Microsoft playing long game with Windows Phone

Looks like Microsoft is getting serious about its next version of Windows Phone, the version that will have multitasking, third-party "Live Tiles" and other cool features. But the software giant isn't promising any quick updates: Developers will get tools in May, then the next version will reach consumers "by the end of this year. This happens to coincide with the promised launch autoclave of Nokia's Windows Phone models. Perhaps that's the point. Perhaps Microsoft is biding its time.

The next version, codenamed "Mango," seems pretty nice, though not exactly unexpected. The key features are:

• Multitasking, or something close enough: "Live Agent" programming tools will let apps play music and continue file downloads in the background, after the user leaves the apps. The tools also let apps communicate with home screen tiles, so you can get at-a-glance flight information, for instance. There are also improved notifications.
• Twitter integration in People: A massive absence was felt (among Twitter users at least) when WP7 shipped with Facebook integration but no Twitter. There is a Twitter app, of course, but this would let you roll your Twitter friends in, and choose the best way to communicate with them and your social group.
• Motion-sensor and camera integration with apps: Many of the coolest new apps for iPhone and Android revolve around camera and motion sensor data — put them together with some graphics or text and you get "augmented reality." Windows Phone wants to augment its reality too.
• Increased SkyDrive functionality: Microsoft talks cloud, but consumers are currently more likely to experience it using services from Amazon and other competitors. Enhancing cloud features in Windows Phone is win-win.
• A bunch of other stuff I won't (or can't) explain that will help developers make nicer apps.

This discussion, delivered publicly at a Microsoft developers conference by Windows Phone chief Joe Belfiore, was aimed at, yep, developers. There was no flashy demonstration of the next Windows Phone look and feel, no show-and-tell of pretty hardware that may never see the light of day. It was shop talk, plus apologies.(Msnbc.com is a joint venture of Microsoft and NBC Universal.)

According to Jay Greene at Cnet, Belfiore shared a mea culpa for several minor bungles, including screwing up the first WP7 update back in February, and announcing that all phones had been updated when they hadn't.

But Microsoft can afford to be apologetic right now, because they're in an off year. Besides apology, caution is the other theme:

"Today, we’re telling developers about the set of Windows Phone Developer Tools coming next month for Mango," wrote Matt Bencke, head of developer and marketplace for Windows Phone, on a Microsoft blog.?"We’re also talking about steps we’ve taken to extend the reach that developers will have with the next version of Windows Phone. What we aren’t doing is demonstrating UI or end user features and capabilities. Today is about preparing developers for the next opportunity."

Let's face it — even people who are very interested in Windows Phone are likely to wait until Nokia has popped a device. And meanwhile, the pickins are almost deliberately slim: The only impressive Windows Phone 7 device in the U.S. remains the Samsung Focus, and it's only at AT&T. Where they sell a lot of iPhones. For those who have already bought in, Belfiore shared a nice consolation: Angry Birds (finally) comes to WP7 on May 25.

Microsoft has had periods like this before: Before Windows 7 launched, before Xbox 360 launched, even now, as it repositions its "slate" strategy in the iPad-dominated tablet electronic ballast business. By and large, these soft periods have benefitted the company. If Windows Phone and Nokia time it right, and go big, they may grab customers in a major way. They just won't be grabbing many customers in the meantime.

JPMorgan Credit Swaps Show Bank’s Record Profits Fail to Impress

Record earnings from JPMorgan Chase Co. (JPM) failed to improve its creditworthiness in the eyes of swaps traders, as reduced provisions for bad mortgages accounted for almost half of its profit.

Credit-default swaps on the second-biggest U.S. bank by assets, which investors use to hedge against losses or to speculate on creditworthiness, climbed 0.2 basis point to 71.7 basis points, according to CMA.

Profits rose 67 percent to $5.56 billion, the New York- based company said today in a statement. The results beat the average per-share estimate for adjusted earnings of $1.15 by 26 analysts surveyed by Bloomberg. Provisions for credit losses dropped 83 percent to $1.17 billion as defaults and late payments declined, allowing the bank to release money that had been reserved for bad loans.

