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January 31, 2005

DOD seized 60TB in search for Iraq battle plan leak

By Paul Roberts

The U.S. Department of Defense (DOD) seized hundreds of computers and around 60T bytes of data as part of an investigation into how details of the U.S. invasion plan for Operation Iraqi Freedom were leaked to The New York Times, a DOD official said. The investigation ended in 2003 without finding the source of the leak. However, it has prompted changes within the department, which is developing new software tools and investigative strategies for computer crime cases that involve large amounts of data, said Lt. Col Ken Zatyko, director of the DOD's Computer Forensics Laboratory.

The investigation was prompted after details of the U.S.'s planned invasion of Iraq appeared in a series of newspaper articles in the Times beginning in July 2002. The articles revealed various details of the planned invasion and options that were being considered by military planners. Operation Iraqi Freedom was launched in March 2003.

The Times articles set off an intense effort within the DOD to discover the source of the leak. Hundreds of computer servers and desktop systems were seized at a number of locations, including U.S. Central Command at MacDill Air Force Base in Tampa, Florida, and from military bases in the Persian Gulf region, including the U.S. Naval base in Bahrain, Zatyko said.

In all, around 60T bytes of data, including data stored on computer hard drives and other data storage devices, was collected and brought back to the DOD's computer forensic lab at the DOD Cyber Crime Center (DC3), he said. A terabyte is a unit of measurement equal to 1,024G bytes, or 1,048,576M bytes.

One Times reporter was also subpoenaed for information pertaining to the leak, but that subpoena was quashed, according to Catherine Mathis, vice president of corporate communications at The New York Times Co.

At DC3, a team of DOD computer forensics investigators searched through the data looking for evidence -- such as an e-mail message or document transfer -- that would link a particular individual to a Times reporter, Zatyko said. Ultimately, the investigation failed, in part because of the challenge of sifting through the huge volume of data, he said.

"It was a 'needle in the haystack' case," Zatyko said. "The challenge is to reduce all that data and hone in on the document that was sent to the reporter."

The DOD investigators did discover a number of versions of a presentation that contained information linked to the articles, as well as e-mail messages to reporters. However, they could not find evidence that the presentation or other sensitive information was sent to the Times, and DC3's investigation ended at the end of 2003 without finding those responsible for the leaks, Zatyko said.

There are a number of possible explanations for why the investigation failed. The best explanation is that the information to the Times wasn't transferred digitally, Zatyko said. "They could have just printed it out and provided it (to the reporter) as a hardcopy document," he said.

The failure to find the source of the leak shows that reporters and their sources are getting sophisticated about covering their trail using information technology, said Bob Giles, Curator of the Nieman Foundation for Journalism at Harvard University. "The people inside the government are being smart about how they're (leaking information) and not doing it in a way that's going to get them caught," he said.

The DC3 is changing the way it conducts large computer forensic investigations in the wake of the case, Zatyko said.

In particular, the DC3 has established a section of its lab and a team of examiners just to work on cases with large data sets, replacing ad hoc teams created to address case requests as they came in. DC3 is also using a combination of commercial forensic software and proprietary tools to comb seized data stored on large capacity storage area networks (SANs) and network attached storage (NAS) devices.

The new DC3 approach replaced individual examiners working on separate workstations, which led to inconsistencies in the forensic examination process and duplication of effort between examiners, Zatyko said.

With the Iraq battle plan leak investigation closed at DC3, forensic investigators are trying out the new techniques on a more common source of large data set investigations: child pornography cases, he said.

"We're focusing on the child porn issue and moving out from there," Zatyko said.

Posted by Chad Dickerson at 06:50 PM

SBC to acquire AT&T for $16 billion

By John Blau and Grant Gross

SBC Communications Inc. plans to acquire AT&T Corp. in a deal worth US$16 billion, the company said in a statement Monday. The deal will create the largest telecommunications carrier in the U.S. The acquisition will be "great for the stockholders," with the merged company expected to be cash-flow positive in 2007, SBC Chairman and Chief Executive Officer (CEO) Ed Whitacre said in an investor conference call Monday. "We will position SBC to be the prototype 21st-century communications company in America today," Whitacre said.

Whitacre will remain in his current position, while AT&T Chairman and Chief Executive Officer David Dorman will become president of the merged company, to be based in San Antonio, Texas, where SBC has headquarters.

Under terms of the agreement, shareholders of AT&T will receive 0.77942 shares of SBC common stock for each common share of AT&T, the statement said. Based on the Jan. 28 closing price of SBC's stock, this exchange ratio equals $18.41 per share. In addition, AT&T will pay its shareholders a special dividend of $1.30 per share, bringing the total consideration for each AT&T share to $19.71, and valuing the deal at around $16 billion, it said.

Officials of both companies trumpeted the acquisition as a way to combine their strengths and cut costs, or achieve "synergies," as they called it. The combined company will be able to eventually achieve $15 billion in cost savings, with up to $2 billion a year by 2008, by combining functions such as IT, sales and headquarters support, said Randall Stephenson, SBC chief operating officer.

Nearly half of that cost-savings will come from combining IT and networking operations, he said. The combined savings will be on top of cost-cutting measures the two companies already have in place.

"Of all the transactions I have been associated with, this deal has the greatest opportunity for synergies that I have ever seen," Stephenson said. "The synergies are straightforward, they're clear."

With the acquisition, SBC gains AT&T's enterprise-focused telecommunications business, which serves "virtually all" of the world's Fortune 1000 companies at some level, according to Dorman. AT&T also brings SBC one of the largest existing IP (Internet Protocol) networks, and one of the "world's strongest brands," Whitacre said.

The acquisition will not mean the end of AT&T, Dorman said. "This deal is the logical next step in the evolution of both companies," he said.

Although the role of the well-known AT&T brand name in the new company is still unclear, it will not disappear, according to Whitacre. "We value the heritage and strength of the AT&T brand, which is one of the most widely recognized and respected names throughout the world, and it will certainly be part of the new company's future," he said in the statement.

The acquisition, which is subject to approval by AT&T's shareholders and U.S. regulatory authorities, is expected to close by the first half of 2006, the statement said. The U.S. Department of Justice and U.S. Federal Communications Commission must approve the deal, SBC officials said.

The combination of AT&T and SBC will reunite "Ma Bell" with a "Baby Bell," a union that former U.S. Federal Communications Commission chief Reed Hundt called "unthinkable" in the late 1990s.

But AT&T's market dominance has shrunk steadily since the government broke up its monopoly in 1984, splitting the operator into seven local Bell operating companies and a long-distance operation.

In a move to expand beyond its core long-distance business, which had come under fierce price pressure, AT&T spent billions early last decade to acquire a mobile phone operator and broadband cable companies. Struggling under its huge debt, AT&T was later forced to shed its wireless and cable operations. AT&T Wireless Services Inc. was acquired by Cingular Wireless LLC, a joint venture between SBC and BellSouth Corp.

SBC, which has grown from the smallest of the Baby Bells to become a company with more than 50 million local-calling customers, had been looking for ways to make inroads with large business and government customers, both in the U.S. and globally.

AT&T serves almost every Fortune 1000 member. Moreover, the company has one of the world's largest communications networks, spanning more than 50 countries. It operates 26 Internet data centers, half of which are in the U.S.

For AT&T, the acquisition will end its more than 125-year history, which began with the invention of the telephone.

The announcement of a deal between the two companies had been expected. Last week, The New York Times and The Wall Street Journal newspapers reported that SBC and AT&T were in talks about a deal that would create the largest telecommunications carrier in the U.S.

Sumner Lemon in Taipei contributed to this report.

Posted by Chad Dickerson at 04:50 PM

Verizon to use Microsoft for TV service

By Stephen Lawson

Verizon Communications Inc. Friday became the latest service provider to choose Microsoft Corp. software for an advanced TV service, following in the footsteps of SBC Communications Inc. and Comcast Corp. Verizon will use the Microsoft TV platform for its Fios TV service, which it plans to launch later this year, said Ed Graczyk, director of marketing and communications for the Microsoft TV division.

Microsoft TV supports digital video recording, video on demand and an interactive program guide that Verizon can customize for its own subscribers. The software, used along with Motorola Inc. set-top boxes, will form the foundation of a high-definition TV service that will run over Verizon's emerging fiber-to-the-home network, he said. Financial terms of the deal were not disclosed.

For Verizon, Microsoft will provide a special implementation of Microsoft TV that can support both QAM (quadrature amplitude modulation), the transmission system commonly used in cable networks, and IP (Internet Protocol) transmission, said Graczyk. Verizon plans to start out using QAM for its TV service and migrate to IPTV, he said.

New TV platforms, especially IPTV, from Microsoft and other vendors are expected to transform the viewing experience with more channels, interactivity and other features. For example, using Microsoft TV, Verizon could send targeted commercials to different types of viewers and prevent digital video recorders from recording rerun episodes of a TV series, according to Graczyk.

Microsoft's IPTV technology isn't even done yet -- the first commercial deployment will come later this year, Graczyk said -- but several service providers worldwide have embraced the company's TV software. Last year Comcast Corp. announced it would use Microsoft TV Foundation Edition 1.7, a cable-network platform, for services to at least 5 million of its subscribers, and SBC announced a US$400 million deal to use the Microsoft TV software for an IPTV service coming later this year.

Outside the U.S., Microsoft's TV customers now include Bell Canada International Inc., Swisscom AG, Telecom Italia SpA and India's Reliance Infocomm Ltd.

Posted by Chad Dickerson at 04:49 PM

Blaster-B creator sentenced to 18 months in prison

By Tom Krazit

The teenage creator of a variant of the Blaster worm that infected tens of thousands of computers in 2003 was sentenced to 18 months in prison on Friday, prosecutors said. Jeffrey Lee Parson, 19, will spend 18 months in prison followed by a three-year supervised release program, and will be required to do 100 hours of community service, Judge Marsha Pechman ruled Friday in the U.S. District Court for the Western District of Washington. In addition, Pechman on Feb. 10 will determine how large a fine Parson will have to pay, according to a news release issued Friday by the U.S. Attorney for the Western District of Washington.

Parson created the W32.Blaster-B worm in August 2003, a few days after the original worm was first set loose on the Internet. He pleaded guilty to the charges in August 2004. The creator of the original worm has not been identified.

Both worms took advantage of flaws in Microsoft Corp.'s Windows operating systems that allowed malicious hackers to take control of PCs. The Blaster worms instructed infected PCs to launch denial-of-service attacks on Microsoft's Windows Update Web site on certain dates.

Parson's variant used a file name that was identical to a domain name registered in his name. The U.S. Federal Bureau of Investigation was able to trace the domain name to computers owned by Parson at his Hopkins, Minnesota, home, where he was arrested days after his variant appeared.

Judge Pechman could have sentenced Parson to as long as 37 months in prison but chose the lighter sentence based on Parson's age, history of mental illness and lack of parental supervision, according to the statement distributed by prosecutors. The judge restricted him from using computers for anything but educational or business purposes, specifically forbidding video games and chat rooms.

Posted by Chad Dickerson at 04:49 PM

CipherTrust e-mail reputation system spots bots

By Paul Roberts

E-mail security company CipherTrust Inc.has updated the TrustedSource e-mail reputation system that it claims will make it easier to block spam e-mail by weeding out traffic from "zombie" machines that have been taken over by malicious hackers, the company said Monday. The latest version of TrustedSource, Version 3.0, integrates data from enterprise e-mail traffic processed by more than 1,600 IronMail e-mail gateways used by CipherTrust customers. The new data allows TrustedSource to create a more accurate e-mail reputation for inbound e-mail, including whether a message originated from one of thousands of infrequent e-mail senders believed to be associated with compromised systems, according to a statement by CipherTrust.

The TrustedSource data is accumulated by the CipherTrust Message Profiler, a component of IronMail appliances that examines e-mail messages. That information is used to create an e-mail reputation that is circulated back to IronPort appliances.

Compared with earlier versions of TrustedSource, Version 3.0 is more dynamic, gathering and analyzing data in real time from IronMail installations, then using that data to calculate mail reputations, said Matt Anthony , director of product marketing at CipherTrust of Alpharetta, Georgia.

The new dynamic reputation system will help spot traffic from "bad senders" such as zombie PCs and new threats without needing specific attack signatures, he said.

Currently TrustedSource has data on about 50 million IP (Internet Protocol) addresses. Analysis of those addresses helped CipherTrust refine its approach to identifying spam, Anthony said.

"We noticed that the number of IP addresses we were monitoring had leveled off at around 50 million, and that around 30 percent of the e-mail we were seeing every day was from IP addresses we've never seen before," he said.

Further analysis showed that around 95 percent of the mail from new IP addresses was malicious, usually from tens of thousands of new zombie machines that TrustedSource identifies each day.

"We found that we could develop a probability of threat, even if we had never seen an IP address before by determining how persistent the IP address is at sending e-mail," Anthony said.

The frequency with which the source IP address sends mail is now one factor used in the TrustedSource service to assign e-mail messages a threat score, causing it to be quarantined, blocked or delivered by the IronMail devices. Other factors are keywords in the message text, whether a spoofed sender address is used, and whether the message has a malicious attachment, he said.

TrustedSource is available Monday as a free update for CipherTrust customers who have purchased maintenance and support.

Posted by Chad Dickerson at 04:49 PM

January 28, 2005

Google opens AdWords API

By Juan Carlos Perez

Google Inc. has launched a test program to let external developers build applications that interact directly with the search giant's advertising servers, the company announced Thursday. Via the AdWords API beta program, advertisers can build custom applications linked to the AdWords servers to, for example, access their accounts via new interfaces and employ new tools to manage their ad campaigns, according to information found in Google's Web site.

The API (application programming interface) program could also be used by other parties that help advertisers manage their campaigns, such as search engine marketers and agencies, according to Google. The beta service is free of charge and more information, sample code, a developers' forum and a guide can be found at http://www.google.com/apis/adwords/.

Google uses the AdWords program to sell text ads that run with the search results. The ads are relevant to the topic searched on Google's search engines or members of Google's ad network. The ads can also appear in pages with content that is related to them. Google matches the ads to the search results pages and to the content pages via keywords previously selected by the advertiser as triggers.

Posted by Chad Dickerson at 11:11 PM

EU Parliament votes to fund eContent

By Simon Taylor

Members of the European Parliament (MEPs) have voted to grant €149 million (US$194.25 million) over the next three years to develop digital content across the European Union (E.U.). At the Parliament's plenary session on Thursday, MEPs voted for the E.U.'s eContentplus program, which supports development of multilingual content for on-line services.

"The Internet offers a unique opportunity for content companies to outgrow their so far mostly national markets," said European Information Society Commissioner Vivian Reding, commenting on the vote. She added that the program would help "preserve and share Europe's cultural and linguistic identities and give them a more prominent place on the Internet."

The eContentplus program aims to tackle the "fragmentation" of the European digital content market and address the areas where market forces have been insufficient to drive growth. Its main focus is on three areas: spatial or geographical data, education material and cultural content.

One of the aims is to tackle the problem of fragmentation in the geographical data sector, where different countries collect and store information such as coordinates, postcodes, planning and land registration details in different ways. The program is designed to help the creation of E.U. information services from such data to be used in areas such as transportation, navigation, emergency response and environmental management.

The final budget for the program was slightly higher than the €135 million proposed by the European Commission, the E.U.'s executive branch.

Now that the Parliament has voted, the package will be formally adopted in the coming weeks by the Council of Ministers, made up of national governments.

Posted by Chad Dickerson at 07:15 PM

Wall Street beat: Excitement relieves doldrums

By Marc Ferranti

Rumors of telecommunications company mergers and earnings reports from IT heavyweights gave investors in technology companies, who appear to remain cautious, a lot to chew over this week. Though in the first three weeks of the year bellwether companies including IBM Corp., Apple Computer Inc., Intel Corp. and Yahoo Inc. reported strong earnings that in some cases exceeded analysts' expectations, guarded vendor forecasts for the year appeared to have made investors skittish.

Trading in technology shares moved lower Monday, with the Nasdaq index sinking 25.57, or 1.3 percent, to close at 2008.70, as investors continued to act cautiously.

Midweek, however, confidence in technology companies appeared to be somewhat boosted, and the Nasdaq index started moving toward 2050, helped by some strong earnings reports and intriguing possibilities for telecom mergers.

On Wednesday, trading in Texas Instruments Inc. (TXN) shares rose by US$1.54 to $22.66 after the company on Tuesday reported calendar fourth-quarter 2004 results that exceeded analysts' expectations. The company said inventory held by distributors appears close to being sold off, which was widely taken as a sign of user demand this year.

EMC Corp. also posted upbeat results Tuesday, reporting that 2004 fourth quarter profit jumped 46 percent on increased spending on data storage technology. The company reported a profit of $320.5 million, or $0.13 cents per share, compared with a profit of $220.1 million, or $.099 cents per share, in the year-earlier quarter. Revenue in period rose 27 percent to $2.4 billion from $1.9 billion a year earlier. Company (EMC) shares rose more than a dollar over the next several days to the $2.90 level.

EMC results appeared to back a forecast last week by Chris Brown, manager of the Pax World Balanced Fund, who predicted strong growth in the storage sector. Though he remained cautious regarding the general technology sector, which many analysts now consider subject to the slower growth of mature markets, he forecast recovery in specific sectors such as volume data storage and security.

In another confidence booster in the software sector, Oracle Corp. Chairman and Chief Executive Officer Larry Ellison said Wednesday that, after its acquisition of PeopleSoft Inc., it can offer a full range of high-end enterprise applications, and that it will able to exceed financial expectations for next year. The next day, company (ORCL) shares rose by $0.35 to close at $13.97.

On Thursday, telecom companies were being scrutinized as rumors emerged about an acquisition by SBC Communications Inc. of AT&T Corp. in a deal that would be worth more than $15 billion. The merger would create the largest phone company in the U.S., though it would have to pass serious regulatory scrutiny. Trading in SBC (SBC) shares dropped by about a dollar Thursday, to close at $23.67.

The news sparked other telecom rumors, which, propelled by analyst reports, spread through the market like wildfire. Several analysts speculated that an SBC deal would push competitors like Verizon into talks about acquiring MCI. Trading on Thursday nudged up MCI (MCIP) shares by $0.65 to $19.31.

Citing strong earnings across its businesses, including gaming, Microsoft Corp. after the market closed on Thursday reported record revenue for the December quarter that surpassed analyst forecasts. In expectation of strong results, trading in Microsoft shares (MSFT) rose by $0.10 to $26.1 earlier in the day.

Microsoft recorded revenue of US$10.82 billion for the quarter, up 7 percent from $10.15 billion for the year-earlier period. Net income for the quarter was $3.46 billion, up from $1.55 billion.

Posted by Chad Dickerson at 04:31 PM

Microsoft posts record Q2 revenue

By Joris Evers

Citing strength across its business, Microsoft Corp. on Thursday reported record revenue for its second fiscal quarter that beat its own guidance as well as Wall Street's expectations. In the final three months of 2004, Microsoft recorded revenue of US$10.82 billion, up 7 percent from $10.15 billion in the year-ago period, the company said in a statement. Net income for the quarter amounted to $3.46 billion, up from $1.55 billion in the year-earlier period, Microsoft said. Last year's second fiscal quarter included an especially large charge from a program that allowed employees to sell stock options that were priced higher than Microsoft's stock at the time.

Earnings per share for the quarter were $0.32, including expenses for stock-based employee compensation, the Redmond, Washington-based company said.

Microsoft surpassed its own forecast, given in October, for revenue between $10.3 billion and $10.5 billion and earnings per share of $0.28. Analysts had expected Microsoft revenue to be $10.55 billion, according to a consensus estimate from Thomson First Call.

While both its consumer and business segments performed well, Microsoft highlighted its Home and Entertainment segment in its earnings release. The group, benefiting from strong sales of the Xbox game console and Halo 2 game, posted its first profitable quarter in the final quarter of 2004, Microsoft said.

Still, while Home and Entertainment was profitable in the second fiscal quarter, it will lose money for the remainder of the year, Microsoft Chief Financial Officer John Connors said on a conference call with financial analysts. The goal for the group is to reach sustained profitability sometime in Microsoft's fiscal year 2007, he said.

Microsoft upped its earnings and revenue forecast for its full 2005 financial year, which ends June 30. The software maker now expects earnings per share to come out between $1.09 and $1.11 and revenue to be between $39.8 billion and $40 billion. In October the forecast was for full-year earnings per share between $1.07 and $1.09 and revenue between $38.9 billion and $39.2 billion.

For its third fiscal 2005 quarter, which ends March 31, Microsoft forecasts revenue between $9.7 billion and $9.8 billion. Earnings per share are expected to be $0.27 or $0.28, including stock-based compensation expense, the company said.

"IT and corporate spending was healthy during this (second) quarter and we expect that to continue for the rest of the fiscal year," Connors said.

Microsoft's growth in the quarter was driven primarily by growth in sales of the Windows operating system on server and client systems as well as other server products, the company said in a regulatory filing with the U.S. Securities and Exchange Commission.

Revenue at the Server and Tools group, responsible for Microsoft's server products and developer tools, jumped 18 percent to $2.52 billion in the quarter from $2.15 billion in the year-earlier period. At the Windows Client group, revenue was up 5 percent to $3.22 billion from $3.06 billion.

"The world is buying a heck of a lot of servers," Connors said. "We expect the Windows platform to grow faster than the overall server segment, just as it has for the past few years."

Microsoft is slightly raising its PC shipment growth forecast to between 9 percent and 11 percent for its fiscal year 2005 and is maintaining its server market growth forecast at 13 percent to 15 percent, Connors said.

Revenue at the Information Worker group, responsible for Office, dropped 3 percent. In 2003's second fiscal quarter, Microsoft introduced Office 2003, which resulted in a very successful quarter, the company said in the filing.

Microsoft's Mobile and Embedded Devices group narrowed its operating loss as it increased sales and benefited from lower expenses for stock-based employee compensation. The group's second quarter operating loss stood at $4 million, compared with $110 million in the year-earlier period.

MSN recorded another profitable quarter with an operating profit of $130 million on revenue of $588 million.

As a result of Microsoft's $32.64 billion dividend payout in December, the company's cash hoard has shrunk to $34.5 billion as of Dec. 31.

Posted by Chad Dickerson at 04:29 PM

Siebel pulls back into the black for 2004

By Stacy Cowley

After two years of losses, Siebel Systems Inc. pulled itself back into the black in 2004 even as its revenue continued to decline, the company said Thursday as it released its 2004 financial results. Siebel's revenue for the year ended Dec. 31 totaled US$1.34 billion, a slight drop from the $1.35 billion it generated in 2003. However, the company's net income for the year rose to $110.7 million, after posting annual losses in 2002 and 2003.

Siebel's fourth-quarter results showed year-over-year growth in both revenue and income. Siebel Chief Executive Officer Mike Lawrie praised in a statement the quarter as the first in more than three years in which Siebel showed growth over the same period in the previous year. Revenue rose 7 percent to $392.4 million, and net income for the quarter rose 32 percent, to $53.8 million.

Posted by Chad Dickerson at 04:29 PM

January 27, 2005

RIAA files 717 new file-trading lawsuits

By Grant Gross

The Recording Industry Association of America (RIAA) has filed 717 new lawsuits against peer to peer (P-to-P) users allegedly trading music for free, the trade group announced Thursday. The lawsuits include 68 alleged song-swappers using 23 university networks to distribute music files, more than three times the number of university users sued when the RIAA announced 754 such lawsuits in mid-December. The RIAA said it is stepping up enforcement of copyright violations on college campuses.

Among the universities targeted in this latest round of RIAA lawsuits are Georgetown University, Harvard University Medical School, Old Dominion University, Ohio State University, the University of Kentucky, Michigan State University and the University of Michigan at Ann Arbor.

Users of the Kazaa, eDonkey and Limeware P-to-P software were among the 717 people sued, according to the RIAA.

With the new round of lawsuits, the RIAA has now sued more than 8,400 alleged file-swappers since September 2003.

RIAA officials noted people who want to pay for music online, instead of using P-to-P software to exchange music for free, now have about 230 vendors to choose from. About one million songs are now available on "legitimate" pay-per-download sites, the RIAA said.

Posted by Chad Dickerson at 10:31 PM

Yahoo links local search with mobile phones

By Juan Carlos Perez

Yahoo Inc. on Thursday rolled out a new feature in its local search service that lets users send results from their PCs to mobile phones, the company said. At Yahoo Local, which is a directory of business listings, users can search for restaurants in Denver, Colorado, or for dentists in Philadelphia. Now, they can send Yahoo Local results as a text message to their mobile phones directly from their PCs by clicking on a new "send to phone" button that accompanies every listing.

The service is available only in the U.S. to subscribers of mobile services provided by the recently merged Cingular Wireless LLC/AT&T Wireless, Verizon Communications Inc., T-Mobile USA Inc. and Sprint Corp. and Nextel Communications Inc., which are in the process of merging. Phones have to support SMS (Short Message Service).

