Microsoft Posts Record Revenues Despite Soft Windows Sales

Microsoft posted record fourth-quarter and full-year revenues despite sluggish sales of Windows and PCs, which were impacted by Apple’s iPad and iPad 2.

Microsoft reported Q4 revenues of $17.4 billion, an 8% jump over the same quarter in 2010. Revenues for its fiscal year, which ended June 30, were also a record $69.9 billion, up 12% from fiscal 2010.

The company’s net income for the quarter was $5.87 billion. For the year, it was $23.2 billion. Those were increases of 30% and 23%, respectively.

Bright spots for fiscal 2011 included the Microsoft Business Division, which grew its revenues 16% for the year, and Server & Tools, which expanded 11%. Online Services revenues also jumped 15%, driven by the growth ofBing, the company’s search engine. Entertainment & Devices grew its revenues 45% for the year thanks to the successful Kinect introduction and continued strong sales for Xbox 360 and Xbox Live.

On the other hand, Windows and Windows Live revenues fell 2% for the year even though Windows 7 sold more than 400 million licenses. Microsoft estimates that sales of PCs to consumers fell 1% for the fiscal year, though sales of PCs to businesses rose 11%.

The company’s earnings compare unfavorably with Apple’s Q3 earnings, which were also announced this week. Apple’s quarterly revenues hit a record $28.57 billion and earnings were another record at $7.31 billion. Apple sold 9.25 million iPads during the quarter, an increase of 183% compared to the same period in 2010. Mac sales also jumped 14%.

Meanwhile, Apple and Microsoft aren’t the only ones recording record quarters — Intel and Google also broke records this month.

Nokia Partners With Microsoft, Embraces Windows Phone 7

by Stan Schroeder

A couple of days ago, an unusually honest internal memo from Nokia CEO Stephen Elop revealed that the company is at a crossroads, and that a new smartphone strategy is necessary.
Today, Nokia and Microsoft have officially entered a strategic alliance that makes Windows Phone 7 Nokia’s primary smartphone platform, but also extends into many other Microsoft services such as Bing, Xbox Live and Office.
Furthermore, the two companies will combine many complementary services; for example, Nokia’s application and content store will be integrated into Microsoft Marketplace, while Nokia Maps will be – as Nokia’s press release puts it – at the heart of Bing and AdCenter.
Nokia will also undergo significant changes in operational structure and leadership. As of April 1, Nokia will have two main business units: Smart Devices, led by Jo Harlow, and Mobile Phones, led by Mary McDowell.
Of course, with such significant changes in Nokia’s strategy, one has to wonder what will happen to its other smartphone platforms. Symbian, says Nokia, will become a “franchise platform, leveraging previous investments to harvest additional value,” and MeeGo will be an “open-source, mobile operating system project.”
While Nokia claims it expects to sell approximately 150 million more Symbian devices in the future, it’s obvious that from now on few people will buy Symbian devices because they run Symbian software. It will more likely power Nokia’s mid-range smartphones and feature phones with Nokia’s flagship phones running Windows Phone 7.
Microsoft and Nokia’s leaders are, of course, enthusiastic about the partnership. “We will create opportunities beyond anything that currently exists,” said Nokia CEO Stephen Elop.
What do you think? Was the partnership with Microsoft the right move for Nokia, and vice versa? Please, give us your opinions in the comments.

Angry Birds Gets Facebook-Infused Valentine’s Day Edition

by Christina Warren
The special Valentine’s Day edition of Angry Birds is now available for iPhone, iPad and Android.
The Valentine-themed levels are part of Angry Birds Seasons, the spin-off version of Angry Birds that first made its debut last fall.