“One of the reasons they did very well is they released a lot of reserves,” said Jason Brady, a managing director at Thornburg Investment Management Inc. in Santa Fe, New Mexico. The firm oversees $73 billion of assets, including stocks and bonds from both companies. “That doesn’t mean they’re making tons of money, it just means they’re not losing it,” Brady said.

Contracts protecting the debt of Bank of America Corp., the largest U.S. lender, climbed 0.5 basis point to 129.8 and those on Morgan Stanley increased 0.5 basis point to 137, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

Swaps on Citigroup Inc. added 0.1 basis point to 119.4 and contracts on debt issued by Goldman Sachs Group Inc. gained 1.1 basis points to 111.3.

‘Fewer Risks’

JPMorgan, led by Chief Executive Officer Jamie Dimon, posted a record $17.4 billion in earnings last year, in part by releasing about $7 billion of reserves against bad loans back into income as the U.S. economy improved. Dimon, 55, has said he doesn’t consider reserve releases as “quality” earnings because they don’t represent growth in the bank’s businesses.

The bank may also settle an investigation by federal regulators into its foreclosure practices as early as today, executives said on a conference call.

The cost of protecting U.S. corporate bonds from default was little changed from the highest level this month after a report that U.S. retail sales increased in March.

Retail Sales

The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 0.1 basis point to a mid-price of 95.1 basis points as of 5:04 p.m. in New York, according to index administrator Markit Group Ltd.

Sales at U.S. retailers rose in March for a ninth consecutive month, easing concern that the jump in food and fuel costs would cause consumers to retrench.

Purchases increased 0.4 percent following a 1.1 percent February gain that was larger than previously estimated, Commerce Department figures showed today in Washington.

The credit swaps index, which typically falls as investor confidence improves and rises as it deteriorates, is at the highest level since March 31.

The price of Markit’s CDX North America High Yield Index, which falls as investor confidence deteriorates, declined 0.2 percentage point to 102.2 percent of face value.

Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

World PC shipments fall below forecasts

An unexpected drop in worldwide personal-computer shipments in the first veterinary syringes quarter appeared to catch market researchers by surprise, with some analysts issuing unusual warnings to PC makers in their press releases about the impact of Apple Inc.’s iPad.

Rival firms Gartner and IDC both issued their first-quarter data on Wednesday, noting that the single-digit declines in shipments had not been expected. Both firms were looking for slight growth in the quarter.

“Weak demand for consumer PCs was the biggest inhibitor of growth,” Gartner analyst Mikako Kitagawa said in a statement.

She added that lower PC prices, which had previously stimulated growth, no longer attracted buyers.

“Instead, consumers turned their attention to media tablets, and other consumer electronics.”

She cited the launch of Apple Inc.’s /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 335.65, -0.48, -0.14%) ?iPad 2 in February as having an impact, as consumers either switched to an iPad or held back from buying a PC. “We’re investigating whether this trend is likely to have a long-term effect on the PC market,” Kitagawa said.

One IDC analyst also talked about the impact from media tablets, cautioning PC makers in language known to many in the tech industry as coming from Clayton Christensen’s book, “The Innovator’s Dilemma.”

“Good-enough computing has become a firm reality, exemplified first by mini notebooks [netbooks] and now media tablets,” said IDC analyst Jay Chou in a press release, using a term from the book, a bible in Silicon Valley. The phrase refers to a new, Coach Bags cheaper product that usurps an entrenched one but is seen as “good enough” to attract massive users.

“Macroeconomic forces can explain some of the ebb and flow of the PC business, but the real question PC vendors have to think hard about is how to enable a compelling user experience that can justify spending on the added horsepower,” Chou added.

Another IDC analyst, Bob O’Donnell, gave another take, saying that while it was “tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles.”

An interesting point made by Gartner was that without the OBD2 code scanner growth in corporate sales — PCs purchased by corporate users — the industry would have seen one of its worst declines in recent history.

At least they all seem to agree on one thing: The PC, at least for consumers, is becoming increasing irrelevant.

More than 2 million computers worldwide were infected with malicious software in a “massive fraud scheme” that the U.S. disabled as part of a autoclave criminal investigation, the Justice Department said.

