Office on Surface Pro suggests a shift in Microsoft's sales strategy

Surface Pro tablets to be sold in Japan will come with fully-licensed copy of Office Home & Business 2013

Microsoft yesterday announced that Surface Pro tablets it will start selling in Japan on June 7 will come with a fully-functional copy of Office, a bundle one analyst said hints at a change in Microsoft's sales strategy for its homegrown hardware.

Both Japanese configurations of the Surface Pro -- one with 128GB of storage space, another with 256GB -- will include Office Home & Business 2013, Microsoft confirmed Wednesday. The productivity suite will be a fully-licensed version, not a time-limited trial.

According to a press release issued by Microsoft Japan, the 128GB Surface Pro will sell for 99,800 yen, including taxes, or $986 at current exchange rates. The 256GB model will cost 119,800 yen, or approximately $1,184.

The tablets sold in Japan will not be the first from Microsoft to bundle Office: More than a month ago the company launched a special edition Surface Pro in China that included Office Home & Student 2013. But the Japanese configurations will be the first to come with a commercial-use edition of Office -- one that can legally be used for work and in the workplace -- and on a tablet powered by Windows 8 Pro. The special Chinese Surface Pro bundle relied on Windows 8, the consumer-grade OS.

Microsoft has also included Office Home & Student RT with all Windows RT-powered tablets, its own Surface RT among them. Like the Surface Pro in China, however, Office on a Surface RT is not licensed for work, and lacks the Outlook email client. Outlook is included with Home & Business 2013.

Surface Pro tablets now sold in the U.S. come with a one-month trial of Office 365 Home Premium, Microsoft's rent-not-buy subscription service for the suite. That, too, is for personal use only, and not licensed for work.

The addition of Office Home & Business to the Surface Pro in Japan sparked speculation from analysts.

"I think it's possible this means Microsoft will do the same elsewhere to firm up the footprint [of the Surface Pro] in the market," said Ezra Gottheil, of Technology Business Research. "After all, the cost of goods for software is zero."

Wes Miller, of Directions on Microsoft, echoed Gottheil. "Definitely possible," he said of Microsoft tossing Office Home & Business 2013 into all Surface Pro tablets. "This could reflect a different angle on selling the Surface Pro."

Both analysts noted that the move would be in keeping with Microsoft's apparent strategy to use Office as a prime selling point for its Surface line, and Windows 8-powered tablets in general.

By using Office as a carrot for Windows, the theory goes, Microsoft has decided to forego revenue it would generate if it released versions for Android and iOS -- reportedly slating those editions for late-2014 shipping -- instead putting all its horses in Windows' traces.

Adding Office Home & Business 2013 would also reinforce Microsoft's implied contention that the Surface Pro is for work, said Miller. And it would be a concession that the Surface Pro's $899-$999 price can't compete in the consumer space.

The Japanese price for the 128GB Surface Pro is close enough to the U.S. price, said Miller, that if Microsoft does pre-load Office in America, it will probably maintain the current cost. "You'd get Office included for the same price," Miller said.

According to a Microsoft price sheet, the pre-tax price of the 128GB Surface Pro in Japan is 95,048 yen, or about $944, just $45 more than in the U.S.

Gottheil and Miller both said that if Microsoft does pull the trigger on bundling Office Home & Business 2013, it would almost certainly extend a deal of some sort to its OEM (original equipment manufacturer) partners for their Windows 8 tablets.

"They won't do this to hurt OEMs, so maybe Microsoft will define a set of products that compete head-to-head with the Surface Pro, and make those OEMs the same deal, or a price cut on Office," said Gottheil.

"I would expect some kind of similar pricing to OEMs," said Miller, "or Microsoft risks more conflict with OEMs."

Microsoft's relationships with its partners has been rockier in the past year, kick started last June when the Redmond, Wash. developer surprised everyone -- OEMs included -- by unveiling its Surface line, the first-ever computing hardware designed in-house. The lackluster performance of Windows 8 and Windows RT has further strained those relationships, with several long-time partners dissing the latter and Dell, the world's third-largest computer maker, blaming Windows 8 for some of its financial woes.

Japan's Surface Pro configurations -- 128GB and 256GB, with the current 64GB model missing -- may also signal that Microsoft will kill off the 64GB Surface Pro in all markets. That entry-level model has come under fire because the storage space available to users is a relatively meager 28GB.

