Posts Tagged Microsoft

End of World Means Most Amazing Home Page Ever, Says Google : The New Yorker


The Borowitz Report

 

DECEMBER 18, 2012

END OF WORLD MEANS MOST AMAZING HOME PAGE EVER, SAYS GOOGLE

POSTED BY ANDY BOROWITZ

 

google-end-of-world.jpg

MOUNTAIN VIEW, Cal. (The Borowitz Report)—While billions around the world await the Mayan Apocalypse this Friday with increasing dread, there is palpable excitement about it at the headquarters of Google, Inc., which is preparing what its C.E.O. is calling “our most awesome Google Doodle ever.”

“People are freaking out about the world coming to an end—I totally get that,” said the Google C.E.O. Larry Page in a conference call with reporters. “But at Google we view the Apocalypse as a unique opportunity. This company was founded with the goal to ‘organize the world’s information’ and we see the next three days as our chance to get that done.”

As for the marching orders that Page gave to Google’s team of designers: “The world is going to be destroyed and mankind will cease to exist. Make Google the last page they see, and give us one last chance to serve them tracking cookies.”

With the ancient Mayan prophets predicting that on Friday the earth will crash into a comet, collide with the planet Nibiru, or burn to a crisp in a mammoth solar storm, “our designers have had a lot of cool stuff to work with,” Mr. Page said.

Mr. Page said that a buzz-worthy home page is crucial to what he sees as Google’s final mission on Earth: “We want to communicate to billions of people that this is the last day of human history, so maybe they should finally sign up for Google Plus.”

When reminded that the end of the world would mean the end of Google, too, Mr. Page was philosophical: “As long as it also means the end of Apple and Microsoft, I’m fine with that.”

End of World Means Most Amazing Home Page Ever, Says Google : The New Yorker.

 

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H-1B visa abuse limits wages and steals US jobs


H-1B visa abuse limits wages and steals US jobs

 

 

The H-1B visa program was created in 1990 to allow companies to bring skilled technical workers into the USA. It’s a non-immigrant visa and so has nothing at all to do with staying in the country, becoming a citizen, or starting a business. Big tech employers are constantly lobbying for increases in H-1B quotas citing their inability to find qualified US job applicants. Microsoft cofounder Bill Gates and other leaders from the IT industry have testified about this before Congress. Both major political parties embrace the H-1B program with varying levels of enthusiasm.

But Bill Gates is wrong. What he said to Congress may have been right for Microsoft but was wrong for America and can only lead to lower wages, lower employment, and a lower standard of living. This is a bigger deal than people understand: it’s the rebirth of industrial labor relations circa 1920. Our ignorance about the H-1B visa program is being used to unfairly limit wages and steal — yes, steal — jobs from US citizens.

H-1B Explained

There are a number of common misunderstandings about the H-1B program, the first of which is its size. H-1B quotas are set by Congress and vary from 65,000 to 190,000 per year. While that would seem to limit the impact of the program on a nation of 300+ million, H-1B is way bigger than you think because each visa lasts for three years and can be extended for another three years after that.

At any moment, then, there are about 700,000 H-1B visa holders working in the USA.

Most of these H-1B visa holders work in Information Technology and most of those come from India. There are about 500,000 IT workers in the USA holding H-1B visas. According to the US Census Bureau, there are about 2.5 million IT workers in America. So approximately 20 percent of the domestic IT workforce isn’t domestic at all, but imported on H-1B visas. Keep this in mind as we move forward.

H-1B is a non-immigrant visa. H-1B holders can work here for 3-6 years but then have to return to their native countries. It’s possible for H-1B’s to convert to a different kind of visa but not commonly done. The most common way, in fact, for converting an H-1B visa into a green card is through marriage to a US citizen.

H-1B isn’t the only way for foreigners to work in America. They can work to some extent on student visas and, in fact, many student visas are eventually converted to H-1B for those who have a job and want to stay but maybe not immigrate.

Poorly Understood

There is a misconception about the H-1B program that it was designed to allow companies to import workers with unique talents. There has long been a visa program for exactly that purpose. The O (for outstanding) visa program is for importing geniuses and nothing else. Interestingly enough, the O visa program has no quotas. So when Bill Gates complained about not being able to import enough top technical people for Microsoft, he wasn’t talking about geniuses, just normal coders.

I don’t want to pick on just Microsoft here, but I happen to know the company well and have written over the years about its technical recruiting procedures. Microsoft has a rigorous recruitment and vetting process. So does Google, Apple — you name the company. All of these companies will take as many of O visa candidates as they can get, but there just aren’t that many who qualify, which is why quotas aren’t required.

So when Microsoft — or Boeing, for that matter — says a limitation on H-1B visas keeps them from getting top talent, they don’t mean it in the way that they imply. If a prospective employee is really top talent — the kind of engineer who can truly do things others simply can’t — there isn’t much keeping the company from hiring that person under the O visa program.

H-1B visas are about journeyman techies and nothing else.

Visa Shuffling

Companies can also transfer employees into the country who have worked for at least a year for the company overseas under an L-1 visa. These, too, are limited by quota and the quota is typically lower than for H-1Bs. Back in the late 1980s when the H-1B program was first being considered it was viewed as a preferable short-term alternative to L-1. It has since turned into something else far darker.

So has the B visa, which is intended for companies to bring their foreign employees into the US for business meetings and trade shows. You’d be amazed how many such business meetings and trade shows last 30 days as companies use B visas to enable foreign employees to work awhile in the United States.  I’m told that IBM sometimes platoons workers on B visas, sending them to places like Mexico for a short time then bringing them back across the boarder for another stint.

Tourist visas are also commonly abused even though they specifically prohibit work.

The more interesting question here isn’t which multinational corporations consistently abuse B and tourist visas but which ones don’t, it is so common.

