T-Mobile Sidekick Disaster

In 1928 twenty-seven cars filled with gasoline exploded outside Zyba, Kansas. The explosion could be seen from miles away. The chaos and horror of this event was cemented in peoples’ memories for decades.

The T-Mobile Sidekick disasteris turning into one of the biggest train wrecks in recent years. In the era of cloud computing and people dependent on their mobile phones Microsoft is in the middle of  a PR disasters.

Its not everyday Perez Hilton breaks a tech story wide open by ranting on his blog how for seven days he has not been able to access email or contacts on his T-Mobile Sidekick. He immediately ignited the twitt-o-sphere by telling all his loyal fans to tweet #TmobileStillSucks. What came next was so unbelievable it had to be considered a sick joke to Sidekick customers. T-Mobile issued a letter to all of its Sidekick customers saying that based on Microsoft/Danger’s recovery assessment, they basically lost all of peoples’ data. And to make matters worse they have no backup.

Update: T-Mobile halted selling Sidekick devices. T-Mobile is now saying that “Recent efforts indicate the prospects of recovering some lost content may now be possible.” CNet reported that those who do suffer permanent data loss will get a $100 “customer appreciation card” good toward T-Mobile service or products.

Dell Gives Linux Another Try

Dell is giving Linux another try with their latest Studio XPS 13 configuration. People can now select Ubuntu Linux on Studio XPS 13 configurations. Dell has been trying to bring Linux to consumers over the last couple years but it doesn’t ever seem to gain any traction. Dell has the ability with their build-to-order model to target specific segments of the market. In previous attempts to broaden Linux to more offerings, Dell has suffered several high cost support nightmares. Unbuntu is becoming a more user friendly copy of Windows XP. But it is still not polished and simple enough for the average consumer to be able to use.

Amazon Shows Off Kindle 2

Amazon finally announced the Kindle 2 today after weeks of speculation from the blogosphere. Amazon made several improvements but most of them are just incremental enhancements. The price is still the same $359. Hopefully in this version Amazon has worked out their supply chain management issues. Since its launch the Kindle has suffered from supply issues. This past holiday season there was a 13 week wait on getting a new Kindle.

The bigger question is how Jeff Bezos can scale this beyond the Kindle device. Even though he has found a niche hardware business that is probably profitable it doesn’t scale to 100s of millions of people.  Beyond the tech savvy affluent few, not many people are going to be shelling out $350 on a device with a singular purpose. Especially when you can get a netbook for roughly the same price.

Google Takes Gmail Offline

Google announced on their blog that Gmail can now be taken offline with Google Gears, a free open source browser extension. This is one of the most obvious moves for Google as they try and make Windows more and more obsolete by building more capability into the browser.

Gmail which is still in beta after more than 5 years has been having a huge growth spurt. Over the last year Gmail has grown over 43% and with offline access I am sure the growth will continue. Gmail is one of Google’s only success stories out of their core search business. If I was Yahoo or Microsoft I would be more concerned than ever about Google taking more market share and more effectively monetizing those new users.

Google Says Employees First Shareholders Second

Google (GOOG) released there earnings this week and had a couple of surprises. First their revenue was stronger than expected due to the economic meltdown. Good news for investors, it looks like Google is more recession proof than most. But here comes the bad news. Google took a $1 billion charge to write down bad investments in AOL and Clearwire. Second, Google is repricing their stock options for employees costing shareholders almost $500 million. This is nothing more than corporate charity for Google employees. Eric Schmidt, Google CEO, said that, “At least 85% of employees have stock under water.” That certainly makes for a lot of unhappy employees.  This really makes a mockery of the “align employee interests with shareholders” argument. What this tells me is Google is saying we don’t care about shareholders and our stock is not going to be going up anytime soon. It also says we will do just about anything to keep our employees.

Microsoft Misses Earnings and Cuts 5,000 Jobs

The economy must really be going down the tubes. Microsoft announced today it missed its revenue and earnings targets and plans to cut 5,000 jobs.  Amid slow PC sales, revenue for the quarter came in at $16.6 billion for the second quarter, up just 2 percent from a year ago. Microsoft’s revenue was $900 million less than the company projected.