The Japanese offering, however, may not herald a shift, cautioned Gottheil. "Microsoft may simply be experimenting with ways for a broader distribution of the Surface Pro," he said of the bundling.

And other problems surface -- no pun intended -- with the inclusion of Office Home & Business 2013, Miller added. "If they're branding the Pro as the business [system], what exactly is the Surface RT for?" he asked.

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Microsoft brushes off claim Xbox Live accounts were compromised

The hacker has posted a link on Pastebin to a 6GB file that supposedly contains account credentials

Microsoft brushed off a dubious hacker's claim on Thursday that he stole 47 million account credentials for Microsoft's Xbox Live gaming service.

The hacker, who goes by the Twitter handle "@Reckz0r," wrote on Pastebin that Microsoft stored the login credentials in plain text. The data included email addresses and passwords, he added.

The alleged breach comes just days after Microsoft unveiled the Xbox One, the latest iteration of the gaming system.

"Xbox Live has not been hacked," the company said in a statement. "Microsoft can confirm that there has been no breach to the security of our Xbox Live service."

In a lengthy note on Pastebin, drenched in profanity, Reckz0r wrote "Microsoft is a pest to humanity." He included a link to a 6GB file of the credentials and posted hundreds more in plain text, some of which he wrote dated to around 2009. The newer accounts were contained in the 6GB file, he wrote.

Reckz0r has a track record of posting old data. Last June, he posted a link on Pastebin to a data dump, writing on Twitter that he had "penetrated over 79 large banks" and obtained 50GB of data on MasterCard and Visa cardholders.

A payment card industry source said at the time the data appeared to be old. One person whose data was released told IDG News Service that the information attached to his name was years out of date.

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Windows Blue will be free upgrade for Windows 8 customers

The update will be officially called Windows 8.1, according to Windows division co-chief Tami Reller

Microsoft's Windows 8 update, code-named Windows Blue, will be formally released as Windows 8.1 and will be free for customers who have the new OS installed.

Windows 8.1 will be an "update" for both Windows 8 and for Windows RT, the version of the OS designed for devices that run on ARM chips, said Tami Reller, the chief financial officer and chief marketing officer of the Windows Division, speaking at the JP Morgan Technology, Media & Telecom Conference Tuesday.

As an update, Windows 8.1 will be more substantial than the regular patches Microsoft pushes out for the OS, but will not represent a dramatic leap like the upgrade from Windows 7 to Windows 8, she said.

Moreover, Windows 8.1 will be "really easy" and "straightforward" for customers to install, Reller added.

Microsoft's decision confirms speculation from industry analysts who spoke recently about this topic.

Last week, Reller and the other Windows chief, Julie Larson-Green, a corporate vice president in charge of the OS' development, provided more details about Windows Blue, including that it will be delivered before the end of the year and that a preview will be released at the end of June during Microsoft's Build conference for developers.

Larson-Green didn't say what changes Windows Blue will feature, but conceded that Microsoft has discussed user complaints about the removal of the start menu on Windows 8 and that it might be useful to restore it.

Asked if she could be more specific about the final release of Windows 8.1, Reller on Tuesday declined to provide a more concrete date but acknowledged that Microsoft wants to give OEM partners a chance to load it into computers they release for the holiday season.

She also reiterated that OEM partners are working on smaller Windows 8 and Windows RT tablets with 7-inch and 8-inch screens, and disclosed that there are now more than 70,000 applications for the OS in the Windows Store.

She also said Microsoft is satisfied with the amount and variety of Windows 8 and Windows RT devices, including desktop PCs, low-priced laptops with touch screens, sophisticated convertible laptops with detachable keyboards that double as tablets, all-in-one PCs and other variations.

"We feel very good about the direction we're headed with Windows 8," Reller said.

Windows 8 has a drastically redesigned interface based on tile icons intended to make the OS optimized for touchscreen devices such as tablets. However, it has not been an unqualified success and the lack of uptake by users has been blamed in part for the dismal performance of the PC market overall.

The Windows 8.1 preview version that will be delivered in June will be available for anyone to download and test drive, not just developers.

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The privacy organization has hidden its ties to corporate backers

After being accused of a lack of transparency by an independent watchdog, the European Privacy Association (EPA) has confirmed that Google, Microsoft and Yahoo are backers.

