Microsoft Pulls From Apple Playbook With Surface Tablet


By Ian Sherr

Microsoft Corp.’s first personal computer, the Surface tablet, provides further evidence that Apple Inc.’s strategies and success continue to shake up the tech sector.

The software giant is for the first time emulating Apple’s longtime practice of managing both elements in a computing device—one that will directly compete with products from its biggest customers.

Though insisting it remains committed to helping other hardware companies make successful tablets using its software, Microsoft also endorsed Apple’s philosophy in forceful terms.

“We believe that any intersection between human and machine can be made better when all aspects of the experience—hardware and software—are considered and working together,” said Steve Ballmer, Microsoft’s chief executive, during the Surface launch event Monday.

Indeed, the Surface mirrors the signature traits of many Apple products: It has sleek edges and it is encased in various metals. The device is also thin and light, with specifications very similar to the newest iPad, which went on sale in March. Microsoft also touts the interplay of software and hardware, particularly with its magnetically attachable screen cover, which also doubles as a touch keyboard and trackpad.

The Redmond, Wash., company even borrowed from Apple’s well-worn playbook of remaining very secretive about its launch event, keeping unusually quiet about details like where it would be held and leaving partners in the dark about its plans.

“This is a drastic change for the company,” Raimo Lenschow, an analyst for Barclays, said in a note to investors. “With Microsoft taking on the end-to-end design and manufacturing of the device, it is clear that they realize the competitive threat that tablets present and are thus taking steps to compete in the tablet market directly.”


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(Published June 22, 2012, on The Wall Street Journal’s website.)

Apple Raising Pay for Retail Workers


By Ian Sherr

Apple Inc. is raising hourly pay for employees at its U.S. retail stores by as much as 25%, following an internal review period earlier this year.

Apple employs the equivalent of 36,000 full-time staffers at its more than 350 retail stores around the globe. About two-thirds of the stores are in the U.S. Apple Store workers are typically paid about $9 to $15 an hour at the sales level, and up to about $30 an hour at its “Genius” tech support teams.

Employees began learning of the raises in face-to-face meetings with managers last week, according to three Apple employees in various regions across the U.S. The raises, which are based on performance, will begin appearing in paychecks around the middle of July, two of these people said.

Employees said they were appreciative of the move, though they considered the raises had been a long time coming. The increased wages, one person said, more accurately reflected Apple’s position as a high-end retailer.


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(Published June 21, 2o12, in The Wall Street Journal.)

AT&T Hints at Charges for FaceTime Users


By Thomas Gryta and Ian Sherr

Software developers using a pre-release version of Apple Inc.‘s iPhone operating system have hit a roadblock while trying to access the popular video-calling application FaceTime on AT&T Inc.‘s cellular network.

The sudden change has prompted speculation that AT&T is gearing up to charge users for the data-intensive application. That‘s because a new notice about the restriction in the software strongly resembles a notification that emerged in another pre-release version of the software two years ago. At that time, the alert appeared just before AT&T began allowing users to pay for tethering, which permits other devices to use the phone‘s network connection.

The emergence of the potential restriction comes as AT&T is widely expected to unveil new pricing plans that will focus on data usage and diminish the role of voice minutes and texts.

Currently, Apple‘s FaceTime app only can be used when connected to Wi-Fi, but it will be available on cellular networks when the new operating system is released in the fall. A development version of the iOS 6 software had previously allowed FaceTime to be used on AT&T‘s network, but a recent update prompts users to activate their account.

For its part, AT&T declined to comment on whether customers will have to pay extra to use the service. A spokesman said the message comes from a “developer preview that will be updated before our customers see it.“

He added that AT&T is “working closely with Apple right now on the new developer build on iOS 6. We will share information with our customers as it becomes available.“ It is unclear if the change would remain in the final release of the software, or if it would apply to all customers or possibly just those who still have unlimited data plans.

Apple spokeswomen did not immediately respond to requests for comment.

Meanwhile, AT&T rival Sprint Nextel Corp., which still offers unlimited data to new and existing users on its network, said it has no plans to erect pricing barriers to FaceTime.

“We are committed to our unlimited data and that means not charging for data consumption based on the application,“ a spokeswoman said.

Officials from Verizon Wireless–a joint venture of Verizon Communications Inc. and Vodafone Group PLC–declined to comment immediately. Verizon Wireless recently launched a new pricing model that focuses on subscribers‘ data usage and will raise prices for many users.

AT&T is expected to disclose a similar pricing structure soon. The company was the first to charge for a preset amount of monthly data in 2010 and has been successful in getting 60% of its postpaid customers off unlimited data plans.

