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April 28, 2005

Shaheen promises restructuring, refocusing at Siebel

By Stacy Cowley

Two weeks after deposing Chief Executive Officer (CEO) Mike Lawrie for overseeing a quarter that fell far short of expectations, Siebel Systems Inc. on Wednesday released first-quarter results in line with the reduced forecast it warned about earlier this month. Siebel's license revenue for the quarter, which ended March 31, was US$75 million, its lowest level since 1998. Total revenue was $298.9 million, down 9 percent from last year's first quarter. Before Siebel's warning, the consensus estimate of analysts polled by Thomson First Call was for revenue of $337.5 million.

Excluding a development charge related to its January acquisition of Edocs, Siebel's net income was $3.2 million, or $0.01 per share. On a GAAP (General Accepted Accounting Principles) basis, the company posted a $4 million loss, compared to income of $31 million in the year-ago quarter.

Chief Financial Officer Ken Goldman said the company's top management was "embarrassed" by the quarter, and newly installed CEO George Shaheen told analysts, "We are all disappointed by our recent financial performance."

Shaheen offered few specifics about his plans for altering San Mateo, California-based Siebel's course, though he did say he expects to overhaul Siebel's sales process. Siebel's sales cycles are becoming longer and more complex, with customers enacting more rigorous approvals processes and increasingly holding out till the final days of quarters to complete deals, Shaheen said.

"We have a sales organization today that I think is somewhat complex and overly bureaucratic in how it communicates to customers and to ourselves," Shaheen said. "We could do a much better job as we do our account planning."

Goldman said Siebel will trim expenses across the board, with the aim of improving its operating margins by the end of the year. Staff cuts may also be involved, although Siebel has already shed thousands of employees over the past few years. In the past 12 months, its headcount grew by about 440 employees, to 5,260, as acquisitions added to Siebel's employee rolls.

Siebel deployed 290,000 additional CRM (customer relationship management) licenses during the quarter, a number executives called a company record. Total, Siebel counts 3.2 million live users on its software. Around 5,000 new subscribers went live on its Siebel CRM OnDemand service, bringing that offering's total customer base to 33,000. Siebel hosted service's growth still significantly lags that of its top ASP (application service provider) rival, Salesforce.com Inc., which added 32,000 subscribers in its most recent quarter (ended Jan. 31).

Siebel will meet with financial analysts on May 5, an event at which further details on Shaheen's turnaround plans are anticipated. In research reports circulated after Siebel's conference call late Wednesday, analysts focused on Siebel's high cost structure and shrinking deal sizes. Smith Barney analyst Tom Berquist speculated in a note that customers may be losing faith in Siebel's ability to remain a viable, independent business, thereby further depressing its deal pipeline and dragging out sales cycles.

During the conference call, Morgan Stanley analyst Ross MacMillan pointed out that Siebel rival SAP AG appears to have successfully compensated for the changing enterprise applications sales process by transitioning to a higher volume of smaller deals. Siebel's Shaheen responded that his company will continue examining how it can better align with customers' buying cycles.

Posted by Chad Dickerson at 05:36 PM

Nokia's new Nseries woos with cameras, music, 3G

By Laura Rohde

Nokia Corp. on Wednesday launched three new Nseries mobile handsets, hoping users will be seduced by the smart phones' built-in multimedia gadgets, which take print-quality pictures, read e-mail, play music, browse Web sites and display mobile TV. Nokia, in Espoo, Finland, is also touting new features such as 3G (third-generation) technology, multigigabyte memory, VHS resolution video, WLAN (wireless LAN) capabilities, megapixel cameras and lens from the German optics maker Carl Zeiss.

The new handsets are the N90, N91 and N70. The first of the new phones to hit the market, sometime before the end of June, will be the N90, which is being marketed as Nokia's premier mobile photography handset, though Nokia declined to give a specific launch date. The suggested retail price for the N90 is €700 (US$909), but a Nokia spokeswoman stressed that prices will depend on local markets and retailers.

The N90 has a multihinge twist-and-shoot design for its 2 megapixel camera, which also offers autofocus and 20x digital zoom as well as integrated flash. It has two screens: the main display has 352 x 416 pixels, while the second screen can shoot video in MP4 format using the display -- 352 x 416 pixels and 262,144 colors -- as a viewfinder, Nokia said.

The N70 is also a 3G smart phone with a 2 megapixel camera, video-calling capabilities, stereo FM radio, a digital music player and new 3D games all in a compact package measuring 108.8 millimeters by 53 mm by 17.5 mm. The phone will be available sometime in the third quarter for just over €500, Nokia said.

Additionally, a variant of the N70 for EDGE (Enhanced Data Rates for GSM Evolution) markets will be available at an unspecified later date.

The N91, which sports the ability to store up to 3,000 songs on the integrated 4G-byte hard disk and plays 12.5 hours of music, will begin shipping in November with a suggested retail price of about €700, the Nokia spokeswoman said.

The phones are initially being pitched at the European markets with pricing in euros. However, the tri-band handsets will be offered worldwide, allowing U.S. consumers, for example, to use the phones wherever WCDMA (Wideband Code Division Multiple Access) and GSM (Global System for Mobile Communications) networks are available, Nokia said.

The handsets are part of Nokia's answer to criticism that the world's largest handset maker had found itself behind the times when a demand for camera and clamshell phones sparked the market.

Nokia has aggressively sought to make its handsets more appealing to customers, particularly in the U.S. where demand for the clamshell form and cameras has been high. Last week the company surprised the market by beating first-quarter expectations with an 18 percent jump in net profit to €863 million coupled with a 17 percent gain in net sales to €7.4 billion. Speaking on a telephone conference call following the results, Chief Executive Officer Jorma Ollila attributed the gains to price cuts, increaesd marketing spending and new mobile phones with cameras and music players.

Nokia hopes that the new range of camera, based on its Series 60 software platform for smart phones and sporting stainless steel finishes and black pearl and silver colors, will continue that trend.

The company also wants to get users hooked on 3G and multimedia. As such it is partnering with companies to boost the appeal of its smart phones and entice users to utilize the Internet connection and audio/video features. On Tuesday, Nokia said that as part of a partnership with Yahoo Inc., it will begin embedding in some of its phones -- the 6680, 6681, 6630 and the N70 -- Yahoo messaging, search and Web browsing software. The 6680, 6681 and 6630 are already widely available in Europe and Asia, said Nokia spokeswoman Karoliina Lehmusvirta.

"We'll see the fruits of this partnership initially in Europe but there is great interest by both parties to expand the capabilities to additional handsets and markets, like the U.S.," Lehmusvirta said, "but we have no time tables to announce yet."

The agreement with Yahoo is not exclusive and Nokia is also currently in "discussions with other players, looking into similar partnerships," Lehmusvirta said, adding that she could not name any potential partners.

Posted by Chad Dickerson at 05:35 PM

April 27, 2005

Yahoo revamps personal search service

By Juan Carlos Perez

Yahoo Inc. has improved a personal search service it launched in October, increasing the ways users can share it with others, making it more widely and prominently available and opening it to developers through an application programming interface (API), the Sunnyvale, California, company said Tuesday. The service, which previously was called My Yahoo Search and has been renamed My Web, lets users save Web pages and can keep a history of users' search queries and the search results they click on.

"We're creating a personal search engine for each user, a personal index of the documents that most matter to them," said Tim Mayer, director of product management for Yahoo Search technology.

Like its predecessor, My Web is integrated with Yahoo's Web mail service to let users share its contents via e-mail. But a new feature in My Web is its integration with Yahoo's instant messaging service for sharing purposes. In the coming weeks, My Web will also be integrated with Yahoo's social networking and Web logging service, Yahoo 360. My Web, however, isn't at this point integrated with Yahoo's desktop search tool, Mayer said.

Whereas My Yahoo Search was only available on the Yahoo Next page, where the prototypes of new services are featured, My Web can be accessed from the main Yahoo Search page (http://search.yahoo.com) as well as from the new beta version of the Yahoo Toolbar at http://beta.toolbar.com.

Moreover, My Web has an API (application programming interface), which its predecessor lacked, so the service can be linked to other applications. The My Web API is at http://developer.yahoo.net/myweb/V1/listFolders.html.

Like its predecessor, My Web lets users annotate search results and pages they save, but new with My Web is the ability to create a public Web page of saved pages, a so-called link blog.

My Web can store pages in HTML format, but not images, audio or video, Mayer said. My Web can only point to that type of multimedia content and index its metadata, such a file's name and description, he said.

My Web can record users' search queries and the ensuing results that they click on, but this feature can be turned off, Mayer said. My Web also lets users delete previously saved items, he said. My Web also can import a user's bookmarks and make them part of its records.

To access My Web, which is currently available in a test, or beta, version, users need to be registered Yahoo users and log into their accounts. All the My Web information is stored on Yahoo servers, so users can access the service from any computer with Internet access and with Microsoft Corp.'s Internet Explorer or The Mozilla Foundation's Firefox browser.

My Web is a free service.

Yahoo competitors Google Inc. and Ask Jeeves Inc. offer similar services.

Posted by Chad Dickerson at 03:16 PM

April 25, 2005

DoubleClick bought for US$1.1B

By Laura Rohde

Two U.S. private equity firms have bought online advertising company DoubleClick Inc. for US$1.1 billion, DoubleClick announced Monday. The firms, Hellman and Friedman LLC of San Francisco and JMI Equity of San Diego, expect to complete the deal in the third quarter, DoubleClick said. JMI Equity, which focuses on the software and business service industries, will hold a minority interest.

Representatives from DoubleClick and Hellman and Friedman could not immediately be reached for comment.

Hellman and Friedman sees the acquisition of DoubleClick, in New York, as an opportunity to extend its online advertising and marketing and data businesses, in part though the recognizable DoubleClick brand as well as utilizing its experienced staff, the company said.

DoubleClick stockholders will receive $8.50 for each share of DoubleClick common stock. The company's board of directors have approved the deal, which is still subject to shareholder approval and other closing conditions.

The company's core business is serving ads to Web sites, a market that has become increasingly competitive with Yahoo Inc., Google Inc. and others entering the fray to drive down prices. In 2004, DoubleClick hired the investment bank Lazard Freres & Co. to evaluate future options for the business including a recapitalization, extraordinary dividend, share repurchase or a spin-off.

Posted by Chad Dickerson at 02:43 PM

Adobe aims at Microsoft

By Stacy Cowley, Martyn Williams and Laura Rohde

Adobe Systems Inc.'s agreement this week to acquire Macromedia for approximately US$3.4 billion will give the company a formidable collection of Web publishing and document management software -- and will place it squarely in the path of tools rival Microsoft. The deal marries Adobe's ubiquitous PDF and Acrobat Reader software with Macromedia's Flash products for creating media content. Adobe will also have a sizable portfolio of desktop software popular with creative professionals -- including Photoshop, Illustrator, and Macromedia's Freehand and Dreamweaver.

"I see this as both companies bulking up against Microsoft," said Steven Brazier, an analyst at Canalys.

The expanded Adobe could create a variety of rich media and Internet applications that use Flash, bumping into areas Microsoft has shown interest in, said Bola Rotibi, an analyst at Ovum. Although Flash is best known to Web surfers as a format for viewing animations, the technology is a powerful development platform, and Adobe said leveraging it will be a "key component" of its strategy for a combined company.

"When you think of where Microsoft is headed with the future of its Media Player and Media Center PCs, this goes head-to-head," Rotibi said.

Adobe also gains Macromedia's base of ColdFusion Web developers. RedMonk analyst James Governor predicted that dynamic forms that allow users to create, change, and share information online will be one of the first products of the marriage. Graphics automation is also in the cards. Both of these capabilities would fly in the face of Microsoft's plans.

"Adobe's ambition in this acquisition looks like a bit of a Longhorn-killer to me," Governor said.

Microsoft has been working on dynamic-form technologies and a graphics system called Avalon as part of its upcoming Longhorn OS. By moving into these areas, Adobe may be trying to cut the software giant off at the pass, analysts said.

Meanwhile, developers anxiously await decisions about what products will survive the merger. Company executives declined to comment on product plans until after the deal's completion, but Adobe and Macromedia have several products that compete head-to-head -- such as Dreamweaver and Adobe's GoLive, and Freehand and Illustrator.

During a conference call with company executives, analysts repeatedly raised the question of a possible antitrust investigation, but executives dismissed the possibility.

"There's a lot of competition. CorelDraw outsells both of us in Germany, and there are open source products like Killustrator [which changed its name to Kontour in 2001 to avoid an Adobe lawsuit]. We don't see it as an issue," Adobe CFO Murray Demo explained.

Posted by Chad Dickerson at 02:43 PM

RFID hooks ride on German mass transit

By John Blau

Efforts to introduce electronic-ticketing systems in Germany's huge mass transit sector have moved forward with the successful testing of a smart card system that combines RFID (radio frequency identification). T-Systems International GmbH, the IT services and infrastructure arm of German telco Deutsche Telekom AG, has developed an e-ticketing system in collaboration with the German Mass Transit Authority (VDV), which represents hundreds of regional bus and train companies in the country, said Frankfurt-based T-Systems in a statement on Thursday.

The system consists of several components: the so-called "VDV core application," a semiconductor-based smart card equipped with a miniature antenna, RFID technology for retrieving data from the cards over the airwaves and sensor-based card readers.

The technology allows passengers to pass by a card reader without having to swipe or insert their cards into the device.

Customer data, such as identification number and pricing, are contained on a chip embedded in the smart card. "This is not an RFID chip, which essentially is dumb, but a chip that contains an operating and software application," said T-Systems spokesman Albert Hold. "All data is encrypted for secure transmission."

RFID is used in the process because the radio technology doesn't require the embedded chips to be powered in order to retrieve information, according to Hold. Also, the cards can be read remotely.

"With our system, passengers don't have to remove the cards from their wallets," he said.

T-Systems has also developed a back-end application for processing usage and billing data. The company aims to host the application in its own data centers.

The necessary hardware will be supplied by equipment manufacturers, which have yet to be announced, according to Hold.

T-Systems hopes to start marketing the e-ticketing system to German mass transit companies after approval of the VDV core application standard, which is expected in June, the spokesman said.

Numerous mass transit companies in the country have expressed interest in the system, which aims to reduce operating costs and curb manipulation from paper-based tickets, according to Hold.

The e-ticketing venture is one of many RFID projects in Germany, which is at the forefront of smart-tag development in Europe.

Metro AG, one of the world's largest retail groups, which is based in Düsseldorf, Germany, is currently rolling out the technology across its German stores.

Fans attending the FIFA (Fédération Internationale de Football Association) World Cup soccer tournament in Germany next year must accept RFID chips on their tickets in order to enter the stadiums.

And earlier this week, Siemens Business Services GmbH & Co. OHG, Fujitsu Siemens Computers (Holding) BV and Intel Corp. joined the German hospital Klinikum Saarbrücken in southern Germany in a pilot project that will test the use of RFID chips embedded in wristbands containing the patient's number.

Posted by Chad Dickerson at 02:42 PM

EBay enters Eastern Europe with Polish service

By Scarlet Pruitt

Time to buy a new samochoód? Or maybe you wanted to sell pisanki over the holidays to make some extra cash. Then eBay Inc.'s announcement Friday that it launched an online auction service in Poland may be welcome news. Poles who may have already been using eBay to sell Easter eggs (pisanki) or buy a car (samochoód) are now being offered a service in their own language and currency at www.ebay.pl.

EBay's move into Poland represents its first service in Eastern Europe, a market that is seen as having strong growth potential. Poland and nine other Eastern European countries joined the European Union last year, and have been working diligently to develop their e-commerce markets.

Poland's business-to-consumer e-commerce market is expected to grow by 400 percent to US$1.2 billion over the next three years, eBay said, citing numbers from researcher IDC.

The San Jose, California, auction powerhouse isn't the only company recognizing Poland's potential. Hewlett-Packard Co., for instance, announced last week that it is opening a BPO (business processing outsourcing) center in the country.

EBay has other local services in Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Malaysia, the Netherlands, New Zealand, the Philippines, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, the U.K. and the U.S.

Posted by Chad Dickerson at 02:41 PM

Hackers plot more phishing, mobile viruses

By Scarlet Pruitt

Mass-mailer viruses like Bagle, Netsky and MyDoom are so passé. Hackers in the know are now concentrating on mobile phone viruses, phishing scams and exploiting vulnerabilities, according to McAfee Inc. The antivirus vendor is set to release its quarterly report on Internet threats on Monday, with an eye on the dangers that lie ahead. More than 1,000 vulnerabilities were discovered in the first quarter of this year, a 6 percent increase from a year ago, McAfee said. And the outlook for the remainder of the year is not very reassuring, considering what the hackers have in store.

Almost gone are the days of mass-mailer viruses, which spread by sending copies of themselves to e-mail addresses harvested from an infected machine, according to Vincent Gullotto, vice president of McAfee's Anti-Virus Emergency Response Team.

Hackers are now focusing their efforts on more lucrative, and malicious ventures, Gullotto said.

Phishing scams, for instance, are some of the fastest-growing threats. In this type of scam, hackers use e-mail to direct Internet users to Web sites designed to look like legitimate e-commerce sites, such as online banks and auction services. Hackers actually control the sites and use them to steal sensitive information such as bank account details and passwords.

Phishing is becoming even more nefarious as hackers are targeting their attacks, Gullotto said. Using tools like spyware programs and keystroke loggers, hackers are figuring out which banks Internet users do business with, he said. These kind of focused attacks are already common in Brazil and are set to grow worldwide, he added.

"Before it was a just a numbers game -- the more people you tried to fool, the higher rate of success," Gullotto said.

Criminals are also discovering new possibilities with mobile devices. Mobile viruses, which until recently seemed an unrealized threat, are now on the move, McAfee said. While the company detected five mobile malware threats in the fourth quarter of last year, that number now stands at 50, it said.

However, mobile attacks won't grow as rapidly as computer threats because of the variety of operating systems and the fact that devices are only intermittently connected to the Internet, Gullotto said.

"We still don't see the ability to produce a worldwide outbreak," he said.

If schemes designed to steal information, bungle mobile phones and spy on users were not enough, McAfee also sees a marked increase in non-malicious threats, such as adware. These Internet nuisances, which perform actions like repeatedly sending advertising pop-ups, are approaching the annoyance level that only spam once enjoyed, Gulloto said.

"Adware is growing exponentially and it has the ability to spread very easily," he said.

More traditional threats like Trojan horse that masquerade as benign applications but in fact do harm, and bots, which are used to crawl Web sites collecting information, are still prevalent. Users should shield themselves as much as possible from all these threats by making sure that they use up-to-date antivirus software, employ spam filters and install the latest patches, McAfee said.

Posted by Chad Dickerson at 02:41 PM

April 22, 2005

Google delivers robust Q1 growth

By Juan Carlos Perez

Google Inc.'s revenue and earnings grew significantly in 2005's first fiscal quarter compared with the same period last year thanks to vibrant sales of online advertising, the Mountain View, California, company said Thursday. Revenue came in at US$1.256 billion for the quarter, which ended March 31, up 93 percent from 2004's first quarter. Of that total, Google paid out $462 million to partner Web sites that carry ads sold by Google. These payments are called traffic acquisition costs, or TACs.

Meanwhile, Google generated net income of $369 million, or $1.29 per share, up from net income of $64 million, or $0.24 per share in 2004's first quarter. This represents a net income increase of about 477 percent.

Unlike most publicly traded companies, Google doesn't provide financial forecasts to analysts ahead of its earnings announcements.

"We're obviously very happy with our first-quarter results," said Eric Schmidt, the company's chairman and chief executive officer, during a conference call to discuss the earnings announcement.

"I'm particularly proud of our sound execution throughout this period of very rapid growth. Again this quarter, Google innovated, grew and delivered strong financial results while concurrently strengthening our relationships with our advertisers and users," Schmidt added.

At the end of the first quarter, Google had 3,482 full-time employees, compared with 3,021 on Dec. 31, 2004, the end of 2004's fourth quarter.

Google-owned sites contributed 52 percent of the total revenue, with the rest coming from third-party Web sites that run ads distributed by Google. Revenue from Google-owned sites grew 116 percent to $657 million. Revenue from partner sites rose 75 percent to $584 million, helped particularly by the first full quarter of partnership with America Online Inc.'s Europe division, said George Reyes, Google's chief financial officer.

On the topic of ad network partners, Ask Jeeves Inc., which is in the process of being acquired by IAC/InterActiveCorp, has a contract with Google that runs through 2007 and will continue throughout the merger process, Reyes said.

International operations contributed 39 percent of total revenue in the first quarter versus 35 percent in the third quarter. "We're pleased that our efforts overseas are paying off handsomely," Reyes said. "We continue to call out international operations as an area of significant focus for us this year."

Larry Page, Google co-founder and president of products, highlighted some major new and enhanced services and products that Google introduced during the first quarter. They included the ability for users to customize the Google News page; an upgrade to the Google Desktop Search tool, which exited its beta, or test, phase; improvements to the Gmail Web mail service, such as a significant storage increase; and the launch of the Google Mini enterprise search appliance, aimed at small and medium-sized businesses.

Meanwhile, Sergey Brin, Google co-founder and president of technology, highlighted improvements in the company's advertising and compensation programs.

During the conference call's question-and-answer period, the executives were asked to comment on the problem of click fraud, which happens when someone clicks on an online ad multiple times to inflate the fee charged to the advertiser by the ad seller, such as a search company. Page said Google has technology in place to detect and combat click fraud and that the problem hasn't had a material impact on Google's business.

In response to a question about copyright claims against Google, such as the recent lawsuit by Agence France Presse (AFP) over the inclusion of its content in Google's news aggregation page, Schmidt said Google is very aware of and sensitive to this issue and that its mission is to collect information without infringing on copyrights.

Days after AFP filed its lawsuit last month, Google announced its decision to remove the news agency's content from its Google News page.

Posted by Chad Dickerson at 05:34 PM

Google service compiles users' search history

By Juan Carlos Perez

Users who routinely can't find Web sites they previously located using Google Inc.'s search engine are getting some help from the Mountain View, California, company. To assist users in looking for previously found, but now misplaced, Web site links, Google will introduce on Wednesday a new service that logs users' Web search queries and the results they click on.

"Essentially we're letting you record searches you've done on Google for easy recall later," said Marissa Mayer, Google's director of consumer Web products.

To access the service, called My Search History, users need a Google account, which can be obtained for free at http://www.google.com/accounts by entering an e-mail address and a password.

Once users log in to the service at http://www.google.com/searchhistory/, all their queries and clicked-on search results are stored in a Google server.

Users can view their search history by date or they can search through it from a query box devoted for that purpose. The new service indexes the full text of all Web pages a user clicked on from the results page.

Users have the option of suspending the service to prevent it from recording certain searches or of eliminating it altogether. Users can also prune the history list by manually removing items from it.

Through its integration with www.google.com, the new service enhances the regular search engine experience. For example, search results served on www.google.com will feature additional information, such as the number of times the user has clicked on a particular search result. Also, search history results are featured atop the regular list of www.google.com results.

Within the My Search History interface, the service also can group search results that are topically related, so that users can see all results about "baseball" for example. Beyond matching keywords, this feature also recognizes synonyms, Mayer said.

The service also features a graphical calendar so users can view the searches they conducted on specific days.

Like so many Google services, this one is being launched with a beta tag, meaning that the company doesn't consider it a final product but rather one that is still in a test phase.

Because this is a server-based product, users can access it from any computer connected to the Internet, not just from their primary PC.

Search engine rival Ask Jeeves Inc. introduced a similar service last year called MyJeeves. Unlike the Google service, MyJeeves doesn't record all searches by default but rather relies on users actively hitting a "save" button next to a result to have it archived.

Another difference is that MyJeeves lets users categorize saved search results into folders, append comments to the results and share the results with other users via e-mail, features that Google's My Search History doesn't offer.

Google's My Search History only records Web searches done from www.google.com, not from other Google search services, such as Google Local, Froogle, Google News or Google Image Search.

Users need to enable Javascript in their browsers for My Search History to work. The service can be accessed from a variety of browsers, including Microsoft Corp.'s Internet Explorer (version 4.0 and higher), America Online Inc.'s Netscape (version 6.0 and higher), Apple Computer Inc.'s Safari (version 1.2 and higher) and The Mozilla Foundation's Firefox and Mozilla.