Yahoo will not charge for the service, but the carriers may apply fees on their end for receiving the text messages. In October of last year, Yahoo introduced a service for querying its search engine, including Yahoo Local, from mobile devices.

Posted by Chad Dickerson at 08:13 PM

Concerns mount over Lenovo's IBM deal

By Sumner Lemon

The acquisition of IBM Corp.'s PC business by China's largest PC maker, Lenovo Group Ltd., may pose a threat to U.S. national security and deserves a closer review by the U.S. Congress and government agencies before a decision is made on whether or not to approve the deal, three U.S. lawmakers said this week. Their concerns were set out in a letter sent Wednesday to U.S. Treasury Secretary John Snow and signed by three Republican congressmen -- House International Relations Committee Chairman Henry Hyde, House Armed Services Committee Chairman Duncan Hunter and House Small Business Committee Chairman Don Manzullo.

Specifically, the congressmen worried that the US$1.75 billion deal could transfer advanced technology and corporate assets to the Chinese government, along with licensable or export-controlled technology, and may result in certain U.S. government contracts involving PCs being fulfilled by the Chinese government, according to a statement released by the House Armed Services Committee.

Lenovo is a public company listed in Hong Kong. However, Lenovo's parent company and largest shareholder, Legend Holdings Ltd., is closely tied to the Chinese Academy of Sciences, a government institution that manages national scientific research efforts in China and is directly overseen by the State Council -- China's highest administrative body.

"Given the important issues at stake, Congress and other federal agencies need more time to evaluate the process and provide comments on the sale," the congressmen said in the statement, noting that the Dec. 8 announcement of the deal took place when Congress was not in session.

In response, Angela Lee, a spokeswoman for Lenovo, said, "Lenovo continues to cooperate with the routine review (of the deal) by all regulatory bodies."

That may not be enough to avoid an extended review of the deal by the U.S. Treasury Department's Committee on Foreign Investment in the United States (CFIUS). The lawmakers' call for additional time to review the Lenovo deal now makes an extended review by CFIUS "very likely," said Helen Lau, an analyst at Celestial Asia Securities Holdings Ltd., in Hong Kong.

That doesn't bode well for Lenovo. There are several possible outcomes to an extended investigation, including U.S. government approval for the acquisition, Lau said. However, a more likely outcome, according to Lau, is that the government will allow most of the deal to go through but block the part that involves the sale of IBM's research and development (R&D) operations. That would reduce Lenovo's ability to compete against rivals like Dell Inc. and Hewlett-Packard Co., which currently spend more on R&D.

"Without IBM's R&D support, it is hard for Lenovo to compete against Dell," Lau said.

Treasury Department officials were not immediately available for comment.

Lenovo's acquisition of IBM PC's business was not expected to provoke a debate over U.S. national security. The initial reaction among analysts and users was generally positive. Even more so in China, where the official People's Daily newspaper declared in an editorial that the deal was a cause for "unlimited reverie" and a "perfect combination." But a range of concerns soon emerged.

Shortly after the deal was announced, Gartner Inc. said in a research note that, "This deal makes sense for both companies." But it warned that disruptions were likely and advised ThinkPad customers to take advantage of the potential risks inherent in the deal and negotiate lower prices from IBM. They should also be prepared to switch vendors if IBM's responsiveness to their concerns dropped, it said.

"Most customers (in Japan) received the news with anxiety," said Kumi Shingyouchi, a senior PC analyst at IDC Japan, citing anecdotal evidence of purchasing managers who considered switching vendors immediately after the acquisition was announced. These IT managers wanted to deal with IBM, not Lenovo, she said.

Japanese users aren't the only ones concerned. "Change always makes people nervous," said Philip Papadopoulos, a long-time ThinkPad user and the program director of grid and cluster computing at the San Diego Supercomputing Center.

"My nervousness is that the vision of the ThinkPad will get lost in transition," Papadopoulos said, adding he will likely stick with Lenovo if it maintains the quality of the ThinkPad series.

Even if most customers opt to stick with Lenovo after the acquisition, the company is sure to lose some customers nevertheless, said Marvin Lo, an analyst at BNP Paribas Peregrine, in Hong Kong. "I think that's unavoidable. Some clients will obviously walk away from this deal, especially the U.S. government," he said.

For its part, Lenovo wants to convince users that it can continue to offer high-quality products under the ThinkPad brand. "We believe that this deal will bring even greater value to IBM’s existing PC customers," Lenovo's Lee said in a statement. The company declined requests to make executives available to comment for this story.

"During the transition period after closing (the deal with IBM), we’ll continue to provide world-class products and professional services," Lee said, adding that ThinkPad users will benefit in the long run from the greater economies of scale created by the acquisition.

That hasn't convinced some investors. Lenovo's stock price dropped by more than 20 percent after the deal was announced and has yet to fully recover. Investors are worried that Lenovo -- which does little business outside China and has never made a significant acquisition -- has agreed to pay too much for IBM's PC business. They also question whether Lenovo's management can succeed where IBM has failed, by bringing the business into profitability after several years of steep losses, Celestial's Lau said.

Moreover, Lenovo's management may not be up to the task of transforming Lenovo from a Chinese company into a global operation, Lau said. "I'm not sure if they can handle the differences in culture and management," she said.

Some investors would be happier to see the deal with IBM called off. Earlier this week, the Bloomberg news agency reported that CFIUS was likely to conduct an extended review of the Lenovo deal. That report tapped into negative sentiment surrounding the deal and sparked a strong rally in the price of Lenovo's stock price on Monday, said BNP Paribas Peregrine's Lo.

"When they saw that the deal might not be able to go through, people actually clapped their hands," Lo said, noting that the stock price soon fell again.

Paul Kallender in Tokyo and Tom Krazit in San Francisco contributed to this report.

Posted by Chad Dickerson at 05:17 PM

Reports: SBC in talks to buy AT&T for over $15 billion

By Scarlet Pruitt

SBC Communications Inc. is reportedly in talks to buy AT&T Corp. in a deal that would create the largest phone company in the U.S. and effectively spell the end of the era of Ma Bell. Executives from both companies have been in negotiations in recent weeks to discuss the marriage, according to an online report published in The Wall Street Journal Thursday, citing people familiar with the situation. SBC could reportedly pay more than US$15 billion for the telecom stalwart, which was known as Ma Bell before being broken up into regional carriers in 1984, according to the Journal. The talks were also reported in Thursday's New York Times.

SBC, a regional operator with headquarters in San Antonio, Texas, offers services in 13 states including California, Texas and Illinois, serving more than 54 million access lines. It also owns 60 percent of cellular carrier Cingular Wireless, with over 46 million wireless customers.

SBC has been focused on its wireless business, broadband access and, most recently, TV programming. The acquisition would allow SBC to bolster its fixed-line business and gain AT&T's valuable client list of corporate and government customers. AT&T, in Bedminster, New Jersey, has been pulling out of consumers market to concentrate on its business customers. Although it is still the U.S.'s largest long-distance carrier, it has been facing revenue declines in recent quarters making it ripe for acquisition, according to the Journal report. The companies have been in talks before without reaching a deal, but this time they are in serious negotiations around price and terms, the Journal reported. If the acquisition goes ahead, it could face significant regulatory scrutiny, the report said.

A representative for AT&T in Europe declined to comment on the report, saying the company does not respond to rumor and speculation. Representatives for SBC weren't immediately available to comment early Thursday.

Posted by Chad Dickerson at 04:45 PM

MyDoom one year later: more zombies, more spam

By Paul Roberts

Computer security experts remembered the MyDoom e-mail worm Wednesday, one year after it tore through the Internet, deluged e-mail systems with infected messages and set records for infecting vulnerable computer systems. The new worm caused headaches for network administrators, downed The SCO Group Inc.'s Web site and spawned a short-lived three-way war of words between virus authors. But the MyDoom outbreak is being recalled one year later as an event that signaled the end of the amateur virus writers and the clear emergence of sophisticated, new virus authors with criminal ties and a hunger for illicit profit from spam and online extortion, experts agree.

MyDoom.A, the first version of the worm, appeared Jan. 26, 2004, and quickly began spreading across the Internet. At the height of the MyDoom outbreak on Jan. 26, and Jan. 27, 2004, the worm was found in one of every 12 messages intercepted by e-mail security vendor MessageLabs Ltd. The company stopped 1.2 million MyDoom messages in the first 24 hours after it was identified, MessageLabs said.

"It was one of worst viruses ever," said Graham Cluley, senior technology consultant at antivirus company Sophos PLC.

MyDoom was a bad virus even on the heels of a year of bad viruses, including Blaster and Sobig, which ravaged computers worldwide five months before, in August 2003, he said.

However, MyDoom was notable for what it left in its wake, rather than the ferocity with which it spread, according to Alex Shipp, a senior antivirus technologist at MessageLabs.

In particular, MyDoom installed a Trojan horse program on machines it infected, which were used to launch a denial of service (DOS) attack against SCO's Web site, beginning on Feb. 1, 2004. At the time, Network Associates Inc., now McAfee Inc., estimated that between 25,000 and 50,000 computers took part in the attack against www.sco.com.

That network of thousands of MyDoom-infected machines became a valuable resource for the underground community because they could be used in future DOS attacks, or to distribute future MyDoom variants and spam, experts said.

"MyDoom marked the moment at which virus writing went commercial," said Shipp.

The success of MyDoom's network of zombie machines helped catch the attention of online criminals, who realized that there was money to be made from controlling virus-infected machines, according to Shipp and others.

The networks created by MyDoom and similar worms, such as Sobig, have led to a huge increase in the amount of spam, which is forwarded through the networks of infected systems. Online extortion, carried out by zombie networks against Web sites that don't pay protection money, has also become more prevalent. Virus-infected zombie machines are also a common avenue for "seeding" new viruses, said Jimmy Kuo, a fellow at McAfee.

"(MyDoom) was another clear piece of evidence that a much more malicious, commercially oriented and criminal element was making money from virus writing by stealing resources and selling them back to hackers, spammers or (extortionists)," Cluley said.

With money to be made, online criminals have also changed the way that malicious code is spread over the Internet, with splashy viruses like Slammer, Blaster and, yes, MyDoom giving way to stealthy and silent compromises, Kuo said.

"I think the bad guys over the past year learned that there was money to be made from viruses, but in order to make money, you must do things stealthily," he said.

Today, malicious code authors are creating programs that infect computers without tipping off the machine's owners. And spam, rather than viruses, is becoming a common means of distributing the new Trojan horse programs, Kuo said.

The backing of professionals also makes it less likely that virus authors and those behind Internet threats will be caught. Despite rewards offered by SCO and Microsoft Corp., and the capture of Sven Jaschen, who created the Netsky and Sasser families of worms, there have not been any arrests in the MyDoom case, nor are arrests likely, Cluley said.

"The person who wrote MyDoom or Sobig is not juvenile and amateurish like (Blaster.B author) Jeffrey Lee Parson," Cluley said. "You're not going to see them include clues about their identity in the worm code, or daft things like that which we've seen juvenile virus writers do in the past."

Ironically, MyDoom's success may ultimately spell the end of e-mail worms.

"My prediction for future exploits is that virus writers are going to be less likely to create a Slammer worm or a Blaster that makes a lot of noise. They're more likely to get out of control, and that forces people to clean them up and diminishes the supply (of compromised machines)," Cluley said.

Posted by Chad Dickerson at 04:44 PM

Nokia Q4 profits fall on cut mobile phone prices

By Laura Rohde

Nokia Corp. reported a 13 percent decline in net profit for the fourth quarter as revenue from its mobile phone division continued to decline. The Finnish handset manufacturer did post a modest gain in total sales but expects tough market conditions to continue throughout 2005, slowing overall growth, it said Thursday. Nokia, the world's largest handset maker, reported fourth-quarter net sales of €9.06 billion (US$12.36 billion as of Dec. 31, 2004, the last day of the period being reported), up 3 percent from €8.79 billion in the year-ago period, it said in a statement.

But sales in its ailing mobile phone division were down by 6 percent year-over-year, to €5.66 billion. As in past quarters, Nokia pointed to price pressure brought on by increased competition and the further weakening of the U.S. dollar. On a positive note, the mobile division shipped a higher number of units. Sales volumes for handsets and other mobile devices rose 19 percent to 66.1 million units, to give Nokia a market share of 34 percent for the quarter and 32 percent for the full year, Nokia said.

"Device volumes also reached new highs for the fourth quarter and full year largely backed by the ongoing boom in growth markets such as Latin America, Russia, India and China and brisk sales of color screen and camera phones," Chief Executive Officer Jorma Ollila said in a conference call on the results Thursday. "Our North American phone volumes were, however, disappointing."

Nokia's handset channel inventories were at normal levels by the end of 2004, Ollila said.

Net profit fell to €1.02 billion, or €0.23 a share, from €1.17 billion, or €0.25 a share, in the fourth quarter of 2003, the Espoo, Finland, company said.

Nokia beat expectations of €0.19 per share on revenue estimates of between €8.4 billion to €8.5 billion, according to Thomson First Call. In October, Nokia had forecast profit of €0.16 to €0.18 a share and sales of €8.4 billion to €8.6 billion.

Ollila credited record volume handset sales, a stabilization in average selling prices and a better-than-expected performance by its networks infrastructure business, for Nokia's ability to beat expectations for the quarter. Sales in its networks infrastructure business were €1.91 billion, up 12 percent year-on-year.

"The past year was demanding for Nokia," Ollila said, but added that he believes the company is now better positioned for 2005 due in large part to restructuring efforts. Ollila reiterated Nokia's five top priorities in 2005 are in the areas of customer relations, product offering, research and development efficiency, demand-supply management and the ability to offer end-to-end solutions.

Separately on Thursday, Nokia announced it will lay off about 350 employees by April at its production facility in Fort Worth, Texas, which the company plans to turn into a customization and logistics center.

The company forecast net sales for the first quarter of between €7 billion and €7.3 billion, or €0.12 to €0.15 per share, compared with €6.6 billion, or €0.17 per share, in the first quarter of 2004.

Nokia said it continues to expect the mobile device market as a whole to grow by about 10 percent in volume from an estimated 643 million units in 2004 "and to grow slightly less in value terms," Ollila said.

In the first quarter of this year, Nokia expects over 160 million phones will be sold, Ollila said.

By the end of 2005, Ollila said he fully expected Nokia to have achieved a well-balanced handset portfolio. "When we are sitting here 12 months from today, I think that the fourth quarter portfolio would be something I could say ... is very balanced," he said.

Posted by Chad Dickerson at 04:43 PM

Windows Media goes mobile with Verizon

By Joris Evers

Verizon Wireless Inc. has selected Microsoft Corp.'s Windows Media format for its new V CAST mobile multimedia service, the companies said Wednesday. Starting Feb. 1, Verizon's V CAST users will have access to audio and video clips encoded in Windows Media, Verizon and Microsoft said in a statement. Verizon announced the launch of its 3G (third-generation) network and the V CAST service earlier this month at the International Consumer Electronics Show in Las Vegas.

While other mobile operators offer Windows Media players on their handsets, Verizon is the first to offer a multimedia service based entirely on Windows Media technology, said Neil Sharma, a business development manager at Microsoft. Competitors in the space include RealNetworks Inc. and Apple Computer Inc.

In addition to Microsoft's Windows Media technology, the V CAST service uses products from Microsoft partners ThePlatform for Media Inc. for encoding and delivering the content while PacketVideo Corp. supplied the player for the handsets, Sharma said.

To use the V CAST service, Verizon customers need a special handset. Three handsets that support the service will be available beginning Feb. 1: the LG VX8000 from South Korea's LG Electronics Inc., which was used in tests of the service in San Diego and Washington, D.C., and phones from Samsung Telecommunications America LLP and UTStarcom Inc.

The V CAST service will cost US$15 on top of the regular calling plan and offer access to more than 300 daily updated video clips from providers including MTV Networks, News Corp., 20th Century Fox and broadcaster NBC Universal, Verizon has said.

Posted by Chad Dickerson at 04:43 PM

NEC eyes Chinese 3G market with carrier equipment base

By Martyn Williams

NEC Corp. has started assembling third-generation (3G) cellular network equipment in China as part of its preparation for the long-awaited issuing of 3G licenses in the country, it said Thursday. The Tokyo company is using its NEC Telecommunications (China) Co. Ltd. factory in Tianjin to assemble 3G base stations from parts supplied by NEC factories in Japan and local companies. The first base stations assembled at the plant have already been supplied to a European carrier customer but NEC's main reason for starting such work in China is to supply the local market when demand appears, said Akiko Shikimori, a spokeswoman for NEC in Tokyo.

China has yet to award any licenses to operate 3G networks and hasn't laid out a clear timetable. Industry watchers invariably expect licenses to be issued this year although many had previously bet on this happening last year.

Some believe China is waiting until a home-grown standard, called TD-SCDMA (Time Division Synchronous Code Division Multiple Access), will be mature enough to compete with the foreign W-CDMA and CDMA2000 standards. A report in June last year said the standard should be ready around the middle of 2005. Other observers note that the 2008 Olympic Games, which will take place in Beijing, will be used by China to showcase itself to the world and that a modern, 3G mobile telecommunications network will be an important addition to this effort.

Once China has issued licenses and carriers have decided which of the three technologies they will use, the situation will become much clearer and NEC will be able to firm up its plans, said Shikimori. Should carriers order W-CDMA base stations, the company will be in a position to begin assembling them and supplying them locally, she said. NEC has a development deal with Germany's Siemens AG, which is a backer of TD-SCDMA, and so the company may be able to supply TD-SCDMA equipment by working with Siemens, she said.

The exact production schedule and the location of factories to be used, including the possible use of outside contractors to assemble the units, will be decided later, she said.

NEC is not the only company casting a hopeful eye on the Chinese telecommunications market. Its huge current and potential size has led many foreign equipment and handset makers to establish local operations in the country in the last few years. Less than a week ago, Nortel Networks Inc. agreed to establish a 3G telecommunication equipment joint venture with China's Putian Corp.

NEC has moved its worldwide design center for 3G handsets, excluding those for the Japan market, to China and the company is currently aggressively pushing 2G handsets in the country.

Posted by Chad Dickerson at 04:43 PM

January 26, 2005

EarthLink, SK Telecom create virtual mobile operator

By Laura Rohde

Internet service provider EarthLink Inc. and South Korean telecommunications company SK Telecom Co. Ltd. will launch a joint virtual mobile network operator in the U.S., called SK-EarthLink, the companies announced Wednesday. The US$440 million, 50-50 joint venture will offer wireless voice and data services as well as handsets, the companies said.

SK Telecom, based in Seoul, sees the partnership as its gateway into the U.S. market and an opportunity to grow its worldwide subscriber base. The company can provide the joint venture with services such as interactive gaming, video streaming and location-based services, the companies said.

EarthLink, in Atlanta, has been actively extending its reach as a communications company since launching a wireless data service in 2000. The ISP has 5.2 million Internet customers.

EarthLink and SK Telecom said the joint venture could generate approximately 3 million net subscribers and revenue of around $2 billion by 2009.

Products using 3G (third-generation) networks and Wi-Fi technology will be announced in coming months, the companies said.

Under the terms of the three-year deal, which is expected to close in March, EarthLink and SK Telecom will each appoint three members to the six member SK-EarthLink board of directors.

SK-EarthLink will offer the services using network capacity bought from Sprint Corp. and Verizon Wireless Inc.

SK Telecom operates a nationwide CDMA (Code Division Multiple Access) network in South Korea and is one of the country's top two carriers. Sprint and Verizon operate CDMA networks in the U.S.

EarthLink already offers some wireless services although they are focused on mobile data offerings. It sells wireless modems for PCs that connect via Verizon's network and offers the Blackberry portable e-mail terminal though which voice calls can also be made.

Martyn Williams, in Tokyo, contributed to this report.

Posted by Chad Dickerson at 04:19 PM

January 25, 2005

Coalition supports RIAA, MPAA in Grokster case

By Grant Gross

A broad group of trade groups, recording artists, and state attorneys general have filed briefs in support of the U.S. entertainment industry in its U.S. Supreme Court lawsuit against vendors of peer-to-peer (P-to-P) software. The Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) announced during a press conference Tuesday that about 20 briefs have been filed in support of their position in the MGM vs. Grokster case, to be argued before the Supreme Court in March.

"These (P-to-P) enterprises have engaged in -- for profit and on a massive and widespread basis -- the greatest ongoing theft of intellectual property that the world has ever seen," said Theodore B. Olson, former solicitor general for the U.S. government and now representing the group Defenders of Property Rights, a copyright-focused legal foundation. "These enterprises were launched with the singular purpose of enabling and profiting from the violations of copyright laws, and taking the works of thousands and thousands of artists without compensation."

The Supreme Court has agreed to hear the Grokster case after the 9th U.S. Circuit Court of Appeals ruled in August that Grokster Ltd., Morpheus distributor StreamCast Networks Inc., and a site operated by StreamCast called Musiccity.com were not liable for copyright violations by their users.

The RIAA and MPAA announcement of their friend-of-the-court briefs comes a day after five technology-focused groups filed their own briefs asking the Supreme Court to reaffirm a 21-year-old ruling protecting most technology companies from being held liable for their customers' copyright infringement. In its 1984 Sony Betamax ruling, the Supreme Court ruled that makers of technologies with significant noninfringing uses were not liable for their users' copyright violations.

Representatives of the RIAA and MPAA denied Tuesday that they are trying to overturn the Betamax decision, but instead they want the court to rule that technologies primarily intended to allow copyright violations be held liable.

P2P United, a trade group representing both Grokster and Morpheus, argues that the entertainment industry would threaten technological innovation if it gets its way in court. If the court rules that the vendors are held liable for the "misuse of a new technology," technologies such as the Internet itself would not have been allowed to exist, said Adam Eisgrau, executive director of P2P United.

"If that was the case, most of the technological products in the 20th century would not have seen the light of day," Eisgrau said. "We're confident that any argument that, if accepted, would chill technological innovation will be rejected by the Supreme Court."

Among those signing onto briefs supporting the entertainment industry's side were 40 state attorneys general; U.S. senators Patrick Leahy, a Vermont Democrat, and Orrin Hatch, a Utah Republican; three major sports leagues, including the National Football League; the Association of American Publishers Inc.; the Independent Film & Television Alliance; and six music publishing groups, including the Songwriters Guild of America.

Also signing onto briefs supporting the RIAA and MPAA were several recording artists, including country artists Brooks and Dunn, Reba McEntire, the Dixie Chicks, pop/rock artists the Eagles, the Barenaked Ladies, Bonnie Raitt, Avril Lavigne, Elvis Costello, and Brian Wilson of the Beach Boys.

Unauthorized file-trading using P-to-P software is causing people in the music industry, including CD store clerks, staff songwriters, roadies, and producers, to lose their jobs, said Rick Carnes, president of the Songwriters Guild of America.

"I'm the victim of illegal downloading," Carnes said. "I've been robbed, my property has been stolen, and it's still being stolen every day. I'm here to tell you people are getting hurt."

Posted by Chad Dickerson at 09:42 PM

Spam busters go on the offensive

By Neal Weinberg, Networkworld Fusion

The war on spam is far from over, but there was a growing sense among the antispam crusaders gathered at MIT last week that advances on both the legal and technology fronts have turned the tide against the Viagra peddlers and Nigerian princesses. Nobody was claiming that spam will ever be completely eliminated, or even that the amount of spam is decreasing. In fact, antispam newsletter writer John Graham-Cumming reported that he conducted an online survey in which spam accounted for 77 percent of e-mail messages received by the nearly 5,000 respondents.

But the crowd of more than 100 members of the spam fighting fraternity was buoyed by several of the day’s presentations.

On the legal front, Jon Praed, founding partner of the Internet Law Group, drew cheers when he reported that convicted North Carolina spammer Jeremy Jaynes was sentenced in November to nine years in a Virginia jail. Jaynes -- No. 8 on Spamhaus’s Register of Known Spam Operations, or Rokso, list -- was charged with sending millions of pieces of spam via a program called RoboMail to America Online Inc. customers in 2003. AOL is based in Virginia.

Jaynes is the first person ever convicted in the U.S. on felony spam charges, which were based on a tough Virginia law in which penalties increase based on the number of fraudulent messages sent. Virginia Attorney General Jerry Kilgore is not letting up, either -- last May he arrested a woman in Fort Worth, Texas, and brought her to Virginia to face spam charges. That trial hasn’t started yet.

“I can guarantee that spammers today are scared to death that they’re next,� Praed said. He added that tough laws are only part of the equation. “The solution is a marriage of technology and law.�

On the tech side, amid presentations on Bayesian noise reduction, lexicographical distancing, and classifier aggregation, there was a general sense that spam filters had gotten about as good as they’re going to get, which is pretty darn good.