No Labor Shortage

A key argument for H-1B has always been that there’s a shortage of technical talent in US IT. This has been taken as a given by both major political parties. But it’s wrong. Here are six rigorous studies (123456) that show there is no shortage of STEM workers in the United States nor the likelihood of such a shortage in years to come.

You may recall a recent column where the IT community in Memphis, TN proved there was no labor shortage in that technology hotbed.

The whole labor shortage argument is total hogwash. Yes, there is a labor shortage at substandard wages.

Can all of this be just about money? Yes.

What are the Rules?

The rules for H-1B visas state that they must be for technical positions for which there is no comparable US citizen available and the position must pay the prevailing wage or higher.

It’s this definition of prevailing wage where we next see signs of H-1B abuse by employers. The intent of the original law was for companies not to use H-1B workers simply to save money. In the enabling legislation from 1990, however, there are two different definitions of the term “prevailing wage.” The first is quite strict while the second, which is used by self-certifying employers to set actual pay scales, has plenty of wiggle room.

Warning, dense reading ahead!

Here is the initial definition of “prevailing wage” in 8 USC 1182(n)(1)A):

1.    The employer­

(i) is offering and will offer during the period of authorized employment to aliens admitted or provided status as an H–1B nonimmigrant wages that are at least­

(ii) the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question, or

(iii) the prevailing wage level for the occupational classification in the area of employment,

And here is the redefinition of “prevailing wage” in 8 USC 1182(p)(4):

(4) Where the Secretary of Labor uses, or makes available to employers, a governmental survey to determine the prevailing wage, such survey shall provide at least 4 levels of wages commensurate with experience, education, and the level of supervision. Where an existing government survey has only 2 levels, 2 intermediate levels may be created by dividing by 3, the difference between the 2 levels offered, adding the quotient thus obtained to the first level and subtracting that quotient from the second level.

Note that section (p) requires that the Department of Labor set up four prevailing wage levels based upon skill but section (n) only requires a prevailing wage for occupation and location. There is no statutory requirement that the employer pick the skill level that matches the employee.

Let’s see this in action. According to Bureau of Labor Statistics data, the mean wage for a programmer in Charlotte, NC is $73,965. But the level 1 prevailing wage is $50,170. Most prevailing wage claims on H-1B applications use the level 1 wage driving down the cost of labor in this instance by nearly a third.

If you were casually reading the statutes, by the way, you would never see this redefinition. That’s because section (p) does not refer to H-1B but rather to section (n) which is referenced by 8 USC 1101(a)(15)(H)(i)(b).

Got that?

Greed gone Wrong

But wait there’s more!

It’s not hard to suppose from this information that an influx of H-1B workers representing an average 20 percent of the local technical work force (those 500,000 H-1Bs against a 2.5 million body labor pool) would push down local wages. There’s plenty of anecdotal evidence that it does, too, but most of the more rigorous academic studies don’t show this because there is no easily available data.

What data is available comes from the initial employer applications for H-1B slots These Labor Condition Applications, called LCAs, include employer estimates of prevailing wages. Because there are always more H-1B applications than there are H-1B visas granted, every employer seeking an H-1B may file 3-5 LCAs per slot, each of which can use a different prevailing wage. But when the visa application is approved, it is my understanding that sponsoring companies can choose which LCA they really mean and apply that prevailing wage number to the hire.

Because the visa has already been granted of course they’ll tend to take the lowest prevailing wage number, because that’s the number against which they match the local labor market.

Remember that part of this business of getting H-1Bs is there must not be a US citizen with comparable skills available at the local prevailing wage. If we consider that exercise using the data from Charlotte, above, a company would probably be seeking a programmer expecting $73,965 or above (after all, they are trying to attract talent, right?) but offering $50,170 or below (the multiple LCA trick). No wonder they can’t get a qualified citizen to take the job.

Based solely on approved LCAs, 51 percent of recently granted H-1B visas were in the 25th percentile for pay or below. That’s statistically impossible under the intent of the program.

We have no clear way of knowing what companies actually pay their H-1Bs beyond the LCAs, because that information isn’t typically gathered, but remember that whatever level it is won’t include benefits that can add another 30-40 percent to a US citizen’s wage.

Extent of Abuse

Here is the Government of India touting its H-1Bs as cheaper than US workers, which of course they aren’t by law supposed to be.

I wish this was the extent of abuse, but it isn’t. A 2011 Government Accountability Office study found that approximately 21 percent of H-1B visas are simply fraudulent — that the worker is working for a company other than the one that applied for the visa, that the visa holder’s identity has changed, that the worker isn’t qualified for H-1B based on skills or education, or the company isn’t qualified for the H-1B program.

H-1Bs, even though they aren’t citizens or permanent residents, are given Social Security numbers so they can pay taxes on their U.S. income. A study by the Social Security Administration, which is careful to point out that its job doesn’t include immigration monitoring or enforcement, found a number of H-1B anomalies, the most striking of which to me was that seven percent of H-1B employers reported no payments at all to H-1B visa holders. This is no big deal to the SSA because these people qualify for no benefits, but it makes one wonder whether they are under-reporting just Social Security or also to the IRS and why they might do so? Those H-1B employers who do report Social Security income do so at a level that is dramatically lower than one might expect for job classifications that are legally required to pay the “prevailing wage.”

Maybe at this point I should point out that the H-1B visa program is administered by the Department of Homeland Security. Feel better?

One defense of H-1B might be that it raises overall skill levels, but studies show H-1B employees to be consistently less capable than their US citizen counterparts. This data point is especially interesting because it is drawn from the LCA data where applying companies claimed that 56 percent of H-1B applicants were in the lowest skill category and could therefore be paid the least.  So at the same time companies are claiming they need the H-1B program to bring in skilled workers, the workers they are bringing in aren’t very skilled at all. Or if they are skilled, then the sponsoring companies are fudging their paperwork to justify paying lower than market wages.

