Microsoft offers discount for Vista upgrade

It wants to appease PC vendors after missing deadlines for new OS, analyst says

Ben Ames
October 25, 2006 (IDG News Service) -- In an effort to mollify hardware vendors worried that delays in the launch of Windows Vista will dampen holiday PC sales, Microsoft Corp. is offering a discount to consumers and small businesses that want to upgrade from Windows XP to the new operating system.

Microsoft will offer the upgrade coupon to shoppers who buy a Vista-capable PC between Thursday and March 15 and will allow them to redeem the coupons for a free or discounted upgrade from Windows XP to Windows Vista and from Office 2003 to Office 2007.

After a series of delays, Microsoft expects to ship the Vista operating system early in 2007. The product offers features like translucent desktop windows, improved performance of digital music and photography, and data backup for business users. But those features come at the cost of greatly increased demands on hardware performance. A Vista-ready PC must have at least 512MB of memory and an advanced processor and graphics card.

PC vendors and component manufacturers stand to profit from the boost in demand for those parts, but they have grown increasingly nervous about missing the holiday sales season, given that Microsoft has bypassed several deadlines for shipping the new operating system, analysts say.

"I definitely see it as a move by Microsoft to appease PC vendors and key component manufacturers such as Intel. Microsoft has very little goodwill left with the vendors, having disappointed them several times with Windows Vista delays," said Martin Kariithi, a hardware analyst at Technology Business Research Inc. in Hampton, N.H.

This is a smart way to achieve that goal, since Microsoft will probably incur only a small charge to maintain the coupon program, and will not lose much potential profit compared to the full Vista sales price, he said.

Also, Microsoft will share the costs of the upgrade program with vendors such as Hewlett-Packard Co., which has an interest in giving consumers enough confidence to buy PCs now instead of later.

"We do believe that the Vista Express Upgrade program will help early adopter customers who prefer to upgrade to Windows Vista but would also like to take advantage of the myriad promotions and discounts typically offered during the holiday period," HP spokeswoman Tiffany Smith said in an e-mail.

The exact cost of the upgrade will vary among PC vendors, but HP will offer its new North American customers a choice of a free upgrade from Windows XP Home to Windows Vista Home Basic, from XP Media Center Edition 2005 to Vista Home Premium, or from XP Professional to Vista Business. The offer applies to those who buy an HP Pavilion or Compaq Presario desktop or notebook PC or an HP Digital Entertainment Center, if it includes a qualified XP system, is Vista-capable and is purchased within the coupon dates.

Other vendors may charge "a nominal fee" to upgrade from Windows XP Professional, XP Tablet PC Edition or XP Professional x64 Edition to Windows Vista Business or Vista Business 64, Microsoft said. More information is available on the Microsoft Vista Web site.

New version of Firefox available for download

Release Candidate 3 is finalized; work starts on Firefox 3.0

The latest release candidate for the Firefox Web browser is posted for free download.

For the Mozilla Foundation and the Firefox community, the posting of Release Candidate 3 (RC3) is a huge milestone because it represents the final code for the long-awaited Firefox 2.0 browser.

"If there are no showstoppers, RC3 will be it" and will become the final version of the Firefox 2.0 release, said Mike Schroepfer, vice president of engineering for the open-source Mozilla Foundation.

The first release candidate for Firefox 2.0 was available Sept. 26, while the second was released Oct. 6 as developers sought additional input and bug reports from users.

And even as Firefox 2.0 approaches its debut, work is already under way on the next full version of Firefox 3.0.

To help create Firefox 3.0, the development team assembled a Firefox Feature Brainstorming Web page on the Firefox community wiki last week, where developers and beta users can add comments about features they would like to see in upcoming versions of the browser. Similar wiki pages were available to users who wanted to give input about features in Firefox 2.0, but the latest brainstorming wiki page will help formalize new-feature requests for all future versions of the browser.

"Anybody who has a good idea and wants to participate" can enter their comments on the wiki page, Schroepfer said. "We're just looking for as wide a range of feedback as people want to give. We've generally tried to solicit ideas in the past. It's part of how we work in general."

