Thursday, October 4, 2007

Microsoft’s chief executive has seen the future - and the future is advertising

Steve Ballmer’s plans for the computer software giant include taking on Yahoo! and Google in their own internet territory

Steve Ballmer doesn’t do half-measures. The veteran Microsoft chief executive says that he relaxes by running, playing golf and seeing his children “and the other 18 hours of the day I work”.

Moments later, the dynamo charged with steering the 30-year-old software giant through an increasingly complicated middle age actually raises his voice to a yell as he maps out his blueprint for Microsoft’s future.

“It gives us the chance to surprise shareholders,” he shouts of his plan to transform Microsoft into an advertising company. He leans forward and raises his voice several decibels as he hits “surprise”. The soundbite is delivered in the manner you might expect of a man whose behaviour PC Magazine said - approvingly - “borders on the maniacal”.

But there looks to be clear thinking behind Mr Ballmer’s strategy: Microsoft, often criticised for not spotting the web’s potential early enough, must catch Google, the runaway leader in online advertising and the king of internet search. Mr Ballmer has just bet $6 billion (£2.9 billion) on that aim, through the acquisition of aQuantive, an online advertising company that specialises in targeting online campaigns to individual consumers. The deal is Microsoft’s largest to date. Mr Ballmer, 51, says that it “proves his commitment” to making Microsoft a true advertising powerhouse (it is languishing in third place behind Yahoo! and Google). “We’re going to keep coming and coming,” he says. “I think everybody would like to see – in advertising and search – Google get some competition.”

There is only one moment when Mr Ballmer’s web evangelism slips – when he voices caution over the longevity of social networking sites such as Facebook: “I think these things are going to have some legs, and yet there’s a . . . faddish nature about anything that appeals to younger people.”

That could be negotiating spiel: they follow reports that Microsoft is weighing up paying as much as $500 million for a 5 per cent stake in Facebook. Such a deal would value the three-year-old site at $10 billion - despite it being expected to achieve revenues of only $150 million this year - and could start a bidding war, with Google, for what is widely viewed as the web’s hottest property.

Mr Ballmer will not comment on Microsoft’s talks with Facebook, but he does suggest that he can see value in the Facebook brand and the “network effects” - or community - that the site has built up by accruing more than 40 million users.

However, he adds that, in contrast to the aQuantive deal, there is little in the way of underlying technology to justify the lofty valuation attached to Facebook. “There can’t be any more deep technology in FaceBook than what dozens of people could write in a couple of years,” he says.

He goes on to reference the past declines of sites such as Geocities, the online community that was bought for $3 billion by Yahoo! in 1999. It “had most of what FaceBook has”, according to Mr Ballmer.

Betting that his site will not meet the same fate, Mark Zuckerberg, 23, FaceBook’s founder, has mooted a valuation of $15 billion but has insisted that Facebook will remain independent. Mr Zuckerberg opening the gates to Microsoft would surprise many in Silicon Valley, but Mr Ballmer admits that he needs to muster up something shocking to catch Wall Street’s attention. To his chagrin (he owns more than 9 per cent of the company that he joined in 1980, a holding that contributes to an estimated $15 billion personal fortune), Microsoft shares have traded more or less flat since 2002 and are languishing at half the levels seen in 2000.

Mr Ballmer says that the sluggishness is in part the result of overly optimistic Wall Street targets - misguided calculations by “all these expensive, well-meaning financial types” - and in part a function of Microsoft being a technology company subject to more risk than a “bricks and mortar business, like Tesco”. In truth, however, Wall Street is also nervous about how long it will take Microsoft’s big bet on advertising to pay off.

Meanwhile, Microsoft’s efforts to revitalise its shares look like an effort to emulate two of its rivals, Google in online advertising and Apple in hardware, two companies whose share prices have left those of Microsoft far behind. Apple’s stock, largely on the back of the iPhone, has doubled in the past year; Google’s has surged 700 per cent in its three years as a listed company.

His advertising plans follow an established Microsoft pattern: chase a market leader into a new sector and pummel it into submission. That, after all, is what the company did to Lotus in spreadsheets (with Microsoft Excel) and Netscape in web browsers (through Internet Explorer).

Mr Ballmer suggests that there lies a new formidable force behind the drive into advertising. “My general rule of thumb today is that anything the consumer doesn’t have to pay for, they won’t,” he says.

The admission beckons towards a trend of free online software and services that has the potential to decimate Microsoft. Google and IBM, for example, recently launched free alternatives to Microsoft Office, Mr Ballmer’s biggest earner by far. The stalwart suite of office tools, which includes Word and Excel, accounted for revenues of $4.6 billion – a third of Microsoft’s total sales – in the company’s most recently reported quarter.

