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Week of May 6, 2001 News Archive

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Monday May 7, 2001 Top

Microsoft Settting Up 3 Year Licensing For Corporate Customers

Microsoft may be changing its licensing practices, potentially compelling large companies to pay up every three years to continue using a piece of software. The Redmond, Wash.-based software company has been talking about selling software on a subscription basis for some time, but the change analysts see coming soon could force some of Microsoft's largest customers to rethink how they buy everything from operating systems to office productivity suites. Under Microsoft's current licensing, large companies contract software purchases under three-year agreements, which they pay for on an annual basis. Under this type of license, known as an "enterprise agreement," they pay for software, such as Office 2000, on a per-user basis. Under the new plan, companies would continue to contract these agreements for three years, but at the end of the period they would either have to pay again or stop using the software. The change would move Microsoft software buyers from a "perpetual" license to one that is fixed for a period of time.

Guernsey Research analyst Chris LeTocq noted that Microsoft already offers three-year subscription programs on a trial basis and for companies requesting it. But the extent of Microsoft's willingness to push companies to pay on a subscription basis is the issue here. "Three years from now, I think you're going to have a pretty tough time buying a perpetual license from Microsoft for anything," he said. MacDonald agreed. By taking the limited commitment from an optional to a mandated choice, "Microsoft essentially is forcing the move to subscriptions." Sources close to Microsoft doubted the company would do away with perpetual licenses, even as it increases subscription revenue. LeTocq balked at this. "Sure, they can offer perpetual licenses, but priced two, three or four times higher than now, so that no one would want them."

Microsoft's move away from perpetual licenses to a subscription model means the company can "further decouple its software revenue streams from the volatile PC shipment trends," Young wrote. The licensing change would "dramatically enhance the predictability and longevity of its mature businesses while reducing their volatility." But LeTocq sees a larger problem at work, with Microsoft customers less willing to upgrade to new versions of its products. "I don't think Microsoft would have been in this spot if the capabilities they offered encouraged people to consistently upgrade," he said. "If you can't get people to upgrade, you do a subscription basis. That essentially says, 'Whether you upgrade or not, you're going to pay me.'"

Infineon's Countersuit Against Rambus Could Have Major Implications

Chip designer Rambus stands to lose its grip on the PC memory industry as German chipmaker Infineon pursues a countersuit that could have far-reaching implications. A federal judge in Virginia on Friday dismissed the three remaining charges in Rambus' patent infringement suit against Infineon. Rambus said it will appeal. In its countersuit, Infineon alleges that Rambus should be barred from collecting royalties on the production of SDRAM, the most common form of memory in computers today, and double data-rate (DDR) DRAM, a high-speed version of SDRAM, because of its conduct while a member of a standards-setting body. If Infineon is successful, the numerous chipmakers that have agreed to pay Rambus royalties on DDR and SDRAM production would likely alter or scrap altogether their payments, chopping Rambus' revenue. Just as important is that the eight memory companies that settled with Rambus would no doubt use an Infineon verdict as ammunition to renegotiate or even cancel SDRAM/DDR DRAM licensing agreements signed before the trial. In certain circumstances, Rambus executives have said that an adverse ruling could make these deals irrelevant. Many of the agreements also are subject to renewal after a year or two, according to Sherry Garber, an analyst at Semico. Potential suits against companies such as Transmeta could also be nipped in the bud, sources have said.

Open Source Community Responds To Microsoft Attack

Open source community spokesmen scratched their heads in distrust and disbelief over recent statements by a top Microsoft executive that the open source code movement "puts at risk the continued vitality of the independent software sector." Craig Mundie, Microsoft senior vice president of advanced strategies, said in a speech Thursday , May 3, at the New York University Stern School of Business, that the recent dot-com failures illustrated the shortsightedness of software developers giving away "the very thing they have produced that was of greatest value." Many of his remarks were aimed at one of the licenses used in the open source community, the General Public License, that requires developers who use and modify open source code to give back to the community those modifications and additions. Such GPL licensing, Mundie claimed, represented a failed business model - one that must be discarded if software companies are to continue to exist in the future. He offered in its place a Shared Source model, where Microsoft selectively shares its Windows source code with academic institutions and developers, but retains control over its intellectual property and commercial products.

Tim O'Reilly, president of O'Reilly and Associates, the Sebastopol, Calif., computer book publisher with many open source titles, said: "Craig Mundie is dead right when he says that the next generation of Internet applications can only come about through development efforts from a wide-ranging group of companies and developers. And Microsoft's Shared Source philosophy is a clear vindication of open source - they're lining up to embrace and extend the open source development model." But O'Reilly parted ways with Mundie on the issue of open source being open to random and destructive development, with no control over parties modifying an open source code product that is incompatible with the versions that have gone before. "Mundie's contention that open source encourages code forking is a red herring. Windows 95, 98, NT, 2000 and ME [Millennium Edition] provide a more compelling example of 'unhealthy forking of a code base' than any open source project.

David Young, chief evangelist at Lutris Technologies, supplier of the open source application server, Enhydra, said Mundie focused on the GPL as the most general purpose open source license, with several more restrained versions also serving the community. "We too had issues with the GPL," Young said. "We went to the Mozilla license [pioneered by Netscape Communications as it made its Navigator browser code public]. It extends any intellectual property added to the code to the user, provided the user uses it for some related purpose." Thus, contributors to the process of developing a next-generation browser can produce their own version of the browser, but they can't add the browser to an operating system as a new combined product under their commercial brand, Young noted. "If they use the Mozilla open source code in another context, that's not allowed," he said. One factor in favor of open source code, in the eyes of users, Young said, is that they own the source code of the products they are using that are built on open source. If a development team goes away or refuses to follow a channel of development that a company would like to pursue, it is free to do so on its own.