Regarding privacy, a user's search history is password-protected to prevent unauthorized users from accessing it. On the backend, Google obviously is collecting usage information and tying it to the user's log on information, IP address, browser type, browser language and any cookies that uniquely identify the browser.

Google doesn't currently have plans to use the collected information to serve up ads to the users of this service, Mayer said. "We understand this data is very sensitive and we're going to treat it with the utmost integrity in terms of how it's used," she said.

There is quite a bit of overlap between this server-based service and Google's desktop search product, which is PC software for indexing the contents of a user's hard drive, including all Web pages called up in the user's browser. Thus, My Search History has been designed to yield to the desktop search tool in situations in which both would be serving up the same search result, Mayer said.

Although My Search History and the desktop search tool aren't very tightly integrated today, Google will probably build tighter links between them in the future, she said. "I think that makes logical sense. There are things My Search History does really well that desktop search should adopt and vice versa," Mayer said.

Posted by Chad Dickerson at 05:30 PM

Vodafone plans 'push' email service across Europe

By Laura Rohde

In a direct challenge to Research In Motion Ltd. (RIM) and its popular BlackBerry wireless device, Vodafone Group PLC plans to launch its own service later on Thursday to push e-mail to mobile handsets. Vodafone already offers the service in Germany and Italy, but will now begin offering it across Europe, according to a person familiar with the situation.

In the past, users have had to check their mailbox periodically and then "pull" new mail from the server to their handset. In a "push" e-mail service, the server notifies the handset automatically as soon as new mail is available, and then pushes the message out to the handset.

The popularity of the BlackBerry device, which pioneered the push e-mail technology, has proven there is a robust market for the service in the enterprise.

Vodafone, in Newbury, England, has been making a concerted effort to cater for the enterprise market with new 3G (third-generation) mobile communication products and services. One such product, launched last year, is its Mobile Connect 3G/GPRS (General Packet Radio Service) datacard range, that plugs into a laptop offering maximum download speeds of 384K bps (bits per second) and a top upload speed of 64K bps.

Vodafone also has an ongoing relationship with RIM, and offers its customers in Ireland and New Zealand wireless e-mail capabilities using the BlackBerry 7230 handset.

Posted by Chad Dickerson at 05:27 PM

Wall Street Beat: Tech earnings bring some relief

By Marc Ferranti

IT company earnings announcements this week are shining some light on a gloomy technology-investment market, reeling from the poor financial reports that were issued earlier this month. The heartening thing about this week's reports was that upbeat company news came from various sectors. Company heavyweights in the processor, telecommunications, storage and Internet markets did well. Acquisition news, which often spurs heavy trading in the sector involved, set the stage for the week.

Macromedia Inc. shares (ticker symbol: MACR) spiked US$3.27 to $36.72 Monday after the announcement that it would be acquired by Adobe Systems Inc. for $3.4 billion in stock. The acquisition merges companies that together will have a range of software to distribute all sorts of media to desktop and mobile devices. The games sector was brightened by Monday's other acquisition announcement: Electronics Boutique Holdings Corp. (ELBO) skyrocketed $14.09 to $55.21 after it was announced Monday that GameStop Corp. would buy it in a $1.44 billion cash-and-stock deal.

Sector bellwethers including Intel Corp. and EMC Corp. and Yahoo Inc. kept the momentum going Tuesday, though fresh fears about inflation, sparked by U.S. Department of Labor figures showing a spike in March consumer prices, exerted some downward pressure on share prices.

Intel quarterly earnings, fueled by sales of chips for mobile devices, included net income of $2.2 billion, up 25 percent from 2004's first-quarter net income of $1.7 billion, coming out to earnings per share of $0.34 and handily beating analyst estimates of $0.31. An especially good omen was that the company also forecast better profit margins, which means that it expects strong user demand for higher-priced chips. Though Intel shares (INTC) Wednesday went as high as $23.44, they settled down to close at $22.66, up $0.03.

Data storage company EMC (EMC), meanwhile, closed Wednesday at $12.99, up $1.52, after it reported that first quarter profits nearly doubled on growth across its data systems, software and services units.

One of the more interesting harbingers of things to come, however, was Yahoo's quarterly report. The company reported net income of $205 million, or $0.14 per share, beating analyst forecasts by $0.02 per share. The exciting thing for company watchers, and anyone interested in online business models, was that Yahoo said that not only are more visitors hitting the site, but that they spend more time there as well. Site visitors called up more than 100 billion page views in March, a hike of 34 percent from the year-earlier figure. Yahoo shares (YHOO) rose $1.43 to close at $34.65 Wednesday.

Yahoo put pressure on archrival Google Inc., which on Thursday did not disappoint. Citing strong interest from advertisers, the company announced net income of $369 million, or $1.29 a share, compared with $64 million, or $0.24 cents a share, in the same quarter last year. Analysts had expected first-quarter earnings of $0.92 a share. In anticipation of the news, company shares (GOOG) rose $6.12 to close at $202.22. The strong report also pushed shares up Friday morning, when the company share price rose again, to $219.53, shortly after the market opened.

The good news helped drive the Nasdaq Composite Index (COMPX) up by 48.65 points to close Thursday at 1962.41, the biggest leap since March last year, though it showed signs of wavering yet again Friday morning, dropping 15 points to about 1947 after opening.

In a week jammed with earnings action, other highlights included:

-- EBay Inc. Wednesday reported net income growth of 28 percent to $256.3 million, or $0.19 per share. Excluding one-time items the figure was $0.20, $0.02 per share above analyst expectations. Though the company raised earnings guidance for the year, analysts had hoped for an even faster pace of growth, and thus company shares (EBAY) slipped by $0.03 Thursday to close at $33.08.

-- Helped by cost-cutting measures, Lucent Technologies Inc. Tuesday reported income of $282 million for earnings of $0.06 per share, beating analyst expectations of $0.04 per share. Wednesday company shares (LU) rose $0.25 Wednesday to $2.62.

-- AT&T Corp. Thursday reported net income of $304 million, with earnings per share of $0.66, beating analyst expectations of $0.59 per share. Cost cuts also played a part for AT&T. Company shares (T) closed the day at $18.75, up $0.32.

Posted by Chad Dickerson at 05:24 PM

MP3 player sales drive Creative to record Q3

By Martyn Williams

Strong sales of MP3 players helped Creative Technology Ltd. achieve record sales during the first three months of this year but increasing competition drove down profits, the Singapore-based company said Friday. Net sales for the January to March quarter were US$333.8 million, up from $201.8 million a year earlier, which was a company record for any quarter other than the holiday season. Net income was $15.9 million for the quarter, down from $57 million in the same period a year ago. Both periods included extraordinary gains on investments. Excluding those gains, net income for the quarter was $1.1 million versus $8.7 million a year ago.

"Strong sales of the Zen Micro 5G-bytes [player] and MuVo Micro flash player helped us to achieve sales of 2 million MP3 players in the period," said Craig McHugh, president of Creative Labs Inc., the company's U.S. unit, in a conference call with analysts. Creative saw strong demand in all regions for its MP3 players and achieved sales of 2 million MP3 players for the second quarter in a row, he said.

McHugh credited the higher sales to the general expansion of the MP3 player market in addition to regional consumer advertising campaigns in Asia, Northern Europe and the U.S. West Coast; a channel marketing campaign; lower prices; and the addition of new retail outlets. These new retailers included Best Buy and Circuit City in the U.S.

The quarter saw increased competition in the market especially from Apple Computer Inc., which in January reduced the price of its popular iPod Mini player and introduced the low-cost iPod Shuffle flash player. This pushed Creative to reduce prices and led to a reduction in the profit margin on each player it sold.

"During the quarter we reduced the selling price following sharp price drops by Apple on the Mini and the introduction of flash players as lower than expected prices," he said. "These were the major factors in the decrease of gross margins."

Gross margin during the quarter averaged 23 percent, which is substantially lower than the 34 percent that Creative reported a year ago. In the near future the company expects to see gross margins fall towards 20 percent, said McHugh.

For the current quarter, the period from April to June, Creative is expecting revenue of between $330 million to $360 million, which would represent a 65 percent to 80 percent increase over the same quarter in 2004.

Posted by Chad Dickerson at 05:20 PM

Time Warner, Comcast to buy Adelphia

By Grant Gross

Time Warner Inc. and Comcast Corp. have reached an agreement to acquire cable television provider Adelphia Communications Corp., which filed bankruptcy in July 2002. Adelphia has accepted the bid, worth approximately $17.6 billion, instead of a $17.1 billion bid from rival cable operator Cablevision Systems Corp. The deal must be approved by the U.S. Bankruptcy Court for the Southern District of New York.

Adelphia expects no immediate effect on consumers and employees, the company said in a statement. The deal should take nine to 12 months to complete, Adelphia said.

If the deal goes through, cable operators Time Warner and Comcast would pay US$12.7 billion and 16 percent of Time Warner Cable Inc.'s common stock, the companies said in a press release Thursday. Time Warner would pay $9.2 billion in cash, with Comcast paying $3.5 billion. As part of the deal, Time Warner Cable and Comcast would swap some cable systems, and Time Warner Cable will buy back a 21 percent interest that Comcast has in it.

Adelphia provides cable TV and cable broadband services to customers on the U.S. East Coast, parts of the Midwest and the West Coast. Adelphia customers would see faster deployment of video, high-speed data, voice and other services, according to the press release.

In the deal, Time Warner Cable would gain cable systems passing about 7.5 million homes, with approximately 3.5 million basic subscribers. Comcast would gain about 1.8 million new basic cable customers for a net cash investment of about $1.5 billion. Following the deal, Comcast would serve about 23.3 million customers, clustered around Washington, D.C., and in Florida, Pennsylvania and Massachusetts.

Both Comcast and Time Warner hailed the deal as good for their long-term growth. The deal provided Adelphia the "best value for its bankruptcy constituents," Bill Schleyer, Adelphia's chairman and chief executive officer, said in a statement. The deal is a better option than Adelphia trying to emerge from bankruptcy as a stand-alone company, he added.

The agreement may not mean the end to bidding on Adelphia, said Jeff Kagan, an independent telecom analyst. "Typically we'd expect to see Comcast and Time Warner upping their bid and hear nothing else from Cablevision," he said in an e-mail. "But Cablevision sees as many reasons to buy as Comcast and Time Warner. The deal will probably go to Comcast and Time Warner, but this is a very interesting deal to watch."

Posted by Chad Dickerson at 01:10 PM

China's 3G standard marks handset milestone

By Sumner Lemon

In a move expected to boost the prospects of China's homegrown 3G (third-generation) mobile standard, four cellular handsets based on the technology will be demonstrated in Beijing on Friday, according to the company that supplied chipsets for the phones. Lenovo Group Ltd., LG Electronics Inc., DBTel Inc. and Ningbo Bird Co. Ltd. will demonstrate handsets based on TD-SCDMA (Time Division Synchronous Code Division Multiple Access) chipsets from Commit Inc., the Shanghai-based chipset vendor said. In addition, these companies and others will display 10 prototype handsets based on Commit's chipset, it said.

These are the first phones to be produced using Commit's two-chip TD-SCDMA chipset and the announcement marks an important milestone for the company, according to Andy Yang, the director of Commit's Marketing Department.

Commit was established in 2002 to develop TD-SCDMA chipsets. The company is backed by more than 15 investors, including LG, Texas Instruments Inc., Nokia Corp. and others. The company plans to introduce a single-chip TD-SCDMA chipset during the first half of next year, Yang said. A single-chip offering will require less space, allowing smaller handset designs, and consume less power.

TD-SCDMA was largely developed in China and is expected to be one of several 3G technologies rolled out in China when the country issues 3G licenses. China's Ministry of Information Industry (MII), which oversees the country's telecommunication services industry, is expected to issue 3G licenses later this year.

However, the exact role that TD-SCDMA will play when China rolls out 3G services is unclear. "One of the key obstacles has been getting handsets ready that support the technology," said Ted Dean, managing director of BDA China Ltd., in Beijing.

So far, Samsung Electronics Co. Ltd. is one of the few companies to have introduced TD-SCDMA handsets and these are being used in ongoing trials of TD-SCDMA networks, Dean said. "Any more handsets that come into the market, any more vendors that are supporting the technology on the handset side definitely helps," he said.

Posted by Chad Dickerson at 01:07 PM

April 20, 2005

Yahoo exceeds Wall St. estimates in Q1 2005

By Juan Carlos Perez

Yahoo Inc. topped financial analysts' earnings and revenue forecasts for its first quarter of 2005, the Sunnyvale, California, provider of online content and services said Tuesday. Revenue excluding traffic acquisition costs (TAC) came in at $821 million, up 49 percent from 2004's first quarter and above the $796.8 million consensus estimate from financial analysts polled by Thomson First Call. Yahoo generated revenue of $1.174 billion, up 55 percent from 2004's first quarter. TAC is the portion of revenue that Yahoo pays to the third-party affiliates of its Overture online ad network.

Net income was $205 million, or $0.14 per share, including $15 million, or $0.01 per share related to the sale of certain investments and settlements, up from $101 million, or $0.07 per share in 2004's first quarter. The analyst consensus had been for $0.11 per share, excluding the $0.01 investment and settlement gain, so Yahoo exceeded that forecast by $0.02 per share.

During a conference call with analysts to discuss the quarterly results, Yahoo executives said they were extremely pleased with the results of the quarter, which ended March 31, 2005.

"Yahoo is off to a terrific start in 2005. We have raised the bar even higher in the first quarter. The pace of innovation and the appeal of our services has translated into deeper relationships with our users and continued growth for Yahoo," said Terry Semel, Yahoo's chairman and chief executive officer.

"Our intention is to continue capitalizing on our industry leading assets to deliver consistent and powerful growth over the long term," he added.

The strong results were driven primarily by Yahoo's sales of online advertising, which continued to grow, with a particular bright spot in the text ads that are triggered by search engine queries, executives said.

"We are in an excellent position to take advantage of all forms of advertising opportunities on the Web. We appeal to a strong and diverse range of customers including hundreds of blue chip traditional marketers, hundreds of thousands of small and medium size businesses and hundreds of millions of consumers and we can extend these opportunities very rapidly on a global scale," Semel said.

The executives are so optimistic about the rest of the year that they raised their financial forecast for revenue excluding TAC, which for the entire 2005 fiscal year is now expected to fall between $3.565 billion and $3.715 billion, up from a previous range of between $3.365 billion and $3.565 billion.

Yahoo ended the quarter with 372 million unique users, up 36 percent from 2004's first quarter. Of the 372 million, 176 million were active registered users, up 25 percent. Active registered users are those 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. Among the active registered users, 8.9 million were fee-paying users -- defined as those who pay for at least one Yahoo service -- up 53 percent.

Meanwhile, Yahoo's workforce increased by 36 percent from 2004's first quarter to 8,023 employees.

Posted by Chad Dickerson at 01:28 AM

New Siebel CEO to receive $1 million annual salary

By Stacy Cowley

Siebel Systems Inc. will pay new Chief Executive Officer George Shaheen an annual salary of US$1 million, under an employment agreement substantially the same as the one it signed a year ago with deposed CEO Mike Lawrie. Shaheen's agreement with the San Mateo, California, software maker entitles him to options on 2 million shares of company stock, with a five-year vesting schedule and a strike price set at the market value of Siebel's shares on the date of the options grant. Shaheen will also receive 350,000 shares of restricted company stock, 150,000 of which vest June 30. The remaining portion will vest in two years.

Siebel's shares (SEBL) closed trading Monday on the Nasdaq exchange at $8.63, valuing Shaheen's stock grant at $3 million.

Shaheen is also eligible for a target bonus of 125 percent of his base salary, which Siebel's board can increase to 200 percent if it judges he has "substantially exceeded" goals.

Lawrie received the same salary, options and stock grant as Shaheen, according to a copy of his offer letter that Siebel included in regulatory filings. In the event of Lawrie's termination, his agreement called for him to receive two years target salary and bonus -- a payout of $4.5 million -- along with termination of restrictions on his stock grant and immediate vesting of 40 percent of his 2-million-shares option grant.

Siebel's shares have sunk since Lawrie was named Siebel's CEO on May 3, 2004. They ended trading that day, before the announcement of Lawrie's appointment, at $10.62.

Posted by Chad Dickerson at 01:27 AM

After controversy, Torvalds begins work on 'git'

By Robert McMillan

A dispute between a prominent open-source developer and the maker of the software used to manage Linux kernel development has forced Linux creator Linus Torvalds to embark on a new software project of his own, in addition to the Linux kernel. The new effort, called 'git,' was started last week after a licensing dispute forced Torvalds to abandon the proprietary BitKeeper software he had been using to manage Linux kernel development since 2002. The conflict touches on the difference between open-source developers who view Linux's open, collaborative approach as a technically superior way to build software and free software advocates, who see the ability to access and change source code as fundamental freedom.

As a result of the dispute, Torvalds is now working with other Linux developers to create software that will be able to quickly make changes to 17,000 files that make up the Linux kernel, the central component of the Linux operating system. "Git, to some degree, was designed on the principle that everything you ever do on a daily basis should take less than a second," Torvalds said in an e-mail interview.

The Linux developers will use git to replace BitKeeper, which is developed by BitMover Inc., based in South San Francisco, California.

Though BitMover allowed Linux developers to use a free version of its software for kernel development, the company was unhappy with efforts by developer Andrew Tridgell to develop an open source version of the BitKeeper client. In February, Tridgell wrote a tool that could work with source code stored in BitKeeper, and after several months of negotiations, BitMover decided to revoke the Linux developers' right to use the current BitKeeper software for free.

Free software advocates argue that Tridgell's code simply provided them with a way of contributing to the Linux kernel without accepting BitKeeper's proprietary software license. As Tridgell's client could only be used to access BitKeeper data, and did not replace the entire system, Torvalds now finds himself looking for a new source code management system, he said.

The most prominent free software advocate, Richard Stallman, had long called for kernel developers to abandon BitKeeper, arguing that its use was helping to convince kernel developers that the use of "non-free" software was an acceptable practice.

Now that goal has effectively been achieved, because of the impasse between Tridgell and BitMover.

Torvalds is clearly unhappy about being forced off BitMover. He called Tridgell's client a "bad project," and said that the software it produced has no benefit to Linux developers, BitMover, or even Tridgell himself.

"It ended up hurting people that didn't agree with (Tridgell)," he said of the software. "And it doesn't actually help anybody, since it only assured its own irrelevance by making BitKeeper no longer be available."

In the last week, Linux's creator has come under fire for publicly slamming Tridgell's efforts. Critics say that Tridgell's reverse-engineering of BitKeeper is analagous to the work Torvalds himself has done with Linux, which itself is based on Unix.

But in the e-mail interview Torvalds explained his perspective, using his usual brand of utilitarianism.

According to Torvalds, Tridgell's software was "bad" simply because it ultimately served no useful purpose. "To me, a program is only as good as what it does," he said. "In this case, it only caused problems."

Tridgell himself declined to comment on the matter, except to confirm, via e-mail, that he wrote a tool that interoperated with BitKeeper and to assert that he "developed the tool in a completely ethical and legal manner."

Both Torvalds and Tridgell, the founder of the open-source Samba project, work for the Open Source Development Labs Inc., (OSDL) a non-profit consortium based in Portland, Oregon, which promotes Linux use. Though OSDL management was "very involved" in the matter, according to a group spokeswoman, it appears to have been unable to broker a compromise in the situation.

Though a number of open source code management products are already available, including a popular system called CVS (Concurrent Version System), they tend to perform slowly when confronted with a project the size of the Linux kernel, Torvalds wrote. "Taking tens of seconds to apply a patch just because the source base is big is just not acceptable."

The Linux kernel is managed by a number of "subsystem maintainers," each of whom accepts bug fixes and new code submissions for a different part of the Linux kernel, and then forwards his changes to either Torvalds himself, who manages the next-generation kernel, or to Andrew Morton, who manages the more stable version of the kernel, which is the basis of most commercial Linux products. Though not all kernel developers used BitKeeper, critics had said that Torvalds' use of the software placed pressure on other developers to use it as well.

Torvalds was unsure how much of a disruption the new source code management system will represent for kernel developers. Torvalds has already put his kernel development work on hold for a week to work on git, but he said the real cost would be measured by how much the new software would slow down the numerous maintainers that contribute to the kernel.

Git, which is not yet "useable," according to Torvalds, will be harder to use and lack many functions available with BitKeeper. "How much that slows us down, we'll see," he said. "The good news is, these are some smart people we're talking about."

The source code management software is not the first side-project that Torvalds has worked on. He has also written software, called "sparse," which is used to check for errors in code. "I actually enjoy programming (outside of the kernel) occasionally, because it's a huge relief to not have to be so horribly careful, as you need to be in the kernel."

Torvalds seemed aware that his decision to drop BitKeeper would also be controversial. When asked why he called the new software, "git," British slang meaning "a rotten person," he said, "I'm an egotistical bastard, so I name all my projects after myself. First Linux, now git."

Posted by Chad Dickerson at 01:27 AM

April 19, 2005

Lucent reorganizes as profits rise

By Peter Sayer

Lucent Technologies Inc. reported a fourfold year-on-year increase in net income for the second quarter of its 2005 fiscal year, on revenue up 6 percent, and announced a reorganization of its network equipment business units. The company reported net income of US$282 million for the quarter ended March 31, for earnings of $0.06 per share. Net income was up 315 percent on the $68 million reported a year earlier.

Revenue totalled $2.34 billion for the quarter, up 6 percent from $2.19 billion a year earlier.

Analysts had expected earnings of $0.04 per share and revenue of $2.31 billion, according to a poll of financial analysts conducted by Thomson First Call.

A tax refund contributed around $0.02 per share of the earnings, the company said.

Looking ahead, the company expects its revenue to grow faster than the market, increasing by 4 percent to 6 percent over the full fiscal year.

"The greatest near-term opportunity is wireless," Chairman and Chief Executive Officer Patricia Russo told analysts and journalists during a conference call.

The market for fixed-line equipment remains "challenging," she said, although she expects the decline in this sector to stop and revenue to stabilize at this quarter's level.

"We have shifted our investment away from legacy products," she said.

The company has cut its workforce by 800 employees since the start of the year, to 31,000 workers, Chief Financial Officer Frank D'Amelio said. Most of the 800 jobs cut were in the fixed-line business, which will lower expense levels in that sector, he said.

Despite declining revenue from legacy telecommunications products in the U.S. and from PHS (Personal Handyphone System) mobile phone systems in China, D'Amelio said he remains confident the company will achieve its target of "midsingle-digit percentage growth" in revenue this year.

To meet that target, the Murray Hill, New Jersey, company is reorganizing to address a decline in demand for its fixed-line networking equipment. Revenue at its Integrated Network Solutions (INS) business unit fell 18 percent over the last year, to $589 million. By merging INS with the Mobility Solutions business unit, where revenue rose 24 percent to $1.2 billion over the same period, Lucent hopes to cut costs and address a growing market for what it calls blended lifestyle services, it said.

The INS unit will now report to Cindy Christy, who already heads Mobility Solutions. The combined entity will be renamed the Network Solutions Group, the company said. Janet Davidson, formerly head of INS, will take on the new role of head of corporate strategy and business development.

Lucent's services business will remain a separate unit. Revenue there rose 4 percent over the year, to $499 million.

The company announced one other personnel change: Bill O'Shea, president of Bell Labs, is retiring after 33 years with the company. He will be replaced by Jeong Kim, who is rejoining Lucent after almost four years' absence. Kim was formerly chief executive officer of access networking equipment vendor Yurie Systems Inc., acquired by Lucent for $1 billion in May 1998. He worked for Lucent until October 2001, before leaving to work on other projects.

Posted by Chad Dickerson at 03:55 PM

Vendors, carriers join Intel with WiMax plans

By Stephen Lawson

Intel Corp.'s commercial launch of a WiMax wireless broadband chip on Monday brought out several equipment vendors planning products based on the chip as well as service providers saying they will hold trials of the technology. The Intel Pro/Wireless 5116 chip, formerly code-named Rosedale, is based on the IEEE 802.16-2004 specification and designed for wireless services comparable to DSL (digital subscriber line) or cable modem offerings. Support for traditional TDM (time-division multiplexing) telephone service also is built in to the chip, according to Intel. The chip, announced last year and now available in volume, is priced at about US$45 each in quantities of 1,000 and is expected to go into consumer or business on-site devices priced from $250 to $550, said Intel spokeswoman Amy Martin.

