Bits Blog: Why the Surface RT Failed and the iPad Did Not

The Microsoft Surface RT, left, and the Apple iPad.

At first glance, to most consumers, the Apple iPad and Microsoft Surface RT tablet computer look somewhat similar. They are both rectangular, have crisp screens and can boast a slick and clean design interface.

Yet on Thursday Microsoft announced that it was taking a $900 million write-down to reflect unsold inventory of the Surface RT. That’s a stark comparison to Apple’s iPad, which continues to break record sales and has sold more than 100 million devices.

So why is one still succeeding while the other has failed? I have a theory. But it begins with a story.

I often receive tech support phone calls from family members — my dad, grandfather, cousins — seeking help with a variety of computer problems. A few months ago I received such a call from my sister. She was having an issue with her iMac, and I started to walk her through a number of steps to diagnose the problem. Halfway though my narration, I asked her, “O.K., what’s the computer doing now?”

“My computer is restarting,” she said, triumphantly.

“Why, what happened?” I said, confused. “Did it crash?”

“No, I just got impatient so I unplugged it and plugged it back in.”

This is exactly one reason the Microsoft Surface RT failed to garner large sales: Impatience.

When Steve Ballmer, Microsoft’s chief executive, announced the Surface tablets last year, he stood on stage and touted a number of new and exciting features to try to separate the company’s offerings from the iPad. Among the new gizmos were additional ports, a USB drive, a microSD memory card slot, the ability to use a pen with the Surface Pro and a built-in flip-up stand. Pens sold by Microsoft also work with the Surface RT.

Just thinking about all those options is enough to make your head spin.

Today’s consumers don’t want options. They are impatient. They want to tear their new shiny gadget from the box and immediately start using it. They don’t have time to think about SD cards or USB drives or pens or flip stands.

The Surface RT didn’t allow that. Customers had to think about it.

Even the ads for the iPad and Surface RT are different. Apple simply shows the device, making the iPad the hero. Microsoft usually unveils snazzy ads that make the ads the hero, not the product.

Last year when the Surface RT was announced I wrote a post noting that one of the device’s new features did look appealing: the flap that doubled as a keyboard and might make it easier to type on a tablet. But Sarah Rotman Epps, an analyst with Forrester Research who specializes in tablets, reminded me that too many options could easily overwhelm consumers.

“Microsoft will be its own worst enemy in this market,” Ms. Rotman Epps wrote at the time. “More so than Apple or Google. Apple gets this, and limits options to connectivity, storage and black… or white.”

Maybe it’s time for Microsoft to do the same thing. It could even skip the black or white option.

This post has been revised to reflect the following correction:

Correction: July 19, 2013

An image associated with earlier version of this post misidentified one of Microsoft's tablets. It was the Surface Pro, not the Surface RT.

Toni Braxton Blames Oprah Winfrey for Failed Career

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Although Toni Braxton has sold over 60 millions records worldwide, the six-time Grammy winner hasn’t had the best luck with her finances. In 1998 and 2010, she filed for bankruptcy due to her unpaid financial obligations totaling between $10 million and $50 million.

The 45-year-old vocalist is the next artist to be featured on VH1's “Behind the Music” which airs on Monday October 29th. And she’s throwing shade and shaking the tables on Mama Winfrey. Toni Braxton claims that her career was damaged after her 1998 appearance on “The Oprah Winfrey Show.”

“She was so freakin’ mean to me,” Braxton says. “I was in shock!”

“She says to me, ‘I heard you have Gucci flatware,’” recalled Braxton. “I’m Oprah Winfrey and even I don’t have Gucci flatware. You don’t have Gucci flatware because you didn’t want to buy it, not because you couldn’t afford it! What do you mean?”

#TeamOprah hasn’t, and probably won’t, respond to Toni’s comments. Most financial woos stem from overzealous spending habits (insert Gucci flatware) so I think it’s little unfair to blame the TV titan for her mishaps. But I’m sure it was hard for Toni to keep up her fabulous lifestyle and support her family as R&B music died right before her eyes.

Check out a sneak peek of the special below. I will be tuned in, will you?

Watch a Teaser of Toni Braxton's "Behind the Music" Special

Bits Blog: Silicon Valley Sounds Off on Failed Cybersecurity Legislation

A cybersecurity bill that would have set security standards for the computer networks that govern the nation’s critical infrastructure was blocked by a Republican filibuster in the Senate on Thursday.

John McCain, the Republican Senator from Arizona, and other Republicans opposed the bill on the grounds that the standards would have been too onerous for corporations. In the weeks leading up to the Senate vote, a compromise was struck to make those standards optional. But on Thursday, following the filibuster, the Senate voted 52 to 46 to end debate on the bill, which fell eight votes short of the 60 it would have needed to pass.