Either truth is damning and the latter is downright illegal.

Here’s where I’ll give a shout-out to the Libertarian contingent reading this column because they’ll tend to say “So what? It’s every man or woman for himself. Employers should be able to do whatever they damned well please while workers can always go elsewhere.”

But it’s against the law. 

Lawyer’s Perspective

At this point a longtime reader of this column speaks up:

I have been a practicing immigration attorney for over 13 years.  I have done many H-1B visas and like any other government program it was loaded and is still loaded with abuses… In my opinion, employers who need H-1B Visa workers should have to go through a screening process before they are allowed to submit the application and a bond should be posted if they violate the law.

For a large multinational corporation to play this game is not new.  The reason that they carry on with these activities are for one reason only — control. Control of the employee and uneven bargaining at the end of the day.  I have dealt with this with different multinational corporations… and they have, can and will act in the same manner.  As always, it takes either an investigation by the USDOJ or massive fines (or both) to redirect bad behavior to federal compliance.

Even if I wasn’t at ground zero in this stuff, it would still bother me,” wrote another longtime reader who has spent his entire career in IT.  “Our country spent decades learning to treat workers fairly and with respect.  The driving force behind unions in the first place was to address serious problems in the workplace.  With all this offshoring and H-1B crap, we’ve dumped 100 years of improving society down the drain.  Maybe USA workers do cost too much.  The problem is we are not fixing the actual problem.  As more and more jobs go off shore, the damage to our economy grows.  If we would fix the problemsthe playing field would be more level and USA workers could compete for jobs.  These abuses by corporations are not only hurting USA workers, they are hurting our nation.

 H-1B visa abuse limits wages and steals US jobs.

 

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Apple’s market cap makes it the most valuable company of all time – Aug. 20, 2012


 

Apple is now the most valuable company of all time

 

By David Goldman @CNNMoneyTech August 20, 2012: 12:16 PM ET

 

NEW YORK (CNNMoney) — As Apple’s stock rose to new high on Monday, the technology giant set another record: It became the most valuable public company in history.

Apple’s market value — the price of its stock multiplied by the number of outstanding shares — hit $623 billion in intraday trading. That eclipsed the previous record of $618.9 billion set by Microsoft on Dec. 30, 1999, at the height of the dot-com bubble, according to Howard Silverblatt, S&P’s senior index analyst.

Apple shares hit a new record of $664.74 per share. The anticipated September launch of the new iPhone, coupled with rumors of a smaller iPad and a more feature-rich Apple TV have lifted the stock in recent weeks.

It’s a stunning achievement for a company that was a struggling also-ran when Microsoft was setting records in the late 1990s. Apple was valued at less than $10 billion as recently as 2004, and at $100 billion just three years ago.

Since 2007, however, Apple (AAPL, Fortune 500) has been an unstoppable force. Its iPhone business alone now brings in more money than Microsoft (MSFT, Fortune 500). Even the iPad, which was intended to be a gap-filling product between the iPhone and the Macintosh, has itself become a multi-billion dollar product for Apple.

Apple is on pace to be the world’s largest technology company in terms of sales by the end of the year, and it’s among the most profitable companies in the world. In the last three months of 2011, Apple made $13 billion – second only to ExxonMobil’s (XOM, Fortune 500) record-setting $14.8 billion quarter from the fall of 2008, when oil prices were at an all-time high.

The company’s lightning-quick growth shows no signs of subsiding. With rumors of new gadgets on the horizon, Apple has crossed the $400 billion,$500 billion and $600 billion marks — all in 2012 — as the stock has soared 64% this year.

Despite the fast growth, some say that the company is actually undervalued, since its stock gains haven’t kept pace with its earnings. Trading at 15 times this year’s earnings forecast, it has a price-to-earnings ratio far below that of some tech stocks, including Facebook (FB),Groupon (GRPN) and even Zynga (ZNGA), whose stock has plunged sharply.

Apple still has one last hurdle to climb: Microsoft still holds the record for most valuable company on the stock market if inflation is taken into account. In 2012 dollars, Microsoft’s all-time-high would have amounted to $851 billion.

Apple has quite a way to go before it hits that mark. Its stock would have to reach $908 per share.

 Apple’s market cap makes it the most valuable company of all time – Aug. 20, 2012.

 

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Hotmail Rebranded Outlook.com | The Onion – America’s Finest News Source | American Voices


 

Hotmail Rebranded Outlook.com

 

Microsoft recently announced that its 16-year-old online e-mail service Hotmail would be streamlined, closely integrated with social media, and renamed Outlook.com. What do you think?

Microsoft is a really nimble company.

Kirk Sanchez
Munitions Handler

I hope they finally got rid of that password nonsense. Who can remember such things? Just let me check my e-mail already!

Jane Grill
Leather Cutter

Normally I fall for lame re-branding attempts, so okay, sign me up.

Colby Ziesmer
Facilities Planner

 Hotmail Rebranded Outlook.com | The Onion – America’s Finest News Source | American Voices.

 

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Want Windows 8? It’ll only cost you $40 – Jul. 3, 2012


Want Windows 8? It’ll only cost you $40

By David Goldman @CNNMoneyTech July 3, 2012: 1:42 PM ET

 

Microsoft executives Mike Angiulo (left) and Steven Sinofsky showed off an early version of Windows 8 at Microsoft's Build conference.

Microsoft executives Mike Angiulo (left) and Steven Sinofsky showed off an early version of Windows 8 at Microsoft’s Build conference.

 

NEW YORK (CNNMoney) — If you’re considering an upgrade to Windows 8 this fall, Microsoft just made the option much cheaper.

