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Bigger packages mean more bang for buck, says new telecom study

National Post Tech Desk - Thu, 06/18/2015 - 16:29

TORONTO — A new study has found that while the cost of using a cell phone in Canada has jumped as much as eight per cent this year, Canadians are getting a better bang for their buck for higher-volume packages.

According to an analysis of telecom pricing in a six major Canadian cities during a two-month period early this year, the average cost of unlimited nationwide talk-and-text packages that include two gigabytes of monthly data usage declined by 11 per cent compared to last year. Further, the variance in rates between upstarts and the pricier incumbents, which ranges from 25 to as much as 65 per cent, is generally at its widest in these higher-volume baskets.

“We see the technology offerings changing over time and you get more for your buck at virtually every price level,” said Gerry Wall, president of Wall Communications Inc., an Ottawa-based economics research and consulting firm that was commissioned by the country’s two industry watchdogs to complete the report. “The average consumption has grown over time and so a mid-level basket of cell service is better today because you’re getting more even though we’re putting it in the same category.”

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The study, which assessed prices in Halifax, Montreal, Toronto, Winnipeg, Regina and Vancouver, found users in Manitoba and Saskatchewan enjoy the lowest mobile prices, especially for higher-volume usage. The spread between what the Big Three telcos and Videotron charge in Montreal is quite narrow, as Quebecor Inc. has employed an aggressive approach to sell subscribers a suite of services rather than just one.

“People say Quebec is a different market for a lot of reasons. But the strategy Videotron has used is to try to bundle,” said Wall. “On a stand-alone basis, just for the cell service, they’re not cutting their legs off.”

The study considered 500 separate Canadian stand-alone and bundled service packages, a number that continues to soar as telcos adjust their mobile offerings to address the explosion of consumer demand.

Despite the average year-over-over price increase, the cost for domestic wireless plans — ranging from talk only, talk-and-text, and talk-and-text and data — is still lower today than it was in 2008, the study concludes. But Canada’s cell phone prices continue to rank “on the high side” compared to other countries.

On a stand-alone basis, just for the cell service, they’re not cutting their legs off

For the past several years, the federal government has tweaked rules governing the sector and introduced incentives for a crop of new players to try to inject more competition and choice into the Canadian market. Still, Rogers Communications Inc., BCE Inc. and Telus Corp. serve about 90 per cent of mobile subscribers.

The report also found that the price of broadband Internet services fell between an average of one and seven per cent, which Wall referred to as “probably the best story for Canadian consumers.”

CIO security roundup: WordPress plugin flaw, LastPass hacked and more OpenSLL patches

National Post Tech Desk - Thu, 06/18/2015 - 13:03

Password Vault Hacked

Popular online password manager LastPass has revealed that it has been hacked, and LastPass account email addresses, password reminders, server per user salts, and authentication hashes were compromised. The company said in a blog post that it is confident that users’ secure password vaults were not accessed, but it is requiring all users to change their master passwords.

It is also requiring verification for new IP addresses and devices, and recommends that users enable multifactor authentication. However, it’s possible that the hackers will launch phishing attacks using the stolen email addresses, so customers are warned not to respond to any emails supposedly from LastPass asking for information.


Stolen Certificates Used to Sign Malware

Security certificates used to verify that software is from a legitimate publisher have been stolen and are being used to sign malware, notably the recently discovered Duqu 2.0. One of the certificates came from Foxconn, the Chinese hardware manufacturer that builds products from Apple, Dell, and many others.

Kaspersky researchers said, “it’s interesting that the Duqu attackers are also careful enough not to use same digital certificate twice. This is something we have seen with Duqu from both 2011 and 2015. If that’s true, then it means that the attackers might have enough alternative stolen digital certificates from other manufacturers that are ready to be used during the next targeted attack. This would be extremely alarming because it effectively undermines trust in digital certificates.”