In Silicon Valley, “regulation” is often treated like a four-letter word. But the Valley seems to have made an exception for cybersecurity, where a sort of Wild Wild West has taken hold. Criminals, “hacktivists” and government agents are able to have their way with few effective security technologies and regulations to stop them.

We contacted three Silicon Valley security experts to get their take on the bill, the cyber threat and the potential, as some have warned, for a 9/11-style cyberattack. They are Rob Rachwald,  director of security strategy at Imperva, a network security firm; Roger Thornton, the chief technology officer of AlienVault, a threat detection service; and Mark Seward, a senior security director at Splunk, a data security firm.

What was your take on the bill? Should it have passed?

Mark Seward: The bill went through a metamorphosis over time. At one point it had real teeth for industry. Then, there was compromise to remove that. The fact is, it’s needed.

Rob Rachwald: It wasn’t going to make any difference. The bill lost its teeth when it dropped the security mandate clause. The problem is that it was all sticks and no carrots. It included security mandates but it did not say, ‘We’re going to invest more in law enforcement, or create a central exchange where you can see where threats are coming from.’ It just said, ‘We’re going to impose a bunch of stuff on you.’ And then, ‘Actually, we’re going to make that voluntary.’ It lost its teeth. It became an empty suit.

What was the opportunity lost?

Mr. Seward: This is a huge setback. Frankly, every day we don’t pass legislation is a huge setback. It’s  the difference between whether we want to be a third world country or a first world country. I’ve traveled abroad and experienced power outages firsthand. The resilience of our infrastructure’s ability to resist an attack is the mark of a first world country. Not being able to trust that water is going to come out of the tap, or that when I light my stove natural gas is going to come out, is a real problem in a first world country. A cyberattack could literally mean that the things we most take for granted won’t be available.

Mr. Rachwald: After the standards became voluntary, it was a wash. The real opportunity loss was the fact that, at least initially, they wanted to build a centralized exchange between the public and private sectors for threat information. They weren’t clear how they were going to do it, but the fact they wanted to do it was important. If nytimes.com gets hacked by someone with ‘IP address 123’ it might look like an isolated incident. But if law enforcement could see that there was an attack from that IP address against multiple news sites, it would indicate that something much bigger was happening. That was the real opportunity missed here.

Roger Thornton: The fact is, intellectual property is being stolen from the industrial base at outrageous rates. Companies are getting broken into all the time. But the idea that there’s some kind of regulation — some sweeping mission to Mars — that is going to solve the whole thing overnight, well, that’s just not going to happen.

This regulation wouldn’t dramatically change the business of cybersecurity in my opinion. It would only build awareness — which is good. Maybe if it had passed 10 years ago, we might have avoided these problems. But now, it’s a different story.

Last week, Shawn Henry, the F.B.I.’s former top cybercop, warned of a 9/11-style cyberattack and said the public won’t take the threat seriously until they experience it firsthand. Is that fear-mongering? When do you think we will witness such an attack?

Mr. Seward: It’s my understanding that the Department of Homeland Security’s incident response team discovered that oil rigs are already under attack. But the fact that I can sit here and imagine scenarios where a key component, like water, might not be available to nuclear reactors is disconcerting. There are plenty of scenarios where the point at which two different parts of critical infrastructure intersect — like oil and gas pipelines, nuclear plants and water treatment facilities — could be jeopardized. All those things are interconnected. Our ability to have the society we have depends on the interconnection of those systems. An attack could happen tomorrow. It could happen next year. Or it could happen 10 years from now. There’s no predicting.

Mr. Rachwald: It’s always quote-unquote imminent. The point is, this legislation would have forced people to think about the threat much more seriously than they will otherwise.

Bits Blog: Silicon Valley Sounds Off on Failed Cybersecurity Legislation

A cybersecurity bill that would have set security standards for the computer networks that govern the nation’s critical infrastructure was blocked by a Republican filibuster in the Senate on Thursday.

John McCain, the Republican Senator from Arizona, and other Republicans opposed the bill on the grounds that the standards would have been too onerous for corporations. In the weeks leading up to the Senate vote, a compromise was struck to make those standards optional. But on Thursday, following the filibuster, the Senate voted 52 to 46 to end debate on the bill, which fell eight votes short of the 60 it would have needed to pass.

In Silicon Valley, “regulation” is often treated like a four-letter word. But the Valley seems to have made an exception for cybersecurity, where a sort of Wild Wild West has taken hold. Criminals, “hacktivists” and government agents are able to have their way with few effective security technologies and regulations to stop them.