The software giant announced Monday that anyone running Windows XP or a more recent version can upgrade to Windows 8 Pro for just $40.

That’s significantly less than what Microsoft typically charges customers to update their operating systems. For instance, the cheapest “upgrade version” of Windows 7 for those running older editions of Windows costs $120 on Microsoft’s online store. Even upgrading from one Windows 7 version to another will set you back at least $65.

Microsoft (MSFTFortune 500) said the $40 upgrade fee is a promotional rate that will last through the end of January 2013, and it will require that users download Windows 8 over the Internet. A DVD version will be available in stores for $70 throughout the promotion.

The company didn’t say anything else about Windows 8′s general pricing or availability.

Slashing the price of a new OS worked well for Windows’ biggest competitor. Apple (AAPLFortune 500) has charged just $29 to upgrade to the last two versions of Mac OS X, and when the newest update called Mountain Lion goes on sale later this month, the company will charge just $20.

Nearly 85% of Macs are running the latest Mac OS 10.7 (Lion) or the previous version, Mac OS 10.6 (Snow Leopard), according to Net Applications.

That rapid adoption hasn’t been matched by Microsoft customers. Almost half of Windows PCs are still running the 11-year old Windows XP.

Upgrading an aging PC to a brand-new version of Windows is usually a bad idea — Windows can be a notorious resource hog — but Windows 8 could be the exception. It’s the trimmest and quickest of all of Microsoft’s recent Windows releases.

CNNMoney has been testing Windows 8 out on a five-year-old, out-of-commission Dell Latitude laptop designed for Windows XP. It booted up in 16 seconds and ran smoothly under a typical application load.

Microsoft has plenty of motive for urging customers to adopt Windows 8.

 

 

The Windows 8 operating system is optimized for touchscreens, giving it the ability to adapt to a large number of form factors — including tablets, which have begun to eat into PC sales. Microsoft last month unveiled its own Surface tablet, which will go on sale when Windows 8 debuts.

But Microsoft’s primary concern is getting a critical mass of users so that its new App Store will thrive.

Some versions of Windows 8 will run legacy Windows applications, but the new operating system will prominently feature a tablet-style layout called “Metro,” which runs a new version of apps only available in Microsoft’s App Store. Microsoft has most of the key apps covered, but its offerings are nowhere close to the hundreds of thousands of apps that Apple and Google have for their smartphones and tablets.

To break the chicken-and-egg problem — many customers don’t want devices until lots of apps are available, but developers won’t spend time writing apps for devices until they have millions of users — Microsoft is working both sides of the issue.

It has tried to lure developers with contests, favorable revenue-sharing terms and other bait. Now, it’s aiming to draw in customers with the lowest price it has ever offered for a Windows upgrade.

Some customers can get Windows 8 for even cheaper. The company is running a separate promotion on its website under which customers who buy a Windows 7 PC between June 2, 2012, and Jan. 31, 2013, can get a Windows 8 Pro upgrade for $15.

Those kind of Windows promotions are typical when the latest version is about to be phased out. Offering upgrades at such a discounted rate will likely keep Windows 7 sales afloat through the holidays, when Windows 8 is expected to go on sale.

 Want Windows 8? It’ll only cost you $40 – Jul. 3, 2012.

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Microsoft’s $6 billion aQuantive whoopsie – Jul. 2, 2012


Microsoft’s $6 billion whoopsie

By David Goldman @CNNMoneyTech July 2, 2012: 5:54 PM ET

 

Microsoft's $6 billion aQuantive whoopsie

 

NEW YORK (CNNMoney) — Some business deals just don’t work out — and sometimes they really don’t work out.

Microsoft spent $6.3 billion in cash buying online display advertising company aQuantive in 2007. On Monday, the company wrote off almost the entire value of the acquisition, taking a $6.2 billion writedown.

Microsoft’s online advertising business has remained wildly unprofitable in the five years since it bought aQuantive. In Microsoft’s most recent quarter, the company said its online services division lost nearly half a billion dollars. Over the past 12 months, the division’s losses reached nearly $2 billion.

“While the aQuantive acquisition continues to provide tools for Microsoft’s online advertising efforts, the acquisition did not accelerate growth to the degree anticipated,” Microsoft said in its understated press release.

Microsoft (MSFTFortune 500) said Monday that its advertising business has been “improving,” but the company also said that it had has lowered its expectations about the unit’s ability to grow and turn a profit.

The software giant has never made money on its online services division, and it has lost roughly $10.4 billion since Microsoft began breaking out the unit’s finances five years ago.

That means Microsoft is nowhere near being the “industry leading, Internet-wide advertising platform” that then-president of Microsoft services Kevin Johnson predicted it would become when it bought aQuantive. Microsoft paid an 85% premium for the company’s stock after most of aQuantive’s rivals had already been gobbled up by competitors.

Johnson is now the CEO of Juniper Networks (JNPR).

Though aQuantive didn’t turn out to be a good fit for Microsoft, a large part of the company’s advertising business struggle stems from Microsoft’s inability to catch up with Google (GOOGFortune 500) in the online search race.

Bing, Microsoft’s search engine, currently maintains a 15.4% share of the search market, up from 8.4% when Bing launched, according to online data tracker comScore (SCOR). That’s a nice jump, but Google still commands 66.7% of the market — up 1.7 percentage points from the 65% it held when Bing debuted.

Most of the share that Bing has gained has actually come from third-place Yahoo (YHOOFortune 500). The rest has come from search cellar-dwellers Ask.com and AOL (AOL).

There’s usually no such thing as “bad” market share growth, but Yahoo’s search is now powered by Bing. That means more than half of Microsoft’s share growth has come from cannibalizing its search partner.