The Corporate Europe Observatory (CEO), which works to expose privileged access in E.U. policy making, said in a complaint Thursday that the European Privacy Association is working to represent industry interests in the debate on data protection in Europe, even though it has not listed any corporate backers on the E.U.'s "Transparency Register."

The register, which is operated by the European Parliament and European Commission, requires all signatories to disclose their interests, objectives or aims and, where applicable, the clients they represent.

The EPA is listed in the category of think tanks, research and academic institutions and claims to have only 10 private (non-corporate) members. However, EPA managing director Pietro Paganini confirmed to the IDG News Service that Google, Yahoo and Microsoft are members.

CEO campaign coordinator Olivier Hoedeman was not surprised. "A look at EPA's activities with regard to the ongoing debate on the overhaul of the European Data Protection rules shows that it favors a lighter regulatory touch and until recently the EPA advertised business membership at a cost of a!10,000 per year on its website," Hoedeman said.

He said that the name of the organization, with its pro-privacy connotations, conflicted with its very pro-industry stance, creating "a confusing, a mismatch." CEO has described the EPA as an "astroturf organization," or front group, defending the interests of large IT corporations.

Paganini refuted these allegations, saying that although the EPA listens to its members ideas and concerns, the reports it produces are independent. He claimed the failure to list the companies on the Transparency Register was an oversight.

Joe McNamee of EDRi (the European digital rights organization) said he had brought the issue to EPA's attention four months ago in January of this year but that nothing had been done. Paganini said that EPA did not know it was supposed to list any corporate members on the transparency register. was unfamiliar with the procedure in Brussels. However, EPA chairwoman Karin Riis Jorgensen is a former elected member of the European Parliament.

CEO says there is also evidence that the EPA has close relationships with two lobbyist consultancy firms, Competere Geopolitical Management and DCI Group, and is working to promote industry-friendly legislation in the new Data Protection Regulation that digital rights organizations say will undermine fundamental civil liberties online.

The CEO has laid out its allegations in a complaint to the secretariat overseeing the transparency register. The secretariat says it will examine the evidence put forward by CEO and by June 7 will announce a decision whether to impose sanctions or require the company to update its entry.

Google had no comment on the issue. Microsoft did not have an immediate comment and Yahoo officials were not available for comment.

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Microsoft responds to Larry Page remarks, but Oracle is quiet

Larry Page criticized both companies in response to questions at Google I/O, just after lamenting negativity in the tech industry

Microsoft has responded to a high-profile put-down by Google CEO Larry Page, but Oracle, at least for now, won't be drawn into a public fight with the executive.

Page criticized Microsoft and Oracle in response to questions after his keynote speech at Google's I/O developer conference in San Francisco Wednesday. Microsoft came under fire about instant messaging interoperability, while Oracle was singled out over Java.

Larry Page makes a surprise appearance at Google I/O.
"We've kind of had an offer forever that we'll interoperate on instant messaging," he said in response to a question. "I think just this week Microsoft took advantage of that by interoperating with us, but not doing the reverse. Which is really sad, right? And that's not the way to make progress. You need to actually have inter operation, not just people milking off one company for their own benefit."

Microsoft fired back Thursday via an emailed statement: "It's ironic that Larry is lending his voice to the discussion of interoperability considering his company's decision -- today -- to file a cease and desist order to remove the YouTube app from Windows Phone, let alone the recent decision to make it more difficult for our customers to connect their Gmail accounts to their Windows experience."

When asked about how Oracle's acquisition of Java might affect Android, he said, "I think we've had a difficult relationship with Oracle. Including having to appear in court as a result of it. So I think, again, we'd like to have a cooperative relationship with them, that hasn't seemed possible."

"And I think, again, money is probably more important to them than having any kind of collaboration or things like that. So I think that's been very difficult," he said.

Oracle declined to comment on the remarks.

CEO's criticizing competitors isn't unusual, but Page's comments came shortly after his speech in which he lamented negativity in the technology sector and said it was an inhibitor to growth.

"You know, every story I read about Google, it's kind of us versus some other company, or some stupid thing. And I just don't find that very interesting. We should be building great things that don't exist. Right? Being negative is not how we make progress," he said in the speech.

Page's comment on negativity got a round of applause from his audience -- around 6,000 of the company's developers -- but the Microsoft and Oracle comments that followed seemed guaranteed to generate just the kind of coverage he finds so uninteresting.