We contacted three Silicon Valley security experts to get their take on the bill, the cyber threat and the potential, as some have warned, for a 9/11-style cyberattack. They are Rob Rachwald,  director of security strategy at Imperva, a network security firm; Roger Thornton, the chief technology officer of AlienVault, a threat detection service; and Mark Seward, a senior security director at Splunk, a data security firm.

What was your take on the bill? Should it have passed?

Mark Seward: The bill went through a metamorphosis over time. At one point it had real teeth for industry. Then, there was compromise to remove that. The fact is, it’s needed.

Rob Rachwald: It wasn’t going to make any difference. The bill lost its teeth when it dropped the security mandate clause. The problem is that it was all sticks and no carrots. It included security mandates but it did not say, ‘We’re going to invest more in law enforcement, or create a central exchange where you can see where threats are coming from.’ It just said, ‘We’re going to impose a bunch of stuff on you.’ And then, ‘Actually, we’re going to make that voluntary.’ It lost its teeth. It became an empty suit.

What was the opportunity lost?

Mr. Seward: This is a huge setback. Frankly, every day we don’t pass legislation is a huge setback. It’s  the difference between whether we want to be a third world country or a first world country. I’ve traveled abroad and experienced power outages firsthand. The resilience of our infrastructure’s ability to resist an attack is the mark of a first world country. Not being able to trust that water is going to come out of the tap, or that when I light my stove natural gas is going to come out, is a real problem in a first world country. A cyberattack could literally mean that the things we most take for granted won’t be available.

Mr. Rachwald: After the standards became voluntary, it was a wash. The real opportunity loss was the fact that, at least initially, they wanted to build a centralized exchange between the public and private sectors for threat information. They weren’t clear how they were going to do it, but the fact they wanted to do it was important. If nytimes.com gets hacked by someone with ‘IP address 123’ it might look like an isolated incident. But if law enforcement could see that there was an attack from that IP address against multiple news sites, it would indicate that something much bigger was happening. That was the real opportunity missed here.

Roger Thornton: The fact is, intellectual property is being stolen from the industrial base at outrageous rates. Companies are getting broken into all the time. But the idea that there’s some kind of regulation — some sweeping mission to Mars — that is going to solve the whole thing overnight, well, that’s just not going to happen.

This regulation wouldn’t dramatically change the business of cybersecurity in my opinion. It would only build awareness — which is good. Maybe if it had passed 10 years ago, we might have avoided these problems. But now, it’s a different story.

Last week, Shawn Henry, the F.B.I.’s former top cybercop, warned of a 9/11-style cyberattack and said the public won’t take the threat seriously until they experience it firsthand. Is that fear-mongering? When do you think we will witness such an attack?

Mr. Seward: It’s my understanding that the Department of Homeland Security’s incident response team discovered that oil rigs are already under attack. But the fact that I can sit here and imagine scenarios where a key component, like water, might not be available to nuclear reactors is disconcerting. There are plenty of scenarios where the point at which two different parts of critical infrastructure intersect — like oil and gas pipelines, nuclear plants and water treatment facilities — could be jeopardized. All those things are interconnected. Our ability to have the society we have depends on the interconnection of those systems. An attack could happen tomorrow. It could happen next year. Or it could happen 10 years from now. There’s no predicting.

Mr. Rachwald: It’s always quote-unquote imminent. The point is, this legislation would have forced people to think about the threat much more seriously than they will otherwise.

Google Failed to Delete Street View Data in France

PARIS — The French data protection authorities asked Google on Tuesday to examine private information that cars taking pictures for its Street View service collected, after Google acknowledged that it had retained some of the information despite promising to delete it.

The request by the French privacy protection agency, known as the C.N.I.L., followed a similar one last week from the Information Commissioner’s Office of Britain.

The C.N.I.L. fined the company €100,000, or $120,000, in March 2011 for collecting private e-mail messages, computer passwords and other personal data as its cars took pictures for Google’s Street View feature, a case that prompted privacy investigations around the world.

“Like its British counterpart, the C.N.I.L. has asked Google to make available the data in question and to keep it secure while the necessary investigations are conducted,” the agency said.

In a letter responding to the British information commissioner, Steve Eckersley, Google’s global privacy counsel, Peter Fleischer, said the continued existence of the data had come to light during a “comprehensive manual review of our Street View disk inventory.”

The company added in a statement Tuesday: “Google has recently confirmed that it still has in its possession a portion of payload data collected by our Street View vehicles. Google apologizes for this error. Google would now like to delete the remaining data.”