As the release of Firefox 2.0 approaches, the release date for the next version, Firefox 3.0, is undetermined.

"It's pretty far on the horizon at this point," Schroepfer said of Firefox 3.0. "I'd be thinking [about a release] late next year."

The $1 Million Netflix Challenge

VP Jim Bennett discusses how recommendation systems suggest your next movie and the challenges of building a better one.

By Kate Greene

Earlier this week, Netflix, the online movie rental service, announced it will award $1 million to anyone who can come up with an algorithm that improves the accuracy of its movie recommendation service.

In doing so, the company is putting out a call to researchers who specialize in machine learning--the type of artificial intelligence used to build systems that recommend music, books, and movies. The entrant who can increase the accuracy of the Netflix recommendation system, which is called Cinematch, by 10 percent by 2011 will win the prize.

Recommendation systems such as those used by Netflix, Amazon, and other Web retailers are based on the principle that if two people enjoy the same product, they're likely to have other favorites in common too.

But behind this simple premise is a complex algorithm that incorporates millions of user ratings, tens of thousands of items, and ever-changing relationships between user preferences.

To deal with this complexity, algorithms for recommendation systems are "trained" on huge datasets. One dataset used in Netflix's system contains the star ratings--one to five--that Netflix customers assign to movies. Using this initial information, good algorithms are able to predict future ratings, and therefore can suggest other films that an individual might like.

Because access to such a dataset is critical to improving the quality of its recommendation systems, the company also released 100 million recommendations--stripped of any personal identifying information--according to Jim Bennett, vice president of recommendations systems at Netflix.

We spoke with Bennett this week about how recommendation systems work--and the challenges of building a better one.

Technology Review: Before building a better recommendation system, it would be useful to understand your current approach. How does Cinematch work?

Jim Bennett: First, you collect 100 million user ratings for about 18,000 movies. Take any two movies and find the people who have rated both of them. Then look to see if the people who rate one of the movies highly rate the other one highly, if they liked one and not the other, or if they didn't like either movie. Based on their ratings, Cinematch sees whether there's a correlation between those people. Now, do this for all possible pairs of 65,000 movies.

TR: So Cinematch would recommend movies to me based on the evaluations of people who rated movies to the way I did. Does that method work for all movies at Netflix?

JB: A lot of the really obscure discs, for instance, the "How to Mow a Lawn" DVDs, don't have very many ratings and this method doesn't work as well. For movies with a large number of ratings, you do substantially well. But to make it work, there needs to be a lot of data-tuning because people can sometimes have interesting rating patterns.

TR: Like what?

JB: For example, there are many people who rate a movie with only one star or five stars. And there are some people who just rate everything with three stars. What you're looking for is an interesting spread of opinions because you're trying to capture correlations. That's the core of the engine. Page 2

Windows Vista RC2: Near final OS more refined, but it's not perfect

Microsoft continues to tweak its upcoming operating system
Scot Finnie October 08, 2006 (Computerworld)

Last Friday, Microsoft pushed Windows Vista Release Candidate 2 (RC2), build 5744, out the door. There's no laundry list of new features and functions associated with this build of Vista, but there is something significant about it.

You can sum it up in one word: refinement.

The areas of installation, performance and bugginess associated with Media Center and the new Sleep power management mode have all been improved. Vista continues to be exceptionally stable. There's no question that this new Windows is more reliable than XP.

Setup certainty

I installed RC2 on three test machines, one Windows XP Pro upgrade and two clean installs. One upgrade installation screen notes that your "upgrade could take several hours" to complete. Mine didn't, although it did run a little over an hour and a quarter. The two dual-boot clean installations were swifter than with Release Candidate 1, and showed some minor visual changes.

The results of RC2's setup process were a tad cleaner. My three test machines were manufactured in different years -- 2003, 2005 and 2006. The two newer models are laptops that have proprietary software for controlling hardware. Although all three have hardware Vista was unable to provide drivers for, with just a couple of exceptions, the new OS quickly accepted "legacy" drivers designed for XP.