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VMware launches dual persona feature for Verizon smart phones

The feature is currently available on the LG Intuition and Motorola RAZR M smartphones

VMware today announced that its dual persona mobile device software is now available on some Android OS-based mobile devices sold by Verizon.

Dual persona technology creates two OS instances, one for business use and the other for personal use.

VMware's dual persona application, called VMware Horizon Mobile, is available now for the LG Intuition and Motorola RAZR M smartphones. Workers who already own the phones can download the application from VMware's website.

VMware said additional device support is expected throughout the year.

"There's no special hardware requirement to run this. All you need is a single core processor and 1GB of RAM," said Srinivas Krishnamurti, senior director of Mobile Solutions for End-User Computing at VMware. "Our expectation is that by end of year there will be tens of millions of VMware ready devices."

VMware and Red Bend separately announced plans to offer dual persona smartphone technology last year. Red Bend offers the ability to host both a business and personal OS instance on hardware. VMware and other companies offer it through software.

Red Bend's Type 1 hypervisor runs on a new generation of mobile processors, such as the ARM Cortex-A15.

VMware uses a Type 2 hypervisor product that embeds on a smartphone and awaits activation by a corporate IT department.

A Horizon Mobile Manager server on the backend recognizes when an authorized users logs-in, and a pre-configured an Android OS instance (with all the work apps) is pushed to the smartphone. If an employee tries to transfer data or apps between the corporate instance and the private instance, the transfer is automatically blocked.

At the beginning of the year, BlackBerry announced its Balance software, which creates dual personas in the BlackBerry 10 OS that runs the Z10 smartphone.

In March, BlackBerry announced a dual persona technology called Secure Work Space for iOS and Android, which runs as an update to BlackBerry Enterprise Server 10. A closed beta test recently began with enterprise and government customers; the software will be generally available by June 30, BlackBerry said. Pricing has not been announced.

Like other dual persona mobile applications, VMware's new Horizon Mobile creates a separate container for corporate content and helps prevent data leakage and preserve the privacy of any personal information on the same device. IT manages only what it needs to manage, bringing security and compliance to personally owned devices.

Security for Android devices is enforced by isolating personal and corporate assets and encrypting all corporate assets that reside on the device.

Horizon Mobile leverages existing enterprise infrastructure including virtual private network, authentication solutions and full integration with standard enterprise directory services so enterprises can extend their current trusted and compliant security services to smartphones.

VMware Horizon Mobile is available immediately with perpetual licensing starting at $125 per user. The server software can be purchased through local VMware and Verizon Wireless resellers.

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Microsoft says Yammer sales are booming

The enterprise social networking's product revenue grew 259 percent year on year in the quarter ended in March

With the backing of its new parent company, Yammer more than tripled its revenue year on year in the quarter that ended in March.

Sales of Yammer's cloud-based enterprise social networking (ESN) software shot up 259 percent in Microsoft's third fiscal quarter, compared with the same quarter in 2012, when Yammer was still an independent company, Microsoft said on Thursday.

Microsoft isn't disclosing Yammer's revenue in dollar figures, but the growth and momentum -- Yammer added 312 new customers in the quarter -- is a validation of the US$1.2 billion it paid for Yammer last July, a Microsoft executive said in an interview.

"We're really pleased with the acquisition, with the process of the teams coming together and with the continued customer acceptance and demand," said Jared Spataro, senior director of the Microsoft Office Division.

"There are always questions after an acquisition, like, 'How is it going?' There's a worry about cultures clashing, and about products and strategies coming together," Spataro said. "When we did the acquisition, we talked a lot about how it would accelerate Yammer's momentum. So this is a great data point to demonstrate how well things are going in general."

Spataro specified that to calculate the revenue spike, Microsoft considered only sales of standalone Yammer licenses, and left out revenue coming in from Enterprise Agreement volume licensing deals involving the ESN product.

It should also be noted that after the acquisition, Microsoft eliminated Yammer's Business edition and slashed the price of the more sophisticated Enterprise edition from $15 to $3 per user per month, so in this year's quarter Microsoft generated significantly less revenue per license than Yammer did in the prior year's quarter.

Microsoft expects Yammer sales to get another boost this summer when the Yammer sales team is merged with Microsoft's global salesforce, boosting the number of reps pushing Yammer from about 100 today to thousands worldwide.