“In general, we’re doing a good job keeping spam out of people’s inbox,� said Andrew Klein, product manager for spam filter company MailFrontier Inc. With success rates currently in the 97 percent to 98 percent range, Klein said, “I don’t know if we can get much better.� He said that no product will ever eradicate all spam, but today’s products can reduce spam to “an acceptable level.�

Graham-Cumming, who is also chief scientist at Electric Cloud, added that Bayesian filtering, the technique used in most antispam products, effectively solves the spam problem for most people. “The reality is that these things work extremely well,� he said.

Matthew Prince, CEO of Unspam LLC, said he has opened another line of attack against spammers with Project Honeypot. Under the federal CAN-SPAM law, harvesting e-mail addresses for use by spammers is illegal, so Prince is soliciting volunteers who will agree to plant fake e-mail addresses on their networks all over the world. The idea is to track those e-mail addresses to try to catch the harvesters.

While the presenters were upbeat about the legal and technical approaches to fighting spam, they conceded that human behavior is a tougher nut to crack. Brian McWilliams, whose book “Spam Kings� profiles some of the nation’s most notorious spammers, argued that blocking spam and dumping it into a separate folder won’t stop some people from digging through their spam folder and buying stuff anyway.

Graham-Cumming said that 1 percent of people in his survey, and 2 percent of people over the age of 55, said they bought from known spammers. And when you’re sending out millions of e-mail messages, that’s enough to make spamming profitable.

This was the third annual Spam Conference, and maybe the last. The auditorium in Building 29 on the MIT campus was packed the last two years, but there were plenty of empty seats this time around.

“There’s not so much of a sense of urgency this year,� said antispam champion Paul Graham, credited with writing a paper in 2002 that led to the Bayesian filters. “The technology problem is pretty close to being solved,� he said. And the recent legal action is having “a chilling effect� on spammers.

Posted by Chad Dickerson at 09:32 PM

ISP EarthLink claims victory in another spam case

By Paul Roberts

ISP (Internet service provider) EarthLink Inc. declared victory in yet another court battle with two men it accused of running a spam e-mail distribution ring from EarthLink's network. EarthLink said on Tuesday that Damon DeCrescenzo and David Burstyn agreed to a court order that requires them to stop sending spam and to pay an undisclosed cash settlement to EarthLink. The announcement is just the latest court victory for a major ISP against those accused of sending spam, and brings to a close a case that began in August 2003.

The company called the agreements a great development in its ongoing battle against unsolicited commercial e-mail and said the cash settlement was "substantial," though EarthLink is bound by the legal agreement to not provide details on the size of the payment, said Larry Slovensky, assistant general counsel for EarthLink.

Burstyn and DeCrescenzo were part of a large, multistate spam operation that EarthLink investigators dubbed the "Alabama Spam Ring," after the group's penchant for using phone lines in the Birmingham, Alabama, area to connect to dial-up EarthLink Internet accounts and send out spam.

In a lawsuit filed in August in U.S. District Court in Atlanta, EarthLink detailed a sophisticated spam operation that used phone lines, falsified names and addresses and shell companies to send out more than 250 million spam messages advertising Viagra, herbal supplements, and adult dating services. The group used stolen or forged credit cards and engaged in identity theft to set up EarthLink accounts that were then used to send spam, EarthLink said.

In an amended lawsuit filed in February, EarthLink named 16 individuals as part of the ring, including Burstyn and DeCrescenzo, claiming that the group violated U.S. federal and state laws covering computer fraud, banking fraud and electronic communications privacy. The lawsuit identified individuals and corporations in Florida, California, Tennessee, Michigan and Nevada.

Burstyn and DeCrescenzo have settled their case with EarthLink, but the status of cases against the other defendants is not known. EarthLink declined to comment, citing the ongoing litigation. However, Burstyn and DeCrescenzo have also agreed to provide additional information to EarthLink about issues raised in its lawsuit, Slovensky said, declining to elaborate.

In May 2003, a district court in Atlanta awarded EarthLink a US$16 million settlement against Howard Carmack of Buffalo, New York, also known as the "Buffalo Spammer." EarthLink accused Carmack of sending out more than 800 million spam messages over its network.

In April 2004, Carmack was found guilty by a jury in Erie County, New York, on 14 counts, including charges that he stole the identity of two Buffalo-area residents, which he then used to send out more than 800 million spam messages, the attorney general's office said. He was sentenced to between three and seven years in prison in May, 2004.

In that case, EarthLink accused Carmack of using the e-mail accounts he set up using stolen credit card numbers to send out a flood of spam messages, often from accounts registered to family members, that advertised a variety of "get rich quick" schemes, herbal stimulants and cable television descramblers. The company then turned over evidence it gathered against Carmack to prosecutors for their criminal case against him.

EarthLink declined to comment on whether it will turn over information on the 16 individuals named in the Alabama Spam Ring suit to law enforcement, or whether Burstyn and DeCrescenzo might also face criminal charges. The company always cooperates with law enforcement to the fullest extent possible, said spokeswoman Carla Shaw.

Posted by Chad Dickerson at 08:29 PM

Google launches video search engine for TV shows

By Agam Shah

Web search giant Google Inc. is bringing television content to users via its video search engine, Google Video, which was launched by the company on Tuesday. Google has indexed video and complete transcripts of thousands of TV shows, which users will be able to search using the service. A search for a phrase will return an excerpt of a matching program transcript and a still TV image of exactly when the phrase was spoken, said John Piscitello, a product manager at Google.

Users will be able to search transcripts and view related TV images from content providers including the Public Broadcasting Service, the National Basketball Association, Fox News Networks LLC and C-SPAN, according to Google. The company started indexing the content of TV shows from Dec. 2004.

Google Video is available at http://www.google.com/video

The video search engine will open up television content to users, said Google. "The search service offers the ability to discover information that can't be found on the Web," said Piscitello. Google is already making the content of library books available in searchable format on the Web.

The search results also offer further TV program information, including episodic and channel information and future airings in the local area. "It's a search service that points to relevant TV shows in the local area," Piscitello said.

Based on the transcript search results, users can also view further information about a TV program. "We show more information from the show on the preview page -- we show five stills and snippets from a show," Piscitello said. The ability to search for specific keywords within a program is also offered by Google Video.

To start off, the service will display still TV images. "Video playback is the obvious next step," Piscitello said, adding that he couldn't comment on the company's plans for Google Video's streaming video capabilities.

Posted by Chad Dickerson at 04:55 PM

IBM to buy Corio for $182 million

By Laura Rohde

IBM Corp. will acquire Corio Inc., a provider of software-management services and software for businesses, in a cash deal worth US$182 million, IBM announced Tuesday. The move for Corio, based in San Carlos, California, is aimed at strengthening IBM's application services portfolio, IBM said.

Corio offers infrastructure, applications management and professional services along with its iSrvce technology resource management software and its Applications on Demand operational software suite.

The deal, which is subject to standard regulatory and Corio stockholder approvals, is expected to close within 60 days, said IBM, based in Armonk, New York.

Under the terms of the acquisition, Corio's chief executive officer, George Kadifa, will continue to manage Corio while undertaking additional responsibility for IBM's application services initiative. Corio employees will become IBM employees, the company said.

Representative from IBM and Corio could not immediately be reached for comment.

Posted by Chad Dickerson at 04:55 PM

Gadget site resolves Microsoft secrets dispute

By Stephen Lawson

Electronics news site Engadget.com has resolved a dispute with Microsoft Corp. in which the software giant sent a letter demanding Engadget remove screen shots concerning the future of Windows mobile software, according to the founder of Weblogs Inc., Engadget's parent company. The letter, which Microsoft also sent to other Web sites that posted the item, suggested Microsoft is attempting to crack down on those who use content that the company considers proprietary. Apple Computer Inc. recently had a similar response to unauthorized publication of future product information, filing suit Jan. 4 against the owner and the editor of Apple fan site Think Secret.

"We have been talking to the people at Microsoft and we've basically worked it out. We're not making any changes to the article," said Jason Calacanis, founder of Weblogs Inc., Engadget.com's parent company. Engadget did not steal any information and was simply reporting on information that it had found elsewhere on the Web, he said.

"At least in the mobile group (of Microsoft), they know that if they have issues, they can talk to us," Calacanis said.

The item, under the heading "Sneak Peek at Windows Mobile 2005 (Magneto)" contained a screen shot and brief article about a future mobile version of Windows, along with a link to an item at Windows fan site Neowin.com. The Engadget item, posted on Jan. 5, said the operating system would be previewed by Microsoft President and Chief Software Architect Bill Gates at the International Consumer Electronics Show in Las Vegas that day. It was not, and has not yet been previewed.

On Jan. 18, Engadget received a letter from a law firm representing Microsoft. The letter, a copy of which was posted on Calacanis's own weblog, said the news item "includes material which is in violation of Microsoft's intellectual property rights" and that "content currently residing within your computer system infringes on the trademark rights of Microsoft Corporation." It identifies the infringing content as screen shots of Windows Mobile 2005. The letter requests that the Web sites remove the information and warns, "you may otherwise be liable for trademark infringement, trade secret misappropriation, and/or other remedies at law, including civil and criminal penalties."

After Calacanis posted the letter and his own comments on his weblog, he was contacted by Robert Scoble, a blogger who works at Microsoft, who introduced him to other Microsoft employees for a discussion, Calacanis said.

Neowin, as well as smart phone information Web site Modaco.com, removed their news items after receiving similar communications from Microsoft. Administrators of those sites could not immediately be reached for comment.

In response to a request for comment, Microsoft said legal requests not to post proprietary material are common in the industry.

"In this particular case, it is important to note the information in question was comprised of stolen images that were obtained illegally from a Microsoft server. While many sites cooperated fully and immediately removed these images, given the viral nature of these illegally obtained images, we were required to take additional steps," Microsoft said in a prepared statement. "It is our preference to address these issues through personal contact and when we cannot, to do so in a respectful manner," the statement said.

Calacanis said this was the first significant case of Engadget receiving such a letter. He fears such tactics will have a "chilling effect" on smaller Web sites that post information about products and industry news.

"They're trying to go after individuals who they don't think will have the wherewithal to handle these kinds of situations," Calacanis said. Weblogs Inc., based in New York and Santa Monica, California, operates 70 weblog sites.

Posted by Chad Dickerson at 02:24 AM

PalmOne CEO Todd Bradley resigns

By Tom Krazit

Todd Bradley, chief executive officer (CEO) at PalmOne Inc., will resign at the end of the first quarter but remain with the company until May, PalmOne announced Monday in a release. Bradley was named CEO in October of 2003 when PalmOne spun off PalmSource Inc., which develops the Palm OS, and acquired Handspring Inc. Ed Colligan, currently PalmOne's president and formerly president and chief operating officer at Handspring, will become the interim CEO while PalmOne's board of directors searches for a replacement.

PalmOne virtually invented the PDA (personal digital assistant), but has steadily lost market share to companies like Hewlett-Packard Co. (HP) in recent quarters as the entire PDA market declines. However, the company has a hit with the Treo smart phone products, originally developed by Handspring. Bradley was credited as a force behind the Handspring acquisition by Eric Benhamou, PalmOne's chairman, in a statement.

Analysts predict that stand-alone PDAs will eventually die out in favor of voice-enabled handheld devices like the Treo 650 and HP's iPaq h6315. PalmOne expects most of its future growth to come from the Treo family of products as well as PDAs with wireless Internet connectivity.

Bradley is leaving to pursue other challenges, he said in a release. He will remain as CEO until Feb. 25, when PalmOne's third fiscal quarter ends, and will advise the company on its management transition until the end of its fiscal year in May.

Colligan will be considered for the permanent CEO position, PalmOne said.

Posted by Chad Dickerson at 12:50 AM

Technology groups file brief in Grokster case

By Grant Gross

Five groups, representing a broad cross section of the technology industry, joined to file legal briefs Monday urging the U.S. Supreme Court to reaffirm a 21-year-old ruling protecting most technology companies from being held liable for their customers' copyright infringement. The briefs were filed in response to a case, scheduled for oral arguments in March, in which members of the U.S. entertainment industry sued peer-to-peer software vendors for copyright infringement. The Ninth U.S. Circuit Court of Appeals ruled in August that Grokster Ltd., Morpheus distributor StreamCast Networks Inc., and a site operated by StreamCast called Musiccity.com were not liable for copyright violations by their users.

One of the two briefs filed Monday came from the Information Technology Association of America (ITAA), NetCoalition, Digital Media Association (DiMA) and the Center for Democracy and Technology (CDT). ITAA is a trade group representing more than 300 technology companies; NetCoalition is a trade group representing Yahoo Inc., Google Inc. and other Web-based businesses; DiMA represents 20 companies that create or distribute digital media; and CDT is a technology-focused civil liberties advocate.

Those four groups ask the Supreme Court to uphold its 1984 Sony Betamax ruling, in which technologies with significant noninfringing uses -- in that case, a video recorder -- were not liable for their users' copyright violations. "Application of this standard ... has promoted the explosion of technological innovation since the mid-1980s, involving everything from the personal computer to digital music players to the rise of the Internet itself," the four groups said in a press release.

However, the groups also asked the Supreme Court to send the case back to the lower court to decide if peer-to-peer (P-to-P) software vendors are liable for copyright infringement using other standards. The lower court should examine whether the P-to-P vendors are actively encouraging users to violate copyright law, whether the vendors profit from the infringement, and whether they have the ability to stop the infringement, the groups said.

Most current P-to-P vendors say they have no control of the files that are traded over decentralized networks.

Separately, the Institute of Electrical and Electronics Engineers-USA (IEEE-USA) also filed a brief Monday, arguing P-to-P vendors should not be held liable for the copyright violations of users unless the vendor has actively induced the user to infringe.

"File-sharing technology serves as the basis for the Internet and should be unrestricted to produce future revolutionary digital products," Andrew Greenberg, vice chairman of IEEE-USA's Intellectual Property Committee, said in a statement. "On the other hand, copyright owners must not be left to the mercy of those who set out to knowingly and intentionally induce third parties to infringe."

The Recording Industry Association of America (RIAA), one of the plaintiffs in the case, declined to comment on the briefs filed Monday. But in November, the RIAA noted that a number of trade groups and recording artists asked the Supreme Court to take the case. Among those groups: Entertainment Software Association, Interactive Entertainment Merchants Association, Association of American Publishers and the Screen Actors Guild.

Posted by Chad Dickerson at 12:49 AM

January 24, 2005

Analyst fuels talk of Google telephony service

By James Niccolai

Comments from a U.K. industry analyst have added to speculation that Google Inc. is planning to offer a voice-over-Internet Protocol (VOIP) telephony service. "This would be an obvious development for the world's leading search engine. Millions have downloaded the 'Google toolbar,' so why not a VoIP client too?" said Julian Hewett, chief analyst with Ovum Ltd., in a note distributed to reporters on Monday.

Such a service would allow users to place calls over the Internet from their PC using a headset and some client software, which can be cheaper than using a traditional voice network. VOIP services have been popularized by companies such as Skype Technologies SA and Vonage Holdings Corp. and are also being rolled out slowly by carriers worldwide.

"The appeal for Google is obvious: search for something, then 'click here' if you'd like to speak to the company that's selling what you're looking for," Hewett continued. "Google then collects a fee from the 'sponsor' for each voice connection. Voice calls with very little cost AND funded by advertising. What a sweet extension to Google's advertising-driven business model!" he wrote.

Speculation over a future business move by Google actually began more than a week ago, when it said in a job posting that it wants to hire people with experience negotiating "dark fiber" contracts to develop a global backbone network. Dark fiber refers to fiber-optic cables that are already laid but have not yet been "lit up," or put into use.

A VOIP service is only one reason Google might be interested in operating its own backbone network, however. The company may simply be looking for a better way to move the masses of data it collects for Web search results among its servers around the globe, noted Danny Sullivan, an editor at SearchEngineWatch.com. "It may just be that they have a lot of bandwidth costs and this could make things cheaper," he said.

Hewett agreed that Google may have other motives for building its own network, but said in an interview he is "100 percent certain" that the company is exploring a VOIP service. "It's just such a natural extension of what they do. ... I'd put money on it, but the timing and nature of it I know nothing about."

He said he had not received any information about a VOIP service directly from Google.

Citing Hewett and the Google job posting, The Times newspaper in London reported on Monday that Google "looks set to launch a free telephone service." The "logical use" of building its own network would be to offer such a service, which would pose a competitive challenge to local network operator British Telecommunications PLC, according to the paper.

The Times report also did not appear to be based on information from Google. A spokeswoman for Google in London dismissed talk of a VOIP service as "rumors and speculation."

Posted by Chad Dickerson at 04:59 PM

Oki tests ZigBee network in Japan

By Paul Kallender

Oki Electric Industry Co. Ltd. began running an experimental ZigBee-based sensor network in Japan's western port city of Kobe on Monday, the company said the same day. The company has installed a network of five solar battery powered wireless terminals on streetlights and 15 terminals in the ceiling of a shopping mall in the city to test the networking capabilities of ZigBee technology, said Naomi Takeuchi, an Oki spokeswoman.

ZigBee is a wireless system based on the 802.15.4 standard approved by the Institute of Electrical and Electronics Engineers. It is designed to carry data at up to 250K bps (bits per second) and use very little power so that ZigBee equipment can run for years on standard household batteries.

The experiment, which will last for five days, is being conducted to test whether a ZigBee network can successfully transmit data in real-life settings: in this case, a mall crowded with shoppers or in the open with cars and pedestrians passing by, Takeuchi said.

ZigBee is supposed to be able to transmit data up to a range of 30 meters. The outdoor nodes are powered by solar cells that will also charge batteries to be used to provide power at night, she said.

In the trials, a tester walks up and down the street and through the mall and sends and receives test data with the network using a handheld communicator supplied by a Japanese government-affiliated research institute called the Ubiquitous Networking Laboratory.

The communicator is an experimental PDA (personal digital assistant) designed to connect to a variety of networks including ZigBee, WLAN (wireless LAN) and Bluetooth. It also features a smart tag reader and is capable of IP telephony, according to specifications released by the laboratory.

Oki is one of about 10 major Japanese companies that are members of the ZigBee Alliance, a consortium of around 100 companies supporting the technology. Other companies from Japan include Mitsubishi Electric Corp. and Renesas Technology Inc. Non-Japanese companies include Freescale Semiconductor Inc., Royal Philips Electronics NV, and Samsung Electronic Co. Ltd.

The consortium finalized the specification for the technology last December. Member companies are planning to release products for monitoring, sensing and control applications during 2005, according to the alliance.

Last May, Oki developed a ZigBee compliant chip, and the company will start shipping samples before the end of February, Takeuchi said.

If the experiment in Kobe is successful, Oki hopes the trials can be broadened. The experiment is being conducted in cooperation with Japan's Ministry of Land, Infrastructure and Transport, which wants to test the technology's performance and is considering testing more ZigBee networks she said.

In addition, the Kobe city government may consider a city-wide deployment using the technology, according to Takeuchi.

"It's about providing information about places and public facilities to people on the move," she said.

Posted by Chad Dickerson at 04:59 PM

Mobile malware kills Symbian service

By John Blau

Two new Trojan horse programs threaten to render some Symbian-based mobile phones totally useless. The programs, Gavno.a and Gavno.b, masquerade as patch files designed to trick users into downloading them, said Aaron Davidson, chief executive officer of SimWorks International Ltd., in a telephone interview on Monday.

Although almost identical with Gavno.a, Gavno.b contains the Cabir worm, which attempts to send a copy of the Trojan horse to other nearby Symbian-based phones via short-range wireless Bluetooth technology.

The Gavno Trojans, according to Davidson, are the first to aim at disrupting a core function of mobile phones -- telephony -- in addition to other applications such as text messaging, e-mail and address books. "Gavno will effectively turn a mobile phone into a paperweight," he said.

Gavno.a and Gavno.b are proof-of-concept Trojan horses that "are not yet in the wild," Davidson said. "We were given an anonymous tip to have a look at them, which we've done. They're real."

Even if the Gavno Trojans aren't sophisticated programs, "they could still cause a lot of damage," Davidson said.

Gavno a., which has a size of around 2K bytes, comes disguised in a SIS (Symbian Installation System) file, called patch.sis. Gava.b, which is slightly larger, is tucked inside the SIS file patch_v2.sis.

Davidson believes the Trojan programs originated in Russia.

The programs affect phones, such as Nokia Corp.'s 6600 and 7610 models, using Symbian Ltd.'s OS version 7 with the Series 60 graphical user interface, according to SimWorks, which is located in Auckland.

Not affected are Symbian-based phones such as the P900 and P910 from Sony Ericsson Mobile Communications AB and the A925 and 1000 from Motorola Inc. equipped with the graphical user interface from UIQ Technology AB, SimWorks said. Also unaffected are Nokia's 3650 and Siemens AG's SX1, running Symbian OS version 6.x together with the Series 60 interface.

To fix infected phones, users will need to restore them to their factory settings, resulting in the loss of all personal data, such as phone book and calendar, according to Davidson.

Mobile phone antivirus experts at F-Secure Corp. have not come across the Gavno Trojan horses, nor have they received reports or questions from customers, said Mikko Hyppönen, director of antivirus research at Helsinki-based F-Secure. "Even if we haven't located the malware ourselves, we do believe it is out there if SimWorks says it is," Hyppönen said. "Lots of new mobile viruses, worms and Trojan horses are emerging around the world."

In December, SimWorks detected the mobile Trojan horse, MetalGear.a. The program, which masquerades itself as a Symbian version of the Metal Gear Solid game, disables antivirus programs and also installs a version of the Cabir worm identified earlier in the year.

Posted by Chad Dickerson at 04:59 PM

January 21, 2005

Ask Jeeves developing wireless search service

By Juan Carlos Perez

Looking to provide yet another way for users to tap its search capabilities, Ask Jeeves Inc. is developing new wireless search services to be launched this year, according to a company executive. Unlike competitors such as Google Inc. and Yahoo Inc., Ask Jeeves currently doesn't offer a way for users to access its search engine via mobile devices, but that will change at some point before the end of 2005, said Daniel Read, Ask Jeeves' vice president of product management.

"In search today you have to offer several access points to provide a good search service for consumers, so we believe we have to be there in wireless search, and we'll be coming out with a mobile product this year," Read said.

Although Google, Yahoo and others have rolled out wireless search services, Ask Jeeves believes this segment of the search market is still in its early days, Read said. In developing its wireless search services, Ask Jeeves will focus on providing very specific information to queries and not try to replicate the conventional Web searching experience, given the nature of wireless communications and devices, he said.

"A lot of search players have put traditional Web search on to wireless devices, but most of the Web pages you want to go to aren't rendered properly on a wireless device screen. So we're looking at rolling out specific search services for the wireless device," he said. For example, likely information Ask Jeeves could make available from its search arsenal to wireless devices includes local business listings and maps, Read said.

"It's a very complex market," he said. "There are lots of different players involved. At the moment we're working out all the different strategic ways of looking at all those relationships and making sure we form the right partnerships and create ultimately products that are compelling for consumers. That's what really matters."

It's a logical move for search engines to extend their capabilities to the wireless market, as users increasingly demand the ability to conduct searches from multiple places and devices, said Allen Weiner, a Gartner Inc. analyst. "Over time, search has to be fairly ubiquitous," he said. For example, wireless search is convenient for people who are on the road and need to find information about a local business, he said.

However, several significant challenges exist for search engines as they plan wireless search offerings, Weiner said. First, search engines have to convince wireless carriers to get on board, which isn't easy considering that carriers currently are being presented with an excess of possible services they can carry, such as games and multiple messaging offerings, Weiner said. As carriers ponder what services they will offer and promote, search might get lost in the shuffle, he said. "The biggest issue is the carrier bottleneck," he said.

The second challenge is the business model for wireless search, such as determining what is the right way to charge users for these services, Weiner said. For example, if users are charged based on time spent conducting searches, that will clash with the way they are used to searching from their PCs, he said. "There's no other searching you do anywhere else in which you're limited by time. People are used to performing searches in a free-flow, free-form manner and now you'll be telling them the clock is ticking as they search," he said.

Last but not least is the issue of privacy and security, since searches will be conducted over a remote network, and particularly if a service is offered that lets users search their desktop PCs from the wireless device, Weiner said.

Beyond wireless searching, Ask Jeeves also has in the works a search service focused on digital music, Ask Jeeves' Read said. The Oakland, California, company believes there is a place for search engines in this market as users increasingly need help finding and retrieving music files on different platforms, such as the Web and mobile devices. "It's an area we're looking at actively," Read said.

The current challenge in the digital music market is resolving the users' desires to have flexibility and not be tied to a specific device, software or service with the vendors' attempts to keep users in one place, Read said. For a search experience to be fruitful and satisfying, users must feel that the results are comprehensive and were gathered impartially, he said. "If we're going to provide a music search experience, we need to bring those kinds of values to it," Read said.