Microsoft's Mac Unit Talks About the Future

Microsoft's support for Apple is embodied in its Macintosh Business Unit, a team of 185 employees who crank out software that many say is better than the stuff made for Windows. "Our relationship with Apple has never been better," Kevin Browne, general manager of "Mac B," said in a recent interview at Microsoft headquarters in Redmond, Wash. The relationship centers on Office, Microsoft's popular software package that includes the Word word processor, Excel spreadsheet and PowerPoint presentation software. "Our business was down, our customer satisfaction was way down," Browne said. "Microsoft took a step back and said, 'What are we going to do with the Mac?' Obviously the easy thing to do would be to say we're not going to do this anymore. "But it's a pretty good business. Compared to Windows it doesn't look big. But as an independent company, it looks all right. We sort of spun it off internally and said there should be this group of people to cater to this Mac user." The result--as measured by the latest product, Mac Office 2001--has been a resounding success.

Now the team has a new, daunting challenge: taking all the features of Office 2001 and rebuilding them on Apple's new operating system, OS X. They want to launch the product, code-named Office X, this fall--a development time of 12 months, less than half that of Office 2001. The Macintosh Business Unit is also trying to figure out how to capitalize on Microsoft's sweeping .Net strategy to turn software into services delivered over the Web. The next version of Office for Windows, due out May 31, takes the first step toward .Net by sporting new collaborative features and "smart tags" that can perform tasks such as pull stock quotes directly off the Web and plunk them into a document or spreadsheet. "On the .Net initiative the watchword for us is to try to ensure that the Mac customer can get these services. It is a little premature for us to detail how we go about doing it," Browne said. One analyst said it should actually be easier to transfer, or port, those features to the Mac because OS X and Windows now have much more in common than in the past. "The Windows 2000 core and (OS X's) Unix core have a lot more similarity than the old Mac OS did with Windows. The port should go easier going forward," said Rob Enderle, an analyst with Giga Information Group.

Apple Officialy Announced Its First Retail Stores Today

Apple Computer has confirmed the launch of its first retail store, in what is expected to become a nationwide chain of outlets. The first store will open May 19 in McLean, Va., according to an invitation to a press event scheduled ahead of the launch. Along with the upscale Tysons Corner shopping area--where the Apple store will be located--McLean is also home to the headquarters of the CIA. An Apple representative declined to offer any details on Monday, beyond confirming the May 19 launch of the McLean store just outside Washington, D.C. Apple has started work on a site in Palo Alto, Calif., and is reported to be taking space at locations in Littleton, Colo.; Chicago; Bloomington, Minn.; New York; and Phoenix, among other spots. Needham & Co. analyst Andrew Scott said the stores will help Apple in its key task, attracting first-time Mac buyers. Many Macs are sold at stores that also carry Windows-based PCs, with salespeople often steering first-time buyers toward those PCs. "Right now, the customer experience for new users in purchasing an Apple is poor at best," Scott said. Opening its own stores will give Apple the ability to show off its machines and let prospective buyers try out new software, such as iMovie and iTunes, he said.

Tuesday May 8, 2001 Top

Intel Delays Introduction of Pentium 4 Based Xeons

Intel has delayed by a few weeks the introduction of the first Xeon server chips based on the Pentium 4 design. The chip, originally slated to come out Tuesday, was delayed because of a flaw in the chip packaging--the housing that holds the core microprocessor--discovered at the end of April, an Intel representative said. A fix is being implemented. The chip, which will run at 1.4GHz or faster, will now come out toward the end of May. Workstations using the chip will come out at the same time, the representative added. Code-named Foster, the new processor will be the first member of the Xeon family to be based on the Pentium 4. Current Xeon chips are based on the Pentium III. The Xeon line will, more than ever, serve an important role in helping the company improve its bottom line. Although Intel ships far more Pentiums, Xeons typically sell for more than their desktop equivalents and, as a result, carry heftier profit margins. The 1GHz Pentium III Xeon, for instance, sells for $425 each in quantities of 1,000. By contrast, a standard 1GHz Pentium III sells for $225.

AOL Time Warner's Cable Lines Will Carry Another Competitor

AOL Time Warner has agreed to carry Internet service provider High Speed Access over its cable lines, a deal that puts the Internet and media giant one step closer to offering consumers a high-speed version of its own America Online service. Littleton, Colo.-based HSA joins EarthLink and Juno Online Services in striking deals to sell high-speed cable access on Time Warner Cable's nationwide network. HSA, which has investments from Microsoft co-founder Paul Allen's Vulcan Ventures and Charter Communications holdings, expects to begin offering service by the second half of the year, pending approval by the Federal Trade Commission. Time Warner Cable spokesman Mike Luftman said the unit is experimenting with multiple ISP carriage in Columbus, Ohio, and expects testing to be finished by the second half of the year. Once the testing is completed, Time Warner Cable plans to launch all of the ISPs, including AOL, at the same time.

