Microsoft Jumps on the Tablet Bandwagon

Story first appeared in The Wall Street Journal.

Microsoft Corp. on Monday unveiled the first computer it has ever made, a tablet called the Surface that comes with a keyboard and other features designed to stand out in a market dominated by Apple Inc.

The new device, unveiled by the Microsoft Chief Executive at an event for journalists, is a sign of the new tactics the software giant has been forced to embrace as it tries to make up lost ground in the mobile market.

Microsoft said the smallest Surface tablet is 9.3 millimeters thick and weighs 1.5 pounds, which is similar to Apple's iPad, at 9.4 millimeters thick and 1.44 pounds. The Surface has a 10.6-inch screen compared with the iPad's 9.7-inch screen.

The Surface has a built-in kickstand and magnetic cover, which also acts as a touch keyboard. Microsoft didn't say whether the device would connect to cellular data networks or would be Wi-Fi only.

The Surface will be priced like comparable tablets. Microsoft will sell the tablets itself at Microsoft's handful of retail stores and through some online channels.

Microsoft didn't identify contractors who will manufacture the hardware, or provide much clarity on timing—except to say that the first Surface models will arrive when Windows 8 is generally available, which is expected to be in the second half of the year.

The new tablet device is styled as a vehicle to exploit its forthcoming Windows 8 operating system, and a variant called Windows RT that relies on different kinds of computer chips. The software is the first from Microsoft designed with tablet computers in mind, offering an interface called Metro that is designed to be controlled by a user touching a display.

Microsoft executives repeatedly use the words "no compromises" to describe the tablet computers they envision running Windows 8 and Windows RT—which means that users will be able to use work-oriented tools like Microsoft Word and Excel programs, not just be used for watching movies and surfing the Web.

Microsoft also emphasized the use of the Surface with a keyboard, a convertible usage model that the company has helped champion and Apple has publicly discounted.

The Surface is a PC, the Surface is a tablet and the Surface is something new that Microsoft thinks people will really love.

Microsoft's involvement with tablet-style computing goes back more than three decades, supplying software to companies for products designed to be activated with a pen-style device. But those machines failed to gain wide acceptance. The Surface, and the new versions of Windows, are an attempt to emulate the touch-based interaction that Apple popularized with the iPhone and iPad.

The company also used the name Surface for a tabletop computer it first demonstrated several years ago.

Microsoft executives said the company's decision to make a homegrown tablet computer fits with the history of Microsoft making hardware when it is needed to bolster the company's software, such as Microsoft's making one of the earliest computer mouses.

But by making its own tablet, Microsoft also risks taking sales away from a coming crop of Windows-powered tablets from its own allies. Microsoft traditionally has left the making of computers to partners such as Dell Inc., Hewlett-Packard Co. and Lenovo Group Ltd. Microsoft treading on the hardware-makers turf threatens to strain that long-standing business arrangement.

The computer makers' business is dependent on Microsoft, so they may not express annoyance publicly at Microsoft's trading on the hardware makers' turf. But at least some hardware executives are fuming privately at Microsoft's decision.

Microsoft's move to make its own tablet comes with consequences, which is complicating choices for consumers and complicating relations with third-party manufacturers.

Microsoft showed off the two versions of the Surface. The versions running Windows 8 will run chips from Intel Corp., which supplies chips used in most PCs. The versions running Windows RT will be powered by chips from Nvidia Corp. based on designs from ARM Holdings PLC, a variety of chips widely used in cellphones and tablets.

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Nokia Cuts Costs and Jobs

Story first appeared in The Associated Press.

Nokia Corp. will lay off 10,000 jobs globally and close plants by the end of 2013, the company said Thursday, in a further drive to save costs and streamline operations.

Nokia said it will shut down some research and development projects, including in Ulm, Germany, and Burnaby, Canada, and close its core manufacturing plant in Finland - in Salo - where it will only maintain research and development operations.

These planned reductions are a difficult consequence of the intended actions the company believes that it must take to ensure Nokia's long-term competitive strength. They are increasing the focus on the products and services that consumers value most while continuing to invest in the innovation that has always defined Nokia.

Nokia also gave an updated outlook, saying that competitive industry dynamics in the second quarter would hit its smartphone sector to a somewhat greater extent than previously expected and that no improvement was expected in the third quarter.

The company's share price plunged more than 7 percent to €2.05 ($2.63) in morning trading in Helsinki.

Although the Finnish cellphone maker said it plans to significantly reduce its operating expenses, it will continue to focus on smartphones as well as cheaper feature phones and intends to expand location-based services.

Nokia also announced that private equity group EQT VI had agreed to acquire Vertu, its global luxury phone brand, but that the Finnish company would keep a 10 percent minority shareholding. No financial terms were announced.

Nokia said that two members of its top leadership team will leave - the head of the struggling mobile phones unit and the head of the markets sector.

The loss-making company has been struggling against fierce competition from Apple Inc.'s iPhone and other makers using Google Inc.'s popular Android software, including Samsung Electronics Co. and HTC of Taiwan. It is also being squeezed in the low-end by Asian manufacturers making cheaper phones, such as China's ZTE.