WordPress Plugin Flaw Fixed

A cross-site scripting flaw in the popular Yoast SEO plugin for WordPress, incorrectly reported as fixed two years ago, has finally been repaired. Versions earlier than 2.2 (released on June 10) are vulnerable. Users are advised to ensure they’re running the latest version of the plugin.

Retrospect Backup Password Issue

The Retrospect Backup client prior to 10.0.2 for Windows and 12.0.2 for the Mac contains an error in its password hash generating algorithm that could allow hackers to easily gain access to the user’s files. Users of password authentication are vulnerable, while those using PKI (public key) authentication are unaffected. Retrospect has released patches for all versions, and also recommends that users switch to PKI authentication.

McAfee ePolicy Orchestrator Improperly Validates Certificates

McAfee’s ePolicy Orchestrator (ePO) versions 4.6.8 and earlier and 5.1.1 and earlier do not properly validate SSL/TLS encryption certificates. This could allow attackers to compromise communication links between the application and its servers. McAfee has released versions 4.6.9 and 5.1.2 to address this and other issues.

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The CERT advisory says that users are encouraged to upgrade to the latest version available and should refer to the vendor’s Knowledge Base KB84628 article for additional steps that are required to enforce certificate validation.

OpenSSL Patches Released

ZDNet reports that OpenSSL, the open source project most famously responsible for the Heartbleed vulnerability, has released patches to head off possible denial of service attacks, as well as preventing man-in-the-middle attacks. Users are advised to update as soon as possible.

Adobe Photoshop and Bridge Flaws Corrected

Adobe has released patches for Photoshop CC and Bridge CC for both Windows and Macintosh to correct multiple issues that could allow an attacker to take control of affected systems. The company recommends that users update the products to the latest versions through each program’s built-in update mechanism.

Twitter Inc’s Project Lightning will revamp newsfeed and allow users to follow live events

National Post Tech Desk - Thu, 06/18/2015 - 12:38

Twitter Inc will start curating tweets on live events, the microblogging service said, as it plans major changes to make its real-time news feed more user friendly.

Dubbed Project Lightning, the changes will let users follow events instead of just people, and instantly upload photos and videos that can be shared across websites, social news and entertainment website Buzzfeed reported on Thursday.

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A team of editors will curate the most visually appealing and relevant tweets about say, a red-carpet event or shooting, and present them in one place, so that users need not be flooded with every single tweet as it is posted, Buzzfeed said.

Twitter’s mobile app will show both pre-scheduled events and breaking news events, Buzzfeed said.

Twitter spokeswoman Rachel Millner confirmed the report but declined to comment further.

Twitter has struggled with user growth. About one billion people have visited the website, but only 302 million are users.

From Mass Effect to Tacoma, E3 2015 will go down as a banner year for sci-fi fans

National Post Tech Desk - Thu, 06/18/2015 - 06:44

With more than 100 games representing just about every conceivable genre trotted out and shown during press conferences at E3 2015 earlier this week, industry trends and themes were ripe for the plucking.

The show could be dubbed the year of long-awaited sequels. Pressers were packed with exciting – if, in some cases, admittedly nebulous – announcements, unveilings, and new footage for games like Shenmue III, Mirror’s Edge: Catalyst, Tom Clancy’s Ghost Recon: Wildlands, Uncharted 4: A Thief’s End, and Gears 4.

One also wouldn’t be wrong to remember this year’s show as the E3 in which the rest of the industry tried to grab a bit of the spotlight traditionally hogged by Microsoft, Sony, and Nintendo, thanks to noteworthy live-streamed events from companies like Bethesda Softworks and Square Enix, and an epically long talk show-style conference dedicated to PC games on Tuesday night.

Pessimists, meanwhile, might see E3 2015 a show of insubstantial industry pomp. The long anticipated Final Fantasy VII remake was announced, but could (and likely is, given all the other projects on its developer’s plate) half a decade away from launch. The next Mass Effect was given a name – Mass Effect: Andromeda – and a distant release date, but not much else. And technologies like Sony’s Project Morpheus and Microsoft’s HoloLens, while undeniably exciting, still seem a bit intangible, especially to the vast majority of enthusiasts not attending the show in person.