Microsoft is in danger of losing licence fees that it has milked for decades as customers depart for free alternatives. The answer: Microsoft will also offer free services - e-mail, photoshare, instant messaging and the like - and reap revenues through advertising.

“There is no way to play in broad consumer services unless you’re going to use advertising,” Mr Ballmer says, “and you only have two choices for advertising: one, you do it yourself, or you outsource it to Google. In our case, that’s probably not going to happen.”

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Tech grads get higher salary offers, but existing workers may face job perils

Computer science graduates and other students leaving college with IT skills appear to be in demand: Starting salary offers are up, according to a recent report, and university officials say that IT recruiters are crowding campuses.

But if you're a high-tech worker in the middle of your career, the job outlook may be less certain, as cutbacks continue at some of the top IT vendors.

Recruiters "are on college campuses constantly looking for people," said Emanuel Contomanolis, associate vice president of co-op and career services at the Rochester Institute of Technology (RIT) in New York. And it isn't just vendors doing the recruiting, he said, pointing to increasing interest in tech grads among companies in certain vertical industries.

For instance, Contomanolis said that financial services firms, which typically had been focusing their college hiring efforts on students with financial-related degrees, are now aggressively hiring graduates with IT skills. That's because the companies have realized that technology capabilities "are going to be critical to how they differentiate themselves in the market," he added.

The heightened interest is borne out by survey data collected by the National Association of Colleges and Employers (NACE), which last month said that computer science graduates have been offered an average salary of $53,051 this year, up 4.5% from last year's level. Contomanolis is present-elect of Bethlehem, Pa.-based NACE, which also said that this year's graduates with management information systems degrees have received an average starting salary offer of $47,407, up 4.7% year to year.

The salaries being offered to computer science graduates from the class of 2007 are the highest reported to NACE in the past seven years. The next-highest salary level was recorded in 2001, when graduates were offered an average of $52,473. The low point was in 2003, when the average salary offer dropped to $47,109, according to NACE.

The fact that recruiters now have a smaller pool of computer science students to choose from may be contributing to the increased salary offers. For instance, according to the Computing Research Association (CRA), the 170 institutions in North America that grant computer science degrees up to the Ph.D. level reported a total of 10,206 bachelor's-degree graduates for the academic year that ended in the spring of 2006 -- the most recent one for which data is available. That was down by nearly one-third from the level at the start of this decade, when there were more than 14,000 graduates annually.

"The drop isn't over yet," said Jay Vegso, a CRA staff member who authored a report on the number of graduates for the Washington-based group. Vegso also looks at enrollment trend data, and he said he expects the decline in computer science graduates to continue for another two years -- or perhaps stabilize at best.

The most-cited reason for the decline is the dot-com bust; the students who graduated last spring would have enrolled when the high-tech downturn was at about its worst point. But the movement of tech jobs to lower-wage countries, is also seen as a factor.

At Michigan State University, a career day this week was filled with IT recruiters, said Kelly Bishop, executive director of career services at the East Lansing-based school. The interest being shown by recruiters is higher than it was in previous years, he said. Companies that had been holding off from hiring new employees are now moving to do so, according to Bishop.

He said he thinks that a major reason for the increased interest is the looming retirements of baby boomers. But although Bishop sees more urgency on the part of employers to find new workers, he said that companies "are going to a lot of lengths to identify a relatively short list of people they consider are going to make a difference in their organization."

Prospective employers "are all eager to talk to you, but it's still going to be tough to get a job," Bishop said. "They are being incredibly selective."

For many established workers, the picture is less pretty than it is for new graduates. For instance, Electronic Data Systems Corp. said in a filing to the U.S. Securities and Exchange Commission last month that it was offering an early retirement program to about 12,000 of its 50,000 U.S. workers (download PDF).

Sun Microsystems Inc. said this week that it plans to cut 1,500 employees as part of a workforce reduction program announced in early August. And Intel Corp. recently confirmed that its IT staff is being cut by as much as 10% after an anonymous blogger described the layoff process in detail.

Those actions indicate that "midcareer workers better beware," said Ron Hira, an assistant professor of public policy at RIT and author of the book Outsourcing America (American Management Association, 2005).

"The same firms that are laying off thousands are clamoring that they need more foreign workers," Hira said. "One interpretation of this phenomenon is that companies have no interest in retraining or retaining incumbent workers to fill those positions."

On Monday, the U.S. government began issuing about 85,000 H-1B visas for its new fiscal year -- a total that is well short of what the high-tech industry says it needs for workers from overseas. Industry efforts to raise the annual H-1B cap have faltered as part of broader immigration-reform legislation, but proponents are still pushing Congress for an increase.

"Until we are emphatically told 'No' by the House and Senate leadership, we continue to make the case," said Robert Hoffman, vice president of government and public affairs at Oracle Corp. and co-chair of Compete America, a Washington-based lobbying group.

