The chief executive of Apple, Timothy D. Cook, has a prediction:
the day will come when tablet devices like the Apple iPad outsell traditional
His forecast has backing from a growing number of analysts and veteran
technology industry executives, who contend that the torrid growth rates of the
iPad, combined with tablet competition from the likes of Amazon.com and
Microsoft, make a changing of the guard a question of when, not if.
Tablet sales are likely to get another jolt this week when Apple introduces its
newest version of the iPad, which is expected to have a higher-resolution
screen. With past iterations of the iPad and iPhone, Apple has made an art of
refining the devices with better screens, faster processors and speedier network
connections, as well as other bells and whistles — steadily broadening their
An Apple spokeswoman, Trudy Muller, declined to comment on an event the company
is holding Wednesday in San Francisco that is expected to feature the new
Any surpassing of personal computers by tablets will be a case of the computer
industry’s tail wagging the dog. The iPad, which seemed like a nice side
business for Apple when it was introduced in 2010, has become a franchise for
the company, accounting for $9.15 billion in revenue in the holiday quarter, or
about 20 percent of Apple’s total revenue. The roughly 15 million iPads Apple
sold in that period was more than twice the number it sold a year earlier.
In the fall, Amazon introduced the iPad’s first credible competitor in the $199
Kindle Fire. Although Amazon does not release sales figures for the device, some
analysts estimate it sold about four million in the holiday quarter. Later this
year, tablets from a variety of hardware manufacturers based on Windows 8, a
new, touch-screen-friendly operating system from Microsoft, could further propel
“Tablets are on fire, there’s no question about that,” said Brad Silverberg, a
venture capitalist in Seattle at Ignition Partners and a former Microsoft
executive, who hastened to add that he was speaking mainly of the iPad, which
dominates current sales.
Tablets are not there yet. In 2011, PCs outsold tablets almost six to one,
estimates Canalys, a technology research company. But that is still a
significant change from 2010, the iPad’s first year on the market, when PCs
outsold tablets 20 to one, according to Canalys. For the last two years, PC
sales were flat, while iPad sales were booming. The Kindle Fire and Barnes &
Noble’s Nook gave the market an additional lift over the holidays. Apple is
banking on the tablet market. Its iPad brought in nearly 40 percent more revenue
during the holidays than Apple’s own computer business, the Macintosh, did.
“From the first day it shipped, we thought — not just me, many of us thought at
Apple — that the tablet market would become larger than the PC market, and it
was just a matter of the time that it took for that to occur,” Mr. Cook of Apple
said recently at a Goldman Sachs investor conference.
Gene Munster, an analyst at Piper Jaffray, estimated that Mr. Cook’s prediction
would come true in 2017, but others contend tablets will be on top sooner than
For example, in a blog post on Friday, Horace Dediu, an analyst with Asymco in
Finland, made a detailed argument that tablet sales would pass traditional PC
sales in the fall of 2013. His projections rest heavily on an assumption that
Apple will face more serious competition in the tablet market from Amazon’s
Kindle Fire, Windows 8 and a wave of other devices based on Google’s Android, an
operating system that has been mostly successful in the smartphone market.
Tim Bucher, an entrepreneur who has held senior positions at Apple, Microsoft
and Dell, said tablet sales would “absolutely” pass those of PCs, a trend he
argued would become even more pronounced as a younger, tablet-savvy generation
“I think the older generation does not pick up on the way of interacting with
the new devices,” Mr. Bucher said, contrasting older people with the next
generation. “I don’t know how many YouTube videos there are out there showing
everyone from babies to animals interacting with iPads.”
Where does that change leave the PC, the lowly machine that defined computing
At a technology conference in 2010, Steven P. Jobs, then Apple’s chief
executive, heralded what he called the post-PC era and compared personal
computers to the trucks that prevailed in the automobile industry until society
began moving away from its agrarian roots. PCs are “still going to be around and
have a lot of value,” said Mr. Jobs, who died in October. “But they’re going to
be used by one out of X people.”
Even Mr. Cook in his recent speech said he was not predicting the demise of the
PC industry, although he did say the iPad was cannibalizing some computer sales,
more Windows PCs than the much smaller market for Macs. One category of PCs
where that is especially true is netbooks, the inexpensive notebook computers
that have had a steep decline in shipments in the last couple of years. “What
the iPad is doing is taking growth away from the PC market that would have gone
to a secondary or tertiary device,” said Mr. Dediu. “It’s not so much people are
going to drop PCs. They’re going to add this additional device.”
Traditional PCs are not standing still. Boxy desktop computers are an
ever-diminishing part of the PC business, while Apple’s MacBook Air and a
category of Windows laptops with Intel processors called ultrabooks have
reinvented traditional clamshell notebooks as superthin devices that turn on
instantly like tablets.
Microsoft’s introduction of Windows 8 promises to shake up computer designs
further. Microsoft and its hardware partners have shown laptops with keyboards
that can be swiveled around or removed altogether, turning them into tablets.
“The tablet and PC markets are all going to blur,” said Tim Coulling, an analyst
at Canalys. “We’re going to see a lot of form-factor innovation. We’ll be
asking, What is a tablet and what is a traditional PC?”
October 5, 2009
The New York Times
By BRAD STONE
and ASHLEE VANCE
SAN FRANCISCO — The high-tech industry has been working itself into paroxysms of
excitement lately over an idea that is not exactly new: tablet computers.