Personally, I’m seeing this E3 as a glass half full. And I think it has everything to do with the fact that I’m a giant sci-fi nerd. Because for me – and I think for a lot of others – E3 2015 will be remembered as a banner year for speculative fiction in games.

I’m not even talking about the monster sequels of the genre. I’m as excited as anyone else about exploring a (presumably) new galaxy in the next Mass Effect, crawling across a futuristic earth in Fallout 4, being a BFG-toting space marine in the new Doom, seeing what Master Chief is up to in Halo 5: Guardians, and fighting snow stormtroopers in Star Wars: Battlefront.

But there’s so much more for a sci-fi fan to look forward to than just these mainstream entities.

Like Star Citizen. This ridiculously ambitious crowd-funded space simulation game was given a few minutes at the PC game event, and it continues to impress. It’s jammed with almost unbelievably detailed (and in some cases unbelievably expensive) fighters, cruisers, and even luxury yachts. The narrative-focused action – including first-person combat and some amazing looking performance capture – is just the gravy. You can buy ships and fly around space right now, but the meat of the game hasn’t a release date yet.

Another E3 highlight running along vaguely similar lines is No Man’s Sky, though this one has more colourful, stylized graphics and looks like it may be a lot more accessible to casual players. It provides an effectively infinite galaxy filled with countless procedurally generated star systems waiting to be discovered and explored. Hello Games’ Sean Murray picked one at random during his live demonstration, and it turned out to be a stunning world filled with exotic flora and fauna that neither he nor anyone on his team had ever seen before. Also: Epic space battles. It’s coming to PlayStation 4 and PC…at some point. Then there’s EVE: Valkyrie, a visually stunning space combat game designed explicitly for virtual reality. CCP Games did a great job at the PC gaming event describing the benefits of seeing the game through an Oculus Rift or Project Morpheus headset. Basically, you’ll feel as though you’re sitting at the controls in a cockpit, able to look left and right and up and down to see what’s happening in space through the ship’s windows. This seems like the perfect fit for VR, and much more palatable than using a headset to look around and aim while playing, say, a first-person shooter.

But not all of the sci-fi adventures shown at E3 were about zooming around and exploring systems beyond ours. The gritty, realistic-looking Ion, made by DayZ creator Dean Hall, has been described as an “emergent narrative massively multiplayer” game that documents the manned exploration of our system. Based on footage shown during the PC gaming event, it looks like it could have been called The Martian: The Video game. Gorgeous, lonely landscapes on planets like Mars and realistic looking habitats and ships make this one seem more science-future than science-fiction. It’s coming to Xbox One and PC.

And how about Tacoma, the latest from the Fullbright Company? This is a fascinating looking exploration game set mere decades into our own future on the Lunar Transfer Station Tacoma, hundreds of thousands of kilometers from Earth. Details are scarce, but given the studio’s previous masterpiece, Gone Home, I’m expecting a narrative tour de force from a sci-fi angle. It’s coming to Xbox One and PC.

If you’re looking for something a little more Star Wars than Gravity, a new game from Mega Man mastermind Keiji Inafune and the folks who made the Metroid Prime trilogy called Recore might do the trick. The trailer shown at Microsoft’s conference included a desert planet, a female warrior, and a lovable robot dog whose life essence seems tied to a glowing blue ball. It’s an Xbox One exclusive set to arrive as early as next spring.

Sony showed a sci-fi themed exclusive of its own called Horizon: Zero Dawn, also slated for 2016. Made by Guerrilla Games (Killzone), this one is set on a far future Earth, the human cities of which have long since fallen to ruin. It features a fur-clad female protagonist who seems to have a tribal verging on religious connection to her world and ecosystem – though the animals she confronted in the demo seemed wholly synthetic.