With the agreement, AOL Time Warner meets more of the minimum requirements set under an FTC consent decree. As one condition to approving the merger between AOL and Time Warner, the FTC required the company to offer EarthLink to its Time Warner Cable subscribers before it offered or marketed AOL. Once the company begins selling AOL access over cable, it must enter agreements with two additional ISPs within 90 days. But some critics of AOL Time Warner were worried about Tuesday's agreement. Jeffrey Chester, executive director of the Center for Media Education and vocal critic of the merger, expressed concern about HSA's relationship with Allen and Charter Communications. He pointed out that Charter, one of the nation's largest cable companies, buys programming such as CNN from AOL Time Warner. "This smacks of double dealing," Chester said. "I think what the (monitor) trustee will have to do is examine whether or not HSA is truly an independent and unaffiliated ISP given the significant financial interrelationships between HSA's owner...with AOL Time Warner."

Infineon Asks for 105 Million From Rambus

Computer memory designer Rambus should pay at least $105 million in punitive damages for defrauding an industry standards committee in seeking patents for memory chips, a lawyer for chipmaker Infineon Technologies told jurors Tuesday. Infineon's demand for damages is a twist in a patent-infringement case originally brought by Rambus. A federal judge in the case threw out the patent claims last week, leaving only Infineon's counterclaims that Los Altos, Calif.-based Rambus violated fraud and racketeering statutes. The $105 million represents the royalties Rambus stood to collect annually from Europe's biggest chipmaker had the patent claims been upheld at trial, Infineon lawyer John Desmarais said in closing arguments. Rambus reported $72.3 million in 2000 sales. Desmarais told jurors that Rambus executives who attended meetings of the Joint Electronic Devices Engineering Council (JEDEC) , a trade group formed to set standards for computer memory chips, used the information they gathered to amend patent applications for high-speed memory chips.

"They corrupted the very core principles" of the standards committee "by purposely ignoring the rules and by secretly working with their patent lawyer to put what they learned" on patent applications, Desmarais said. "It was a cold and calculated plan to get the industry entrenched and then ask for $100 million a year," Desmarais said. Munich-based Infineon is a spinoff of German electronics powerhouse Siemens, which owns 71 percent of the chipmaker. Desmarais said Rambus didn't tell anyone it held the patent applications until the industry had adopted the committee's standards. In addition to the punitive damages, Infineon also is seeking $560,000 in compensatory damages for fees paid to patent attorneys. Rambus attorney David Monahan is scheduled to make closing arguments late Tuesday in U.S. District Court in Richmond, Va. Rambus has said the standards committee was stealing its technology. Rambus filed the lawsuit in an effort to enforce its patents and eventually collect as much as $1 billion in license fees and royalties on other companies' sales of Dynamic Random Access Memory (DRAM) chips. The chips bring in an estimated $30 billion a year.

Net2Phone Brings Internet Telephony to The Real World

Net2Phone will soon give its customers who make Net-based phone calls two features never offered before: their own phone numbers and the ability to take incoming calls. Net2Phone executives say that at the end of May customers will be able to choose a 1-800 phone number or a phone number from any area code they like, regardless of where they live. People will also be able to take incoming calls. Previously, Net2Phone customers could dial out but could not answer incoming calls. "The phone number we assign you doesn't have to be tied to a geography," said Joe Morris, Net2Phone's senior vice president of product strategy. "If you are in New York, there's no reason we can't give you a California number, so if you have a relative in California, they can call you at the cost of a local call." The features will be available to high-speed Net access customers who buy devices that Net2Phone and network equipment maker Linksys build, which allow consumers to make low-cost, long-distance calls using Net2Phone's Internet-based voice networks. The new services are part of Net2Phone's latest push into the high-speed Internet access market. To attract more customers and to help pump up sales, the company, as well as competitors such as Deltathree and, are targeting subscribers of high-speed Net access.

Apple's Darwin Get Gaming Boost

Apple Computer Inc.'s efforts to cultivate game development for its open-source Darwin technology recently gained a new ally. Monkey Byte CEO Lane Roathe is now heading the development of networking communications tools for Darwin-compatible games. In an e-mail sent to the mac-games-dev mailing list, Ron Dumont, open-source program manager with Apple, of Cupertino, Calif., announced that Roathe will participate in NetSprockets and OpenPlay development for Darwin. The Darwin kernel, which also forms the core of the commercial Mac OS X, is based on FreeBSD and Mach 3.0 technologies and provides protected memory and pre-emptive multitasking. Darwin runs on PowerPC Macs as well as x86-compatible PCs. Roathe co-founded Quake developer Id Software before taking the reins of Monkey Byte Development LLC, a developer and publisher of games and a publisher of independent music. Dumont said Roathe is currently working on Mac OS X-native, Carbonized versions of NetSprockets and OpenPlay that will retain the cross-platform capabilities of earlier builds. The work on this new version has been done in part by Joe Gervais and Randy Thompson, along with other anonymous benefactors. Roathe told MacCentral that a new version of the technology is being readied for release. "It's a major update," he said.

