Update: Facebook says no 'smear' campaign intended

USA Today
by Tim Mullaney
May 12, 2011

Facebook has released this statement about the campaign aimed at Google's Social Circle feature:

No 'smear' campaign was authorized or intended. Instead, we wanted third parties to verify that people did not approve of the collection and use of information from their accounts on Facebook and other services for inclusion in Google Social Circles—just as Facebook did not approve of use or collection for this purpose. We engaged Burson-Marsteller to focus attention on this issue, using publicly available information that could be independently verified by any media organization or analyst. The issues are serious and we should have presented them in a serious and transparent way.

You and your readers can look at the feature and decide if they have approved of this collection and use of information by clicking here when their Google account is open: http://www.google.com/s2/search/social. Of course, people who do not have Gmail accounts are still included in this collection but they have no way to view or control it.

Earlier coverage:

Update by Brett Molina, USA TODAY at 12:22 p.m. ET: The PR firm behind a negative campaign against Google's Social Circle feature has confirmed it was working on behalf of social-networking giant Facebook.

In a statement released Thursday, Burson-Marsteller backed away from the campaign, saying it went against the firm's policies and "should have been declined."

Here's the complete statement from Burson:

"Now that Facebook has come forward, we can confirm that we undertook an assignment for that client.

"The client requested that its name be withheld on the grounds that it was merely asking to bring publicly available information to light and such information could then be independently and easily replicated by any media. Any information brought to media attention raised fair questions, was in the public domain, and was in any event for the media to verify through independent sources.

"Whatever the rationale, this was not at all standard operating procedure and is against our policies, and the assignment on those terms should have been declined. When talking to the media, we need to adhere to strict standards of transparency about clients, and this incident underscores the absolute importance of that principle."

Our original post

Sheryl Sandberg is supposed to be the "adult supervision" at Facebook, the 41-year-old veteran executive brought in from Google as chief operating officer in 2008 to keep a company led by Mark Zuckerberg (who turns 27 on Saturday) organized and professional even as it zooms to an estimated $4 billion-plus in sales this year. I know this because it says so in the cover story of this week's Bloomberg BusinessWeek.

How, then, to explain the Facebook stunt The Daily Beast's Dan Lyons broke today? Facebook hired public-relations agency Burson-Marsteller to plant negative stories about a social-networking plan of Google 's called Social Circle, contending that it violated user privacy and may have broken federal regulations.

USA TODAY's Byron Acohido and Jon Swartz evaluated the claims and found many of them false, in a story that apparently sent Lyons hunting for Burson's anonymous client.

Now the story is popping out all over technology blogs and the mainstream press, with everyone clamoring to see the battle between Silicon Valley's old (Google was founded in 1998) and new (Facebook is about 7 years old) beasts.

At a minimum, hiring Burson to pitch reporters on a controversy about Google without disclosing they were working for Facebook is amateurish. Many news organizations would have dismissed the pitch for that reason alone, reasoning that no one from Burson could be quoted without disclosing their interest and that reporters couldn't know what Burson's real motives were. That the pitch was apparently based on bogus information and/or shoddy legal analysis only makes things that much worse.

The real question, though, is this: If true, by what standard does this episode show any sign of adult supervision?

The stakes are real and, yes, it's a matter Facebook's top brass must answer for. This stunt messes with Facebook's brand, and the brand is the company. Unlike Google, whose search engine was a giant technical advance over what came before, Facebook attracted 500 million users primarily because it held itself out as more approachable and normal-people-friendly than its onetime rival Myspace.

People who post on Facebook use their real names, and generally behave like normal human beings. There's no porn, few if any predators. That brand is reportedly on track to generate $4 billion or more in advertising revenue this year, and has sparked speculation that Facebook might be worth $100 billion when it goes public, which is expected to happen by next year.

So this is not just an inside media issue. It's a question of management, and of who at Facebook lacked the basic judgment to understand that the blue-chip industry leader the company has become must be better and more honest than this with billions of dollars' worth of credibility on the line.