As a frame of comparison, worldwide revenue for enterprise social collaboration software grew about 25 percent in 2012 compared with 2011, according to Michael Fauscette, an IDC analyst.

Another market benchmark is Jive Software, a publicly traded ESN vendor, whose revenue grew 34 percent to almost $34 million in the quarter that closed at the end of March.

"Clearly with this announcement Microsoft is trying to put a certain amount of validation out there that says they made a good acquisition, because some people thought they had overpaid for Yammer," Fauscette said.

Looking back, it's clear to Fauscette that Microsoft picked the best ESN product available at the time, and that so far the acquisition appears to be working well for both parties.

Microsoft bought Yammer primarily to boost the ESN features in its all-purpose and ubiquitous SharePoint enterprise collaboration server, which has an on-premises version and a cloud-based version called SharePoint Online that is part of the broader cloud email and collaboration suite Office 365. The newest on-premises version is called SharePoint 2013.

Integration of Yammer and SharePoint is grinding along and will take probably two years to complete. In March, Microsoft offered an integration road map that calls for Office 365 customers to get the option this summer to replace SharePoint Online's activity-stream component with Yammer's, a modest, basic first integration point.

Also by this summer, Microsoft will deliver a Yammer application that will let users embed a Yammer group feed into a SharePoint site. This Yammer application, which will be available in the SharePoint app store, will work both with SharePoint Online and with SharePoint 2013 servers installed on a customer's premises. Microsoft will also make it possible for customers to replace the newsfeed in SharePoint 2013 servers installed on premise.

Later in the year, the integration will deepen with a single sign-on and the inclusion of Yammer in the Office 365 interface. Yammer will also gain integration with Office Web Apps, the browser-based version of the Office productivity suite, before the end of the year.

Next year, Office 365 customers can expect integration between Yammer and other Office 365 components beyond SharePoint, such as Lync and Exchange. Yammer is already being integrated with Microsoft Dynamics enterprise software.

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Microsoft's Windows Blue to be available later this year

The update to Windows 8 will be delivered across a variety of form factors and display sizes

Microsoft's update of its Windows 8 operating system, code-named Windows Blue, will be available later this year, supporting a variety of form factors and display sizes, and providing more options for both businesses and consumers.

"The Windows Blue update is also an opportunity for us to respond to the customer feedback that we've been closely listening to since the launch of Windows 8 and Windows RT," said Tami Reller, Microsoft's chief marketing officer and chief financial officer in a post on Tuesday on the progress of Windows 8.

Microsoft shipped Windows RT for ARM-based devices and Windows 8 for devices based on Intel processors in October last year. The update to Windows 8 comes in the wake of sometimes adverse user feedback about the operating system, which is said to have failed to boost flagging PC sales.

First-quarter PC shipments, for example, totaled 76.3 million units, down 13.9% compared to the same quarter last year, in part because Windows 8 failed to boost sales, and also because of the popularity of alternative computing devices like tablets, research firm IDC said in April.

Reller did not provide details on the features of the upcoming version of Windows 8.

Microsoft has recently crossed the 100 million licenses sold mark for Windows 8, about six months after its general availability, which includes Windows licenses that ship on a new tablet or PC, as well as upgrades to Windows 8. "This is up from the 60 million license number we provided in January," Reller said.

The company has also seen the number of certified devices for Windows 8 and Windows RT grow to 2,400 and is seeing more and more touch devices in the mix, she added.

"While we realize that change takes time, we feel good about the progress since launch, including what we've been able to accomplish with the ecosystem and customer reaction to the new PCs and tablets that are available now or will soon come to market," Reller said.

The decline in the PC market in the first quarter was worse than the 7.7% drop previously forecast, and the market could be headed into further contraction, IDC said in April. Reller, however, continues to be optimistic about the PC business.

"The PC is very much alive and increasingly mobile," she said. The PC part of the market is evolving fast to include "new convertible devices and amazing new touch laptops, and all-in-ones," she added. Some of these PCs are coming into the market now, and they are more affordable than ever, Reller said. The Microsoft executive said Windows 8 was also built to address a broader market consisting of devices like tablets.

Microsoft has also seen the number of apps in its Windows Store grow six-fold since launch. Over 250 million apps were downloaded from the store in the first six months, with almost 90 percent of its app catalog downloaded every month.