Posted by Chad Dickerson at 10:16 PM

Grokster gets a date with the US Supreme Court

By Scarlet Pruitt

The U.S. Supreme Court has set March 29 as the date for oral arguments on whether companies providing peer-to-peer (P-to-P) file trading software should be held responsible for copyright infringement committed by users of their products. The arguments are part of a long-playing case pitting a cadre of entertainment industry players against distributors of the Grokster and Morpheus file trading software.

The P-to-P companies have already won in district court, and declared victory again last August when the 9th U.S. Circuit Court of Appeals ruled that Grokster Ltd., Morpheus distributor StreamCast Networks Inc., and a site operated by StreamCast called Musiccity.com were not liable for copyright violations by their users.

The entertainment companies, led by the Recording Industry Association of America Inc. (RIAA) and the Motion Picture Association of America (MPAA), decided to appeal the case to the U.S. Supreme Court, saying there are seminal issues at stake.

The lower court rulings were largely based on the landmark 1984 "Sony Betamax" case between Sony Corp. and Universal City Studios Inc. In that case the Supreme Court decided that Sony was not responsible for copyright violations committed by users of its Betamax video recorders, noting that the technology had significant noninfringing uses.

Now the Supreme Court looks set to revisit many of the arguments discussed in the Sony Betamax case.The Electronic Frontier Foundation (EFF), which is helping defend StreamCast, said this week that it looks forward to the Supreme Court reaffirming the Betamax ruling. It added that like Betamax, Morpheus has substantial noninfringing users.

Grokster is also standing by the Betamax defense. In a statement posted on its Web site the company said that any change to the Betamax ruling would serve to kill a revolutionary technology in its cradle.

The Supreme Court is expected to issue an opinion on the case by the end of July, according to EFF.

Posted by Chad Dickerson at 04:35 PM

FCC's Powell reportedly plans to resign

By Grant Gross

Michael Powell, chairman of the U.S. Federal Communications Commission (FCC) for the past four years, plans to resign, according to reports. Powell, a Republican and champion of telecommunications deregulation, plans to announce his resignation Friday, according to a report in The Wall Street Journal Friday. The Journal article doesn't cite any sources in its story.

An FCC spokesman didn't immediately return a phone call seeking confirmation of Powell's plans to resign. Powell would presumably disclose his resignation in a press conference, which had yet to be announced early morning local time in Washington, D.C.

The Progress & Freedom Foundation, a free-market-oriented think tank, praised Powell's tenure at the commission in a statement Friday. "No policymaker could have done a better job of articulating the critical importance of embracing the changes inherent in the digital age," said foundation President Ray Gifford. "The FCC chairman always puts consumers first, recognizing that the best way for the government to serve them is to ensure that it not prevent the emergence of a world of choice in platforms and services."

Others, including competitive telephone carriers, have criticized Powell for pushing to get rid of most rules requiring the incumbent carriers, often called the regional Bells, to share parts of their networks at discounted rates. The competing carriers have called the FCC's move away from the network-sharing rules bad for competition and bad for consumers.

Independent telecom analyst Jeff Kagan praised Powell's efforts as moving the government away from control of the telecom market. Government, by "getting out of the way and letting the industry find itself," will let the telecom industry focus more on technology and finances than on FCC rules, Kagan said in an e-mail.

"During Powell's tenure, the communications industry has decided to start a very dramatic change which will take several years," Kagan added in his statement. "It's changing from an industry full of smaller companies competing in separate sectors, to fewer, very large companies competing in the entire industry, and even blending the telephone and television markets. Yesterday we saw separate companies competing in different segments, tomorrow we will see fewer, larger companies competing in all the segments. The telecom landscape is changing dramatically, and it's the hands-off approach of the FCC that is allowing the industry to find itself in a new world of technology and economics."

Posted by Chad Dickerson at 04:35 PM

Sony learned its lesson in digital music, says exec

By Martyn Williams

Sony Corp. has learned several lessons from its reluctance to quickly embrace music download services and is now working hard to make up ground against the dominance of competitors such as Apple Computer Inc., a senior executive said on Thursday. The Tokyo-based consumer electronics giant wasn't as quick off the mark as Apple, RealNetworks Inc. and some others in offering a system for downloading music to digital players. When it did launch a service it stuck to a proprietary encoding system and offered no support in its players for the widely used MP3 format. The result has been a poor showing for Sony -- traditionally one of the strongest names in portable audio -- in the market for players based on flash memory and hard-disk drives.

"Because we had a music business, Sony was reluctant about introducing an iPod type of new product but we (learned) many lessons," said Ken Kutaragi, executive deputy president of Sony, speaking Thursday at The Foreign Correspondents' Club of Japan.

Until recently, Sony's numerous divisions did not work as closely together as they could have to develop a coherent online music strategy, but that is now changing, Kutaragi said.

Sony formed an internal group in November called Connect Company that spans several business units. Its goal is to tie together its digital music efforts in the areas of hardware, content, online sales and software, and to help Sony develop a more user-friendly digital music system. Later that month Sony said it would offer a new version of its Network Walkman player with support for MP3. Owners of earlier models can get their players upgraded to support the format.

"Right now we are sharing a common agenda, common technology and a common interest. It's just starting," Kutaragi said. "The situation in the past few years (has been) a bit frustrating for everyone."

"We have invited many people from the industry to join the Sony group and started to communicate with many people, started to collaborate with many companies, publishers and content services, so we are growing up," he said.

Several hours after Kutaragi spoke, Sony announced a downward revision to its full year financial forecast. It blamed the revision on price competition and lower demand for some of its products, and again underlined the difficulties its portable audio business is facing.

The structure of the market for personal audio products changed drastically with the arrival of players based on flash memory and hard-disk drives, leaving Sony's product range unable to meet and catch up, according to Takao Yuhara, corporate senior vice president in charge of finance and investor relations at Sony.

Sony's range of CD and MiniDisc players lost some sales to the newer technologies, which are increasing their share significantly in Europe, he said.

Sony will announce its third quarter financial results on Jan. 27.

Posted by Chad Dickerson at 04:35 PM

January 20, 2005

Vendors to cooperate on mobile VOIP

By Stephen Lawson

Some well-known names are lining up behind one company's technology to let consumers and enterprises put away their cell phones -- and mobile call charges -- when they get to their homes and offices. IBM Corp., VeriSign Inc. and Airespace Inc. want to foster roaming between cell phone systems and IP (Internet Protocol) networks so calls to a user's cell phone number can come to a wired or wireless VOIP (voice over IP) phone instead. And with dual-mode cell/Wi-Fi phones that are starting to emerge, a subscriber could just carry one phone and simply switch modes when in range of a Wi-Fi network.

On Wednesday the three companies became the first members of an alliance program that mobile VOIP vendor BridgePort Networks Inc. formed to help carriers quickly deploy such services. The companies gathered at this week's Global Convergence Summit in Chicago, a show initiated by BridgePort. The alliance, called MobileIGNITE (Mobile Integrated Go-to-Market Network IP Telephony Experience), will conduct interoperability testing and aim to help deliver end-to-end systems to carriers, said Mike Mulica, president and chief executive officer of BridgePort.

"It's work that is ongoing in both our labs and their labs, and in conjunction with several carriers," Mulica said.

Roaming between cell and VOIP networks can save enterprises and consumers money by freeing them from using mobile minutes when they have access to a wired or wireless LAN in their homes or offices, Mulica said. The technology also lets them avoid poor cell network coverage at home or in the office, which could also pay off with better performance for data applications on smart phones. Mobile operators can benefit by combining a VOIP service with traditional cell phone plans, so they do not lose revenue from calls that subscribers otherwise would make on a separate VOIP provider's network, he said. The dual service also can make a customer more loyal, he added.

BridgePort has its technology in trials at Bell Canada International Inc. and also is talking to at least one of the major U.S. mobile operators, according to Mulica.

Many mobile operators are interested in combined mobile and fixed-line services, including cellular-VOIP combinations, according to Peter Jarich, an analyst at Current Analysis Inc., in Sterling, Virginia. There is more than one vendor and more than one approach to doing it, Jarich said, and BridgePort's newly announced partnerships could help raise its profile among mobile operators and the main suppliers of their network gear, such as Nortel Networks Corp. and Lucent Technologies Inc.

"I don't think it's a home run. I think it's getting them on base," Jarich said. Rivals include Kineto Wireless Inc., which uses an industry specification called UMA (Unlicensed Mobile Access) and LongBoard Inc. BridgePort's technology is designed for the core of the network, whereas Kineto's is to be added in the access portion of the network, near where the end user connects. Some carriers don't believe the cores of their networks are ready to handle this kind of functionality, he said.

"For BridgePort to get this out there, it requires that operators begin to think more about deploying applications from the IP core," Jarich said.

BridgePort's technology is based on server software that has two personalities, according to Mulica. One part can work with a cell phone network and the other part works with an IP network. The software can translate a cell phone's identification information on the carrier network into a SIP (Session Initiation Protocol) address, which is used on the IP network, Mulica said.

In the MobileIGNITE alliance, IBM contributes its eServer Blade Center for data centers and its eServer BladeCenter T for carrier central offices, which can be used as platforms for BridgePort's software. VeriSign has an infrastructure on which it provides translation between carrier and IP networks as a service to carriers. Airespace offers wireless LAN technology that supports voice calls, according to BridgePort.

Airespace's involvement adds heft to the alliance because the startup agreed earlier this month to be acquired by IP network giant Cisco Systems Inc. Cisco sees strong demand for this type of capability and is looking at all the different approaches to providing it, company officials said Wednesday, but they were not able to discuss Airespace's role in detail.

"Cisco is very excited about being able to provide the infrastructure to help support that type of seamless mobility," said Ann Sun, Cisco's senior manager of marketing for wireless and mobility. Airespace did not respond to a request for comment.

Despite carriers' current excitement about mobile-to-VOIP roaming, it's too early to say what impact it will have, Current Analysis's Jarich said. Between improving indoor coverage, grabbing more of their customers' calls and keeping subscribers loyal, they are exploring a variety of benefits, he said.

"They see there's a huge amount of opportunity from this," Jarich said. "I don't think they know exactly what the opportunity is."

Posted by Chad Dickerson at 07:49 PM

New worm spreading via MSN Messenger

By Paul Roberts

A new computer worm is using Microsoft Corp.'s MSN Messenger instant message network to spread on the Internet, according to antivirus software companies. Bropia.A was first spotted on Wednesday and spreads by sending copies of itself to an MSN Messenger user's instant message (IM) contacts. When the worm is launched, it installs a Trojan horse program, Rbot, on vulnerable machines, according to alerts from F-Secure Corp. and Symantec Corp.

Windows machines running MSN Messenger and have a Messenger window open on the desktop are vulnerable to infection. F-Secure and Symantec rated Bropia a low threat, based on the number of reports of infected machines, and issued virus definition updates that allow their products to spot the new IM worm.

While previous IM worms spread by sending links to worm files embedded in IM messages, Bropia spreads by sending commands to Messenger that cause the program to send copies of the worm file directly to the infected user's IM contacts.The Bropia worm is also able to monitor Messenger for any change to a user's IM contacts and send worm files to contacts as they log on to the IM network, Symantec said.

When the worm file is launched, Bropia copies itself to the hard drive of the infected machine, disguised as a file with one of several names, including:"Drunk_lol.pif", "Webcam_004.pif", "sexy_bedroom.pif", "naked_party.pif" or "love_me.pif."

The worm also disables a user's right mouse button to prevent users from accessing context sensitive menus, and to alter the Windows sound mixer volume settings, F-Secure said.

The Trojan horse program that is installed by Bropia, which F-Secure referred to as Rbot, and Symantec as W32.Spybot.worm, opens a back door into infected Windows systems and has features that log user keystrokes, collect vital system information and relay spam, F-Secure said.

IM worms are not a new concept, and computer virus researchers have frequently warned of their potential to spread quickly across global IM networks such as those run by Microsoft, Yahoo Inc. and America Online Inc.

In August, researchers at PivX Solutions Inc. of Newport Beach, California, intercepted a version of the Scob worm that used mass-distributed instant messages to lure Internet users to Web sites that distribute malicious code similar to Download.ject.

Symantec and F-Secure advised customers to update their antivirus software definitions to spot the new worm.

Posted by Chad Dickerson at 07:49 PM

Microsoft marries Hotmail and Outlook in new service

By Juan Carlos Perez

Microsoft Corp. is launching on Thursday a subscription service that offers users a tight link between the company's MSN Hotmail Web mail service and its Outlook e-mail client PC software. The new service, called Microsoft Office Outlook Live, costs US$59.95 per year and includes Office Outlook 2003 for Subscription Services, which is a new downloadable subscription version of Office Outlook 2003, 2G bytes of online storage, spam and virus protection and the ability to send 20M-byte attachments.

Outlook Live has been designed as a single interface to subscribers' Hotmail accounts so that they can use Outlook Live to access, send and receive e-mail messages and manage their contacts and calendars, said Karin Muskopf, MSN product manager. Changes made using Outlook Live are reflected in the Hotmail accounts.

Outlook Live currently is available only in the U.S., the U.K. and Canada, but Microsoft might consider making it available in other countries later, she said. More information about the service can be found at http://outlooklive.msn.com.

Microsoft has provided similar interaction between Hotmail and Outlook with an existing service called Outlook Connector, which is part of the MSN Premium suite, but Outlook Connector doesn't include a copy of Outlook. MSN Premium costs $9.95 per month.

The Web mail space is heating up and players such as Microsoft, Yahoo Inc. and Google Inc. are trying to differentiate their respective services, an analyst said.

"Microsoft's big advantage is that it has Outlook, which many people are familiar with, so Microsoft is trying to use that as an advantage to build some loyalty with their Hotmail subscribers," said Marcel Nienhuis, an analyst at The Radicati Group Inc., a market research company.

However, the $59.95 price seems a bit steep and could turn off potential subscribers who already own Outlook, which is included with the Office suite, Neinhuis said. Although Outlook Live will be more attractive to people who don't own Outlook, the subscription nature of the service means "there is no end in sight to how long you'll be paying for (Outlook)," he said.

Posted by Chad Dickerson at 04:40 PM

AOL expands search services, desktop function to come

By Nancy Weil

America Online Inc. (AOL) launched a new version of AOL Search Thursday, and announced new partnerships aimed at expanding its search services. One of the deals is with Copernic Technologies Inc., to provide an integrated desktop search feature, AOL said. A time frame for that feature was not provided.

AOL also licensed clustering technology from Vivisimo Inc. and is using that in a new sorting and clustering feature that automatically organizes the most relevant search results by topics and shows those with a list of general Web search results. The feature means that AOL is the first of the major search engines to incorporate that type of clustering technology in search results, the company said.

Before users actually hit the "search" button, they can use an automated SmartBox suggestion tool that helps users refine their searches so that they get more accurate results. Searching on the word "eagles," for instance, brings up a query box listing the bird, the rock band or the Philadelphia football team.

Pulling in information from AOL's content and Web brands network, the search function now includes a set of results called "Snapshots" that offer editorial content and information for various topics such as local movie showtimes, sports statistics and current events, AOL said. Member ratings of local business and restaurants are included in Snapshots, which also provide a calculator, currency converter and the ability to find an airline flight or a restaurant.

AOL has programmed more than 2.5 million Snapshot packages that will be provided at the top of search results for up to 20 percent of all search queries.

Integrated shopping search results include access to the Pinpoint Shopping database that consists of more than 25 million products so that users can narrow the range by store name, category of items being shopped for, brands, price and merchant ratings.

AOL Search, which has been redesigned to move away from a tabbed interface, also has been enhanced so that people with vision problems can adjust font sizes, and it also is more compatible with screen reader software that blind people use.

Based on a new algorithm, AOL Search will also have expanded local search functions soon, with more features so that users can obtain more information about the places where they live and to which they travel, AOL said. AOL and Fast Search & Transfer Inc. are working together to expand local search services and results that users can customize to their geographic locations.

The ISP (Internet service provider) also announced a deal with Ingenio Inc., which has a Pay Per Call advertising service for merchants that will lead to sponsored link search results being listed on AOL Search, as well as AOL.com, AOL Yellow Pages and other of its Web content, aimed at customers who are searching online for local products and services.

Posted by Chad Dickerson at 04:39 PM

China Netcom takes stake in Hong Kong's PCCW

By Sumner Lemon

China Network Communications Group Corp. (China Netcom), China's second-largest fixed-line telecommunications carrier, will buy a 20 percent stake in Hong Kong's dominant fixed-line operator, PCCW Ltd., the companies said in a joint statement on Thursday. After months of negotiations between the two companies, China Netcom has agreed to pay HK$7.9 billion (US$1.01 billion) in cash for a 20 percent stake in PCCW, the companies said.

"The logic (behind the deal) is not that apparent," said Duncan Clark, managing director of BDA China Ltd., a telecommunications consultancy in Beijing.

The two companies are looking for ways to help each other expand their respective markets, Clark said. PCCW wants to expand out of Hong Kong and reach into China, while China Netcom wants to expand beyond its base in northeastern China and tap into southern China's lucrative market, he said.

However, it's not immediately clear to what extent the tie-up will help either company realize these objectives or in what areas they hope to cooperate, Clark said. "Caution is the watch word for this deal," he said.

The deal between PCCW and China Netcom is subject to the approval of PCCW's shareholders. PCCW will announce plans for a shareholder meeting to approve the deal at a later date, the statement said.

If the deal is approved by shareholders, China Netcom will be an active investor in PCCW and help shape the future strategy of the company, the two companies said in the statement. China Netcom will nominate three directors to join PCCW's board of directors and one of those directors will also become a deputy chairman of PCCW, it said.

For its part, PCCW will set aside up to HK$5 billion for telecommunication-related investments in China and will create a business development committee for China comprising two PCCW executives and two China Netcom executives, the companies said.

They did not say in the statement when the committee would be established.

Posted by Chad Dickerson at 04:39 PM

January 19, 2005

NetSuite launches price war against Salesforce.com

By Stacy Cowley

Hosted business applications provider NetSuite Inc. has launched an aggressive pricing discount aimed at stealing market share from its top rival: For the next two months, NetSuite is offering to beat Salesforce.com Inc.'s CRM (customer relationship management) subscription prices by 50 percent. With a customer base of around 7,000 companies using its CRM, accounting and e-commerce software, San Mateo, California, NetSuite trails hosted CRM market leader Salesforce.com in both customers and market presence. Salesforce.com has 13,300 companies and 214,000 end users subscribed to its service.

"They're trying to get invited to the table," Yankee Group Inc. analyst Sheryl Kingstone said of NetSuite's discount offer. "Salesforce.com has a lot of brand awareness, and NetSuite does not."

NetSuite's offer is available to customers who sign a contract with NetSuite by March 31. Those considering Salesforce.com's professional (list price US$65 per user, per month) or enterprise (list price $125 per user, per month) editions can bring their Salesforce.com estimate to NetSuite and receive NetSuite's NetCRM at 50 percent of Salesforce.com's quoted price. For current Salesforce.com customers, NetSuite is offering 50 percent off Salesforce.com's renewal price and free data migration services.

Salesforce.com Chief Executive Officer Marc Benioff blasted the offer as "another act of desperation," and touted his company's significantly larger user base.

Kingstone said she'll be watching with interest to see how the discount offer affects the two vendors' businesses over the next several months. NetSuite, in particular, targets small companies, which are acutely price sensitive. However, Kingstone said companies would be foolish to choose software primarily on price, rather than by what best fits their business needs. She's also concerned about how aggressive pricing will affect the still fledgling ASP (application service provider) market.

"The last thing I want to do is see price wars to the point where some vendors lose viability," Kingstone said.

NetSuite's offer comes at the beginning of a year it hopes will propel it to the forefront of the ASP market, where it will jockey for position not only with Salesforce.com, but also with Siebel Systems Inc., which is heavily marketing its CRM OnDemand subscription service. Siebel has not yet disclosed the user base for its year-old service, but a spokeswoman said it will begin breaking out that number when it reports its first-quarter earnings.

NetSuite Chief Executive Officer Zach Nelson said his company plans to double its staff of 300 this year, and to aim for an initial public offering (IPO) in late 2005 or early 2006. Salesforce.com had one of last year's most successful IPOs, raising $110 million and leaving the company with a valuation well over $1 billion. CRM and customer service ASP RightNow Technologies Inc. also went public last year.

NetSuite's primary difference from others in the ASP market is its broader suite of applications. While vendors like Salesforce.com focus on sales management tools, NetSuite also offers accounting, e-commerce, inventory, supplier and shipping management functionality.

One customer, My Flat in London LLC President Todd Haedrich, said he picked NetSuite because his Frenchtown, New Jersey, designer handbag company needed the broad ERP (enterprise resource planning) tools NetSuite offered. Haedrich's two-year-old company is now doing more than $3 million annually in sales, and when the business outgrew QuickBooks, Haedrich said he first considered traditional ERP packages aimed at small businesses. But Microsoft Corp.'s CRM and Great Plains software would have needed expensive custom configuration, and sales representatives from SAP AG and Best Software Inc. were slow to return calls and provide product information, Haedrich said. He's been using NetSuite for eight months, and says he's pleased with the software -- and happy he went with a hosted provider, allowing him to access his company information on the Web from remote locations.

"The Web access has been invaluable," Haedrich said. "I don't know how we'd run the company without it."

Posted by Chad Dickerson at 09:53 PM

New copyright protection bills likely in 2005

By Grant Gross

Online copyright protection, including bills focused on peer-to-peer (P-to-P) file-trading, will likely be on the U.S. Congress' agenda as lawmakers gear up for their 2005 session this month. Telecommunications reform may command a significant amount of attention from tech-focused lawmakers this year, but congressional observers also expect a push for new legislation that would focus on discouraging file trading using P-to-P software.

While some lawmakers remain interested in ways to punish the makers of P-to-P software, other lawmakers and public interest groups predict that a much-debated bill that would have allowed copyright holders to sue P-to-P vendors will not gain traction in 2005.

The so-called Induce Act, sponsored by Senator Orrin Hatch, failed to move out of the Senate Judiciary Committee in late 2004 after the Utah Republican couldn’t reach a compromise with technology and civil liberties groups that opposed the bill. Critics said the bill, aimed at those who “induce� copyright violations, was worded so broadly that it would allow the music and movie industries to sue many groups, including venture capitalists who invest in new technologies and journalists who review digital recording products.

A spokeswoman for Hatch declined to detail his specific plans for copyright legislation in 2005.

“Senator Hatch fully intends to continue to be active in his ongoing efforts to protect intellectual property rights,� the spokeswoman said in an e-mail. “He strongly believes that Congress should work to ensure that intellectual property rights are protected and that, as technology develops and changes, the federal patent, trademark, and copyright laws should -- to the extent necessary -- be updated to reflect these changes.�

Other lawmakers predict legislation similar to the Induce Act will have a tough time in 2005 because of the lack of support for the bill last year. The “barely supported� bill attracted opposition from a wide range of technology and civil rights groups, noted Representative Rick Boucher, a Virginia Democrat.

Boucher, who has generally opposed bills that strengthen digital copyright law, said he plans to again push for legislation that would allow customers to make personal copies of copyrighted digital products, including movies and music. Boucher’s Digital Media Consumers' Rights Act, introduced in 2003, gained support from several consumer rights groups and technology companies, but it didn’t make it out of the House Energy and Commerce Committee last year.

The committee is likely to take a longer look at any similar legislation this year. Representative Joe Barton, a co-sponsor of the Boucher bill, was named chairman of the committee in February 2004. Barton, a Texas Republican, has said he plans to push for a digital consumer rights bill.

Many other voices will call for tougher copyright laws, however. This month, the Business Software Alliance (BSA), a trade group representing major software vendors, issued a white paper focused on the group’s legislative priorities, including patent reform and copyright protections.

While trading software over P-to-P networks doesn’t get as much attention as music and movies, BSA officials call software piracy a major problem for their members. BSA’s legislative priorities white paper doesn’t recommend specific legislation Congress should adopt, but it calls for U.S. law enforcement agencies to step up enforcement of existing copyright laws and for Congress to ensure that copyright laws fight piracy without deterring technology companies from developing “innovative new products.�

Congress needs to look at the growth of P-to-P services and ask whether Internet service providers (ISPs) are providing law enforcement officials with enough information to prosecute copyright violation cases, said Robert Holleyman, BSA’s president and chief executive officer. Some ISPs, including Verizon Internet Services Inc., have fought efforts by the recording industry to subpoena names of their subscribers using a provision in the 1998 Digital Millennium Copyright Act.

“Some of the goals Congress intended may not be fully met,� Holleyman said. “We believe Congress needs to examine the question, but we’ve stopped short of calling for legislation.�

Holleyman suggested the Induce Act didn’t strike the right balance between the need for copyright protection and the ability for technology companies to bring new products to market.

Despite strong opposition to the Induce Act, P2P United, a trade group representing P-to-P vendors, expects more bills this year that attempt to strengthen existing copyright law, said Adam Eisgrau, executive director of the group.