There's a lot we don't know about what happened here -- and it's Sandberg's job more than anyone's to dig out the truth, quickly. Who at Facebook had this brilliant idea? Why did they ask that Burson go anonymous, or to position itself in talks with journalists as acting in the interest of consumers or the common good, rather than just disclose that Facebook had a beef with Google? What were the specific factual problems with Burson's pitch, and was any disinformation deliberate? Why did they target the outlets they did, and were they hunting for a soft target that would peddle their claims without examining them much? (Why, for example, not just hand it to BusinessWeek's Brad Stone, who was working on the cover?) Did anyone think about the costs and benefits of making themselves look like fools over a perceived threat from a year-old Google product that most people have never even heard of?

Most of all, what did the adult supervisor in the room know, and when did she know it? And if she didn't, why not?

It's too soon to know whether any heads should roll over this. After all, Google survived some of Sergey Brin's brasher, more inappropriate public comments before its IPO and did just fine. Sandberg still has a chance to fix this by telling the truth and taking steps to assure Facebook stays out of the dirty-tricks business.

But fix it she must. Management involves convincing big corporations like Facebook to act professionally, which includes telling the truth.

As BusinessWeek told us this morning, that is Sandberg's job description. Until there's a reason to say otherwise, the buck stops with her.

Google braces to pay at least $500M in ad probe

Associated Press
by MICHAEL LIEDTKE
May 11, 2011

SAN FRANCISCO (AP) - Google Inc.'s lucrative online advertising system is facing a U.S. Justice Department investigation that is expected to cost the Internet search leader at least $500 million.

The disclosure made by Google on Tuesday in a quarterly report to the Securities and Exchange Commission serves as the latest reminder of the intensifying regulatory scrutiny facing the Internet's most powerful company.

European regulators have opened a wide-ranging probe into whether Google unfairly manipulates its search results to favor its own services and rigs its ad system to drive up prices. The Texas attorney general also has been looking into complaints about whether Google's search recommendations stifle competition.

The SEC documents filed Tuesday provided few details about the nature of the Justice Department's inquiry except that it involves how Google's automated system has been treating some unnamed advertisers. Google's ad network, which primarily delivers short text ads alongside search results and other Web content, is the main way the company makes money. In the first three months of this year alone, Google sold $8.3 billion in advertising.

Google, which is based in Mountain View, California, declined further comment late Tuesday.

Dealing with the Justice Department's ad investigation apparently won't be cheap. In its SEC filing, Google said its management decided earlier this month to set aside $500 million to cover a possible settlement.

That move resulted in a charge that lowered the first-quarter earnings that Google announced in mid-April. With the change, Google's net income fell from the previously reported $2.3 billion, or $7.04 per share, to $1.8 billion, or $5.51 per share.

Even before the revision, Wall Street had panned Google's first-quarter results because of rapidly rising expenses that are outpacing the company's revenue growth. Google's stock price has fallen 6 percent since the original first-quarter earnings came out while the technology-driven Nasdaq composite index has gained 4 percent during the same stretch. Google shares closed Tuesday at $542.66.

Investors also have been worried whether all the regulatory scrutiny will make it more difficult for Google to counter emerging competitive threats from hard-charging rivals such as Facebook. The Internet's largest social networking site has built an audience of more than 500 million users that is attracting more advertisers and creating a trove of content in walled-off social circles that can't be indexed by Google's search engine.

The Justice Department has previously raised concerns about Google's market power in court filings. The agency objected to Google's attempt to win the digital rights to millions of out-of-print books, helping to persuade a federal judge to deny a settlement that would have granted the company's wishes. The Justice Department also demanded concessions before approving Google's $700 million acquisition of airline fare tracker ITA Software last month in an effort to preserve competition in the online travel market.

News of the latest investigation also could cast a cloud over a developer's conference that Google is holding in San Francisco. The conference is scheduled to conclude Wednesday.

Microsoft deal should vastly expand reach of Skype

Associated Press
by MICHAEL LIEDTKE
May 10, 2011

SAN FRANCISCO – Imagine using your Xbox and switching from a game to a video chat with a faraway friend holding an iPad. Or going into your office email to invite Grandma to a virtual family reunion beamed on TV sets to relatives across the country.

Microsoft's $8.5 billion purchase of Skype is supposed to make using the Internet for video phone calls as common as logging on to Facebook or instant messaging is today.