Quietly, several high-tech companies are lining up to deliver versions of these
keyboard-free, touch-screen portable machines in the next few months. Industry
watchers have their eye on Apple in particular to sell such a device by early
Tablets have been around in various forms for two decades, thus far delivering
little other than memorable failure. Nonetheless, the new batch of devices has
gripped the imagination of tech executives, bloggers and gadget hounds, who are
projecting their wildest dreams onto these literal blank slates.
In these visions, tablets will save the newspaper and book publishing
industries, present another way to watch television and movies, play video
games, and offer a visually rich way to enjoy the Web and the expanding world of
“Desktops, laptops — we already know how those work,” said Brian Lam, editorial
director of the popular gadget site Gizmodo, which reports and hypothesizes
almost daily about these devices. Tablets, he said, “are one of the last few
Tablet computers were first conceived as a way to supplant plain old paper, in
the same way that PCs replaced the typewriter.
In 1993, Apple’s Newton MessagePad, with its expansive screen and stylus pen,
became known less for its innovative features than for being lampooned in
“Doonesbury,” which ridiculed the device for its flawed handwriting recognition.
Steven P. Jobs killed the Newton when he returned to Apple in 1997.
Then in 2001, at Comdex, the industry trade show, Bill Gates introduced new
Windows software for tablets with a bold prediction: within five years, he said,
tablets “will be the most popular form of PC sold in America.” It didn’t happen,
of course. Tablets running Windows sell only a few hundred thousand units a
year, mostly in business fields like health care and financial services.
There were basic problems with these early tablets: they cost too much and did
not do enough.
“Software engineers got ahead of the hardware capabilities,” said Paul Jackson,
a consumer product analyst at Forrester Research. “But we may be finally getting
to the point where the dreams and aspirations of those designers are actually
meeting capable and reasonably priced technology.”
You can thank Moore’s Law and the immutable advance of technology for that.
Integrated microchips now combine wireless connectivity and support for features
like multimedia, GPS functions and rich graphics. They are also more
At the same time, the iPhone and its imitators have demonstrated that new
tactile touch screens work and that people are comfortable with them, in a way
they never got accustomed to using earlier tablets and stylus pens.
“We darn well should be about ready to take advantage of this stuff. It’s time,”
said Bill Buxton, a researcher at Microsoft who has been working on multitouch
systems for 20 years, and has a comprehensive collection of tablets and touch
screens he keeps in his office in Toronto.
The drumbeat of tablet product introductions has already begun. In June, Archos,
a French consumer electronics company, began selling a small touch-screen tablet
running Google’s Android software. Later this month, it will introduce another
tablet that runs on Microsoft’s Windows 7, which has built-in support for touch
“A road warrior doesn’t want to take a big clamshell netbook with him,” said
Frédéric Balaÿ, vice president for marketing at Archos.
The industry blog TechCrunch has also commissioned its own Web tablet, called
the CrunchPad, which it has said it will start selling later this year.
Despite its past bruises in the tablet business, Microsoft appears ready to try
again. In September, images of a booklike Microsoft device called Courier, with
two 7-inch color screens, surfaced on Gizmodo.
In an interview, Steven A. Ballmer, Microsoft’s chief executive, would not
discuss that product in particular, but said the company devises such prototypes
all the time, so it can take them to its hardware partners. Still, rumors of a
Microsoft tablet computer sparked interest. “I got an e-mail from some customer
who said, ‘I want that,’ ” Mr. Ballmer said.
Apple’s rumored tablet is the most highly anticipated of the lot. Analysts
expect Apple to introduce it early next year — a sort of expanded, souped-up
version of the iPod Touch, priced at around $700.
Last week, Apple rehired the original chief marketer of its old Newton, Michael
Tchao, who was working at Nike. Mr. Tchao’s former Apple colleagues believe he
will help market this new device.
Colin Smith, an Apple spokesman, declined to comment on the company’s
recruitment or product plans. But Apple’s tablet will most likely have little in
common with the Newton, which was essentially a personal digital assistant. The
new crop of tablets is being viewed as more flexible — gadgets that combine
elements of the iPhone, e-book readers like the Kindle and laptops.
Apple has been working on such a Swiss Army knife tablet since at least 2003,
according to several former employees. One prototype, developed in 2003, used
PowerPC microchips made by I.B.M., which were so power-hungry that they quickly
drained the battery.
“It couldn’t be built. The battery life wasn’t long enough, the graphics
performance was not enough to do anything and the components themselves cost
more than $500,” said Joshua A. Strickland, a former Apple engineer whose name
is on several of the company’s patents for multitouch technology.
Another former Apple executive who was there at the time said the tablets kept
getting shelved at Apple because Mr. Jobs, whose incisive critiques are often
memorable, asked, in essence, what they were good for besides surfing the Web in
The success of the iPhone may have partially helped to answer that question. As
of last month, developers had created 85,000 applications for the iPhone and
iPod Touch — video games, social networking software, restaurant finders and
more. Analysts believe that all those programs will immediately work on the new
tablet while developers begin to tailor new software for the larger screen.