Eisgrau expects few bills addressing P-to-P file trading to be introduced before the U.S. Supreme Court rules on a case in which the music and movie industries sued P-to-P vendors Grokster Ltd., StreamCast Networks Inc. and MusicCity.com Inc. Lower courts have ruled that the P-to-P vendors aren’t liable for their users’ copyright violations, and the Supreme Court is expected to rule in mid-2005.

“The very powerful copyright interests have sought in every Congress to sufficiently lower the bar for prosecutions,� Eisgrau said. “P2P United has every expectation that the powerful interests that backed that (Induce Act) legislation will do everything they can to keep the issue front and center.�

The Recording Industry Association of America didn’t respond to requests for its legislative agenda for 2005.

Other likely tech-related issues in Congress in 2005 include the following:

• Spyware: Representative Mary Bono, a California Republican, has reintroduced a bill that would allow fines of up to US$3 million for makers of software that steals personal information from a user's computer or highjacks its browser. The bill passed the House in 2004, but failed to pass the Senate. Bono’s original bill created a broad definition of spyware as software that changes a user’s computer without explicit permission, but after antivirus and other software vendors complained, the bill was amended to outlaw actions associated with spyware, instead of defining spyware.
• Spam: Congress isn’t likely to pass new legislation that would add to the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, which went into effect in January 2004. But committees may hold hearings on the effectiveness of the law, which critics say has done little to reduce the amount of unsolicited commercial e-mail.
• Cybersecurity: Legislation mandating private businesses to take cybersecurity action isn’t likely, but Congress could tweak existing laws such as Sarbanes-Oxley to include IT security in its corporate-controls reporting requirement.

Posted by Chad Dickerson at 09:51 PM

Congress to focus on telecom reform in 2005

By Grant Gross

As the U.S. Congress gears up for its 2005 work following the presidential inauguration, reform of the rules governing telecommunications competition promises to be a top priority. Other technology-related issues, particularly digital copyright, are likely to come up during the year. But tech-savvy lawmakers and tech-focused committees will spend much of their time working on changes to a 9-year-old law that regulates wireline-based telephone services, predict lawmakers and congressional observers.

Critics of the Telecommunications Act of 1996, including several lawmakers and some telecom trade groups, say growing Internet-based services like voice over Internet Protocol (VOIP) have rendered the law largely obsolete. Backers of telecom reform say it's time to update the law, which focused on promoting competition among wireline carriers, to factor in Internet-based services.

"We need to have the first legislative enactment for the new era of telecommunications," said Representative Rick Boucher, a Virginia Democrat. "The Internet has been treated in an ad hoc way for the past 10 years."

In a November ruling, the U.S. Federal Communications Commission (FCC) exempted Vonage Holdings Corp.'s residential-focused VOIP service from state regulations. But some lawmakers pushing bills to deregulate VOIP and other Internet applications say a more comprehensive approach is needed.

Congressional deregulation of VOIP could create a "boon for consumers" and a new era of competition, said Senator John Sununu, a New Hampshire Republican who introduced his own IP services deregulation bill in 2004. "If we get this right, if we create a clear framework for IP services, then we'll create a very good incentive for investment and innovation," Sununu said in an interview. "We owe it to industry participants and consumers to provide clear rules of the road."

Boucher, cosponsor of a 2004 bill that would have exempted VOIP and other Internet-based communication services from most federal regulation, argues that such a bill would achieve most of the telecom reform that's necessary. "The '96 Act needs to be repaired on the edges," he said in an interview. "Let's get the old rules out of the way when they don't apply."

Others, including major telecom trade groups, have called for a major overhaul. The '96 Act established a set of rules in which the incumbent owners of much of the nation's telephone network infrastructure -- four companies often called the regional Bells -- were required to share parts of their networks with competing carriers. After a series of rulings by the FCC, neither side is happy with the results.

The United States Telecom Association (USTA), representing facilities-based carriers including the incumbent Bells, argues that rules requiring the incumbents to share their networks aren't needed anymore, because consumers have a variety of choices, including VOIP and competing carriers that purchase access from wireline wholesalers.

"We advocate that where there's competition, there's no need for economic regulation," said Allison Remsen, spokeswoman for USTA. "There's plenty of competition out there."

CompTel/Ascent, which represents Bell competitors such as AT&T Corp. and Sprint Corp., also wants extensive changes to the '96 Act, but for different reasons than USTA. In December, the FCC, prompted by court rulings, relaxed some of its network-sharing rules. The FCC backtracked on an earlier decision requiring incumbents to share local switching facilities in the residential market. Bell competitors, collectively called competitive local exchange carriers or CLECs, decried the December ruling as bad for competition and for customers' pocketbooks.

With recent court and FCC decisions going against competitive carriers, the coming telecom debates will be a "tense time for us," said Robert McDowell, senior vice president at CompTel/Ascent.

CompTel/Ascent members generally support a light regulatory touch for VOIP, McDowell said. Some CLECs have begun offering VOIP services, and most believe VOIP should be treated with the same relaxed regulatory approach as other IP-based services, he said.

But without some protections for CLECs, the providers of broadband connections could shut CLECs out of the VOIP market, McDowell said.

The regional Bells control most DSL (digital subscriber line) connections, and cable companies control cable modem broadband service. VOIP needs a broadband connection to work, and without some regulation, CLECs fear that an incumbent carrier could lock out competing VOIP or other services.

Sununu's 2004 bill, which prohibited the FCC from imposing rules on VOIP unless approved by Congress, appeared to assign incumbent network owners no responsibility to share their lines, McDowell said. "We're concerned that the bill would give monopolies control over the content that rides over the network," McDowell added. "The big fear is we're on the precipice of an era where he who controls the network controls the content that rides over the network."

In addition to the competing interests of the Bells and the CLECs, groups such as the Consumers Union and the National Association of Regulatory Utility Commissioners (NARUC) are likely to press Congress to keep some telecom regulations intact. Consumers Union has advocated that the FCC address issues such as 911 emergency service requirements for VOIP providers.

NARUC has argued that state regulators should play a role in ensuring that VOIP providers offer services for the hearing disabled and 911 services. The regulators also seek to fine-tune the incumbent network-sharing rules in their own states. NARUC officials argue that state regulators are closest to the disputes among phone carriers and between carriers and customers can best deal with those issues.

States should also have a role in requiring carriers to provide affordable access to customers in poor and rural areas, NARUC argues.

NARUC is currently working on an official policy on telecom reform, said James Ramsay, NARUC's general counsel. But he also predicted that other voices, including more consumer groups, will join the telecom reform debate and question wholesale deregulation this year. "This year, I anticipate we won't be lonely any more," Ramsay said of NARUC's positions.

Beyond the basic questions of network sharing and VOIP regulation, some telecom carriers may ask Congress to address a variety of other issues. Likely to be on the table are carrier payments to the Universal Service Fund, which helps fund telephone service to rural and poor areas, and the highly technical rules governing access fees, which carriers pay to each other when a phone call starts on one carrier's network and ends on another's.

Because of the competing visions for telecom reform, quick fixes aren't likely. Some observers predict a drawn-out fight, although USTA's Remsen hopes Congress can pass telecom reform legislation by late 2006. "By the end of this Congress, I think we will have a law," she said. "But there's a lot to address."

Posted by Chad Dickerson at 09:49 PM

P-to-P operators plead guilty to copyright violations

By Grant Gross

Operators of two peer-to-peer (P-to-P) services have pleaded guilty to felony criminal copyright infringement charges in the first U.S. federal convictions for copyright violations using P-to-P networks, the U.S. Department of Justice (DOJ) announced Tuesday. William R. Trowbridge of Johnson City, New York, and Michael Chicoine of San Antonio, Texas, each pleaded guilty to one count of conspiracy to commit felony criminal copyright infringement. The pleas were entered Tuesday in the U.S. District Court for the District of Columbia.

Trowbridge operated at P-to-P hub named Movie ®oom between August 2002 and August 2004, and Chicoine operated a P-to-P hub named Ãçhènøñ's Alley TM, according to the DOJ. The two sites offered a wide variety of computer software, computer games and music and movies in digital format, including some software titles that legitimately sell for thousands of dollars, the DOJ said.

During an investigation, government agents downloaded 35 copyright works worth US$4,820.66 from Chicoine's site and more than 70 copyright works worth $20,648.63 from Trowbridge's site, the DOJ said. Both men pleaded guilty to acting for commercial advantage or private financial gain -- the DOJ accused the two of operating their sites with the intent of obtaining copyrighted works from others.

"Those who steal copyrighted material will be caught, even when they use the tools of technology to commit their crimes," U.S. Attorney General John Ashcroft said in a statement. "The theft of intellectual property victimizes not only its owners and their employees, but also the American people, who shoulder the burden of increased costs for goods and services."

The convictions came after a joint investigation dubbed Operation Digital Gridlock, conducted by the DOJ's Computer Crime and Intellectual Property Section, the U.S. Federal Bureau of Investigation and the U.S. Attorney's Office for the District of Columbia. The operation, announced in August 2004, targeted file-sharing of copyright materials over five P-to-P networks that belonged to an online group of hubs known as The Underground Network.

Member sites required their users to share large quantities of computer files with other users, according to the DOJ.

An e-mail to The Underground Network wasn't immediately returned Wednesday, but the group has posted comments about the U.S. government's P-to-P efforts on its Web site. "Peer-to-peer (P2P) technology is engaged in a constant battle with those who fear change and innovation," The Underground Network says on its site. "The United States Government has recently joined the wrong side of this fight. (The large corporations, who fear losing control, have lined the pockets of the lawmakers.) The civil liberties of every person are at stake when organizations such as the (music and movie industries) rage battles against the very customers that support them."

The maximum penalties for a first-time offender convicted of conspiracy to commit felony criminal copyright infringement are five years in prison, a fine of $250,000, restitution to the victims and the forfeiture and destruction of infringing copies and all equipment used to manufacture infringing copies. The defendants are scheduled to be sentenced on April 29.

Posted by Chad Dickerson at 04:46 PM

Spanish police nab suspected creator of webcam Trojan

By Scarlet Pruitt

Spanish police have arrested a man suspected of creating a Trojan horse software program capable of making secret recordings of Internet users through their webcams and stealing confidential information. The 37-year-old suspect is a computer programmer from Madrid identified by the initials J.A.S. Spanish Civil Guard units caught the man spying on various Net users through their webcams when they surprised him in his home on Monday during an operation dubbed "Tic-Tac," they said.

The man is alleged to have created a Trojan horse program distributed through peer-to-peer file sharing networks, like Kazaa. The Trojan horse can be hidden in a file for a picture or song, and once downloaded gives the hacker remote access to the victim's computer. The hacker can install a keystroke logger that records confidential information such as banking passwords, as well as accessing personal photos and other sensitive information stored on computers. What's more, it gives the hacker the ability to operate a webcam connected to the computer, and to view and record anything in the camera's field of vision.

Police characterized the Trojan horse as "highly sophisticated" and said they believe it has already infected thousands of computers in several countries. As far as they know, no commercial antivirus products are able to detect it, they said.

Because they have not identified which Trojan horse the suspect allegedly created, antivirus companies cannot say definitively whether or not they are able to detect it, explained Graham Cluley, senior technology consultant for Sophos PLC.

That said, since the Trojan horse appears to have been around for a while, he suspects that it has been seen by antivirus companies before.

It's now up to the police to share whatever information they have so users can check to see if they are infected, Cluley said.

"You could see how people would be quite disturbed by the thought of being burgled and recorded in this way," he added.

Spanish police were made aware of the Trojan horse in July when a resident in the city of Alicante contacted the Civil Guard through its Web site to report a computer problem, police said. They then launched Operation Tic-Tac, and by working with a Spanish antivirus company they were able to locate the suspect, they said.

In addition to catching him in the act of spying, police found abundant documents, recordings and other incriminating material in his home, they said.

"We believe he is guilty. We found a mountain of evidence," a spokesman for the Civil Guard said Wednesday. The suspect is due to appear in court later Wednesday. If convicted, he could face years in jail, the spokesman said.

Posted by Chad Dickerson at 04:46 PM

Australian company takes blame for Panix domain hijack

By Paul Roberts

An Australian company that manages Internet domain name registrations acknowledged that it was partially responsible for a Web domain hijacking that left Public Access Networks Corp. (Panix), a New York Internet hosting company, without an Internet address over the weekend. An error by Melbourne IT Ltd. allowed fraudsters using stolen credit cards to take control of Panix.com, Public Access Networks Corp.'s Internet domain, early Saturday, Eastern Standard Time, according to Ed Ravin, a Panix system administrator. The hijacking deprived some Panix customers of e-mail access for two days, and shone a light on what some contend are holes in the system for managing Internet domain transfers, according to Ravin and others.

Panix regained control of its Internet domain Monday, after Melbourne IT reversed the registration change that transferred ownership of Panix.com to an unknown party Saturday night . However, some customers were still experiencing problems Tuesday as the transfer changes worked their way through the worldwide network of DNS (Domain Name System) servers that manage requests for Internet addresses, Ravin said.

The hijackers somehow exploited a "loophole" in the process used to verify requests for domain transfers with the party that owns a Web domain, according to an e-mail message sent to Panix's founder and President Alexis Rosen from Bruce Tonkin, chief technology officer at Melbourne IT. About 5,000 customers were affected and some of them may have lost 100 or more e-mail messages over the weekend, Rosen said in an interview.

According to a recently updated policy from the Internet Corporation for Assigned Names and Numbers (ICANN), requests to transfer domains between two domain registrars require the registrar who will be taking over control of an Internet domain to receive approval for the transfer from an administrator at the "losing" registrar-- the organization that will be ceding control of a domain. ICANN also requires an e-mail to be sent to both registrars involved in the transfer and allows five days for the losing registrar to cancel the transfer. (See: http://www.icann.org/transfers/policy-12jul04.htm.)

However, an error at Melbourne IT allowed an individual or individuals to use an account at Melbourne IT reseller Fibranet Services Ltd., a U.K.-based ISP (Internet service provider), to gain control of the Panix.com domain without the permission of Panix staff or Panix.com's domain registrar, Dotster Inc. of Vancouver, Washington, Tonkin wrote.

The administrative contact for the Panix domain at Dotster, the company's registrar, was not contacted before the transfer went through, as required by ICANN. Panix also was left in the dark about the transfer and only realized what was going on when it lost control of its domain Saturday, Ravin said.

Furthermore, an investigation by Fibranet revealed that the account to which ownership of the Panix.com domain was transferred was fraudulent and set up with stolen credit cards, Tonkin said.

The loophole that led to the unauthorized transfer has been closed and Australian authorities are investigating the fraudulent account. Some security features do exist to prevent hijacking, including a domain registration locking feature that automatically denies transfer requests. However, such a feature was not used for the Panix domain, he wrote.

For Panix customers like Andrew Ross, the mistake at Melbourne IT meant a weekend without e-mail, as Panix staff struggled to get through to their counterparts at Melbourne IT to reverse the changes.

Ross, of Brooklyn, New York, noticed there was a problem on Saturday morning, when he woke up to find an error message from his e-mail program.

While the domain hijacking wasn't a big inconvenience for Ross, who only uses Panix for e-mail, the loss of almost two days of e-mail messages does raise concerns about identity theft, if the hijackers mined the misdirected e-mail traffic for personal information, he said.

Ross contacted his bank and credit card companies to change the e-mail address connected to his account, he said.

There is no evidence that misdirected e-mail and Web traffic were being harvested for information. The hijacking is probably an instance of Internet "vandalism" that was intended to make a point, rather than siphon off sensitive information, Ravin said.

However, the success of the ploy points out a serious vulnerability in the Internet's domain management system, said Rosen, Panix's president.

The system is obviously broken," said Rosen, who expects to lose customers and "a bundle of money" as a result of the hijacking.

Rosen said he didn't know the motivation for the hijacking, but speculated that it may have been retaliation for his company's cooperation in identifying spammers, or an attempt to call attention to problems with the domain transfer system, as ICANN is in the midst of a comment period on domain transfer policies.

The involvement of Melbourne IT and Tonkin in the incident lends credence to the latter theory. Tonkin has been an active participant in discussions of domain transfer policy and has acted as chairman of the Names Council for the Domain Name Supporting Organization at ICANN.

ICANN is looking into the domain transfer system to see if there are ways to improve the security of domain transfers or provide more protection against erroneous transfers, wrote Steve Crocker, chairman of the group's Security and Stability Advisory Committee.

ICANN will be studying the interactions across organizations regarding domain transfers and considering ways to improve the system. But those recommendations and changes "may take a little while," he said.

As life returned to normal at Panix.com, the company was not making immediate changes, but was looking at ways to fix problems it encountered this weekend -- including a lack of 24-hour contact numbers at its own Internet registrar, Dotster, Ravin said.

Still, a permanent fix for the domain hijacking problem won't come without larger changes and cooperation from domain registrars, he said.

"Vandalism is common on the Internet. People break things because they can. And, as far as we can tell, there's nothing anyone can do to stop (hijacking) as long as there are registrars like Melbourne IT with loopholes that can be exploited," he said.

Grant Gross in Washington, D.C., contributed to this report.)

Posted by Chad Dickerson at 01:43 AM

Yahoo exceeds earnings, revenue expectations

By Juan Carlos Perez

Yahoo Inc. exceeded financial analysts' expectations for revenue and earnings in its fourth quarter, ended Dec. 31, 2004, the provider of Web content and Internet services said Tuesday. Yahoo, in Sunnyvale, California, attributed the strong results to a continued increase in use of its Web site network, which in turn boosted the company's ability to sell advertising and fee-based services.

Revenue grew 62 percent to US$1.078 billion compared with 2003's fourth quarter. Excluding traffic acquisition costs (TAC), Yahoo's revenue rose 54 percent to $785 million, exceeding the consensus expectation of $756 million from analysts polled by Thomson First Call. TAC is the portion of revenue that Yahoo pays to the third-party affiliates of its Overture online ad network.

Meanwhile, net income came in at $372.52 million, or $0.25 per share, up from $75.02 million, or $0.05 per share, in 2003's fourth quarter. Excluding an investment gain of $185 million, or $0.13 per share from the sale of Google Inc. shares, Yahoo's net income was $187 million, or $0.13 per share, exceeding analysts' consensus expectations by $0.02.

For the full year, Yahoo's revenue grew 120 percent to $3.58 billion. Excluding TAC, annual revenue grew 77 percent to $2.60 billion. Meanwhile, net income for the year was $840 million, or $0.58 per share, including the positive impact of an investment gain and related tax benefit of $314 million from the sale of Google shares. Excluding this gain, net income for 2004 came in at $526 million, or $0.36 per share. In 2003, Yahoo had net income of $238 million, or $0.18 per share.

"Yahoo has delivered a terrific fourth quarter to cap off a remarkable year," said Terry Semel, Yahoo's chairman and chief executive officer, during a conference call to discuss the results. "It was a year in which we relentlessly focused on our consumers, increased the rate of innovation and product development and continued to invest in advanced technologies throughout the world."

Unique users totaled 345 million in the quarter, compared with 263 million in 2003's fourth quarter. Of the 345 million, 165 million were active registered users, or users who have signed up for at least one Yahoo service, such as e-mail, and who visit the Yahoo network at least once per month. Active registered users were up from 133 million in the fourth quarter of 2003.

Among the active registered users, 8.4 million were fee-paying users, defined as those who pay for at least one Yahoo service. This was up from 4.9 million in 2003's fourth quarter.

Meanwhile, Yahoo finished the quarter with 7,631 employees, up from 5,493 in 2003's fourth quarter.

Revenue, excluding TAC, per average unique user per month increased to $0.78, up from $0.67 in 2003's fourth quarter.

U.S. revenue in the fourth quarter grew 42 percent to $775 million, while international revenue rose 156 percent to $303 million.

Yahoo expects revenue, excluding TAC, to be in the range of $765 million to $805 million in 2005's first quarter, and in the range of $3.37 billion and 3.57 billion for the full year 2005.

Posted by Chad Dickerson at 01:43 AM

January 18, 2005

Panix.com domain hijacked

By Grant Gross

Panix.com, the main domain name of New York Internet provider Public Access Networks Corp., was apparently hijacked over the weekend, leaving customers of the company without e-mail and Web access for a day and a half. Unknown parties managed to wrest the Panix.com domain away from the company between early morning Saturday and 6 p.m. EST Sunday, when the domain was returned to Panix, according to a statement on Panix.com. The company accused the hijackers of "multiple felonies" in violation of U.S. and other laws.

The site's registration was moved to a company in Australia, while the DNS records were moved to a company apparently based in the U.K., the company said. Panix.com's mail was redirected to a server in Canada. Panix officials were unable to contact the companies involved over the weekend because the companies did not have support or emergency numbers listed, Panix said.

"None of the systems exploited to perform this hijacking were under Panix's control," the company said on its Web site. "It's not supposed to be possible to transfer a domain name from one registrar to another without notifying both the current registrar and the current domain owner, and yet it happened anyway."

Panix.com officials expected some problems to persist until Monday evening in the U.S. The company directed customers to use the Panix.net Web site and e-mail domain if they experienced problems Monday.

Law enforcement agencies in the U.S. and at least three other countries are working on the case, Panix added. Company officials did not immediately return a phone and an e-mail message Monday.

Posted by Chad Dickerson at 05:02 PM

New worm poses as tsunami aid appeal

By Scarlet Pruitt

Internet users were warned Monday of a new mass mailer worm that masquerades as an appeal for aid after last month's Indian Ocean tsunami disaster. The worm carries the subject line "Tsunami Donation! Please help!" and the text message "Please help us with your donation and view the attachment below! We need you!" The attachment, labelled "tsunami.exe," spreads the virus to other Internet users, according to security firm Sophos PLC.

Running the attached file also launches a denial-of-service (DOS) attack against German hacking site www.hacksector.de, said Sophos Chief Technology Consultant Graham Cluley. The site appeared to be down Monday morning when Sophos researchers tried to access it, Cluley added.

"This could be a skirmish between two hacker groups," Cluley said.

Sophos has received a small number of reports of the worm, VBSun-A, being found in the wild. It appears to be part of a new trend in Internet hoaxes that seek to take advantage of the tsunami tragedy, Cluley said. Sophos, based in Abingdon, England, warned last week of a number of e-mail scams related to the tsunami, and similar to the seemingly ubiquitous Nigerian letter scams which seek money from their recipients.

"This is a healthy reminder that people need to be very careful of what they run on their computers," Cluley said, noting that he's seen an increase in hoaxes based on recent news events.

Still, 2005 has started as a relatively slow year for new Internet viruses, Cluley said. The most prevalent at the moment is Netsky.P, which was first discovered nine months ago, he said.

Posted by Chad Dickerson at 05:02 PM

MIT pulls plug on Media Lab Europe

By John Blau

The Massachusetts Institute of Technology (MIT) isn't having much luck gaining a foothold outside the U.S. for its Media Lab, a ground-breaking research lab in the field of digital technologies. On Friday, the board of directors of Media Lab Europe announced the closure of the Dublin-based research facility after failing to agree to a new funding model.

This is the second time MIT has decided to bow out of a venture aimed at helping it expand its research activities outside the U.S. Two years ago, MIT ended its involvement in Media Labs Asia, which was founded in Bangalore, India, in 2001. The prestigious research university in Cambridge, Massachusetts, handed over the venture to the Indian government after the two parties clashed over the lab's research direction.

The problem this time wasn't direction but money.

Launched in 2000, Media Lab Europe received a grant from the Irish government to help kick-start the venture. The plan was for the European lab to become a self-sustaining facility, funded largely by corporate grants. But the corporate support never materialized, due to a severe technology downturn at the beginning of the decade that forced many companies to cut back on technology spending.

Because neither MIT or the Irish government were willing to pour money into Media Lab Europe to keep it afloat, the board of directors had no option other than to pull the plug on the research facility, the lab's board said in a statement.

Over the past four years, Media Lab Europe established more than 20 collaborative research projects, working together with several well-known companies such at BT Group PLC, Intel Corp., Orange SA and Telefonaktiebolaget LM Ericsson.

Media Lab's board of directors, which included U2 rock bank guitarist The Edge and MIT Media Lab co-founder Nicholas Negroponte, said in a statement that the Dublin research facility was involved in several advanced projects with "ground-breaking potential." The lab had already filed 14 patents.

The projects included the development of "liminal" devices aimed at merging virtual and physical reality and palpable machines, which are intended to enrich the experience of interacting with the digital world by focusing, in particular, on the sense of touch.

The Irish government had hoped that Media Lab Europe, located in a former warehouse of the Guinness brewery, could serve as a magnet to help attract other high-tech companies to the city.