If it wins regulatory approval, the deal announced Tuesday provides Microsoft, the world's largest software maker, with the means to sell more digital advertising and offer more popular conferencing tools to help businesses save money.

Skype's services also span hot markets — online socializing, mobile phones and digital video — where Microsoft has been struggling to catch up with Facebook, Apple and Google.

Analysts and investors couldn't seem to agree whether Microsoft is wasting its money on an unprofitable service or has pulled off a coup that will help it restore clout. Microsoft stock was virtually unchanged, falling 0.6 percent.

About 170 million people worldwide who use Skype regularly for calls and chats. Microsoft believes it can attract hundreds of millions more by weaving Skype into its products. Not just Windows, which runs on eight of every 10 computers and servers on the planet, but also its Outlook email program, software for phones and the Xbox video game console.

Microsoft already has a Skype-like service called Windows Live. But the real Skype is far more popular and bridges different computers and phones. Already, someone using the Skype application on an iPhone can talk to someone who has it installed on a Dell laptop.

For businesses, Microsoft has separate communications software. Building Skype into it would make it easier for corporate users to conduct video chats with people at other companies, or from home, said Bern Elliott, an analyst at the research firm Gartner Inc.

Skype allows users to make voice and video calls for free or pennies. Calls from one Skype account to another are free. Those to a landline or cellphone using the regular phone network cost money, but much less than going through the phone company.

It has become a popular way to avoid large phone bills. Skype is the largest provider of international calling services in the world, surpassing any single phone company, according to research firm TeleGeography.

Skype users made 207 billion minutes of voice and video calls last year — almost 400,000 years' worth. Most of that was free, which has made it difficult for Skype to make money. Only about 5 percent of active Skype users pay for it.

Microsoft pledged to keep Skype in all the places it is currently available, including mobile devices that run of the software of two major rivals, Apple and Google. Skype users don't have to pay to install the software on Apple's iPhone, iPad computer tablet or devices running on Google's Android system.

The new ownership probably means more advertising in Skype's video services along with potentially compelling new uses. Skype only recently began experimenting with ads. Microsoft, which has a much larger sales team, intends to expand them.

The partnership would also bring Skype to the Xbox video game console and has sold 50 million copies, making it the world's No. 2 video game system behind the Nintendo Wii.

Already, players using the Kinect motion-sensing controllers can videoconference with each other. The Microsoft-Skype partnership means a player could one day put a game aside and use the Xbox to call anyone else who has registered for a Skype account — a grandmother on her landline phone, a friend holding an Android phone, a coworker using Outlook email at work.

It's also conceivable that Microsoft could expand Skype's video chatting services into Facebook, the social networking site that has more than 500 million users of its own. Microsoft owns a 1.6 percent stake in Facebook, and both have an interest in cutting into Google's power.

Microsoft's pursuit of Skype may have even been motivated by a desire to make sure Google didn't buy it first, said technology analyst Rob Enderle. He believes Microsoft will plug Skype into Facebook.

"Either Microsoft or Google could turn Skype into an international standard," Enderle said. "Microsoft didn't want to be at the other end of that — that's why it got as pricey as it did."

The purchase is the most expensive in Microsoft's 36-year history, eclipsing its $6 billion acquisition of online ad service aQuantive in 2007. That deal has helped Microsoft sell more online ads, although analysts aren't convinced it was worth the money. The $8.5 billion is also more than three times what Skype was valued at 18 months ago when an earlier owner, eBay Inc., sold a two-thirds stake to a group of investors led by the private equity firm Silver Lake.

When eBay bought Skype for $2.6 billion in 2005, it saw tremendous potential to bring together the millions of buyers and sellers in its online bazaar. But "Skyping" and shopping didn't fit together the way eBay envisioned, feeding the skepticism about whether Microsoft will be able to realize its ambitions.

"The onus is on Microsoft to execute with this deal," said Morningstar analyst Sunit Gogia. "It's really hard ... for shareholders to be optimistic at this price point."

Although it makes billions of dollars selling software for personal computers, Microsoft has struggled badly in its effort to become a bigger force on the Internet. In the past six years, Microsoft's online division has lost more than $7.2 billion.