Despite the preponderance of apps, there is still the persistent question of
whether regular people will really find a use for tablet computers. Smaller
cellphones are increasingly multipurpose and fit nicely in a jacket pocket. And
low-end laptops are inexpensive, run a full-fledged operating system and offer
the luxury of a keyboard.
“I can imagine something like the iPhone with a much bigger screen being a
gorgeous device with great capacity, but I don’t know where I would fit that
into my life,” said a former Apple executive, who declined to be named because
of Apple’s secrecy policies, but who anticipates an Apple tablet next year.
“Those are the debates that have been happening inside Apple for quite some
MOUNTAIN VIEW, Calif. — The computer industry has a lot riding on your fingers.
For years, companies have dabbled with the touch-screen technology that lets
people poke icons on a display to accomplish tasks like picking a seat at an
airport check-in kiosk. Apple elevated such technology from a novelty to a
must-have feature on mobile devices with its iPhone. People can flip through
pictures with a flick of a finger or make a document larger by pressing two
fingers against the screen and stretching them out.
Now both personal computer manufacturers and software makers hope to do more
with touch on larger devices by giving people a 10-fingered go at their screens.
“You don’t even operate your TV with two fingers,” said Amichai Ben-David, the
chief executive officer of N-trig, which produces touch-screen technology for PC
makers. “In order for this to feel really natural, you need more than two
fingers for sure.”
The PC industry hopes the feature spurs sales. PC makers like Hewlett-Packard
and Dell have been clobbered during the recession as struggling businesses drop
computer upgrades to the bottom of their to-do lists. Consumers have shown more
interest in new machines, but they are buying cheap, tiny laptops rather than
H.P., Dell, Intel and Microsoft expect that when companies and consumers
increase their spending, touch technology will be one of the things that nudge
them to upgrade. Computers with the special screens will probably cost consumers
about $100 more than standard machines.
H.P. has been selling a PC with an early version of touch technology. The $1,150
TouchSmart PC has been popular, H.P. says, particularly in kitchens as a family
computer. But outside of science-fiction films, touch computers have been met
with lukewarm reactions. Tabletlike computers that ship with plastic pens for
marking on screens remain a niche in the overall PC market, as do pure touch
machines. Mr. Ben-David said that about two million of about 300 million PCs
sold last year were touch computers.
H.P. has already been pushing touch technology to large businesses. It sells a
custom touch interface for both desktops and laptops. Customers can turn these
machines into bespoke kiosks for, say, ordering merchandise at a sporting event
or flipping through a menu while waiting at a restaurant.
The PC industry wants to make touch functions more sophisticated and widespread.
On-screen objects could be twisted and turned with several fingers, mimicking
the action used in real life. The next version of Windows from Microsoft,
Windows 7, will usher in a new era of touch technology when it appears on PCs
later this year, according to Mr. Ben-David. Backed by Microsoft, Israel-based
N-trig uses a combination of software and sensors to create a special type of
computer screen that can interact with pens and fingers. N-trig’s technology
works by pumping an electrical signal through the screen. When a finger hits the
screen, the electricity is discharged. Software interprets that to move graphics
on the screen. The company claims that its technology works better on the larger
displays of laptops and PCs since it handles many inputs at once.
Working together, Microsoft and N-trig have created a type of software interface
that lets other companies add touch functions to their programs. Such touch
software can handle lots of fingers hitting a screen at once rather than just
relying on one or two digits, as most of today’s touch screens do.
N-trig hopes to build more momentum later this year, when three more PC makers
are set to join H.P. and Dell as backers of the touch technology. It did not
disclose the names of those companies.
The big question is whether companies can create software that makes touch
useful rather than a mere curiosity.
Corel, which makes document and photo editing software, also plans touch
products that rely on N-trig’s technology for Windows 7.
SpaceClaim, which makes software for designing objects in 3-D, has taken a
business-oriented approach to touch. Its software, which will work with Windows
7, creates 3-D models that can be turned, pinched and altered via two-handed
touches. Frank DeSimone, the head of development urges other software makers to
try something new and stick with the technology rather than just replicating the
functions of a mouse.
“A lot of people say they will support touch, but they do a disservice to
everyone by not doing anything interesting,” he said.
SANTA CLARA, Calif. — Intel has worked hard and spent a lot of
money over the years to shape its image: It is the company that celebrates its
quest to make computer chips ever smaller, faster and cheaper with a quick
five-note jingle at the end of its commercials.
But as Intel tries to expand beyond the personal computer chip business, it is
changing in subtle ways. For the first time, its long unheralded software
developers, more than 3,000 of them, have stolen some of the spotlight from its
hardware engineers. These programmers find themselves at the center of Intel’s
forays into areas like mobile phones and video games.
The most attention-grabbing element of Intel’s software push is a version of the
open-source Linux operating system called Moblin. It represents a direct assault
on the Windows franchise of Microsoft, Intel’s longtime partner.
“This is a very determined, risky effort on Intel’s part,” said Mark
Shuttleworth, the chief executive of Canonical, which makes another version of
Linux called Ubuntu.
The Moblin software resembles Windows or Apple’s Mac OS X to a degree, handling
the basic functions of running a computer. But it has a few twists as well that
Intel says make it better suited for small mobile devices.