To capture the attention of a critical mass of advertisers — enough to turn a profit — search market analysts say that Bing will need at least 25% to 30% of the market. That’s double Microsoft’s current share.

 Microsoft’s $6 billion aQuantive whoopsie – Jul. 2, 2012.

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It’s Modern Parental Involvement – Room for Debate – NYTimes.com


It’s Modern Parental Involvement

Betsy Landers

Betsy Landers is the president of the National Parent-Teacher Association.

UPDATED JUNE 28, 2012, 4:42 PM

 

The use of new technology is a daily part of children’s lives, which means it should play a part in parents’ lives, too.

One cannot compare reading a child’s journal to accessing his or her conversations online. The Internet is a different paradigm.

While technology can open up new worlds of rich learning experiences for children, it can also expose them to harm. Today’s parents should be technology savvy and try to stay a step ahead — or at least keep up with — new media and technology to protect their children.

There are plenty of resources that teach parents how to keep their children safe from cyber-bullying, child predators and adult Web sites. It’s up to parents and families to decide which resources they feel are necessary, but ultimately, it’s the parents’ responsibility to protect their children, at least until these children become adults. Parental use of all available resources, including electronic monitoring tools, should not be considered an invasion of privacy; it’s simply modern involvement.

One cannot compare reading a child’s journal to accessing his or her conversations online or through text messages. The Internet is a different paradigm and should not be treated the same as a diary or private letters. Anything that parents would not condone or allow in the real world should be forbidden online. Setting rules may not be enough. A perceived lack of trust lies not necessarily with the children, but rather with the yet-to-be-navigated waters of new technology.

Parents who are monitoring their children’s activities via technology are not crossing the line into invasion of privacy; they are cyber-savvy and involved.

 It’s Modern Parental Involvement – Room for Debate – NYTimes.com.

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A Conversation With Bill Gates – Technology – The Chronicle of Higher Education


A Conversation With Bill Gates About the Future of Higher Education

Bill Gates never finished college, but he is one of the single most powerful figures shaping higher education today. That influence comes through the Bill & Melinda Gates Foundation, perhaps the world’s richest philanthropy, which he co-chairs and which has made education one of its key missions.

The Chronicle sat down with Mr. Gates in an exclusive interview Monday to talk about his vision for how colleges can be transformed through technology. His approach is not simply to drop in tablet computers or other gadgets and hope change happens—a model he said has a “really horrible track record.” Instead, the foundation awards grants to reformers working to fix “inefficiencies” in the current model of higher education that keep many students from graduating on time, or at all. And he argues for radical reform of college teaching, advocating a move toward a “flipped” classroom, where students watch videos from superstar professors as homework and use class time for group projects and other interactive activities. As he put it, “having a lot of kids sit in the lecture class will be viewed at some point as an antiquated thing.”

The Microsoft founder doesn’t claim to have all the answers. In fact, he describes the foundation’s process as one of continual refinement: “to learn, make mistakes, try new things out, find new partners to do things.”

The interview comes on the eve of Mr. Gates’s keynote speech at an event Tuesday to celebrate the 150th anniversary of the Morrill Act, which created the nationwide system of land-grant colleges. The “convocation” will be held in Washington, D.C., sponsored by the Association of Public Land-Grant Universities.

Below: A complete transcript of the conversation. First: Three video excerpts from the chat. (We’ll post additional clips throughout the week.)

On Business’s Role in Higher Education

“If you’re engaged in some inefficient practice, maybe that’s a bad thing.”

On Tablets in the Classroom

“Just giving people devices … has a really horrible track record.”

On the Meaning of MOOC’s

“Even though I only have a high-school degree, I’m a professional student.”

Q. You have been interested in education for quite a while. I was looking back at your 1995 book, The Road Ahead, and you laid out a vision of education and how it could be transformed with technology. It seems like some of that vision is still only just emerging, so many years later. Did it take longer than you thought it would?

A. Oh sure. Education has not been changed. That is, institutional education, whether it’s K-12 or higher education, has not been substantially changed by the Internet. And we’ve seen that with other waves of technology. Where we had broadcast TV people thought would change things. We had early time-sharing computing—so-called CAI, computer-assisted instruction—where people could do these drills, and people thought that would change things. So it’s easy to say that people have been overoptimistic in the past. But I think this wave is quite different. I think it’s more fundamental. And we can say that individual education has changed. That is, for the highly-motivated student, the ability to go online and find lectures of various length—to see class materials—there’s a lot of people who are learning far better because of those materials. But it’s much harder to then take it for the broad set of students in the institutional framework and decide, OK, where is technology the best and where is the face-to-face the best. And they don’t have very good metrics of what is their value-added. If you try and compare two universities, you’ll find out a lot more about the inputs—this university has high SAT scores compared to this one. And it’s sort of the opposite of what you’d think. You’d think people would say, “We take people with low SATs and make them really good lawyers.” Instead they say, “We take people with very high SATs and we don’t really know what we create, but at least they’re smart when they show up here so maybe they still are when we’re done with them.” So it’s a field without a kind of clear metric that then you can experiment and see if you’re still continuing to achieve it.

Q. So who’s to blame? Are there things like the U.S. News rankings or other pressures that give colleges the wrong incentives?

A. Well there certainly is a perverse set of incentives to a lot of universities to compete for the best students. And whether that comes out in terms of being more selective or investing in sort of the living experience, it’s probably not where you’d like the innovation and energy to go. You’d like it to go into the completion rates, the quality of the employees that get generated by the learning experience. The various rankings have focused on the input side of the equation, not the output.

Q. There’s a moving moment in Walter Isaacson’s biography of Steve Jobs that describes a time when you visited Mr. Jobs at his house not long before his passing, and the two you reflected on the innovations you both led in technology. I understand that one thing Steve Jobs asked you that day was about how technology could change education. What did you tell him?