Wednesday May 9, 2001 Top

AMD Plans to Call Next Version of the Athlon the Athlon 4

As part of its ongoing rivalry with Intel, AMD will call its new chip, coming out next week, the Athlon 4, according to sources. Presumably, the name change comes as a way to better market the chip against Intel's Pentium 4. There is no Athlon 2 or 3. Since 1999, all of the chips in the family have been called Athlon. The naming scheme will also let AMD claim a partial marketing victory in that its No. 4 chip will appear in notebooks in May. Intel won't squeeze a Pentium 4 into notebooks until the first half of 2002. Code-named Palomino, the Athlon 4 will contain a number of improvements. Most importantly, the chip will consume far less power than current Athlon chips, according to AMD. Athlon chips right now consume about 60 watts of power, more than the Pentium III or 4. By ratcheting down the power consumption, AMD will be able to slip the chip into notebooks. The chip will appear in notebooks first, then servers and desktops. The same basic microarchitecture, for instance, was used in the Pentium Pro, Pentium II, Pentium III, Celeron and Xeon. The chips differ in terms of packaging, speed, cache size, bus speed and other features, but share a common computing unit. Similarly, the K6-2 and K6-III from AMD shared the same core. More often than not, AMD has followed Intel's branding campaigns. AMD, for example, followed Intel in coming out with a budget brand. AMD's Duron chip is a lower cost Athlon and serves a similar purpose as Intel's Celeron.

CD-R Discs Are Expected to Have a Price Jump This Summer

Wholesale prices for CD-recordable discs will spike this summer, a new report asserts, though the effects should be short-lived. The wholesale price of CD-R discs is expected to as much as triple this summer because of a shortage of the media, according to market researcher IDC. However, prices should fall back to "normal levels" by the end of the year and possibly before the holiday-shopping season, IDC analyst Peter Brown said Wednesday. The prices have been as low as 10 cents per disc and will increase this summer to an average of around 30 cents, he said. Consumers shouldn't feel the pinch, however. "The price increase should only affect consumers incrementally--probably less than $1 more for 50 CDs," Brown said. "Resellers and distributors are likely to feel the effects more dramatically." The price increase is partly in reaction to an artificially low bar set by manufacturers amid a price war last year, Brown said. The growing popularity of burning CDs created a market for the media, and disc manufacturers jumped aboard. In 1999, up to 80 companies were manufacturing CD-R discs. To try to drive out competitors, they cut prices. In addition, companies overestimated demand. The result: Disc prices dropped to as low as 10 cents, Brown said, and companies began consolidating or going out of business. With fewer disc makers around, Brown predicts that prices will rise as inventory drops. He expects that manufacturers will react to the new conditions and that inventory should be back up by the end of the year.

Rambus Loses Again

A jury in the U.S. District Court for the Eastern District of Virginia ruled Wednesday that Rambus committed fraud against Infineon by failing to properly disclose patent information when required by an industry standards body. The jury awarded Infineon $3.5 million. But Judge Robert Payne is likely to reduce the award to $350,000 to conform with state law, according to reports from the trial. Infineon had sought $105 million. Rambus immediately said it will file an appeal. The company's stock, which has whipsawed for the past month because of the trial, dropped 90 cents, or 6.5 percent, to $12.80 in regular trading Wednesday.The verdict will likely reverberate through the PC industry. Rambus sued Infineon, alleging that the German memory manufacturer owed it royalties on its output of SDRAM, the most common form of memory used in PCs, and DDR DRAM, a high-speed memory design gaining popularity. Infineon filed a counterclaim alleging Rambus did not properly disclose its patents to the Joint Electronic Devices Engineering Council (JEDEC), a trade group formed to set standards for computer memory chips. The failure to disclose amounted to fraud, Infineon claimed, because Rambus' technology was integrated into what was supposed to be an open, royalty-free standard.

Roxio Splitting off From Adaptec, With Big Plans

Roxio, which makes CD-burning software, will spin off from data storage company Adaptec next week and hopes to become as well known to music fans as Madonna--or even Napster. The low-profile company is a leading provider of digital media software to personal computer giants such as Dell Computer, Hewlett-Packard and Gateway. People use the software, which is bundled on many PCs, to record audio, video, photos, and other data from the Internet onto compact discs. Roxio's CD-burning software, Easy CD Creator for Windows-based PCs and Toast for Macintosh computers, is the best-selling software of its kind. It was bundled with about 24 million CD recorders last year, accounting for about 70 percent of the entire CD recorder market. Roxio is now hoping to go mainstream with a huge magazine promotion in coming weeks, according to Chris Gorog, chief executive officer of Milpitas, Calif.-based Roxio. About 60 percent of Roxio's business comes from its partnerships with major PC makers, with the remaining 40 percent derived from retail sales.

Gorog asserts that a slowdown in PC sales will not severely hurt his company because of increasing adoption of recordable CD drives. "Notwithstanding the PC slowdown, anybody who is buying a computer is still buying one with CD-burning software," he said. Nevertheless, analysts said, Roxio needs to expand into video applications to sustain its growth. Gorog said Roxio is poised to expand in the video recording market. "In the next four to six weeks, we'll be making a big announcement on Roxio's entry into DVD recording," Gorog said. Roxio's recording software is included in Microsoft's Windows Media Player 7 and RealNetworks' RealJukebox, software players that let people play music or view videos on a PC.