For example, Moblin fires up and reaches the Internet in about seven seconds,
then displays a novel type of start-up screen. People will find their
appointments listed on one side of the screen, along with their favorite
programs. But the bulk of the screen is taken up by cartoonish icons that show
things like social networking updates from friends, photos and recently used
With animated icons and other quirky bits and pieces, Moblin looks like a fresh
take on the operating system. Some companies hope it will give Microsoft a
strong challenge in the market for the small, cheap laptops commonly known as
netbooks. A polished second version of the software, which is in trials, should
start appearing on a variety of netbooks this summer.
“We really view this as an opportunity and a game changer,” said Ronald W.
Hovsepian, the chief executive of Novell, which plans to offer a customized
version on Moblin to computer makers. Novell views Moblin as a way to extend its
business selling software and services related to Linux.
While Moblin fits netbooks well today, it was built with smartphones in mind.
Those smartphones explain why Intel was willing to needle Microsoft.
Intel has previously tried and failed to carve out a prominent stake in the
market for chips used in smaller computing devices like phones. But the company
says one of its newer chips, called Atom, will solve this riddle and help it
compete against the likes of Texas Instruments and Qualcomm.
The low-power, low-cost Atom chip sits inside most of the netbooks sold today,
and smartphones using the chip could start arriving in the next couple of years.
To make Atom a success, Intel plans to use software for leverage. Its needs
Moblin because most of the cellphone software available today runs on chips
whose architecture is different from Atom’s. To make Atom a worthwhile choice
for phone makers, there must be a supply of good software that runs on it.
“The smartphone is certainly the end goal,” said Doug Fisher, a vice president
in Intel’s software group. “It’s absolutely critical for the success of this
Though large, Intel’s software group has remained out of the spotlight for
years. Intel considers its software work a silent helping hand for computer
Mostly, the group sells tools that help other software developers take advantage
of features in Intel’s chips. It also offers free consulting services to help
large companies wring the most performance out of their code, in a bid to sell
Renee J. James, Intel’s vice president in charge of software, explained, “You
can’t just throw hardware out there into the world.”
Intel declines to disclose its revenue from these tools, but it is a tiny
fraction of the close to $40 billion in sales Intel racks up every year.
Still, the software group is one of the largest at Intel and one of the largest
such organizations at any company.
In the last few years, Intel’s investment in Linux, the main rival to Windows,
has increased. Intel has hired some of the top Linux developers, including Alan
Cox from Red Hat, the leading Linux seller, last year. Intel pays these
developers to improve Linux as a whole and to further the company’s own projects
“Intel definitely ranks pretty highly when it comes to meaningful
contributions,” Linus Torvalds, who created the core of Linux and maintains the
software, wrote in an e-mail message. “They went from apparently not having much
of a strategy at all to having a rather wide team.”
Intel has also bought software companies. Last year, it acquired OpenedHand, a
company whose work has turned into the base of the new Moblin user interface.
It has also bought a handful of software companies with expertise in gaming and
graphics technology. Such software is meant to create a foundation to support
Intel’s release of new high-powered graphics chips next year. Intel hopes the
graphics products will let it compete better against Nvidia and Advanced Micro
Devices and open up another new business.
Intel tries to play down its competition with Microsoft. Since Moblin is open
source, anyone can pick it up and use it. Companies like Novell will be the ones
actually offering the software to PC makers, while Intel will stay in the
background. Still, Ms. James says that Intel’s relationship with Microsoft has
turned more prickly.
“It is not without its tense days,” she said.
Microsoft says Intel faces serious hurdles as it tries to stake a claim in the
operating system market.
“I think it will introduce some challenges for them just based on our experience
of having built operating systems for 25 years or so,” said James DeBragga, the
general manager of Microsoft’s Windows consumer team.
While Linux started out as a popular choice on netbooks, Microsoft now dominates
the market. Microsoft doubts whether something like Moblin’s glossy interface
will be enough to woo consumers who are used to Windows.
Intel says people are ready for something new on mobile devices, which are
geared more to the Internet than to running desktop-style programs.
“I am a risk taker,” Ms. James of Intel said. “I have that outlook that if
there’s a possibility of doing something different, we should explore trying
October 12, 2008
The New York Times
By RICHARD DOOLING
“BEWARE of geeks bearing formulas.” So saith Warren Buffett, the Wizard of
Omaha. Words to bear in mind as we bail out banks and buy up mortgages and tweak
interest rates and nothing, nothing seems to make any difference on Wall Street
or Main Street. Years ago, Mr. Buffett called derivatives “weapons of financial
mass destruction” — an apt metaphor considering that the Manhattan Project’s
math and physics geeks bearing formulas brought us the original weapon of mass
destruction, at Trinity in New Mexico on July 16, 1945.
In a 1981 documentary called “The Day After Trinity,” Freeman Dyson, a reigning
gray eminence of math and theoretical physics, as well as an ardent proponent of
nuclear disarmament, described the seductive power that brought us the ability
to create atomic energy out of nothing.
“I have felt it myself,” he warned. “The glitter of nuclear weapons. It is
irresistible if you come to them as a scientist. To feel it’s there in your
hands, to release this energy that fuels the stars, to let it do your bidding.