For Wall Street, this was a big surprise given IBM and Apple had strong quarters. People were expecting Microsoft to perform well given its diversified business. I think Microsoft performance is a result of a broader economic downturn that could become much worst before  it gets better. And a growing problem with the effect of netbooks and losing share to Apple. With the economy in more of a reset mode than a recession I think we are in for a long downturn and IT spending will be impacted broadly.

 With this news Steve Ballmer announced that Microsoft would cut 5,000 jobs and reduce other costs across the company. You can read his whole email below. Read more

Google Kills Print Advertising

More bad news for newpapers. Google is exiting the printed advertising business. Today Google announced on their blog that they would be cutting the project entirely, Spencer Spinnel, Director of Google Print Ads, writes:

 

In the last few months, we’ve been taking a long, hard look at all the things we are doing to ensure we are investing our resources in the projects that will have the biggest impact for our users and partners. While we hoped that Print Ads would create a new revenue stream for newspapers and produce more relevant advertising for consumers, the product has not created the impact that we – or our partners – wanted. As a result, we will stop offering Print Ads on February 28. For advertisers who have campaigns already booked, we will place their ads through March 31.

Google Cuts Projects and People

Google is human and not immune to the downturn in the economy. Google announced that they are cutting 100 recruiters and ending deals with several contractors. Now they are cutting several projects like Dodgeball, Jaiku, Mashup Editor, Notebook, Catalog Search, and Google Video. 

I am sure this is the start of a bigger trend to re-focus and prioritize engineering resources across the company. Some of the lavish perks I am sure will also be on the chopping block as Google positions itself to weather the tough economic storm ahead. Google’s quarter looks to be under pressure according to Piper Jaffray analyst Gene Munster, who said in a research note that “Google’s paid clicks are tracking down in December, and that may put pressure on the fourth quarter.”

Regardless of what happens anyone who is in the advertising bsuiness will suffer in this economic down turn. The easiest thing for a CEO to cut in tough times is the marketing budget.

Steve Jobs Takes Medical Leave

Today Apple (AAPL) CEO Steve Jobs announced that he would be taking a medical leave of absence. Apple’s stock was halted from trading after the news broke. There has been a lot of speculation over the last month on his health, especially since he bowed out of MacWorld.

Many thought his pancreatic cancer had come back. But two weeks ago he tried to quell rumors about his health and said his weight loss was due to a hormone imbalance. Now he is being more definitive about how serious his health condition is. Below is the full text of his email.

 

Team,

I am sure all of you saw my letter last week sharing something very personal
with the Apple community. Unfortunately, the curiosity over my personal health
continues to be a distraction not only for me and my family, but everyone else
at Apple as well. In addition, during the past week I have learned that my
health-related issues are more complex than I originally thought.

In order to take myself out of the limelight and focus on my health, and to
allow everyone at Apple to focus on delivering extraordinary products, I have
decided to take a medical leave of absence until the end of June.

I have asked Tim Cook to be responsible for Apple’s day to day operations, and
I know he and the rest of the executive management team will do a great job. As CEO, I plan to remain involved in major strategic decisions while I am out. Our
board of directors fully supports this plan.

I look forward to seeing all of you this summer

LG Adds Netflix to HD TVs

Netflix and LG Electronics announced that LG will soon introduce TV sets that can stream Netflix movies directly from the Web without an external box. “It’s hugely symbolic,” said Netflix’s chief executive, Reed Hastings. “The holy grail has always been to give the TV an Internet jack in addition to the cable jack. It’s an early glimpse of the long-term future.”

Netflix has been hard at work practically equiping every consumer electronic in the home with the capability of instant movie viewing.  From Tivo and DVD players to Xbox 360, Netflix has been fast to lock up as many devices as it can. This partnership with LG is really significant because it is a big step forward in making the TV become a connected device in the home. Read more

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