Microsoft steps up legal pressure against Windows 10 pirates

Dear All,
Microsoft, Files fifth lawsuit since February to stop alleged pirates from illegally activating Windows and Office

Microsoft last week continued its campaign to quash software pirates when it filed the fifth lawsuit in as many months accusing unidentified individuals with illegally activating more than 1,000 copies of Windows, including the newest Windows 10, and Office.

The suit was filed in a Seattle court last Thursday. It was almost identical to others submitted since February, when Microsoft started a string of cases targeting numerous "John Does."

"Microsoft’s cyberforensics have identified over one thousand activations of Microsoft software originating from IP address 69.92.99.109 ('the IP Address'), which is presently assigned to Cable One, Inc.," Microsoft's complaint read.

Microsoft did not identify the culprits, but tagged them as "John Doe" 1 through 10.

"Defendants have activated and attempted to active [sic] copies of Microsoft Windows 10, Windows 8.1, Windows 8, Windows Vista, Windows 7, Office 2013, Office 2010, and Windows Server 2008," Microsoft charged.
As with the previous four John Doe cases of 2016, Microsoft asserted that it tracked the allegedly illegal activations to the IP address, and that the number and pattern of those activation's "make it more likely than not" that they were using stolen product keys or abusing legitimate keys.

The 25-character alphanumeric key codes are a core component of Microsoft's anti-piracy technology. Although the software can be copied an unlimited number of times, the keys individually lock a license to a device. Minus a legitimate key and thus activation, Microsoft's software retreats to a hobbled or even crippled mode.

In a related filing for the same case, Microsoft requested that the latest be assigned to the same federal judge who is overseeing the four others initiated this year because they "are substantially related." Altogether, Microsoft has filed 13 anti-piracy lawsuits since November 2014 with the Seattle court.

Microsoft has been given permission in two of the 2016 cases -- both filed in early June -- to serve subpoenas to internet service providers (ISPs) Comcast and Earth-link. Those subpoenas have demanded that the ISPs identify the alleged software pirates who have been assigned the IP addresses Microsoft had fingered.

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Satya Nadella says Microsoft is revising its goals for Windows 10

Dear All,
We all know that Microsoft was having its stakes high on Windows 10.

Microsoft was recently forced to delay its ambitious goal of getting 1 billion devices onto Windows 10 within the next two years, after its collapsing phone business made that an unrealistic milestone.

Instead, CEO Satya Nadella announced Tuesday during the company's quarterly earnings call that Microsoft will change the way it reports the number of Windows 10 installations (currently at over 350 million), reflecting a shift in how it thinks about the operating system.

 

"We changed how we will assess progress," Nadella says. 

 

Now, instead of the irregular updates on Windows 10 growth we've been gotten for the last year, mainly at Microsoft conferences and events, Nadella says Microsoft will share monthly active users on the operating system "regularly."

 

Notably, instead of installations, Microsoft is now tracking monthly active users of Windows 10 — the same kind of metric used to track services like Google's Gmail, which has a billion monthly active users.

And what does "regularly" mean? Who knows? With Windows 10 rapidly approaching its first birthday, maybe it'll become just another line item on the quarterly earnings report. 

 

Furthermore, Nadella says that Microsoft is measuring the success of Windows 10 on some key benchmarks, which will also be reported on that same "regularly" scale:

 

"Deliver more value and innovation" — on August 2nd, Microsoft is delivering the Windows 10 Anniversary Update, a free upgrade that brings new stylus and security features. Nadella says new features bring new people into the Windows 10 fold.

"More services" — Nadella has long held that Windows 10 is an excellent sales funnel towards Microsoft's key subscription services, including Office 365 and Xbox Live. Nadella says that Microsoft is focusing on how Windows 10 can push more of that kind of service revenue.

"New device categories" — In the same way that the Surface Pro tablet and Surface Book laptop are incentivizing manufacturers like Dell, HP, and Lenovo to up their games in the hardware market, Nadella says that new-era devices like the HoloLens holographic headset and Surface Hub mega-tablet can inspire new kinds of Windows-powered computers to hit the market, increasing Windows' footprint.