To perform these miracles, to lift a million tons of rock into the sky. It is
something that gives people an illusion of illimitable power, and it is, in some
ways, responsible for all our troubles — this, what you might call technical
arrogance, that overcomes people when they see what they can do with their
The Wall Street geeks, the quantitative analysts (“quants”) and masters of “algo
trading” probably felt the same irresistible lure of “illimitable power” when
they discovered “evolutionary algorithms” that allowed them to create vast
empires of wealth by deriving the dependence structures of portfolio credit
What does that mean? You’ll never know. Over and over again, financial experts
and wonkish talking heads endeavor to explain these mysterious, “toxic”
financial instruments to us lay folk. Over and over, they ignobly fail, because
we all know that no one understands credit default obligations and derivatives,
except perhaps Mr. Buffett and the computers who created them.
Somehow the genius quants — the best and brightest geeks Wall Street firms could
buy — fed $1 trillion in subprime mortgage debt into their supercomputers, added
some derivatives, massaged the arrangements with computer algorithms and — poof!
— created $62 trillion in imaginary wealth. It’s not much of a stretch to
imagine that all of that imaginary wealth is locked up somewhere inside the
computers, and that we humans, led by the silverback males of the financial
world, Ben Bernanke and Henry Paulson, are frantically beseeching the monolith
for answers. Or maybe we are lost in space, with Dave the astronaut pleading,
“Open the bank vault doors, Hal.”
As the current financial crisis spreads (like a computer virus) on the earth’s
nervous system (the Internet), it’s worth asking if we have somehow managed to
colossally outsmart ourselves using computers. After all, the Wall Street titans
loved swaps and derivatives because they were totally unregulated by humans.
That left nobody but the machines in charge.
How fitting then, that almost 30 years after Freeman Dyson described the almost
unspeakable urges of the nuclear geeks creating illimitable energy out of
equations, his son, George Dyson, has written an essay (published at Edge.org)
warning about a different strain of technical arrogance that has brought the
entire planet to the brink of financial destruction. George Dyson is an
historian of technology and the author of “Darwin Among the Machines,” a book
that warned us a decade ago that it was only a matter of time before technology
out-evolves us and takes over.
His new essay — “Economic Dis-Equilibrium: Can You Have Your House and Spend It
Too?” — begins with a history of “stock,” originally a stick of hazel, willow or
alder wood, inscribed with notches indicating monetary amounts and dates. When
funds were transferred, the stick was split into identical halves — with one
side going to the depositor and the other to the party safeguarding the money —
and represented proof positive that gold had been deposited somewhere to back it
up. That was good enough for 600 years, until we decided that we needed more
speed and efficiency.
Making money, it seems, is all about the velocity of moving it around, so that
it can exist in Hong Kong one moment and Wall Street a split second later. “The
unlimited replication of information is generally a public good,” George Dyson
writes. “The problem starts, as the current crisis demonstrates, when
unregulated replication is applied to money itself. Highly complex
computer-generated financial instruments (known as derivatives) are being
produced, not from natural factors of production or other goods, but purely from
other financial instruments.”
It was easy enough for us humans to understand a stick or a dollar bill when it
was backed by something tangible somewhere, but only computers can understand
and derive a correlation structure from observed collateralized debt obligation
tranche spreads. Which leads us to the next question: Just how much of the
world’s financial stability now lies in the “hands” of computerized trading
Here’s a frightening party trick that I learned from the futurist Ray Kurzweil.
Read this excerpt and then I’ll tell you who wrote it:
But we are suggesting neither that the human race would voluntarily turn power
over to the machines nor that the machines would willfully seize power. What we
do suggest is that the human race might easily permit itself to drift into a
position of such dependence on the machines that it would have no practical
choice but to accept all of the machines’ decisions. ... Eventually a stage may
be reached at which the decisions necessary to keep the system running will be
so complex that human beings will be incapable of making them intelligently. At
that stage the machines will be in effective control. People won’t be able to
just turn the machines off, because they will be so dependent on them that
turning them off would amount to suicide.
Brace yourself. It comes from the Unabomber’s manifesto.
Yes, Theodore Kaczinski was a homicidal psychopath and a paranoid kook, but he
was also a bloodhound when it came to scenting all of the horrors technology
holds in store for us. Hence his mission to kill technologists before machines
commenced what he believed would be their inevitable reign of terror.
We are living, we have long been told, in the Information Age. Yet now we are
faced with the sickening suspicion that technology has run ahead of us. Man is a
fire-stealing animal, and we can’t help building machines and machine
intelligences, even if, from time to time, we use them not only to outsmart
ourselves but to bring us right up to the doorstep of Doom.
We are still fearful, superstitious and all-too-human creatures. At times, we
forget the magnitude of the havoc we can wreak by off-loading our minds onto
super-intelligent machines, that is, until they run away from us, like mad
sorcerers’ apprentices, and drag us up to the precipice for a look down into the
As the financial experts all over the world use machines to unwind Gordian knots
of financial arrangements so complex that only machines can make — “derive” —
and trade them, we have to wonder: Are we living in a bad sci-fi movie? Is the
Matrix made of credit default swaps?
When Treasury Secretary Paulson (looking very much like a frightened primate)
came to Congress seeking an emergency loan, Senator Jon Tester of Montana, a
Democrat still living on his family homestead, asked him: “I’m a dirt farmer.
Why do we have one week to determine that $700 billion has to be appropriated or
this country’s financial system goes down the pipes?”
“Well, sir,” Mr. Paulson could well have responded, “the computers have demanded
ONE year after the birth of Windows Vista, why do so many Windows XP users still
decline to “upgrade”?