“The scale of the botnet is huge,” said Don Jackson, the director of intelligence at Dell Secureworks, a cyber security firm that said it first discovered Coreflood. “The scale of the operation itself, in terms of the core team, is very small and very close-knit.”

Bank Transfers

The stolen information was used to make bank transfers in some cases of hundreds of thousands of dollars, the Justice Department said. Thieves attempted to transfer more than $934,000 from an unnamed defense contracting company in Tennessee in one case. They removed $78,421 from the bank account of an unidentified law firm in South Carolina and $115,771 from an unidentified real estate company in Michigan, according to court papers.

The department filed a civil complaint, criminal seizure warrants and issued a cold room temporary restraining order in coordinated action with Microsoft Corp., which issued a software patch yesterday to correct a vulnerability in its Windows operating system. The vulnerability allowed the software to spread from one computer to another creating a so-called botnet.

The action was aimed at software called Coreflood, which collects passwords and financial information that was used by criminals, the Justice Department said in a statement today. The group of computers infected with Coreflood, known as the Coreflood botnet, is suspected by the U.S. of operating for almost a decade and infecting more than 1.8 million computers in the U.S. alone.

Americans are believed to have lost millions of dollars in the scheme, according to an FBI official who spoke on condition of anonymity because the criminal investigation remains open. Authorities were unable to tally how much money was stolen “due in part to the large number of infected computers and the quantity of stolen data,” according to court documents.

People in Russia

The company, based in Atlanta, concluded that the botnet is cone crusher controlled by as few as three people in Russia, Jackson said. The hackers specifically targeted corporations, downloading private e-mails and confidential financial data, he said.

The U.S. attorney in Connecticut filed a civil complaint against 13 unidentified defendants known as John Does, alleging wire fraud, bank fraud and international interception of electronic communications, according to the statement. Authorities also obtained search warrants for computer servers and a seizure warrant for 29 domain names.

“Botnets and the cyber criminals who deploy them jeopardize the economic security of the United States and the dependability of the nation’s information infrastructure,” Shawn Henry, executive assistant director of the FBI’s Criminal, Cyber, Response and Services Branch, said in the statement

The complaint alleges that some of the John Does are the owners of Coreflood domains, the computer addresses that are used by the botnet to issue instructions and extract the data. Laura Sweeney, a Justice Department spokeswoman, said she couldn’t comment on 13 civil defendants’ country of origin.
Botnet Control

In this case, authorities seized the command-and-control apparatus and sent commands to computers to shut down the malware.

“There has been a real legal barrier to do this because electronic ballast essentially you are issuing instructions to someone else’s computer,” said Alex Cox, principal research analyst at NetWitness Corp., a cyber security firm based in Reston, Virginia.

The operation to shut down Coreflood is the first time U.S. law enforcement has seized control over a botnet and used that authority to send instructions to computers belonging to victims, according to court papers.
“That is very, very significant,” Cox said.

U.S. District Judge Vanessa Bryant in Hartford, Connecticut, ruled the U.S. could set up a substitute server to replace the seized ones. The ruling allowed the server to be operated, under law enforcement supervision, by the Internet Systems Consortium, a nonprofit group based in Redwood City, California.

Security Breach

“Should the government inadvertently acquire the content of any communication, it will destroy such communication upon recognition,” prosecutors said in court papers.

Authorities will also collect the Internet protocol addresses of computers infected with the virus. Prosecutors said they would work with Internet service providers to notify individual customers of the security breach.

The size of the botnet and the fact that it has escaped for years a systematic effort to shut it down is unusual,
said Jackson. He said that the software had features that allowed it to spread quickly through corporate computer networks before it was discovered. Among its victims were U.S. government contractors, a state police agency and a major hotel chain, from which the software stole thousands of credit card numbers belonging to customers.

“There is clearly a strong public/private stainless steel pipe momentum happening in the fight against botnets,” Richard Boscovich, a lawyer in Microsoft’s digital crimes unit, said by e-mail. The unit was “was happy to provide technical information from the lessons we learned from the recent Rustock and Waledac botnet takedowns to assist these agencies,” he said.