If simulation games are more your style, keep an eye out for Ubisoft’s Anno 2205, a city building and strategy game that will let you build futuristic cities not only on Earth, but the moon as well. It will arrive in November on PC.

Granted, only some of these sci-fi epics are arriving this year. Some will come next year, and others maybe not until 2017 or beyond.

I’m not overly concerned about the when of it, though.

E3 2015 has proven that there are enough drool-worthy science-fiction odysseys in the pipeline that any gamer with a soft spot for space and speculative storytelling is going to be well served for the foreseeable future.

On U2’s global tour, Montreal company Saco Technologies takes the stage by lighting it up

National Post Tech Desk - Wed, 06/17/2015 - 13:47

MONTREAL – When U2 took the stage at Montreal’s Bell Centre this week, Bono was illuminated on an elevated catwalk, pacing through scrolling dreamlike video images of his childhood neighbourhood in Dublin as he sang Cedarwood Road.

Behind the visual wizardry of the iNNOCENCE + eXPERIENCE tour’s two massive see-through LED video screens is Montreal-based Saco Technologies Inc., a company that changed forever when it first aligned itself with the iconic rock group nearly 20 years ago.

Before 1997, Saco had never worked in entertainment and was making control panels for nuclear and hydro power plants.

“I never thought of going in this direction,” Saco CEO Fred Jalbout said in an interview.

“My head was more focused on industrial-type projects because at the company we loved the quality of our projects and the quality of our clientele.”

Saco was, however, in the final stage of developing the world’s first LED screen, using coloured pixels to create images.

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Before this, bands would use video projectors or thick heavy screens that resembled giant television sets.

A consultant for U2 heard about Saco’s prototype and came to Montreal to see the company ahead of the group’s 1997 PopMart Tour.

“U2 were looking for something new that is easy to carry with their show and at the same time they needed a huge screen to go on their stage,” said Jalbout.

The band’s management came to Montreal that same weekend and the next thing he knew, Jalbout was flying to Dublin to meet U2.

Graham Hughes for National PostSaco Executive Vice President and CMO Jonathan Labbee poses for a photograph behind a V-Thru at the Saco assembly plant in Montreal, Monday, June 15, 2015.

He says he presented his technology to Bono and the band in a warehouse where they practice.

“Of course I was nervous,” said Jalbout.

He says the prototype was about one square meter, but the band wanted something bigger – several hundred times bigger. It also had to be compact enough to fit in two touring trucks.

“It’s something that had never been done before so it was a risk that we all took together,” said Jalbout.

“Bono has a very special way of communicating with people. He loves to take risks and encourage new technology.”

The pixels were mounted onto 4,500 separate aluminum tubes, which were then broken down into 187 foldable panels.

It also put Saco in the Guinness Book of World Records for the Largest Touring Screen in the World.

Graham Hughes for National PostSaco Senior Project Manager James Aitken inspects V-Sticks at the Saco assembly plant in Montreal, Monday, June 15, 2015.

“These shows are getting so big and are bringing in so many people that you have to think of us as a visual megaphone,” said Saco Executive-Vice President Jonathan Labbee.

After the tour, the company began focusing on custom lighting and screens for buildings, including the largest LED screen in the world at New York’s NASDAQ Market, and the world’s largest chandelier in Doha, Qatar.

“When we started working with U2 doing their project, the whole thing changed,” said Jalbout.

Saco has also worked with acts such as Madonna and Paul McCartney, a far cry from a time when their clients included Hydro Quebec and Ontario Hydro.

“The thing with Saco is that they are extremely creative and what’s very rare is that their word means everything to them. They’re the most honourable people we’ve ever dealt with,” said Bob Brigham, Co-President at PRG Nocturne, an event production company that first worked with Saco during Paul McCartney’s 2005 US tour.

