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Microsoft executive says workers slept in data centers during lockdown


System administrator Alexander Landmann carries a server in the computer centre of Deutsche Bahn in Berlin on Oct. 22, 2020.

Britta Pedersen | picture alliance | Getty Images

Microsoft employees slept in the software company’s data centers during the height of the coronavirus pandemic, an executive said on Wednesday.

While many top technology companies directed their employees to work from home after Covid showed up in the U.S. in 2020, some employees were so important that they had to work on site. That was the case for a select few who worked at the locations containing the servers for online services like Microsoft Teams, as well as public-cloud infrastructure powering third-party customers’ applications.

“I heard amazing stories about people actually sleeping in data centers,” Kristen Roby Dimlow, corporate vice president for total rewards, performance and human resources business insights, said during a conversation with Morgan Stanley analysts Josh Baer and Mark Carlucci. “In certain countries there was huge lockdown, and so we would have our own employees choose to sleep in the data center because they were worried they’d get stuck at a roadblock, trying to go home.”

Generally data centers are not places where people sleep. Aisles can be hot from air coming off of servers, and cold because of air conditioning to prevent machines from overheating. A Microsoft spokesperson would not say where employees slept in data centers or how many did it.

The company changed several aspects of work at its data centers because of the pandemic, Noelle Walsh, corporate vice president for the company’s Cloud Operations and Innovation group, said in an interview with CNBC in April.

Employees were allowed to work from home if they felt anxious about coming to data centers, Walsh said. If people didn’t want to take the bus, the company provided transportation to and from data centers and even allowed people to stay in hotels, she said.

“We had to in some cases go to shift work, day and night, to get the work done within the same schedule,” Walsh said.

WATCH: Why data centers were the top real estate sector of 2020



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Intel falls on report Microsoft will design own chips for PCs, servers


Satya Nadella, chief executive officer of Microsoft Corp., speaks during the company’s annual shareholders meeting in Bellevue, Washington, on Nov. 29, 2017.

David Ryder | Bloomberg | Getty Images

Intel dropped 6.3% on Friday following a Bloomberg report that Microsoft plans to design its own chips for its Surface PCs as well as servers.

Intel has famously had a long-running partnership with Microsoft as the primary processor maker for Windows PCs.

“Because silicon is a foundational building block for technology, we’re continuing to invest in our own capabilities in areas like design, manufacturing and tools, while also fostering and strengthening partnerships with a wide range of chip providers,” Microsoft spokesperson Frank Shaw said in a statement.

The report comes a month after Apple started selling PCs using its own M1 processor, instead of Intel chips. The Microsoft chips are reportedly based on technology from Arm, which Nvidia is in the process of acquiring from Softbank.

Apple’s chips for its iPhones and Amazon‘s server chips are also based on Arm’s instruction set, which is distinct from the x86 technology Intel primarily uses.

Earlier this month, a senior Microsoft executive did not reject the idea that Microsoft would build its own “first party” chips at a conference.

“The partnerships that we have though in this realm, from the OpenAI efforts that we have to our relationship with Intel and Arm developments that we have certainly point to the need to have advanced capabilities here, whether we build it first party or have an ecosystem of third-party partners, it’s sort of yet to be disclosed,” Judson Althoff, executive vice president of worldwide commercial business at Microsoft, said during an appearance at the UBS Global, Technology, Media and Telecommunications conference on December 8.

Windows currently runs on Arm-based PCs, usually with chips made by Qualcomm. Microsoft introduced the Surface RT tablet in 2012 that contained an Arm chip from Nvidia, although the device was discontinued in 2013. Last year it introduced the Surface Pro X containing a Qualcomm Arm chip, and it came out with an updated version of the device this year.

Microsoft said in 2017 that it was working with Arm server makers to optimize silicon for use in its own data centers.

Intel reported $9.85 billion in revenue from its group that sells PC chips in the quarter ending in September. Server chips are also a major business for Intel. In the quarter ending in September, Intel reported $5.91 billion in revenue for its Data Center Group that sells server chips.