WiMax is the commercial name of the network technology based on IEEE 802.16-2004, which allows for wireless data and voice system over a range of several miles. WiMax is expected to be deployed in most cases by service providers using licensed spectrum. The WiMax Forum later this year will begin certifying products to carry the WiMax name.

Intel unveiled a long list of vendors developing gear based on the chip, including Alvarion Ltd., Aperto Networks Inc., Proxim Corp., Redline Communications Inc., Siemens AG, and China's Huawei Technologies Co. Ltd. and ZTE Corp. Carriers planning trials include heavy hitters AT&T Corp., BT Group PLC, Brasil Telecom SA, Qwest Communications International Inc. and Teléfonos de México SA de CV.

Vendors and others backing WiMax are counting on the standard, approved last year, to allow for interoperability and the high volumes of manufacturing that typically drive electronics prices down. The WiMax Forum announced Monday that it launched a certification program at a meeting last week and expects approved products to hit the market by year's end. The Cetecom test lab in Malaga, Spain, will start accepting products in July to test for interoperability and conformance to the standard, the group said in a statement. Products should ship in November or December, it said.

Carrier trials are likely to occur before that time. Aperto, a WiMax vendor in Milpitas, California, plans to hold trials of Intel-based devices in August and September with several carriers, including Interbanda in Spain and Intertel in the Netherlands, said Alan Menezes, vice president of marketing. Aperto sees its biggest initial markets as Europe, Latin America and Asia, Menezes said.

Qwest, which serves consumers in 14 Western U.S. states has tested WiMax in several locations over the past year, according to spokeswoman Claire Mylott. The company sees WiMax as a tool for delivering broadband to customers in the many rural areas in its territory that it hasn't yet reached with high-speed data, she said.

AT&T Corp. plans to hold trials of WiMax service to enterprises in the U.S., said Behzad Nadji, vice president of research and vice president of enterprise network and system architecture. The trials will take place in three phases in three different states, with the first starting within a month in Middletown, New Jersey. The third trial will use a wireless mesh network covering a major city, Nadji said. AT&T sees WiMax as a possible way around paying incumbent local carriers for last-mile access to its customers, an expense that currently costs AT&T about $10 billion per year, he said.

Alvarion, which has been shipping a "WiMax-ready" subscriber device based on its own chip, said it demonstrated equipment based on the Intel chip last week at the WiMax Forum meeting in Spain. Its Intel-based gear should be certified and on the market some time in the second half of this year, company officials said.

Posted by Chad Dickerson at 03:52 PM

New Sober variant tricks users in German

By Scarlet Pruitt

A new Sober mass mailer worm is slithering its way around the Net and tricking users into opening attachments with clever messages in both English and German, antivirus companies warned Tuesday. W32.Sober.N@mm sends e-mail messages with the subject headers "I've_got your EMail on my_account!" and "FwD: Ich bin's nochmal" and carries attachments with names like your_text.zip, according to Helsinki security firm F-Secure Corp. When opened, the attachment scans files on the infected computer to harvest e-mail addresses that enable the worm to spread.

Symantec Corp. also released an advisory on the Sober variant, rating its damage as "medium."

The worm was first reported at 2 a.m. CET, and has been spreading in Europe, particularly in German speaking countries, according to Mikko Hyppöouml;nen, director of antivirus research at F-Secure.

The body text for the English version begins "Hello, First, Very Sorry for my bad English. Someone is sending your private e-mails on my address." It then tells the recipient that 10 of their personal e-mails are attached in a zip file.

The message represents a clever bit of social engineering because it appears plausible, and in the case of the German versions, is in a local language, Hyppöouml;nen said. Most users are accustomed to receiving spam and viruses in English, he added.

The motive behind creating the worm is still unclear and F-Secure does not know the identity of the author, Hyppönen said.

It is difficult to tell how rapidly the worm is spreading because the author used computers infected with a previous version of Sober to launch the new variant and "get a head start," Hyppöouml;nen said.

The researcher believes that the author is based in Europe because Sober variants are always released very early in the morning European time, giving them a chance to spread before the antivirus companies start their day.

F-Secure and Symantec both advised Internet users to update their antivirus software to guard against the new worm.

Posted by Chad Dickerson at 03:50 PM

April 18, 2005

Adobe to buy Macromedia for $3.4 billion

By Scarlet Pruitt and Martyn Williams

Adobe Systems Inc. has reached a definitive agreement to acquire Macromedia Inc. for US$3.4 billion in stock, the company said Monday.

The deal would combine the companies' document management, Web publishing and online video delivery tools, putting Adobe squarely in the path of rival Microsoft Corp., analysts said. Between the two of them, Adobe, in San Jose, California, and Macromedia, in San Francisco, have some of the most widely-distributed software in the world. Adobe's portable document format (PDF) and Acrobat Reader software is common on most desktops, and Macromedia's Flash products are widely used to create and view animation, video and other content.

"I see this as both companies bulking up against Microsoft," said Steven Brazier, an analyst at Canalys Ltd. The first step will be both vendors supporting each other's formats, and Adobe will likely start integrating Flash into its products, Brazier said.

Adobe has traditionally been strong in the offline graphical design business, such as desktop publishing, while Macromedia has a presence in graphical user interfaces for the desktop with its Dreamweaver and Flash products. The merging of these two businesses would give Adobe new capabilities for delivering rich media tools, analysts said.

Adobe also stands to benefit from Macromedia's base of ColdFusion Wed developers, allowing it to integrate and automate new offerings, according to RedMonk LLC analyst James Governor.

Governor predicted that dynamic forms that allow users to create, change and share information online will be one of the first products of the marriage. Graphics automation is also in the cards. Both of these capabilities would fly in the face of Microsoft's plans, according to Governor.

"Adobe's ambition in this acquisition looks like a bit of a Longhorn killer to me," Governor said.

Microsoft has been working on dynamic form technologies and a graphics system called Avalon as part of its upcoming operating system, Longhorn. By moving into these areas, Adobe may be trying to cut the software giant off at the pass, both analysts said.

"There is no doubt that this is a significant competitive threat to Microsoft and one of Adobe's goals is to predict future battles," Brazier said.

The combined company would be able to create a variety of rich media and Internet applications that use Flash, bumping into areas that Microsoft has shown interest in, said Ovum Ltd. analyst Bola Rotibi.

"When you think of where Microsoft is headed with the future of its Media Player and Media Center PCs, this goes head-to-head," Rotibi said.

The difference, however, is that the Microsoft offerings are locked into one platform, whereas Adobe will be trying to get its products on multiple platforms, she added. The company is looking to deliver content and applications not just to desktops, but to cell phones and other devices.

But while Adobe and Macromedia have a lot of strengths and products between them, the question now is what the big strategy is, according to Rotibi.

"Integration of products is one thing, but creating a new lineup is something else," she said.

The deal, which has been approved by both boards of directors, will see Macromedia shareholders receive 0.69 shares of Adobe common stock for each Macromedia share they hold, Adobe said in a statement. Based on Friday's closing prices, this values each Macromedia share at US$41.86, considerably above the market value of $33.45.

The top two executives at Adobe will retain their positions once the acquisition has been completed, which is expected in the second half of the year. Bruce Chizen will remain its chief executive officer and Shantanu Narayen will remain president and chief operating officer. Macromedia's president and chief executive officer, Stephen Elop, will become president of worldwide field operations at Adobe.

The acquisition requires shareholder and regulatory approval.

Posted by Chad Dickerson at 03:36 PM

Skype launches new premium services, plans more

By John Blau

Skype International SA has commercially launched beta versions of two new premium services, with two more in the pipeline, as the Internet telephone company moves to generate revenue from VOIP (voice over Internet Protocol) technology. "We now offer customers the opportunity to purchase phone numbers so they can be reached by non-Skype users with ordinary fixed or mobile phones, and to sign up for a voicemail service," said Skype spokeswoman Kat James on Monday. "We are also planning a video conferencing service and another tailored for small and medium-size businesses (SMBs) in the near future. Adding new premium services to our free Skype-to-Skype offer is something we've planned from the start."

Under the SkypeIn service, users can buy up to three numbers currently available in eight countries: Denmark, Finland, France, Hong Kong, Norway, Sweden, the U.K and the U.S. A three-month subscription costs €10 (US$13) and a full year €30, the company announced Friday.

While the main feature of the SkypeIn service is to allow non-Skype users to reach registered customers, there's another benefit: calls made to Skype phone numbers are billed at the normal long distance rate.

Take, for instance, a call between Berlin and London. Even if the Skype user, who has a London number, takes the call while on a trip to Japan, the person calling still only pays the rate for a call between the two European capitals, according to James.

The SkypeIn service complements the SkypeOut service, which allows Skype customers to call standard phones from their VOIP devices for a per-minute fee.

The new voicemail offering is available as part of the SkypeIn subscription or can be purchased separately for €5 for three months and €15 for a full year.

In addition to a video conferencing service, Skype aims to launch an offering tailored to meet the needs of SMBs in the coming months, according to James.

The spokeswoman was unable to say, however, whether Skype would offer SLAs (service level agreements) and a fully managed network service, including telephone equipment, similar to the business offer announced by Colt Telecom Group PLC last week.

"We're still working on the service so I can't say exactly what it will entail, but one feature will be group billing, instead of the individual billing that we currently offer our consumer customers," she said.

Skype uses peer-to-peer (P-to-P) technology to connect users to other users to talk and chat with friends. Skype was developed by the founders of Kazaa P-to-P technology, widely used to share music files. Sharman Networks Ltd. is the company behind the Kazaa file sharing software

More than 100 million copies of Skype software have been downloaded from the Internet. The company claims 35 million registered users.

Posted by Chad Dickerson at 03:36 PM

AOL goes live with pay-per-call ads

By Juan Carlos Perez

America Online Inc.'s search engine on Friday began displaying text ads that provide a phone number to reach the advertiser, a twist on the conventional approach of having these ads link to advertisers' Web sites. Text ads that are contextually relevant to search-engine queries and that run along with search results have become immensely popular among online advertisers. This type of ad has fired up the once lethargic online advertising market and turned Yahoo Inc.'s Overture unit and Google Inc. into cash cows.

These ads are described as pay-per-click because the advertiser pays the search engine company only when someone clicks on the ads. Advertisers bid for placement on the list of text ads; the higher the bid, the higher an ad's placement on the list.

These text ads have featured mostly live links to advertisers' Web sites. But now AOL has partnered with Ingenio Inc. to give advertisers the option of having this type of ad run instead with a toll free phone number.

Advertisers pay whenever someone calls. Since Ingenio provides the phone numbers to the advertisers, it knows when a call was made as a result of seeing the ad displayed on a search engine. Ingenio automatically routes the call to the advertiser's regular phone line.

Ben Harrison, a commercial real estate broker in Oakland, California, has been testing Ingenio's pay-per-call service for several months and is excited about its possibilities.

Harrison, who works at Colliers International Partnership, has, like his broker peers, a Web page hosted by the company but the IT set-up doesn't allow the brokers to track incoming traffic, he said. Consequently, he hasn't spent money on pay-per-click ads. However, the Ingenio service gives him a control panel to review call statistics and patterns and adjust his bids accordingly, he said.

This capability is important, particularly since Harrison envisions using these ads to not only promote his services in general but also possibly specific locations in his portfolio of properties, he said. How much he's willing to bid for an ad will depend on what his fee is for the specific property. With fees sometimes in the range of US$50,000 to $100,000, it wouldn't be out of the question for him to spend $1,000 on an Ingenio ad. "A good call is worth a lot of money for me," he said.

Harrison advertises in newspapers and via signs, but advertising online makes sense for him, because clients for commercial real estate in the San Francisco Bay Area tend to be tech-savvy Internet users. Harrison is particularly interested in using his online ads to reach potential clients located outside of the Bay Area before his local competitors. "The edge will come from [being the first to reach] tenants exploring opportunities before they come to the Bay Area," he said.

Ingenio is betting its service will attract advertisers which either lack a Web presence altogether or for whom customer leads are more valuable and effective if they arrive by phone than through their Web site, said Marc Barach, Ingenio's chief marketing officer. Ingenio estimates there are about 13 million businesses in the U.S. that fit that description, he said.

"We offer the advantages of per-per-click but we deliver [customers] to businesses whose first contact is typically made by phone," Barach said. So far, Ingenio has had the most success attracting service companies, in industries such as finance, insurance, real estate, home improvement and health care, Barach said.

AOL and Ingenio announced their partnership in January, and the first so-called pay-per-call ads began running on AOL's search site (http://search.aol.com) on Friday.

It isn't possible for an ad to feature both a phone number and a Web site link, nor does the service allow users to click on the phone number and generate the call from the PC, said Gerry Campbell, vice president and general manager of AOL Search and Navigation. However, he acknowledged that there are a number of ways in which the Ingenio service could be extended, he said, without speculating how.

Ingenio and AOL don't have an exclusive deal but AOL's deployment of the Ingenio service is the first by a major search engine, Ingenio's Barach said. Likewise, AOL will continue to deliver pay-per-click ads, which it gets from Google's ad network, Campbell said.

In addition to distributing ads to partners such as AOL, Ingenio also licenses its platform to companies that want to use it to sell their own pay-per-call ads, an Ingenio spokeswoman said.

Posted by Chad Dickerson at 03:35 PM

Intel's WiMax chip starts shipping in volume

By Stephen Lawson

WiMax broadband wireless technology will clear a hurdle Monday as Intel Corp. announces volume shipments of its Rosedale chip for the wireless broadband technology, people familiar with the company's plans said this week. Intel has put its marketing weight behind WiMax for years as standards development dragged on, but the chip giant finally is supporting the technology the way it knows best, churning out silicon. Equipment vendors including Alvarion Ltd., Proxim Corp., Redline Communications Inc. and ZiMax Technologies Inc. all have announced agreements to use Intel silicon in products based on the IEEE 802.16-2004 standard that Rosedale addresses.

In addition, some equipment vendors will announce products on Monday using the chip, formally called the Intel Pro/Wireless 5116. Among them will be Redline, in Markham, Ontario, which will launch its RedMax line of customer premises equipment. The company will introduce a product with an outdoor antenna and an indoor box with connections for phone and broadband data service, said Kevin Suitor, vice president of business development. It will cost consumers less than $500, Suitor said. Redline currently is running 50 trials with service providers using its pre-WiMax product, called the AN-100, he said.

Intel is not the first chipmaker to announce WiMax silicon, but it carries a lot of weight as both a high-volume chip leader and the rich uncle of the WiMax family, ready to put marketing dollars behind the technology. Rosedale hitting the market marks a significant moment for WiMax, according to Michael Cai, an analyst at Parks Associates, in Dallas.

"The industry is really looking at Intel, because it's been positioned as the leader in the WiMax space," Cai said.

The next major step for WiMax will be product certification and interoperability testing by the WiMax Forum, the industry body moving to commercialize 802.16 technology. Industry observers expect 802.16-2004 products, which are designed to deliver broadband services to homes and offices without wires, to be tested by the forum in this year's third quarter and hit the market some time before year's end.

Rosedale is a "system on a chip" for customer premises devices that would send and receive data from a base station that could be several miles away. The chip includes a MAC (media access control) component for the IEEE 802.16-2004 standard, a "phy" (physical interface) element that uses OFDM (orthogonal frequency division multiplexing), an integrated 10/100M bps (bit-per-second) Ethernet MAC for a home or office LAN, and a TDM (time-division multiplexing) controller interface to support voice and streaming data, according to Intel.

Intel integrated all those components on the chip as part of its focus on low-cost equipment that it believes will make wireless broadband a success. Some earlier wireless broadband technologies have stalled because of the cost of proprietary equipment and the need for engineers to set up a "line-of-sight" connection for each customer's antenna.

However, opinions are mixed on the potential for fixed WiMax, which in many parts of the world will compete against well-established DSL (digital subscriber line) and cable modem services. Even Intel has said the larger opportunity lies in IEEE 802.16e, a standard still under development that will allow for WiMax services to mobile devices such as notebook PCs. That technology is expected to hit the market in 2007 or 2008.

For fixed WiMax customer devices such as those based on Rosedale to take off in the market, they will first have to go below $200 in total cost, said Philip Solis, an analyst at ABI Research, in Oyster Bay, New York. That isn't likely to happen for two to three years, in his view. However, service providers could shield subscribers from some or all of that cost through subsidies, he said.

The fixed WiMax that Rosedale supports may be relegated to filling in where other broadband is not available in Western Europe and North America, according to some analysts, but it could have greater potential in less developed areas.

ZiMax, a subsidiary of Shenzhen, China-based ZTE Corp., expects initial response to its products to be strongest in China, Southeast Asia and Eastern Europe, according to James Jiang, general manager at ZiMax, which is based in San Diego. Analysts said countries such as India and China, which have dense populations and less broadband infrastructure in place, may be ripe for fixed WiMax. It's likely to show up in metropolitan areas first, but could extend out to rural villages if governments mandate widespread broadband coverage, said Parks Associates' Cai.

Posted by Chad Dickerson at 03:35 PM

SugarCRM preps next version of open-source apps

By Stacy Cowley

SugarCRM Inc. is preparing for release later this month a major upgrade to its open-source CRM (customer relationship management) system, a software package SugarCRM's founders hope will woo customers that would otherwise turn to more expensive commercial CRM offerings. Sugar Suite 3.0 represents a significant advance for the young product, which publicly launched in September. The forthcoming update adds campaign management, e-mail marketing and forecasting components to the suite, along with tools for broader back-office administration like project management and an employee directory.

"We started getting a lot of requests for the ability to manage internal projects," said SugarCRM Chief Executive Officer John Roberts. "People don't always see that as CRM, but I think that's one of the great things about being an open-source company. You sometimes come up with interesting things that you wouldn't traditionally think of, but that are really valuable."

Cupertino, California-based SugarCRM was founded in April 2004 by a group of developers that had worked together at CRM maker Epiphany Inc. Frustrated by what they saw as the inefficiency of the commercial software development process, SugarCRM's creators felt an open-source model could build both better software and the foundation for a viable business, Roberts said. The company is backed by close to US$8 million in venture capital funding from Draper Fisher Jurvetson and Walden International.

The software's development home is SugarForge.org, where the source code can be downloaded for free. A commercial version, Sugar Professional, includes customer support and additional extensions, such as improved reporting and data security features. Pricing for Sugar Professional starts at $239 per user, per year and drops with volume licensing. A hosted version is available for $40 per user, per month.

Athenahealth Inc. Chief Technology Officer Bob Gatewood is in the process of replacing several hundred Salesforce.com Inc. licenses in his organization with SugarCRM deployments. Waltham, Massachusetts-based Athenahealth has been using Salesforce.com for four years, in which time Gatewood says the privately held healthcare practice management firm grew from $2 million to $60 million a year in annual revenue.

"We've gotten to a size where we need more control and tighter integration with our internal systems," Gatewood said. "We love open source, and we have a sizable development team already. This was really about getting the code."

Gatewood's group has extensively modified SugarCRM to suit its needs and will be going live with its deployment later this month. Eventually, Gatewood expects SugarCRM to roll out to 200 Athenahealth employees, cutting the organization's Salesforce.com licenses from 300 to 100. The move will reduce Athenahealth's software licensing costs, but that wasn't the primary motivation, Gatewood said.

"We have some customer case routing issues. The call center is able to resolve 85 percent of the calls, but the ones they need help with they have to send off to a subject matter expert. Salesforce.com's data structure doesn't make it easy for us to track it when that happens," Gatewood said. "With Sugar, all that stuff is transparent now. We could get in and change the code."

SugarCRM's customer base is a small fraction of that of major CRM vendors. SugarCRM has logged 150,000 downloads and sold licenses to 200 organizations, according to Roberts. The company is only lightly covered by analysts; in a recent report, Gartner Inc. listed SugarCRM among a pack of companies offering commoditized sales management tools suitable for "small, simple organizations."

Still, plenty of organizations don't need more than basic CRM functionality. "What percentage of the features do you actually use in Microsoft Word?" said Pride Industries Chief Financial Officer Tim Yamauchi, who picked SugarCRM for use in his 3,000-employee non-profit company.

Roseville, California-based Pride Industries employs disabled workers to provide a variety of outsourced maintenance and administrative services. Yamauchi had used a variety of CRM systems in previous jobs, and wasn't overly impressed by any of them. Pride Industries uses a number of open-source applications, and when its IT team brought SugarCRM to Yamauchi's attention, he was impressed by both the technology and the ethos of SugarCRM's executives.

"They're a young, entrepreneurial company, and they've been great to work with," Yamauchi said. When he requested functionality that would push out sales and marketing reports by e-mail, SugarCRM's developers provided it.

Freelance programmer Dave Fancella said he went looking several years ago for an open-source CRM systems to use in his work, but found the available options abysmal. He ended up opting for GoldMine, a commercial contact management system. Then, in December, NewsForge bought SugarCRM to Fancella's attention and asked him to write a review.

"I was really impressed with what I saw. I thought it was a very solid design," Fancella said in an interview. "For me, it doesn't make sense that a CRM package should ever be closed-source, because nine times out of ten you need some customization. CRM and open source is like a no-brainer. They should have been married years ago."

In his review, Fancella had a few quibbles with SugarCRM -- criticizing, for instance, the lack of an embedded e-mail client or support for outside clients other than Microsoft Outlook -- but concluded the software should satisfy the needs of most small to medium-sized organizations. He became so intrigued with the software that he later accepted a freelance development contract with SugarCRM, and is now working on the system.

SugarCRM's Roberts said the software is on a release cycle of around four months between versions. It's now available in more than a dozen languages, varying from French to Swedish and Lithuanian. What's next on the development schedule?

"That depends on our development community," said Roberts.

Posted by Chad Dickerson at 03:35 PM

April 15, 2005

Taiwan prods China to drop ban on two news Web sites

By Dan Nystedt

Taiwan has expelled journalists from two Chinese news agencies and won't consider letting them return until China lifts a ban on the Web sites of two major newspapers from the island, an official said Friday. "We think it would help people in China better understand our views if they had access to the Web sites," said an official from Taiwan's Mainland Affairs Council, which is in charge of China affairs. Lifting the ban alone might not cause Taipei to allow the Chinese journalists back immediately, she said, but "it would be an important step in the right direction."

Taiwan hopes China will stop blocking access to the Web sites of The China Times and United Daily News, two of the island's largest media groups.

China carefully controls the Internet sites it allows its citizens to view. A Harvard Law School study from 2002 found that at least four Internet filtering methods were in use in China, rendering thousands of Web sites inaccessible, including regular news and commentary sites.

Taiwan announced Monday it had revoked visas for journalists from China's official Xinhua News Agency as well as the People's Daily, alleging that the news organizations were contributing to worsening relations between Taipei and Beijing through their reporting.

Relations between Taiwan and China have been strained for decades. The two split in 1949 after a civil war, and Beijing has long threatened to attack the island if it moves toward formal independence.

Posted by Chad Dickerson at 05:30 PM

Wall Street Beat: Tech earnings disappoint

By Marc Ferranti

Any hope that the start of the earnings season would bring a fresh wind to the tech sector evaporated quickly this week. The Nasdaq Composite Index, under pressure from the first quarter's dismal close, modest corporate buying plans, and concerns about oil prices and inflation, was knocked down yet again in the middle of the first wave of reports. Investors don't necessarily like surprises, and on Thursday, ahead of an unexpected earnings announcement from IBM Corp. and after several companies reported, the Nasdaq index (ticker symbol: COMPX) dropped 27.66 points to close at 1946.71, a low for the year and its worst finish since October.

IBM, which had said it would report Monday, instead announced on Thursday that March-quarter earnings were US$0.85 per share, below the $0.90 forecast of analysts polled by Thomson First Call. Profit was $1.4 billion, on revenue of $22.9 billion, both up 3 percent from last year's first quarter, but analysts were expecting revenue of $23.6 billion. The main reason that IBM missed expectations was that it failed to close hoped-for deals toward the end of the period, especially in countries with "soft economic conditions," Chief Executive Officer Sam Palmisano said in a statement.