“My guess is we’ve spent with them $50 million-plus, and it’s all been on a handshake.”

As U2 continues on their 20-city tour after four shows in Montreal, Jalbout says the company hopes it brings the same attitude to its clients that the band brings its audiences.

“They always like to show their fans something different and something new,” said Jalbout.

Information overload stymies Canada’s banks in mobile payments battleground: ‘Things are changing so quickly’

National Post Tech Desk - Wed, 06/17/2015 - 12:39

As banks aim to stake their ground in the burgeoning mobile payments market, a U.K.-based software company says its efforts in Canada are being stymied by the hazards of innovation.

Two of the country’s Big Six banks have come close to inking deals to buy software built by Proxama Plc that can plug the credit card issuers into multiple mobile payment offerings, but cell phone applications have forced the banks to rethink their game plans and set back negotiations.

“Things are changing so quickly, and that’s what’s delaying us,” says Ricky Ranjan, a vice-president of sales in North America for Proxama. “Every time we sit down, a new payment initiative is popping up. You just have to go back to the drawing board and say, ‘okay, how do we support this?'”

The onslaught of mobile payment offerings from the likes of Apple Inc., Samsung Electronics Co. and Google Inc.’s Android has rendered the makers of many Canadian digital apps and card issuers to be cautious and a bit stagnant in their own efforts at home. There’s a lot to digest both during and after every product announcement, as these companies try to look beyond any initial hype, identify and then stay true to their business goals, and gauge whether these latest systems will gain any or more traction with Canadians who have been slow to swap their physical wallets for the banks’ virtual ones so far.

“No one knows how it’s going to play out,” Ranjan adds. “Any time new information comes in, it delays the process because banks want to be sure they assess the entire ecosystem before deploying a solution.”

Ranjan points out that Royal Bank of Canada is an exception. The small internal team tasked with building the 146-year-old company’s mobile wallet is run like a nimble startup that’s eager to experiment and create new things. It was the first and only Canadian financial institution that unveiled a new version of its wallet app on the new Android M operating platform at Google’s developer conference this year.

“If you talk to any of the banks, except for RBC, they want to wait and watch how technologies are coming across,” says Ranjan, who declined to name the two companies that are in talks to use Proxama’s platform. And there are many moving parts in this crowded space. “Banks want to do something, but they don’t want to rush. They want to do their due diligence and come out with a strategy that can support that.”

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At stake for the banks is the long-term loyalty of the latest crop of young clients who have strong ties to their cell phones and are quick to try new gadgets and virtual currencies like Bitcoin. “We were in a position to establish early leadership in an area that would be of vital importance to the current generation and fundamental to the next,” says Linda Mantia, executive vice-president of digital, payments and cards at RBC. “We continually look for new and innovative ways to bring payments to our clients.”

While many of the big Canadian banks have been slow to deploy major updates to their offerings, they are busy behind the scenes testing the new apps, asking questions and evaluating any compliance implications. But it’s easy to get sidetracked by ideas about innovation and be left with nothing to show for it. That’s because there is no real accepted road map, which can surely make a software engineer’s mind wander.

I sometimes wish we can move the team to a deserted island to take the distractions out of the picture

Urging his 25-person team to ignore the noise and complete their daily tasks is something Alec Morley does as the chief executive of Ugo Mobile Solutions L.P., the maker of the Ugo Wallet that is financially backed by President’s Choice Financial and TD Bank Group. The app, which he says has been downloaded 40,000 times, lets users pay for things and amass or redeem loyalty points using their smartphone.

“The challenge with leading [a startup] is keeping the team focused on building real stuff,” says Morley. “I sometimes wish we can move the team to a deserted island to take the distractions out of the picture.”

Ugo’s philosophy is it can’t afford to build a super-deluxe version, but there’s room for iterations. “You’ve got to get out there. You’ve got to get something out there, even if it’s not perfect,” he adds. “If we fail, we want to fail fast, take the learning, reapply it and push it back out to the market. You learn from it.”

