Microsoft Invests $1 Billion to sell a Million Nokia Windows Phones - DotTechnologies

At face value, Nokia's results for Windows Phone are solid. One million Lumia devices sold in just its first quarter of availability. The sales add a bright spot to an otherwise gloomy Nokia calendar fourth-quarter earnings report, where smartphone sales slid 31 percent amid a 21 percent year-over-year drop in revenues.

The real story here though is the cost to Microsoft to ensure that success. Microsoft agreed to pay Nokia $1 billion to abandon Symbian as primary operating system for Windows Phone, according to reports soon after the deal was announced in February 2011. The Redmond, Wash.-based company paid Nokia $250 million in the fourth quarter for "platform support payments", meaning each device cost Microsoft about $250 before any royalty payments received. That's a run rate of a billion dollars per year. So just how much is Nokia giving back to Microsoft?

Not much it appears. "We have a competitive software royalty structure, which includes minimum software royalty commitments", Nokia says in its earnings statement. "Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US Dollars".

Microsoft has never publicly disclosed the royalties it charges for Windows Phone 7, although reports claim the company receives around $15 for each device sold. Nokia is key to Microsoft's strategy to make Windows Phone relevant, so it's likely if that number's true the Redmond company had no choice but to accept a smaller payment.

With Lumia's early success apparent through Nokia's quarterly results, and the disclosure of the payments Microsoft is making you have to wonder if it's all worth it. While a high cost, it's paying early dividends. Not everyone's impressed, but Microsoft arguably stole the show at CES 2012 thanks to the Lumia 900 and HTC Titan II.

This excitement has lead to positive press: IHS iSuppli wireless analyst Wayne Lam says Windows Phone will become the second biggest mobile platform in 2015. While a boisterous claim, it keeps Windows Phone in the headlines -- and in a positive light.

On the flipside, there are pitfalls to this strategy. By giving Nokia such favorable terms, it is preventing itself from getting terms more favorable to it with other manufacturers. That may force the company to make a decision in the not too distant future to end the royalty structure and "give away" Windows Phone much like Google does with Android.

(That will also destroy one of its key arguments in demanding royalties from Android manufacturers -- that Google's strategy puts it at a competitive disadvantage.)

There's also more expenditures to worry about: as BetaNews first reported during Consumer Electronics Show 2012, Microsoft is planning a huge ad blitz to surround the launch of the Nokia Ace (otherwise known as the Lumia 900). With $100 million being spent on launching that device alone, and as much as an additional $100 million to be spent on the marketing of other devices.

It's a lot of money, that's for sure.

Microsoft Set To Launch SQL Server 2012 on March 7 - DotTechnologies

Microsoft has announced a March 7 online event for the launch of SQL Server 2012, the next generation of its database product.

                                   

The event will feature keynote addresses from Microsoft corporate vice presidents Ted Kummert and Quentin Clark, who will respectively give attendees a look at Microsoft's "data evolution vision" and a general overview of SQL Server 2012's features.

It wasn't immediately clear whether March 7 is the actual general availability date for the release, but the event indicates that the release could be imminent.

"Let me throw out a dose of reality: if you are not on a [beta program] or otherwise going live with a private build or release candidate, you will not be installing and deploying SQL Server 2012 on March 7th. I promise," SQL Server expert Aaron Bertrand wrote in a blog post late Monday. "These launch events are marketing tools to get you excited about the product. Will you be able to download Express editions from the Microsoft web site, and other SKUs from MSDN or your volume licensing portal, shortly after that? Sure. The next day? Almost certainly not."

SQL Server 2012 is set to arrive in three main editions, including a new BI (business intelligence) version that adds features such as the Power View data-discovery tool and data quality services to the standard edition's features. Microsoft is also planning to offer an Enterprise Edition that includes advanced security, high-availability capabilities and a columnar data store on top of the BI edition's feature set.

Microsoft is enacting a new licensing plan for the 2012 release. Enterprise and Standard Edition will be available on a core-based model, with licenses sold in two-core packs. Standard Edition is also available on a server plus CAL (client access license) basis. BI edition is only available via server-plus-CAL licensing.