The company claims to be doing well in some of its other services too. It announced Monday that over 250 million people are now using its SkyDrive online file hosting service. Microsoft now has 400 million active accounts for its Outlook.com webmail, after completing the transition of Hotmail users to the new service. The company plans to add more features to Outlook.com, which started with the integration of Skype, which is being phased in throughout the world. It now has over 700 million active Microsoft accounts using its services, Reller said.

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FAQ: What you need to know about cloud computing's hidden tax hit

KPMG LLP tax expert Reid Okimoto speaks to state tax burden of cloud computing and questions you should ask before buying

Cloud computing services, both software as a service (SaaS) and infrastructure as a service (IaaS), are subject to taxes, whether your cloud provider tells you or not when you purchase them. Reid Okimoto, senior manager in the state and local tax practice at KPMG, shares tips to help you understand the real cost of cloud computing.

Q: What questions should companies buying cloud services be asking about state and local taxes?
Reid Okimoto
Reid Okimoto, senior manager, state and local tax practice, KPMG

A: One major question is, "Is it subject to sales tax?" If sales tax isn't clearly charged by the cloud provider, the customer may still be subject to 'use tax.' IT-focused professionals and their enterprises are consuming and purchasing cloud services and they're normally dealing with sellers and vendors of cloud services, not necessarily those familiar with the "taxability of services." Questions to ask the seller of the cloud services: "Are you charging sales tax or not?" If the answer is no, the next question is, "Why not?" It could be either that the provider does not have nexus or that the service is not taxable. This answer makes a difference to the consumer.

Q: So what happens with taxation and "nexus," which means a connection or link?
A: The concept of "nexus" determines who has the obligation of collecting and remitting a sales tax. Nexus is not synonymous with taxability. If the vendor has nexus in the state and the cloud service is taxable in the state, it should collect the sales tax. If not, the consumer will be responsible for self-accruing and remitting.

Q: State taxes vary, with some at 8% or even more. You note that state policies regarding taxation of cloud services also vary. Would you give us some examples?
A: New York imposes sales tax on many cloud services. California, in the majority of cases, does not tax cloud services. By contrast, a state like Washington shifts the burden of self-accruing and remitting the use tax from the cloud service provider to the consumer. States that offer multiple points of use exemptions for multi-state users of cloud services are preferred to those that impose sales tax of 100% of the purchase price based on the billing address. Imposing sales tax on 100% of the purchase price based on a billing address makes it likely that more than 100% will be taxed or nothing will be taxed. Taxpayers are always concerned about getting "whipsawed" by two competing states' taxing policies.

Q: If you don't go into this fully understanding the tax situation with cloud services, what might come back to haunt you later?
A: A state auditor does periodic audits of companies and they will require you to prove that sales tax was charged and paid appropriately. You may need to prove this by showing them your invoices. Also, your financial statement auditors may inquire about contingent sales or use tax liabilities on the sale or purchase of cloud services. This could result in a contingent liability being placed on the balance sheet. Another reason to keep straight on the cloud-tax issue is that when companies are sold or recapitalized, they typically go through a "due diligence" process with the buyer to "scrub" companies for all liabilities, including tax liability. If there's a lot of liability, there will be a "failed process" question.

Q: What more do business professionals need to think about here?
A: Clear guidance on taxability and sourcing of cloud services creates predictability from a business investment standpoint. States that do not provide clear guidance put cloud service providers in an awkward position, stuck between a possible state tax audit or False Claims Act allegation for under-collecting and a possible class action lawsuit for over-collecting.

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Microsoft promises more Windows Embedded Compact 7 updates

Microsoft promises more Windows Embedded Compact 7 updates

Microsoft has revealed several Windows Embedded Compact 7 updates, one planned for the fourth quarter of this year and one for the second half of 2012. Next year's version will get an updated kernel, faster file system, and broader hardware support, according to an EE Times report.
A 9:30 a.m. keynote was delivered Oct. 26 at the ARM TechCon show in Santa Clara, Calif. by Microsoft's Dan Javnozon, group product manager for the Windows Embedded marketing group. At the time, we were up north in our Palo Alto batcave getting other news stories out, so we're grateful to EE Times for reporting on what transpired.

According to writer Rick Merritt, Javnozon spilled the beans regarding two pending updates to Windows Embedded Compact 7. Building on an "Windows Embedded Compact 7 Update 3" version that was released last month -- see later -- the revisions suggest that the Windows CE-based operating system won't be left forgotten in the wake of an ARM-powered Windows 8.