Homepage Virus Fizzles Out Quickly

Less than 24 hours after the Homepage worm started spreading, the surge of e-mail created by the infectious computer code has started to subside, antivirus experts said Wednesday. "It has gone through the Asia-Pacific (region), then Europe and now America," said Alex Shipp, chief antivirus technologist for e-mail service provider MessageLabs. "But now it is essentially over." By late Wednesday morning PDT, Shipp said, the Gloucester, U.K.-based company was seeing 1,500 infected e-mail messages every hour--about half the volume at the peak eight hours earlier. Though the worm wasn't waning as fast as previous self-spreading programs, such as the AnnaKournikova virus and the LoveLetter worm, Homepage seems to be on its way out, he said. In total, MessageLabs deleted more than 23,000 copies of the virus from incoming e-mail, Shipp said. Created by a newer version of the worm-generating toolkit that spawned the AnnaKournikova worm, Homepage arrives in a person's in-box, apparently from a known friend or colleague, with the subject line "Homepage" and the message: Hi! You've got to see this page! It's really cool ;O)

The worm is attached as the file "HOMEPAGE.HTML.VBS." In some e-mail programs, it may appear without the VBS extension designating it as a program written in Microsoft's Visual Basic language, leading people to believe that the attached file is a Web page. The attached file is not an HTML document but a malicious Visual Basic script. Once executed, the script will forward the same e-mail to all the people in a victim's address book and automatically open one of four pornographic Web pages on the person's computer. At its peak, the Anna virus accounted for one out of every 200 e-mails processed by MessageLabs. The Homepage worm accounted for one out of every 55 e-mails but fell short of the one out of every 28 e-mails for which the LoveLetter virus was responsible. Graham Cluley, head of research at British antivirus company Sophos, said the new worm illustrates that people need to be alert to the danger of e-mail attachments. "It's not even a particularly clever bit of social engineering," he says. "It just says, 'this is cool.'" The new e-mail worm, known to virus experts as VBS.VBSWG2, infected hundreds of companies Tuesday and Wednesday, according to antivirus firms.

Thursday May 10, 2001 Top

Microsoft Releases Details of Licensing Program

Thursday revamped its software licensing program for most business customers, effectively raising the cost of upgrades by as much as 107 percent, analysts said. Under the new licensing agreements, Microsoft will encourage customers to enter "software assurance" contracts that will effectively commit them to buying operating system and application upgrades for an annual fee. Additionally, Microsoft will also lease software through annual subscription contracts, rather than sell software outright. The Redmond, Wash.-based giant will also sell more of its software directly to customers rather than through computer dealers or consultants. Although Microsoft will continue to sell software the old-fashioned way, an increasing pool of customers will likely sign these lease-like agreements. While some of these programs will make it easier and cheaper for some customers to acquire software, it will also place many on a more rapid upgrade cycle. The change is so dramatic that "for people that upgrade every four years, it would be cheaper to go out and just buy the full version of the product," said Guernsey Research analyst Chris LeTocq.

"Looking forward, Microsoft saw many customers deferring upgrades, which would be a loss of revenue," LeTocq said. "So what Microsoft is doing is putting a pricing structure in place to protect those upgrades." Bill Henningsgaard, Microsoft's vice president of worldwide licensing and pricing, attributed the changes to meeting customer needs. But he acknowledged the revenue advantage for Microsoft. "It does tend to smooth things out," he said. "Many customers tell me the way we license software today is too complicated and requires too much administration," Henningsgaard said. The new program is simplier to manager and is more "a maintainence model, where you spread the cost of upgrades over a couple of years." "Microsoft says they're simplifying software contracts," said Gartner analyst Neil MacDonald. "We believe they're confusing simplifying with removing options." Gartner estimates that medium-sized businesses upgrading software every three years will pay anywhere from 33 percent to 77 percent more under the new plan than they did with the old. Four-year upgrades would cost 68 percent to 107 percent more.

"We went through a typical organization with 5,000 desktops that runs Microsoft Office and uses version upgrades," MacDonald said. "The increase in cost with the elimination of version upgrades ranges from $900,000 to $1.6 million." Companies that upgrade software every two years, however, would see an annual decrease of between 2 percent and 19 percent, according to Guernsey Research. "The message here is if you're a good Microsoft customer, you will be rewarded, but anyone pushing off upgrades will pay more," LeTocq said. Microsoft introduced one other significant change to licensing with the introduction of an optional subscription program for its largest customers. Speculation earlier in the week had the software maker forcing companies using the Enterprise Agreement program to abandon perpetual licenses for three-year subscriptions. Enterprise Agreement licensees, like anyone else, pay once for software with the right to use it indefinitely. But those opting for the subscription plan would have to repay every three years. MacDonald praised Microsoft's decision not to force a switch to subscriptions. "Making them mandatory would have been a huge tactical error on the part of Microsoft." Microsoft also introduced a buyout option that would allow companies to return to a perpetual license by paying 1.5 times the third-year subscription fee.

Mozilla Will Become The Browser of Choice for Red Hat

When Red Hat Inc. bundled the Mozilla Web browser into its latest Linux distribution, version 7.1, it was the beginning of the end for the company's relationship with America Online's Netscape browser. Mozilla is the open-source version of the once-dominant Netscape browser, which is bundled with most Linux packages. Red Hat still bundles Netscape 4.77, but not the latest version, Netscape 6.0. Red Hat currently bundles both Mozilla 0.7 and Netscape. Mozilla is now in a 0.9 release, the first builds of which were released this week on When it reaches 1.0 status, Red Hat will drop Netscape altogether and go only with Mozilla, Red Hat officials said here this week at NetWorld+Interop. Mozilla has the exact same look and feel of the current Netscape browser, but officials said that the reason to go strictly with Mozilla is that its open-source development model has a better fit with Red Hat's philosophy.