Microsoft says high prices have been the deterrent. Last month, the company
trimmed prices on retail packages of Vista, trying to entice consumers to
overcome their reluctance. In the United States, an XP user can now buy Vista
Home Premium for $129.95, instead of $159.95.
An alternative theory, however, is that Vista’s reputation precedes it. XP users
have heard too many chilling stories from relatives and friends about Vista
upgrades that have gone badly. The graphics chip that couldn’t handle Vista’s
whizzy special effects. The long delays as it loaded. The applications that ran
at slower speeds. The printers, scanners and other hardware peripherals, which
work dandily with XP, that lacked the necessary software, the drivers, to work
well with Vista.
Can someone tell me again, why is switching XP for Vista an “upgrade”?
Here’s one story of a Vista upgrade early last year that did not go well. Jon,
let’s call him, (bear with me — I’ll reveal his full identity later) upgrades
two XP machines to Vista. Then he discovers that his printer, regular scanner
and film scanner lack Vista drivers. He has to stick with XP on one machine just
so he can continue to use the peripherals.
Did Jon simply have bad luck? Apparently not. When another person, Steven, hears
about Jon’s woes, he says drivers are missing in every category — “this is the
same across the whole ecosystem.”
Then there’s Mike, who buys a laptop that has a reassuring “Windows Vista
Capable” logo affixed. He thinks that he will be able to run Vista in all of its
glory, as well as favorite Microsoft programs like Movie Maker. His report: “I
personally got burned.” His new laptop — logo or no logo — lacks the necessary
graphics chip and can run neither his favorite video-editing software nor
anything but a hobbled version of Vista. “I now have a $2,100 e-mail machine,”
It turns out that Mike is clearly not a naïf. He’s Mike Nash, a Microsoft vice
president who oversees Windows product management. And Jon, who is dismayed to
learn that the drivers he needs don’t exist? That’s Jon A. Shirley, a Microsoft
board member and former president and chief operating officer. And Steven, who
reports that missing drivers are anything but exceptional, is in a good position
to know: he’s Steven Sinofsky, the company’s senior vice president responsible
Their remarks come from a stream of internal communications at Microsoft in
February 2007, after Vista had been released as a supposedly finished product
and customers were paying full retail price. Between the nonexistent drivers and
PCs mislabeled as being ready for Vista when they really were not, Vista
instantly acquired a reputation at birth: Does Not Play Well With Others.
We usually do not have the opportunity to overhear Microsoft’s most senior
executives vent their personal frustrations with Windows. But a lawsuit filed
against Microsoft in March 2007 in United States District Court in Seattle has
pried loose a packet of internal company documents. The plaintiffs, Dianne
Kelley and Kenneth Hansen, bought PCs in late 2006, before Vista’s release, and
contend that Microsoft’s “Windows Vista Capable” stickers were misleading when
affixed to machines that turned out to be incapable of running the versions of
Vista that offered the features Microsoft was marketing as distinctive Vista
Last month, Judge Marsha A. Pechman granted class-action status to the suit,
which is scheduled to go to trial in October. (Microsoft last week appealed the
Anyone who bought a PC that Microsoft labeled “Windows Vista Capable” without
also declaring “Premium Capable” is now a party in the suit. The judge also
unsealed a cache of 200 e-mail messages and internal reports, covering
Microsoft’s discussions of how best to market Vista, beginning in 2005 and
extending beyond its introduction in January 2007. The documents incidentally
include those accounts of frustrated Vista users in Microsoft’s executive
Today, Microsoft boasts that there are twice as many drivers available for Vista
as there were at its introduction, but performance and graphics problems remain.
(When I tried last week to contact Mr. Shirley and the others about their most
recent experiences with Vista, David Bowermaster, a Microsoft spokesman, said
that no one named in the e-mail messages could be made available for comment
because of the continuing lawsuit.)
The messages were released in a jumble, but when rearranged into chronological
order, they show a tragedy in three acts.
Act 1: In 2005, Microsoft plans to say that only PCs that are properly equipped
to handle the heavy graphics demands of Vista are “Vista Ready.”
Act 2: In early 2006, Microsoft decides to drop the graphics-related hardware
requirement in order to avoid hurting Windows XP sales on low-end machines while
Vista is readied. (A customer could reasonably conclude that Microsoft is
saying, Buy Now, Upgrade Later.) A semantic adjustment is made: Instead of
saying that a PC is “Vista Ready,” which might convey the idea that, well, it is
ready to run Vista, a PC will be described as “Vista Capable,” which supposedly
signals that no promises are made about which version of Vista will actually
The decision to drop the original hardware requirements is accompanied by
considerable internal protest. The minimum hardware configuration was set so low
that “even a piece of junk will qualify,” Anantha Kancherla, a Microsoft program
manager, said in an internal e-mail message among those recently unsealed,
adding, “It will be a complete tragedy if we allowed it.”