In addition to 15 standard levels of pig-busting fun, Angry Birds Valentine’s Day features some interesting new tie-ins with Facebook and Bing.
On the main app screen, users are invited to go to Facebook to send Angry Birds-themed Valentine’s Day cards. We were able to connect to our Facebook accounts on the iPhone and iPad versions of the game, but weren’t able to actually send the bird-themed greeting.
Fortunately, the page can be accessed from a regular web browser too.
Moving on, by clicking on a link on the second page in the app and clicking the Facebook “Like” button, three more levels are opened.
And of course, it wouldn’t be Angry Birds without hidden surprises. It looks like there are three different golden eggs in this latest Angry Birds update, and Rovio has partnered with Bing to offer an instant link to a pre-filled Bing web search.
In past Angry Birds updates, we’ve seen Rovio push more of its other content, including Angry Birds plush toys and other merchandise, but this is the first time extra content has been linked to fan pages or other partnerships.
During Sunday’s Super Bowl, the birds received a cameo in a spot for the upcoming film Rio (which will be getting its own edition of Angry Birds this March) that gave fans a clue to a hidden level.
The game is one of the most successful mobile phone games of all time — with tens of millions of fans across mobile platforms.

Microsoft: 'We do not copy Google's results'

On February 1, Google went public (via SearchEngineLand.com) withclaims that Microsoft is copying Google search results with Bing.

Google’s ‘Bing Sting’ evidence (screenshots)

(SearchEngineLand has details of how Google created a “Bing Sting” operation to try to catch Microsoft in the act.)

Is Microsoft copping to the claim? Here’s the original response Microsoft is providing to folks who are asking:

“We use multiple signals and approaches in ranking search results.  The overarching goal is to do a better job determining the intent of the search so we can provide the most relevant answer to a given query. Opt-in programs like the toolbar help us with clickstream data, one of many input signals we and other search engines use to help rank sites,” said Stefan Weitz, Director, Bing.

(Update: Matt Rosoff at Silicon Alley Insider has some good historical perspective on how Microsoft has been using its toolbar add-on for Internet Explorer to keep tabs on search terms and topics.)

I went back and asked the Bing folks again, noting that I couldn’t figure out if this was a verbose way of admitting Bing was copying or a denial.

Here’s the new statement, attributable to a company spokesperson:

“We do not copy Google’s results.”

I’m expecting there could be a longer and more detailed answer, via a blog post or a statement during today’s Farsite 2011 future of searchevent. If Microsoft isn’t copying Google’s results, how do they explain the results of the “Bing Sting”? No word so far.

In the interim, the motto of today’s story: The direct answer is almost always the best answer.

Update No. 2: And here it is: Microsoft has posted its explanation of how it uses more than 1,000 different “signals” to create its search algorithm. An excerpt of a blog post from Harry Shum, Bing Corporate Vice President:

“To be clear, we learn from all of our customers. What we saw in today’s story was a spy-novelesque stunt to generate extreme outliers in tail query ranking. It was a creative tactic by a competitor, and we’ll take it as a back-handed compliment. But it doesn’t accurately portray how we use opt-in customer data as one of many inputs to help improve our user experience.”

The evidence

Google’s search engine looked for the word ‘tarsorrhaphy’ after ‘tarsoraphy’ was typed into the search box.

A search on Bing for the misspelled word came up with the exact same results. Here is Google’s comment.

Google: Sting proves Bing copied search results

By the CNN Wire Staff

(CNN) -- Microsoft's search engine Bing is copying results from Google, the dominant search engine on the internet, has claimed.


Suspicious of their new rival, Google engineers set up random results on their site for a series of unlikely search terms, such as "hiybbprqag." (Google arranged for the nonsense word to point to a Los Angeles theater seating plan on its search engine.)


"Within a couple weeks of starting this experiment, our inserted results started appearing in Bing," Google said in a statement on its official blog Tuesday.


Google said it welcomed honest competition, but sneered at Bing's "recycled search results from a competitor."


Bing did not deny that it took Google into account when producing its own search results, but suggested they were only one factor among many. They also accused Google in turn of a "spy-novelesque stunt" that would only affect very unusual search terms.