Roxio Faces Suit From Owner of CD Information Database

A cloud is forming over CD-burning company Roxio's planned spinoff next week in the form of a lawsuit filed Thursday by Gracenote, an online music service. Roxio, a subsidiary of Adaptec, sells software that allows people to burn CDs from MP3 music files or other data. In early versions, the company had licensed software from Gracenote that allowed automatic identification of music CDs and songs. Gracenote now says that Roxio, which let that contract expire last month, is illegally continuing to distribute the music recognition software and has infringed on Gracenote patents by creating a parallel service of its own in new versions of the software. "We don't know what distribution they're doing, but we know we have the right to make them stop," said Gracenote general counsel Dave Marglin. Gracenote's service is built around a vast database of song names and CD titles. Its software recognizes songs on CDs and then tells applications such as AOL Time Warner's Winamp what the names of songs and discs are. Song-swapping service Napster is using Gracenote's database to help identify songs and block them at the request of music labels.

Patent is Given For Internet Filtering Software

SurfControl, which produces Web and e-mail filters, said Thursday that it has been granted a U.S. patent for software that allows companies to block Web sites, despite the ire of online activists against such restrictions. SurfControl spokeswoman Heather Cook said companies use the software to keep employees from personal Web surfing, which can help them manage bandwidth capacity and provide legal protections. Many consumers and businesses use filters to prevent children and employees from accessing certain sites, such as those with sexual content. Yet some Internet users do not see filters--and patents for such technology--as positive developments and regard the movement toward Web regulation with skepticism. Companies such as Internet security company Symantec have received patents for similar technology. SurfControl owns a second patent for similar software that it gained through the acquisition of SurfWatch, first announced in September 1999.

SurfControl won a patent for its "pass by" technology, which works from a standalone computer and "sniffs" Internet data before it hits a server. Cook said the company targets the corporate market with this technology, competing with rival Websense. It also provides "pass through" technology, which operates within an organization's server, that schools and parents use to keep children from reaching certain Web sites. Despite objections to the software from privacy advocates, business is booming. SurfControl announced that third-quarter revenue grew to $27.3 million from $9.1 million last year.

Pair of Apple Related Stories

Apple Computer has released a third update to its new Mac OS X operating system. Version 10.0.3 is a minor tweak to allow full visibility of file lists in large directories. The latest update comes a week after Apple released version 10.0.2, which enables CD burning using iTunes. The new update is available on Apple's Web site.

IBM Microelectronics is counting on its research powerhouse to push it ahead of Motorola in the lucrative market for networking chips with PowerPC processors that will reach the 2GHz mark. IBM's PowerPC development team plans to use several homegrown technologies to help boost performance of future PowerPC chips, which it will announce later this year. The chips will be capable of hitting 1GHz late this year, with IBM eyeing the 2GHz mark for late 2002. The added speed will help IBM, which prides itself on its cutting-edge chip technology, keep pace with Motorola in the PowerPC market. Faster chips likely will mean faster Apple computers, which are based on the PowerPC. The new chips still won't let Apple close the speed gap with Intel and AMD, however. Intel is scheduled to hit 2GHz with its Pentium 4 in the third quarter of this year. Motorola isn't sitting on its thumbs, however. It is now shipping PowerPC 7450 chips at speeds of up to 733MHz, found in the latest PowerMacs. It plans to release a follow-up version of this chip, code-named Apollo, later this year. Apollo, which will use some tricks similar to those found in IBM's chips, is expected to hit 1GHz speeds as well. |

Friday May 11, 2001 Top

Systems Using Intel's Itanium Chip May Be Released Soon

Intel will release the long-awaited--and oft-delayed--chip at the end of May, according to sources, and most computer companies plan to come out with their products around the same time. IBM, Hewlett-Packard, Dell Computer and other large computer manufacturers will soon unveil two-, four- and even 16-processor computers containing the 64-bit Itanium chip for the first time. The chip, and computers containing it, will compete against more expensive Reduced Instruction Set Computing (RISC) servers and workstations from Sun Microsystems, IBM and HP. Along with processors running at 800MHz and 733MHz, the Itanium boxes will tout such features as 32GB of memory--enough to store entire Web sites--and fairly large hard drives. While it's unclear how well these computers will perform in benchmark performance tests against the established RISC aristocracy, it appears that some Itanium computers could cost slightly less than earlier anticipated. "Our expectation is that this (release of Itanium-based products) will be for early adopters," said Mark Hudson, worldwide marketing manager in the business systems and technology organization at HP.

"They will be (priced) significantly higher than typical (Intel) servers but less than a RISC offering," Hudson added. Despite the relatively limited introduction, the Itanium presence will grow as the year goes on. At the end of 2002, HP will start putting Itanium into "Superdome," its 32-processor RISC machine. Superdome pricing starts at a lofty $1 million. Eventually, HP's Intel-based server line and the server line containing its PA-RISC chip will merge, Hudson said. At that point, HP will primarily be marketing one server family, and the main decision for the customer will be which operating system to select. IBM will come out with a single two-processor workstation and one four-processor server. The company's Itanium Intellistation will contain two 800MHz Itaniums with 2MB of cache, up to 16GB of memory and an 18.2GB or 36.2GB hard drive. IBM's Itanium server, by contrast, will contain four processors and 32GB of memory. The size of the memory banks and the huge performance boost they offer remain one of the key features of Itanium systems. "You can load up all of the Web pages on a site and never go to disk," Bretzmann said. Meanwhile, Dell is expected to come out with both servers and workstations, and Gateway will release a server.

Dual-Processor Athlon Motherboards Released

The first dual-processor motherboards for the AMD Athlon processor have begun to appear on the market, though they have yet to be formally announced. Beta testing has begun on a motherboard from Tyan Computer, the S2462UNGM, or Thunder K7, according to several Web sites for the developer community. A launch date for the Thunder K7 has not yet been announced. The motherboard includes dual on-board LAN, on-board SCSI and ATI video, and has four slots for DDR DRAM memory, as well as eight fan headers to keep the assembly cool. It is based on AMD's 760MP chipset.