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Is Java Full of 'CRAP'?

At one point or another every developer has looked at a piece of code and said aloud (or to themselves), "this is crap." Until now the definition of what actually constitutes crappy code has not been a finite science with a proper formula or analytics.

Thanks to the efforts of Alberto Savoia, founder and CTO of Agitar Software, there is now a statistical measure to monitor Java code. Called crap4j, CRAP is an acronym for Change Risk Analyzer and Predictor.

Savoia said that code complexity and a lack of testing lead to code that is difficult to maintain and enhance. Actually determining how inefficiently complex a piece of code may be is what the CRAP score is all about.

"Even though the name is humorous, CRAP is meant for a very serious purpose," Savoia told "There is no standardization for code quality. Our goal is to come up with a metric for code quality that people would use."

The basis of how Savoia determines inefficient complexity is by measuring how much complexity there is in the Java methods included in a particular piece of code. Too much complexity in the form of too many branches in Java code methods is not a good thing, Savoia said.

The CRAP formula also tries to determine whether there are automated tests for the code, since untested code is also an indicator of CRAP. "The more branches, the more pieces of code and the harder it is to maintain," Savoia said.

The general idea is that the higher the CRAP score, the more crap a developer will need to deal with in order to maintain the code. That said, the CRAP score is not necessarily an indicator of code security.

"The reality is that no metric is infallible," Savoia admitted. "Having a low CRAP score doesn't mean you don't have bugs; but having a high CRAP score means you've got a sloppy development. A high CRAP score likely indicates you've got problems in more than one area."

Though the crap4j effort has been spearheaded by Savoia and his company Agitar, he expects no direct financial gain from the effort and intends on running the project as an open source endeavor. The crap4j tool itself is an Eclipse plug-in and Savoia noted that the plan it to move the source code over to the Eclipse Foundation where Agitar is a member.

"It will be more fun if others pick CRAP up," Savoia said. "The metric should not be controlled."

For Savoia, the CRAP effort is all part of his own crusade to improve code quality for all.

"Software is such a black box thing and for the industry to be open about the degree of testing and hopefully by trying not to have their code labeled as crappy, we can improve software."

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Remove clutter with Windows XP SP2's Duplicate Finder tool

Even if you're a conscientious computer user (i.e., you regularly delete unnecessary files, empty the Recycle Bin, and run Disk Defragmenter), you may be unaware of a potentially big waster of hard disk space: duplicate files. Applications can litter your hard disk with duplicate files, or you can actually create duplicate files by copying files from one folder to another.

Windows XP's default installation doesn't provide you with a decent utility for tracking down duplicate files. However, Microsoft does have a tool called Duplicate Finder, which is part of the Windows XP Service Pack 2 Support Tools. Here's how to install and use the Duplicate Finder tool:

1. Download the Windows XP Service Pack 2 Support Tools and follow the instructions for installing the Complete installation version.
2. Open the Run dialog box by pressing [Windows]R.
3. Type Dupfinder in the Open text box and click OK.
4. Once DupFinder loads, simply select the drive or folder to search and then click the Start Search button.
5. When DupFinder completes its search, you can scan through the list and examine the duplicate files.

Here are tips for working with the list of duplicate files:

* Use either the Print Report or Export Data commands on the File menu to create a permanent record of the duplicate files.
* Use the Sort command on the View menu to reorganize the list for better analysis.
* To get more detailed information about any file, select the file, pull down the File menu, and select the Info command.
* Leave duplicate files in the Windows folder and its subfolders alone.
* If you don't recognize the duplicate file, it's better to use the Rename or Move commands on the File menu rather than the Delete command.

Delete Hiberfil.sys in Windows XP before defragmenting

If you use the Windows XP's Hibernation feature on your laptop, you may want to delete the Hiberfil.sys file from the hard disk before defragmenting. When you put your computer in hibernation, Windows XP writes all memory content to the Hiberfil.sys file before shutting down the system. Then, when you turn your computer back on, the OS uses the Hiberfil.sys file to put everything back into memory, and the computer resumes where it left off. However, Windows XP leaves the Hiberfil.sys file on the hard disk, even though it's no longer needed.

The Hiberfil.sys file, which can be very large, is a special system file that Disk Defragmenter cannot defragment. Therefore, the presence of the Hiberfil.sys file will prevent Disk Defragmenter from performing a thorough defragmenting operation.

Follow these steps to remove the Hiberfil.sys file from the hard disk:

1. Access the Control Panel and double-click Power Options.
2. Select the Hibernate tab in the Power Options Properties dialog box.
3. Clear the Enable Hibernation check box and click OK.

As soon as you clear the check box, Windows XP automatically deletes the Hiberfil.sys file from the hard disk. Once you complete the defrag operation, you can re-enable the Hibernation feature.