Before the announcement, which came after the market close, IBM shares (IBM) dropped $0.93 to $83.64. Early Friday morning, it tumbled $4.56 to $79.08. It might take awhile for the significance of IBM's report to sink in, but the failure of the world's largest IT company to close deals in the face of uncertain market conditions does not bode well.

On its part, Sun Microsystems Inc. Thursday once again disappointed investors, reporting a loss of $61 million or $0.02 per share for the quarter. Analysts had forecast a break-even quarter. Though the loss was narrower than its year-earlier loss of $0.08 per share, revenue, at $2.625 billion, edged down from last year's $2.651 billion. This is especially worrying given that users and investors had been hoping that Sun's renewed efforts -- including new Linux offerings and cheaper servers -- to woo its traditional users in financial institutions would bear fruit in the form of increased sales. Sun had missed analysts' revenue target last quarter, as well. In advance of the announcement, Sun (SUNW) shares dropped by $0.06 to close at $3.96. The price dropped another $0.25, to $3.71, early Friday morning.

Meanwhile, Apple Computer Inc., which has become a bellwether stock for online music, couldn't get a break from traders despite a Wednesday earnings report that announced record profit and revenue. Due to strong Macintosh computer and iPod digital media player sales, Apple posted a profit of $290 million, or $0.34 per share for its fiscal 2005 second quarter, compared to earnings of $46 million, or $0.06 per share, one year earlier. But some analysts said they thought Apple's projection of $0.28 per share earnings for its next quarterly report to be conservative, given the iPod's sales momentum. As a result, Apple shares (AAPL) dropped by $3.78 Thursday to close at $37.26.

Advanced Micro Devices Inc. gave investors a lot to chew on with its Wednesday earnings report, announcing a first-quarter loss and plans to spin off its money-losing Spansion LLC flash memory business. Spansion's $110 million loss in the quarter outweighed the processor group's operating profit of $92 million, and led to an overall company net loss of $17 million, the company's second consecutive quarterly loss. Loss per share was $0.04, and analysts had forecast earnings of $0.02.

While the Spansion spinoff would allow the company to separate the part of its business that is most subject to commodity-market supply and demand fluctuations, some analysts saw a downside: Without Spansion, AMD has to fight mighty Intel Corp. solely on the strength of its processor business. Company shares (AMD) dropped $0.80 Thursday to $16.26

On the business-management software front, software maker Siebel Systems Inc. (SEBL) shares Wednesday dropped by $0.29 to $8.68 after the company announced that Chief Executive Officer J. Michael Lawrie resigned after less than a year on the job, and that software executive George Shaheen will succeed him. Earlier this month it announced that it expects revenue and earnings for the first three months of 2005 to come in below expectations, as a result of deals slipping through in the quarter's final days.

Posted by Chad Dickerson at 05:29 PM

Four arrested in US game piracy sting, says Nintendo

By Martyn Williams

Four people have been arrested in New York on suspicion of distributing video game consoles that include pirated Nintendo Co. Ltd. gaming software, the Japanese company said Friday. The arrests were made by the U.S. Federal Bureau of Investigations (FBI) on April 13 and involved consoles sold under the "Power Player" name that contain "dozens" of pirated versions of Nintendo games including Donkey Kong and Mario Bros., Nintendo said in a statement.

The four are accused of importing 27 cargo containers containing a total of 280,000 of the consoles between September and December last year, Nintendo said. In several meetings with undercover FBI agents posing as toy distributors, the defendants are alleged to have provided the locations of the warehouses used to store the consoles and details of their distribution network, the statement said.

The arrests were accompanied by searches in Queens and Brooklyn, New York; Maple Shade, New Jersey, and Philadelphia and resulted in the confiscation of illegal products, computers and business records, Nintendo said.

Nintendo is based in Kyoto, Japan, and is a major manufacturer of games consoles and publisher of video game software.

Posted by Chad Dickerson at 05:29 PM

Reuters shuts down system to fight Kelvir IM worm

By Laura Rohde

Reuters Group PLC was able to bring its instant messaging (IM) system back online early Friday morning, after an outbreak of the Kelvir worm led the company to shut down the system for most of Thursday. The London-based news and information provider detected the external worm on its network coming though a customer Internet portal mid-morning on Thursday and took the system down as a precaution, according to Reuters spokesman Johnny Weir. After insuring there were proper filters in place, the IM system was made operational again at 7 a.m. local time Friday, he said.

The Kelvir worm is designed to use Microsoft Corp.’s IM software as a means for disseminating malicious code. The variant that hit Reuters, W32/Kelvir-Re, was not unique to their IM system, called Reuters Messaging, Weir said.

No incidents of users being infected by the attack have been reported and Reuters' other services continued operating as normal, Weir said.

Reuters has its own IM application for the financial services industry which it developed to be interoperable with Microsoft's MSN Messenger. Reuters' IM system also works with AIM software from America Online Inc. (AOL). According to Weir, the problem only affected users on the Reuters system.

The Kelvir worm spreads by sending messages through the IM system to all of an infected user's contacts, encouraging the recipients to visit a Web page to download a file. New versions of both the Kelvir and Bropia worms have been actively attacking systems this year, especially within corporations, according to antivirus software company Sophos PLC.

Reuters has increasingly been connecting customers to its IM system and there are currently more than 60,000 active users, according to Weir.

Posted by Chad Dickerson at 05:28 PM

Intel employees put hotspot on the North Pole

By Scarlet Pruitt

Intel Corp. is contributing to global warming, the company admitted Thursday. Not the bad kind, though. Two employees at Intel Russia have erected what may be the world's most northerly Wi-Fi hotspot 130 kilometers from the North Pole. The hotspot was built in the Arctic Region at the Barneo ice camp, a tent complex used by scientists, researchers and rescue crews during the month of April, when ice conditions are safe.

Still, the camp environment is never ideal for computer devices, as the air temperature rarely rise above -30 Celsius, according to Intel.

Such extreme temperatures are bad for computer equipment since humidity inside the living tents, caused by the differences in indoor and outdoor temperatures, causes condensation to form on components. What's more, batteries lose power rapidly in low temperatures.

Despite the challenges, the employees installed a 802.11b/g access point at the camp's headquarters and then established a WLAN (wireless LAN) using four laptops with Intel's Centrino mobile technology, the company said. Another computer was placed outdoors and connected to a satellite phone to provide the network with Internet. The hotspot could be accessed by anyone at the camp who had a mobile or pocket PC, Intel said.

The equipment survived the cold and worked reliably, according to Intel Russia's Vsevolod Sementsov. The main problems were battery life and "backseat drivers," Sementsov said.

The hotspot has already been taken down, but one Centrino-based laptop was left for polar researchers at the “North Pole 33� ice-drifting station, which is expected to deploy its own WLAN soon, Sementsov said.

Intel pointed to the experiment as an example of how mobile technology allows users to work anywhere. Where better to test new equipment than the North Pole, it said.

Posted by Chad Dickerson at 05:28 PM

April 14, 2005

Google launches video upload program

By Juan Carlos Perez

Google Inc. on Wednesday launched a program that lets its users worldwide store their digital videos at the Google Video service. This new program, whose existence was disclosed by Google Co-founder and President for Products Larry Page last week, is aimed at anyone interested in making their digital videos available to a broad audience, according to a statement from the Mountain View, California company.

"We're actually going to start taking video submissions from people, and we're not quite sure what we're going to get, but we decided we'd try this experiment," said Page, speaking last week a panel discussion at the National Cable Television Association (NCTA) National Show in San Francisco

Those interested can go to https://upload.video.google.com and load their digital videos to Google Video, itself a relatively new service that, when queried, returns excerpts of close-captioning transcripts of television programs, still images from broadcasts and other programming information. Google Video doesn't return actual video clips that users can play back. Google Video is still in test, or beta, phase.

Although Google is accepting videos, it is not making them searchable yet. The plan is to eventually let users search, play back and purchase videos stored in Google Video. Owners will have the option of giving their videos away for free or charging for them.

The upload program is available to all types of video content owners, from individuals to corporations, according to Google.

The approach Google is taking to indexing video is markedly different from its approach to indexing text and still images on Web pages, said Allen Weiner, a Gartner Inc. analyst.

Whereas Google actively harvests text and images, it is instead relying on video content owners to send in their video files, and there are several reasons for the different approach, he said.

For example, this approach lets Google get a sense for the breadth and depth of digital video content out there, and tune its search capabilities accordingly, creating a taxonomy, he said.

After creating the index, Google can then sit back and ponder what it's going to do with the content. It could become a bridge between the content owner and the content consumer, providing the platform for delivering the video and for charging on behalf of the owners, Weiner said. Google could also adopt an advertising-driven approach, he said. The company could also generate revenue from hosting the videos, which take up a lot of storage space, Weiner said.

Steve Lawson in San Francisco contributed to this report

Posted by Chad Dickerson at 03:56 PM

Mac, iPod sales bring Apple record earnings

By Joris Evers

Apple Computer Inc. on Wednesday reported record quarterly earnings and revenue on significant increases in Macintosh computer and iPod digital media player shipments. The Cupertino, California-based company posted a net profit of US$290 million, or $0.34 per share for its fiscal 2005 second quarter, which ended March 26. That compares with earnings of $46 million, or $0.06 per share, in the year-earlier period, the company said in a statement.

In the second quarter, Apple shipped 1.07 million Macintosh computers and 5.31 million iPod players, it said. That's up 43 percent year-on-year in computer shipments and up 558 percent on the iPods, according to Apple.

Revenue for the quarter hit $3.24 billion, up 70 percent from $1.9 billion in the year-ago quarter. International sales accounted for 40 percent of Apple's revenue in the quarter, the company said.

The results are records in both earnings and revenue, Apple Chief Executive Officer Steve Jobs said in the statement.

Apple's results beat Wall Street expectations. Analysts had forecast $0.24 in earnings per share on $3.21 billion in revenue, according to a consensus estimate from Thomson First Call.

Apple is optimistic about the future, with new products in the pipeline for the coming year, starting with an update to its Macintosh operating system that is to be released later this month. The company predicted revenue of $3.25 billion and earnings per share of about $0.28 for its current third quarter.

In the past quarter, 62 percent of Apple's revenue came from its Mac business, which grew 27 percent from the year ago quarter driven by strong Mac, peripheral and software sales, Apple Chief Financial Officer (CFO) Peter Oppenheimer said during a conference call.

The company shipped 608,000 desktop systems during the quarter, an increase of 55 percent from the year-ago level. Combined sales of iMac G5s, eMacs and Mac Minis more than doubled to 467,000 units from the year-ago quarter, and PowerMac shipments totaled 141,000, Oppenheimer said.

Total portable shipments were 462,000 units, up 29 percent from the year-ago quarter. Apple shipped 251,000 iBooks and 211,000 of the recently refreshed PowerBooks, according to Oppenheimer.

Apple's digital music business, which includes the company's iPod music players and iTunes online music store, generated 38 percent of total company revenue and grew 280 percent compared to the year-ago quarter, Oppenheimer said. The iTunes store operates in 15 countries and last week sold its 350 millionth song download, Apple's CFO said.

Shipments of iPods, over six times the year-ago level, were driven by strong response to the new iPod Shuffle, a refreshed 4G-byte iPod Mini and a new 6G-byte iPod Mini, Oppenheimer said. Apple in the quarter also lowered the price of both of its iPod Photo models, he said.

The iPod Shuffle is now the top flash-based MP3 player in the U.S. with a 43 percent market share in February, Oppenheimer said, citing NPD Techworld numbers.

Apple is very happy with the performance of its retail stores. Revenue from its retail segment more than doubled from a year ago to $571 million and actually increased sequentially, bucking the expected seasonal decline. Apple opened two stores in the quarter, bringing the total number of Apple Stores to 103. The company expects to end its fiscal year with 125 stores, including 10 outside the U.S., Oppenheimer said.

The company's record earnings did nothing to help Apple's shares (AAPL), which ended the day down $1.62, or 3.8 percent, at $41.04 on the Nasdaq stock exchange. In after-hours trading the shares dropped a further $0.40.

Posted by Chad Dickerson at 03:55 PM

Colt launches Europe-wide VOIP service

By John Blau

Colt Telecom Group PLC launched on Thursday one of Europe's first Internet telephone services aimed at businesses. The VOIP (voice over Internet Protocol) service, now available in 13 European countries, costs €44.50 (US$57.50) per phone, per month, said Colt spokeswoman Gill Maclean.

The price has two components: a monthly telephone service flat fee of €24.50 per phone, and a monthly phone rental flat fee of €20.

In addition, businesses signing up for the new service must pay a one-off installation fee per phone, according to Maclean. Pricing details about the installation fee were not immediately available.

Customers must agree to a three-year contract.

"According to our market research, businesses can reduce their telephone costs by as much as 20 percent with our VOIP service," Maclean said.

Not included in the VOIP service are calls made to mobile phones, premium rate numbers (also known as "non-geographical" numbers) and countries outside those covered by Colt, such as the U.S., Japan and China.

The VOIP offering is a fully managed network-based service that provides all the functions and features of a PBX (private branch exchange) without requiring businesses to buy and operate equipment on their premises, according to London-based Colt.

Calls are carried over corporate LANs using VOIP over MPLS (multi-protocol label switching) via 100BaseT or 1000BastT Ethernet, or DSL (Digital Subscriber Line) systems.

VOIP traffic is routed over Colt's extensive fiber-optic network. The network uses softswitch IP technology from Siemens AG to deliver carrier-grade voice quality.

Colt uses Point-to-Point Tunnel Protocol (PPTP) to establish secure tunnels for phone calls.

The service is backed by "stringent" SLAs (service level agreements), according to the operator.

Service is available in the following countries: Austria, Belgium, France, Denmark, Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden, Switzerland and the U.K.

Posted by Chad Dickerson at 03:55 PM

Cisco to acquire Topspin for $250 million

By Stacy Cowley

Cisco Systems Inc. said Thursday it has agreed to buy server networking equipment provider Topspin Communications Inc. for US$250 million in cash and options. Mountain View, California-based Topspin sells programmable server switches used in systems from vendors including Dell Inc., Hewlett-Packard Co., IBM Corp. and Sun Microsystems Inc. Buying Topspin adds to Cisco's portfolio a line of InfiniBand switches, which Cisco previously lacked.

Five-year-old Topspin has a staff of 135 in Mountain View and Bangalore, India. Cisco, based in San Jose, California, plans to add Topspin to its Data Center, Switching and Wireless Technology Group, headed by Luca Cafiero.

With more customers building server architectures incorporating blades, grid computing and clustered applications, Cisco needs to deliver technology like Topspin's server fabric switches and virtualization software, Cafiero said in a written statement.

Pending regulatory approvals and other closing conditions, Cisco expects to complete the acquisition in the quarter ending July 30.

Posted by Chad Dickerson at 03:54 PM

April 13, 2005

Siebel dumps CEO Lawrie for Shaheen

By Laura Rohde

Business applications company Siebel Systems Inc. has appointed George Shaheen as its new chief executive officer (CEO), effective immediately, the company announced Wednesday. Shaheen is replacing Michael Lawrie, who became CEO just last May. Siebel's board of directors and Lawrie agreed mutually that he would resign the position, the San Mateo, California company said.

Lawrie's dismissal comes just hours before a scheduled meeting of disgruntled institutional shareholders. Providence Capital Inc. arranged the New York meeting, at which it planned to discuss with other major investors Siebel's strategy and board of directors composition.

Shaheen, 60, has been a member of Siebel's board since 1995. Until resigning in 2001, he was CEO and board chairman of the now defunct Webvan Group Inc., a company he joined in 1999 after leaving his job as managing partner and CEO of Andersen Consulting Inc., which later became Accenture Ltd.

Siebel highlighted Shaheen's experience at Andersen Consulting as particularly relevant to his new position at Siebel, saying that he has a track record of building strong customer value and developing a global brand, all while consistently meeting or exceeding financial expectations.

Siebel has been weathering rough financial waters recently. Earlier this month the company announced that it expects revenue and earnings for the first three months of 2005 to come in below expectations, as a result of deals slipping through in the quarter's final days.

Siebel forecast total revenue for the quarter, which ended March 31, to come in between US$297 million and $300 million. The consensus forecast of analysts polled by Thomson First Call was for revenue of $337.5 million. In last year's first quarter, Siebel had revenue of $329.3 million.

Shaheen is quoted in the statement as saying he plans to develop Siebel's strategy on promoting its CRM (customer relationship management) customer-facing applications while also extending the reach of its products into the front office market which he sees as a largely untapped opportunity.

(Additional reporting by Marc Ferranti and Stacy Cowley in New York.)

Posted by Chad Dickerson at 03:42 PM

Gordon Moore looks back, and forward, 40 years

By James Niccolai

Forty years after he coined the most famous law in computing, Gordon Moore still has a few words of advice for the industry. For software developers: Simplify! Your interfaces are getting worse. Nanotechnology? Don't believe the hype; silicon chips are here to stay. Artificial intelligence? Try again, folks! You're barking up the wrong tree.

Speaking by telephone from Hawaii, where he now lives, Moore fielded an hour of questions from reporters Wednesday to mark the approaching 40th anniversary of his celebrated prediction -- that the number of transistors on integrated circuits would double roughly every two years.

Christened later as Moore's Law, his observation became something of a self-fulfilling prophecy for the industry, he said, driving computer makers to keep pace with the expected rate of advancement. But he was too humble to claim credit for a phenomenon that effectively made possible the rapid evolution of modern electronics.

"If I hadn't published this paper in '65, the trends would have been obvious a decade later anyway. I don't think a particular paper made a difference. I was just in a position where I could see the trend," he said.

Moore, now 76, was director of research and development at Fairchild Semiconductor when his paper was published in Electronics Magazine on April 19, 1965. Three years later he founded Intel Corp. with Robert Noyce, becoming its chief executive officer (CEO) in 1975 and chairman four years after that.

His law had little effect at first, he said. The first big impact he recalls is when Japanese manufacturers entered the memory chip business in the 1970s. For a while, the Japanese struggled to find their step in a business where the technology seemed to advance in an unpredictable fashion.

"Once they saw the memory series developing -- from 1K, to 4K, to 16K -- they had a method by which to plan where the industry would end up, and they were very successful at intersecting the trajectory and taking a leading position," he said.

Moore reread his paper about a year ago, he said, and was pleasantly surprised to find that it also foresaw the use of computers at home, although he had forgotten he made that prediction by the time the first home computer appeared. In fact, as CEO of Intel years later, he would dismiss home computing altogether.

"An engineer came to me with an idea about a home computer," he recalled. "I said, 'Gee, that's fine but what would you use it for?' He could only think of a housewife using it to keep recipes on. I didn't think that would be a very powerful application, so I didn't think Intel should pursue a personal computer at that time."

In general, the computing industry has done "a pretty good job" over the years, he said. But he singled out software interfaces -- and by implication Microsoft Corp., which has dominated PC software for decades -- for particular criticism. By cramming ever more features into applications, software makers may actually be moving backward, not forward, he said.

"As people make improvements in the interface, the complexity seems to grow, and I think if anything we're losing ground a bit in general purpose computing," Moore said. "They want to offer so many new functions in applications, it's difficult to simplify everything at the same time."

Regarding nanotechnology, he is "a skeptic," he said, and has little faith in it replacing silicon-based integrated circuits for mainstream use any time soon.

"There's a big difference between making one tiny transistor and connecting a billion of them together to do a useful function," he said. "That's something I think people often overlook."

Far from being outdated, the integrated circuit is spreading into new fields, such as gene chips for disease analysis, airbag sensors and "microfluidics," which he described as a tiny chemistry lab on a chip. In a sense, he noted, silicon chips have become nanotechnology, since they include features smaller than 100 nanometers, a popular measure for what constitutes nanoscience.

Asked about artificial intelligence, he said computers as they are built today will not come close to replicating the human mind because they were designed from the outset to handle information in a different way. Scientists need to figure out more clearly how the mind works, and then build a computer from scratch to mimic it.

"I think computers are actually going in the wrong direction" when it comes to replicating human intelligence, he said.

Still, they may mimic parts of human intelligence, such as the ability to recognize language and distinguish, for example, between when a person is saying "two" or "too."

"I think when it recognizes language that well, then you can start to have an intelligent conversation with your computer and that will change the way you use computers dramatically," he said. That level of intellect may be anything from 10 to 50 years away, he added.

He's excited about the future of computing, which will bring "mind boggling" developments, he said. "I sure wish I could be around in 40 years to see what happens," he said.

Asked to come up with a new law that might carry the industry forward for another 40 years, Moore declined. He acknowledged several times that he is no longer as close to modern computing as he once was.

"I think I'll rest on my laurels on this one," he said.

Posted by Chad Dickerson at 03:41 PM

MusicNet sold by RealNetworks, other founders

By Laura Rohde

Online music company MusicNet Inc. has been sold to the private equity company Baker Capital for an undisclosed amount, it said Wednesday. MusicNet, which sells digital music subscriptions, portable subscriptions and downloads as a private label to retailers, was one of the first digital music companies, launched in 1999 by RealNetworks Inc., Time Warner Inc. (which at the time owned Warner Music), Bertelsmann AG, and EMI Group PLC.

MusicNet serves over 500,000 subscribers through its partners, including America Online Inc. (AOL), Virgin Digital (owned by Virgin Group Ltd.), HMV Group PLC and Trans World Entertainment Corp., it said.

Though the full terms of the agreement were not disclosed, RealNetworks said Tuesday in a separate release that for its 40 percent stake in MusicNet, it has received US$7.3 million and expects another $2.7 million after escrow arrangements expire.

Baker Capital, in New York, focuses on investing in digital communications businesses and said it will invest to expand the scale of MusicNet's operations in mobile and international markets. It also plans for MusicNet to continue operating as an independent company with headquarters in New York and additional offices in Seattle.

Posted by Chad Dickerson at 03:40 PM

Google adds local search for wireless devices

By Juan Carlos Perez

Google Inc. on Tuesday made more of its information available via wireless devices, allowing Google Local business listings to be accessed from browser-equipped mobile devices, and driving directions to be obtained via SMS-enabled devices. The move is part of an ongoing attempt by Google to offer its information search services beyond the desktop PC, as wireless devices capable of connecting to the Internet continue to proliferate and the convenience of using them to tap into search engine indexes becomes apparent.

Users whose mobile devices have a Web browser can access Google Local by going to http://mobile.google.com/local, where they'll find a box to enter a search term and another one to enter a location. Keying in "Boston" and "pizza" will return pizza places in that city. The service, available in the U.S. and Canada, can also provide driving directions and maps.

Meanwhile, Google SMS, an existing service for querying the Google index for specific types of information using SMS (short message service) technology, has been extended to now provide driving directions. In a wireless device that supports SMS, users enter the code 46645 to access the Google SMS service, which grabs information from a variety of Google sources and provides various types of information, including business listings from Google Local, weather information and movie showtimes. Driving directions were added Tuesday. Google SMS is available "on most" U.S. carriers, the company said.

"This part of an overall strategy (from Google) to give users the information in the place that's most useful to them," said Allen Weiner, a Gartner Inc. analyst. "It's all about state. When I'm in a particular location or doing a particular activity, I want the content then. I don't want to have to print it out from the Web or have to write it down."

Posted by Chad Dickerson at 03:40 PM

RIAA, MPAA target student file trading on Internet2

By Grant Gross

The Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) on Wednesday separately will file lawsuits against college students that are allegedly using an Internet2 peer-to-peer service for illegal file trading. The RIAA will file copyright infringement lawsuits against 405 college students, while the MPAA will do the same against an undisclosed number of college students. Both groups are targeting college students who have allegedly used their schools' high-speed Internet2 networks to trade files illegally using the Internet2 P-to-P service called i2hub, the trade groups announced separately Tuesday.

In addition, the MPAA said it will also name defendants in a number of lawsuits it filed previously against unnamed P-to-P users.

The students in the RIAA lawsuits, from 18 colleges across the U.S., used i2hub to share a total of 1.5 million files, the "overwhelming majority" of those files copyrighted, according to Cary Sherman, president of the RIAA.