"We use over 1,000 different signals and features in our ranking algorithm," Bing vice president Harry Shum said Tuesday, referring to the mathematical code that search engines use to choose their results.


Each company develops its own search algorithms, and the quality of the results depends on them, making them the key to a search engine's effectiveness.


Bing gets "a small piece" of the data for its algorithm "from some of our customers, who opt-in to sharing anonymous data as they navigate the web in order to help us improve the experience for all users," Shum said, saying many internet companies used "collective intelligence" gathered online the same way.


He shrugged off Google's sting as "a creative tactic by a competitor, and we'll take it as a back-handed compliment."


Google had more than 70% of the U.S. search engine market as of the end of August, when it started running its sting, according to Experian Hitwise, which monitors web traffic. Bing had just under 10%.

Google claims Bing copies its search results

CNET

by Stephen Shankland

After noticing curious search results at Bing, then running a sting operation to investigate further, Google has concluded that Microsoft is copying Google search results into its own search engine.

That's the report from Search Engine Land's Danny Sullivan today, who talked to both companies about it and presented Google's evidence. According to the report, a mechanism could be the Suggested Sites feature of Internet Explorer and the Bing Toolbar for browsers, both of which can gather data about what links people click when running searches.

The story began with Google's team for correcting typographical errors in search terms, which monitors its own and rivals' performance closely. Typos that Google could correct would lead to search results based on the correction, but the team noticed Bing would also lead to those search results without saying it had corrected the typo.

Next came the sting, setting up a "honeypot" to catch the operation in action. Google created "one-time code that would allow it to manually rank a page for a certain term," then wired those results for particular, highly obscure search terms such as "hiybbprqag" and "ndoswiftjobinproduction," Sullivan said. With the hand coding, typing those search terms would produce recognizable Web pages in Google results that wouldn't show in search results otherwise.

Next, Google had employees type in those search terms from home using Internet Explorer with both Suggested Sites and the Bing Toolbar enabled, clicking the top results as they went. Before the experiment, neither Bing or Google returned the hand-coded results, but two weeks later, Bing showed the Google results that had been hand-coded.

Microsoft didn't immediately respond to requests for comment.

But in a comment to ZDNet blogger Mary Jo Foley, Microsoft said, flatly, "We do not copy Google's results." It's not clear how Bing explains the honeypot results, though it's possible the company could make some kind of argument that monitoring search behavior through a Bing toolbar is just gathering human-mediated relevance data.

Google made it clear it's isn't happy about it.

"I've got no problem with a competitor developing an innovative algorithm. But copying is not innovation, in my book," Sullivan quotes Google Fellow and search expert Amit Singhal as saying. "It's cheating to me because we work incredibly hard and have done so for years but they just get there based on our hard work...Another analogy is that it's like running a marathon and carrying someone else on your back, who jumps off just before the finish line."

And in a statement to CNET News, Singhal added that Google disagrees with Microsoft's position, speaking just as flatly as Microsoft denying copying:

Our testing has concluded that Bing is copying Google Web search results.

At Google we strongly believe in innovation and are proud of our search quality. We look forward to competing with genuinely new search algorithms out there, from Bing and others--algorithms built on core innovation and not on recycled search results copied from a competitor.

Google brought its concerns to Sullivan shortly before a Bing search event today. Coincidentally or not, Google just shifted that event's agenda significantly.

Stefan Weitz, director of Microsoft's Bing search engine, shared this response with Sullivan: "Opt-in programs like the [Bing] toolbar help us with clickstream data [information that shows Microsoft what links people click on], one of many input signals we and other search engines use to help rank sites. This 'Google experiment' seems like a hack to confuse and manipulate some of these signals."

Hack, experiment, or honeypot, it's very revealing. Google created about 100 such hand-coded results, Sullivan said, so it's hard to imagine the act distorting search results in any significant way. The next relevancy question will be to see whether Microsoft concludes it's time to update its own search algorithm so that a Bing search for "hiybbprqag" won't lead to ticket information for the Wiltern theater anymore.