For the three months ending Sept. 30, Microsoft recorded $908 million in revenue for the Surface tablet line, an increase of 127% over the same quarter in 2013. The nearly one billion in revenue was a one-quarter record for the Surface, and beat the combined revenue of the previous two quarters.
Using information in Microsoft’s filing with the U.S. Securities and Exchange Commission (SEC), as well as data from earlier quarters, Computerworld calculated the quarter’s cost of that revenue at $786 million, leaving a gross margin of $122 million. Cost of revenue is the cost to make and sell a product, but excludes expenses such as advertising and R&D.
Microsoft said that the Surface line posted a positive gross margin — implying that outside estimates of prior losses were correct — but did not disclose a dollar figure.
According to Computerworld‘s estimate, the margin was small, about 13.4%. That’s more than the average for a Windows personal computer, but less than half or a third of the margins on tablets like Apple’s iPad.
It was even smaller by the figuring of Jan Dawson, principal analyst at Jackdaw Research, who has also used Microsoft’s SEC filings to estimate the Surface’s cost of revenue. He pegged the September quarter’s cost of revenue at $825 million, the gross margin at $83 million, and the margin rate at just 9.1%.
“That’s a gross margin … which is not earth-shattering and in fact about half the gross margin of the phone business at Microsoft. But it’s progress,” Dawson wrote on his blog, where he published his analysis of Surface’s financial performance.
Since its October 2012 introduction, Surface has been a money pit for Microsoft, in the hole to the tune of $1.73 billion through its first seven quarters. With the September quarter in the black, those overall losses have been reduced to about $1.6 billion.
Over the last four quarters, Surface also remained in the red, with losses of $325 million on revenue of $2.7 billion. Put another way, for each dollar Microsoft earned on Surface sales, it lost about 12 cents.
The company released Rooms on Thursday, its answer to the craze around posting and sharing anonymously. People can use any name they want and don’t need a Facebook account. The app contains rooms geared around various topics, all of which require an invite link to enter. Providing an email address is optional, for the purposes of having accessed rooms restored if the user deletes the app.
The app is only available on iOS. Plans for other platforms like Android or Windows Phone were not disclosed.
The app is not just about anonymity. With it, Facebook hopes to provide a discussion board-type platform where users can chat about shared interests outside of their usual social circles. It’s a concept that has been super popular since, oh, the web’s been around.
“One of the magical things about the early days of the web was connecting to people who you would never encounter otherwise in your daily life,” Facebook said in a statement Thursday.
“From unique obsessions and unconventional hobbies, to personal finance and health-related issues — you can celebrate the sides of yourself that you don’t always show to your friends,” the company said.
But the app’s ability to succeed likely depends on the number and diversity of rooms created by its users, and whether the app’s focus on visuals and photos appeals to them. There’s also no desktop version.
The app was developed as part of Facebook’s Creative Labs project, which has also released stand-alone apps like Slingshot and Paper.
Facebook stresses that Rooms will let users create a unique identity separate from their Facebook account. Your name can be “Wonder Woman” in the app, Facebook said.
I tried out the app, and was even able to use “Mark Zuckerberg” as my name. (A short “hello” post of mine then immediately generated several “high fives.”)
Facebook, however, may share information about Room users within the companies and services operated by Facebook, which would include Facebook itself and other apps like Instagram and WhatsApp, according to the Rooms terms of service.
The update, designated as Build 9860, followed the Oct. 1 release of the preview, which Microsoft has offered businesses and technology enthusiasts to give potential customers a look at the work in progress and collect feedback during development.
The Oct. 1 version of Windows 10 was labeled Build 9841.
“Sometimes [updates] will be more frequent and sometimes there will be longer gaps, but they will always be chock full of changes and improvements, as well as some bugs and things that are not quite done,” wrote Gabe Aul, of Microsoft’s Operating Systems Group on a company blog.
Aul said that Build 9860 had been handed to his group only a week ago, and repeated earlier warnings by other Microsoft managers that the preview remains incomplete and unpolished.
Although rapid iterations are nothing new to preview or beta software, Microsoft plans to accelerate the delivery of updates — ones that will include not only security patches and performance fixes, but also new features — once Windows 10 officially ships in mid-2015.
Updates will ship as often as monthly for consumers, while businesses will be able to choose between that and two additional tempos that Gartner has tagged as “near-consumer speed” and “long-term servicing.” The former will roll up the “consumer-speed” updates every four to six months to versions that fast-acting enterprises will test and deploy, while the latter will remain feature- and UI-static for as long as two to three years, receiving only security updates.