Google has said that it never intended to collect the data, saying it was the result of mistakes by an engineer working on the Street View program. The company had promised to destroy the information but last week acknowledged it had not actually deleted all of it.

The U.S. Federal Communications Commission concluded an investigation into the matter in April, saying Google had “deliberately impeded and delayed” the inquiry. The agency fined the company $25,000, but determined that it had not violated data protection laws.

The British information commissioner said in November 2010 that Google’s collection of the data was a “significant breach” of British privacy laws, though the company was not fined. In June, the commissioner’s office opened a new investigation into the matter.

“The I.C.O. is clear that this information should never have been collected in the first place and the company’s failure to secure its deletion as promised is cause for concern,” the office said in a statement.

DealBook: Microsoft Takes Write-Down in Failed Digital Ad Foray

Microsoft owned up on Monday to the collapse of its biggest push into digital advertising, announcing that it would take a $6.2 billion accounting charge in its online services division for a failed acquisition.

The accounting charge, called a write-down of good will, was essentially a write-off of the value of aQuantive, a digital advertising company that Microsoft bought in 2007. It will effectively wipe out Microsoft’s fourth-quarter profit.

The company said it took the write-down because “expectations for future growth and profitability are lower than previous estimates” for the online services unit.

The charge will not affect the online services division’s operations or financial performance, Microsoft said.

“It’s disappointing, but it is not a shock at this point,” said Brendan Barnicle, senior research analyst at Pacific Crest Securities. “The industry has evolved beyond where aQuantive was when Microsoft bought it.”

Microsoft does make money in online advertising, but has relied on a number of digital advertising partnerships.

The deal for aQuantive was struck when technology and traditional advertising firms were desperately seeking footholds in the world of Internet display advertising. At the time, aQuantive was the biggest company Microsoft had bought in its history.

A month before the aQuantive acquisition, Google, Microsoft’s big rival in online advertising, purchased a similar firm, DoubleClick, for $3.1 billion. That deal has been highly profitable for Google, analysts say.

The purchase of aQuantive may well have been driven by pressure Microsoft was feeling at the time, not only from the DoubleClick deal, but by similar acquisitions by other companies. Microsoft bought aQuantive one day after the WPP Group bought 24/7 Real Media, another digital advertising company, for $649 million, and a month after Yahoo agreed to pay $680 million for Right Media, an online ad exchange.

All of the acquisitions were in one or another part of the display advertising business across the Web. Once highly profitable by indiscriminately pasting digital ads across the borders of millions of Web pages, the business has become under pressure as companies like Google got better at aiming for individual tastes with search advertising.

With DoubleClick, Google appeared to be using that personalization technology for the placement of banners and other display advertising.

Google used DoubleClick’s huge inventory of Web ads inside AdSense, Google’s self-serve ad placement technology for third-party Web sites.

AQuantive was a well-respected online agency based in Seattle, but its focus was on design and client services. The company did have ad inventory and an ad placement engine similar to DoubleClick’s at the time, but Microsoft did little to update it.

“It could have been another DoubleClick, but they would have had to know a business where publishers and advertisers meet, and then invest heavily,” said Todd Sawicki, chief revenue officer at Cheezburger, a publisher of several popular Web sites.

“Microsoft bought aQuantive in a reactionary move to Google buying DoubleClick, thinking that ad serving was its core strength,” he added. “Then they woke up the next morning and realized what they had.”

Brian McAndrews, the chief executive of aQuantive, was promoted to head Microsoft’s publisher and advertising group in August 2007, but left the company in December 2008. Now a venture partner with the Madrona Venture Group, Mr. McAndrews was recently elected to the board of The New York Times Company.

The poor performance of aQuantive has not hurt other parts of Microsoft’s online ad business. The company’s Bing search engine has grown, as has its revenue per search. Microsoft has struck a number of partnerships, including with Yahoo, WPP and App Nexus, which does real-time ad placement.

In May 2011 Microsoft paid $8.1 billion for the communications company Skype, its biggest purchase, and one that is thought to be going well for Microsoft.

Microsoft still has some innovative ad technology products, said Darren Herman, chief digital media officer at the Media Kitchen, a digital advertising agency. It may be using some of its partnerships to learn more about the online ad business as a prelude to an actual purchase, he said.

“There are a lot of people that think that Microsoft and App Nexus are going to link up,” Mr. Herman said. “It’s just a matter of when, not if.” Nonetheless, the end of possible competitor to Google’s DoubleClick ad placement engine left some even outside Microsoft feeling the sting.

“AOL has a small ad engine, and so does 24/7, but for ad placement it’s really DoubleClick or bust,” said Mr. Sawicki. “It’s a phenomenal failure.”

Tanzina Vega contributed reporting.