Easy for an upstart with little brand equity to say; tougher for a bank that has built its reputation on trust to do. The bank-led solutions may not be the most user friendly but they work. Still, the risk-averse players will need to eventually make decisions and push out product updates if they want to compete, says Dragan Nerandzic, chief technology officer at Ericsson Canada Inc.

“We have to be very careful that we don’t spend too much time talking, regulating, debating [about mobile payments] and while we do that, someone else comes in and does it,” Nerandzic said during a panel discussion at a Toronto telecom conference in early June. “It will be too late for us.”

Financial Post
cpellegrini@nationalpost.com

What FitBit Inc needs to do to not become another BlackBerry

National Post Tech Desk - Wed, 06/17/2015 - 10:32

FitBit Inc.’s fitness trackers face threats on all sides – from Apple Inc. competition to patent-infringement lawsuits.

That sounds a lot like the travails of another device maker – BlackBerry Ltd. – almost a decade ago. Like FitBit, BlackBerry was the established market leader with a ubiquitous gadget and a lower-priced alternative to Apple’s shiny new iPhone. It offers FitBit a lesson: use the capital from an upcoming initial public offering to fund research into innovative technology.

The lesson for anyone in a similar position: there really isn’t a margin for error

“BlackBerry’s failure was the fact that they weren’t able to meet the expectations that consumers were looking for and keep up with the times,” said Angelo Zino, a New York-based equity analyst at S&P Capital IQ. “FitBit has to find a way to defend the position they’ve built here.”

For now, investors seem willing to bet FitBit will avoid BlackBerry’s fate. As it wound up two weeks of meetings with fund managers, the San Francisco company on Tuesday boosted the IPO’s size and price range, a sign of strong demand.
FitBit held 85 percent of the U.S. connected activity- tracker market in the first quarter of 2015, it says, citing industry-research firm NPD Group. Revenue more than tripled in the quarter through March, from a year earlier, and earnings are rising fast.

Obama’s FitBit

Though it may not have achieved the status of a “CrackBerry” as the BlackBerry was dubbed for its addictive nature, the FitBit is garnering its own media attention: President Barack Obama was spotted wearing one in March.

This success has attracted an unwanted rival in Apple. In April, the consumer-electronics giant began selling the Apple Watch, with functions to track health, heart rate and athletic activities.

Apple is no stranger to taking on early movers in the device world. In early 2007, when the iPhone was introduced, BlackBerry was a US$30 billion market-cap company, with revenue increasing almost 50 percent annually.

The Canadian company first seemed protected with a lower price and security features that made it a favourite of corporate customers. The lowest-end iPhone cost US$499 in 2007, while BlackBerry’s Pearl was US$199. Similarly, FitBit’s highest-end product is still $100 less expensive than Apple’s lowest-priced watch.

Thin Margin

For BlackBerry, that didn’t matter as consumers largely preferred the style and functionality of the iPhone. In 2014, the company held just 0.5 percent of the global smartphone market, according to IDC data.

Some of FitBit’s $400 million in IPO proceeds will be used for research and development, which is critical for anyone taking on Apple because the pace of innovation is incredibly fast, said Jacquie McNish, co-author of “Losing the Signal,” a book about the rise and fall of BlackBerry.

“The lesson for anyone in a similar position: there really isn’t a margin for error,” said McNish, whose book was published in May.

In an e-mailed statement, BlackBerry said it is “well into a turnaround that is taking it to new markets with innovative products and services.”

A representative from FitBit declined to comment.

Apple’s Model

One thing FitBit could do is follow Apple’s model of letting third parties create apps for its devices, according to Ed Maguire, a software analyst at CLSA.

“If FitBit can manage to become a platform and be able to support innovations from third parties, I think that would be a really viable road to creating more sustainable value,” he said.