Other analysts have contended that Microsoft is pushing frequent updates to Windows 10 Technical Preview as much to test the process — both the back-end Windows Update service and the Windows 10 clients’ ability to absorb the changes and smoothly install the updates — as for the company’s stated reasons of gathering feedback and offering users an early look.
“Changes in Windows Update were put in place to make this possible,” Wes Miller, an analyst with Directions on Microsoft, said in an interview earlier this month. “The biggest question for Microsoft is how the updating process works with the Technical Preview.”
In the preview, customers have an update frequently choice of only “Fast” or “Slow.”
Build 9860 will be delivered automatically to most PCs running Windows 10 within days, but users can manually initiate the process by going to “PC Settings,” choosing “Update and recovery” and then “Preview builds,” and finally clicking the “Check Now” button.
Aul said that the download would weigh in at between 2GB and 2.7GB, and that the reboot, the reconstruction of the OS’s search index, and the syncing of OneDrive would take “longer than normal” and “some time.”
Microsoft will ship a second consumer-oriented preview in early 2015, but it’s virtually certain that the firm will provide more-or-less-monthly updates to the Technical Preview between now and then.
After several years of accelerated growth, the U.S. market is feeling the effects of market saturation and smartphone ownership that’s lasting longer than once expected, Ramon Llamas, an analyst IDC, said in an updated forecast.
IDC’s five-year forecast issued for October significantly undercuts its April forecast, dropping expectations for U.S. smartphone and feature phone shipments by manufacturers to retailers. IDC now expects 1.7 million fewer phones shipped in 2104 than it had expected in April; it predicts 174 million phones will ship this year, with that figure declining gradually to 169 million in 2018.
Smartphone shipments alone will grow just slightly through 2018 in the U.S., but about 5% less than earlier expected, rising from 150 million in 2014 to 160.5 million in 2018. Feature phones shipments have dropped off faster than earlier expected.
Llamas said the signs of decline started in late 2011, prompting carriers in the past year to try to get customers to replace phones more often with easy trade-in plans and relaxed contracts.
It’s too soon to say what effect the early trade-in plans will have on the market, Llamas said. The life of an average smartphone still lasts about two years, but that could be changing.
Paying on installment plans “could really change the market,” Llamas said in an interview. “But if people pay off their devices and then realize they don’t have to pay the carrier as much [at the end of the payoff period] and only pay for wireless service, they might just hold onto their phones. I think people will hold onto their phones as long as they can after they are paid off. If this plays out and they hold on and don’t update, we’ll see flattening of sales volumes year after year, or even declines, all in the name of saving money.”
Realizing what’s happening in the U.S. and among other major economies, both Apple and Samsung have concentrated heavily on selling their new smartphones in China and other areas where smartphone sales are still strong.
Qualcomm wants to buy British Bluetooth expert CSR for $2.5 billion. The company is doing rather well in areas like automotive and wearable devices which is exactly where Qualcomm wants to be.
CSR has previously said no to any take-over, but the two had remained in talks to reach a deal, with a deadline imposed by UK regulators. There is a chance alternative bidders may emerge, but they might be put off by the huge amounts of cash that Qualcomm is paying.
Qualcomm Chief Executive Steven Mollenkopf said the addition of CSR would allow it to diversify into the markets for short-range, wireless Bluetooth chips and audio processing used in portable audio, automotive controls and wearable devices.
“Combining CSR’s highly advanced offering of connectivity technologies with a strong track record of success in these areas will unlock new opportunities for growth,” he said.
CSR Chief Executive Joep van Beurden said the two companies were a good combination something analysts appear to agree with. CSR, short for Cambridge Silicon Radio, specializes in connectivity, with its chips used in products such as portable audio speakers and Beats headphones.
It was a pioneer in the market for wireless Bluetooth technology, which is now mushrooming in popularity for use in wireless audio speakers, network-connected appliances in homes and for use in so-called “connected car” features in autos.
Gartner is warning that tablet sales could fall to the power of the cheaper and bigger smartphones. Gartner’s Q3 and annual figures for device sales worldwide — covering smartphones and tablets as well as PCs of all sizes — shows that tablet sales in 2014 will only see 11 per cent growth over last year, compared to growth of 55 percent the year before.
This works out to a projected 229 million tablets selling in 2014, or 9.5% of overall worldwide device sales, which will total 2.4 billion devices for the year, and 2.5 billion in 2015. In short the novelty is wearing off and tablets are getting a good kicking from Android smartphones. Devices built on Google’s mobile operating system will see sales of 1.2 billion devices this year, working out to more than half of all devices sold.