Act 3: In 2007, Vista is released in multiple versions, including “Home Basic,”
which lacks Vista’s distinctive graphics. This placed Microsoft’s partners in an
embarrassing position. Dell, which gave Microsoft a postmortem report that was
also included among court documents, dryly remarked: “Customers did not
understand what ‘Capable’ meant and expected more than could/would be
All was foretold. In February 2006, after Microsoft abandoned its plan to
reserve the Vista Capable label for only the more powerful PCs, its own staff
tried to avert the coming deluge of customer complaints about underpowered
machines. “It would be a lot less costly to do the right thing for the customer
now,” said Robin Leonard, a Microsoft sales manager, in an e-mail message sent
to her superiors, “than to spend dollars on the back end trying to fix the
Now that Microsoft faces a certified class action, a judge may be the one who
oversees the fix. In the meantime, where does Microsoft go to buy back its lost
Randall Stross is an author based in Silicon Valley
and a professor of business at San Jose State University.
February 22, 2008
Filed at 10:28 a.m. ET
The New York Times
By THE ASSOCIATED PRESS
PITTSBURGH (AP) -- People will increasingly interact with computers using speech
or touch screens rather than keyboards, Microsoft Corp. Chairman Bill Gates
''It's one of the big bets we're making,'' he said during the final stop of a
farewell tour before he withdraws from the company's daily operations in July.
In five years, Microsoft expects more Internet searches to be done through
speech than through typing on a keyboard, Gates told about 1,200 students and
faculty members Thursday at Carnegie Mellon University.
Gates also said the software that is proliferating in various branches of
science, including biology and astronomy must become even more advanced.
''They're dealing with so much information that ... the need for machine
learning to figure out what's going on with that data is absolutely essential,''
Microsoft is trying to establish ties not only with university computer science
departments but also with reseachers in other scientific areas ''to help us
understand where new inventions are necessary,'' Gates said.
Gates plans to retire as Microsoft's chief software architect in July and focus
November 30, 2006
Filed at 10:37 a.m. ET
The New York Times
By THE ASSOCIATED PRESS
NEW YORK (AP) -- For the first time in five years, Microsoft Corp. is finally
unveiling a new system for operating personal computers. Now the company must
persuade PC buyers that the launch really matters to them.
Beginning Thursday, businesses that buy Windows licenses in bulk have first
crack at the new operating system, called Vista. Consumers can get Vista on home
PCs beginning Jan. 30.
Microsoft and computer vendors contend that Vista will make Windows machines
more secure, powerful and graphically dynamic, especially when combined with
other products Microsoft is releasing simultaneously. Those include new back-end
server software for businesses, as well as Office 2007, which brings sweeping
changes to widely used programs such as Word, Outlook, Excel and PowerPoint.
Much is at stake for Microsoft. Most of its revenue and almost all of its profit
comes from Windows and Office, funding the company's sexier ventures in video
games and music players.
But even with all the touted improvements, analysts expect Vista to only
gradually emerge, especially in big organizations where upgrading can be a
costly, complicated affair. Gartner Dataquest predicts that it will be 2010
before Vista outnumbers the previous operating system, Windows XP, on business
A company with 10,000 employees, for example, likely has 1,000 business
applications, many of which need to be tested on Vista before a company can
switch its PCs to the new operating system, said Gartner analyst Michael Silver.
That process often takes 12 to 18 months and lots of labor by the technology
staff. (In other words, for a large business to implement Vista right away would
probably require it to have been an eager-beaver type that experimented with
Vista during its ''beta'' phase that began in mid-2005).
In the meantime, the last operating system, Windows XP, works just fine for most
companies -- especially with a security-enhancing patch known as Service Pack 2
that Microsoft released in 2004.
PC makers say Vista will enable computers to do things that previously were
difficult or costly. For example, Lenovo Group Ltd., the world's No. 3 PC maker,
says Vista greatly enhances data-backup tools it builds into its machines.
''All those capabilities are going to be one step better with Vista,'' said
Clain Anderson, Lenovo's director of software peripherals.
But many buyers want more dramatic reasons to change their PCs.
Kamal Anand, chief technology officer for TradeStone Software Inc., a
Gloucester, Mass.-based provider of supply-chain software, examined test
versions of Vista and Office and found ''no compelling need'' to upgrade his
company's 100 PCs and laptops anytime soon. Instead, Anand expects Vista and
Office to slowly permeate TradeStone as it buys new PCs for employees in coming
''Nobody wants to go through the extra time and effort and money to upgrade an
existing, well-working system,'' he said.
The programs in Office 2007 have been overhauled in many ways. Generally they
can make it easier for people to collaborate on documents and to manage
information from multiple sources. Excel in particular packs a wallop, with
vastly increased number-crunching abilities. The Outlook e-mail program performs
noticeably faster searches for tidbits buried in messages.
Some Office programs also have scrapped their familiar menu structure in favor
of a ''ribbon'' atop the screen that reorders how command choices are presented
to the user. While that new interface unlocks many features that were hard to
find in previous generations of Office software, it will require some time to
get used to, which might give tech buyers pause.
Another potential drag for Office is that the world has changed considerably
since the last major release in 2003. Inexpensive, open-source alternatives to
Office have gained traction. And rivals such as Google Inc. are increasingly
delivering spreadsheets, word processing and other tools for free over the
Internet, an attractive choice for smaller companies.
At Tabblo Inc., a Cambridge, Mass.-based startup that lets people assemble,
print and share online photo collections, CEO Antonio Rodriguez expects to
upgrade many, though not all, of the company's 25 PCs to Vista throughout 2007.