Microsoft's Dan Javnozon announcing Windows Embedded Compact 7 updates

Source: EE Times
Javnozon, pictured above, is said to have promised a Compact 7 update for the fourth quarter of this year, though apparently no details were provided. In addition, Merritt writes, he promised "Compact v.Next" for the second half of 2012 -- with an updated kernel, faster file system, and "broader hardware support."

Compact v.Next will also get boosted real-time capabilities, EE Times reports. But in a brief post-keynote interview, Javnozon declined to provide further specifics, the story added.

Microsoft's most recent revision to Windows Embedded Compact 7 operating system was announced on Oct. 17. "Windows Embedded Compact 7 Update 3" includes approximately 125 code defect fixes, several new tools for automating testing, and available Silverlight source code for the operating system's media player, according to the company.

Windows Embedded Compact 7 was first announced in June 2010 as a significant upgrade to the previous Windows Embedded CE 6.0 R3. New features included multicore support, an upgraded Internet Explorer web browser, Adobe Flash support, user interface (UI) development via Silverlight, and the ability to share and manage content across DLNA (digital living network alliance) devices.

The operating system runs not only on x86 processors like its big brother Windows 7, but also on other architectures such as ARM -- including the multicore Cortex-A9 -- and MIPS. (However, Microsoft notes, Hitachi's SH4 is no longer supported by this particular Windows CE variant, and ARMv5 is the earliest supported ARM architecture.)

According to an Oct. 17 blog entry by Olivier Bloch, chief software architect for Windows Embedded, Windows Embedded Compact 7 Update 3 is now freely downloadable. He wrote that the new release contains "approximately 125 code defect fixes" for the Compact 7 operating system, Platform Builder tools, and the Compact Test Kit (CTK).


The installer for Microsoft's Windows Embedded Compact 7
The CTK has two new tools, Bloch adds: The Compact Automation Tool Solution (CATS) for automating test scenarios, and The Compact Stress Tool for automating stress tests. Also now included is new Silverlight for Windows Embedded (SWE) sample code for the Compact 7 Media Player, which was previously provided only in binary format. A previous dependency on the compositor in the sample code has been removed, so Media Player performance should be improved across all hardware configurations, according to Microsoft.

Microsoft originally promoted Windows Embedded Compact 7 as "bringing the power of Windows 7 across ... specialized devices such as slates, portable media players, and others." Indeed, the operating system was shown off last year on an early version of the Asus Eee Pad EP101TC (below), a tablet that was later revamped to run Android instead.


The Asus Eee Pad EP101TC originally ran Windows Embedded Compact 7
Since then, both the progress of Android devices and the announcement of a pending, ARM-based version of Windows 8 has caused Redmond to lower its sights -- or so it would appear. Thanks to its low cost, simpler hardware requirements, modularity, and real-time characteristics, however, Windows Embedded Compact 7 will continue to find customers, or so its supporters argue.

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Why you should take hacked sites’ password assurances with a grain of salt

Beware of e-mails that play down the ease of cracking your leaked passcode.

Reputation.com, a service that helps people and companies manage negative search results, has suffered a security breach that has exposed user names, e-mail and physical addresses, and in some cases, password data.

In an e-mail sent to users on Tuesday, officials with the Redwood City, California-based company said the passwords were "highly encrypted ('salted' and 'hashed')," a highly vague description that can mean different things to different people. "Although it was highly unlikely that these passwords could ever be decrypted, we immediately changed the password of every user to prevent any possible unauthorized account access," the e-mail added unconvincingly.

It's unfortunate that companies make such assurances, because they may give users a false sense of security. As Ars has been reporting for nine months, gains in cracking techniques means the average password has never been weaker, allowing attackers to decipher even long passwords with numbers, letters, and symbols in them. Even Ars' own Nate Anderson—a self-described newbie to password cracking—was able to crack more than 45 percent of a 17,000-hash list using software and dictionaries he downloaded online.

Jeremi Gosney, a password cracking expert with Stricture Consulting Group recently explained in an Ars forum post that it's highly unusual for a leaked password list to go uncracked, as suggested by the Reputation.com e-mail.

"It definitely depends on the specific leak we're talking about, but generally speaking, your average security expert/penetration tester/casual password cracker is probably only going to be able to recover at most 50-60% of passwords in any given leak," he wrote. "Seasoned password crackers will likely recover 70-75%; and truly exceptional password crackers will recover 80% or more."