Ultramobiles, the not-quite-PC and not-quite-tablet and not-quite-phone category, will remain niche but continue growing: there will be 37.6 million of these sold this year, and as befits a fast-growing but still-small category, ultramobiles will grow the fastest, doubling in sales in 2015 while the other categories continue to see only modest rises. Ultramobiles are also suffering from the same issue as tablets. People are simply not replacing them as much.
“In the tablets segment, the downward trend is coming from the slowdown of basic ultramobiles,” Gartner concludes.
The life cycle of tablets and ultramobiles is around three years and buyers this year won’t replace devices until 2018. Gartner says it projects 83 million less new tablet purchasers in 2014-2015 and 155 million less tablet replacements through 2018.
Roberta Cozza, a Gartner analyst and co-author of the report said there are too many solid devices out there and users don’t have a reason to upgrade to the new units. Cozza also confirmed Samsung is heads and shoulders above all other OEMs.
If you look at PCs, ultramobiles and phones, Samsung is still number one, with around a 20 per cent share this quarter. Samsung’s fortunes are driven by Android and its share in the PC category is “tiny.”
With Apple in second place at around 10 percent, Nokia in third just behind it and Lenovo in fourth in the overall category.
Kwon Oh-hyun has said he is not worried about a price war in the semiconductor industry next year even though the firm is rapidly expanding its production volume.
“We’ll have to wait and see how things will go next year, but there definitely will not be any game of chicken,” said Oh-hyun, according to Reuters, suggesting the firm will not take chip rivals head on.
Samsung has reported strong profits for 2014 owing to better-than-expected demand for PCs and server chips. Analysts have also forecast similar results for the coming year, so things are definitely looking good for the company.
It emerged last week that Samsung will fork out almost $15bn on a new chip facility in South Korea, representing the firm’s biggest investment in a single plant.
Samsung hopes the investment will bolster profits in its already well-established and successful semiconductor business, and help to maintain its lead in memory chips and grow beyond the declining sales of its smartphones.
According to sources, Samsung expects its chip production capacity to increase by a “low double-digit percentage” after the facility begins production, which almost goes against the CEO’s claims that it is not looking for a price war.
Last month, Samsung was found guilty of involvement in a price fixing racket with a bunch of other chip makers stretching back over a decade, and was fined €138m by European regulators.
An antitrust investigation into chips used in mobile device SIM cards found that Infineon, Philips and Samsung colluded to artificially manipulate the price of SIM card chips.
Dorset police told the BBC that six devices were wiped within the space of a year while they were being kept in police custody, and Cambridgeshire, Derbyshire, Nottingham and Durham police also confirmed similar incidents.
The technology being used was originally designed to allow device owners to remove sensitive data from phones or tablets if they are lost or stolen.
“We have cases where phones get seized, and they are not necessarily taken from an arrested person, but we don’t know the details of these cases as there is not a reason to keep records of this,” a spokeswoman for Dorset police told the BBC.
A spokeswoman for Derbyshire police also confirmed one incident of a device being remotely wiped while in police custody.
“We can’t share many details about it, but the case concerned romance fraud, and a phone involved with the investigation was remotely wiped,” she said. “It did not impact upon the investigation, and we went on to secure a conviction.”
Software that enables this remote wiping has been available from a variety of security firms for some time now.
For example, BitDefender announced a product a while back intended to track lost or stolen Android devices. Not only did it allow users to connect remotely and ‘wipe’ data from a web profile via the internet, but to activate commands with text messages.
Pen Test Partners’ digital forensics expert, Ken Munro, said it is common practice to immediately put devices that are seized as evidence into a radio-frequency shielded bag to prevent any signals getting through and stop remote wipes.
“If we can’t get to the scene within an hour, we tell the client to pop it in a microwave oven,” he said. “The microwave is reasonably effective as a shield against mobile or tablet signals – just don’t turn it on.”
Adobe has been accused of snooping on e-document readers and using spyware to feedback on user libraries.
The accusation comes from the Digital Reader website and Nate Hoffelder, its editor. Hoffelder said that he was tipped to the issue by a ‘hacker’ associate and has tested and confirmed its authenticity.
At the nut of the issue is Digital Editions 4, which has more features than its users expected.
“My source told me, and I can confirm, that Adobe is tracking users in the app and uploading the data to their servers,” he said.
“Adobe is gathering data on the e-books that have been opened, which pages were read, and in what order. All of this data, including the title, publisher and other metadata for the book, is being sent to Adobe’s server in clear text. I am not joking.”