Posted by Chad Dickerson at 05:02 PM

Google offers update to Picasa photo software

By Scarlet Pruitt

Google Inc. has introduced an upgrade to its Picasa photo editing and organizing software, offering users advanced capabilities such as adding new lighting and color effects, and burning CDs. Picasa 2, available for free download from the search giant's Web site on Tuesday, builds on the product Google gained when it acquired photo management company Picasa Inc. last year.

Perhaps not surprisingly, the release underscores the search company's focus on allowing users to better find and organize information stored on their computers.

Picasa 2 scans stored images and sorts them by date, allows users to add labels and star ratings to favorites, and lets them keep pictures in multiple albums.

For editing, users are offered basic fix buttons for cropping photos, removing red eye and fixing contrast and color. The new release also contains added effects, such as the ability to focus on a subject and turn a gray sky to blue. Picasa 2 can also be used to create a poster or screensaver with photos, or even a short film.

The sharing features have also been enhanced. Using Picasa's instant messaging product, Hello, photos can be sent directly to a friend's computer, or transferred to a personal blog using Hello's Bloggerbot tool.

The new software is available for download from Google's Picasa page at http://www.picasa.com. It requires Microsoft Corp.'s Windows 98, ME, 2000 or XP operating systems, and Internet Explorer 5.0 or higher.

The Mountain View, California, search company snapped up Picasa in July of last year, and began offering free downloads of its then current software, Picasa 1.6, almost immediately. The software had been selling for US$29.

Posted by Chad Dickerson at 05:02 PM

January 15, 2005

Microsoft files civil suit against Texas spammer

By Paul Roberts

Microsoft Corp. filed a civil lawsuit against two men accused of running a host of spam companies that sent out millions of spam messages that violated the federal Controlling the Assault of Non-Solictied Pornography and Marketing Act (CAN-SPAM). The Redmond, Washington, company joined Texas Attorney General Greg Abbott in suing Ryan Samuel Pitylak, a student at the University of Texas, Austin, and codefendant Mark Trotter in a lawsuit filed Friday in a federal court in Seattle. Microsoft accused Pitylak and Trotter with setting up shell companies that sent tens of millions of illegal spam messages to Internet users over its network, according to a company spokesman.

On Thursday, Pitylak and Trotter, of California, were named in a civil suit filed in the U.S. District Court for the Western District of Texas in Austin. The men set up a number of Nevada-based shell companies, including Leadplex Inc., Payperaction LLC, and Eastmark Technology Ltd., to distribute spam, according to the suit. Together, the companies made up the fourth largest illegal spam operation in the world, according to a statement by the Texas Attorney General.

Microsoft cooperated with the Texas Attorney General's office for almost one year on the case, according to Aaron Kornblum, Internet safety enforcement attorney at Microsoft.

The Texas Attorney General said in its suit that the two men violated CAN-SPAM by using misleading subject lines and not indicating that their e-mail messages were advertisements. Some messages also offered home refinancing services the defendants were not licensed to offer. Recipients were also tricked into giving away personal information with promises that information would be protected. The information collected was then sold to other companies, according to the statement.

Microsoft provided more than 20,000 examples of allegedly illegal e-mail sent by the Pitylak and Trotter that were snared in Microsoft spam trap accounts, Microsoft said in a statement.

Microsoft did not specify what damages it was seeking in its civil suit.

The two defendants already face considerable fines if they lose in court. CAN-SPAM imposes penalties of US$250 per violation, up to a maximum of $2 million. The attorney general is also suing the two men under two Texas state laws that cover electronic mail and solicitation as well as deceptive practices. Those laws carry fines of up to $25,000 per day and $20,000 per violation, the attorney general said.

Microsoft is also suing the men under CAN-SPAM, as well as two Washington state laws: the Washington Commercial and Electronic Mail Act and the Washington Consumer Protection Act, according to a copy of the complaint.

This is the third time Microsoft has teamed with state attorneys general to sue spammers. In June 2003, the company filed a number of civil suits along with the Washington State Attorney General. In December 2003, the company joined with New York Attorney General Eliot Spitzer to sue still more spammers, Kornblum said.

The state suits are important because they send a message to spammers that they have more to fear than simply Internet service providers. "It shows (that) the people of the state are also moving against spammers," Kornblum said.

Microsoft will soon begin discovery in the case and hopes to find out how the spammers distributed e-mail on the Internet as well as how they used the shell companies to hide the origins of the messages, he said.

Posted by Chad Dickerson at 02:30 AM

January 14, 2005

EBay buys e-commerce tools from Kurant

By Laura Rohde

EBay Inc. will buy the technology assets of Kurant Corp., a company that makes e-business software for small and medium-size businesses. The online auction company was primarily interested in acquiring Kurant's software relating to online stores, the companies said in a statement Thursday. Terms of the cash deal, which is expected to close by the end of March, were not disclosed.

Kurant's flagship product is StoreSense, a software package for building e-commerce Web sites that includes software for supply chain management, secure transaction processing and wireless shopping.

EBay expects to hire nearly all of Kurant's employees and to support its current customers.

Representatives for eBay, in San Jose, California, and Kurant, in San Francisco, could not immediately be reached for comment.

Posted by Chad Dickerson at 06:40 PM

Ridge presses for biometric data in passports

By Laura Rohde

The outgoing U.S. Department of Homeland Security Secretary, Tom Ridge, called for a new international standard for putting biometric data such as fingerprints on passports. In a speech Friday at the London School of Economics and Political Science, Ridge said that the fight against terrorism requires a global approach to developing the technology and assuring that its use becomes common practice. "Common international standards of biometrics must be developed. In my view, the sooner, the better,'' Ridge said. "We believe that biometrics is an extraordinary technological tool. It cannot only accurately identify and crosscheck travelers and potential terrorists before they enter our countries, but biometrics also provide increased travel document security and important personal identity protections.''

The address caps a week of speeches by Ridge, who steps down from his job on Feb. 1, extolling the virtues of biometric data on passports. On Thursday in a speech before the European Policy Centre in Brussels, Ridge announced the launch of a registered traveler pilot program being carried out in partnership with the government of the Netherlands to provide a "fast track" plan that would allow travelers to produce biometric and biographic information voluntarily in an effort to speed themselves through airport immigration checks.

Ridge, who told the audience that he enrolled in the program, said that a fingerprint or iris scan is all that is needed for quick passenger identification, which would in turn expedite processing "low-risk passengers" through security. "The Trans Atlantic Partnership and the international community would benefit greatly from an agreement on a set of international standards for capturing, analyzing, storing, reading, sharing and protecting this sensitive information, ensuring maximum interoperability between systems… and maximum privacy for our citizens," Ridge said.

Ridge and the U.S. government have faced a fairly receptive audience in the European Union (E.U.) to the notion of biometric technology in passports and the belief that the technology required is rapidly becoming ready for roll out on a wide scale.

The E.U. remains committed to instituting a system for biometric passports despite backing away earlier this month from plans to include biometric identifiers on the several million visas it grants every year. The move came after concerns that interference among multiple chips on different visas could make the proposed system unworkable.The E.U. is now looking into creating a Visa Information System to centralize and store all information relating to visa applications. Officials said they expect to get such a system up and running by 2007.

The U.K. Passport Service (UKPS) has also just completed its six month trial of biometric technology involving 10,000 volunteers and plans to report on its finding in the next two or three months, a U.K. government spokesman from the Home Office said Friday.

The U.K. wants to create a centralized database that is expected to contain such information as a person's name, address, date of birth, gender, immigration status and a confirmed biometric feature such as an electronic fingerprint, or a scan of the iris or face.

Atos Origin SA, the company that ran the trial for the U.K. government, tested each of the three biometrics traits.

A chip with biometric facial identifiers will be included in passports by the end of 2005 or the beginning of 2006, which will in turn "build the base" for the ID card plan, the Home Office spokesman said. The UKPS has already determined that it will initially use a facial recognition biometric chip in the British passport, he said.

Critics have warned that it is unclear how much information or what types of information could eventually be entered into the database, or even who would be given access to such databases. Additionally, security experts have questioned whether such a vast databases of personal information could ever be free of errors and that they make for appealing targets for hackers and terrorists.

Posted by Chad Dickerson at 06:40 PM

Google settles with SEC over stock options

By Juan Carlos Perez

Google Inc. has settled charges with the U.S. Securities and Exchange Commission (SEC) that the search engine company violated the law when it granted stock options to employees without registering those or making required financial disclosures, the SEC said Thursday. In the two years prior to its initial public offering (IPO), Google granted over US$80 million in stock options to employees but, as mandated by law, it neither provided detailed financial information to the recipients nor did it register the option awards with the SEC, the SEC said in a statement.

The SEC also charged Google's general counsel, David Drummond, with the same offenses, according to the SEC, saying he was aware of Google's obligations related to the stock options, but believed the company could avoid complying by relying on an exemption.

Without admitting nor denying the SEC's findings, Google and Drummond consented to cease and desist from violating or causing violations to Section 5 of the Securities Act of 1933, the SEC said. Google, based in Mountain View, California, also settled similar charges with the California Department of Corporations on Thursday.

Finally, the SEC decided not to pursue any enforcement action against Google related to an interview that the company's founders granted to Playboy magazine prior to the IPO, Google said in a filing with the SEC Thursday. Company executives have to abide by certain rules over what they can say publicly about their companies before an IPO, and it was speculated at the time that the Playboy interview could have put Google in violation of those rules.

"We are pleased there will be no further proceedings regarding the Playboy article and we are satisfied with the settlement on the stock option issues. We are glad to have these issues behind us," said Steve Langdon, a Google spokesman.

Posted by Chad Dickerson at 05:00 AM

WiMax vendors creep ahead, look to mobility

By Stephen Lawson

WiMax equipment and component makers this week announced steady progress on fixed wireless broadband products but looked eagerly to a future mobile WiMax as industry participants gathered at the Wireless Communications Alliance's WCA International Symposium & Business Expo in San Jose, California. With a standard for fixed WiMax complete and a product certification program in the works, vendors are preparing to ship interoperable base stations and customer premises equipment (CPE) later this year. They see the technology as an alternative to stationary broadband services such as DSL (digital subscriber line) and cable. The WiMax Forum industry group is expected to start certifying interoperability of products around the middle of this year. However, some vendors are now focusing greater attention on a mobile form of WiMax that is still being standardized and is expected to hit the market next year.

Tireless WiMax backer Intel Corp. announced it is teaming up with one of China's biggest telecommunications equipment makers on both generations of WiMax. ZiMax Technologies Inc., a subsidiary of Shenzhen, China-based ZTE Corp., will use Intel's upcoming Rosedale chipset in infrastructure and CPE equipment for fixed WiMax. ZiMax, which has offices in San Diego, Shenzhen, and Shanghai, plans to begin shipping fixed WiMax gear this year for carriers in China, Eastern Europe and Southeast Asia, according to the company.

Intel is confident that Rosedale-based equipment will find a receptive market for fixed WiMax services, but it has higher hopes for services that will work on the road.

"Rosedale starts the WiMax clock ... in terms of building market momentum," said Scott Richardson, general manager of Intel's Broadband Wireless Division, in an interview at the conference. However, "the mobile opportunity ends up being the largest opportunity," he said. Intel expects to integrate mobile WiMax into its Centrino chip set along with Wi-Fi beginning in late 2006, with a wide rollout in 2007.

The companies also will jointly contribute to the development of standards and specifications for both fixed and mobile WiMax, said Sean Maloney, Intel executive vice president and general manager of the Intel Communications Group, in a keynote address Wednesday at WCA.

A key to the success of mobile WiMax will be more unified specifications, Richardson said. Currently the WiMax Forum industry group defines many implementation options through what it calls "profiles," he said. That may work for fixed WiMax because the customer equipment for that technology stays at the subscriber's home, but it won't work for a mobile technology in which a device could be brought to many different countries, he said.

Ultimately, Intel would like to see the WiMax Forum narrow the options down from something on the order of 20 to just a few, Richardson said.

Intel and ZiMax also will push for harmonized allocation of spectrum for WiMax, with an eye to 2.5GHz as a band that could be opened to mobile WiMax in many countries, allowing for international roaming, Richardson said.

RHK Inc. analyst Nitin Shah warned that getting many countries to agree on use of a spectrum band is a tall order. The 2.5GHz band is assigned to wireless broadband services in much of the Western Hemisphere, but not in many other parts of the world, Shah said.

In China, the government is preparing to allocate spectrum in the 2.5GHz band and could open it to WiMax, said James Jiang, president of ZiMax, in an interview at the conference. However, ZiMax has high hopes that carriers in China will be able to use mobile or fixed WiMax in a block of spectrum around 3.5GHz, he said. All six major telecommunications carriers have licenses in the 3.5GHz band, he said. In particular, China Telecommunications Corp. and China Network Communications Group Corp. (China Netcom) are looking for ways to deliver mobile services and may turn to WiMax, according to Jiang. He expects a decision from the government on use of WiMax by the end of the year.

Other vendors this week announced steps toward availability of fixed WiMax.

Redline Communications Inc. used the show to preview the AN-100U, a platform that the company says is fully compliant with IEEE 802.16-2004, the standard for fixed WiMax. Redline expects the AN-100U, which can be configured as either a base station or a high-end CPE geared toward businesses, to be generally available early in the second half of this year. The Markham, Ontario, company will ship the product as soon as its low-cost consumer CPE, based on Rosedale and expected to cost less than $500, is completed, said Vice President of Business Development Kevin Suitor.

Lucent Technologies Inc. said it will integrate WiMax capability into its portfolio of offerings for carriers through a partnership with Alvarion Ltd. Carriers will be able to deploy Alvarion's BreezeMax pre-WiMax system using Lucent's IP Multimedia Subsystem, which is designed for offering multiple communications services across a variety of wired and wireless networks. Both companies are members of the WiMax Forum and will seek WiMax certification for the product, according to a statement.

WaveSat Inc. announced at the conference that its DM256 WiMax chip is shipping in volume. The DM256 is a "phy," or physical layer, chip, which essentially plays the role of a modem. System manufacturers will combine the chip with a MAC (media access control) processor and an RF (radio frequency) component, said Francois Draper, vice president of sales and marketing at Montreal-based WaveSat. The DM256 can be used in both base stations and customer premises equipment, he said. Draper expects the chip to appear in systems costing about $250 to $300 that should begin shipping in the second quarter.

Equipment maker Aperto Networks Inc. expects to have products ready for the beginning of WiMax Forum testing, said Dean Chang, vice president of marketing. The company has waited longer than it expected for chips to become available, but such delays are typical, he said. Aperto sees strong demand for fixed WiMax in less developed countries, but standards are crucial to push up volume and drive down prices to what those markets demand, Chang said.

One industry analyst downplayed the potential of fixed WiMax, at least in countries like the U.S.

"Right now, all it is, is a DSL or cable modem replacement, and it's not a very cost effective replacement," said Tad Neeley, of RHK, in South San Francisco, California.

Mobile is where the potential is, he said. As cell phone customers start to use 3G networks for demanding applications such as downloading presentations, those networks could run out of capacity quickly, Neeley said. Then WiMax may save the day.

Posted by Chad Dickerson at 05:00 AM

January 13, 2005

Google patches Gmail security hole

By Matthew Broersma, Techworld

Google has fixed a bug in its Web-based e-mail service, Gmail, that allowed users to read the contents of other people's messages. HBX Networks, a Unix community group, discovered the bug while testing a Perl script intended to automate sending batches of newsletters. Messages sent to the group's own e-mail address contained HTML code in the "Reply To" field, and this code turned out to be the message body of other users' e-mail messages.

The problem appears to be caused by a missing ">" character in the formatting of the "From" fields generated by the group's Perl script. "This, apparently, was enough to get GMail to provide us with some portion of someone else's messages," HBX members wrote in their analysis on Wednesday.

They speculated that the missing character caused Google's application to read other data into this buffer - a message that had been sent recently, for example. In at least one case, the intercepted e-mail contained username and password information, the group said.

"Regardless of the specific failure, the result is a compromise of the privacy of communications over Gmail," the group wrote. "Message content and address information are easily - if somewhat randomly - available to unintended recipients."

Google said the problem was fixed on Wednesday, shortly after the HBX Networks report appeared. "At 10:15am PST mails with the problematic formatting as described in your previous story stopped being accepted into Gmail. Previous e-mails that had this problem will also no longer will be accessible. We appreciate your patience and we're sorry about the bug," said Chris DiBona, Google's open source programme manager, in an e-mail to the tech discussion site Slashdot. He urged users to report security bugs to security@google.com.

HBX expressed concern that other such bugs might exist. "The appearance of this issue, at the user level, probably indicates a failure in GMail's code review and/or quality assurance standards, which may result in other, similar errors," the group wrote.

While it is technically still in beta-testing, Gmail has become one of the most popular Web-based e-mail services since its launch in April, and has begun to come under the same scrutiny as other Google services. Last month, for example, Google fixed a flaw with its desktop search that could have allowed hackers to search the contents of a PC.

Security problems are nothing new to Web e-mail. Last March, shortly before Gmail's launch, IT security firm GreyMagic Software demonstrated that scripts could be run in Hotmail and Yahoo's Web e-mail, bypassing scripting restrictions. Scripts embedded in e-mail messages could have been used to steal passwords or spread worms, researchers said. The problem has now been fixed.

Posted by Chad Dickerson at 07:17 PM

Steve Case looks back on AOL's turbulent history

By Paul Krill, InfoWorld

America Online co-founder and former AOL Time Warner Chairman Steve Case on Wednesday evening reflected back on the legacy of AOL, including its merger with Time Warner and battles with Microsoft. Taking the audience at the Computer History Museum here through a history lesson, Case noted high and low points. AOL was founded nearly 20 years ago.

The 2001 merger with Time Warner was intended to meld the broadband cable capabilities and content brands of Time Warner with AOL’s Internet savvy, Case said. But the deal has not worked out as hoped, at least not yet, he noted. The timing of the merger, which began when AOL had a market value of more than $100 billion, subsequently became difficult, Case said.

"I probably wasn't the right guy to be a chairman of a company with 90,000 employees and the team didn't quite gel," Case said. As chairman, Case said he became the logical target of ire. He left as chairman in 2003 but still serves on the board of directors of the company, now again known as Time Warner.

Recalling the company's battle with Microsoft over online services, Case said the competition prodded AOL to improve service. "In retrospect, the fear of Microsoft killing us was the best thing that happened to AOL," Case said.

"We were always as a company deathly afraid of Microsoft," because of its software bundling power, he said.

Then, the browser wars began. "The reality was, [Microsoft] wanted to kill us but quickly decided they wanted to kill Netscape more," said Case. Eventually, AOL merged with Netscape.

Additionally, AOL believed it needed to move to a flat rate for services because Microsoft was doing so, Case said.

AOL's rapid growth at one point resulted in customers getting too many busy signals, Case said. The company responded by building out network capacity and responding to customers, or members, as AOL calls them.

It took AOL nine years to get its first million customers and just nine more months to get the second million customers, said Case. "What really drove us from 1 million [customers] to 2 million to 30 million was [AOL] became the easy way for most people to get online," said Case. "AOL became kind of the logical place to go."

At one point, the company was criticized for being the Internet "on training wheels," Case said. But this actually was good because the company wanted to spread the use of the Internet, he said.

Case also is pleased with the growth of Instant Messaging. "We did the concept of IM and the concept of buddy lists. Those proved to be very powerful communications tools," he said.

Getting PC companies to bundle modems proved critical for AOL, said Case. When AOL started, only 3 percent of households had computers and fewer than a third of those had modems, said Case. AOL persuaded IBM to bundle modems and position their consumer PC as a communication device, Case said.

Posted by Chad Dickerson at 07:14 PM

Apple sets company records for Q1 revenue, income

By Tom Krazit

Apple Computer Inc. reported US$3.5 billion in revenue for the first quarter of its 2005 fiscal year on the strength of a huge increase in iPod sales during the holiday season, the company said Wednesday. That figure was a record for quarterly revenue at Apple, Chief Executive Officer Steve Jobs said in a statement. The company also set a record for net income in the quarter, with $295 million in profits for the period ended Dec. 25.

Analysts polled by Thomson First Call had expected Apple to record $3.2 billion in revenue for the quarter. The $3.5 billion in revenue represented a 74 percent increase in revenue compared to the first quarter of Apple's 2004 fiscal year, while the net income figure was up more than 350 percent compared to the same period last year.

During a keynote address at MacWorld on Tuesday, Jobs said Apple shipped 4.5 million iPod music players during the quarter, a whopping 525 percent increase compared to last year. But while Apple has received a great deal of attention for the iPod, consumers also increased their purchases of the company's flagship Macintosh computers. Shipments of Macintosh units increased 26 percent compared to last year, the Cupertino, California, company said in a release.

Apple shipped just over 1 million Macintosh computers in its first quarter, the highest number of Macs shipped in a quarter in over four years, said Peter Oppenheimer, Apple senior vice president and chief financial officer, on a conference call following the company's earnings announcement. The iMac was the most popular unit in the quarter with 456,000 units shipped, Oppenheimer said.

The iPod was Apple's top revenue-producing product for the second straight quarter. The company earned $1.2 billion on iPod shipments in the quarter, almost double the $620 million the company earned on sales of iMacs.

Apple executives were unable to point directly to the popularity of the iPod among users of Microsoft Corp.'s Windows operating system as a reason for the increase in Mac shipments. However, the company has seen some data in its retail stores that points to a large number of Mac shipments going to new users, Oppenheimer said.

Apple expects to report $2.9 billion in revenue during its second fiscal quarter. Like most hardware companies, Apple typically posts higher revenue in the second half of a given calendar year compared to the first half.

Financial analysts asked several questions about Apple's new products, the Mac Mini and the iPod Shuffle, during the conference call. Apple unveiled the Mac Mini, a small $499 computer, and the iPod Shuffle, which is based on flash memory, during Jobs' keynote speech at MacWorld Tuesday.

Both new products have smaller margins than their more expensive counterparts in Apple's product lineup, Oppenheimer said. The company has internal projections for 2005 shipments of those products, but doesn't plan to share those at this time, he said.

Posted by Chad Dickerson at 07:00 PM

Google expands reach of enterprise search tool

By Juan Carlos Perez

Google Inc. has improved its enterprise Search Appliance so that it can now index documents that aren't accessible via the Web protocol HTTP (Hypertext Transfer Protocol), thus significantly expanding the range of data the product can search for and retrieve. Google plans to announce the improvement Thursday. Google will also begin shipping Thursday a simpler and less expensive version of the Search Appliance, called Google Mini, that is designed for use by small and medium-size businesseses, whose enterprise search needs Google believes are grossly underserved.

The new version of the Search Appliance is able to access for the first time documents that aren't available via an HTTP (Hypertext Transfer Protocol) Web interface, through two improvements: JDBC (Java Database Connectivity) support, for access to relational databases; and a "feeder" API for establishing links between the Search Appliance and the data repositories of wares such as enterprise business applications, content management software and legacy systems.

“We have added a connection to (relational) databases because naturally in a big company a lot of the information that’s important resides in (relational) databases," said Dave Girouard [cq], Google's enterprise general manager. "With the feeder API, instead of relying on the crawler, other content systems within a company can feed information automatically into the Search Appliance."

This way, the Search Appliance expands beyond its previous incarnation as a tool companies bought to let employees search intranets or to let visitors search their public Web sites.

The Search Appliance, which is a hardware box with Google search software in it, has also been enhanced with a new security API to integrate it with corporate security systems that control user access to documents and information, so that the Search Appliance only serves up documents to users that they are allowed to access.

Finally, the Search Appliance, which was introduced in 2002 and has been bought by over 800 clients, now offers its administration and user interfaces in five languages other than English: Spanish, Italian, French, German and Japanese.

These enhancements represent "good, consistent, steady movement for Google in the enterprise space" but they are not enough to put the Search Appliance at the same level of more robust enterprise search products from vendors such as Verity Inc., Autonomy Corp. and Fast Search & Transfer ASA, said Laura Ramos [cq], a Forrester Research Inc. analyst.

For example, while the security API is a move in the right direction, Google should build native support into the Search Appliance for document access methods from specific systems, such as Lotus Notes/Domino, she said. Likewise, the JDBC support is a good feature, but it's not a native format of specific database systems, such as ones from Microsoft Corp., Oracle Corp., IBM Corp. and Sybase Inc., Ramos said.

Thus, the Google Search Appliance serves the low end of the enterprise search segment and as such is best suited for small and medium-sized businesses and for individual departments within large companies, Ramos said.

Meanwhile, the Google Mini, which will be sold online from the Google Web site for US$4,995, initially will be able to index only documents available via HTTP, and has a ceiling of 50,000 documents.

The Search Appliance, by contrast, starts at $32,000 with a capacity of 150,000 documents, while one with the maximum capacity of 1.5 million documents costs $175,000, according to pricing information Google provided in June 2004. The Search Appliance is also sold in pre-configured stacks of multiple devices.

Future versions of the Google Mini will inherit features from the Search Appliance, so the Google Mini could index non-Web documents, Girouard said.

