Microsoft shows IE 8 at Mix

Microsoft offered its first public demonstration of Internet Explorer 8 on Wednesday, a prospect that had general manager Dean Hachamovitch struggling to figure out what to cover.

"I'm so excited that I had to figure out how to focus,"

he told the crowd. The marketing folks naturally suggested he point to three major advances, but Hatchamovitch disagreed.

"These are developers,"

he said he told the marketers.

"They can count higher than three."

So, instead he said he would talk about eight features: CSS 2.1 support, CSS Certification, performance, start of HTML 5 support, new developer tools, activities, Web slices and one he hasn't named yet.

Microsoft also said that the first beta of the browser, intended for developers, will be available after today's keynote.

One of the new features, WebSlices, allow users to break a Web site into parts and only get updates from the part they want.

"In IE 8 users can subscribe to parts of Web page,"

Hachamovitch said. He showed an example in IE 8 where users can use Web slices to subscribe to a single eBay auction.

Apple has its own Web-clipping subscription method that is part of Mac OS X.

Separately, Microsoft said it was making available a beta version of Silverlight 2, which will move the technology further beyond delivering video and into creating rich Internet applications.

Among the features of Silverlight 2 is what Microsoft calls adaptive streaming: the ability of the client PC to decide how large a streaming file it can handle at any given moment based on its CPU and network resources.

"If the network gets congested it can drop down to a lower bit rate,"

said Scott Guthrie a vice president in Microsoft's developer division.

With IE8, Hachamovitch discussed Microsoft's commitment to compatibility. He relayed a story of what his kids used to say whenever they had Internet problems.

"They'd ask 'Daddy, did you break the web?'"

Hachamovitch said.

"Most of the time I could honestly say 'No.'"

In a broader sense though, Hachamovitch said, that others might disagree that Microsoft, had in fact broken the Web.

"Web developers might answer the question differently,"

he said.

Hachamovitch then went on to talk about Microsoft's commitment to interoperability and steps that it has taken. Microsoft announced earlier this week that IE 8 would use its most standards compliant mode by default. The company said it believed that move would assuage developer concerns as well as regulatory and competitive issues.

Google Unveiling Orkut Apps To The Public

After several months of testing, Google is planning on releasing the first batch of (hopefully) many Orkut apps to the public.

(Orkut Official Blog) Starting this month, we're enabling developers to make their social applications available to orkut users. We'll start ramping up to more than 50 million people over the next few weeks.

To prepare for this growth, we're now accepting social applications. For a while now, developers have been able to write, test, and play with applications on orkut. Later this month, however, we're going to start rolling them out to orkut users. OpenSocial developers can submit their completed applications (deadline: Feb. 15).

While Google is silent on the total number of apps being tested in the Orkut Sandbox, those with access can test (and check out) a variety of applications over at the OpenSocial Directory.

It will be interesting to see which applications make the cut, although I am hoping that the Orkut Facebook App is approved, not to mention the various chat programs (especially Google Talk, although the greasemoneky version looks better in my opinion).

Google's earnings miss raises worries

SAN FRANCISCO - Google Inc.'s top executives say all is well at the Internet search leader despite a rare earnings disappointment, but investors are worried something is amiss.

Concerns about how the feeble U.S. economy might affect Google contributed to a nearly 20 percent decline in the company's stock during January.

Now, it looks like February will begin on a sour note. Google shares dropped by more than 6 percent from their Thursday closing price of $564.30 after the company released fourth-quarter results that missed analysts' expectations.

Precisely what caused the letdown is likely to be a matter of intense debate in the next few days.

"There is a lot to scratch my head over about in this (report),"

Jackson Securities analyst Brian Bolan said late Thursday.

"I might be up all night trying to figure it out."

Chief Executive Eric Schmidt rebuffed the notion that the economy undercut Google's growth.

"I am happy to say we have not seen a negative impact from the rumors of a future recession,"

Schmidt told analysts in a conference call.

Company co-founder Sergey Brin said in an interview that the company hasn't seen evidence of the recent economic turmoil affecting its business.

"I'm very happy with things,"

Brin said.

"I think things are going really well."

Google earned $1.21 billion, or $3.79 per share, during the final three months of 2007. That's a 17 percent improvement over net income of $1.03 billion, or $3.29 per share, in the same period a year earlier.

It's the first time Google's quarterly profit has climbed by less than 25 percent since the Mountain View-based company went public nearly 3 1/2 years ago.

If not for stock awards given to its employees, Google said it would have made $4.43 per share — a penny below the average estimate among analysts polled by Thomson Financial.

The earnings would have been even lower if Google hadn't benefited from an abnormally low tax rate of 25 percent in the quarter. American Technology Research analyst Rob Sanderson estimated Google would have earned 11 cents per share less if the company had been taxed at its more typical rate of 27 percent.

Fourth-quarter revenue totaled $4.83 billion, a 51 percent improvement over $3.21 billion in the previous year.

In a more important measure to investors, Google retained $3.39 billion in revenue after paying fees to the thousands of Web sites in the online advertising network that fuels its profits.

The net revenue missed analyst estimates by about $60 million.

Google executives said a revision in the company's formula for showing advertising links crimped the fourth-quarter results by reducing the number of revenue-generating clicks. Without providing details, the executives said Google made the change to decrease the frequency of "accidental" clicks on ads.

Total paid clicks in the fourth quarter rose 30 percent from the same period in 2006. In the first three quarters of 2007, Google's paid clicks were rising at a clip of 45 to 52 percent.

Brin and other executives also said Google didn't reap as much revenue as management envisioned from its advertising partnerships with rapidly growing online social networks like News Corp.'s MySpace.

Management didn't quantify the size of the shortfall, but Brin said engineers are addressing the problem.

Google has guaranteed News Corp. payments totaling $900 million during a three-year contract scheduled to end in 2010, so it can lose money if ads on MySpace aren't paying off.

Sanderson said Google's explanations made sense to him.

"I don't think much has changed at Google from yesterday to today. They are still in a sweet spot."

But Google's reassurances didn't seem to placate jittery investors worried that online advertising revenue may taper off as the United States — the world's biggest economy — teeters on the brink of recession.

Google shares rose $16.03 to finish regular trading at $564.30, then plunged $36.90 in extended trading after the fourth-quarter results came out.

Because Google generally only gets paid when Web surfers click on an advertising link, its growth could taper off if consumers become less inclined to click on ads as they curtail their spending.

But Google also could benefit if consumers become more focused on saving money during hard times, according to Jonathan Rosenberg, the company's senior vice president of product management and marketing.

In Thursday's conference call, Rosenberg painted a scenario in which more consumers will turn to the Internet in search of the best deals — a quest that will lead them to Google and perhaps induce more revenue-producing clicks on ads.

For all of 2007, Google earned $4.2 billion, or $13.29 per share, a 37 percent improvement over $3.08 billion, or $9.94 per share, in 2006. Revenue in 2007 totaled $16.59 billion, a 56 percent increase from $10.6 billion in 2006.