Hoffelder said that the data is sent from hardware to server in plain text, and that it takes other information with it, including metadata from e-books stored on the user’s hard drive. He added that he is shocked, and has put the issue to Adobe but failed to get a response.
We have followed suit and asked Adobe for comment or explanation as to what the system is and why it is happening.
Hoffelder has uploaded documents with information from tracking software Wireshark that shows material leaving his computer and going to an Adobe IP address.
“This is a privacy and security breach so big that I am still trying to wrap my head around the technical aspects, much less the legal aspects,” he said.
“I would highly recommend that users avoid running Adobe’s apps for the near future – ever again, for that matter. Luckily for us there are alternatives.”
Kaspersky has revealed that it is working with Interpol in attempting to foil a gang of cash machine (ATM) hackers who have found a way to make it spit out its contents without even using a card.
The hack is incredibly carefully thought out. Hackers gain access to cash machines, through mole employees or perhaps cleaners, and add the malicious code, named Tyupkin by Kaspersky. The cash machine continues to function as normal.
The malware is triggered only at set times – Sunday and Monday nights – thus avoiding being accidentally triggered by a member of the public.
At that time, the mule is sent to the machine and types in a series of digits unique to that raid based on an algorithm known to the gang.
He then makes a second call to the gang who generate the second half of the code from their end, thus ensuring that the mule isn’t tempted to swan off with the dough.
At that point, it’s Winsday. The machine will display how much is in each cash compartment and willingly spits it out to the waiting mule who goes back to distribute the swag.
“Offenders are constantly identifying new ways to evolve their methodologies to commit crimes, and it is essential that we keep law enforcement in our member countries involved and informed about current trends and modus operandi,” said Sanjay Virmani, director of the Interpol Digital Crime Centre.
“We strongly advise banks to review the physical security of their ATMs and network infrastructure and consider investing in quality security solutions,” added Vicente Diaz, principal security researcher at Kaspersky Lab’s Global Research and Analysis Team, who, coincidentally, knows a company that can offer those solutions. Fancy.
Among the recommendations Kaspersky offers is a reminder to switch away from default passwords for systems including the system BIOS for each cash machine.
In June of this year, two Canadian teenagers showed how they had broken into an in-store ATM simply by downloading the instructions from the internet and using unchanged default passwords.
Malware for ATMs first came to the fore in 2008 when two Louisiana criminals reconfigured a cash machine to make it believe that it had smaller denomination bills than it really did.
AMD announced that it would demonstrate the first implementation of Apache Hadoop on an ARM Cortex-A57 part at the JavaOne conference.
The chip in question is of course an A-series Opteron. AMD recently announced the Opteron A1100 and it is the company’s first ARM-based server part.
The presentation was delivered by AMD corporate fellow Leendert van Doorn and Henrik Stahl, VP of Java product management and IoT at Oracle.
“This demonstration showcases AMD’s leadership in the development of a robust, standards-based ecosystem for ARM servers,” said van Doorn. “Servers powered by AMD Opteron A-Series processors are well-suited for Hadoop, offering an efficient scale-out compute platform that can also double as an economical persistent storage platform.”
The demo showed an A1100 dev platform running Apache Hadoop on the Oracle JDK. AMD said it would continue its collaboration with ARM, Oracle, Red Hat, Linaro and SUSE in order to boost ARM development in the server space.
RedHat has announced the Fedora 21 Alpha release for Fedora developers and any brave users that want to help test it.
Fedora is the leading edge – some might say bleeding edge – distribution of Linux that is sponsored by Red Hat. That’s where Red Hat and other developers do new development work that eventually appears in Red Hat Enterprise Linux (RHEL) and other Red Hat based Linux distributions, including Centos, Scientific Linux and Mageia, among others. Therefore, what Fedora does might also appear elsewhere eventually.
The Fedora project said the release of Fedora 21 Alpha is meant for testing in order to help it identify and resolve bugs, adding, “Fedora prides itself on bringing cutting-edge technologies to users of open source software around the world, and this release continues that tradition.”
Specifically, Fedora 21 will produce three software products, all built on the same Fedora 21 base, and these will each be a subset of the entire release.
Fedora 21 Cloud will include images for use in private cloud environments like Openstack, as well as AMIs for use on Amazon, and a new image streamlined for running Docker containers called Fedora Atomic Host.
Fedora 21 Server will offer data centre users “a common base platform that is meant to run featured application stacks” for use as a web server, file server, database server, or as a base for offering infrastructure as a service, including advanced server management features.
Fedora 21 Workstation will be “a reliable, user-friendly, and powerful operating system for laptops and PC hardware” for use by developers and other desktop users, and will feature the latest Gnome 3.14 desktop environment.