SQL Server "is an adequate product if you don't mind being locked into the Microsoft stack," said analyst Curt Monash of Monash Research. "For example, the ColumnStore feature is very partial, given that it can't be updated; but Oracle doesn't have columnar storage at all."

There's more lock-in with SQL Server than other platforms due to its reliance on Windows for an OS, Monash said.

IT shops using competing products such as Oracle could consider using SQL Server 2012 in a cohabitation scenario as a potential alternative to adding more Oracle licenses, but it would make sense only if they already have a strong investment in the Microsoft stack, Monash said.

"[IBM] DB2 works just as well to keep Oracle honest as SQL Server does, and without a major operating system commitment," he said.

In any event, no single database can serve all workloads equally well, so the best approach is to have a general-purpose product along with additional database platforms aimed at analytics and other areas, Monash added.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

Android, not iOS, will win over developers - DotTechnologies

Android will replace iOS as the most important platform to developers within the next 12 months, British analyst firm Ovum says. It also notes an increased interest in Windows Phone and BlackBerry OS, and sees a move towards web standards in development over proprietary technologies.

Timing is surprising. Tomorrow, Apple will announce fourth calendar quarter earnings, where analysts expect record iOS device sales. Despite these platform gains, developer attention shifts to Android.

"A smartphone platform's success is dictated not only by the pull of consumers and the push of handset vendors and mobile operators but also by a healthy economy of applications delivered by third-party developers", devices and platforms practice leader Adam Leach says of his findings. Leach's research should come as no surprise given Android's strength in the marketplace.

Save for the holidays, Android smartphones have been outselling the iPhone by as much as a two-to-one margin for much of the past year. It was only a matter of time before developers took notice of this fast growing market and develop for it.

"It is important for all players in the smartphone ecosystem to understand the choices developers are making today and the downstream impact of those choices," Leach says.

Indeed, the survey shows a marked move away from once important platforms such as Symbian and WebOS. Developers' confidence in BlackBerry OS is surprising, however, given the platform's struggle in the market, and the internal turmoil plaguing the company. Windows Phone is not as surprising, given Nokia's big gamble on the platform and the building interest in its partner's devices.

"The growing momentum behind Windows Phone indicates that Microsoft has managed to convince developers that its platform is worthy of investment, its challenge now is to persuade consumers", Leach argues.

Developers also are showing a desire to develop their applications using web-based standards. This allows for an even cross-platform experience without the need for recoding. HTML5 is favored, while older more platform-specific technologies like Java, Flash, and WAP fall by the wayside.

Even with this move towards standards in development, the developer still leans on vendor-specific distribution -- Google's Android Market or Apple's App Store -- in order to distribute their work. This is likely a function of the developer's desire to reach the largest possible audience, Ovum says.

Pages With Too Many Ads "Above The Fold" Now Penalized By Google's "Page Layout" Algorithm - DotTechnologies

Do you shove lots of ads at the top of your web pages? Think again. Tired of doing a Google search and landing on these types of pages? Rejoice. Google has announced that it will penalize sites with pages that are top-heavy with ads.

 Top Heavy With Ads? Look Out!

The change — called the “page layout algorithm” — takes direct aim at any site with pages where content is buried under tons of ads.

From Google’s post on its Inside Search blog todaWe’ve heard complaints from users that if they click on a result and it’s difficult to find the actual content, they aren’t happy with the experience. Rather than scrolling down the page past a slew of ads, users want to see content right away.

 So sites that don’t have much content “above-the-fold” can be affected by this change. If you click on a website and the part of the website you see first either doesn’t have a lot of visible content above-the-fold or dedicates a large fraction of the site’s initial screen real estate to ads, that’s not a very good user experience.

 Such sites may not rank as highly going forward.

Google also posted the same information to its Google Webmaster Central blog.