Vista's driver pack support for recently released hardware continues to be a weak point. I had expected that, with this release, the driver pack would be better than it is. For example, Vista RC2 lacks a driver for the Linksys EG1032 Gigabit PCI NIC. It also wasn't able to locate a driver for SoundMax audio cards on my oldest and newest machines. SoundMax audio is widely distributed and there's just no excuse for this. It was easy for me to find and feed Vista my OEM-provided XP drivers for these devices, however.

Not so easy to get around is the fact that Vista doesn't contain drivers for IBM/Lenovo's UltraNav built-in pointing devices (which have been shipping with ThinkPads for years). Nor was Vista able to run these XP drivers, even when I used some of Vista's compatibility tricks.

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Startup Co. Plastic Jungle Offers Gift Card Exchange

A new Web gift card exchange could shake up the gift card space, with cards selling to consumers for less than face value and retailers getting the gift that keeps on giving: previously unavailable data on who is using these cards.

Trying to address the hundreds of millions of dollars lost each year in gift cards that are never redeemed, Plastic Jungle, of Fresno, Calif., has created a Web gift card exchange with a twist: The company is selling valid gift cards for less than the card's face value, which could have a significant impact on retail gift card sales.

Plastic Jungle CEO Tina Henson said the company plans on partnering with major retailers, to help them reduce accounting losses from unredeemed gift cards.

"Home Depot had $43 million gift cards that were unredeemed and more than two years old," said Henson. "It just goes on their books as a liability because they're not able to show it as revenue until it's been redeemed."

The way it works is consumers go to the site and fill out some forms (the current site doesn't ask much but that's going to change by mid-October), and they can then sell whatever gift cards they have for something in the range of 65 to 75 percent of the card's remaining value. The site charges a flat fee of $3.99 for each gift card listed, regardless of value, and all transactions are processed through PayPal.

Consumers can also purchase gift cards and pay about 90 to 95 percent of the card's remaining value, with PlasticJungle.com keeping the difference, Henson said. This would allow consumers to purchase, for example, a $100 Home Depot gift card for $90.

The actual percentages paid and received will vary based on supply and demand, Henson said, adding that some gift cards are simply more popular than others and therefore demand a higher percentage. What are the most popular gift cards? Those from Home Depot, Wal-Mart and Target. The least popular? Barnes & Noble and Borders.

Henson speculated on a few reasons for those popularity differences, but thought a key reason are that those booksellers happen to still use expiration dates (two years for Borders and one year for Barnes & Noble), which is going to be phased out as states—and the feds—crack down on gift card expiration dates.

Beyond those specific retailers, Henson said, the most popular gift card categories are restaurants and department stores, while the least favorites are toy stores and bookstores. Why are toy store gift cards so unpopular? "Children can't use a gift card," Henson said, and adults are hesitant to give toy store gift cards to other adults, even adults who need to purchase a lot of toys.

Today's larger retailers are experimenting with a wide range of different uses for gift cards, with Subway experimenting with merging loyalty cards, gift cards and payment cards.

Security issues are another concern, with e-commerce gift cards posing particular security and fraud challenges, and some retailers are experimenting with adding a secondary identification number on the card, à la traditional payment cards.

One potential advantage for retailers working with Plastic Jungle is a wealth of CRM (customer relationship management) data. Today, gift cards are plastic marketing frustration because the person who buys the card is not the person who will use it, so correlating usage data with the purchaser's identity is worthless.

"Right now, retailers are selling blind because the whole product is designed to be given away," Henson said. "We're going to be able to gather that data and see who is actually using the cards and—more importantly—who doesn't want that card."

Initial data to be collected includes age, income level, gender, name, address and related demographic data, she said, but other data points—such as asking why consumers are turning in a particular card—could be added shortly.

The company, which now employs "fewer than five" full-time workers, is also making a plea for charitable contributions with small dollar amounts left on gift cards, Henson said. "Often, people will use almost their entire gift card amount at a store, but then have a little money left on the card," she said. "These low-balance cards typically get forgotten and go unused, but now people can donate them to worthy causes. All those less-than-$5 cards can add up to a great deal of help."