Intel has had challenges with manufacturing its chips in recent years. Intel controls its own chip factories, called “fabs,” as compared to other chip designers, which contract with companies in Asia to manufacture chips to client specifications.

The more transistors that a chipmaker can fit into the same space, the more efficient a chip is. Currently, Intel ships chips with 10-nanometer transistors, but dedicated foundries, like TSMC, are now making 5-nanometer chips, which are technically superior.

Earlier this year, Intel CEO Bob Swan said that it was considering outsourcing its manufacturing, like what Apple does.

Representatives for Intel and Microsoft didn’t immediately return requests for comment.

—Jordan Novet contributed to this story.



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As Apple releases its new line of Macs, the biggest beneficiary may be Microsoft


Apple is set to launch its next generation of MacBooks this week. For the first time since the surprise 2005 announcement by Steve Jobs that Apple was moving from PowerPC to Intel (x86), the company is set to take on chip-making responsibility for the Mac.

With Apple
AAPL,
-0.37%

coming off strong earnings that included better-than-expected growth for its Mac line, which grew 7.3%, more than double the PC market’s 3.6%, it would seem like the perfect moment for its new launch of improved MacBooks.

However, I believe the launch could test Apple, as it is essentially deriving the silicon for its new Macs from the iPhone. In time this may pan out well, but there is a good chance this show could get off to a rocky start.

Apple has made many claims about its new MacBooks, and while we will have to wait until Tuesday’s event to get the full picture, there have been plenty of leaks on what to expect from the company.

It’s the same old-new normal for Apple, which CEO Tim Cook alluded to at this year’s WWDC event, including promises of a whole new level of performance, with the lowest power consumption, maximizing battery life to be better than ever before. Also, a new level of graphic performance and even more market innovation.

In the WWDC transcript, Cook’s exact words were: “The Mac will take another huge leap forward.”

All of this will remain TBD until broad benchmarking and compatibility testing for software and peripherals is available.

Challenging transition

My biggest concern, though, isn’t the promises, but rather the potential vulnerabilities for Apple. The transition from Intel
INTC,
+1.87%

to its new Arm-based silicon is almost certain to be a challenging transition that will impact both consumers and developers.

The company’s entire software ecosystem will have to be rewritten to work on this new architecture, and this takes time. Microsoft
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-1.02%
,
for instance, has been working for a decade on building its software ecosystem to run smoothly on Arm-based variants, both of its Surface Pro X but also other Arm-based notebooks from the likes of Samsung and Lenovo. The improvement has been material, but it has been markedly difficult to meet all the developer and consumer needs.

More specifically, the transition from Intel to Apple’s new silicon will likely break applications, and create compatibility issues with peripherals. While I expect Apple to have a set of “hero apps” that will work flawlessly, this certainly won’t be the case across all the apps, tools and games used by Mac consumers.

Reaction of consumers, developers

This will leave consumers frustrated with their new Macs, perhaps more so than Mac’s constant quality issues with its keyboards in recent generations. Furthermore, this creates more work for developers, who will now be required to support disparate apps for the Intel version and the Arm version — this is anything but straightforward.

Perhaps Apple’s biggest mistake is its claims that this transition will be seamless. Sure, that is good marketing, but the more realistic approach should be: “Bear with us while we make the Mac experience even better.”

Another big question mark for Apple will be around support of its current generation of Intel-based Macs. The company was heavily scrutinized for its short period of support for PowerPC after shifting to Mac. The support period lasted only three years, and that left some Apple customers dissatisfied. Many Mac users stay with a device for five to eight years, and certainly won’t want to be forced to buy another $2,000-plus device prematurely if Apple decides to stop supporting its Intel-based Macs after three years. This will be something to watch closely.  

If Apple does stumble for a period while it seeks to perfect its new silicon, the next question is where do consumers seeking an alternative to Mac turn?

Microsoft stands to gain

I believe Microsoft could be the big winner during this transition for the Mac. The Microsoft Surface has seen its growth rates up 37% in its most recent quarter, tracking over $6 billion in its trailing four quarters. This number is still much smaller than Mac, which saw its Mac revenue at $9 billion in its most recent quarter, reflecting its best quarter ever, growing 28% year over year. Still, I believe there may have been some padding with buyers seeking to upgrade before Apple moves away from the Intel-based silicon.