Skype has lost money consistently since its inception in 2003, mostly because it charges only a small fraction of its users. As a standalone company, Skype lost $7 million on revenue of $860 million last year.

That did not deter Microsoft. We are a super-ambitious company," Microsoft CEO Steve Ballmer said. "This Skype acquisition is entirely consistent with our irrepressible, forward-looking nature."

Skype was founded in 2003 by Scandinavian entrepreneurs Janus Friis and Niklas Zennstrom. They also created Kazaa, a file-sharing program that, along with Napster, roiled the music industry a decade ago.

Skype, based in Luxembourg, will become a new business division of Microsoft. Skype's CEO, Tony Bates, will run it and report to Ballmer.

The vast majority of paying Skype users are in Europe, where it's popular among people who want to avoid expensive charges for traditional country-to-country phone calls. In the U.S., calling state to state is comparatively cheap.

Microsoft can easily afford the purchase. At the end of March, it had a cash hoard of $50.2 billion. Because Skype is based overseas, Microsoft plans to pay for the deal from the portion of cash that Microsoft holds overseas to avoid higher taxes in the U.S. The company hopes regulators will approve the Skype takeover before the end of the year.

That's likely. MF Global analyst Paul Gallant said regulators might even view the deal as good for consumers by helping Microsoft compete with Google.

Google's YouTube adds 3,000 titles to video rental store

Los Angeles Times
by Dawn C. Chmielewski
May 9, 2011

LOS ANGELES -- Google's YouTube dramatically expanded its movie rental service with the addition of 3,000 titles from major Hollywood studios, positioning the dominant online video service to capitalize on the growing number of Internet-connected televisions and portable devices.

YouTube head Salar Kamangar notified the site's estimated 105 million U.S. users via a blog post Monday that they will be able to watch "full-length blockbuster films," read reviews and catch behind-the-scenes videos on the site. Three studios -- Sony Pictures Entertainment, Warner Bros. and Universal Pictures -- as well as independents, including Lionsgate Films, will offer their movies on YouTube the same day they are available on other on-demand services. Prices for new releases start at $3.99.

Among the newly released titles available for rent on YouTube are Columbia Pictures' masked vigilante movie "The Green Hornet," Warner Bros.' Academy Award-nominated fantasy sci-fi film "Inception" and last year's best picture Oscar winner, "The King's Speech." Older movies, such as "Caddyshack," "Goodfellas" and "Taxi Driver," are priced at $2.99 and up.

"Six years ago, there were just two types of video: video you watched on your TV and video you watched on your laptop," Kamangar wrote on YouTube's blog. "Today, there's increasingly just video, and it's available everywhere: on a phone, a tablet, a laptop or a television screen."

YouTube, which has been propelled by the popularity of user-created short videos, has been adding more professionally produced content, including music videos, live concerts and sporting events. The service augmented its offerings with more long-form content as users showed a willingness to watch Internet-delivered programming, including TV shows and movies, on phones and tablet computers.

The site began making movies from the Sundance Film Festival available for online rental early last year and offers a limited selection of titles to rent, including the Weinstein Co.'s 2006 release "Scary Movie 4" and Lionsgate's 2007 slasher film "Saw IV."

Augmenting YouTube's video library with more Hollywood movies helps position YouTube for the day when the distinctions between online video and other forms of video -- say, television programming -- disappear, Kamangar wrote.

Some 27 million Internet-connected TVs shipped worldwide last year, and the number is expected to grow to 49.2 million by the end of 2011, according to researcher ISuppli Corp.

Not all Hollywood studios have joined YouTube's expanded rental offering. Paramount Pictures, 20th Century Fox and Walt Disney Studios were reluctant to sign on because of concerns that Google had not done enough to combat online piracy, according to people familiar with the matter.

RIM using Microsoft's Bing on new BlackBerrys

Associated Press
May 3rd, 2011

SAN FRANCISCO (AP) - Research In Motion will use Microsoft's Bing services on new BlackBerry smartphones.

Microsoft Corp. CEO Steve Ballmer made the announcement Tuesday at RIM's annual BlackBerry World conference in Orlando, Florida. Bing director Matt Dahlin outlined the plans on the Bing Search Blog.