Gracenote Under Fire Over Roxio Suit

Online music database Gracenote, which once labeled itself a "grassroots Internet darling," got a lesson Friday in the slash-and-burn culture of the Internet after announcing it would sue a customer intent on moving to an open-source competitor of its song database. After the Thursday announcement, open-source advocates--from Linux evangelists to technophile site the defendant of the suit, CD-burning software maker Roxio, with letters of support and criticized Gracenote openly. In a statement Thursday, Gracenote said it had charged Roxio with patent infringement. Without addressing the legal merits of those claims, critics attacked the suit for seeking to undermine principles of the open-source philosophy, which posits that information should be freely shared. Most irksome for open-sourcers: Gracenote's efforts to put a fence around a database of CD songs and album titles, which were largely entered by the public, not the company's employees. "The (CD database) project out of which these guys grew was an open project, and because of their positioning as an open database, they got thousands of people entering in titles and songs on their own," said Bruce Perens, the senior global strategist for Linux and open source at Hewlett-Packard and a well-known open-source evangelist. "Having taken those people's works, they decided to close it off. That sounds extremely sleazy to me."

New Technlogy Will Reduce Power Requirements for Displays

A display technology start-up is creating a type of electronic "ink" that could lead to paper-thin screens by mid-decade. E Ink will present and demonstrate its technology at the Society for Information Display's conference, which will take place June 3 to June 8 in San Jose, Calif. E Ink's electronic ink is based on microcapsules that Vice President Russ Wilcox describes as similar to "a bunch of tiny magic 8-balls"--or electrically sensitive white chips that float in a ball of black dye. The chips rise or fall in the dye depending on an electric charge. The technology is similar to "electric paper" devised by Xerox spin-off Gyricon Media. The Xerox method uses tiny balls colored white on one side, black on the other, encapsulated in an oily liquid. An electrical charge is applied to rotate the balls. Electronic ink will give future displays the look of paper, said Wilcox, a co-founder of the Cambridge, Mass.-based E Ink. Displays are often the most power-consuming and expensive component on a device, and manufacturers are constantly looking for methods to improve battery life and lower cost. "The electronic ink displays have tremendous potential for power-saving because the displays maintain their images when the power is off," IDC analyst Bob O'Donnell said. "However, all this still remains to be proven." The eventual goal for E Ink is to deliver paper-thin displays that look like ink on paper and can be wirelessly updated with new content.

New Software Allow Tracking Files on Aimster

An anti-piracy company has begun shining a light on people trading music files through the Aimster file-swapping network, a Napster-like service that promises privacy features that theoretically place it beyond the reach of copyright police. MediaForce --one of several companies that tracks people trading files through Napster, Gnutella and similar services--announced Thursday that it had found a way to find copyrighted works by evading the encrypted network, exposing a serious hole in Aimster's claims to privacy. The New York-based company's terms of service bar anyone using the network from spying on its members. It also argues that attempts to track use of its service violate digital copyright law's ban on subverting cryptography schemes. MediaForce's approach isn't particularly complicated--it's simply running searches on Aimster's network using the company's own software and taking down the results. The outcome of these searches, and Aimster's attempts to have them deemed illegal, could go a long way toward shaping the future of online file-swapping as people look for an alternative to Napster. "What's been unique is that Aimster has billed itself as an encrypted private network," said MediaForce CEO Aaron Kessler. "But we haven't broken their encryption or reverse engineered their software at all."

Weekend May 11 & 12, 2001 Top

Microsoft Releases Update To Windows 2000

Microsoft has quietly posted a second collection of Windows 2000 bug fixes, indicating the official release of an update could come this week. The Redmond, Wash.-based software company in July released the first Windows 2000 bug fix--or service pack--in a similar manner the weekend before the official announcement of the update. Microsoft officials were unavailable for comment. CNET early Sunday downloaded the 101MB file from a Microsoft Web site. The service pack installed without incident on a MicronPC TransPort GX+ Plus notebook with 850MHz Pentium III processor and 256MB of RAM. Overall, Windows 2000 Service Pack 2 appeared to modestly boost system performance, while adding several new features. One of the biggest changes introduced by the service pack affects security. Until now, Windows 2000 offered 56-bit encryption by default, forcing users who wanted tighter security to either install higher encryption from a separate CD or download via Windows Update. This meant some companies could be unaware their Windows 2000 installations included relatively poor security. Service Pack 2 offers 128-bit encryption by default, and it updates 56-bit version Windows 2000 versions as necessary. Another new feature comes from Windows XP: Windows Compatibility Mode. In a recent interview, Shawn Sanford, Microsoft's group product manager for Windows, described Compatibility Mode as a "series of tweaks and tricks" that "fool" older programs into running on Windows 2000.

Cisco Supports IPv6 In New Software

Cisco Systems will ship new software this month that supports an Internet technology standard that will increase the number of devices that can connect to the Web. Like many technology companies, Cisco has spent the past three years working to support a new standard for assigning IP (Internet Protocol) numbers, which all devices need to hook into the Net. The new IP standard, called Internet Protocol version 6, is expected to affect every Net user once the technology is widely adopted in the next few years. The new standard was created because the quantity of available IP numbers was declining as cell phones and other devices became more popular. For Cisco, support for the standard is vital because the company is the dominant network equipment player in the routing of information through IP. The company is building it into an operating system that runs within the company's network equipment. Proponents say the standard will increase the amount of numbers, much like the way adding new area codes increases the amount of phone numbers available. Telecommunications services and businesses are expected in the next few years to start supporting the new standard in their networks.