A. Well, I’d been involved in the education space because of my full-time foundation work. And so I’d been able to get out to various charter schools, to inner-city high schools, to community colleges, different universities, and learn about the financial situation about what discourages kids. And based on that, you get more of a sense of, OK where can technology come in? If the kids don’t have to come to the campus quite as often, that would be good. But then what’s the element that technology can’t deliver? And it’s through that that I really have developed a lot of optimism that we can build a hybrid. Something that’s not purely digital but also that the efficiency of the face-to-face time is much greater. Where you take the kid who’s demotivated or confused, or where something needs to be a group collaboration as opposed to the lecture. So I talked about the vision and what type of innovators we should draw in.

Q. Getting to some of those ideas, you’re famously not a college graduate, since you left Harvard early to start Microsoft. So I’m curious what you think of EdXout of Harvard and MIT. What do you think of that model of certificates or badges for taking free online courses?

A. Well at the end of the day you’ve got to have something that employers really believe in. And today what they believe in by and large are degrees. And if you have a great degree then you’re considered for jobs, and if you don’t have that degree there’s a lot of jobs you won’t get consideration for. And so the question is, Can we transform this credentialing process? And in fact the ideal would be to separate out the idea of proving your knowledge from the way you acquire that knowledge. So even though I only have a high-school degree, I am a professional student. That is, I like to watch courses and do things online. So things like OpenCourseWare, the various lectures that have been put online, I consume a lot of those because I’m very interested.

Q. That’s interesting. I’m hearing a lot about that idea in the tech industry—such as companies like Microsoft trying to hire programmers—but do you think this could work as well in things like humanities fields where it’s harder to measure mastery?

A. Well, there are a lot of fields where things are fairly objective. If you want to be a nurse or a doctor, there are various exams that are given for those things. There are softer areas, like you want to be a salesman or something, but it’s not even clear what college degree is appropriate for that. Employers have decided that having the breadth of knowledge that’s associated with a four-year degree is often something they want to see in the people they give that job to. So instead of testing for that different profession, they’ll be testing that you have that broader exposure.

Q. The Gates Foundation has given tens of millions of dollars to traditional universities and to some new upstart players in higher education. But with that amount it would be possible to build a new campus of your own—have you considered starting your own university?

A. Well, we have a couple of people who are starting new universities that we’re getting behind. They’re looking at low-cost models where they figure out the right student pool, where they use technology the right way.

For us, our role is different than that. Our role is to make sure that the universities that are out there that already have a lot of professors, a lot of real estate, a lot of reputation, that if there’s ways that they can do things better, like looking at their completion rates and saying, OK, what are the best-practices? And seeing a student who seems to be disengaged, what do you to do to get them re-engaged?

Even these top universities often only have a 60-percent completion rate. And the average university will have something like a 30-percent completion rate. So you have an immense amount of wasted resource, and students who end up with a big loan and sort of a negative experience in terms of their own self-confidence. And so that failing student is a disaster for everyone. And yet there’s been surprisingly little put into finding out who does it well. Even universities knowing their completion rates. It’s only been recently with some things we and others have gotten behind that there have been standard metrics and a willingness to share what is actually a fairly embarrassing statistic for these universities and be able to say if somebody’s got 80 percent, what are they doing? Is it the pool of people they bring in or what they’re doing when they get there?

Q. The role of business in higher education is a hot topic these days. Many new online-education efforts are run by companies, and in some ways the controversy at the University of Virginia over the forced resignation of the president there was partly about how fast the institution should move online and adopt a more business-style approach. What would you say to those who worry that businesses, and in some cases even foundations like yours, are becoming too influential at traditional colleges?

A. Well, if you’re against completion and measuring completion then, yeah, we’re a real problem. Because we’re saying, Hey, maybe we ought to look at that. Because budgets are so tight we’re going to have to find best practices there, and if you’re engaged in some inefficient practice, maybe that’s a bad thing.

Our goal is pretty simple: Seeing the U.S. education system as a real gem. As the thing that’s provided broad opportunity and made the country do very well. And so the question is how do we renew that when others have looked at what we do well and copied a lot of those things. And so their universities are getting a lot better. Their completion rates are better than ours. Their efficiency rates are better than ours. The number of students who go into science and math are better than ours. What is it that we need to do to strengthen this fundamental part of our country that both in a broad sort of economic level and an individual-rights level is the key enabler. And it’s amazing how little effort’s been put into this. Of saying, OK, why are some teachers at any different level way better than others? You’ve got universities in this country with a 7-percent completion rate. Why is it that they don’t come under pressure to change what they’re doing to come up with a better way of doing things? So if casting light on the current state of the system is a good thing, then we’re a positive change. And if not, then people could feel differently.

Q. In blunter terms, some have asked what makes successful business people—even if they are successful at business—qualified to weigh in on the operation of universities?

A. Well, obviously anything that has to do with the universities is going to be figured out by people who’ve worked in universities, and it’s going to be piloted in universities. I don’t think there’s any business people who are just walking out of their office door and walking over to a university and saying, Hey, reorganize your university this way. I’ve never heard of that. What we do is we fund universities who are on the cutting edge. And so it’s people from universities who apply and say, Hey, I want to do this next-generation learning. Because you need the people doing the neat content, and the people who actually sit with the students and motivate the students and help them when they’re confused, help them with the labs, you need those elements to come together.

Take remedial math, which is an absolute disaster. What destroys more self-confidence than any other educational thing in America is being assigned to some remedial math when you get into some college, and then it’s not taught very well and you end up with this sense of, Hey, I can’t really figure those things out. If we can take and bring the right technical things and people things to that, then that would make a huge difference.

So all the grants are to people in universities, and, yes, some people in universities disagree with other people in universities. But if you have a sense that completion is a good thing, then you’re all eventually going to come to a consensus that yes, we can improve.

