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Week of September 2, 2001 News Archive

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Tuesday September 4, 2001 Top

Hewlett Packard to Acquire Compaq

Hewlett-Packard will acquire Compaq Computer in a stock swap worth about $25 billion, the companies announced late Monday. The deal, one of the largest in technology history, would merge two of the biggest names in computers, printers and computer servers, and would have total revenue only slightly less than that of IBM, the largest computer company. Carleton "Carly" Fiorina, the chairman and chief executive of HP, will become the new company's chairman and CEO, while Compaq Chairman and CEO Michael Capellas will become president of the new entity. Capellas and four other Compaq board members will join HP's board. The companies touted the complementary aspects of the union--on both the organizational and the product fronts--and predicted a shake-up for the industry. "We think, obviously, it makes us a more effective competitor and a more effective partner, and for those who don't believe us, watch," Fiorina said in a press conference Tuesday.

In Fiorina's estimation, the company that should be watching over its shoulder most vigilantly is IBM. In a letter e-mailed to HP's employees and filed with the Securities and Exchange Commission among the merger documents, she wrote: "And, for the first time in a very long time, IBM will have a competitor that's strong enough, bold enough, and talented enough to take them head-on in the enterprise space." The combined entity, which will take the Hewlett-Packard name, will be based in Palo Alto, Calif., HP's hometown, and retain a "significant presence" in Houston, where Compaq is headquartered. The deal is subject to regulatory approval. But Rich Gray, a Silicon Valley-based antitrust attorney, said he didn't see any serious threat to the merger. "If there is a soft spot, it's at the high end with the Tandem (servers)," he said. "If I were the government, I'd be talking to customers in the financial and airline sectors about how they see this acquisition."

Gray predicted that in the worst-case scenario, HP might have to spin off some portion of its high-end server business. "It's not a deal-killer," he said. The combined company will be organized around four operating units: an imaging and printing group led by Vyomesh Joshi, now president of imaging and printing systems for HP; an access business led by Duane Zitzner, now president of computing systems for HP; an information-technology infrastructure business led by Peter Blackmore, currently executive vice president of sales and services for Compaq; and a services business headed by Ann Livermore, now president of HP services. But Ashok Kumar, an analyst at U.S. Bancorp Piper Jaffray, said HP's buyout of Compaq would be fraught with difficulty. The two companies are very much alike: Roughly one-third of HP's revenue comes from PCs, notebooks and servers, while about half of Compaq's earnings come from the same sources. Their Unix server businesses are similar.

Motorola Announces Breakthrough Chipmaking Technology

Motorola has developed a computer chip it says is 35 times faster than today's models and will cut the cost of manufacturing electronics such as cell phones and DVD players, the company announced Tuesday. The semiconductor combines silicon, the inexpensive material commonly used to produce semiconductors, and gallium arsenide, a more expensive material that can transmit signals at much higher speeds, according to Motorola. The discovery solves a problem the semiconductor industry has been working on for nearly 30 years. The technology should give consumers smarter, cheaper electronic products that perform better, the company said. The U.S. Patent Office is scheduled to publish the patent applications Tuesday. "It's a monumental change in the constraints on the construction of semiconductor systems," said Dennis Roberson, chief technology officer of Motorola. "We've opened the door on a whole new world." Analysts say the new chip is a breakthrough in technology because it allows relatively inexpensive semiconductors to process at high speeds. Products that previously demanded fast semiconductors had to use expensive materials. The new chips also allow one chip to handle more functions.

"This could go down in history as a major turning point for the semiconductor industry," said Steve Cullen, director and principal analyst for semiconductor research at Cahners In-Sat Group, a technology research company. "This could obsolete current conventional wisdom that some products will always require at least two chips. Placing all components on the same chip also offers performance enhancements by eliminating the speed loss and power consumption that results from driving signals from chip to chip. "According to Motorola, the new technology could drastically reduce costs associated with connecting high-speed optical networks for Internet and data communications to the home. It also could influence the development of new wireless devices, such as radar systems to help automobiles avoid collisions, and new semiconductor-based lighting systems. The company said it hoped to license its discovery to other manufacturers widely and quickly. Motorola expects demonstration versions will be available next year for other manufacturers. The first products with the new chips could hit the market in 2003.

New Virus Spreads Through Outlook

Antivirus experts have warned about a new e-mail worm that uses Microsoft Outlook to spread. "Troj_Apost.A" is a worm rather than a Trojan horse, as its name suggests. The malicious e-mail arrives with the subject line "As per your request!" with the message, "Please find attached file for your review. I look forward to hear from you again very soon. Thank you." When the attached file entitled "Readme.exe" is executed, it will try to copy itself to the floppy drive. It will then self-propagate by e-mailing itself to all addresses listed in the infected user's address book. "We've had several reports of Apost over the last few days, but to be honest it's a lot smaller than Magistr or SirCam," said Graham Cluely, senior technology consultant at antivirus company Sophos. "After six months we are still getting reports of Magistr, and SirCam is even bigger, although it has not been around for as long," he added. Apost was first captured on Monday, and since then e-mail screening company MessageLabs stopped 54 cases. Experts at antivirus company Trend Micro have categorized the worm as a medium risk, but Cluley asserted that "Apost isn't anything in particular to get worried about, despite what other vendors are saying." Security experts warned people to update their antivirus software and to be suspicious of any unsolicited e-mail attachments.