Aiming a search product at small companies is a very good move by Google, Ramos said. "This very low end of the search market has been very underserved for a long time, and probably the best solutions you could get to date were from hosted providers that charged on a per page or monthly fee basis," she said.

Beyond that, enterprise search products typically start above $30,000 and can cost over $1 million [m] for large deployments, a range that is out of the reach of small organizations, she said.

Because this segment of the market has been so underserved, "there is some education and support Google will need to offer" prospective clients, Ramos said.

Posted by Chad Dickerson at 06:59 PM

DOD cyber sleuths swap secrets in Florida

By Paul Roberts

The U.S. Department of Defense (DOD) is making changes to streamline its response to online threats across the various branches of the military, and deal with a steady stream of new online woes, from hacking attempts to child pornography and threats posed by powerful portable storage devices such as iPods, according to senior DOD officials. The DOD blocked and traced 60,000 intrusion attempts on its unclassified networks in 2004, and wrestles with spam, illicit pornography and other common Internet threats. If left to fester the threats could hamper the massive defense agency, which relies on global, unclassified networks for critical business operations, said Lieutenant General Harry Raduege, director of the Defense Information Systems Agency.

Raduege was speaking at the Department of Defense Cyber Crime Conference in Palm Harbor, Florida, an annual gathering of some of the government's top IT, computer forensic and research and development talent.

The DOD is taking the threat to its networks seriously, as global information networks now play a crucial role supporting troops abroad, as well as critical logistics, financial, and medical information systems that the DOD relies on to support its employees and to communicate with suppliers in the U.S. and abroad, he said.

"The importance of reliable, accessible networks is growing as we move to a netcentric world," he said.

Larger, more open networks provide more opportunities for malicious hackers or terrorist groups to infiltrate those networks, stealing sensitive information or wreaking havoc on DOD operations, he said.

The DOD is drafting organization-wide policies to respond to a number of threats that are well known to many private sector network administrators, including peer to peer (P-to-P) file sharing applications, and vulnerable computer communications ports and protocols, he said.

The DOD is also working to develop a list of IP (Internet protocol) addresses for a "do not block list" so that critical DOD communications are not accidentally blocked by ISPs (Internet service providers) and other organizations, he said.

Networks that contain classified information are not connected to the public Internet and are not affected by the same threats that affect unclassified department networks, he said.

A reorganization approved by the Joint Chiefs of Staff in Nov. 2004, should make it easier for the government to coordinate its response to cyber threats and create more discipline on DOD networks by creating clear lines of command from the U.S. Secretary of Defense, to the DOD's Strategic Command, to the various branches of the military, Raduege said.

Asked whether the U.S. public should feel confident that the government is on top of cyber crime, Raduege said that the government's preparedness to deal with online threats had improved dramatically since the first "Solar Sunrise" exercise in the late 1990s.

"We're good. We're very good," he said.

With the theme of "Cyber crime: overcoming the challenges of new technology," the 4th annual DOD Cyber Crime Conference brought together 500 experts in technology, law and computer forensics to discuss ways to improve computer investigations, protect government networks from attack and coordinate the response to computer threats across the huge military and defense sectors.

The conference offered a diverse set of mostly closed-door sessions, with topics such as "Cyber Jihad and the Globalization of Warfare" and "Current Trends in Digital Forensics."

Child pornography has become a huge problem for DOD investigators, accounting for as much as 50 percent of the criminal digital evidence processing work done by the DOD's Defense Cyber Crime Center (DC3), said Steven Shirley, executive director of DC3.

The proliferation of inexpensive digital cameras and scanners has caused instances of child pornography to mushroom in the military, as elsewhere in society, said Jim Christy, director of the Defense Cyber Crime Institute at DC3.

Other hot topics at the show were techniques for capturing and analyzing data from a flood of new digital storage media, including Apple Inc. iPods, GPS (Global Positioning System) devices and portable USB (Universal Serial Bus) memory sticks, Christy said.

Government investigators working on cases, ranging from homicides to espionage, need to be aware of the wide range of new places that valuable information could be stored, he said.

"Twenty years ago, investigators used to walk right past the desktop computer when they were gathering evidence. Now they know enough to seize that, but we've got to get them to be aware of these other devices," he said.

Posted by Chad Dickerson at 06:59 PM

Germans move ahead on cheap RFID plastic chip

By John Blau

Researchers in Germany have come one step closer to realizing a dream of manufacturers, retailers and other companies seeking advanced but inexpensive ways to trace products and materials -- a cheap chip made of plastic that can be printed on foil the same way a newspaper is printed on paper. Although PolyIC GmbH & Co. KG, a joint venture between Siemens AG and Kurz GmbH & Co. KG, isn't claiming to have developed the first-ever integrated circuit made of polymer, it is taking credit for having created the world's fastest plastic chip to date -- 600KHz -- and having pioneered a technique to print circuits directly onto foils.

"We're still at the beginning of using polymer, an organic material, to mass-produce inexpensive chips that could be used, for instance, as RFID tags, but we're moving steadily ahead," said Wolfgang Mildner, managing director of PolyIC in Erlangen, Germany.

Using its technology, PolyIC plans next year to begin production of a plastic 4-bit chip, which could be used for applications such as forgery-proof labeling, according to Mildner. The next step will be a 32-bit chip aimed at applications in the logistics sector.

By 2008, PolyIC hopes to have a chip with a storage capacity of 128 bits and a processing speed of 13.56MHz to comply with RFID (radio frequency identification) standards, according to Mildner.

Today's bar code labels, which many companies hope to replace with RFID tags, have a typical storage capacity of 44 bits.

The prototype plastic chips of PolyIC contain at least four layers placed on a foil substrate made of a special type of polyester. The electrodes consist of conductive polymers. Above them is a semiconductive layer made from poly-3 alkylthiophene, followed by an insulating polymer layer and a counter-electrode.

Mildner referred to the process as "a chip evolving on foil and becoming one."

The plastic chips are only a few square centimeters in area and have a thickness of 1 micrometer, while the electrodes and the semiconductor layer account only for a few hundred nanometers of the total.

In the lab printing process, researchers use stamps to print the conductors. Then they coat the foil with the semiconductor and insulator using a type of squeegee technology that is common in the textile-printing industry.

The goal of PolyIC is to produce RFID chips with a price point of €0.01 (US$0.013), compared to the price of silicon-based RFID chips that range between €0.30 and €0.50, said Norbert Aschenbrenner, a spokesman in Siemens research and development division.

PolyIC was launched after Siemens decided to spin off its plastic chip research activities into the new joint venture with Kurz, which specializes in production of stamping foils, according to Aschenbrenner.

Albrecht von Truchsess, a spokesman for Metro AG, which is at the forefront of deploying RFID technology in the European retail sector, called the PolyIC development "super."

Metro welcomes all technology advances that will help make the price of RFID chips become "a non-issue," von Truchsess said.

In an interview published Thursday in the German weekly business magazine Wirtschaftswoche, Zygmunt Mierdorf, a Metro board member, said he expects to have the retail group's entire operations -- from the producer and shipper to the warehouse and checkout counter -- equipped with RFID technology within the next 15 years.

Since November, 22 suppliers have been delivering products on pallets marked with RFID tags, according to Von Truchsess. The goal is to have around 100 suppliers using RFID by the end of this year.

Currently, around 20 of Metro's 1,800 stores and distribution centers in Germany are using RFID, according to the spokesman. The goal is 250 by year's end, he said.

Metro, based in Düsseldorf, Germany, has more than 2,500 retail stores and distribution stores worldwide.

Posted by Chad Dickerson at 06:59 PM

TiVo chief Ramsay leaving CEO post

By Brendan Sullivan

TiVo Inc. Chairman and Chief Executive Officer (CEO) Michael Ramsay will step down as CEO, but will retain his role as chairman, TiVo announced on Wednesday. Ramsay will step down when the company finds a replacement, TiVo said in a statement. The search is already underway, but no candidates have been named, the Alviso, California-based company said.

In the statement, Ramsay described the leadership transition at TiVo as a "natural transition" as the company grows and matures. Experts said Ramsay's departure may be in part a result of unsuccessful attempts by the company to establish strong relationships with cable providers.

Ramsay's departure comes after TiVo had limited success establishing relationships with TV cable providers, which put a great deal of pressure on the company, said Jupiter Research Analyst Todd Chanko.

"It's an unfortunate development because the person stepping down is one of the founders of the company, and somebody had to take responsibility for the company's strategies," he said.

TiVo currently has strong ties with satellite TV provider The DirecTV Group Inc. However, the contract between the two companies expires in 2007 and is unlikely to be renewed, which will send TiVo scrambling to find new subscribers, Chanko said.

Although no specific names have been mentioned as Ramsay's successor, Chanko predicts that the company will bring in a new executive to develop connections with other cable or satellite outlets.

"I'm guessing that (TiVo) would want to find someone extremely strong who maybe comes from the cable industry ... bridging the gap between (TiVo) technology and cable services," he said.

Ramsay founded TiVo in 1997 with Jim Barton and has been its only CEO. TiVo specializes in hard drive-based digital video recorders which allow subscribers to record and store TV programs and offer features such as pausing live TV.

Posted by Chad Dickerson at 06:54 PM

January 12, 2005

Microsoft CFO Connors resigns

By Joris Evers

Microsoft Corp. Chief Financial Officer (CFO) John Connors is leaving the software maker and will become a partner at Seattle area venture capital firm Ignition Partners LLC., Microsoft and Ignition Partners announced separately on Tuesday. A replacement was not immediately named and no date has been set for Connors' departure. He will stay on to assist with the transition to a new CFO, a Microsoft spokeswoman said Tuesday. The Redmond, Washington-based company will consider both internal and external candidates to fill the position, it said in a statement.

Connors has been with Microsoft for 16 years, the last five as the company’s CFO. Microsoft has gone through many changes during those years, including the forming of seven independent profit and loss centers, the phasing out of employee stock options, several major legal settlements and the handing out of billions of dollars in dividends to shareholders.

"I will miss Microsoft a great deal, but it’s time for me to move to a new chapter in my life," Connors said in a statement distributed by Microsoft. "I’m looking forward to a greater emphasis on community and business participation in the Northwest."

At Ignition Partners, Connors will focus on investments in enterprise software and services, the Bellevue, Washington, company said in a statement. Ignition was founded in early 2000 by former Microsoft and McCaw Cellular executives and has approximately US$750 million of funds under management, the company said.

Connors' departure is a bit surprising, said Matt Rosoff, an analyst at Directions on Microsoft Inc., in Kirkland, Washington. Still, Connors has been with Microsoft for a long time. With many major projects done, now is probably a good and quiet time to leave, Rosoff said.

"I think he has probably been looking for other challenges. He could not leave before now because there was always some new big thing coming around," Rosoff said.

A replacement most likely will come from within Microsoft, Rosoff said. "Microsoft has historically not done well hiring high-level executives from outside the company. They don't seem to last very long," he said.

Posted by Chad Dickerson at 01:41 AM

January 11, 2005

FTC charges companies with CAN-SPAM porn violations

By Grant Gross

The U.S. Federal Trade Commission (FTC) has charged a network of six adult entertainment companies and an affiliate marketer that sent unsolicited sexually explicit e-mail on its behalf with violating a federal antispam law. The six companies, operating up to 20 adult Web sites, plus four executives and the affiliate spammer, are accused of violating several sections of the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, including a requirement that unsolicited adult-themed e-mail include a "SEXUALLY-EXPLICIT" label in the subject line.

The action announced Tuesday is the first case the FTC has brought against defendants alleged to have violated the adult-labeling rule, which went into effect in May. The defendants could face prison sentences of up to five years and fines of up to US$6 million for CAN-SPAM violations alleged by the FTC.

The companies and Arizona-based affiliate e-mail marketer Paul Rose violated "virtually every core provision" of the CAN-SPAM law while sending out hundreds of thousands of pieces of unsolicited e-mail, said Eileen Harrington, director of the FTC's marketing practices division. Many of the e-mail messages didn't include a valid postal address for the companies, as required under CAN-SPAM, and many included false e-mail header information and false subject lines, both prohibited under CAN-SPAM, Harrington said.

In addition, many of the e-mail messages falsely promised free access to adult Web sites in a violation of the FTC Act's prohibition against deceptive and unfair marketing practices, and many of the messages didn't included working opt-out mechanisms, as required in CAN-SPAM. In much of the e-mail that included opt-out mechanisms, recipients had to scroll through explicit adult pictures to find the opt-out link, Harrington said during a press conference.

Defendants named in the FTC case include Rose; Global Net Solutions, based in Las Vegas; Global Net Ventures, Ltd., based in London; Wedlake Ltd., apparently based in Riga, Latvia; Open Space Enterprises Inc., based in Las Vegas; Southlake Group Inc., based in Las Vegas; and WTFRC Inc., based in Las Vegas. Also charged are Dustin Hamilton, Tobin Banks, Gregory Hamilton and Philip Doroff, executives in the network of companies.

Most of the companies did not have phone numbers listed; a message to Southlake Group was not immediately returned.

Affiliate marketing, the practice of hiring another person or company to market your products, is common on the Internet, especially among adult Web sites, Harrington noted. CAN-SPAM clearly allows prosecutions of both the affiliate marketers and the company whose product is being marketed when the law is violated, she said.

"It's not just the people who push the button who send the spam who can be held liable under CAN-SPAM," she said. "If businesses are going to use affiliate marketing programs, they had better be all over those programs in terms of close monitoring to make sure no third party is sending spam on their behalf that violates the CAN-SPAM Act."

The FTC filed a complaint against the defendants Jan. 3 in U.S. District Court for the District of Nevada. The court granted a temporary restraining order requiring the defendants to stop their e-mail marketing practices, and a hearing to extend the restraining order is scheduled for later Tuesday.

Posted by Chad Dickerson at 11:24 PM

Apple unveils slimmer Mac, iPod

By Tom Krazit

Apple Computer Inc. plans to attack the low-end of its primary markets this year with smaller versions of the Macintosh computer and the iPod music player, Chief Executive Officer Steve Jobs said Tuesday at MacWorld. During a keynote address to the rapt audience of Apple fans, Jobs unveiled the Mac Mini and the iPod Shuffle, along with several enhancements to the forthcoming "Tiger" version of Mac OS X. Both the Mac Mini and the iPod Shuffle are designed to attract mainstream users who may be familiar with Apple's other products, but are unwilling to spend the money on the full-featured versions, Jobs said.

The Mac Mini is a complete Macintosh system not much longer or wider than a compact disc, and shorter than an iPod Mini at only two inches (4.9 centimeters). It features Apple's G4 processor, a generation behind the G5 processor currently shipping in Power Macs and iMacs.

Apple will release two versions of the Mac Mini on Jan. 22. The least expensive model will cost US$499 with a 1.25GHz G4 processor, 256M bytes of PC2700 (333MHz) DDR (double data rate) SDRAM (synchronous dynamic RAM), a 40G-byte hard drive, a DVD-ROM/CD-RW optical drive and a Radeon 9200 graphics processor from ATI Technologies Inc. The other model costs $599 with a 1.42GHz processor and an 80G-byte hard drive.

The iPod Shuffle is Apple's vision of a low-cost music player that is extremely easy to use, Jobs said. The earlier versions of the iPod came with hard disk drives ranging from 4G bytes for the iPod Mini to a 60G-byte iPod Photo. The iPod Shuffle can store either 512M bytes or 1G byte of data on flash memory.

Most users will put music on the iPod Shuffle, but it can also be used as a portable USB (Universal Serial Bus) device, Jobs said. The bottom of the iPod Shuffle snaps off to reveal a USB attachment which can plug directly into a PC or a Macintosh, he said.

Coming off a fourth quarter in which the company sold 4.5 million iPods, Apple now holds 65 percent of the market for digital music players, Jobs said. The remaining chunk of that market is held by a variety of flash-based players that will now compete with the iPod Shuffle. The 512M-byte version of the iPod Shuffle will cost $99 while the 1G-byte version will cost $149, and both are available immediately.

"We've just begun the era of digital music," Jobs said. Apple now takes in more revenue from iPod sales than it does from selling computers, according to the company's third-quarter earnings release.

Keynote attendees greeted the Mac Mini and iPod Shuffle with sustained applause and cheers, as they did just about every new feature or product shown during Jobs' two-hour presentation. Most attendees had already gotten news of the new products through leaks posted on various Apple enthusiast Web sites over the past month, which prompted a lawsuit from Apple.

But that couldn't put a damper on the enthusiasm of the attendees at the San Francisco show. While awaiting Jobs' arrival, conference goers danced on chairs to music played over the sound system by Apple-friendly artists such as U2 and the Black-Eyed Peas. Audience members whooped and whistled at some of the new features in the Tiger operating system, which is expected to ship in the first half of this year.

The Dashboard feature was probably the most well-received addition to Mac OS X. Dashboard integrates a number of helpful applications that Jobs called "widgets" into the bottom of a Mac's screen, such as a weather report window, a currency converter, a dictionary and countless others.

Apple also released a new office productivity suite called iWork. IWork costs $79 and features a new version of Keynote, Apple's presentation software, and Pages, a new word-processing application designed as an update to the venerable Appleworks.

Posted by Chad Dickerson at 11:23 PM

Yahoo to launch desktop search product

By Juan Carlos Perez

Yahoo Inc. on Tuesday will become the latest search engine to provide a product for searching hard drives, following similar launches by rivals Google Inc., Ask Jeeves Inc. and Microsoft Corp. With the release of its Yahoo Desktop Search, Yahoo makes good on the promise it made in December that it would launch a desktop search tool this month.

Like the competing products from Google, Ask Jeeves and Microsoft, the Yahoo software is being released as a test version, called a beta version in computer industry parlance.

Desktop search tools are designed to help users find information stored in their PC hard drives, a task that utilities included with the Windows operating systems traditionally have performed poorly.

Yahoo, in Sunnyvale, California, will make its Yahoo Desktop Search application available as a free download at http://desktop.yahoo.com.

Based on technology Yahoo licensed from desktop search specialist X1 Technologies Inc., the Yahoo Desktop Search application can index over 200 different types of files, including those created by Microsoft's Word, Excel and PowerPoint and Adobe Systems Inc.'s PDF and PhotoShop. The tool can also index the content of Microsoft Outlook and Outlook Express e-mail messages and their attachments.

Yahoo Desktop Search lets users preview the content of the files it finds, so that they don't necessarily have to launch the files in their native applications in order to view them. The tool even plays audio and video files without the need to launch them in a separate media player. It also lets users sort, delete, print and share files it finds right from its interface.

Letting users perform a variety of actions on the list of desktop search results reflects Yahoo's "holistic view of search," said Bradley Horowitz, Yahoo's director of multimedia and desktop search. The search activity doesn't end with the delivery of a list of results but rather when the user has completed the task that prompted the search, he said. "This application delivers on that agenda," Horowitz said.

Another feature of Yahoo Desktop Search is that it searches for files as the user types the query, as opposed to waiting for the user to hit a search button. Yahoo Desktop Search also allows users to specify which files they want and don't want indexed, and to refine searches based on a variety of parameters.

Yahoo isn't trying to replicate the functionality of X1's desktop search product, Horowitz said. For one, Yahoo's tool is being designed with consumers in mind, while X1's product is aimed at business users, he said. Moreover, Yahoo plans to tightly integrate its desktop search tool with its online services, such as its Web mail service and online address book. That integration will not be part of X1's product. A final and significant difference between the two products is that Yahoo has no plans to charge for Yahoo Desktop Search, while X1 charges for its application, he said.

Yahoo Desktop Search currently only works with computers running Microsoft's Internet Explorer browser on Windows XP and Windows 2000 operating systems.

Other companies that provide applications for searching hard drives include Copernic Technologies Inc., Blinkx and Lycos Inc.

Posted by Chad Dickerson at 05:48 PM

Comcast moves into phone service

By Stephen Lawson

Cable operator Comcast Corp. plans roll out a VOIP (voice over Internet Protocol) service reaching 15 million homes by the end of this year, and offering unlimited local and domestic long-distance calls for US$39.95 per month. The company aims to sell the phone service not as a cheap alternative to traditional carriers' offerings but as richer telephony that eventually will include features such as unified messaging and video calling, Comcast Chairman and Chief Executive Officer Brian Roberts said at a financial conference on Monday.

"It's not our desire to do this to hurt phone companies... We want to build value in the phone," Roberts said at the Citigroup Smith Barney Entertainment, Media and Telecommunications Conference in Phoenix, monitored via a webcast.

However, he does expect voice to drive revenue at Comcast, which along with other cable operators, increasingly is coming into competition with carriers. Cable and phone companies both are moving toward offering a "triple play" of phone service, Internet access and TV, possibly also adding mobile phone service.

Comcast is the last of the major cable companies to lay out details of its VOIP plans, according to The Yankee Group analyst Lindsay Schroth, but it carries a lot of weight as the country's biggest operator. Cablevision Systems Corp. offers voice across almost its entire footprint and Cox Communications Inc. and Charter Communications also have started rollouts, Schroth said. Comcast has had trials running in three markets -- Indianapolis, Springfield, Massachusetts and its home market of Philadelphia -- but has not talked much about its larger strategy, Schroth said.

However, the company hasn't been sitting on its hands. All of its back-office systems are already in place for billing, provisioning, customer care and E911 emergency calls, Roberts said. It will not be an Internet telephony service, he said: Though they will use IP, the voice calls won't touch the Internet, running instead over Comcast's private data network, with priority over regular data packets to ensure good quality. The network will have a battery backup system to keep services running in case of a power failure, so Comcast's phone offering will be as reliable as traditional circuit-switched telephony, he said. Also at launch, the system will include directory assistance, operator service, international calling capability and support for monitoring under CALEA (Communications Assistance for Law Enforcement Act).

Comcast sees future features including unified voice-mail and e-mail, customized ring tones, caller ID information that appears on the TV when a call comes in, voice-activated dialing and eventually a videophone capability.

By the end of 2006, phone service will be available across Comcast's whole network, Roberts said. He expects the voice service to achieve 20 percent penetration of Comcast's customer base about five years from now. That would equal approximately 8 million customers.

"We really do believe that this is the next engine for growth," Roberts said.

Comcast already has about 1.2 million customers using a circuit-switched phone service over cable, which the company acquired through its purchase of AT&T Broadband in 2001. The company's focus is now on VOIP, but it won't force customers of the old phone service to switch over as it rolls out the new service, said Bob Smith, senior director of corporate communications at Comcast.

Established service providers such as Comcast are likely to make significant inroads into the phone market this year with competitive flat rates and bundling with other services, said Kate Gerwig, an analyst at Current Analysis Inc., in Sterling, Virginia. That could be bad news for dedicated VOIP companies as well as traditional carriers, she said.

"I'm wondering if this will push some of the niche players like Vonage ... out of the way a little bit," Gerwig said.

However, with traditional telecommunications carriers gear up TV services to counter the cable operators' telephony strategies, the big showdown will be between those big players, she said.

"The next year is going to be sort of a wild shootout," Gerwig said.

Posted by Chad Dickerson at 05:47 PM

Cell phone for kids pulled off market after warnings

By Laura Rohde

The U.K. company Commun8 Ltd. pulled the MyMo, a mobile phone aimed at children, off the market on Tuesday following a government backed study warning of the health risks mobile phone use poses to children. Sales of the MyMo, the U.K.'s first mobile phone specifically designed for children, were immediately halted by Commun8 after it studied the report, "Mobile Phones and Health," published by the U.K.'s National Radiological Protection Board (NRPB) on Tuesday. Aimed at children between 4 and 8 years old, the MyMo phone hit the market last November and was designed to give parents piece of mind in being about to quickly and easily stay in touch with their offspring.

"The product has been withdrawn from the market. We read very carefully the NRPB report, we listened closely to the tone of subsequent interviews given by (NRPB Chairman) William Stewart and decided to act quickly. We absolutely do not want to damage children's health," a Commun8 spokesman said.

The number of children between 7 and 10 years old using a mobile phone has doubled since 2001, to one in four, according to the study. But the NRPB study warned that children may be more vulnerable to radio frequency (RF) radiation exposure because of their developing nervous system, the greater absorption of energy in the tissues of the head and a longer lifetime of exposure.

The study stresses that though no conclusive evidence currently exists that mobile phones are harmful, a cautious approach of risk management, especially in relation to children, should be taken by the government and consumers. There are currently around 50 million mobile phones being used in the U.K. compared with about 25 million in 2000.

The MyMo stores up to five numbers that can be dialled automatically through one of three buttons located on the front of the phone. According to the Commun8 spokesman, about 40,000 of the phones have been sold throughout Europe over the last nine to 12 months through various outlets, including but not limited to Commun8.