Q. Still, these grants do create an incentive—and it’s not just your foundation, it’s all foundations—to work toward the goals that the foundation has set out. It sounds like your argument is that you’re placing a variety of bets, in a way, rather than telling universities that this is the way that it should be done with your grant money, which is pretty powerful.

A. We bet on the change agents within the universities. And so, various universities come to us and say, We have some ideas about completion rates, here are some things we want to try out, it’s actually budget that holds us back from being able to do that. People come to us and say, We want to try a hybrid course where some piece is online, some piece is not, and we’re aiming this at the students that are in the most need, not just the most elite. So that’s who we’re giving grants to, people who are trying out new things in universities. Now the idea that if you have a few universities that figure out how to do things well. how do you spread these best practices, that’s a tough challenge. It’s not the quite same way as in the private sector that if somebody’s doing something better, the price signals force that to be adopted broadly. Here, things move very slowly even if they are an improvement.

Q. Some of what you’ve been talking about is getting people to completion by weeding out extraneous courses. There’s a concern by some that that might create pressure to make universities into a kind of job-training area without the citizenship focus of that broad liberal-arts degree.

A. Right now, a lot of the institutions that are all-access are essentially overloaded. That is, if you’re trying to get through in the appropriate amount of time you’ll find yourself constantly not able to get into various required courses. And so if you’re taking more years and more courses simply because you’re being held out of the ones that are required for your degree, that’s a real problem. And there’s not very good metrics about that. Costs are being constrained because the state money is going down. They can only raise tuition a certain amount, and what happens is the federal support for tuition is really very up in the air, like so many elements of the federal budget right now. And so yes, it is important to distinguish when people are taking extra courses that broaden them as a citizen and that would be considered a plus, versus they’re just marking time because they’re being held up because the capacity doesn’t exist in the system to let them do what they want to do. As you go through the student survey data, it’s mostly the latter. But I’m the biggest believer in taking a lot of different things. And hopefully, if these courses are appealing enough, we can get people even after they’ve finished a college degree to want to go online and take these courses.

Q. At a conference in 2010, your said that in five years, “placed-based colleges,” would be less important because of the rise of some of these video-based options and credentials. Should traditional college leaders be worried about their place-based model?

A. If they want to innovate, they should be worried about whether they’re going to pick the right things and innovate in the right way. If the point is, can you just stay the same, I think the answer is no. Other countries are sending more kids to college. They’re getting higher completion rates. They’ve moved ahead of us. The cost of an education just keeps going up. So you’ve go to see if you can change the way the system works. Having a lot of kids sit in the lecture class will be viewed at some point as an antiquated thing. On the other hand, having a bunch of kids come into a small study group where peers help each other, where you can explain why you’re learning these various topics, that will be even more important. And so the skill sets that you want on the university campus and that you’re really valuing and measuring and giving feedback to, I think those are shifting somewhat because we can take the lecture piece versus that study-group piece and make the lecture piece more of a shared element, and not have to have that duplicated again and again.

Yes, universities are somewhat reluctant to give up a piece. So it’s not clear who those innovators will be. But I think its time is coming.

Q. Tablet computers are big these days. The Surface tablet was just released by Microsoft last week, and iPads are all over campuses, but it doesn’t sound like your approach has been to give devices to students and hope things change that way. What do you think needs to happen for factors like tablets to really make a difference? Or is that not even part of the equation?

A. Just giving people devices has a really horrible track record. You really have to change the curriculum and the teacher. And it’s never going to work on a device where you don’t have a keyboard-type input. Students aren’t there just to read things. They’re actually supposed to be able to write and communicate. And so it’s going to be more in the PC realm—it’s going to be a low-cost PC that lets them be highly interactive.

But the device is not the key limiting factor at this point, at least in most countries. If we ever get the curriculum to be super, super good, then the access piece, which is the most expensive part, will be challenging, requiring special policies to let people get access. The device, you’ll be able to check out of the library a portable PC, so I don’t see that as the key thing right now.

Q. Is there a professor or teacher who inspired you to get into education? And of all the things that your foundation could invest in, why higher education, and where does that passion come from?

A. For the United States, I think the main area that will determine whether we retain our traditional strength or not is what we do in the education system, and I put K-12 and higher ed into that.

In higher ed, there’s a part of it that has been extremely strong in the U.S.—the best in the world. You know it hasn’t been easy for other people to do what we’ve done well. But for the first time now, we see them doing some of those things. The top universities in China, like Tsinghua, is a world-class university, absolutely in the top 50 universities in the world. So we have to double-down, particularly when there’s new opportunity, which technology is bringing, and when there’s a challenge, which all these budget issues are pretty dramatic in that regard. So there’s nothing more catalytic. There’s nothing that was more important to me in terms of the kind of opportunity I had personally. I went to a great high school. I went to a great university. I only went three years, but it doesn’t matter; it was still extremely valuable to me to be in that environment. And I had fantastic professors throughout that whole thing. And so, if every kid could have that kind of education, we’d achieve a lot of goals both at the individual and country level.

Q. As a foundation, what’s next? Do you see new areas, maybe domestic health care, say, or are there other new sectors that the foundation might get into?

A. Basically no, because until we achieve our goals in the areas we picked—globally, it’s really health, agriculture, things having to do with helping poor people, and here in the U.S. it’s education—because these are tough-enough problems. We want to learn, make mistakes, try new things out, find new partners. And so until we’ve done something quite dramatic, which in the best case would be in 10 to 20 years, we’re not going to move on and do something else. So we’ve really picked our areas and hopefully every year we get a little bit better in how we pursue them.