Another challenge that set BlackBerry behind was a four- year legal battle with NTP Inc. over patents. By the time the lawsuit was settled for US$612.5 million in March 2006 — averting a court-ordered halt to service — the dispute had deterred customers and allowed competitors to gain market share.

FitBit has been hit with two lawsuits of its own from rival Jawbone Inc. over the last month. Jawbone says FitBit’s activity-tracking devices use technology protected by three patents owned by BodyMedia Inc., which Jawbone acquired in 2013. In a separate lawsuit, Jawbone alleged FitBit recruited its employees and plundered its trade secrets.

A representative from Jawbone didn’t respond to a request for comment.

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The worst-case scenario would be an injunction that prohibits FitBit from importing certain parts to make their devices, according to Maulin Shah, managing attorney at patent- research firm Envision IP LLC. FitBit, with 77 issued U.S. patents and 132 pending applications, may come out with a countersuit against Jawbone, he said.

FitBit’s patents, which are for technology it developed itself rather than through acquisitions as Jawbone did, show the company is very focused on innovation, according to Shah.

“FitBit is consumer-facing, and as long as they continue to innovate that would be one way to avoid what happened to BlackBerry,” he said.

Bloomberg.com

Microsoft Corp chief Satya Nadella’s big management shakeup ousts Canadian Stephen Elop

National Post Tech Desk - Wed, 06/17/2015 - 09:46

Microsoft Corp. Chief Executive Officer Satya Nadella made his biggest overhaul since taking over early last year, cutting executives in underperforming operations or marginalized roles and focusing on areas he views as critical.

Senior executives Stephen Elop, Kirill Tatarinov and Eric Rudder are leaving the software maker, the Redmond, Washington-based company said in a statement Wednesday.

Executive Vice President Terry Myerson will lead a newly formed Windows and Devices Group, while Executive Vice President Scott Guthrie will continue to lead the Cloud and Enterprise group, the company said. Qi Lu will remain in charge of the applications and services group, which includes Office apps and Bing search. The revamped leadership team reflects a focus on three key areas: personal computing, cloud platforms and productivity and business processes.

“This change will enable us to deliver better products and services that our customers love at a more rapid pace,” Nadella said in the statement.
Microsoft cautioned in April that it might have to take a writedown in its Nokia handset business. Elop, a Canadian and executive vice president of Microsoft’s devices group, had been the CEO of Nokia Oyj and engineered the US$7.33 billion sale last year of the handset unit to Microsoft. The acquisition returned him to a company where he earlier had been a senior executive.

The departure of Elop, whose Devices group will be rolled into Microsoft’s Windows unit, signals a shift of emphasis away from hardware and back to Microsoft’s core business.

Profit last quarter exceeded analysts’ estimates as Microsoft boosted cloud software sales. In the phone-hardware unit, the former Nokia business, the cost of goods sold exceeded revenue, weighing on results even before marketing and development expenditures were taken into account.

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‘Hard Decisions’

“Nadella looked in the mirror and realized hard decisions needed to happen,” said Daniel Ives, an analyst at FBR Capital Markets & Co. “These changes needed to happen sooner rather than later as Nadella and Redmond head into a crucial, make-or- break fiscal 2016.”

Rudder, executive vice president for advanced strategy, is a 27-year veteran of the company who once ran Microsoft Research. His role has been reduced of late. Tatarinov, executive vice president for business solutions, was the only senior executive whose products — accounting and customer software — hadn’t been integrated in previous reorganizations.

Also, Chief Insights Officer Mark Penn will resign in September to form a private-equity fund, Nadella said in a memo to employees. Microsoft said his departure is unrelated to the management restructuring. Penn had previously overseen marketing and strategy but Nadella gave those roles to other executives.

The restructuring will leave Microsoft’s senior leadership team with 12 executives, including Nadella.

The company’s shares were little changed at US$45.70 at 11:44 a.m. in New York.

Bloomberg.com, with files from Reuters

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