $16.07 in early trading. Meanwhile, Microsoft’s (MSFT) shares were up 0.98 percent to $23.70.

Apparently, investors aren’t too keen on the deal. Why? A number of reasons, according to Needham & Company analyst Mark May. “While the details of the deal can confuse the risks and benefits to Yahoo!, this deal ultimately means that Yahoo! is outsourcing search to Microsoft,” May told Digital Daily. “If you you’re bullish on search, and on the power of having combined strength in both search and display, I think you’d have to view this deal as negative for Yahoo! and positive for Microsoft.” May noted that there are a number of reasons for Yahoo investors to look askance at this deal. Among them:

There’s no upfront payment.
The deal requires regulatory approval and isn’t expected to close until 2010.
The companies don’t expect to see the full benefits of the deal until 24 months after regulatory approval.
While the companies claim Yahoo “will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers,” most of the value is and will be derived via the self-service channel–which Microsoft will now control.
The deal could put Yahoo!’s affiliate/syndicated search business at risk.
The deal’s 10-year length may put Yahoo at Microsoft’s mercy given that there’s only one other supplier–Google (GOOG).

Complete Coverage

WWGD: What Will Google Do, Now That There Is Finally a MicroHoo?

Liveblogging the Yahoo-Microsoft Search Deal Conference Call: The Carol and Steve Show Debuts!

Yahoo Investors on Microsoft Deal: Do Not Want

Yahoo CEO Carol Bartz’s Letter About the YaSoft Deal

MicroHoo Deal Finally Official in a 10-Year Landmark Partnership (Plus the Full Press Release)

Yahoo To Get 110 Percent of Search Revenue in First Two Years of Deal With Microsoft

Before Yahoo-Microsoft Deal Terms Are Unveiled, Let’s Go to the Videotape From the Last One

Microsoft-Yahoo Deal Struck–Will Be Announced Within Next 24 Hours

Microsoft Disappoints…Big Time

John Paczkowski — Thu, 23 Jul 2009 20:18:47 +0000

Good thing Wall Street wasn’t expecting much from Microsoft. Because it didn’t get it.

After market close Thursday, the Redmond, Wash.-based tech giant reported that fiscal fourth-quarter net income fell to $3.05 billion, or 34 cents a share, from $4.3 billion, or 46 cents a share, in the same period a year earlier.

Revenue for the period ended in June fell 17 percent to $13.1 billion. Wall Street had been looking for earnings of 36 cents a share on $14.37 billion in revenue, according to data compiled by Thomson Reuters.

Online advertising revenue decreased $86 million, or 14 percent, to $529 million, primarily reflecting a decline in display advertising.

The company missed estimates by $1 billion. Gruesome.

“Our business continued to be negatively impacted by weakness in the global PC and server markets,” CFO Chris Liddell said in a statement. “In light of that environment, it was an excellent achievement to deliver over $750 million of operational savings compared to the prior year quarter.”

Microsoft shares are trading down more than eight percent at $23.50, as I write this.

Below is the full earnings release. BoomTown’s Kara Swisher will be liveblogging the earnings call later this afternoon.

Microsoft Reports Fourth-Quarter Results

The company delivered operational efficiency and innovation in a difficult environment

REDMOND, Wash., July 23, 2009–Microsoft Corp. today announced revenue of $13.10 billion for the fourth quarter ended June 30, 2009, a 17% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $3.99 billion, $3.05 billion and $0.34 per share, which represented declines of 30%, 29% and 26%, respectively, when compared with the prior year period.

“Our business continued to be negatively impacted by weakness in the global PC and server markets,” said Chris Liddell, chief financial officer at Microsoft. “In light of that environment, it was an excellent achievement to deliver over $750 million of operational savings compared to the prior year quarter.”

The financial results for the fourth quarter ended June 30, 2009, included the deferral of $276 million of revenue related to the Windows 7 Upgrade Option program that was announced on June 25, 2009. This revenue deferral reduced earnings per share by $0.02.

The fourth-quarter financial results also included $193 million of legal charges, $108 million of impairments to investments and $40 million of additional severance charges related to the previously announced plan. Operating expenses were reduced by $105 million of capitalized research and development expenses due to the technical milestones reached for Windows 7. Combined, these items also reduced earnings per share by $0.02.