Q. What did you learn from K-12 that you’re bringing to higher ed?

A. In K-12 you learn a lot about the motivational aspects. Why should somebody learn algebra? It’s so far away in terms of connecting that with a job or any life outcome. And how to make things interesting. K-12 has been more homogenized in terms of how it’s done: what the standards are, what the personnel system looks like. One of the strengths of higher ed is the variety. But the variety has also meant that if somebody is doing something particularly well, it’s hard to map that across a lot of different institutions. There aren’t very many good metrics. At least in high schools we can talk about dropout rates. Completion rate was really opaque, and not talked about a lot. The quality-measure things are equally different. We don’t have a gold standard like SAT scores or No Child Left Behind up at the collegiate level. And of course, kids are more dispersed in terms of what their career goals are at that point. So it’s got some things that make it particularly challenging, but it has a lot in common, and I’d say it’s equally important to get it right.

 A Conversation With Bill Gates – Technology – The Chronicle of Higher Education.

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Daily Report: For Tablet, Microsoft Breaks Away From Partners – NYTimes.com


 

Daily Report: For Tablet, Microsoft Breaks Away From Partners

By THE NEW YORK TIMES

SEATTLE — A move by Apple to secure high-quality aluminum from Australia foriPad cases was one of many incidents that gradually convinced Microsoft that it needed to create its own tablet computer,Nick Wingfield reports in Monday’s New York Times.

The announcement of the Microsoft tablet, called Surface, was the most striking evidence yet of the friction between Microsoft and its partners on the hardware side of the PC business. It is the first time in Microsoft’s almost four-decade history that the company will sell its own computer hardware, competing directly with the PC makers that are the biggest customers for the Windows operating system.

For hardware makers, the PC market has long been a struggle because Microsoft and Intel, maker of the microprocessors that power most computers, have traditionally extracted most of the spoils from the industry, leaving slim profits for the companies that make them. Manufacturers pay hefty fees to license Windows from Microsoft, putting pressure on them to make computers as cheaply as possible using commodity parts.

That, in turn, has limited their ability to take the kinds of risks on hardware innovation that have helped define the iPad. Furthermore, with the iPad, Apple has proved that there are significant advantages to designing hardware and software together. When separate companies, each with its own priorities, handle those chores, integrating hardware and software can be more challenging.

“You’ve got this sclerotic partnership structure where the partners don’t have any oxygen to be innovative,” said Lou Mazzucchelli, an entrepreneur in residence for a venture capital fund backed by the state of Rhode Island and a former technology analyst. “I believe Microsoft was painted into a corner. If they didn’t move soon, Apple would have so much of a lead, it would be almost impossible to catch them.”

 Daily Report: For Tablet, Microsoft Breaks Away From Partners – NYTimes.com.

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Who will be Microsoft’s Tim Cook? | asymco


Who will be Microsoft’s Tim Cook?

JUN 20 2012

Horace Dediu

As previously noted, Apple has overtaken Microsoft (and Google) in operating margin percentage. This is an astonishing statistic as Apple is still largely perceived to be a “hardware company” while Microsoft is a “software company” and Google is a “services company.”

To suggest that “hardware” could be more operationally profitable than either software or services is akin to heresy in technology analysis. This reversal is newsworthy indeed. However, even the most casual observer would note that Apple does not derive its market power from hardware alone. It is, in fact, an integrated hardware, software and services company (with a few more roles besides.)

So the emergent successful business architecture in this technologically transitional period is of integration and completeness of solutions.

This shift explains at least at a conceptual level Microsoft’s tectonic Surface shift.

But what about another point of view? What does integration mean for Microsoft’s income, cost and profit structure? Is integration self-disruptive to Microsoft?

Here’s a reminder of Microsoft’s revenues and operating income by division:

The challenge of devices for Microsoft is that the licensing of software for devices is very difficult to sell.

In 2011 Microsoft received about $18.7 billion in Windows revenues and $23 billion in Office revenues. The chart shows that this is a fairly steady growth business. According to Gartner, in 2011 there were about 336 million Windows PCs sold and that this too is a fairly stable and mature business.

If we simply divide revenues by PCs sold we get about $55 Windows revenues per PC and $68 of Office revenues per PC sold [1]. The total income for Microsoft per PC sold is therefore about $123. If we divide operating income by PCs as well we get $35 per Windows license and $43 per Office license. That’s a total of $78 of operating profit per PC.

Now let’s think about a post-PC future exemplified by the iPad. Apple sells the iPad with a nearly 33% margin but at a higher average price than Microsoft’s software bundle. Apple gives away the software (and apps are very cheap) but it still gains $195 in operating profit per iPad sold.

Fine, you say, but Microsoft make up for it in volume. Well, that’s a problem. The tablet volumes are expanding very quickly and are on track to overtake traditional PCs while traditional PCs are likely to be disrupted and decline.

So Microsoft faces a dilemma. Their business model of expensive software on cheap hardware is not sustainable. The future is nearly free software integrated into moderately priced hardware.

For Microsoft to maintain their profitability, they have to find a way of obtaining $80 of profit per device. Under the current structure, device makers will not pay $55 per Windows license per device and users will not spend $68 per Office bundle per tablet. Price competition with Android tablets which have no software licensing costs and with iPad which has very cheap software means that a $300 tablet with a $68 software bill will not be competitive or profitable.

However, if Microsoft can sell a $400 (on average) device bundled with its software, and is able to get 20% margins then Microsoft is back to its $80 profit per device sold. This, I believe, is a large part of the practical motivation behind the Surface product.

The challenge for Microsoft therefore becomes to build hundreds of millions of these devices. Every year. Sounds like they need a Tim Cook to run it.

Notes:

1.    Microsoft accounts for revenues using deferrals due to Software Assurance pre-payment models for many corporate customers so this figure is not a precise value for each license sold.

 Who will be Microsoft’s Tim Cook? | asymco.

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