 

None of this is especially new: The reason Microsoft was angling for a billion devices in the first place was because with Windows 10 everywhere, it gives the crucial software development industry a reason to stick around Windows and not leave for the iPhone or Android.

 

But by reporting the monthly number, and explicitly making these three points Microsoft's goals, it's demystifying its intentions around Windows 10, while making it more explicit that it plans to keep growing in these areas. 

 

The Windows 10 free upgrade offer will end on July 30th, meaning people are going to have to pay $130 for the operating system. It'll be really interesting to see, on a more regular basis, how many people are willing to pony up for Nadella's vision of an always-improving Windows.

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Microsoft’s Q4 earnings beat Street with $22.6B in revenue

Dear All,

Wall Street expected the company to report earnings per share of $0.58 on revenue of $22.14 billion.

The company’s stock was trading up 3.5 percent right after the earnings were announced.

As Microsoft’s director of investor relations Zack Moxcey told me after the earnings announcement, the GAAP results this quarter still reflect the charges Microsoft took related to its phone business and adjustments for Windows 10 revenue deferrals. He also attributed part of Microsoft’s higher than expected earnings to the company’s lower than expected tax rate.

In the year-ago-quarter, Microsoft’s revenue was $22.2 billion, but earnings per share came to a $0.40 loss because of the $7.5 billion charge Microsoft took related to its acquisition of Nokia. Without the charge, the company’s earnings per share would have been $0.62.

“This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations,” said Satya Nadella, chief executive officer at Microsoft. “The Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead.”

Like in previous quarters, analysts will be especially interested in Microsoft’s cloud revenue. In its Q3 report, Microsoft said revenue from its “Intelligent Cloud” business had grown to $6.1 billion, up 3 percent (or 8 percent in constant currency). Azure revenue had grown 120 percent year-over-year while its server products and cloud services revenue had increased 5 percent.

This quarter, Intelligent Cloud revenue hit $6.7 billion and Azure revenue grew 102 percent year-over-year.

 

Microsoft has long said that it expects its commercial cloud business to hit a $20 billion run rate by 2018. In Q3, it reported that its run rate was $9.4 billion. With this new report, that number has now hit $12.1 billion, which Microsoft prominently highlighted in its earnings release. Moxcey told me that the company is standing by its plan to reach a $20 billion run rate by 2018.

Sadly, Microsoft doesn’t provide geographic breakdowns of its revenue numbers, but Moxcey attributed some of the growth in the company’s Azure business to Microsoft’s wide geographic footprint with regard to Azure regions.

As far as Intelligent Cloud goes, Moxcey also noted that the company doubled its customer base for its enterprise mobility solutions year-over-year (it now has 33,000 customers), and that the installed base grew nearly 2.5x year-over-year.

Here is a breakdown of Microsoft’s numbers for its other business units:

Productivity and Business Processes (this includes Office, consumer Office and Dynamic, among other products): $7.0 billion, compared to $6.3 billion in revenue in the last quarter. Microsoft attributes this to strong growth across its productivity services and especially the fact that Office 365 commercial revenue grew 54 percent year-over-year and that its Dynamics CRM paid seats are growing at more than 2.5x year-over-year.

More Personal Computing (including Windows, Devices, Gaming and Search): $8.9 billion in revenue, compared to $12.7 billion in the last quarter. Phone revenue, unsurprisingly, declined 71 percent, but the company’s revenue from its Surface line continues to increase and was up 9 percent in the last quarter (mostly driven by the Surface 4 and Surface Book).

Windows OEM consumer revenue grew 27 percent. For the commercial market, it grew 2 percent (which sounds low, but is far better than in previous quarters). Because Microsoft’s revenue in this area is largely driven by new purchases, Microsoft doesn’t expect the end of the free update offer to have a markable influence on next quarter’s results.

Microsoft also announced that Xbox Live now has 49 million monthly active users and that its search advertising revenue was up 16 percent, largely due to the deeper integration of its search tools into Windows 10. During today’s earnings call, Microsoft CEO Satya Nadella also noted that Windows 10 users have now asked Cortana 8 billion questions to date.

For the full year, Microsoft reported $92 billion in non-GAAP revenue and $2.10 in adjusted earnings per share. The company’s operating income was $27.9 billion on a non-GAAP basis.

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