Significant product milestones were achieved in the quarter including the releases of Windows 7 release candidate, Windows Server 2008 R2 release candidate, as well as Bing, Microsoft’s search engine designed to help people make faster, more informed decisions.

For the fiscal year ended June 30, 2009, Microsoft reported revenue of $58.44 billion, a 3% decline from the prior year. Operating income, net income and diluted earnings per share for the year were $20.36 billion, $14.57 billion and $1.62, which represented declines of 9%, 18% and 13% respectively.

“While economic conditions presented challenges this year, we maintained our focus on delivering customer satisfaction and providing solutions to our customers to save money,” said Kevin Turner, chief operating officer at Microsoft. “I am very excited by the wave of product and services innovations being delivered in this next fiscal year.”

Business Outlook

Microsoft is providing operating expense guidance of $26.6 billion to $26.9 billion, for the full year ending June 30, 2010.

Management will discuss fourth-quarter results and the company’s business outlook on a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today.

Here’s an Idea to Boost Notebook Sales: Call Them Netbooks…

John Paczkowski — Mon, 13 Jul 2009 19:30:51 +0000

Consumers may have trouble distinguishing netbooks from notebooks, but that’s clearly not preventing people from buying them. DisplaySearch, an NPD Group subsidiary, estimates that netbooks will claim a 20 percent share of the world-wide market in 2009. The research outfit predicts that consumers will purchase almost 33 million netbooks this year, nearly double the number they bought last year.

Meanwhile, the market for traditional notebooks, which DisplaySearch defines as laptops with displays 12.1-inches and larger, will be flat year over year for the first time. And that’s interesting because one of the factors driving netbook sales, along with their lower price point, is screen size. Increasingly, consumers are looking for near-notebook-size screens in their netbooks.

“Mini-notes are forecast to continue to be a significant portion of the market. However, as display sizes of these devices have quickly moved from 7.0” to 8.9” to 10.1”, and now with the emergence of 11.6” and 12.0” mini-note products, it is clear that buyers want a light-weight device, but that they also want a bigger display,” said John Jacobs, director of notebook market research at DisplaySearch. “While these devices have certainly created a new market, our research indicates that they are predominantly used as secondary PCs by consumers, and are not replacing notebooks.”

Sony Apparently Recovering From Netbookaphobia

John Paczkowski — Wed, 08 Jul 2009 11:50:34 +0000

“If (the Eee PC from) Asus starts to do well, we are all in trouble. That’s just a race to the bottom.”

– Mike Abary, senior vice president of Sony’s IT product division, February, 2008

If the netbook market is a race to the bottom, then Sony is bringing up the rear. Not a year after Sony execs disparaged netbooks as undeserving of its premium brand attention, the company announced its token entry into the market: the Vaio W.

Outfitted with a 10-inch screen, an Intel (INTC) Atom processor, 1GB of memory, a 160GB hard disk drive and Windows XP, the machine prices out at $630 in Japan, $499 in the U.S. That’s quite a bit more expensive than rival netbooks. Which is odd since the market for these machines is fairly price-sensitive. Still, Sony (SNE) feels the W is good value for the money, given its design, cheery color palette (white, brown, pink!) and screen resolution–at 1366 by 768 pixels, the W’s display is clearly better than that of its rivals.

Said Vaio chief Nicolas Barendson, “We believe that this screen resolution and design offers our customers a better experience, and that it will be popular with both newcomers to the netbook market looking for a quality portable PC at a netbook price point, and customers wanting to improve their existing netbook experience to date by upgrading their screens.”

Sony’s announcement leaves Apple (AAPL) as the lone major computer manufacturer without a netbook offering, a designation it’s likely to keep for the foreseeable future, according to company execs. “When I look at netbooks, I see cramped keyboards, terrible software, junky hardware, very small screens,” COO Tim Cook said back in April, noting that it’s “a stretch” to call a netbook a personal computer. “It’s just not a good consumer experience and not something we would put the Mac brand on…it’s not a space as it exists today that we are interested in, nor do we believe that customers in the long term would be interested in. It’s a segment we would choose not to play in.”