in December, Microsoft 'ran out' of Xbox 360s

Microsoft's Xbox 360 sales are so steep that the company is having trouble keeping up with demand, claims Xbox Live's director of programming.

Larry Hryb, who is better known as "Major Nelson," tweeted yesterday: "I found out we ran out of consoles at end of the month (!) so don't expect to win Dec." The "win" is in reference to unit sales rankings for game consoles that market researcher NPD is set to release today. Basically, Microsoft is saying that if it isn't No. 1, the cause is actually its popularity, not lack thereof.

The situation apparently won't ease up for consumers still hoping to get their hands on the Xbox 360. Major Nelson reported in a follow-up tweet that "Jan/Feb supply is tight as well."

For now at least, Xbox 360 units seem to be readily available from several retailers. The online stores for Amazon.com, Best Buy, GameStop, and Wal-Mart all have Microsoft's console in stock. The companies promise to ship units within 24 hours.

But if Microsoft did indeed run out of consoles last month, recent sales estimates released this week by Wedbush analyst Michael Pachter could be off.

The analyst estimates that 2.5 million Xbox 360 units were sold in December, trailing only Nintendo's Wii with 2.6 million units sold. If Microsoft hit that mark, the company would have seen 91 percent growth year over year. However, Pachter's report to investors made no mention of any Xbox 360 shortages.

But we won't know for sure if Pachter's estimates were too high unless Microsoft reports actual sales figures. Last year, NPD stopped publicly sharing unit sales for hardware and software. Since then, the three main console makers have, at times, reported unit sales on their own.

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Microsoft says research budget may create new jobs

Microsoft may create up to 3,000 jobs as it raises investment in research and development by $1 billion this year, its chief operating officer said Tuesday.

"Realignment of the company will help us reassign people and could allow us to create some 2,000 to 3,000 new jobs," Kevin Turner said here at CeBit, Europe's biggest technology trade fair.

Turner said while Microsoft was eliminating jobs in some areas, new opportunities would arise at the same time. He reiterated that Microsoft, under pressure to trim costs amid a global recession, would stick to its research budget this year.

"We will invest a record $9 billion in R&D...spend a billion more than last year," Turner said, adding Internet-based applications--so called cloud computing--would be a major field for Microsoft's investment.

The current macroeconomic climate was the most challenging most people had ever seen in their lifetime, Turner said.

"We believe while this may be a once in a lifetime event it may also be a once in a lifetime opportunity to create new business models," Turner said.

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Microsoft backtracks on severance issue

Microsoft in the middle of lye waves criticism, Microsoft backtracking on the decision to ask the laid off workers to pay back the money that the software maker said the plan was less than the cutting.

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Over the weekend, Microsoft confirmed it is cutting to some underpaid workers and others. At that time, the company did not say how much money is involved, but that the workers sent a letter of claim they will be required to pay back the excess money from them because of the cutting.

On Monday, Microsoft HR chief Lisa Brummel said the company is reversing course.

"I thought it was not reasonable for us to continue on the road at us," he told CNET News. Twenty-five workers and about 20 more underpaid, Microsoft said.

Brummel said that he had spoken or left a message to those who are most affected.

Brummel said the more received, on average, about $ 4000 or $ 5000 in extra pay.

"I have now called 22 of 25 employees affected, not only because I have time for three but I will hang up after us," said Brummel.

In general, said Brummel reasonable for companies to get money back if you make an accounting mistake, but he recognizes the extraordinary situation that is one. Brummel said the company was more at one point during her long tenure.

"This really happened to me and I write a company check," he said. "It may happen to other people."

Later on Monday Microsoft issued the following statement about this:

Last week, 25 former employees of Microsoft has been informed that they are as part of their cutting payments from the company. This is a mistake to us. We must handle this situation in a more tactful way. We will reach those who are affected to relay that we will not ask for payment from the individual.

Microsoft also said that the company is immediately reimbursing employees underpaid.

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Microsoft hopes 'Windows phone' has a ring to it

Prithvi Raj, a product manager for Microsoft, demonstrates the new Windows Mobile 6.5 running in an HTC touch-screen handset at the GSMA Mobile World Congress 2009 in Barcelona.

(Credit: Marguerite Reardon/CNET Networks)

Microsoft is trying to sell the world on the notion of a "Windows phone."

The first part of that effort is simple. It's a rebranding exercise. Although Microsoft will continue to sell its Windows Mobile operating system, it is going to put its marketing muscle behind the term "Windows phone" to describe the devices that run its software.

The second part is trickier: convincing consumers that they want a Windows phone as opposed to all of the other smartphones on the market, such as the iPhone, BlackBerry, or Palm's Pre, to name just a few.

On Monday at the Mobile World Congress event in Barcelona, Spain, the company is showing off Windows Mobile 6.5, an update to its operating system aimed at making the software more "finger friendly" and just more appealing to consumers in general. The update, which won't show up on phones until the fourth quarter of this year, also features an update to the mobile Internet Explorer browser and a new "marketplace" for buying software that can run on the phone.

Images: A peek at Windows Mobile 6.5

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Microsoft will also formally announce its My Phone backup and restore service, some details of which leaked out earlier this month. The service is designed to not only make sure things like calendar and contact data are synced to the Web, but also other phone data such as photos and text messages.

These are the kinds of improvements that Windows Mobile boss Andy Lees said he was alluding to in an interview with CNET last month, where he laid out Microsoft's vision for the phone.

"We talked about importance of the device being easier to use and being a window in on your life," Lees said in an interview on Friday, shortly before he headed to Barcelona.

In the earlier interview, Lees acknowledged that Microsoft had fallen somewhat behind by trying to offer software that could run on "the least common denominator" of hardware, but said that the next 12 to 18 months would bring a series of announcements that would help Microsoft thrive in a world in which phones will soon have dual-core processors and graphics abilities to rival the original Xbox.

With the new software update, Microsoft is adding a rival to the iPhone's App Store as well as making its software easier to use without having to reach for a stylus or flip down a keyboard.

But it remains a question whether Microsoft's changes will be enough, particularly as rivals improve their products over the coming year.

On the browsing front, for example, Microsoft is focusing on the fact that, while other browsers may look nice, Mobile IE can do more than the others because it is compatible with the desktop Internet Explorer 6 and with Adobe's Flash. Microsoft commissioned a study that found its browser can execute "up to 48 percent more assigned tasks than the other browsers and phones studied."

However, it is unclear that such metrics--as opposed to just plain ease of use--are what consumers use to select a phone.

Lees notes that supporting multitouch, a la the iPhone, has its downsides as well. Such phones require capacitive screens which are less precise, making things like handwriting recognition less feasible. Microsoft sells many Windows phones, for example, in Asian countries where handwriting recognition can prove far quicker than a keyboard for entering text.

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