On Monday, at 4:23 p.m. Eastern Standard Time, there were 7,070 users connected to i2hub sharing 99.2T bytes of files, according to the MPAA. "Ninety-nine terabytes is enough storage space to hold all the movies that are available in a local Blockbuster store, yet people are swapping those movies entirely free," said Dan Glickman, the MPAA's president and chief executive.

College students seemed to believe they were shielded from RIAA lawsuits by trading music files on the closed Internet2 network, built by a consortium of universities to aid with university research, Sherman said. The RIAA limited this round of lawsuits to no more than 25 students at any one university, but the two trade groups have evidence of copyright infringement using i2hub at 140 colleges in 41 states, he added.

"I2hub has, for some reason, been thought to be a safe zone to engage in illegal activity," Sherman said during a press conference. "What we wanted to do is puncture that misconception and let people know that when you are on the Internet there's really no such thing as a safe zone for lawlessness."

I2hub issued a statement Tuesday, saying its creators do not condone copyright infringement. "Students across the globe utilize i2hub for many reasons -- help on homework, exam reviews, sharing ideas, and some have even found their significant other through the network," said the statement, e-mailed by Wayne Chang, chief executive officer of The i2hub Organization.

Both the RIAA and the MPAA declined to disclose how they identify users of i2hub and other P-to-P services, saying that describing their methods would hurt their ability to hunt down file traders in the future. The MPAA declined to disclose how many Internet2-related lawsuits it planned to file Wednesday.

"Whether we're filing 10 lawsuits or 10,000 is, we believe, irrelevant to the point we've been saying all along, which is this is wrong and you are not anonymous," said John Malcolm Sr., senior vice president and director of worldwide antipiracy operations at MPAA.

Both groups said they did not fault the developers of Internet2 for the file trading, but they said they hoped college presidents would take action to stop file trading on their Internet2 networks. Using Internet2, students can download a full-length movie in about five minutes, compared to an hour or longer using a cable modem or DSL (digital subscriber line) broadband service, Sherman said.

Glickman also called on the creators of i2hub to shut down unauthorized file trading. Chang, in an e-mail, disputed RIAA claims that it operates a central server where files are stored. "I2hub does not have the means to filter 'unauthorized files' on our network," Chang said. "We liken ourselves to AOL's Instant Messenger, or IRC (Internet Relay Chat), or even a hybrid of both. It would be the same to ask them to filter 'unauthorized files' on those networks."

Among the colleges targeted by the RIAA: Boston University, Carnegie Mellon University, Columbia University, Georgia Institute of Technology, Harvard University, Massachusetts Institute of Technology, Ohio State University, Princeton University, and University of Southern California.

Including these new lawsuits, the RIAA has filed more than 9,000 lawsuits against alleged P-to-P users since September 2003.

Posted by Chad Dickerson at 03:39 PM

LexisNexis: 280,000 more possible data theft victims

By Paul Roberts

An internal investigation at the LexisNexis division of Reed Elsevier PLC has uncovered evidence that as many as 310,000 more people may have had their personal information exposed to unauthorized individuals who compromised the security of a massive database of public and private information, including Social Security and drivers license numbers. An in-depth review and analysis of two years' of search activity uncovered 59 incidents of unauthorized access to information, LexisNexis said in a statement. The news follows revelations in March that intruders used the IDs and passwords of legitimate LexisNexis customers to gain access to information on 30,000 people whose information was stored in "Multistate Anti-Terrorism Information Exchange," (MATRIX), a database and information retrieval system managed by LexisNexis's Seisint division. The latest report form the company expands the number of potential victims by 280,000.

LexisNexis did not immediately respond to request for comment. Seisint collects data on individuals that is used by law enforcement and private companies for debt recovery, fraud detection and other services.

LexisNexis, of Dayton, Ohio, Monday sent letters notifying those whose information may have been viewed during the incidents, and will offer free support services to those who are notified, including credit bureau reports, fraud insurance and credit monitoring services for one year. Individuals who have been victimized will be able to receive fraud counseling services, the company said.

In most of the 59 incidents uncovered by the investigation, the hackers stole passwords and IDs from legitimate Seisint customers who were legally permitted to view the sensitive information. The company's infrastructure was not hacked or penetrated, nor was customer data accessed or compromised, LexisNexis said.

The company will be improving customers' password and ID administration and security, according to the statement.

The new disclosures from LexisNexis bring the Seisint MATRIX database compromise into a league with ChoicePoint Inc., of Alpharetta, Georgia, which agreed in February to tell 145,000 potential victims that ID thieves, in a breach of its database, may have gained access to personal information such as Social Security numbers and credit reports.

Data breaches at ChoicePoint, LexisNexis and elsewhere have made data brokers the focus of intense scrutiny.

Since disclosing its security breach, ChoicePoint has been the subject of a U.S. Federal Trade Commission inquiry into its compliance with federal information security laws, a U.S. Securities and Exchange Commission (SEC) investigation into possible insider stock trading violations by its chief executive officer and chief operating officer, and lawsuits alleging violations of the federal Fair Credit Reporting Act (FCRA) and California state law.

In March, the company said it will stop selling sensitive consumer data to many of its customers, except when that data helps complete a consumer transaction or helps government or law enforcement.

Some members of Congress have also called for new laws that would regulate the type of information that can be gathered and shared. A 2003 California state law, Senate Bill (SB) 1386, requires organizations that maintain computerized databases of personal information on state residents to notify them if the security of their private information is compromised. Experts have credited that law with prompting disclosure of the breaches at ChoicePoint and LexisNexis, even though many of those notified by the companies are not California residents.

Posted by Chad Dickerson at 03:39 PM

Salesforce.com shows off upcoming CRM upgrade

By Joris Evers

Salesforce.com Inc. is focusing on integration with the Summer '05 edition of its online customer relationship management (CRM) product, it said Tuesday. The release, due online in June, includes Sforce 6.0, an upgrade to the Salesforce.com integration offering. Part of Sforce 6.0 is a new Sforce Partner Portal toolkit that will let users create dedicated Web sites for partners. Salesforce.com unveiled and demonstrated several of the new features at a San Francisco event that it dubbed "Integrationforce Day."

Another part of the new edition is Multiforce, which will allow users to either customize or build multiple applications running on top of shared services. Applications built on the platform can share a single data repository and use the same security features and user interface. Multiforce was announced last month and shown Tuesday for the first time.

Multiforce is built atop Sforce using Salesforce.com's Customforce customization toolset. It is designed to let customers and third-party developers expand on Salesforce.com's service, so the service can go beyond CRM to provide other hosted services such as event planning or recruiting support.

"We're building a platform," Salesforce.com Chairman and Chief Executive Officer Marc Benioff said in a presentation at the event. He taunted traditional software vendors Oracle Corp., Microsoft Corp., Siebel Systems Inc. and SAP AG for running years behind in offering a CRM product that can be easily integrated with a user's other enterprise applications.

In addition to the Partner Portal toolkit, Sforce 6.0 includes a new Data Loader to let customers upload large chunks of data to Salesforce.com's systems and a new Self Service API (application programming interface). The API lets customers include the features of Salesforce.com's self service Web site in other sites and applications, Salesforce.com said.

Another new feature is single sign-on, which gives customers the option of linking their enterprise user directory to Salesforce.com. This would mean a user signed on to Windows won't need to log on separately to Salesforce.com. Directories supported include Microsoft's Active Directory and other LDAP (Lightweight Directory Access Protocol) directory services.

The single sign-on and the partner portal features jumped out at Christopher Pokrana, responsible for relationship management applications at United Way of America, a charitable organization that hopes to start a Salesforce.com pilot with 300 users in June. "Single sign-on is something I have been asking for," Pokrana said.

The same features will be investigated by Analog Devices Inc., which uses Salesforce.com for field sales purposes, said IT manager Rich Feist. The semiconductor company also would like to talk more with Salesforce.com about deeper integration between its applications and the Salesforce.com product, which is used by about 800 people, Feist said.

Missing from Salesforce.com's new release is an improved Salesforce.com test environment, which Pokrana and Feist as well as other users attending the event on Tuesday would like. Today it is not possible to build custom features in a Salesforce.com test environment and then migrate it to a production environment, these users said.

"One of the biggest issues I have with our developers is a testing environment," Pokrana said.

Salesforce.com is working on improving the testing possibilities, users said. "They listen to their customers," said Feist.

As of January 31, Salesforce.com had about 13,700 customers and about 227,000 paying subscribers, the company said.

Posted by Chad Dickerson at 03:38 PM

April 12, 2005

Microsoft to show off new Xbox on May 12

By Joris Evers

Anyone who wants to learn more about the next Xbox console should tune in to MTV on May 12, Microsoft Corp. said Monday. The software maker and cable TV channel have struck a marketing deal to provide an early look at the highly anticipated video game console on MTV channels in the U.S., Asia Pacific and Europe during a 24-hour period, Microsoft said in a statement.

The new Xbox, which is widely expected to be in U.S. stores by the end of this year, will be featured in a 30-minute show titled "MTV Presents: The Next Generation Xbox Revealed." The show starts May 12 at 9.30 p.m. Eastern Time and will be hosted by actor Elijah Wood and also star Las Vegas rock band The Killers, Microsoft said.

The broadcast will show gameplay of future Xbox games, news on the future of the Xbox Live online gaming service, celebrity interviews and footage on the making of the next-generation console, Microsoft said.

Microsoft has gradually been giving out more details of the console technology and games for the device. The company is expected to officially unveil the console at the Electronic Entertainment Expo (E3), which starts May 17 in Los Angeles. Sony Corp. is expected to premiere its new PlayStation console at the same event.

Microsoft introduced the current Xbox game console, the first model, in late 2001. As of Dec. 31, the company had sold 19.9 million consoles worldwide, 13.2 million of which were in North America, 5 million in Europe and 1.7 million in Japan and the Asia-Pacific region.

Local times for the program, which will air on May 13 in other regions, are: Japan/Asia, 11:30 a.m.; Australia, 7 p.m.; France and Germany, 7 p.m.; Netherlands, 7:30 p.m.; Portugal, Romania and U.K., 8 p.m.; Poland, 9 p.m.; Spain 9:30 p.m.; Scandinavia, 10 p.m.; and Italy, 11:30 p.m.

Posted by Chad Dickerson at 03:45 PM

Time Inc. to use mobile messaging with magazines

By Stephen Lawson

Time Inc. will use mobile messaging to promote some of its approximately 138 magazine titles through offerings such as news, voting and exclusive content, the publishing giant announced Monday. Time has awarded an exclusive two-year contract to London-based Flytxt Ltd. to develop and implement interactive mobile programs for Time publications, starting with campaigns for People and Teen People magazines that have already begun, according to Flytxt representative Susan Donahue.

The strategy should be a smart move for Time, and not just for youth-oriented titles, said analyst Mark Donovan of M:Metrics Inc., a research company based in Seattle.

"Text messaging is one of those mobile applications that is delivering value to people in all age categories," Donovan said. An M:Metrics survey released Monday indicated that in the three months ended Feb. 28, more than 37 percent of U.S. mobile subscribers had used text messaging at least once in that period. Still, the heaviest usage is among young subscribers, he said: About 34 percent of those using text messaging at least once a month were under age 24, he said.

Time wants to reach its readers wherever they are and form interactive relationships with them, according to a statement from the companies. Time's editorial and marketing teams will use Flytxt Direct, a product that lets Flytxt clients directly set up and manage their mobile messaging programs, Donahue said. The platform also allows for profiling of readers, which can be used for tie-ins to third-party marketing campaigns, she said.

The "Teen People Mobile Club" program, already under way, includes competitions and daily horoscopes in addition to news, votes and mobile content, the companies said. Users sign up by sending a keyword via text message. Users may then get messages from Teen People as well as its "affiliates and partners," according to an information page at http://www.teenpeople.com/teenpeople/mobile. Standard text messaging rates for the user's mobile operator apply, it said.

Audience interaction programs such as voting on the Fox TV reality show "American Idol" have caught on with some people, but companies using mobile messages for marketing have to walk a fine line to promote rather than degrade audience loyalty, Donovan said.

"When text messaging turns into just spam, or sort of advertising without some payoff [for the audience], I think it will tip into something that's an annoyance," he said.

Posted by Chad Dickerson at 03:45 PM

Legislation would prevent federal Internet tax

By Grant Gross

A U.S. senator announced Monday he will soon introduce a bill that would prevent Congress from extending a long-standing telecommunications tax to Internet access. Senator George Allen, a Virginia Republican, said legislation is needed after Congress' Joint Committee on Taxation in January suggested an expansion of a 3 percent federal excise tax (FET) on telecommunications to Internet traffic, including e-mail and data services. Allen plans to introduce his bill, which would exempt Internet access from the FET, early this week.

The FET, first enacted in 1898 to fund the Spanish-American War, raises about US$6 billion a year for the U.S. government. At points during the last 107 years, the tax has been eliminated, reinstated, and raised to 25 percent. Congress made the tax, which applies to local and long-distance calls, permanent in 1990.

"We won the Spanish-American War over 100 years ago," Allen said at a press conference. "This tax represents an unnecessary service tax on consumers."

The Joint Committee on Taxation in January presented three options for the FET, one being the proposal to tax all Internet traffic. A second option would extend the FET just to voice traffic over the Internet, with a third option redefining how long-distance calls are taxed, with no taxes on Internet data or voice.

In November, Congress passed the Internet Tax Nondiscrimination Act, which extended a moratorium on new Internet-only taxes passed by state and local governments. But that bill, also sponsored by Allen, didn't apply to the existing FET, Allen said. Allen's new bill wouldn't prohibit taxes on VOIP (voice over Internet Protocol) that would be addressed under a separate bill likely to be introduced later.

The January report from the Joint Committee on Taxation noted that the growth of wireless voice services and the Internet have created confusion about how the FET should be applied. "The present communications excise tax provisions were enacted before the development of most modern technology -- the growth of computers and new electronic means of communication," the report said. "The proliferation of wireless communications technology and the Internet, and in particular broadband access, has blurred the lines between 'data' and 'voice' and between the functions of transmission and application. Consequently, service providers have found it increasingly difficult to determine which services are taxable communications services and which are nontaxable information services."

Asked why a bill was necessary to prevent a tax on Internet access that does not yet exist, Allen said it was important to head the idea off before it gains momentum. In addition to the Joint Committee on Taxation proposal, the U.S. Internal Revenue Service last July asked for public comments about whether VOIP should be subject to telephone taxes.

"It's very important to put your flag in the ground and say, 'we're staking this territory -- this hill will stay tax free'," Allen said.

The Internet is an important factor in the growth of the U.S. economy, and it's important to encourage its growth, said Allen and other speakers at the press conference, organized by the Computing Technology Industry Association (CompTIA). A 3 percent tax on Internet services will make it harder for Internet services reseller CTintegrators, based in Clifton, Virginia, to market its services to small businesses "slicing every penny," said company president Tony Lachick.

"I try to make payroll every week," Lachick said. "It's a little harder when you start to add the taxes to that."

Representatives of the Progressive Policy Institute, a liberal think tank, and Americans for Tax Reform, a conservative policy group, both endorsed Allen's efforts to exempt Internet access from the FET. Grover Norquist, president of Americans for Tax Reform, called the FET a "dishonest" tax that isn't separated out from other telecommunications taxes on customers' telephone bills. He called on Congress to eliminate the FET, and Allen said he'd support that.

Robert Atkinson, vice president of the Progressive Policy Institute, disagreed with the elimination of the FET during the U.S. government's current budget deficit. But an additional tax on Internet access could slow the U.S. economy and discourage IT investors, he said.

"I think we're a long way from maturity in the industry," he said. "One of the things that's made the Internet attractive [to investors] is the light tax burden."

Posted by Chad Dickerson at 03:44 PM

T-Systems,Samsung: Fuzzy picture on mobile TV

By John Blau

Maybe it was wishful thinking. Maybe it was a deliberate public relations move. But contrary to news reports that originated on Monday in South Korea, Samsung Electronics Co. Ltd. has not signed a contract with T-Systems International GmbH, the IT services and infrastructure arm of Deutsche Telekom AG, to deliver handsets capable of receiving broadcast TV signals based on a local standard. "We have no contracts to purchase and distribute handsets," said Thomas Wächter, director of digital broadcasting technology at T-Systems. "That's not our business."

T-Mobile International AG, the mobile arm of Deutsche Telekom and the unit typically responsible for purchasing handsets, was also unaware of a deal. "This is news to me," said company spokeswoman Marion Kessing.

Several media groups, including The Korea Times, reported that Samsung had signed a mobile TV handset deal with T-Systems, referring to a statement from the South Korean manufacturer.

A statement was not available on the manufacturer's English-language Web site.

Neither Samsung's headquarters nor its subsidiary in Germany could be immediately reached.

"What we signed late last month was an MOU (memorandum of understanding) to cooperate in the development and promotion of mobile TV services," Wächter said. "As part of this agreement, we will test equipment from Samsung, including handsets. But we have no contract to purchase equipment."

At the Cebit trade show in March, T-Systems demonstrated mobile TV, using a handset from Samsung based on the DMB (Digital Media Broadcasting) format. This format, which evolved from the DAB (Digital Audio Broadcasting) standard, is being pushed by South Korean manufacturers, including LG Electronics Inc., the first company to offer a mobile TV phone based on the DMB format last November.

Although T-Systems plans to provide broadcasting infrastructure services for mobile TV service at the FIFA (Fédération Internationale de Football Association) World Cup soccer tournament in Germany next year, the unit has yet to reach a decision with TV stations and mobile operators as to which technology will be used, according to Wächter.

Two competing standards are under review: South Korea's DMB; and DVB-H (Digital Video Broadcasting-Handheld), which was approved by the European Telecommunications Standards Institute in November. The DVB-H standard is backed by some of the world's largest handset makers, including Motorola Inc., NEC Corp., Nokia Corp., Siemens AG and Sony Ericsson Mobile Communications AB.

"The choice of standard could depend, at least for mobile TV service at the World Cup games, on available frequencies, and if this is the case, DMB could have an advantage," Wächter said.

Posted by Chad Dickerson at 03:44 PM

EDS system drove staff to enter false data, report says

By Laura Rohde

Stockpiled claims that never made it into the computer system, files that were deleted for no clear reason and incorrect information that was intentionally entered by demoralized staff in a desperate attempt to keep cases active. These are all parts of a decidedly difficult picture painted in a report commissioned by the U.K. government to assess the child-support case management and telephony system of the U.K.'s Child Support Agency (CSA). The problem-plagued, £456 million (US$863 million) CSA system involves a Java-based application developed by Electronic Data Systems Corp. (EDS) as well as a telephone call center system from BT Group PLC's consulting and systems integration business. The CSA system, launched two years behind schedule in March 2003 and £256 million over budget, has been blamed for delaying payments to tens of thousands of single parents.

"Some innovative members of staff had attempted to find alternative solutions to the problems caused by the fragile IT system, in order to provide better service to clients. Staff were not always entirely sure how near they were to breaking rules," according to the report, "Child Support Reform: The views and experiences of CSA staff and new clients."

Some at the CSA were so frustrated with the IT system that they simply broke down in tears. "Others told us that all kinds of members of staff were succumbing to tears: male and female, old and young, experienced and new," the report said.

The Department for Work and Pensions (DWP), responsible for overseeing the CSA, commissioned the report from the Personal Finance Research Center (PFRC) at the University of Bristol. Most of the 64 staff interviews were conducted in April last year, according to a PFRC spokesman. The report itself was submitted in September to the DWP, which in turn published the paper on March 24, he said.

The DWP on Tuesday stressed that improvements have since been made to the system, reducing the impact of the report. "The information in this report is quite old; a number of new software releases have been made and there has been significant improvement," a spokesman for the DWP said.

EDS is still working with the DWP to get the system "satisfactorily functional," the Secretary of State for Work and Pensions Alan Johnson said last month in a House of Commons Parliamentary Select Committee progress report. He also revealed that the DWP has withheld £13.3 million in payments to EDS over the last two years.

However, despite the progress being made in addressing problems with the IT system, the CSA is expected to delay the transfer of hundreds of thousands of cases from its old systems until next year, the PFRC report said.

"We will not jeopardize cases where money is already flowing to children by moving them onto the new system until we are sure it is working properly," the DWP spokesman said Tuesday.

The report, which assessed not just the new IT system but the entire overhaul of the CSA that was undertaken at the same time, consists of interviews with 42 administrative officers and 12 executive level staff members, as well as 58 clients. The CSA employes 10,000 people.

Those interviewed criticized the design, speed and reliability of the system, specifically pointing to screens that took anywhere from 20 seconds to 10 minutes to refresh, the lack of a delete button for accidental errors and instances where staff were unable to send cases to the right office and therefore "simply deleted them" with the hope that they were duplicated in the appropriate business unit.

"Some staff said that they were entering some incorrect information to fill in unknown details so that they could get the system to continue with the case," the report said. "One admitted to entering old employer details knowing a client had changed jobs, just to keep the case active."

The training process was also highlighted as ineffective and inappropriate. Rather than receiving training on the live system, the majority of staff were given specially prepared computer training discs containing only straightforward and problem-free cases. On a positive note, that process had already begun to improve last year as trainers started delivering the course in modular format, with time for consolidation between topics, the report said.

Despite being encouraged last year by the Select Committee to completely scrap the system, it appears that the DWP has decided to focus on fixing what it has, though the DWP was unable to say when the system is expected to be fully operational.

The CSA "very much values its staff who work in difficult circumstances involving emotional family break-ups. That said, there is still some way to go before the (CSA) is delivering for all its clients the level of service they are entitled to expect," the DWP said.

Posted by Chad Dickerson at 03:43 PM

April 11, 2005

Mobile email company Seven buys Finland's Smartner

By Scarlet Pruitt

Mobile e-mail software provider Seven Networks Inc. has purchased European rival Smartner Information Systems Ltd. in a bid to expand its global presence and relationships with carriers, the Redwood City, California, company said Monday. The deal gives Seven a customer base of 45 mobile operators across 30 countries, as well as licensing agreements with the top five handset manufacturers, including Nokia Corp. and Motorola Inc., it said. Terms of the deal were not disclosed.

Seven already had relationships with many handset manufacturers that integrate its software for sending e-mail to and from cell phones, but the acquisition of Smartner gives the company additional carrier agreements, according to a spokeswoman.

Smartner, based in Helsinki, Finland, has a strong customer base in the European market, while Seven has strengths in the U.S. and Japan, making the two companies a good fit, the spokeswoman said.

Together, the companies plan to target Fortune 500 enterprises as well as individual consumers by introducing new products and investing more in research and development, Seven said. The company's wireless e-mail products will take on the market currently dominated by BlackBerry provider Research in Motion Ltd. (RIM).

"RIM is still the 800-pound gorilla in this market but the consolidation of these companies will give them advantage against other, smaller players," said John Delaney, principal analyst with Ovum Ltd.

Agreements with a variety of handset manufacturers will also help Seven, given that RIM is locked into the proprietary BlackBerry platform, Delaney said. He added that Europe is currently the fastest growing push e-mail market, so Smartner's regional strength will also be an advantage.

The combined company will operate under the Seven brand, with headquarters in Redwood City. Seven Chief Executive Officer (CEO) Kent Thexton will head the new company and Smartner CEO Paul Hedman will become managing director of the European and Asia Pacific operations.

Posted by Chad Dickerson at 04:05 PM

April 08, 2005

Drinking for IP law change

By Stacy Cowley

P-to-P (peer-to-peer) file-trading enthusiasts like to rant about the draconian steps taken by groups like the RIAA (Recording Industry Association of America) to enforce laws protecting their intellectual property rights, by shutting down distribution systems like the original Napster. But can those enthusiasts be organized into an influential grassroots organizing force? The founders of CopyNight hope that the answer is "yes," and that social gatherings can ferment political activism. Last week, on the evening of opening arguments in the U.S. Supreme Court's hearing of MGM vs. Grokster, people interested in intellectual property (IP) issues and concerned about current legal trends assembled in bars in eight cities throughout the U.S. for the inaugural meeting of CopyNight. The new monthly event is intended to give participants a forum for discussing IP law -- and, CopyNight's founders hope, to mobilize a coalition to fight for changes in how the law deals with protection and distribution of creative works.