Maybe more than just Microsoft and Surface’s growth momentum is the brand strength and ultra-premium branding that comes with Surface. I have long believed Microsoft’s endeavor into Surface had much less to do with competing with its large software OEM’s like Dell
DELL,
+0.55%
,
HP
HPQ,
+3.40%

and Lenovo, and much more to do with building a true competitor to the Mac.

This has been visible in the entire approach to Surface, including acute attention to details such as the packaging, the branding on the notebooks, the construction materials and the premium pricing. Microsoft has also been wise in its development of the Surface to include Intel, AMD
AMD,
-1.64%
,
and Arm-based variants, giving customers a choice while taking advantage of its ability to support all three chipsets’ software compatibility nuances.

Tuesday’s launch has a lot at stake for Apple. Apple’s move away from Intel has long been touted as a big problem for Intel, but it could be equally, if not more problematic, for Apple. With Microsoft Surface continuing to gain momentum for its ultra-high-quality notebooks, Mac faces more competition and will be under pressure to get this right— sooner than later.

Daniel Newman is the principal analyst at Futurum Research, which
provides or has provided research, analysis, advising and/or consulting to
Qualcomm, Nvidia, Intel, Microsoft, Samsung, ARM, and dozens of companies in
the tech and digital industries. Neither he nor his firm holds any equity
positions in any companies cited. Follow him on Twitter 
@danielnewmanUV.





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Hardware

Atari Seeks New Cachet With Crypto — And a Return to Hardware


As Microsoft Corp. and Sony Corp. prepare to launch their new video-game consoles, another legendary player, Atari, is readying its first new hardware in more than 20 years. The Atari VCS will come with a twist — a way for gamers to spend a cryptocurrency while they play.

First teased several years ago and expected to ship in November, the Atari VCS is being called a mini-console or a gaming computer. The product will offer access to more than 100 Atari arcade games and home classics, like Pong, plus new titles. It will have internet connectivity and let consumers buy products using Atari Tokens, which will go on sale in late October.

Fred Chesnais

“We have a brand, we have a following — we think we are going to get some attention in any case,” said Chief Executive Officer Frederic Chesnais, adding that his competition is more the iPhone than an Xbox or PlayStation. “After that the product has to be good.”

On Oct. 29, Bitcoin.com Exchange will start selling $1 million worth of Atari Tokens for 25 cents apiece to retail investors outside of the U.S. The tokens will be used for in-game purchases and for partner games, as well as eventually in the broader gaming ecosystem if Atari’s effort to create a standard currency for the industry bears fruit. The company is also working on a gaming stablecoin, which won’t be as volatile as most tokens. But it isn’t close to launch, said Chesnais, who led Atari out of its 2013 bankruptcy.



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Q3 PC shipments hit fastest growth in a decade


A customer looks at Dell computers at a Best Buy store in Orem, Utah.

George Frey | Bloomberg | Getty Images

Computer makers shipped 79.2 million PCs in the third quarter, up 12.7% year over year, showing the fastest growth in a decade, technology research company Canalys estimated on Friday.

Despite the swelling popularity of phones and tablets in recent years, people have been leaning harder on personal computers while working or studying from home in the past several months because of the coronavirus pandemic.

Acer of Taiwan was the biggest individual beneficiary from the trend in the third quarter, shipping 5.6 million PCs, up 15%, according to the Canalys estimates, which include Chromebooks that run Google-led Chrome OS. The company said Lenovo, the largest PC maker by shipments in the quarter, shipped 19.3 million PCs, up 11.4%.

Microsoft, whose Windows 10 operating system runs on over 1 billion devices, said in May that people are spending more than 4 trillion minutes per month on Windows 10, up 75% on an annualized basis.

Other firms such as Gartner and IDC have not issued third-quarter estimates yet. Gartner said in July that second-quarter PC shipments grew 2.8%.

WATCH: HP Inc CEO on strong Q3 sales: ‘We have never shipped so many PCs’



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