Sites using pop-ups, pop-unders or overlay ads are not impacted by this. It only applies to static ads in fixed positions on pages themselves, Google told me.

How Much Is Too Much?

How can you tell if you’ve got too many ads above-the-fold? When I talked with the head of Google’s web spam team, Matt Cutts, he said that Google wasn’t going to provide any type of official tools similar to how it provides tools to tell if your site is too slow (site speed is another ranking signal).

Instead, Cutts told me that Google is encouraging people to make use of its Google Browser Size tool or similar tools to understand how much of a page’s content (as opposed to ads) is visible at first glance to visitors under various screen resolutions.

But how far down the page is too far? That’s left to the publisher to decide for themselves. However, the blog post stresses the change should only hit pages with an abnormally large number of ads above-the-fold, compared to the web as a whole:

We understand that placing ads above-the-fold is quite common for many websites; these ads often perform well and help publishers monetize online content.

This algorithmic change does not affect sites who place ads above-the-fold to a normal degree, but affects sites that go much further to load the top of the page with ads to an excessive degree or that make it hard to find the actual original content on the page.

 This new algorithmic improvement tends to impact sites where there is only a small amount of visible content above-the-fold or relevant content is persistently pushed down by large blocks of ads.

Impacts Less Than 1% Of Searches

Clearly, you’re in trouble if you have little-to-no content showing above the fold for commonly-used screen resolutions. You’ll know you’re in trouble shortly, because the change is now going into effect. If you suddenly see a drop in traffic today, and you’re heavy on the ads, chances are you’ve been hit by the new algorithm.

For those ready to panic, Cutts told me the change will impact less than 1% of Google’s searches globally, which today’s post also stresses.

Fixed Your Ads? Penalty Doesn’t Immediately Lift

What happens if you’re hit? Make changes, then wait a few weeks.

Similar to how last year’s Panda Update works, Google is examining sites it finds and effectively tagging them as being too ad-heavy or not. If you’re tagged that way, you get a ranking decrease attached to your entire site (not just particular pages) as part of today’s launch.

If you reduce ads above-the-fold, the penalty doesn’t instantly disappear. Instead, Google will make note of it when it next visits your site. But it can take several weeks until Google’s “push” or “update” until the new changes it has found are integrated into its overall ranking system, effectively removing penalties from sites that have changed and adding them to new ones that have been caught.

Google’s post explains this more:

    If you decide to update your page layout, the page layout algorithm will automatically reflect the changes as we re-crawl and process enough pages from your site to assess the changes.

    How long that takes will depend on several factors, including the number of pages on your site and how efficiently Googlebot can crawl the content.

    On a typical website, it can take several weeks for Googlebot to crawl and process enough pages to reflect layout changes on the site.

Our Why Google Panda Is More A Ranking Factor Than Algorithm Update article explains the situation with Panda, and how it took time between when publishers made changes to remove “thin” content to when they were restored to Google’s good graces. That process is just as applicable to today’s change, even though Panda itself now has much less flux.

Meanwhile, Google AdSense Pushes Ads

Ironically, on the same day that Google’s web search team announced this change, I received this message from Google’s AdSense team encouraging me to put more ads on my site:

                          

This was in relation to my personal blog, Daggle. The image in the email suggests that Google thinks content pretty much should be surrounded by ads.

Of course, if you watch the video that Google refers me (and others) to in the email, it promotes careful placement, that user experience be considered and, at one point, shows a page top-heavy with ads as something that shouldn’t be done.

                              

Still, it’s not hard to easily find sites using Google’s own AdSense ads that are definitely pushing content down as far down on their pages as they can or trying to hide it. Those pages, AdSense or not, are subject to the new rules, Cutts said.

Pages Ad-Heavy, But Not Top-Heavy With Ads, May Escape

As a searcher, I’m happy with the change. But it might not be perfect. For example, here’s something I tweeted about last year:

                             

Yes, that’s my finger being used as an arrow. I was annoyed that to find the actual download link I was after was surrounded by AdSense-powered ads telling me to download other stuff.