AT&T, once the exclusive carrier of the iPhone, previously blocked users from tethering other devices to the iPhone because of fears about the amount data that would be consumed. The feature was available on the phone in 2009, but AT&T only made it available for an extra fee in 2010 when it stopped offering unlimited data to new customers.

When that feature was enabled, the notification for its activation was virtually identical to the wording of the latest notice. That option emerged in a pre-release version of the software about a month before AT&T announced its availability. With that announcement, AT&T also first introduced its tiered pricing plans and moved the company away from offering unlimited data.

FaceTime uses a camera on the iPhone to connect with others on their phones, iPads or Mac computers. The data consumption from FaceTime on a cellular network could be significant for regular users as the next-generation iPhone is expected to operate on 4G networks using LTE, or Long Term Evolution, technology.

The existance of the message was previously reported by “9to5Mac,“ a technology blog. According to the notification message seen by Dow Jones, the attempt to activate FaceTime‘s use on the network prompts the user to contact AT&T “to enable FaceTime over cellular on this account.“

FaceTime allows for variable bandwidth so that the quality of the picture can adjust to the available connection speed. The ability to use high-speed connections should allow FaceTime to operate at the maximum rate and thus consume maximum data.

Akshay Sharma, an analyst at research firm Gartner, estimates the application uses about 1.5 megabytes to 7.5 megabytes per minute. For those on the low end of Verizon‘s new data plan–with a single gigabyte to last the month–users could potentially exceed their allotment just by making one five-minute call a day on FaceTime.

FaceTime‘s ability to enable more data consumption is part of the reason why the application wasn‘t initially allowed on cellular networks that were once dominated by subscribers with unlimited data, industry sources have said.


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(Published July 17, in The Wall Street Journal Digits blog.)

The iPhone Gives ‘Sonic the Hedgehog’ a Second Chance


By Ian Sherr

LOS ANGELES—Old is the new cool in videogames.

Videogame titles that once gathered dust on collectors’ shelves have found a new life on mobile devices such as Apple Inc.’s iPhone, giving companies a cheap way to make money while also helping to promote new software.

It is what Take-Two Interactive Software Inc. did when it was preparing to release the third installment in a popular film-noire series called “Max Payne.” About a month before the new title went on sale, the company released “Max Payne Mobile”—the first game in the series released 11 years ago, reworked to run on smartphones and tablet computers rather than videogame consoles and personal computers.

“It used to be people were skeptical there was any library value at all [to these old games],” said Strauss Zelnick, Take-Two’s chief executive, in an interview at this week’s Electronic Entertainment Expo, or E3, trade show here.

The company also has released the decade-old “Grand Theft Auto III” for mobile devices, and “Grand Theft Auto: Chinatown Wars.” Reselling older games both on mobile devices and traditional videogame consoles and personal computers has become a big business for Take-Two, representing as much as almost a third of the company’s revenue in some quarters.

“If they’re beloved and highly regarded and at the right price, they might be appealing,” Mr. Zelnick said.


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(Published June 7, 2012, in The Wall Street Journal.)

Microsoft to Offer Xbox Subscriptions at Best Buy, GameStop


By Ian Sherr and Steven D. Jones

Microsoft Corp. plans to boost the number of outlets offering its subscription plan for the Xbox, an effort to attract more users by lowering upfront costs of acquiring the game console.

The company, which had previously only made the offer available through 17 of its own stores, plans to extend its $99 offer—which combines a Xbox 360 and Kinect motion sensor with a two-year service contract—to all U.S. Best Buy Co. stores and a “select” grouping of GameStop Corp. stores.

Microsoft said it still regards the program as a pilot, adding that the stores will offer the deals to a limited number of users for a short period. If there is enough interest in the program, it may once again expand, the company said.

The subscription approach upends typical pricing models for videogame consoles, under which customers typically purchase the device for a higher price and would choose whether or not to pay for additional services. The Xbox and Kinect package retails for $299, while the company’s Xbox Live Gold online service regularly costs $60 per year.

Under the $99 subscription offer, customers agree to pay $14.99 per month for two years of access to the Xbox Live network, which allows gamers to play games with one another, watch streaming videos and access Netflix Inc.’s service, among others.

Don Mattrick, head of Microsoft’s gaming business, said customers have so far responded well to the new pricing program, though it is still in its pilot phase. He noted that sales have risen among both core gamers and more casual customers as well.


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(Published June 5, 2012, on The Wall Street Journal website.)