Posted by Chad Dickerson at 05:47 PM

January 08, 2005

Incompatibility threatens digital lifestyle

By Joris Evers

For the digital lifestyle to become a reality, consumer electronics makers need to overcome one major consumer frustration: incompatible technologies, a panel of experts agreed Friday. Many hardware makers at the International Consumer Electronics Show (CES) in Las Vegas this week are showcasing devices such as entertainment hubs, digital media players, gaming devices, cell phones, and digital cameras, as well as a plethora of multipurpose gadgets, but many of those products don't work together.

"The industry has not done a very good job to provide interoperability. ... I think that will stand in the way of mass adoption," said Frans van Houten, president and chief executive officer (CEO) of Philips Semiconductors, a part of Koninklijke Philips Electronics NV. Van Houten called on the consumer electronics industry to adopt common standards.

Incompatibility often occurs not because of inadequate technology but because vendors can't agree on a common standard. As a result, there is a wide variety of digital camera memory cards, and music bought in a certain online store can only be played on a specific device, for example.

The industry has to deal with the issue of incompatibility, agreed Pat Griffis, vice chairman of the Digital Living Network Alliance (DLNA) and director of worldwide media standards at Microsoft Corp. Members of the DLNA include Microsoft, Sony Corp., Hewlett-Packard Co. (HP), Philips, Nokia Corp. and Samsung Electronics Co. Ltd.

"The good news is there is no shortage of standards; the bad news is there is no shortage of standards," Griffis said. The DLNA, established in 2003, is an industry group created to find interoperability between standards. A first set of guidelines has now been issued and the first products are coming soon, Griffis said.

Van Houten and Griffis participated in a panel discussion at CES with five other industry insiders. The discussion was moderated by Tim Bajarin, president of technology consultancy Creative Strategies Inc. "We as an industry have an incredible amount of work to do so consumers will adopt the products," Bajarin said.

Carl Vogel, president and CEO of cable operator Charter Communications Inc., also on the panel, spoke out against cable set-top boxes with proprietary technology.

"All of us in the cable industry have grown up with some legacy issues. I think you will see more and more cable operators look for alliances that make sense for the consumer. As a cable operator, I am not excited about having to buy proprietary boxes and distribute them to consumers," he said.

Microsoft's Griffis pitched the PC and Windows as an open platform for companies to use to build a hub for digital entertainment in the home. However, Philips' Van Houten said Windows may not be good enough to play that role. "Not everybody wants to put Windows in all boxes. Certainly, when we are sitting on the couch and watching TV, we don't want to see that blue screen in front of us."

Posted by Chad Dickerson at 01:35 AM

Tech stocks mixed as year opens

By Marc Ferranti

Investors in technology stocks appeared to be somewhat nervous in the first week of the new year, as they braced for earnings reports that will detail 2004 fourth quarter results and set the stage for the rest of 2005. Trading also may have been affected, according to some broker-research notes, by jittery traders who sold stocks to take profits after some sectors showed positive results at the end of 2004. Trading in tech stocks was mixed, with some bellwether shares moving lower mid-week, flattening out Thursday and ticking upward slightly Friday morning.

There was not much joy for Sun Microsystems Inc. (SUNW), however, as trading on the Nasdaq exchange for the shares was soft throughout the week, closing at US$4.60 Thursday and remaining at that price until at least mid-day Friday. Trading in Sun was influenced by a widely quoted research note by Merrill Lynch & Co. analyst Steven Milunovich, who noted that amid generally positive sales and stock trends at the end of last year, Sun showed a "soft" close in sales in December, ahead of its earnings report later this month.

Milunovich noted that Sun's fiscal second quarter appears to have had sales somewhat skewed toward midrange and low-end products, which generally provide lower margins for the company, and its software business is experiencing slow sales.

Apple Computer Inc. (AAPL) shares were buoyed throughout the week by expectations that it will see strong income on sales of its iPod music player. The Goldman Sachs Group Inc. raised forecasts for the company, and traders showed strong interest in the vendor through the week, pushing shares up by $0.05 to $64.55 on Nasdaq Thursday, toward the high end of the company's 52-week range, which topped out at $69.57 in November.

High expectations for Apple came even as Microsoft Corp. Chairman Bill Gates kicked off the Consumer Electronics Show in Las Vegas Wednesday night with a speech in which he talked about how his company is muscling in on the music and digital entertainment market. Gates pointed to deals with Yahoo! Inc., MTV Networks Inc., TiVo Inc. and Fox Sports Networks that are meant to boost content deployed through Microsoft applications and Web sites.

In an interview with the Wall Street Journal, Gates also mentioned that Microsoft would be interested in working with Sony Corp., a notion later confirmed by a company statement that said the companies have been in discussions about "areas of common interest." Microsoft (MSFT) closed at $26.75 on the Nasdaq Thursday, rising a bit in Friday morning trading and nudging up against its 52-week high of $27.60.

While Apple shares seemed invulnerable to the Gates speech, Microsoft online rival Yahoo! (YHOO) slipped 70 cents to $35.43 in mid-day Thursday trading on Nasdaq, recovering to $35.85 Friday morning.

In other online-company news, Google Inc. (GOOG) shares soared past $200 on Nasdaq Monday, close to its post-IPO high of $203.64, boosted by an upbeat note about search companies from Goldman Sachs. However, Merrill Lynch during the week began coverage of Google with a "neutral" rating, noting the company's high valuation. Google settled back to $191.58 by mid-day Friday.

On the software front, Oracle Corp.'s (ORCL) announcement that it was closing its acquisition of enterprise resource planning (ERP) rival PeopleSoft Inc. on Friday appeared to boost investor confidence in the company, with share prices rising slightly toward the end of the week, closing at $13.22 Thursday and trading at $13.43 mid-day Friday.

Posted by Chad Dickerson at 01:35 AM

New specification brings video to electric sockets

By Tom Krazit

While it can be difficult for technical novices to configure a wireless network, most people have figured out how to insert an electrical plug to a wall socket. The HomePlug Powerline Alliance is counting on that simplicity to appeal to customers who may own the components of a digital home but haven't yet made all the pieces work together. The alliance announced the selection of the underlying technology for its forthcoming HomePlug AV specification at the International Consumer Electronics Show (CES) this week. The HomePlug specifications allow consumers to send video content over their home electrical networks by simply plugging a HomePlug-equipped set-top box or personal video recorder into the wall.

HomePlug AV is designed to improve upon an existing HomePlug standard with faster bandwidth, greater quality of service and simpler operation, said Oleg Logvinov, president of the HomePlug Powerline Alliance, during a press conference Friday in Las Vegas. The specification can be built into peripherals that connect digital televisions and wall sockets or directly into the television, allowing data to travel over its power cord.

The existing HomePlug 1.0 specification was designed for simple Internet content like Web pages or e-mail messages, which don't require as much bandwidth as is needed to display video content. HomePlug AV will let set-top boxes, digital televisions and other home entertainment devices share video content with up to 200M bps (bits per second) of bandwidth, Logvinov said.

Sharp Corp.'s booth at CES featured a living room entertainment center with Internet connections set up over power lines. The HomePlug AV specification allowed Sharp to send digital movies and television from a home media server to a digital television.

The concept is simple, but consumers have not rushed to purchase the devices, especially in the U.S. Most consumers have chosen wireless technologies like 802.11 for their home networks, due in part to the major support for Wi-Fi on the part of companies like Intel Corp., Microsoft Corp., Dell Inc. and Hewlett-Packard Co.

The HomePlug Powerline Alliance has the support of prominent television vendors such as Sharp and cable providers like Comcast Corp. But Matsushita Electronics Co. Ltd. (better known by its Panasonic brand name), Sony Corp. and Mitsubishi Electric Corp. launched their own powerline Internet alliance at CES this year, ensuring that multiple standards will be available in the market.

Posted by Chad Dickerson at 01:35 AM

January 07, 2005

Six Apart buys LiveJournal

By Grant Gross

Six Apart Ltd., maker of the popular Moveable Type Web-logging software, has acquired Danga Interactive Inc., the operators of the Web-log service LiveJournal, for an undisclosed amount of cash and stock, the company announced Thursday. With the acquisition, Six Apart, which also operates the TypePad personal Web-logging service, now counts more than 6.5 million customers, according to the company.

LiveJournal, an online personal journal Web site, offers customers either free or paid subscriptions to a personal publishing Web-logging tool, built on open source software. Every week, more than 860,000 users update their Web logs on LiveJournal, according to a Six Apart press release. LiveJournal's users are mostly in their teens and 20s, younger than users of Six Apart's other products.

As part of Six Apart, LiveJournal will operate as a separate division. Brad Fitzpatrick, Danga's founder, president and lead developer, will join Six Apart as the company's chief architect. Six Apart plans to expand the staff at Danga, and the company doesn't plan any layoffs in the acquisition, with LiveJournal's engineering team moving from Portland, Oregon, to Six Apart's San Francisco headquarters, said Jane Anderson, a Six Apart spokeswoman.

LiveJournal will continue to distribute a large portion of its software under various open source licenses, and Six Apart plans to keep the LiveJournal software separate from its Movable Type and TypePad products, with engineering and support teams for each product.

The acquisition of LiveJournal makes Six Apart the industry's largest independent provider of Web-logging tools, according to company officials. According to a survey released this week by the Pew Internet & American Life Project, more than 8 million U.S. adults now have Web logs and readership jumped by 58 percent in 2004.

The acquisition is a natural fit because "both companies are fanatics about Web-logging," LiveJournal founder Fitzpatrick said in a statement.

Posted by Chad Dickerson at 07:16 AM

EBay initiative promotes electronics recycling

By Joris Evers

Ebay Inc. has brought together several technology industry heavyweights in an initiative to promote recycling of old computers and other consumer electronics hardware. The move also is an attempt by the industry to pre-empt further electronic waste legislation. With Intel Corp. as its main ally, eBay's new "Rethink Initiative" seeks to bring together public and private organizations to promote recycling and reuse of old PCs and consumer electronics products, the online auctioneer said on Thursday.

"Together we are hoping to build awareness about alternative ways to dispose of computers and consumer electronics," eBay President and Chief Executive Officer Meg Whitman, said during a news conference announcing the initiative at the International Consumer Electronics Show in Las Vegas.

Apple Computer Inc., Gateway Inc., Hewlett-Packard Co., IBM Corp., distributor Ingram Micro, United Parcel Service Inc. and the United States Postal Service are part of the effort, as are the U.S. Environmental Protection Agency and the Silicon Valley Toxics Coalition, eBay said.

PC giant Dell Inc. is notably absent from the list of participants. "We have been in contact with Dell, they have not said no and over time we hope that they will join," Whitman said. "I invite the industry to join with us to help solve the problem of electronic waste."

The Rethink Web site, http://www.ebay.com/rethink, offers information on recycling options for electronics and options to use eBay to sell still working hardware. While many PC makers offer recycling programs for old hardware, most consumers don't know what to do with old PCs, Whitman said. They are collecting dust in storage, she said.

"We cannot only help reduce ewaste, but also offer economic incentives to consumers, making it easy and even profitable for consumers and businesses to find new uses for old products, while also encouraging responsible disposal of nonworking products," Whitman said.

With the industry initiative, eBay also hopes to prevent further government regulation. The announcement comes days after the Electronic Waste Recycling Act of 2003 became active in California, requiring consumers to pay an Electronic Waste Recycling Fee for certain electronic devices including monitors and laptop computers.

"I am not against regulation, if as an industry we have tried to develop a market-based solution," Whitman said. "I would love to try as an industry to come together with market-based solutions so we won't have to face federal and state regulation."

Posted by Chad Dickerson at 07:16 AM

Vonage launches in UK

By John Blau

Consumers and small businesses in the U.K. can now take advantage of the same inexpensive Internet telephone service that Vonage Holdings Corp. offers its customers in North America. Vonage, which calls itself the largest provider of VOIP (voice over Internet Protocol) services in the U.S., officially launched a new Net telephony offering in Britain on Thursday, according to company spokesman Jamie Serino.

"Our U.K. Web site actually went live over the weekend," Serino said. "Our first customers signed up within hours -- which is encouraging considering that we hadn't even begun to market the service."

Vonage has made a name for itself in the U.S. and Canada by selling a low-cost phone service. That, in a nutshell, is exactly what the company aims to achieve in the U.K., Serino said.

The prices speak for themselves: for £9.99 (US$19) per month, customers can make unlimited phone calls within the U.K. Small businesses are offered the same all-you-can eat phone service for £18.99 per month.

"Of course, you're always going to have the one or other business try to register as an individual to take advantage of the lower fee," Serino said. "But we have a system that monitors traffic and once we see that a connection is generating way too many calls for a single person, we'll call the customer to discuss the business fee."

Calls to mobile phones in the U.K. cost £0.15 per minute during business hours, £0.10 per minute evenings and £0.05 per minute on weekends.

Calls outside the U.K. are charged international rates that Vonage publishes on its Web site.

For an additional £3 per month, customers can also subscribe to a virtual number service. London-based users, for instance, can set up a local phone number in New York so that people trying to reach them from the U.S. only have to make a local or long distance call but not an expensive international call.

To use the VOIP service, customers need an always-on, broadband DSL (digital subscriber line) or cable connection. They are given a free phone adapter that connects their normal home or office phone to the digital modem, converting the analog phone signal to digital.

"Customers don't really notice anything different when they make a call using our service," Serino said. "They dial regular phone numbers and hear traditional dial tones."

However, customers must accept a new phone number. "We aren't able to port telephone numbers yet, but we hope to offer this service at some point," Serino said.

U.K. phone numbers currently available to Vonage are all London-based, according to Serino. "But we'll have more numbers from different cities soon," he said.

Vonage, which has more than 400,000 connections in North America, plans to expand in other European countries and Asia, according to Serino. But he declined to say where and when.

Posted by Chad Dickerson at 07:16 AM

January 06, 2005

Congresswoman reintroduces spyware bill

By Grant Gross

Spyware legislation that would allow fines of up to US$3 million for makers of software that steals personal information from a user's computer or highjacks its browser will get a second look after the U.S. Congress failed to pass the legislation in 2004. On Tuesday, Representative Mary Bono reintroduced an antispyware bill that passed the House of Representatives in 2004, but failed pass in the Senate. The Securely Protect Yourself Against Cyber Trespass Act, or SPY ACT, defines most functions performed by so-called spyware as unfair business practices subject to U.S. Federal Trade Commission fines.

Bono, a California Republican, expects the bill to sail through Congress this year, she said in a statement. The bill passed the House in October on a 399-1 vote.

"The SPY ACT was introduced because we feel that consumers have the right to know and be protected when they are downloading software that has the ability to collect and transmit personal information," Bono said in her statement. "From its original introduction, the SPY ACT has evolved through a tremendously collaborative bipartisan effort to what we feel is strong and sound legislation. We have received a tremendous amount of support for the SPY ACT and are confident that this year we will see a spyware bill in the law books."

The SPY ACT, which would require a user's permission before software is downloaded onto a computer, ran into some objections from software vendors, who suggested the bill could force software vendors to notify users every time the software scans their machines for updates. The SPY ACT also would prohibit unauthorized software from changing a browser's default home page, changing the security settings of a computer, logging keystrokes and delivering advertisements that the computer user cannot close without turning off the computer or closing all sessions of the browser.

The bill Bono introduced is the same as the bill passed by the House, except for a one-year extension in the bill's sunset clause, from December of 2009 to December of 2010. An earlier version of a Bono spyware bill, introduced in July 2003, broadly prohibited spyware and defined it as "any computer program or software that can be used to transmit from a computer, or that has the capability of so transmitting, by means of the Internet and without any action on the part of the user of the computer to initiate such transmission, information regarding the user of the computer, regarding the use of the computer, or that is stored on the computer."

Some software vendors, including those that market antivirus update software, objected that the definition was overly broad and could make their services subject to fines. Some tech companies continued to call the amended version of the bill too broad, but authors of the amended version attempted to address concerns that the original bill outlawed a type of technology instead of outlawing bad activities.

Some consumer and privacy advocates supported the bill, however. The Center for Democracy and Technology, a civil liberties group, supports the bill's penalties, said Ari Schwartz, the center's associate director. "It would be a lot easier to get the message out in terms of deterrence," he said.

Posted by Chad Dickerson at 01:40 AM

Court rejects RIAA request to identify song-swappers

By Grant Gross

A U.S. appeals court has rejected a tactic used by the music industry to identify alleged file-swappers in order to sue them, marking the second time a federal court has struck down subpoenas that seek names of Internet service provider (ISP) subscribers. The U.S. Court of Appeals for the Eighth Circuit on Tuesday overturned a Missouri district court ruling that ordered ISP Charter Communications Inc. to turn over about 200 subscriber names to the Recording Industry Association of America (RIAA).

The court's decision will not stop the RIAA from filing lawsuits against unnamed peer-to-peer users, however. The association has filed more than 7,000 such lawsuits against unidentified file-traders since December 2003, when the U.S. Court of Appeals for the District of Columbia rejected the subpoena process used by the RIAA to obtain ISP subscriber names.

The RIAA has filed lawsuits only against unnamed defendants, called John Doe defendants, since the District of Columbia court ruling, said RIAA spokesman Jonathan Lamy. The defendants are then identified in the course of the lawsuit.

"There is no practical effect of this decision," Lamy said of Tuesday's ruling. "We've been filing John Doe lawsuits."

The RIAA sought the names under a provision in the 1998 Digital Millennium Copyright Act (DMCA) that allows copyright holders to issue subpoenas to ISPs for the names of alleged infringers before filing a lawsuit. The DMCA subpoenas do not need the approval of a judge; instead, the law directs court clerks to issue the subpoenas.

ISPs including Verizon Internet Services Inc. and Pacific Bell Internet have fought the subpoenas, saying they are too easy to obtain and could destroy Internet privacy. Verizon, which fought RIAA subpoenas in the District of Columbia court, argued that anyone claiming to be a copyright holder, including stalkers and rapists, could file subpoenas to find out the identity and home address of any Internet user.

In December 2003, the District of Columbia court rejected the RIAA argument that the DMCA subpoenas apply to material transmitted by ISP subscribers as well as content stored by an ISP. The Eighth Circuit court used similar arguments in rejecting the RIAA tactic with Charter Communications, which turned over subscriber names after a district court rejected its efforts to kill the subpoenas in November 2003.

Eighth Circuit Judge Kermit Bye wrote that subpoenas only apply to material stored on ISP servers, according to language in the DMCA. "As a court we are bound to interpret the terms of the statute and not to contort the statute so as to cover the situation presented by this case," he wrote.

The Eighth Circuit ordered the RIAA to return any information it obtained from Charter Communications using the subpoenas and to destroy any records of the information.

Charter Communications, based in St. Louis, applauded the new ruling. "Charter takes its responsibility to protect the private information of our customers very seriously," said David Andersen, Charter's senior vice president for communications. "Our customers place their trust in Charter, so we took all appropriate legal measures in this matter to fulfill this responsibility. This said, our actions in this case should assure them that this trust is justified."

Posted by Chad Dickerson at 01:40 AM

Real expands online music partnership with Comcast

By Laura Rohde

Broadband provider Comcast Corp. has extended its Rhapsody online music service deal with RealNetworks Inc. and plans to begin offering its broadband users access RealNetworks' Internet radio service, Rhapsody RadioPlus, by the end of June, the companies announced Wednesday. Comcast, one of the largest U.S. cable Internet service providers (ISPs), will provide a free Rhapsody Internet radio service to its subscribers in the hopes that customers upgrade to the subscription-based Internet radio service. The Rhapsody Internet radio service offers 90 professionally programmed Internet radio stations and over 30,000 artist-based radio stations. For a fee, customers can also create customized radio stations that play full songs, a service that RealNetworks usually bills at US$5 a month. The full Rhapsody RadioPlus product, which is about $10 per month, allows users to search for and listen to specific songs.

Comcast, in Philadelphia, has been offering the Rhapsody jukebox service to its 6.5 million high-speed Internet customers since November 2003. The company currently offers a 14-day free trial of the service featuring over 60,000 albums and over 760,000 songs. Subscribers pay a monthly fee for unlimited streaming music and an additional fee to record tracks to a CD.

For its part, RealNetworks, in Seattle, is seeking to build its base as a market leader in subscription-based music services, as it attempts to compete against other online music service providers such as Apple Computer Inc.'s iTunes Music Store and Napster LLC, which both let users buy individual music tracks for download for a set fee.

RealNetworks said that it had over 625,000 paying subscribers as of the end of September.

Representatives from RealNetworks and Comcast could not immediately be reached for comment.

Posted by Chad Dickerson at 01:40 AM

MapQuest offers to navigate mobile users

By Scarlet Pruitt

U.S. mobile phone users might not have to stop and ask for directions as often thanks to a new service from MapQuest.com Inc. that sends color maps and directions to their phones. The navigation-focused Internet company, owned by America Online Inc. (AOL), unveiled the "Send to Phone" feature on Wednesday as part of its MapQuest Mobile service, priced at US$3.99 a month.

To access the feature, users visit MapQuest.com from a computer, request maps and directions and enter their mobile phone number. They can then retrieve the information through the MapQuest Mobile application on their cell phones. The MapQuest Mobile service is offered through a partnership with mobile phone application publisher Vindigo Inc., which leverages its relationships with wireless carriers, AOL said.

MapQuest.com, which claims over 33 million monthly users, said that it hopes to expand its reach by offering the new mobile feature.

A number of U.S. wireless operators have already signed up to offer Send to Phone, including Cingular Wireless LLC, AT&T Wireless Services Inc., Verizon Communications Inc., Sprint Corp. and ALLTEL Corp., according to an AOL representative.

In addition to subscribing to MapQuest Mobile, users must also be signed up for a data plan with their wireless carrier.

The service is the latest in a slew of mobile data offerings being offered by carriers to help ratchet up revenue, such as image and music downloads.

Posted by Chad Dickerson at 01:40 AM

January 05, 2005

CES : Vonage to offer wireless phones

By Grant Gross

Vonage Holdings Corp. on Tuesday announced it has partnered with two companies to offer wireless telephone handsets for its VOIP (voice over Internet Protocol) service. Both phones will eliminate the need for Vonage customers to buy VOIP adapters to connect with traditional, non-VOIP phones. Vonage in the past has marketed the adapters, but not VOIP phones, said Louis Mamakos, Vonage's chief technology officer.

Vonage, which provides VOIP service to residential and small business customers, announced it will begin offering a VTech Holdings Ltd. cordless VOIP telephone through retail outlets by mid-2005.

A second new phone, offered through a partnership with UTStarcom Inc., will be a Wi-Fi phone that customers can use to connect to the Vonage service wherever they have a Wi-Fi connection. Customers with Wi-Fi networks at home can use the phone there and take the phone with them to work to connect to their employers' Wi-Fi network, Mamakos said. The same phone number will follow the phone, much like cellular phone service.

The Wi-Fi phone will be available through retailers by the middle of this year. Vonage has not yet determined a price for either of the phones.

Both phones will allow customers to avoid buying VOIP adapters, and customers are looking for more types of phones to use with the Vonage service, Mamakos said. Customers could save money if they buy a VOIP-enabled phone, instead of buying an adapter and a traditional phone, he added.

"We see a lot of diversity in the products we're able to provide," he said. "We're trying to offer different products for different users."

Vonage, in conjunction with the International Consumer Electronics Show in Las Vegas, also announced Tuesday that it is extending its current relationship with Texas Instruments Inc. It will include Texas Instruments' VOIP software and semiconductors in the VTech product as well as a in Viseon Inc. fixed-line home video phone, also available some time this year.

Posted by Chad Dickerson at 03:45 AM

January 03, 2005

Intel adds to 'digital home' investments

By Robert McMillan

Intel Corp. has invested in three companies that it believes will help make home entertainment devices better and easier to use, the company announced Wednesday. Two of the recipients of the funding, portal vendor Synacor Inc. and digital magazine distributor Zinio Systems Inc., had previously received investments from Intel. A third company, Gteko Ltd. announced the investment as part of a US$12 million round of funding.

Founded in 1992, Gteko sells technical support software that is used by such technology companies as Hewlett-Packard Co. and Canon Inc. It is based outside of Tel Aviv, Israel.

San Francisco-based Zinio distributes electronic versions of magazines like BusinessWeek, Cosmopolitan, and U.S. News & World Report that can be read using the company's Zinio Reader software. Synacor sells portal software that Internet service providers can use to provide subscription services to their customers.

"These new investments were made to support the wide-spread adoption, use and sharing of digital entertainment in the home," said Laura Anderson, an Intel spokeswoman.

Anderson declined to say how much money Intel had invested in the three companies, but she said that Intel expects to make a number of similar investments over the next year -- particularly in the area of digital video.

The money behind the investments came from the $200 million Digital Home Fund, which was established by Intel's venture capital division in January 2004 to foster the development of consumer electronics technology.

Intel Capital manages a number of such funds, including the $250 million Intel 64 Fund, which invests in companies developing products related to the company's Itanium microprocessor. The company has also set up a $500 million fund, called the Intel Communications fund, which invests in networking companies.

Posted by Chad Dickerson at 06:05 PM