Dahlin says BlackBerrys shipped to wireless carriers will use Bing as its default search and map services. Bing will be the BlackBerry browser's preferred search engine. RIM's BlackBerry PlayBook tablet already uses Bing for search and maps.

According to comScore Inc., Microsoft had about 14 percent of the U.S. search market in March, while Google had about 66 percent. But the growth of smartphones could present opportunities for search engines such as Bing to catch up.

Newspapers see big demand from bin Laden news

Associated Press
by BARBARA ORTUTAY and BRETT ZONGKER
May 3rd, 2011

WASHINGTON (AP) - When big news breaks, newspapers are in demand despite the immediacy of online news.

Newspaper across the country including The New York Times, The Washington Post and The News & Advance in Lynchburg, Va., printed extra copies in anticipation of higher demand Monday, when headlines heralded the death of Osama bin Laden.

Some newspapers stopped their presses to update their front pages with late Sunday's developments. The Washington Examiner, a free daily newspaper, ran a special edition Monday afternoon under the headline, "We Got Him!"

The website for the Newseum, a museum in Washington devoted to journalism, was inaccessible for many visitors Monday as thousands of people flocked to it to see how newspapers around the world handled coverage of the terrorist leader's death. The website posts digital replicas of front pages of hundreds of newspapers every day.

The site was working fine on Tuesday, when many international papers that couldn't get the news in Monday's editions reported the news of bin Laden's death.

Paul Sparrow, senior vice president of broadcasting at the Newseum, said the museum often sees demand for newspapers' front pages spike when there are major stories in sports, entertainment or politics. Some of the biggest news events recently were the 2008 presidential elections and the New Orleans Saints' Super Bowl victory in 2009.

The site was processing more than 2,800 requests per second when it became overloaded Monday, he said. Traffic started to peak at 3 a.m. Eastern time Monday when Europeans woke to the news. It grew again at about 6 a.m. Newseum even became one of the 10 most-talked about topics on Twitter for a while.

Although websites allow people to get up-to-the-minute news, readers turn to newspapers because they offer a snapshot in time, Sparrow said.

"It reflects an emotional moment in time versus an ongoing story that's constantly changing," he said.

Stephen G. Smith, editor of The Washington Examiner, said readers like to relive major events, and newspapers offer a chance to stop and digest news, rather than chase the latest developments.

Several newspapers promoted Monday's editions as keepsakes, just as many did the day after President Barack Obama's election and inauguration. Some newspapers, such as the Chicago Tribune, plan to make Monday's edition available for sale on Tuesday for people who missed it.

A newsstand at the National Press Building in Washington sold out nearly every newspaper with the bin Laden story by noon Monday. The Wall Street Journal and the New York Post were sold out on some newsstands, according to those newspapers.

The New York Times doubled or tripled the number of newsstand copies it printed for several markets, including New York, Washington, Boston and San Francisco. The Washington Post said it printed an additional 70,000 copies, which is about double its normal print run, excluding home subscribers. USA Today added roughly 200,000.

The Los Angeles Times printed 100,000 extra copies and kept printing plates in place "if we need to run more," said spokeswoman Nancy Sullivan. The News & Advance in Lynchburg added about 2,000 copies to its daily run of 28,000.

The newspapers did not say how many were actually sold Monday.

Newspaper websites were also seeing increased traffic. Visitors to The New York Times' website who were not already logged in could not access articles for about 30 minutes, as the site coped with an unprecedented surge in volume.

At the Newseum on Washington's Pennsylvania Avenue, a newspaper from Pakistan joined the daily displays of newspapers from every state and Canada. Many visitors pulled out their cell phones to take pictures of the screaming headlines, especially the New York Post's: "Got Him: Vengeance at last! US nails the bastard."

"It's exactly how New York feels," said Jamie Jablonowski, 24, of East Brunswick, N.J., who was visiting a friend in Washington. The two had joined hundreds of others at the White House when news broke Sunday night.

She and her friend, Rachel Nomberg, 24, remember 9/11 from their junior high years. It's the first huge moment of history they can remember.

"People talk about newspapers going out of style and the Internet taking over, but I do think it's really cool to have something tangible," Nomberg said.