Adding cryptographic salt to passwords is crucial to the safe storage of passwords because it forces password cracking programs to guess the plaintext for each individual hash, rather than guessing passwords for thousands or millions of hashes all at once. (Yes, it also thwarts rainbow-table attacks, but no one uses this method anymore.) But it's easy to overstate the benefits of salting. It in no way slows down the cracking of a single hash, so if an attacker locates the hash belonging to a particular high-value Reputation.com user, the measure does nothing to thwart the cracking of that hash. The security value of salting alone only slows down cracking of large lists by a multiple of the number of unique salts, so that value decreases with each hash that is decoded.

A far more meaningful security measure is the type of algorithm that's used to convert plaintext passwords into cryptographic hashes. If the company used SHA1, SHA3, MD5, or any number of other "fast" hashes, it's extremely likely that at least some of the leaked password data has already been cracked. If, on the other hand, the company used bcrypt, scrypt, PBKDF2 or another "slow" algorithm specifically designed to hash passwords, the chances are significantly lower. Reputation.com makes no mention of the algorithm it used, so users should presume the worst. Anyone who used their Reputation.com password to protect one or more accounts on other sites should change those passcodes immediately. Passwords should be randomly generated by a password-manager, contain a minimum length of 11 characters, and include numbers, letters, and symbols. They should also be unique to each site.

For a deeper dive into the benefits of salting and hashing, see last Saturday's story about the password breach that hit LivingSocial.com. Some of the user comments are especially illuminating.

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Companies explore self-detonating data as security control

Self-detonating data would put expiration dates on sensitive documents

The popular Snapchat photo-messaging app used mainly by Android and iOS mobile device owners to share images that then self-destruct after 10 seconds is the sort of security idea that businesses say can help them secure online transactions with business partners.

“It puts controls on what people see, and I can put expiration dates on sensitive documents,” says Marc McDonald, owner of Chicago-based Midland Metal Products that a few months ago started using the software-as-a-service called VIA from Intralinks Holdings that now lets the maker of store fixtures share computer-aided design files for custom manufacturing with business partners. Midland Metal Products restricts download of sensitive information and also sets a time for the files to self-destruct. McDonald says the password-controlled VIA option is simpler and has more security controls than the Dropbox option he’d previously used.

While Intralinks sometimes casually refers to the collaboration service, which is priced at $25 per user per month as a “Snapchat for the enterprise,” it’s not related to the real Snapchat, which was launched in September 2011 by Stanford students Evan Spiegel and Bobby Murphy as a way to share “impermanent photos” taken on mobile devices through their Snapchat app.
We've been getting a lot of inquires about Snapchat apps."
— Jason Novak, assistant director of digital forensics, Stroz Friedberg

After a short period of time, each Snapchat image is said to be deleted from the devices and the Snapchat servers. The still-evolving Snapchat service, which has started to receive venture-capital funding, is proving popular with teens and young adults that now send millions of Snapchat photos and videos each day. Snapchat is also starting to be noticed in business circles in connection with questions about whether unauthorized photos and images of sensitive business information are being sent via mobile devices.

“We’ve been getting a lot of inquires about Snapchat apps,” says Jason Novak, assistant director of digital forensics at Stroz Friedberg, the New York-based firm which focuses on cybercrime issues and providing digital evidence that will stand up in court, if need be.
One big question is whether Snapchat does leave any trail of evidence of use on a mobile device. Stroz Friedberg says its forensics analysis can detect a trail of use of Snapchat for the Apple iPhone, though not evidence of specifically what photos or videos were sent. It hasn’t yet completed forensics for Snapchat on an Android device.

In its digital forensics tests it did with Snapchat for the iPhone, Stroz Friedberg found Snapchat maintains what’s called the user.plist file which is not encrypted. The file is a way to identify, preserve and analyze that the user of the iPhone did send something to a recipient via Snapchat. Novak says it’s possible to clear the Snapchat plist file on the device if the user knows how.

He points out that other Snapchat-like services oriented toward mobile have sprung up -- such as Facebook’s Poke, as well as Wickr and Silent Circle which take advantage of encryption as well. These type of services are presenting digital forensics with new challenges, Novak notes. Mobile devices such as smartphones and tablets that use these type of services remains a new and evolving field beyond traditional computer-based forensics which is now more automated.

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