Microsoft Licensing Program Puts Squeeze On Customers

A new licensing program being put in place by Microsoft will force the majority of its business customers to either upgrade to Office XP before Oct. 1 or pay a heftier purchase price later, analysts say. As part of the revamp, Microsoft eliminated the most popular licensing plan for upgrading to new versions of its software, replacing it with a new program called Software Assurance. The new program guarantees customers access to the latest versions of Microsoft's business software, including Office and Windows. But to participate in the program--to take advantage of discounted upgrade prices--businesses must be running what Microsoft terms the "current" version of its software. For Office, that is version XP, which the company won't formally launch until May 31. If customers upgrade to Office XP, they are eligible to receive future versions of the software at a reduced price. However, if customers don't upgrade all of their machines to Office XP before an Oct. 1 deadline, they in essence have to buy Office licenses at full price, as if they were new customers. "You're being forced to do an upgrade to get into (Software Assurance)--or you can just wait, and at some point in the future you can rebuy the license at full price," said Gartner analyst Alvin Park.

Company Introduces the "Personal Server"

Startup Memora Corp. is attempting to create a new product category--"personal server." A name reminiscent of "personal computer," the term "personal server" is meant to convey the idea of an appliance-like device that performs a range of useful services and can be easily installed and operated by nontechnical users in their homes. Accordingly, the company is billing its initial product offering, the Servio Personal Server, as "the first 'personal server' for the home." The Linux-based device integrates a combination of services increasingly desired in many of today's well-connected homes, including a residential gateway, firewall, a wired or wireless network server, e-mail services, and multimedia and other file storage and sharing. Plus, it offers secure external access via the Internet to e-mail, Web pages, and designated files. The Servio Personal Server is basically a small, unique-looking system, not too different from an ordinary desktop PC. It measures 12 inches by 14 inches by 6 inches (height by depth by width). However, instead of running Windows, the Servio runs Linux and several other open-source programs, including the Apache Web server, MySQL, and the Exim mail server. It comes preconfigured, so its applications operate right out of the box. No external monitor or keyboard are required.

You connect the Servio between a broadband connection (DSL or cable) and the local (wired or wireless) network within your home. Then, you turn the device on and let its auto-configuration program discover your specific network settings. Finally, using any PC browser, you enter your name and a public name for your Servio. Assuming everything went as expected, you're now ready to create accounts for friends, associates, or family members and begin sharing photos, video clips, music, and other files. Initial Servio models are based on a 600MHz or faster Intel Celeron processor with 128MB of memory and a 30GB hard disk. Larger hard disks will be offered as future options. External input/output connections consist of two fast Ethernet (10/100Mbps) ports and two USB ports. Typically, one Ethernet port connects to a DSL hookup, while the other goes to an in-home LAN. The two USB ports let you connect the Servio to wireless LANs and other external interfaces. Rodriguez lists three key reasons why Memora decided to use Linux: "Linux is rock-solid as a server; there's tons of available software; and there's zero cost." "We have tried very hard not to make extensive customizations to core pieces--i.e., the kernel, Apache, Reiser FFS, etc.--beyond available patches, because maintaining these modifications would be out of the realm of the possible, given our current available resources," explains Rodriguez. "Memora would not have been possible without open-source software." "We are very conscious of that, and hope that the market affords us the opportunity to pay the community back in a major way," he says. "In the future, we'd like to do something for USB support within the kernel--especially relative to reading/writing of camera memory cards--and we also want to provide some assistance to the various video-for-Linux projects."

Linus Trovalds Speaks About Microsofts Licensing Program

Microsoft and a host of other software companies are trying to convince customers to buy software through subscription-like contracts. And the vast majority of them will fail, Linux creator Linus Torvalds said in an interview with CNET "Everyone wants to go into this 'Let's not sell software. Let's license it,' but that's horrible," Torvalds said. "It is the most stupid thing because nobody wants it." The subscription debate will likely emerge as one of the major flash points in the software industry. Although the exact terms vary, in most of these programs customers sign multiyear contracts that commit them to pay for new software on an ongoing basis. Microsoft put an exclamation point on the movement Thursday when it announced a software assurance program, a licensing option under which corporate customers agree to purchase a steady stream of upgrades. The Redmond, Wash.-based giant also unveiled a subscription service in which customers rent software on an annual basis but don't get to keep it at the end of the contract.

These strategies are doomed to failure for a number of reasons, Torvalds said. Companies want to charge too much, and consumers don't need to upgrade their software as fast as they used to. Besides, human nature also abhors a rental. The increasing proliferation of open-source programming will also likely alter the value of patents. Currently, large companies wield patents like nuclear missiles, threatening to hit competitors with patent infringement suits to force them into deals. Established companies also browbeat start-ups. In the end, customers pay more for software because alternatives are limited. The open-source system, though, creates a safe haven of alternative products. "Nukes don't go away, but at some point you get away from them," Torvalds said. Microsoft, he pointed out, takes a completely different viewpoint, publicly portraying openly licensed intellectual property as dangerous and a threat to the industry. "I think the whole Microsoft approach is complete crap," he said. "If you try to logically follow their arguments, you get completely lost."

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