Those interested in testing the Fedora 21 Alpha release can visit the Fedora project website.
Quick law enforcement access to the contents of smartphones could save lives in some kidnapping and terrorism cases, FBI Director James Comey said in a briefing with some reporters. Comey said he’s concerned that smartphone companies are marketing “something expressly to allow people to place themselves beyond the law,” according to news reports.
An FBI spokesman confirmed the general direction of Comey’s remarks. The FBI has contacted Apple and Google about their encryption plans, Comey told a group of reporters who regularly cover his agency.
Just last week, Google announced it would be turning on data encryption by default in the next version of Android. Apple, with the release of iOS 8 earlier this month, allowed iPhone and iPad users to encrypt most personal data with a password.
Comey’s remarks, prompted by a reporter’s question, came just days after Ronald Hosko, president of the Law Enforcement Legal Defense Fund and former assistant director of the FBI Criminal Investigative Division, decried mobile phone encryption in a column in the Washington Post.
Smartphone companies shouldn’t give criminals “one more tool,” he wrote. “Apple’s and Android’s new protections will protect many thousands of criminals who seek to do us great harm, physically or financially. They will protect those who desperately need to be stopped from lawful, authorized, and entirely necessary safety and security efforts. And they will make it impossible for police to access crucial information, even with a warrant.”
Representatives of Apple and Google didn’t immediately respond to requests for comments on Comey’s concerns.
Red Hat has acquired Feedhenry, a designer of mobile apps for the enterprise market.
The company sees the acquisition as a key driver to offer cross-platform support for its existing software products, including Red Hat Enterprise Linux Openstack 7, which it released earlier this year.
Feedhenry uses Node.js architecture to create mobile apps supporting both the client and server, running natively across Android, iOS, Windows Phone and Blackberry, as well as offering web apps in HTML5. It combines a wide range of toolkits and APIs offering integration with existing systems and most popular software applications from enterprise vendors like Salesforce, SAP and Oracle.
The purchase price is said to be approximately $82 million in cash (just over $8m) and is expected to close in quarter three fiscal year 2015.
Craig Muzilla, SVP of the Application Platform Business group at Red Hat said, “The mobile application platform is one of the fastest growing segments of the enterprise software market. As mobile devices have penetrated into every aspect of enterprise computing, enterprise software customers are looking for easier and more efficient ways for their developers to build mobile applications that extend and enhance traditional enterprise applications.”
“Feedhenry will help us enable customers to take advantage of the capabilities of mobile with the security, scalability, and reliability of Red Hat enterprise software.”
Red Hat said that it will continue to sell and support Feedhenry is products and work with its existing customer base. Feedhenry products will continue to offer a wide variety of cloud deployments, but under the ownership of Red Hat is likely to see particular emphasis on Openshift and Openstack. At the end of last month, Red Hat’s long-serving CTO Brian Stevens left the firm, according to a brief press announcement.
IBM has launched a beta of Watson Analytics, an interactive Q&A service designed to answer questions and highlight trends within sets of enterprise data.
The service “is about putting powerful analytics in the hands of every business user,” said Eric Sall, IBM vice president of marketing for business analytics.
Traditional business intelligence tools remain too difficult to use for business managers, Sall said. “It is hard to get the data. It is hard to analyze the data if you’re not a specialist, and it is hard to use the tools,” he said. Watson Analytics attempts to streamline the process.
Natural language systems are becoming increasingly prevalent as a form of human-computer interface. Apple’s Siri, Google’s GoogleNow and Microsoft’s Cortana all act as virtualized personal assistants, able to answer a range of simple questions on behalf of their users.
Watson Analytics operates in a similar manner, in that it can offer responses to questions posed by the user in their chosen language, rather than forcing the user to develop a SQL query, master a complex statistical package or write data-parsing code to better understand some large set of data.
The effort is the latest move in IBM’s $1 billion initiative to commercialize Watson technologies.
IBM Research developed Watson to compete with human contestants on the “Jeopardy” game show in 2011, using natural language processing and analytics, as well as many sources of structured and unstructured data, to formulate responses to the show’s questions.
In the years since, the company has been working to commercialize the Watson technology by identifying industries that could benefit from this form of cognitive computing, such as health care, law enforcement and finance.
Earlier this year, IBM launched the Watson Discovery Advisor, which is customized for scientific researchers who need to deeply probe one specific body of scientific knowledge, such as chemistry or cellular biology.
Another service, the company’s Watson Engagement Advisor, uses the artificial intelligence technology to aid in customer support.