CopyNight's founder is David Alpert, a New York political organizer who also launched IPac, a political action committee focused on IP policy. While IPac works for change through the legislative system, CopyNight is aimed at broadening the pool of people who follow and care about the shaping of IP law.

For Alpert, fighting overly restrictive IP laws is essential to furthering technical innovation. "The opposition is out of control," he told the group of about 20 that assembled in a midtown bar for New York's debut CopyNight. "They want greater and greater control at the expense of peoples' ability to be creative."

Some who came to CopyNight could cite clear cases of legal obstacles hindering artistic or technical projects. Wendy Cohen is a co-producer of a film festival called Media That Matters. Sorting music rights is a constant problem for festival administrators, she said: "People have this inclination to include music they love -- and when they do, bang, copyright issues."

Others at the event admitted baser motivations for their interest in IP issues -- and even copped to being part of the shadowy mob of copyright-infringing downloaders P-to-P advocates try to downplay. "I like to download music for free," Sean Hart said cheerfully. But Hart also works as an actor, and appreciates the IP protections that ensure he gets paid when his recorded work is reused.

That's the crux of the problem people opposed to the RIAA's controlling approach will need to address, according to technology investor, activist and pundit Esther Dyson. An industry generalist best known as the founding chairman of ICANN (the Internet Corporation for Assigned Names and Numbers), Dyson stood out among the mostly twentysomething participants at CopyNight.

Members of groups like the RIAA "have cost structures based on old distribution channels," Dyson said. "Show them a new business model. If you don't like the law, you have to work to change it, rather than just grouse about it."

For now, CopyNight is more about social networking than direct action, according to organizer Alpert. Still, he kicked off the night by handing out flyers with bulleted discussion topics ("Hollywood located in California to escape the reach of Edison's patents. Might the U.S. lose the engine of future economic growth for the same reason?"), and is setting up forums on CopyNight's Web site to encourage participants to stay continuously involved.

CopyNight's organizers hope to take the effort national. In addition to New York, CopyNight gatherings were held simultaneously in Washington, D.C; Providence, Rhode Island; Raleigh, North Carolina; Austin, Texas; Los Angeles; San Francisco and Seattle. CopyNight San Francisco coordinator Ren Bucholz said the gathering there drew about a dozen people, from such varied fields as neuroscience research, medicine and software development.

"People who were there were having really good conversations about current IP issues and putting together a citizen lobbying day," Bucholz said. "We're setting up a community listserv to help plan the things we talked about and continue the conversations that we left at the bar."

The next CopyNight is scheduled for April 26 -- a day the World Intellectual Property Organization (WIPO) has declared "World Intellectual Property Day." In its advertisements for the campaign, WIPO offers a list of suggested activities such as "mount an essay competition in local schools on simple intellectual property-related themes" and "arrange for performers to deliver messages encouraging respect for creators and creativity."

In bars across the U.S., CopyNight attendees will be celebrating the day by brainstorming on how best to encourage creation and distribution of creative works while stripping away from them the legal protections of "property."

Posted by Chad Dickerson at 11:16 PM

US PlayStation Portable sales top 500,000 in two days

By Martyn Williams

Sony Computer Entertainment America Inc. sold more than half a million of its PlayStation Portable (PSP) handheld gaming devices during the first two days they were on sale in North America, the company said Thursday. The PSP went on sale there on March 24, priced at US$250 or C$300. Total sales generated during the first week were US$150 million, according to Sony. The company did not specify if this includes related software sales.

Sony had shipped a million units of the device ahead of the launch in anticipation of strong demand.

When it went on sale in Japan on Dec. 12, it was greeted by long queues of prospective customers, some of who waited through the night. The company's entire shipment of 200,000 units was nearly gone by the end of the day.

Sales of the PSP in Japan have reached more than 1.1 million units since its launch, according to the latest point-of-sale system data collected by Media Create Co. Ltd.

Posted by Chad Dickerson at 04:04 PM

April 07, 2005

Yahoo to support Wikipedia (Update)

By Juan Carlos Perez

Yahoo Inc.'s search engine division will supply hardware and other resources to the Wikimedia Foundation Inc. to support that nonprofit organization's free Wikipedia online encyclopedia. Yahoo Search's contribution is the most significant received by Wikimedia from a corporate sponsor to date, the two organizations said Thursday in a joint statement.

Yahoo Search also will feature abstracts of Wikipedia content at the top of relevant search results in the form of "shortcuts," which are either factual information or links to factual information. Yahoo's shortcuts are intended to give users the answer they're looking for right on the search results page, so users don't have to browse away to other Web sites and scour them for the desired information.

Yahoo's support comes completely free of charge to Wikimedia, David Mandelbrot, Yahoo's vice president of search content, said in an interview. Featuring Wikipedia's content abstracts and links in the form of shortcuts is in line with Yahoo Search's mission to provide high-quality, relevant information to its users, he said.

"To operate a site that reaches as many people as Wikipedia can be costly for a non profit, and we're contributing with resources to help with that effort," Mandelbrot said. "Their popularity is growing very fast and, accordingly, their bandwidth and hardware needs have increased substantially."

The hardware support will bolster Wikimedia's technical infrastructure, while the shortcuts inclusion will increase Wikipedia's exposure worldwide, the organizations said.

"Our growth in Web traffic continues to be staggering, doubling every few months. Yahoo's generous donation to our cause in the form of servers, hosting and bandwidth will have a huge impact on our ability to get our message of sharing knowledge out to the world," wrote Jimmy Wales, Wikimedia's president, in the official Yahoo Search Web log.

Yahoo's gesture comes with no strings attached, Wales wrote: "Yahoo's donation is purely charitable in nature with no requirements for us to show advertising, and no ownership or control of our work by Yahoo of any kind. Yahoo is simply enthusiastic about the goodness of our work."

In a separate statement from Wikimedia, the group said Yahoo will provide it with hosting capacity by dedicating "a significant number of servers" in a Yahoo facility in Asia.

Yahoo Search plans to begin serving up shortcuts with Wikipedia content in the coming weeks on its U.S. site and on other select country sites.

The content of the increasingly popular Wikipedia (www.wikipedia.org) is available for free. Anyone can add and edit Wikipedia content via a Web browser. It receives about 50 million hits every day and its English-language version now has over half a million articles, according to Wikipedia. Since its launch in 2001, about 40,000 people have contributed content to Wikipedia, which has versions in more than 100 languages.

Wikipedia's main site, www.wikipedia.org, ranks number 63 among the most visited English-language sites, according to Alexa Internet Inc.

Posted by Chad Dickerson at 09:34 PM

AOL starts rolling out 'Net phone service

By Stephen Lawson

America Online Inc. (AOL) on Thursday began the nationwide rollout of an Internet phone service for subscribers to its Internet service. AOL began introducing the AOL Internet Phone Service to more than 40 initial markets around the U.S., including New York, Chicago, Los Angeles, Dallas-Fort Worth, Las Vegas, Washington, D.C., and the San Francisco Bay area. It will expand the service to other cities over the coming months, according to a company statement.

Subscribers to the VOIP (voice over Internet Protocol) service will get an adapter into which they can plug a traditional touch-tone phone and a broadband Internet connection. In addition to a variety of pricing plans for local, long-distance and international calling, the service comes with standard call waiting, caller ID and unified voice mail, e-mail and instant messaging, according to AOL. A voice portal allows users to receive their AOL e-mail via phone with an electronic voice reading out the messages, said spokeswoman Cindy Harvey. Enhanced 911 (E911) emergency calling is enabled on the service in all of the 40 initial markets, according to AOL.

VOIP can cut the cost of phone calls by converting them into IP packets and putting them on a data network, while also making possible new types of user interfaces and services. Startups, established phone companies and cable operators all are jumping into consumer VOIP with a variety of approaches. AOL has integrated its VOIP service with its existing Internet offering, allowing users to combine their standard AOL contact list for e-mail and instant messaging with a phone contact list. That list can indicate in real time whether a contact is reachable via instant message as well as providing a phone number that can be dialed with a mouse click, Harvey said.

AOL is offering several pricing plans for the service, each with discounted introductory rates:

A Local Plan with unlimited local and regional calls for US$13.99 per month for the first three months, plus $0.04 per minute for long-distance calls in the U.S. and Canada. After the first three months, the monthly rate will go up to $18.99.

An Unlimited Calling Plan including unlimited local and long-distance calls in the U.S. and Canada for an initial price of $24.99 per month for the first three months and $29.99 thereafter.

A Global Calling Plan with unlimited local and long-distance calling in the U.S. and Canada plus low international rates, priced at $29.99 per month for the first three months and $34.99 per month thereafter.

A special rate for new AOL customers, with unlimited local and long-distance calling in the U.S. and Canada plus the AOL Internet service over broadband for $29.99 per month for the first six months. After that, the monthly rate will go up to $39.99.

Posted by Chad Dickerson at 09:34 PM

Google intros Q&A service

By Juan Carlos Perez

Google Inc. on Thursday began delivering factual answers for some queries at the top of its results page, to save users from having to navigate over to other sites and look for the information. For example, if a user enters the query "Portugal population," Google returns the answer -- 10.5 million -- along with a link to the Web page where the information came from, which in this case is the population page of the U.S. Central Intelligence Agency's Factbook.

The query "who is Jane Fonda?" triggers the answer "... is an Academy Award winning American actress, model, writer, producer, activist and philanthropist" and provides the link to the Wikipedia online encyclopedia's entry for the actress.

A small percentage of queries currently trigger these factual answers, but the service, called Google Q&A, is in its early stages, said Peter Norvig, Google's director of search quality. Currently, Google Q&A is strong in areas such as geography, information about famous people and physical facts, such as the size of planets, he said. Google will continually work to broaden the service's scope of topics and to improve its capability to deliver more complex answers, he said.

Other search engine providers such as Ask Jeeves Inc., Yahoo Inc. and America Online Inc. also offer features similar to this one, but Google doesn't feel it's late to the game, Norvig said. All search engines are moving toward resolving queries in this manner, and the quest for that is just beginning, he said.

Google feeds this service with information from Web sites it considers reliable, but it hasn't established formal relationships with any content provider whose information is being used for this feature, Norvig said. Google doesn't expect that the owners of the Web sites will complain over the possibility that this new service will steal traffic away from them, Norvig said. On the contrary, being featured at the top of Google's results list will give these Web sites great exposure, and will likely result in increased traffic, he said.

Posted by Chad Dickerson at 09:33 PM

Microsoft creates tools to crack child porn cases

By Paul Roberts and Joris Evers

Microsoft Corp., in a joint effort with Canadian law enforcement agencies, has developed a system to help track down people who prey on children online, the company said Thursday. The Child Exploitation Tracking System (CETS) was developed by Microsoft Canada and law enforcement agencies, including the Royal Canadian Mounted Police (RCMP) and the Toronto Police Service. The technology lets investigators spot trends and link pieces of information in, for example, child pornography cases, which often span borders and involve unknown perpetrators and victims. Also, CETS is accessible to multiple agencies and can be linked to systems used by law enforcement agencies in other countries.

"It allows us to store massive amounts of information and share it. We're all working on one common database and it uses social networking analysis to identify nonobvious relationships," said Paul Gillespie, a Toronto Police detective sergeant. "Within law enforcement, just the fact that we will all be working off the same page is a bit of a cultural shift."

CETS is an information management tool that uses XML (Extensible Markup Language) Web services and other Microsoft technology, including SharePoint Portal Server and the SQL Server database to capture information related to child exploitation. It then allows investigators to search that information and share it. Police agencies can use CETS to cross reference large volumes of case information in new ways and uncover obscure relationships between different pieces of data. The technology's social-network analysis features can spot communities of sex offenders, Microsoft said in a statement.

Microsoft spent US$2 million developing the program and at a news conference Thursday pledged another $2 million to help police agencies adopt and implement CETS. Any agency interested in obtaining the system at no cost can contact the software maker in Canada. "CETS is not something that we are going to be selling. We've offered to give this away to any law enforcement agency on a worldwide basis," said Microsoft Canada President David Hemler.

Details of how the system works are being kept secret, Hemler said. "We're intentionally coy about the technology that is used in this because we think it gives the good guys an advantage over the bad guys," he said. "Think of it as an assembly of commonly available Microsoft software, using techniques from Microsoft Research and best practices that the law enforcement community shared with us."

In Canada, the RCMP maintains a central CETS database that is used by more than 25 police forces across the country. Investigators can share information over a secure network and consolidate investigations that involve the same perpetrators or victims.

The program had backing at the highest levels within Microsoft. Chairman and Chief Software Architect Bill Gates instructed Microsoft Canada to work with law enforcement to develop CETS after he received an e-mail from Gillespie in January 2003. The Toronto Police detective sergeant told Gates that officers in his unit were falling behind sex offenders because they lacked the tools and training to properly investigate crimes on the Internet or penetrate shadowy communities of pedophiles.

"I sent the e-mail and about three weeks later I was contacted by Microsoft Canada. They wanted to know what they could do for me. To be honest, I thought it was people in my office playing a joke on me. When I sent the e-mail I really did not expect to hear anything back," Gillespie said. Following the first contact, Microsoft and Gillespie had several meetings, the collaboration ultimately led to the development of CETS.

The CETS system showed promise even before it was complete. During a test in November, CETS identified a link between information in a U.S. Federal Bureau of Investigation probe and a separate U.S. Department of Homeland Security operation called "Falcon." That information allowed the Toronto Police's Sex Crimes Unit to charge a man already under arrest on child pornography charges with sexually assaulting a 4 year-old girl, Microsoft said.

Once the purview of postal inspectors, child pornography cases are becoming an increasing concern for federal, state and local law enforcement agencies. Widespread Internet access and inexpensive digital imaging technology allow for easy creation of child pornography and sharing it online.

In the U.S., the Department of Defense (DOD) spent $500,000 and put its top cybercrime researchers on a program to make the fight against child pornography more efficient, according to officials at the agency.

The DOD's Defense Cyber Crime Center (DC3) launched the "Known Image Database System," or "KIDS" in July, 2004, to hasten the identification of pornographic images depicting children and relieve the workload on swamped computer crime investigators.

Posted by Chad Dickerson at 09:33 PM

RFID policy panel raises privacy concerns

By Grant Gross

Radio frequency identification (RFID) technology has many current and future benefits, but U.S. policymakers need to be aware of potential privacy and security problems of the rapidly evolving technology, a privacy advocate and a security expert said Wednesday. A parade of RFID vendors and users championed the potential of the technology at a U.S. Department of Commerce workshop on RFID and its policy implications, but Paula Bruening, staff counsel at advocacy group the Center for Democracy and Technology, warned that RFID is one example of a growing trend toward businesses collecting and using their customers' personal data.

While most current forms of RFID aren't capable of compromising privacy by doing things such as tracking customers' movements, the technology is rapidly moving forward and may soon catch up to consumer and privacy advocates' fears, Bruening said. "We need to be forward-looking and address privacy concerns around this technology," she said.

RFID uses small processors and antennas that are integrated into a paper or plastic label. Those chips can then be read by an electronic scanner, and unlike barcodes, RFID chips withstand dirt and scratches. As the range of RFID scanning grows beyond the current 25 feet (7.6 meters), RFID could allow corporations and governments to track people's movements and purchases, privacy advocates have said.

But representatives of RFID technology vendors including Texas Instruments Inc. and Microsoft Corp., along with users PepsiCo Inc. and General Motors Corp., talked of the potential for RFID to revolutionize the way companies manage their inventories, fight counterfeiters and stop shoplifters.

No one offered concrete cost savings numbers, however, and Pam Stegeman, vice president of the Grocery Manufacturers of America, noted that because of the cost of RFID chips and readers, the technology is still not for everyone. Companies that often carry counterfeited or stolen products, or that ship mixed products on pallets, can most benefit from RFID, she said. RFID isn't a good solution for companies that sell many low-cost items, she said. RFID labels now cost about US$0.50 each.

Already, RFID technology is used to track livestock, to find lost pets and to pay for gas and subway fares simply by passing an RFID-enabled card close to a reader. Applied Digital Inc., an RFID hardware vendor, even received U.S. government approval in October 2004 to offer RFID chips that can be implanted in humans, just as the chips are now implanted in dogs and cats. Such chips could contain a person's health records that doctors could access in emergencies, said Scott Silverman, Applied Digital's chairman and chief executive officer.

"This is going to be bigger than cell phones," said Jeff Fischer, chief RF architect at Reva Systems Corp., another RFID hardware vendor.

With large retailers including Wal-Mart Stores Inc. and Target Corp. requiring their suppliers to move to RFID on shipping containers, the technology will become more prevalent in the next couple of years. But Tom Kellermann, senior data risk management specialist at The World Bank Group, warned audience members at the U.S. Department of Commerce forum that like Wi-Fi and other wireless technologies, RFID has major security challenges.

"Radio frequency is impossible to secure," Kellermann said.

RFID labels don't check readers for authentication, so identity thieves could set up their own readers that impersonate legitimate ones, he said. And as with other wireless technologies, criminals will find ways to exploit RFID and "grab money out of the air," he added.

Kellermann advised companies against using RFID for financial transactions, even though oil company Exxon Mobil Corp. is already using RFID in its Speedpass "contactless" gas purchasing program, and major credit card companies are rolling out their own contactless cards. Mark MacCarthy, senior vice president for public policy at Visa International Service Association, predicted other retailers would begin rolling out contactless payment terminals within months.

Bruening encouraged policymakers in Washington, D.C., to engage in a debate broader than RFID, focusing more on what companies can do with their customers' personal information.

RFID has the potential to expand what people around you know about you, and its uses are worth a policy debate, said James Lewis, director of the Technology and Public Policy Program at the Center for Strategic and International Studies, a Washington think tank. "When you walk down the street now, people can see you," he said. "(With RFID), people will be able to see you and know more about you."

However, Lewis also warned policymakers not to focus new rules on all uses of RFID when many existing uses cause no privacy or security problems. "If you're putting a chip in the ear of a cow, is there really a privacy concern?" he said. "A one-size approach won't work." And although rules on the proper use of RFID are needed, they could be industry rules instead of ones set by the government, Lewis added.

Posted by Chad Dickerson at 05:06 PM

Siebel struggles with changing CRM market

By Stacy Cowley

Siebel Systems Inc.'s warning Tuesday that its sales last quarter were significantly short of expectations has analysts watching and waiting to see whether Siebel's problems are short-term and company-specific or are a sign of broader weakness in the enterprise applications market. Siebel said it now expects license revenue for the quarter, which ended March 31, of about US$75 million, its lowest level since 1998. Siebel estimated its total revenue for the quarter at $297 million to $300 million, below its earlier management guidance and below the $337.5 million consensus forecast of analysts polled by Thomson First Call.

Siebel Chief Executive Officer (CEO) Mike Lawrie attributed the shortfall to both soft demand and execution problems at Siebel. In a conference call with analysts, he promised quick action to improve Siebel's financial performance, including discretionary spending cuts and, potentially, management changes. Further details on what changes Lawrie will implement will be available April 27, when Siebel releases its full results for the quarter.

The news slammed Siebel's Nasdaq stock (SEBL) on Wednesday, sending it down nearly 10 percent to close at $8.26.

Siebel has already been in a belt-tightening mindset for several years, and its headcount has steadily declined, from 8,300 in 2001 to just over 5,000 at the end of 2004. Earnings warnings are almost routine; Siebel last issued one in 2004's second quarter, when its license revenue fell to $94.8 million.

Siebel's core focus is selling CRM (customer relationship management) software to run corporate sales and marketing functions, a market it essentially invented. With about three million end users running its enterprise applications, twelve-year-old Siebel has the largest CRM installed base, but its growth has slowed as other enterprise vendors -- SAP AG and Oracle Corp. at the high end, Salesforce.com Inc. at the low end -- chip away share in the fragmented market.

Now, analysts say that market may not be enough to sustain Siebel. Piper Jaffray & Co. analyst Tad Piper said in a research note that Siebel's wide sales miss "was obviously not just normal seasonality" and "calls the growth of the CRM space into question." Smith Barney analyst Tom Berquist said that while he's inclined to believe Siebel's management when they say the problems are correctable operational issues, he doesn't anticipate much pickup in customer spending over the next few quarters. Berquist thinks it reasonably likely that Siebel will be acquired within a year.

Oracle also has struggled to grow its applications revenue in recent quarters, although its long battle with and acquisition of rival PeopleSoft created an unusual selling environment for the company. Germany's SAP has enjoyed a run of growth and solid quarters, possibly at the expense of its U.S. competitors.

Meanwhile, as several of the traditional enterprise applications vendors face slumping sales, the market's newer entrants are steadily closing the gap between them and the "tier one" vendors. Salesforce.com, which sells its CRM software as a hosted subscription service, has posted heady growth rates over the past few years. Now, it's on the verge of edging past some of the traditional vendors in terms of revenue, not just growth: Gartner Inc. predicts that Salesforce.com will be ranked third in enterprise application license revenue by the end of 2005, eclipsing the combined Oracle/PeopleSoft applications business.

If Siebel can't shore up its business and continues to face declining sales, it too could find itself pushed to the sidelines of a rapidly changing industry. Although Siebel has launched a hosted service, Siebel CRM OnDemand, its user base is currently about one-tenth the size of Salesforce.com's, and when it competes against Salesforce.com for new customers, it wins about half the time, according to company executives.

In one month, Mike Lawrie will celebrate his one-year anniversary at Siebel. Investors are getting impatient for results. Next week, institutional shareholder Providence Capital Inc. plans to hold a meeting in New York with other institutional investors, at which it will discuss forming a shareholder coalition to push for changes at Siebel. With dissidents waiting in the wings, Lawrie will need to work quickly to prove that Siebel still belongs at the pinnacle of the CRM market it created.

Posted by Chad Dickerson at 05:06 PM

MSN Messenger gets video call update

By Scarlet Pruitt

Microsoft Corp. released an update to its MSN Messenger application on Thursday, offering improved video and voice calls in an effort to catch the eyes and ears of more Internet users. At the same time it launched a finished version of an online scrapbook service it has been testing, MSN Spaces, and rolled out new advertising opportunities. The MSN updates are aimed at making the company's services more interactive, as it takes on challengers such as Internet telephony startup Skype Technologies SA. Skype has seen steady growth for its free PC-to-PC voice service, leading it to roll out PC-to-mobile phone calls and messaging capabilities.

Microsoft wants to get one step ahead with the release of its new MSN Messenger 7.0 instant messaging (IM) application which offers free PC-to-PC video calls for users with a webcam, in addition to free voice calls. The video call feature uses technology from webcam maker Logitech Inc. to synchronize audio and video streams. Users can watch a video in the Messenger window or get up close and personal in full-screen mode. Additionally, the company plans to incorporate a feature in coming months that will allow Messenger users to send messages to friends' mobile phones.

Messenger 7.0, which has been in beta since December, also includes the ability to perform a search during a chat session and share photos.

The company also officially launched its MSN Spaces service on Thursday, an online scrapbook that lets users post blogs, photo albums, music lists and other personalized information. Introduced in beta form in December, MSN Spaces now offers more storage space -- allowing users to post around 750 photos --and a variety of backgrounds and personalization options. Over 4.5 million people have already signed up for the free service, Microsoft said.

Both MSN Spaces and Messenger 7.0 have also been optimized for advertising, allowing marketers to tout brands in brief video commercials, text ads, links to Web sites, and banner spaces, among other sponsorship options.

"We're trying to build an advertising experience into the product, but we don't want it to be obnoxious," said Phil Holden, director for communications services for MSN.

(Joris Evers in San Francisco contributed to this report.)

Posted by Chad Dickerson at 05:06 PM

Microsoft CFO Connors leaves company

By Joris Evers

Microsoft Corp. Chief Financial Officer (CFO) John Connors has left the company as of March 31, without a replacement being named, Microsoft said Wednesday. Microsoft announced Connors' resignation on Jan. 11, but at that time it did not set a date for his departure. The company did say that Connors would assist with the transition to a new CFO. In a filing with the U.S. Securities and Exchange Commission on Wednesday, Microsoft said that Connors left March 31, the end of the company's third fiscal quarter.

"John leaves behind him a strong and capable team and we are confident in the ability to continue to execute as we have during his tenure," a Microsoft spokeswoman said.