The Honolulu Star-Advertiser stood out for having one of the biggest pictures. Bin Laden's image filled nearly the entire page with the big headline, "Dead."

Some newspapers were noteworthy for not having the bin Laden news at all, with news apparently coming too late for their deadlines. Some including The New York Times and USA Today had to redo their front pages after their press runs had already begun. Others delayed their printing; The Washington Post said its final edition wasn't finished until 2 a.m., hours past its normal deadline.

Time magazine plans to publish a special edition Thursday to mark the occasion. The cover image of the new, 68-page issue will be the fourth in the magazine's history to feature a red "X" over a historical figure's face. The first time was on May 7, 1945, following the death of Adolf Hitler.

The Newseum will save Monday's front pages and post them in the museum's permanent 9/11 exhibit, which also features the broadcast tower that once stood atop the World Trade Center.

The Newseum also plans to set up a video booth over Memorial Day weekend for visitors to record their remembrances. Curators will create a special exhibit for the 10th anniversary of the Sept. 11 attacks this year.

Tyson Tuttle, 43, of Austin, Texas, was visiting Washington with his wife for their daughter's school trip. They plan to save copies of several newspapers and hope to snag a copy of the New York Post.

"In 2001, when you woke up and you saw the buildings on fire and everything we've been through from then until now, it's a good end point," he said. "I hope that we can move on and start solving some of our other problems. But it's a good day to celebrate."

Facebook planning big for its Menlo Park campus

San Francisco Chronicle
by Benny Evangelista
April 29, 2011

Facebook Inc. could expand to as many as 9,400 workers in the next six years, an employment boom that might require construction of as many as five more buildings at its new Menlo Park headquarters.

The company's plans would need approval by the city and eight other agencies before Facebook can go forward with its planned move from Palo Alto to the old Sun Microsystems headquarters.

The plans are detailed in a notice of a pending environmental impact report that was posted last week on Menlo Park's city website.

Facebook spokesman Larry Yu cautioned that the report has projections that may or may not pan out, "so it's anyone's guess on what the actual numbers will be."

The social-networking giant announced in February that it will move into Sun Microsystems' old 57-acre campus along Bayfront Expressway.

Facebook has also acquired a vacant 22-acre parcel formerly occupied by General Motors Tyco Electronics on the west side of Bayfront across from the Sun Microsystems campus.

Facebook now has more than 2,000 employees, but has outgrown the two Palo Alto buildings that serve as its headquarters.

The company's plans to increase its workforce are part of a Silicon Valley employment boom. Mountain View's Google Inc., for example, had 24,400 employees by the end of last year, and the search engine giant plans to hire at least 6,000 more this year.

San Francisco's Twitter Inc., meanwhile, is also moving to new headquarters on Market Street to accommodate as many as 3,000 employees by 2013, up from the current 400.

According to the environmental notice, Facebook plans to move in two phases, starting with the existing nine Sun Microsystems buildings with about 1 million square feet of space located on what will be called the East Campus.

The report says Facebook plans to "repurpose" those buildings, including tearing down office walls that were part of the old "hardware-intensive laboratory" and create "open, shared work space" that is more in tune with the collaborative environment found at Facebook and other newer tech companies.

The city now zones the East Campus to accommodate maximum peak traffic for 3,600 employees traveling to and from the facilities. But Facebook is seeking permission to bump that cap up to accommodate 3,000 more workers, for a total of 6,600 by 2015 or 2016. The company projects it would hit the 3,600-worker cap by mid-2013.

The West Campus now has two 58,000-square-foot buildings, plus a guard house and parking areas that Facebook plans to demolish. In their place would be up to five two- to four-story buildings, creating about 433,700 square feet of floor space, and a five-story parking garage for 1,500 cars. The buildings would surround a central courtyard with open spaces, meeting rooms and walkways.

Facebook is seeking to rezone the West Campus to raise the maximum height of buildings from 35 feet to 70 feet.

Facebook said the West Campus would house up to 2,800 employees, starting in late 2014, and it could reach capacity by 2016 or 2017.

The city has scheduled a hearing at the Planning Commission's May 16 meeting to receive public comments on what the impact report should study and set a May 26 deadline for written comments.