Tabblo's staff expects Vista to make it easier to back up files and synch data
over multiple computers. Rodriguez and crew also have energetically adopted
Microsoft's latest Web browser, Internet Explorer 7.
But Office 2007 holds few such attractions for his company. Tabblo employees
have largely abandoned Excel and Word for free programs on the Web, praising the
flexibility that comes with having files stored online. Just about the only
Office program Rodriguez still uses is PowerPoint for presentations.
''To me, Office 2007 is a complete non-event. I have no interest in an
upgrade,'' he said. ''Most of what I like about computing now lives online.''
Quick, name the world’s most popular electronic game system.
If PlayStation or Xbox popped into your head, that’s understandable. Sony and
Microsoft, the companies that make those machines, have spent rafts of cash over
the years trying to make those brands synonymous with video games. But however
understandable, if you answered PlayStation or Xbox or even Nintendo, you were
In fact, the world’s most popular game machine is the personal computer. And
that doesn’t mean Macintoshes; Macs are essentially nowhere in the game world.
That means PC’s based on Microsoft’s Windows operating system. Hundreds of
millions of people around the world use Windows PC’s and in Microsoft surveys
about half of them report playing games. That doesn’t include the legions of
office-bound Solitaire and Minesweeper addicts who don’t even think of
themselves as gamers. (You are, though!)
But as popular as PC gaming is and has been, the general public has never really
thought of the home computer as a primary game system. That is no accident. For
the first few decades of the digital age, Microsoft’s top goal was to get
computers into as many homes as possible. Bill Gates and friends knew that a
family was more likely to spend $1,000 on its first computer if was meant to
help little Johnny with his homework, or send baby pictures to Grandma, or help
with the taxes, rather than if the family was thinking about the PC’s ability to
send them into outer space or the depths of a dragon’s lair.
Well, here come the dragons.
After years of treating games, game players and game makers as the vaguely
disreputable loons of the PC family, Microsoft is making a major strategic
shift. Just as games are becoming a core part of mainstream entertainment,
Microsoft is beginning to embrace gaming as a core part of using a computer.
That means marketing the PC as the world’s most powerful gaming system and
revamping Windows to make it more game-friendly.
Now that the computer business is about convincing people who already have PC’s
to buy new ones (rather than their first one), Microsoft executives say they
have realized that emphasizing games is a great way to do that.
“Previously we’ve had game technology built into Windows, but we didn’t approach
gaming as one of Windows’ fundamental applications, and that’s what we want to
start to do,” Rich Wickham, the director of Microsoft’s Windows gaming group,
said during a recent visit to New York. “That means supporting developers more
closely, seeding great games, making games easier to install and play, and
having a unified marketing presence.”
The bigger picture is that PC gaming is surging these days even without
Microsoft’s help. A few years ago, the conventional wisdom in game circles (even
at Microsoft) was that PC gaming was stagnant, a niche backwater that would soon
be swamped by consoles like PlayStation and Xbox.
The tsunami most game executives didn’t see coming was the rise in
subscription-based online PC gaming, which wasn’t reflected in the retail sales
charts that dominate big screens in boardrooms. Online PC games like Lineage II
and World of Warcraft are on pace to take in more than $2 billion this year
At the same time, publishers are coming to appreciate that having a strong
portfolio of PC games can help them through the tough times that accompany the
transition to a new generation of consoles every few years. With the
introduction of the Xbox 360 just last November and the scheduled debuts of
Sony’s PlayStation 3 and Nintendo’s Wii this fall, game publishers have been
suffering as customers adjust and wait for the new consoles. Perhaps the biggest
hit of the year has been the Elder Scrolls IV: Oblivion, a game with a fanatical
PC fan base (though the game has sold more copies for the Xbox 360).
So with the two new Japanese consoles coming this fall, Microsoft will try to
blunt their impact in two ways. The first is an all-but-certain price cut on the
Xbox 360. The second will be a new marketing and branding campaign around
Windows gaming. That means advertising, but just as important, it also means
some long overdue help for the sad patch of real estate known as the PC games
section in stores.
“There’s no question about it: Windows games at retail is a disaster,” Mr.
Wickham said, “and we’re going to fix that.”
This is what he means: If you walk into a game store or the game section at a
Wal-Mart these days, the PlayStation games have a clearly marked area of their
own. All the PlayStation game boxes look somewhat similar, and the overall
impression is that PlayStation is a unified community of games and products.
Same with the Xbox area. Same with the Nintendo area. This is because Sony,
Microsoft’s Xbox group and Nintendo try to make their products as attractive as
possible in stores and offer financial incentives to retailers to make that
The PC games area, however, usually looks like a dump. Games may be organized
haphazardly, they all look different, and they are probably stacked on some
dusty shelf in the back of the store. For decades PC games have been the
children of a hundred mothers, with each publisher pursuing its own retail
strategy, if any at all. Having learned how to do retail marketing correctly
with the Xbox, look for Microsoft to apply most of those lessons to PC games
So there will certainly be some new buzz around computer games this holiday
season. But that will hardly compare with what the general public should expect
to hear about PC gaming from Microsoft early next year as the company trots out
its next version of Windows, called Vista. As Microsoft tries to persuade
millions of people around the world to upgrade to Vista, enhanced support for
gaming is going to be one of the main selling points.
So even if your current computer does the taxes just fine, there may be dragons
in your future.