Microsoft's 'terrible, horrible, no-good, very bad' week

This week's damage: Surface RT lawsuits, botched security patches, SkyDrive and outages, and a subpar Windows 8.1 leak

With apologies to author Judith Viorst, Microsoft has Alexander beat hands down. The tech giant came under the gun from all directions this week, with fallout from its Surface RT fiasco resulting in a lawsuit on behalf of disgruntled shareholders; a Black Tuesday that botched six -- count 'em, six -- Windows updates; outages for SkyDrive and still ongoing issues with; and a leaked Windows 8.1 build that failed to inspire confidence that the company will turn things around any time soon.

First things first: Does it really come as a surprise that Microsoft is being sued for misleading shareholders about Surface tablet sales? After closely guarding the secret about how many units it was actually selling (or not), Microsoft finally announced in July a $900 million Surface RT write-down that it actually put on the books in June -- what InfoWorld's Woody Leonhard called a "multibillion-dollar boondoggle." Microsoft's next-day share price took its biggest dive in more than four years, plunging more than 11 percent.

After that debacle, InfoWorld's Bill Snyder called for CEO Steve Ballmer to go, saying "the Surface combines the worst conceptual mistakes of the Newton and the Edsel: technology that doesn't work plus a product that completely misses consumer expectations."

That hammering in your ears is the sound of nails being driven into Surface RT's and Ballmer's coffins.

Before Ballmer goes, he'll face his day in court if the law firm Robbins Geller Rudman & Dowd has anything to say about it. Calling Microsoft's entry into the tablet market an "unmitigated disaster," the lawsuit charges that Microsoft knew the launch had gone badly and deliberately kept investors in the dark. Citing Ballmer and marketing leader Tami Reller, among other execs, the suit states that the "defendants caused Microsoft to issue materially false and misleading financial statements and financial disclosures ... to forestall Surface RT's day of reckoning."

Speaking to the Seattle Times, University of Washington law professor Sean O'Connor said he was unconvinced that Microsoft violated generally accepted accounting principles with the timing of its write-down. But Microsoft execs' statements about the momentum of Surface were another matter. "Based on those kinds of very positive statements, people could say they bought stock because they thought things were going swimmingly well," when Microsoft knew they weren't. "That could be a problem for Microsoft," O'Connor said.

Lest you say it stretches credulity to think there were people who thought things were going "swimmingly well" with the Surface tablet, InfoWorld's J. Peter Bruzzese held out hope this week that the Surface RT 2 tablet will be worthwhile. For one, Bruzzese says, it will include Outlook, the "killer app" for the Surface RT, not to mention the new Tegra 4 chip, which could perhaps address the tablet's performance issues. "I'm not quite ready to deliver the eulogy for the Surface RT," he writes. "The Surface brand and product line is salvageable. Let's see how it goes in Round 2."

InfoWorld's Leonhard wasn't nearly so sanguine about the future of Windows 8.1 after getting his hands on a leaked build of the operating system this week. While "relieved" because there were no huge changes from "the preview version that you've no doubt come to know, admire, and/or loathe," he did find "a couple of the new features that are decidedly anticonsumer." For starters Windows 8.1 enables by default Smart Search, which collects "every single search term that you use on your machine. ... reaching into Windows itself and pulling out local search terms."

Then there's the way Windows 8.1 hides Windows libraries:

I had a hard time understanding why Microsoft would do something so bone-headed. Then a good friend reminded me: Microsoft doesn't make any money on libraries. It makes a ton on SkyDrive. ... Microsoft is now designating the SkyDrive Documents folder as the default save location for the Documents library. So if you drag a file into your Documents library in Windows 8.1, it ends up on SkyDrive. Ka-ching.

That would be the same SkyDrive that went down this week along with, which was still experiencing problems syncing email with mobile devices as of Thursday afternoon.

In yet another debacle for the tech giant, Microsoft's Automatic Update chute on Tuesday accidentally released a few bombs -- six bad patches in all that the company was forced to acknowledge just 48 hours later. Leonhard writes:

Microsoft has had no end of problems with patches lately, with at least four botched patches just last month. For a change, this time the company is fessing up to it -- quickly and as best I can tell accurately, and the mea culpas are posted where they're supposed to be posted. That's a start.

Perhaps it's a start, Microsoft must be hoping, to better times ahead.

This story, "Microsoft's 'terrible, horrible, no-good, very bad' week," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.

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