The search for a replacement CFO is ongoing. "Given the importance of this position, we are taking our time and going through a very thorough process to find the right person," the spokeswoman said.

Meanwhile, Scott Di Valerio, corporate vice president and corporate controller at Microsoft, plans to lead the April 28 quarterly earnings call, the spokeswoman said.

Connors left to become a partner at venture capital firm Ignition Partners LLC, which is in Bellevue, Washington, near Seattle. He had 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.

Microsoft, in Redmond, Washington, has said it will consider both internal and external candidates to fill the CFO position.

Posted by Chad Dickerson at 05:05 PM

April 06, 2005

Google adds satellite images to maps

By Juan Carlos Perez

Google Inc. has enhanced its Google Maps and Google Local services with satellite and aerial images, letting users view digital snapshots of an area, the Mountain View, California, company announced Tuesday. Now, users of Google Maps can choose to see an overhead photograph of the area they searched for instead of a conventional graphical map. The same option is provided to users of the Google Local index of business listings.

As is possible with Google's conventional maps, users can zoom in and out of the image, as well as drag it in any direction to view cropped-out sections. When users request driving directions, Google also lays over the image a line linking the two destinations, as it does with its conventional maps.

The new functionality comes from Keyhole, a company Google bought last year. It can be accessed at http://local.google.com and http://maps.google.com.

The satellite and aerial images will be handy for a variety of users, said John Hanke, the Keyhole unit's general manager. For example, users who are visually oriented might find it easier for planning driving directions, while those in the process of moving to a new place will be able to survey the locations of house or apartments they may be considering, he said. Likewise, users in the process of booking travel will be able to scan the surroundings of available hotels, he said.

The images come from a variety of private-sector and government sources and are refreshed typically every 12 months to 18 months, he said. They cover the continental U.S., as well as some cities in Canada and the Baja California, which is part of Mexico.

For those concerned about privacy, the service doesn't zoom in to a degree that would let a user say, identify a person or peek at a window, Hanke said.

Google sells downloadable versions of Keyhole with extra features not available on the Web site. A version for individual users costs $29 per year, while one for businesses costs $599 per year.

The version for individuals, among other things, lets the user "fly" across the areas being scanned in a video game-like experience, Hanke said. The business version has features such as measuring the size of an area and exporting the flying "movie" experience to other applications such as software for presentations, he said.

Google will continue to develop the fee-based versions, as well as the free service, because the company feels they appeal to different types of users, Hanke said.

Posted by Chad Dickerson at 03:59 PM

NEC develops wireless system for high-definition video

By Paul Kallender

NEC Corp. has developed a wireless system that can transmit uncompressed high-definition (HD) video signals and could eliminate the need for cables when connecting HD-capable products, the company said on Tuesday. Systems based on the technology could be available in 2007. Over the next few years more and more products using HD video will emerge, said Hidenori Shimawaki, chief manager of NEC's System Devices Research Laboratories located in Shiga prefecture, western Japan.

With the products will come a need to interconnect them with a system that doesn't degrade the HD picture.

At present, most systems compress the HD signal, which can be around 1G bps (bits per second) in bandwidth, to a fraction of its size to allow for transmission between devices. However, with each compression and subsequent decompression of the signal some data can be lost and so the picture quality can be reduced slightly.

A new system called HDMI (High-Definition Multimedia Interface) can transfer uncompressed HD signals between devices via a cable. And while consumer electronics makers are beginning to offer HDMI-compatible equipment, there is not yet a suitable wireless technology that is capable of transmitting uncompressed HD signals, Shimawaki said.

Wireless LAN and similar technologies can suffer interference issues when several devices are connected and they do not have the bandwidth to carry the uncompressed HD signal. UWB (ultra wideband) technology offers higher bandwidth and can transmit HD signals without compressing them but works over a relatively close range and is yet to be commercialized.

NEC's prototype transmitters and receivers have overcome such speed, range and interference hurdles, according to Shimawaki.

In the system, the HD signal is converted into a 1G bps data stream, which is enough to carry the signal between devices without the need for compression and decompression. The technology works to a range of about 7 meters, which is enough to work well in most living rooms, Shimawaki said.

The signal uses the unlicensed 60GHz band, which is largely unused and has few interference issues, he said.

The transmitters and receivers developed by the company measure 70 millimeters by 50 millimeters by 15 millimeters. NEC plans to make these smaller and may offer the technology to other consumer electronics companies, according to Shimawaki.

"The technology could be embedded in other devices, or it could be sold as an optional unit," he said.

Posted by Chad Dickerson at 03:59 PM

Siebel quarterly results come up short

By Stacy Cowley

Siebel Systems Inc. warned Tuesday that its revenue and earnings for the first three months of 2005 came in below expectations, a result it attributed to deals slipping through in the quarter's final days. Siebel CEO Mike Lawrie said the shortfall came from declining applications license revenue; Siebel's services and maintenance businesses met expectations, he said in a written statement.

"Though we predicted some license revenue softness going into the quarter due to normal seasonality, we did not expect the results to be this low," Lawrie said. "This was a combination of poor execution on our part, exacerbated by a challenging economic and IT environment."

Siebel expects total revenue for the quarter, which ended March 31, to come in between US$297 million and $300 million. The consensus forecast of analysts polled by Thomson First Call was for revenue of US$337.5 million. In last year's first quarter, Siebel had revenue of $329.3 million.

Siebel expects license revenue for the quarter to be $75 million, down from $126.8 million in last year's first quarter.

Excluding a charge related to its January acquisition of Edocs Inc., Siebel expects net income for the quarter of $2 million to $4 million, or up to $0.01 per share. Analysts' consensus estimate was for earnings of $0.05 per share.

Lawrie, who took over as Siebel's CEO in May 2004, promised "decisive action" in response to the weak quarter, but did not immediately specify what he intended. Siebel scheduled a conference call Tuesday afternoon with analysts to discuss its preliminary results. Siebel is scheduled to release its full results on April 27.

Posted by Chad Dickerson at 03:58 PM

Apple launches wireless Internet store in Japan

By Martyn Williams

Apple Computer Inc. has opened a version of its online store for wireless Internet users in Japan. The service is available to owners of most handsets sold by NTT DoCoMo Inc. and KDDI Corp.'s Au unit, which together account for about 82 percent of all wireless Internet subscribers in Japan. The version for Au's EZWeb service launched on March 28 and the NTT DoCoMo I-mode site went live on April 1, Apple said.

The site offers for sale all models in Apple's popular iPod digital music player range, the recently launched Mac mini computer and iPod accessories. Prices are the same as those offered by Apple's conventional Web site.

Apple said that cell phones and the wireless Internet are used by people in the same market segment in which the iPod is popular.

No decision has been made on whether to expand the site to include other products. Such a decision will depend on how well it is received by potential customers, a company spokesman said.

By opening the store Apple can potentially reach a much larger prospective customer base.

In Japan, around 74 million people had subscriptions to one of the country's three wireless Internet services as of the end of February, according to data from the Telecommunication Carriers Association. In contrast, the number of people who access the wired Internet from home was estimated to be around 22 million in 2004, according to a report published in June by Access Media International Inc.

Users of compatible cell phones can access the service at http://applestore-mobile.jp. Users of non-compatible cell phones or other browsers will see a page advising them which handsets are compatible.

Posted by Chad Dickerson at 03:57 PM

VOIP over Wimax takes to the airwaves in France

By Peter Sayer

The construction site of a new highway in northern France became, for just one day, one of the hottest wireless networking hot spots in the country. Minister of Industry Patrick Devedjian held a news conference there Monday to outline his plans for the attribution of four licenses to operate Wimax wireless services across France, and network operator Altitude Telecom SA demonstrated how it will use Wimax technology to deliver telephone calls beginning June 1. Wimax is an emerging wireless networking technology that offers the potential for higher data rates than wireless LAN technologies such as Wi-Fi -- and over much greater distances: tens of kilometers, instead of tens of meters. Wimax standards are still under discussion, however. The standard for fixed terminals is the most advanced, but other standards for portable and mobile terminals are also in development.

Altitude already uses 50 Wimax base stations to offer data networking services to around 500 customers in three regions of France. Alvarion Ltd., the supplier of Altitude's equipment, has promised to upgrade the terminals to conform to the final 802.16D Wimax standard when the Institute of Electrical and Electronic Engineers Inc. votes on it, according to Altitude spokeswoman Sylvie Le Roux.

Later this year, Altitude will begin selling the VOIP (voice over Internet Protocol) service it demonstrated Monday. From June 1, Altitude will offer business customers the service with a simple tariff: half what you're paying already, Le Roux said. The company will average prospective customers' existing telephone bills for the previous 12 months, and then charge them half that as a fixed monthly fee, she said.

There will be some checks in place to stop companies from abusing the system, and to take account of their growth. The fixed fee will be indexed to companies' annual revenue, and also to any significant increase in call volumes if the all-you-can-eat pricing prompts a sharp increase in their appetite for telephone service. "For the same usage, it will be half the price," Le Roux said.

The service can be adapted to businesses of any size by adding more capacity in the wireless network, she said. The company uses MPLS (Multi-Protocol Label Switching) to guarantee quality of service for the voice traffic in the IP layer, and the G.711 voice codec to translate speech into digital form for transmission. "It's uncompressed, so the quality is as good as an analog line," she said.

Altitude will extend the offer to consumers in September.

Today, Altitude Telecom SA is the only company still operating a wireless local loop network in France, out of 14 awarded licenses in 2000. It is licensed to run its radio network in the 3.5GHz band.

The French government is planning a second round of wireless local loop licenses, this time to offer high-speed Internet access using Wimax technology. The licenses could be awarded before the end of this year, according to Devedjian, the Minister of Industry. In each region, four licenses will be available, but the administration has not yet decided on what basis they will be awarded.

The telecommunication regulatory authority, ART, suggested auctioning the Wimax licenses, while licenses to operate 3G mobile phone networks were awarded in a "beauty contest" in which operators were selected on the basis of their promised coverage, capacity and anticipated future network quality.

Devedjian sees problems with both those systems, and wants to find a middle ground, based in part on a comparison of proposed prices for the future services. He also plans to hold on to some of the frequencies reserved for Wimax services, so as to be able to react to evolution in the technology and the market.

There's plenty of interest in Wimax in France: Aéroports de Paris (ADP) announced plans on Monday to test the technology at one of the airports it manages, Roissy-Charles de Gaulle, northeast of Paris. Alcatel SA will supply the equipment, which will be evaluated by ADP Télécom, a subsidiary of ADP.

Posted by Chad Dickerson at 03:57 PM

Tiscali sells Liberty Surf

By John Blau

Italy's Tiscali SpA has shed another of its European subsidiaries in a continuing effort to raise cash and reduce its debt. The Italian ISP (Internet service provider) agreed on Tuesday to sell 95 percent of its French business, Liberty Surf SA, to Telecom Italia SpA for &eruo;266 million (US$342 million). [m] Once the transaction is completed, Telecom Italia will bid for the remaining 5 percent, as required by French law, Tiscali said.

The French sale follows divestments in several markets, including Austria, Denmark, Switzerland, Sweden and South Africa.

Tiscali, in Cagliari, Italy, began a fire sale of assets several months ago to raise capital to repay a &eruo;250 million [m] bond due in July. The operator borrowed money largely to finance its aggressive European expansion, amounting to 40 acquisitions in 15 countries within a six-year period.

The Italian ISP is now expected to focus on providing broadband Internet access and VOIP (voice over Internet Protocol) services in a handful of key markets, including Germany, Italy, the Netherlands and the U.K., according to Dan Bieler, research director at the London-based consultancy Ovum Ltd.

The move by Telecom Italia to snatch up the French business reflects a widening assault by former European telephone monopolies on the region's ISP market. Incumbent operators such as Deutsche Telekom AG and France Télécom SA have not only moved to reintegrate their Internet arms but also to expand their geographic presence, with a focus similar to Tiscali's on high-speed Internet access and VOIP.

"Unfortunately, a good chunk of the ISP business is moving to the incumbents because, at the end of the day, it's all about making money," Bieler said. "ISPs owned by telecom operators such as Deutsche Telekom and France Télécom with their own network infrastructure in their domestic markets and acquired infrastructure in others have better margins than resellers like Tiscali that have to pay for infrastructure services."

While not dismissing the resell model altogether, Bieler said "scale is essential" to make it work.

That, however, is exactly what Tiscali attempted and failed to achieve. The huge debt amassed from its acquisition binge, coupled with the collapse of the Internet economy at the turn of the century, undermined the ISP's business case.

Despite Tiscali's retrenchment, the European ISP market enjoys a high level of competition, which is delivering attractive prices and services for consumers and small businesses alike, according to James Woodcock, an analyst with Gartner Inc. "We're seeing numerous Net offers for higher speeds and lower monthly fees, in addition to a wealth of value-added services such as video, gaming and Net telephony," he said. "Even if the incumbent telephone companies are stepping up their efforts in the ISP market, they face plenty of competition."

Posted by Chad Dickerson at 03:56 PM

MCI again rejects Qwest bid

By Martyn Williams

The board of MCI Inc. has again rejected a takeover bid by Qwest Communications International Inc., Qwest said Wednesday. The rejection appears to make it more likely that Verizon Communications Inc. will get its way in acquiring MCI, a proposition MCI has agreed to twice already. Qwest has been trying to woo MCI since mid-February when MCI said it had accepted a takeover bid from rival carrier Verizon. The bid would have seen Verizon pay $6.7 billion for MCI. However, subsequent bids and counter-bids have resulted in Verizon raising its offer to about $7.6 billion, which has been accepted by MCI's board.

Despite that acceptance and with the blessing of Verizon, MCI returned to discussions with Qwest this week after the carrier attempted to trump Verizon by offering to pay around US$8.9 billion.

On Monday, while waiting the outcome of the discussions, Verizon suggested that it would walk away from the table should MCI decide to accept Qwest's offer. In a letter to MCI's top executives, Verizon's Chairman and CEO Ivan Seidenberg said his company would conclude that an acceptance of Qwest's offer means the MCI board is interested in short-term investors and not on the company's long-term strength, according to a statement issued by Verizon.

"Should this occur, we would no longer be interested in participating in such a process," the statement said.

Reacting to the latest rejection, Qwest said on Wednesday that it is weighing its options. The carrier also put some hope in MCI shareholders coming to its rescue in the event that they should favor the higher Qwest bid.

"We are confident that our offer is superior, and statements of support from many MCI share owners indicate that they are in agreement with us," Qwest said in the statement. "And, as stated above, Qwest will allow shareholders to dictate the next steps."

Posted by Chad Dickerson at 03:56 PM

April 05, 2005

Google Video to accept submissions

By Stephen Lawson

Google Inc.'s video search engine may soon take you to your neighbors' home movies. Google is about to start accepting video content from the public for its Google Video service, a system now in public beta testing that lets anyone search a variety of TV clips by keyword. The service returns excerpts of show transcripts -- grabbed from close-captioning feeds -- and still images captured from the shows' footage, but it doesn't provide actual video clips that users can play back. "In the next few days we're actually going to start taking video submissions from people, and we're not quite sure what we're going to get, but we decided we'd try this experiment," said Larry Page, Google's co-founder and president for products said on Monday at a panel discussion at the National Cable Television Association (NCTA) National Show in San Francisco. A large audience gathered to see Page and other IT and entertainment executives burst into laughter. Page didn't provide any other details of the plan, but Google spokesman Nate Tyler said Monday that more information would be available in a few days.

Page also drew loud applause when he said he had recently switched from DSL (digital subscriber line) to a cable modem and found a big speed boost.

The five executives agreed that technology is transforming the way the public consumes information and entertainment and that cable operators have a good opportunity to benefit from the changes. Time-shifting, online content downloading and the proliferation of new mobile devices such as Apple Computer Inc.'s iPod and Sony Corp.'s PlayStation Portable are among the forces disrupting traditional cable TV and other programmed entertainment sources, they said.

Also during the panel, Cisco Systems Inc. President and Chief Executive Officer (CEO) John Chambers said he believes more consolidation is necessary in the U.S. service provider industry.

"Too much competition is just as bad as too little," said Chambers, who heads the dominant provider of data network backbone equipment and warned of the need to build out the nation's broadband infrastructure for global competitiveness.

Also participating on the panel were Jeffrey Katzenberg, film producer and co-founder of DreamWorks LLC, Jonathan Miller, chairman and chief executive officer of America Online Inc. and Brian Roberts, chairman and CEO of Comcast Corp.

Posted by Chad Dickerson at 04:41 PM

More sophisticated cyber crime costs UK billions

By Laura Rohde

As cybercriminals grow in sophistication and organized crime becomes increasingly involved in the mix, the cost of cybercrime to U.K. business continues to grow, resulting in billions lost in down time, systems damage and client loss, according to a report released Tuesday by the National Hi-Tech Crime Unit (NHTCU). As of last year, the estimated minimum cost of the impact of high-tech crime on companies based in the U.K. with more than 1,000 employees was £2.45 billion (US$4.61 billion), the NHTCU said. The results of the yearly survey were announced on the first day of the e-Crimes Congress in London.

In the survey of 200 large and medium-size companies, 89 percent said that they had experienced some form of high-tech crime in 2004; of those, 90 percent suffered from unauthorized access to, or penetration of, their company systems, while 89 percent suffered theft of information or data, the NHTCU said. Security breaches occurred from outside and, more often, from within a company's system.

Furthermore, 97 percent of all respondents said they had experienced virus attacks in the year, costing £70.8 million, while financial fraud cost 9 percent of respondents £68.2 million, the NHTCU said.

The survey was conducted by NOP (the market research division of United Business Media PLC) for the NHTCU, which was created as part of the National Crime Squad in 2001. Since its inception, the unit has been involved in over 100 investigations and has arrested over 200 people involved in serious and organized computer related crime, the NHTCU said.

The Director General of the National Crime Squad, Trevor Pearce, estimated that in 2004, nine out of 10 companies in the U.K. suffered some sort of cybercrime, reiterating the study's findings, and that the growing spread of that crime was having far reaching effects. "The inability to carry on with the day job (because of cybercrime) is a growing concern of companies," Pearce said, speaking at the e-Crimes Congress Tuesday.

According to Pearce, the biggest trend in cybercrime has been the emergence of organized crime. "We are seeing a professionalization of organized crime as they enter the high-tech world," he said.

Yet despite all of the warnings, a third of companies in the U.K. still do not perform security audits, and 35 percent have no crisis management procedures to deal with high-tech crime, Pearce said.

On average, a company experiences 7 virus attacks a day, though that figure can vary wildly depending on the company. For example, Alan Jebson, Group Chief Operating Officer at HSBC Holdings PLC told the audience that on the bank's busiest day last year, the U.K.-based financial institution was hit with 100,000 attacks.

"Criminals are attracted to the Internet by the sheer lever of opportunity," Jebson said.

Jebson expressed his industry's concern that as cybercrime continues to take new forms, consumers are becoming more fearful of conducting any financial transaction over the Internet.

Blossoming new security threats include the use of zombie networks or botnets to attack companies; phishing online identity theft scams; pharming frauds which redirect Internet users looking for legitimate Web sites to Web pages at another site controlled by the unknown attackers, and the use of money mules, people who allow their bank account to be used to store stolen money (most likely from the same bank) before it is then moved to another site, often offshore.

"This is an area where our regulators could have a significant impact by helping to [ensure] banks move together towards addressing [these challenges to] secure banking online," Jebson said.

As part of its efforts to combat cybercrime, Jebson said that HSBC has signed up with the U.K. government to play a major role in Project Endurance, a consumer education campaign on Internet security that was launched last November. The steering group includes the NHTCU, the Department of Trade and Industry, the Home Office, the Confederation of British Industry (CBI) and the Association of Payment Clearing Services.

However, Jebson warned that simple consumer education may fall short of the security mark, driving financial institutions to force their customers into a more proactive role. "I think the industry as a whole may have to adopt a firmer line with customers," Jebson said. "For example, at some point we may not allow customers without a firewall to use HSBC online services."

All of the conference speakers on Tuesday morning stressed the need for partnerships to be established between governments and corporations, as well as all levels of law enforcement, nongovernmental organizations (NGOs) and every computer user on both a local and an international level.

Every case opened by the cybercrime division of the U.S. Federal Bureau of Investigation (FBI) since it was set up in 2003 has had an international dimension, making cross-border cooperation, such as between the FBI and the U.K. National Crime Squad, all the more important, according to Steve Martinez, deputy assistant director of the FBI.

Martinez pleaded with conference attendees to report all instances of cybercrime. "We estimate that the FBI receives reports on only a third of cyber attacks. Law enforcement needs to be notified of all attacks," Martinez said.

If the best way for curbing crime -- good old fashioned law and order -- is to be effective, corporations and individual users need to reach out to law enforcement officials, he said. "Sanctions must hit hackers and the most effective sanction is locking these criminals up, but we need your help providing intelligence and evidence," Martinez said.

The e-Crimes Congress in London runs through Wednesday.

Posted by Chad Dickerson at 04:40 PM

Web postcards hide Trojan horse programs

By Paul Roberts

Beware of Web postcards bearing greetings. That's the advice from The SANS Institute's Internet Storm Center (ISC), which is warning about e-mail messages that pose as Web postcards, then direct recipients to a Web site that installs a Trojan horse program. The new attacks use sophisticated social engineering techniques to trick users into installing Trojan remote access programs that can fool antivirus and firewall software by appearing to be authorized applications like IRC (Internet Relay Chat) software, ISC said.

ISC has received an increasing number of reports of the postcard scams in recent days. Victims receive e-mail messages with subject lines such as "You have received a virtual postcard from a family member," with a link to a pickup site that installs the Trojan, according to a post on the ISC Web site Sunday.

Another recent scam posed as a message from Blue Mountain Greeting Cards, a service operated by American Greetings Inc. of Cleveland, Ohio. The messages use a spoofed sender address and appear to come from bluemountain.com. A link in each e-mail claims to go to Blue Mountain's card pickup Web page, where recipients are asked to enter a unique card ID number provided in the e-mail. However, victims who click on the link pass first through one of a number of sites that may have installed malicious software, ISC said.

Those Web sites were not available Tuesday. A customer service representative from Blue Mountain said in an e-mail message that the company has recently received reports of false e-mails purporting to come from the company and that the company's abuse team is investigating.

Web greeting cards have been used to spread malicious code before. Variants of the Zafi worm in December arrived in e-mail attachments claiming to be postcards offering Christmas greetings. Some variants of the Cult worm in 2003 also spread in e-mail attachments that were said to be Blue Mountain greeting cards.

While the method of attack is well-established, the latest threats are becoming harder to detect because they install programs that piggyback on existing, authorized applications to carry out malicious acts. For example, the Trojan horse installed through one recent Web postcard attack took over, or "hooked," IRC applications on compromised systems. Antivirus and firewall software is often instructed to trust such programs and allow traffic from them to pass to and from a protected computer unmolested, which gives remote hackers access to infected systems, ISC said.

Users are advised to be cautious when opening unexpected e-mail from unknown sources, ISC said. When links to legitimate Web sites are provided in HTML-format e-mail messages, users should note the address, then type it into the address field of their Web browser, rather than clicking on the link provided in the message, which often trigger the installation of malicious code or take the user to a Web site that will install unwanted programs.

Posted by Chad Dickerson at 04:40 PM

Verizon may drop MCI acquisition attempt

By Juan Carlos Perez

Sounding like a spurned suitor, Verizon Communications Inc. on Monday said it will drop its efforts to acquire MCI Inc. if the latter's board deems superior a competing offer from Qwest Communications International Inc. The message was conveyed in a short statement sent to the press and in a long letter Verizon's Chairman and Chief Executive Officer Ivan Seidenberg sent to his counterparts over at MCI: Chairman Nicholas deB. Katzenbach and CEO and President Michael Capellas.

This is the latest scene in a drama that began in mid-February, when Verizon agreed to buy MCI in a stock-and-cash deal worth around US$6.7 billion. Since then, Verizon and Qwest have been trying to outbid each other. The most recent offer was put on the table last Thursday when Qwest upped its bid to around US$8.9 billion. This topped Verizon's current offer of around $7.6 billion, which MCI's board had accepted.