Apple juggernaut sends ripples through tech world

Associated Press
by PETER SVENSSON
April 29, 2011

NEW YORK – Consumer technology companies reporting financial results this week are looking like rowboats bobbing in the wake of Apple Inc.'s supertanker.

Close to oblivion in 1997, Apple is now the world's second-most valuable company, after Exxon Mobil Corp. On April 20, it reported net income of $5.99 billion for the January-to-March period, nearly double that of a year ago. It shipped a record 18.65 million iPhones during the quarter. Its iPad tablet computers are so popular, the company couldn't make enough.

Apple's ascendancy has produced many losers and a few winners, as underscored over the past two weeks:

Microsoft Corp.: loser

Apple dethroned Microsoft as the world's most valuable technology company a year ago. In its mid-fall report, it surpassed Microsoft in quarterly revenue. In the January-March period this year, it surpassed Microsoft in net income, too.

On Thursday, Microsoft reported that revenue from the Windows operating system declined for the second straight quarter because people are buying fewer Windows computers.

Some prospective buyers are going to Macs instead — Apple reported that it sold 28 percent more units. Others are going to iPads. Goldman Sachs now believes that more than 30 percent of iPads sold may be replacing PC sales. In the 90s, the trend was the opposite, as Windows PCs were crowding out Macs.

Nokia Corp.: loser

Nokia said this week that it will slash 7,000 jobs through layoffs and outsourcing. It still sells more phones than anyone else, but it's losing share to Apple, especially when it comes to smartphones.

Research firm Strategy Analytics also said revenue from Apple's iPhone sales surpassed that of Nokia's phones in the January-to-March period, as iPhones are much more expensive than the average Nokia phone. That makes Apple the world's largest phone maker by revenue.

To better compete with the iPhone, Nokia is ditching its old Symbian software and adopting Microsoft's Windows Phone 7. But the transition will take time; the first Windows-powered Nokia phones aren't expected until late 2011 or early 2012.

Research In Motion Ltd.: loser

The maker of the BlackBerry is in a predicament that's similar to Nokia's. RIM warned Thursday that net income, revenue and unit sales for the quarter ending in May will come in below its previous forecast.

The company's high-end phones are looking old compared with the iPhone and ones running Google Inc.'s Android software. They aren't selling as well as the company expected.

RIM promised investors that new phones with revamped software will bring sales roaring back in the latter half of the year, but investors are skeptical, sending RIM's stock down Friday.

HTC Corp., Samsung Electronics Co. and Motorola Mobility Holdings Inc.: winners, indirectly

Although all three companies compete with Apple's iPhone, they are doing well. Unlike Nokia and RIM, the three are betting on Google's Android system, which comes the closest to mimicking the look, feel and functions of the iPhone.

Motorola Mobility is a shadow of the old Motorola, once the world's second-largest maker of phones. But its focus on Android-powered smartphones is showing signs of success. It reported on Thursday a near-doubling of smartphone sales in the first quarter.

HTC of Taiwan has been making smartphones for a decade, and sales are really taking off with the help of Android. On Friday, it reported selling 9.7 million in the first quarter.

For South Korea's Samsung, smartphone sales were a bright spot in the first quarter as overall phone sales declined and other electronics were weak. The company is embroiled in patent litigation with Apple.

Verizon Wireless: winner

The No. 1 U.S. cellphone carrier posted a jump in new contract-signing customers — the more profitable kind — after it introduced its version of the iPhone on Feb. 10, which ended AT&T Inc.'s exclusive grip on the device in the U.S.

(Verizon Wireless is a joint venture of Verizon Communications Inc. of New York and Vodafone Group PLC of Britain.)

AT&T and Sprint Nextel Corp: mixed

Verizon's new subscribers came at the expense of AT&T and Sprint Nextel Corp. But neither carrier saw signs of current customers moving to Verizon for the sake of the iPhone. Rather, it seems customers weighing between carriers were more likely to go to Verizon because of the iPhone.

AT&T appeared to be splitting new iPhone customers evenly with Verizon Wireless.

Sprint lost lucrative contract customers in the quarter, but continued its long turnaround by signing up a record number of people on cheaper, contract-free plans.