Tech roundup: Microsoft is No. 3, but not out of the running

It takes being more than dropping to 3rd place behind Apple and IBM in market value to keep Microsoft down. Plus news on other Seattle-related tech developments.

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It takes being more than dropping to 3rd place behind Apple and IBM in market value to keep Microsoft down. Plus news on other Seattle-related tech developments.

One wonders if the Microsoft campus in Redmond is resounding with the proud cry, “We’re Number 3!  We’re Number 3!”  Probably not.  For a company that topped the financial charts of being the world’s most valuable company for so many years, it must be humbling to have two companies it once bested in financial worth  —Apple and IBM — to be first and second respectively, and Microsoft humbly accepting the third slot, according to Bloomberg.

There’s probably not much to cry about, considering that IBM’s market value was $214 billion as of late last week, and Microsoft’s value fell to a not-exactly-pathetic $213.2 billion. Apple continued on its record-breaking ways with a value of $353.5 billion. With the steep back-and-forth volleying of the stock market over the last week, these prices will no doubt have changed by the time you read this blog.

On the other hand, Microsoft has moved ahead on a few fronts that show what a company of its size and magnitude can do.  Microsoft has been taking its time (too much time, some argue) to reinvent its approach to both desktop computing and its mobile phone business.  A few weeks ago it released a beta version of Windows 8—the successor to today’s familiar PC operating system but with a radically new version that is designed as much for touch screens as it is for use with a mouse.  The same system will be featured on an upcoming generation of Microsoft tablets.

The approach is visually different — and striking — based on “tiles” that either contain information or are gateways to other information, or both. If it bears a striking resemblance to Microsoft’s Windows 7 mobile phones, it’s not unintentional.

Speaking of Windows 7 phones, a long-awaited update to those phones, Windows 7.5 or, popularly, Mango, was released this week, with a slew of new features.  In a Microsoft official blog posting carried by CNET, Microsoft indicated that about 50 percent of all Windows 7 users can now receive the update.  It offers enhanced apps, an improved marketplace, and more.  (You can read a consumer-oriented review of the system from the Huffington Post.)

The Mango phones also contain enhanced connectivity with Microsoft’s best-selling Xbox game console: a feature that may have as much to do with Microsoft’s big-Big-BIG plans for the Xbox being the center of home-based entertainment, and not merely a “game console.”

Today (Wednesday), Microsoft confirmed a a much-rumored story that it is planning to offer pay-TV/cable TV services from both Comcast/Xfinity and Verizon/FIOS via the Xbox's Xbox Live subscription service.  According to a Bloomberg report, the partners will also include AT&T Inc., Time Warner Inc.’s HBO, Sony Corp.’s Crackle, and the BBC, with content from nearly 40 TV and entertainment companies. Reportedly, the new service won't include U.S. network programming, but a Microsoft executive said that Comcast and other partners are "quite likely" to add network content in the future.  Xbox Live has 35 million subscribers, and almost 55 million Xboxes are installed worldwide.

Microsoft CEO Steve Ballmer has been out in front of this movement to make the Xbox the cornerstone of home entertainment. He also sees Microsoft’s Kinect controller, which allows body movement and voice to control game movement and other on-screen entertainment, as a key to the Xbox strategy. “We all know the frustrations of using guides and menus and controllers, and we think a better way to do all of this is simply to bring Bing [Microsoft's answer to Google] and voice to Xbox,” Ballmer was quoted as saying at a developers conference. “You say it, Xbox finds it.”

And lest we really feel sorry for Microsoft’s ignominious fall to Number 3, note this NPR news story (also reported elsewhere) that the manufacturers of Android smartphones are paying off Microsoft with a royalty of between $10 and $15 per phone in order to avoid being sued by Microsoft for patent violations.

In more local tech news, Rhapsody, the online subscription music service launched here in Seattle by Real Networks in 2001, is a successful survivor in the music business, one of the most brutal areas of on-line competition.  And ironically, one of the companies most responsible for that disruption, Napster, founded at roughly the same time as Rhapsody and once its great rival, is quietly going into oblivion as a total buyout by Rhapsody from Best Buy, its last corporate owner. 

This week, Rhapsody made the announcement in a press release. Terms were not announced, nor was the fate of the Napster brand and well-known logo.  What was said, however, was that Rhapsody is acquiring Napster’s subscriber list and “certain other assets” while giving in return a minority interest in Rhapsody. 

Commented Jon Irwin, Rhapsody’s president, “This deal will further extend Rhapsody's lead over our competitors in the growing on-demand music market.  There's substantial value in bringing Napster's subscribers and robust IP portfolio to Rhapsody as we execute on our strategy to expand our business via direct acquisition of members and distribution deals.”

A decade ago, the Napster name was on every tech list as one of the hottest Internet companies.   It was also on the music industry’s hit list: seen as leading the piracy movement against America’s endangered recording industry through pioneering the use of peer-to-peer file sharing — essentially setting up a service where people could exchange legally or illegally obtained digital music files from each other and avoid buying albums, paying retail CD proces,s and cuting musicians out of their royalties.

In 2002, Napster’s assets were acquired by German music giant Bertelsmann, then its name was used on a few other music services before landing with Best Buy three years ago as a street-legal subscription service. Now with its Rhapsody takeover, it’s likely that we’ve seen the last of one of the most notorious game-changing companies of the digital age. R.I.P, Napster. 

And lastly, looking for some iPad-centric family games — and to put more money back into the Seattle economy?  Then rush out to your local toy store to buy one of the two new Duo games from Seattle’s Discovery Bay Games , which combine a hands-on game with free apps from the iPad.  Both games attach themselves to the iPad and allow families from age 6 and up to interact with a game unit, an iPad, and each other.  Duo Pop lets multiple players or teams answer questions correctly using one of four handheld “poppers” and a device that talks wirelessly to the iPad.  Cost: $39.95.  Duo Plink uses the iPad to let players choose what color is coming up next. Its cost: $29.99. More apps for each can be purchased through each game’s in-app store.

Discovery Bay Games works with some blue-ribbon partners, including Atari, the Smithsonian Institution, and the producers of "Saturday Night Live."  Co-founder and CEO Craig Olson is a UW graduate and holds a Masters in history from Harvard.  The website notes he is “conversational in German, speaks Italian poorly, and flounders hopelessly in Ethiopian.”  And I was so hoping to have a conversation with him about whether he prefers drumming on the negarit or the kebero over the atamo.

Editor's Note: Crosscut is expanding its coverage of local technology companies and issues.  We welcome input from those with any over-the-transom/under-the-front-door story ideas.  Please feel free to drop an email to or directly to Skip Ferderber,


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