"Verizon believes that the decision facing MCI is not about the math of a particular moment in time; it is about good business judgment, the best interests of shareowners and the long-term viability of the new company," Verizon's Monday statement reads. "Based on these criteria, Qwest has submitted what we believe to be an inferior offer."

If the MCI board declares Qwest's offer superior, Verizon would conclude that the MCI board is interested in short-term investors and not on the company's long-term strength, according to the statement. "Should this occur, we would no longer be interested in participating in such a process," Verizon's statement reads.

Verizon also urges the MCI board not to capitulate to Qwest's "artificial deadline" for deciding which bid is superior. This refers to Qwest's statement on Friday in which it says it expects MCI's board to notify it of its decision regarding Qwest's offer by Tuesday of this week.

In his letter, Seidenberg says that if MCI is acquired by Verizon, the combined company will be much more solid and will be in much better position to compete, compared with a combined MCI/Qwest.

"Not only would Verizon's financial position protect the new company from the inevitable operational and financial challenges as new business models emerge, but it would also allow Verizon/MCI to invest the substantial sums required to pursue exciting new opportunities in IP and wireless products and services," Seidenberg wrote.

Posted by Chad Dickerson at 04:40 PM

Jamster slammed for mobile selling practices

By Stephen Lawson

Jamster, a service owned by VeriSign Inc. that sells ringtones and other content to mobile phone subscribers, is under attack for allegedly misleading young consumers into paying for expensive text messages. A lawsuit filed last week in San Diego accuses Jamster of fraud and false advertising, saying it falsely advertises that mobile customers can get a free ringtone by sending a text message to the company. In reality, those customers then get text messages from Jamster that each cost $1.99 plus the mobile operator's standard per-message charge, according to the complaint brought by Charles Ford, who claims his daughter was lured into the service. Ford's lawyers at Callahan, McCune & Willis APLC filed the case last Tuesday in Superior Court of California, County of San Diego, and are seeking to make it a class action on behalf of Jamster customers around the world.

Jamster is the U.S. name of Jamba AG, a German mobile content provider that VeriSign acquired in June 2004. The suit names VeriSign, Jamster, Jamba, and three U.S. mobile operators that Jamster says carry the service: T-Mobile USA Inc., AT&T Wireless Services Inc. and Cingular Wireless LLC. VeriSign and T-Mobile declined to comment on the suit. Cingular, which now also owns AT&T Wireless, could not be reached for comment.

The Jamster service was launched in the U.S. late last year, the complaint says. The suit follows numerous gripes from consumers in the U.S. and Europe, some posted on Web sites. One disgruntled customer has started an online petition against the company. However, some posts indicate unhappy users have been able to cancel their subscriptions and get refunds from Jamster.

Jamster advertises on TV and other media that mobile customers can get a free ringtone if they send a text message to the number displayed on the ad. In fact, those who sent the text message got multiple messages back notifying them that content was available for download, according to the complaint. The customers had to pay for all those messages. Consumers who have contacted the company have reported monthly charges totalling as much as $75 for content they didn't want or even download, said Charles Russell, one of the attorneys representing Ford.

Downloads of content, especially ringtones and games, are a bright spot for mobile operators seeking to boost revenue. An IDC survey of mobile users last year found more than half of respondents in Europe and about 25 percent in the U.S. had downloaded a ringtone. However, additional services that unexpectedly jack up the monthly bill could hurt the wireless industry if consumers get fed up, said Current Analysis Inc. analyst Eddie Hold. Mobile operators may get a per-message charge of a few cents but end up alienating confused subscribers, he said.

"There's no such thing as an easy-to-read wireless bill," Hold said. "The short-term revenue gain for three to six months ... or a year ends up biting them at the end of the contract when the customer believes they're paying too much for wireless service."

Premium text messaging, which can allow customers to pay for content by receiving a text message and then get the charge on their regular monthly phone bills, is commonly used, analysts said. However, it can be implemented in different ways. For example, Flycell, a unit of Rome-based Acotel Group SpA that provides ringtones and other content with payment via premium text messages, sells monthly subscriptions to a selection of content. It gives customers two chances to opt in to the service before they pay for any content and offers a chance to opt out each month, according to Flycell Chief Executive Officer and General Manager Alberto Montesi. Flycell uses premium text messaging because it is more convenient to the mobile consumer than payment by credit card, he said.

In the case of Jamster, the service is advertised heavily on TV channels such as Nickelodeon that are aimed at children, according to the suit. The company depended on young mobile users getting drawn into the service and on their parents paying the charges, which appear on the monthly cell phone bill, it alleges.

Posted by Chad Dickerson at 04:39 PM

April 04, 2005

Radio service comes to mobile phones

By John Blau

Add streaming of radio entertainment and news programs to the growing list of services available to owners of new Internet-enabled mobile phones. MSpot Inc. launched one of the world's first radio services for mobile phones, initially targeting Sprint PCS Vision customers, the Palo Alto, California, mobile media company said Monday in a statement.

The service, now available on select phones on the nationwide network of Sprint PCS, offers 13 channels of live and on-demand programming, including music, news, sports and weather. The content is delivered as a media stream over the mobile phone network to Internet-enabled phones equipped with a media player. It's available for US$5.95 per month.

Customers of Sprint PCS Vision, a unit of Sprint Corp., can preview and purchase MSpot Radio directly from their phones through the "available channels" menu located on the Sprint media player. Once customers have subscribed to the service, they can browse, select and play any of the MSpot channels through the media player.

MSpot, launched last year, aggregates audio and video entertainment from major media companies and adapts the content to mobile phones with its proprietary buffering and pixelation techniques.

The upstart plans to expand into video programming in the future, it said.

Numerous mobile phone operators now offer television programs as a streamed service.

Posted by Chad Dickerson at 03:56 PM

Blinkx upgrades search tool

By Juan Carlos Perez

Blinkx on Monday plans to unveil the newest version of its PC search software, which combines search results from a user's hard drive and from the Internet in a single results list . Providing one set of results is important because when people search for information, they don't view the sources as segmented between their PCs and the Internet, said Suranga Chandratillake, the company's founder and chief technology officer (CTO). "As a user, you don't think that way," he said.

Blinkx's new version, Blinkx 3.0, also features improved security, a document-preview function and the ability to index new files, such as Lotus Notes e-mail messages and attachments, he said. The product recognizes more than 200 file formats, Chandratillake said.

The improved security comes in the form of support for Windows security profiles. The Blinkx tool will now recognize if more than one person uses a PC and index their documents separately, restricting access to the appropriate user, Chandratillake said.

Also, Blinkx 3.0 pops up a preview of a document when the user hovers over its search result.

Blinkx, a start up company with about 30 employees, launched version 1.0 of the software in July of last year and followed with Blinkx 2.0 in November. Over one million people use the Blinkx software, he said.

Blinkx's search technology has generated interest because instead of relying only on keyword-based queries, Blinkx reads users' screens and, based on that information, flags documents from their PCs and from the Internet. Blinkx works in the background and displays search results when prompted by the user.

In addition to its desktop software, Blinkx also has a search engine on its Web site whose highlight is an index of audio and video content that lets users find and play back radio and television clips.

The speed and quality at which Blinkx is upgrading its search tool is impressive, considering it is a small start up company, said Gary Stein, a Jupiter Research analyst. "They seem like a very dedicated and focused group. It shows what a small group of very smart people with the right resources can do," Stein said.

The pace of innovation Blinkx is keeping is also remarkable, as is the effect it is having on its much bigger rivals, Stein said. Since the launch of the Blinkx tool in mid-2004, Google Inc., Yahoo Inc. and Microsoft Corp. often seem to be looking at the smaller competitor for clues on the direction they should be heading towards in search, Stein said.

"Blinkx is not a flash in the pan," Stein said. "It faces monumental competitors, but I think Blinkx is just dedicated to building compelling search technology as opposed to unseating the market leader."

Blinkx 3.0 can downloaded for free at http://www.blinkx.com.

Posted by Chad Dickerson at 03:56 PM

Google turns to advertising in Japan

By Martyn Williams

Google Inc., well known for relying on word of mouth to spread news of its services, launched its first large-scale advertising campaign last week in Tokyo. The campaign promotes its Google News service and involves posters on subway and railway trains and at five major railway stations in the Tokyo metropolitan area, said Kaori Saito, a spokeswoman for Google Japan. In addition to the scheduled 7,770 transport ads, the campaign is also using banner ads on 18 Web sites.

The first transport ads appeared on subway trains on March 30 and the last ones will be taken down on May 10.

The launch of the campaign was timed to coincide with the beginning of the Japanese financial year, said Saito. April 1 is typically the day that large Japanese companies take in new employees. It is also close to the beginning of the school and university year, so many people are starting "new lives" at around this time of year. With the campaign, Google wants to promote itself as a way for people to get information relevant to their new lives, said Saito.

The ads list a handful of news events and the times at which they were first reported in an effort to raise a sense of urgency about keeping up with the latest news, said Daigo Hayamizu of the advertising agency Grey Worldwide, which created the campaign.

Also highlighted is the service's recently launched personalization option, which lets users create sections for their favorite news topics and also bring in news from the 22 global versions of the service.

"We communicate that Google News can provide them with the latest news or news they want at any time very efficiently," Hayamizu said.

By focusing on news, the company is promoting a Google service that hasn't achieved any growth since its first month online in September last year, according to market research figures. Google News debuted with 1 million home users accessing the service during its first month, according to figures from NetRatings Japan Inc. That figure fell to a low of 892,000 in November. The service was accessed by 928,000 users in February, the latest month for which NetRatings has estimates.

"Each month its reach is somewhere between about 900,000 and 1 million," said Soichiro Nishimura, a spokesman for NetRatings Japan.

In contrast, the Daily News page of Yahoo Japan reached 13.7 million home PC users in February, and the Web sites of the Yomiuri Shimbun and Asahi Shimbun newspapers reached 4 million and 2.8 million, respectively, according to NetRatings.

The aim of the Google News campaign is to attract an extra 166,000 users to the service, said Hayamizu.

The campaign marks a change in the way Google promotes its services. The company's sites around the world have grown since launch almost exclusively through word of mouth to become among the most popular on the Web.

The only exception has been promotions in trade magazines for products like Google's search appliance and a small amount of online advertising on targeted Web sites.

Google said it has found word of mouth worked because users like to share positive experiences with their friends and families.

The company's problem in Japan isn't an unattractive service but the formidable competition it faces, especially from Yahoo Japan, according to Nishimura of NetRatings.

Yahoo Japan's portal attracted 29.6 million users in February, making it the most popular portal in Japan. MSN was ranked second with 18.8 million home users, followed by the Nifty, Infoseek, Biglobe, Goo and Livedoor portals before Google, in eighth place with 9.7 million users, said NetRatings.

Posted by Chad Dickerson at 03:55 PM

April 01, 2005

New bugs found in Outlook, Internet Explorer

By Joris Evers

Microsoft Corp. is investigating a new set of potentially serious security flaws in Internet Explorer and Outlook reported by security company eEye Digital Security Inc., the software maker said Friday. The two flaws in the Web browser and e-mail client could let an attacker take control over a system with minimal action from the user, eEye said in two security alerts posted on its page of upcoming advisories. The company ranks the flaws "high" risk.

One of the vulnerabilities could let an attacker compromise a user's machine after the user clicks on a Web link, said Marc Maiffret, co-founder and chief hacking officer at eEye. "Nothing that would be normally suspicious to the user," he said. The flaws affect both Outlook and Outlook Express, according to Maiffret.

The flaws exist in the default installations of the applications on most current versions of Windows, according to eEye of Aliso Viejo, California. The company has informed Microsoft and will not provide further details until Microsoft has provided a patch or security alert, it said on its Web site.

"We keep all the details private until Microsoft produces a patch. But that is not to say that nobody else has discovered the vulnerability and produced an exploit," Maiffret said. However, eEye has not seen any attacks that take advantage of the flaws yet, he said.

Microsoft is investigating the privately reported possible vulnerabilities, a spokeswoman for the Redmond, Washington, software maker said. The company is not aware of any attempts to exploit the vulnerabilities, she said.

Upon the completion of the investigation, Microsoft will take the appropriate action to protect users. That could be a fix as part of the company's monthly patching cycle, a fix in the next service pack or a special update, the spokeswoman said.

EEye reported the flaws to Microsoft on March 16 and March 29, according to the eEye Web site. Maiffret hopes Microsoft will produce a patch within two months, the industry standard time for delivering a fix, he said.

Posted by Chad Dickerson at 08:33 PM

Google to increase Gmail's inbox to 2G bytes and more

By Juan Carlos Perez

Google Inc. on Friday plans to increase the in-box storage of its Gmail Web mail service from 1G byte to 2G bytes, and it will continue to raise that ceiling in coming weeks and months, on a rolling basis, to unspecified heights, according to a Google executive. "Since we introduced Gmail, people have had a lot of place to store e-mail, but some of our heavier users have been approaching their limits and have been wondering what's going to happen," said Georges Harik, Gmail's product management director. "So, starting Friday, we're going to give people more and more space continuously and indefinitely on Gmail, as we're able to technologically."

There are no current plans to increase Gmail's 10M-byte limit on attachment sizes, he said. There are also no plans to add capabilities to Gmail that would allow subscribers to turn the in-box storage into a full-featured virtual external hard disk, he said. However, Google is aware that some Gmail subscribers are using the service for this purpose, mailing files to themselves to have them stored in their Gmail inbox, he said.

The percentage of Gmail users approaching their in-box storage limit isn't large, but "they are a number that we care about," Harik said. "We want our users to understand that we have a plan and that we're anticipating their needs, and that there isn't something strange that's going to happen with Gmail down the line."

When it announced Gmail a year ago, Google rocked the Web mail market, whose main players generally offered minimal inbox storage for their free services. For example, at the time, Yahoo Inc. offered its free Web mail users 4M bytes and Microsoft Corp. offered MSN Hotmail users 2M bytes of in-box storage.

Since then, most major Web mail providers have reacted to Gmail's in-box offer and have increased their storage significantly. Microsoft and Yahoo now both offer 250M bytes for their free services, and Yahoo plans to begin offering 1G byte starting in late April. Both Yahoo and Microsoft offer 2G-byte in-boxes with their fee-based Web mail services.

A caveat with Gmail is that it is still technically in a test, or beta, phase, and isn't generally available. To obtain a Gmail account, one has to receive an invitation from an existing user; each current user has 50 invitations to give. Google also randomly offers Gmail accounts via its main Google.com Web page.

Asked whether access to Gmail accounts would ever be totally open, Harik declined to answer. "We keep looking for ways to make it more broadly available to people who want to use it," he said.

While Gmail is free to use, it does feature text ads that are served up to users with each message they open; ads are based on each message's text. This feature caused an outcry from critics concerned about privacy, but Google responded by saying the text scanning is automated and without human intervention.

Posted by Chad Dickerson at 05:11 PM

Bertelsmann returns to P-to-P

By John Blau

German media giant Bertelsmann AG, a former investor in the Napster file-sharing network, is taking another stab at peer-to-peer (P-to-P) technology with a new service for downloading and sharing movies, games and other content over the Internet. The service, called GNAP, will allow mobile and fixed network operators, ISPs (Internet service providers), TV stations and other content distributors to market large downloadable files both legally and cost efficiently, Arvato AG spokesman Gernot Wolf said Friday. Arvato is the services and technology arm of Bertelsmann, which is located in Gütersloh, Germany.

The new service has both centralized and decentralized components, according to Wolf. On the one hand, it uses a central server to store content and process DRM (Digital Rights Management) transactions. On the other, it offers users the opportunity to download and store content on their own computers and share it with others via P-to-P technology.

"In this way, content distributors don't have to invest in huge network capacity to be able to provide, say, 100 downloads at once but rather can take advantage of the storage capacity of its P-to-P customers," he said.

Users who choose to download a film or game from another user because, say, the central server is already flooded with requests must still pay for the film. "Each transaction within the user community is session controlled," Wolf said. "Our technology knows that customer A, for instance, has received a movie from customer B, so we have a strong control over copyrights."

End users must install GNAP client software to be able to use the software, according to Wolf.

In addition to copyright protection, GNAP offers content distributors a cost-efficient way for numerous customers to download large files at once. "It's not economic today for many companies to offer an on-demand download service for movies and games if they have to invest in all the necessary storage and networking equipment themselves," Wolf said. "GNAP makes this service more affordable with P-to-P by allowing users to choose alternative sites to download."

Arvato has completed beta testing of the GNAP service and is conducting "technical due diligence" tests with holders of content licenses "to ensure that all security requirements are met," Wolf said.

The Bertelsmann subsidiary hopes to sign up the first customers at the end of the second quarter, according to Wolf.

Bertelsmann, a co-owner of the Sony BMG music label with Sony Corp., teamed with the former Napster Inc. in October 2000, only to see the service sued by the music industry for copyright infringements. Napster was later acquired by Roxio Inc., which has since sold off its software business to become Napster LLC.

Posted by Chad Dickerson at 05:10 PM

RFID will open gates at world soccer tournament

By John Blau

If you're planning to attend the FIFA World Cup soccer tournament in Germany next year but oppose the use of RFID (radio frequency identification) smart tag technology, you won't get past the front gate. All 2.9 million tickets currently on sale will include an embedded RFID chip, which will entitle entry to the games, Gerd Graus, a spokesman with the FIFA World Cup Organizing Committee, said Friday in a telephone interview.

The use of RFID technology offers a high degree of security, which not only FIFA but also the German Interior Ministry have required, and should also help speed up entry at the gates, according to Graus. "The tags will contain no personal data -- just a number that identifies each cardholder," he said.

Fans applying for a ticket must submit various personal data in the registration form.

The soccer tournament will feature the largest use of RFID at a public event ever anywhere in the world and is expected to be a big boost for smart tag technology.

Dutch electronics giant Koninklijke Philips Electronics NV, a World Cup sponsor, is rumored to be one of the main suppliers of RFID chips.

Graus declined to confirm the selection of Philips but said the Organizing Committee will announce its choice of RFID suppliers shortly.

The use of RFID is not without its critics, however.

"We're really concerned about what is being required of fans to attend the games," said Rena Tangens, a spokeswoman for the privacy group FoeBud e.V., in Bielefeld, Germany. "First of all, they're being asked for all sorts of personal data, such as address, phone number, birth date and passport number. Then they have to accept a card with an RFID chip, which supposedly will be used to let them into the stadium."

Tickets with bar codes would suffice, according to Tangens. "I don't understand why so much personal data is required to attend a soccer game; such information isn't required for a large concert," she said. "What bothers us is that with a bar-coded ticket, a cardholder has control over who or what sees the ticket. This isn't the case with an RFID smart tag."

FoeBud also has an issue with the RFID scanners in the stadiums.

Although Graus said the scanners will have a reading range of 15 centimeters and only be located at the gates and not inside or outside the stadiums, Tangens has her doubts.

"Who says that is really the case?" she asked. "Ticket holders won't be able to tell if hidden scanners in doors or floors are tracking their whereabouts."

The privacy group is currently studying whether to take legal action against FIFA's registration requirements, according to Tangens.

Posted by Chad Dickerson at 05:10 PM

Microsoft files 117 phishing lawsuits

By Grant Gross

Microsoft Corp. on Thursday filed 117 civil lawsuits against alleged phishers trying to scam Microsoft customers out of personal information such as credit card numbers. The lawsuits, filed in U.S. District Court for the Western District of Washington, seek to identify large-scale scam operations and recover damages from so-called phishing operations. Phishers typically send out spam e-mail, made to look like official e-mail from a real e-commerce company, asking recipients to click on a link and update their personal information. The link takes consumers to a Web site that mimics the look of the real e-commerce company, but collects personal information for ID thieves to use.

The new phishing lawsuits -- Microsoft previously went after two other phishing schemes using lawsuits -- target unnamed defendants who sent spam e-mail and put up Web sites targeting Microsoft services such as MSN and Hotmail, Aaron Kornblum, Microsoft's Internet safety attorney, said in a Washington, D.C., press conference. Through the lawsuits, Microsoft will issue subpoenas and attempt to uncover the names of the scam artists, as well as identify support operations such as Web hosting services and mass e-mail services, he said.

Microsoft is using trademark law to target the phishers, who use the company's trademarks on their e-mail messages and Web sites, Kornblum said.

Asked if Microsoft expected to identify the creators of all 117 phishing schemes, Kornblum said the company hopes to find as many as possible. In another phishing lawsuit the company filed in October 2003, it took several months to identify a suspect, but Microsoft eventually obtained a US$3 million default judgment against an Iowa man.

"Will we catch all 117?" Kornblum said. "I don't know. It'll definitely be a learning experience."

Microsoft has also taken action to shut down more than 1,700 phishing operations targeting its services since January 2004, according to the company.

In addition to the phishing lawsuits, Microsoft joined with the U.S. Federal Trade Commission (FTC) and the National Consumers League to work on educating consumers about phishing attacks. The groups showed examples of phishing attacks through e-mail at the press conference, and Susan Grant, vice president and public policy director of the National Consumers League, noted that her organization has heard reports of telephone phishing schemes.

Gartner Inc. in 2004 estimated phishing cost consumers US$2 billion a year, and the phenomenon seems to be growing, said Jacqueline Beauchere, business strategy manager for Microsoft. She called phishing the "international cyber crime of choice" in recent years.

In February, U.S. Senator Patrick Leahy, a Vermont Democrat, introduced the Anti-Phishing Act of 2005, which would prohibit Web sites that misrepresent themselves to be that of a legitimate business, and then attempt to induce victims to divulge personal information, with the intent to commit a crime of fraud or identity theft. The bill would also outlaw the creation of such an e-mail, with penalties of up to five years in prison, plus fines.

Kornblum called phishing legislation "critical" to helping law enforcement agencies go after scam artists. "Seeing a phisher in an orange (prison) jumpsuit is an image I'd very much like to see," he said.

Among the tell-tale signs of a phishing e-mail, according Beauchere:

-- Legitimate companies don't generally ask their customers by e-mail to give away personal information such as credit card numbers.

-- Phishing e-mails often have spelling or grammatical errors.

-- Phishing e-mails often threaten recipients with immediate penalties such as a deactivation of their accounts if they don't respond. Legitimate businesses generally don't issue such urgent pleas.

-- Links in phishing e-mails often contain a legitimate Web address such as www.microsoft.com followed by an @ symbol and another Web address. Most browsers don't recognize the characters before the @ symbol, meaning the link wouldn't go to microsoft.com.

While technology companies such as Microsoft have a responsibility to protect consumers, individual Internet users also need to educate themselves about online risks, said Lydia Parnes, acting director of the FTC's Bureau of Consumer Protection. "Consumers actually need to be responsible," she said. "People won't leave their doors open when they leave the house."

The FTC has more tips for consumers about phishing at http://www.ftc.gov/bcp/conline/pubs/alerts/phishingalrt.htm.

Posted by Chad Dickerson at 05:09 PM

MCI to consider new Qwest bid

By Grant Gross

MCI Inc. will consider a new acquisition bid from Qwest Communications International Inc., even though MCI has twice announced its intention to be acquired by Qwest rival Verizon Communications Inc. Just days after accepting for a second time a Verizon acquisition deal, MCI said Friday it will "re-engage" with Qwest on merger talks. Qwest on Thursday increased its bid for MCI to US$8.9 billion, about $1.3 billion more than Verizon has offered.

In accepting Verizon's $7.6 billion bid Tuesday, MCI officials said the larger Verizon would offer the combined company a better competitive position than Qwest. Verizon's debt at the end of 2004 was $39.3 billion, but its yearly revenue was $71.3 billion. Qwest had a full-year revenue of $13.8 billion for 2004, with a debt of $15.3 billion.

In a press release Friday, MCI said it has received a waiver from Verizon enabling it to talk with Qwest. That waiver is good until the MCI shareholder vote on the proposed Verizon transaction. The date for the shareholder vote has not been scheduled.

Qwest's increased bid Thursday shows the company is serious about acquiring MCI, said Jeff Kagan, an independent telecom analyst. "With this move I'd say Qwest has just leveled the playing field," Kagan said by e-mail. "Even though MCI has an agreement with Verizon already, at this point since Qwest is being so adamant I'd say we are looking at the chances being 50-50 that MCI could go either way."

Posted by Chad Dickerson at 05:09 PM