In April, Nokia announced one of its worst quarterly results ever, blaming tough competition for a €929 million net loss in the first quarter as sales plunged, especially in the smartphone market. Boston-based Strategy Analytics said Nokia had significantly lost market share to Samsung, which pushed it out as the world's largest seller of cellphones by volume, grabbing a 25 percent global market share against Nokia's 22 percent.

Last year, Nokia was still the world's top cellphone maker with annual unit sales of some 419 million devices, but in the last quarter of the year it posted a net loss of €1.07 billion, a marked reverse from the 745 million profit a year earlier.

It has fared even worse in the smartphone sector against Samsung and Apple by dropping to third place in the first quarter of the year, dropping to 12 million units against Samsung's 44.5 million and Apple's 35 million.

Nokia is significantly increasing its cost reduction target for devices and services in support of the streamlined strategy announced today. With these planned actions, Nokia believes its devices and services business have a clear path to profitability. Nokia intends to maintain its strong financial position while proceeding aggressively with actions aimed at creating shareholder value.

Last year, Nokia announced more than 10,000 layoffs, aimed at cutting operating expenses by €1 billion ($1.31 billion) by 2013.

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RIM on the Ropes

Story first appeared on NPR.

President Barack Obama couldn't bear to part with his BlackBerry. Oprah Winfrey declared it one of her "favorite things." It could be so addictive that it was nicknamed "the CrackBerry."

Then came a new generation of competing smartphones, and suddenly the BlackBerry, that game-changing breakthrough in personal connectedness, looks ancient.

There is even talk that the fate of Research In Motion, the company that fathered the BlackBerry in 1999, is no longer certain as its flagship property rapidly loses market share to flashier phones like Apple's iPhone and Google's Android-driven models.

With more than $2 billion in cash, bankruptcy for RIM seems highly unlikely in the near term, but these are troubling times for Waterloo, Ontario, the town of 100,000 that was transformed by the BlackBerry into Canada's Silicon Valley. RIM is Canada's most valuable technology company, an international icon so prestigious that the founder and its other driving force, are on an official government list of national heroes, alongside the likes of Alexander Graham Bell.

RIM's U.S. share of the smartphone market belly-flopped from 44 percent in 2009 to 10 percent in 2011 according to market researcher NPD Group. The company still has 78 million active subscribers across the globe, but last month RIM issued a warning that it will lose money for the second consecutive quarter, will lay off workers this year, and has hired a team of bankers to help it weigh its options. Last July it slashed 2,000 jobs.

Of RIM's 16,500 remaining employees, 7,500 live in Waterloo, a university town 90 minutes' drive from Toronto, where everyone seems to know someone who works for RIM.

The decline of the BlackBerry has come shockingly fast. Just five years ago, when the first iPhone came out, few thought it could threaten the BlackBerry. Now the Chief Executive says his employees are getting asked all the time, 'What's going on with you guys? What happened? I mean RIM is the star of Canada and what happened to you guys? And how bad is it going to go?'

RIM's software is still focused on email, and is less user-friendly and agile than iPhone or Android. Its attempt at touch screens was a flop, and it lacks the apps that power other smartphones. Its tablet, the PlayBook, registered just 500,000 sales to Apple's 11.8 million in the last quarter despite a price cut from $500 to $200, well below cost.

RIM's hopes now hang on BlackBerry 10, a new operating system set to debut later this year. It's thoroughly redesigned for the new multimedia, Internet browsing and apps experience that customers are now demanding.

The CEO, formerly RIM's chief operating officer, says he can turn things around with BlackBerry. He took over in January after the company lost tens of billions in market value and the founder stepped down along with the co-CEO.

RIM was once Canada's most valuable company with a market value of $83 billion in June 2008, but the stock has plummeted since, from over $140 share to around $10. Its decline is evoking memories of Nortel, another Canadian tech giant, which ended up declaring bankruptcy in 2009.

But Waterloo is home to more than 800 tech companies and is certainly no company town, many here insist. Smaller firms like e-learning company Desire2Learn have doubled their head count in the last year, and Google has opened an office here.

The chairman of the Center for International Governance and Innovation, a Waterloo-based think tank, likens Waterloo to Rochester, New York, where the blow of Kodak's bankruptcy filing is cushioned by the network of startups the company helped to spawn.

They've taken an enormous hit because of the collapse of Kodak, and Waterloo will take an enormous hit assuming that RIM ultimately vanishes from the scene, but the overall economy and region has been so fundamentally changed by RIM that it will actually do very well.

In an interview with The Associated Press at RIM headquarters in Waterloo, the CEO said he won't try to compete head-to-head with Apple but will try to build on RIM's strengths, such as its dominance of the corporate smartphone market. RIM says more than 90 percent of Fortune 500 companies use BlackBerry and that more than a million North American government workers rely on BlackBerry's software security.

But he acknowledges RIM failed to quickly adapt to the emerging bring your own device trend, in which employees bring their personal iPhones or Android devices to work instead of relying on BlackBerrys issued by their employers.

That's where BlackBerry 10 comes in — delayed but not too late to vie with the new Apple iPhone expected this fall, or so the company hopes. At the end of the day if the product is good you can always come back.

Other tech companies have indeed recovered from the ropes. The late Steve Jobs said Apple was less than three months away from bankruptcy when he rejoined it in 1997, and it's now the world's most valuable company.

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