This particular site was heavily used by kids who might easily click on an ad by mistake. That’s potentially bad ROI for those advertisers. Heck, as net-savvy adult, I found it a challenge.

But the problem here wasn’t that the content was pushed “below the fold” by ads. It was that the ratio of ads was so high in relation to the content (a single link), plus the misleading nature of the ads around the content.

Are Google’s Own Search Results Top Heavy?

Another issue is that ads on Google’s own search results pages push the “content” — the unpaid editorial listings — down toward the bottom of the page. For example, here’s exactly what’s visible on my MacBook Pro’s 1680×1050 screen:

                             

(Side note, that yellow color around the ads in the screenshot? It’s much darker in the screenshot than what I see with my eyes. In reality, the color is so washed-out that it might as well be invisible. That’s something some have felt has been deliberately engineered by Google to make ads less noticeable as ads).

The blue box surrounds the content, the search listings that lead you to actual merchants selling trash cans, in this example. Some may argue that the Google shopping results box is further pushing down the “real content” of listings that lead out of Google. But the shopping results themselves do lead you to external merchants, so I consider them to be content.

The example above is pretty extreme, showing the maximum of three ads that Google will ever show above its search results (with a key exception, below). Even then, there’s content visible, with it making up around half the page or more, if you include the Related Searches area as content.

My laptop’s screen resolution is pretty high, of course. Others would see less (Google’s Browser Size tool doesn’t work to measure its own search results pages). But you can expect Google will take “do as I say, not as I do” criticism on this issue.

Indeed, I shared this story initially with the main details, then started working on this section. After that was done, I could see this type of criticism already happening, both in the comments or over on my Google+ post and Facebook post about the change.

Here’s a screenshot that Daniel Weadley shared in my Google+ post about what he sees on his netbook:

                                    

In this example, Google’s doing a rare display of four ads. That’s because it’s showing the maximum of three regular ads it will show with a special Comparison Ads unit on top of those. And that will just add fuel to criticisms that if Google is taking aim at pages top-heavy with ads, it might need to also look closer to home.

NOTE: About three hours after I wrote this, Google clearly saw the criticisms about ads on its own search results pages and sent this statement:

    This is a site-based algorithm that looks at all the pages across an entire site in aggregate. Although it’s possible to find a few searches on Google that trigger many ads, it’s vastly more common to have no ads or few ads on a page.

    Again, this algorithm change is designed to demote sites that make it difficult for a user to get to the content and offer a bad user experience.

    Having an ad above-the-fold doesn’t imply that you’re affected by this change. It’s that excessive behavior that we’re working to avoid for our users.

Algorithms? Signals?

Does all this talk about ranking signals and algorithms have you confused? Our video below explains briefly how a search engine’s algorithm works to rank web pages:

                                          

Also see our Periodic Table Of SEO Ranking Factors, which explains some of the other ranking signals that Google uses in its algorithm:

                                

Name The Update & More Info

Today’s change is a new, significant ranking factor for our table, one we’ll add in a future update, probably as Va, for “Violation, Ad-Heavy site.”

Often when Google rolls out new algorithms, it gives them names. Last year’s Panda Update was a classic example of this. But Google’s not given one to this update (I did ask). It’s just being called the “page layout algorithm.”

Boring. Unhelpful for easy reference. If you’d like to brainstorm a name, visit our posts on Google+ and on Facebook, where we’re asking for ideas.

Now for the self-interested closing. You can bet this will be a big topic of discussion at our upcoming SMX West search marketing conference at the end of next month, especially on the Ask The Search Engines panel. So check out our full agenda and consider attending.

About The Author: Danny Sullivan is editor-in-chief of Search Engine Land. He’s a widely cited authority on search engines and search marketing issues who has covered the space since 1996. Danny also oversees Search Engine Land’s SMX: Search Marketing Expo conference series. He maintains a personal blog called Daggle (and maintains his disclosures page there). He can be found on Facebook, Google + and microblogs on Twitter as @dannysullivan. See more articles by Danny Sullivan