Federal Trade Commission Investigating Rambus

Hynix Semiconductor and Micron Technology have been interviewed by the U.S. Federal Trade Commission in an investigation into chip designer Rambus, according to reports. Earlier this year Rambus was convicted of fraud for failing to disclose patent applications while it was a member of the JEDEC memory standards body, and the investigation is now believed to be focusing on Rambus' patent conflict with JEDEC. A Micron spokesman and a Hynix executive told trade publication Electronic Buyer's News last week that executives from their companies had been interviewed. Micron also said that the FTC had subpoenaed records in the case. The FTC is believed to have been investigating Rambus since at least the beginning of this year. Rambus controls a high-speed memory standard, RDRAM, designed for high-end computers. However, it also claims that its patents cover the double data rate (DDR) DRAM design, which had been designed by JEDEC as an open standard. Several chip makers have accused Rambus of secretly patenting the technology discussed by JEDEC for the company's own uses. Rambus has denied any knowledge of an FTC investigation, and is appealing the fraud ruling.

Highly Destructive Worm Returns in New Form

Virus researchers have discovered a new variant of the destructive Magistr virus that destroys local and network files and can also overwrite data stored on the CMOS and BIOS chips. Known as Magistr.B, the new virus arrives in an e-mail and can carry multiple message attachments. The virus itself is contained in a file called readme.exe, and the user must open the file for the virus to execute. The virus is reported to be spreading quickly in Europe, but has not been seen in the United States yet, anti-virus vendors say. The virus is a variant of the original Magistr.A virus, which has been around since early 2000 and is still one of the most common viruses on the Internet. In addition to destroying files, Magistr.B also overwrites and NETLDR, the operating-system loaders for Windows, and destroys any file with a .ntz extension, which are files used by AV software, according to an alert released by security vendor Vigilinx Inc. The new virus also disables any active copies of Zone Labs Inc.'s ZoneAlarm personal firewall that it finds. The virus spreads via e-mail and generates random subject lines of up to 60 characters. Unlike many other mass-mailing viruses, Magistr.B can pull addresses from the files of several e-mail clients, including Outlook, Outlook Express, Eudora, Netscape Messenger and some Web-based mail clients.

Wednesday September 5, 2001 Top

Microsoft Celebrates 10th of Anniversary Microsoft Research

Microsoft Chairman Bill Gates on Wednesday demonstrated technologies for transcribing spoken Chinese, making handheld computers aware of when they're being touched and moved, and adding emotion to computer slide shows. At an event recognizing the 10th anniversary of Microsoft Research, Gates indulged his fondness for technology, raising hopes for a world where computers will become more useful. "The message you'll get is one of incredible optimism," he said as he described Microsoft's vision for its research labs. Microsoft Research concentrates on three main areas, Gates said: using computers to extend what people can do; improving digital music, videos and images; and building the company's .Net vision of computing services available over the Internet. Microsoft currently spends nearly $5 billion a year in basic research and product development, a sum that will increase in coming years. "Research has more than paid off for us. We're continuing to increase that investment even as the economy goes up and down through the next several years," Gates said.

Microsoft Research was founded in Redmond in 1991 and has grown quickly in recent years, with new offices in Cambridge, England; San Francisco; Mountain View, Calif.; and Beijing. The employee count has increased significantly in recent years--from 300 researchers in 1998 to 420 in 1999, 500 in 2000 and 650 today. In the midst of this growth--and the government's antitrust case against the company--Microsoft Research lost a key employee. Chief Technology Officer Nathan Myhrvold, the man responsible for starting Microsoft Research, left for a one-year sabbatical that later became permanent. And it takes time for research to make its way into products. The first projects from Microsoft Research emerged in Windows 95 and Office 95, Rashid said.

Dell to Begin Selling Networking Hardware

Dell on Wednesday is officially jumping into the networking market with the release of four low-end networking devices that connect PCs and servers together in small and midsized businesses. The PC maker two months ago announced plans to break into the network-equipment market that focuses on small and midsized businesses. The $5 billion-a-year market includes entrenched networking players such as 3Com and Nortel Networks spinoff Netgear, as well as Intel, Hewlett-Packard, Linksys and D-Link. Dell is also battling Cisco Systems, although the networking giant focuses mostly on higher-end equipment. Dell's goal is to persuade its small and medium-sized business customers that buy PCs to also purchase low-end "switches," devices that allow office PCs and servers to connect and that can swap data. Dell has historically succeeded in eking out profits by using a cheaper manufacturing process, in which it won't build products until they are ordered and will sell products directly to customers through its Web site. For its family of "PowerConnect" low-end switches, however, Dell has hired a Taiwanese manufacturer to build the products. Dell's four new PowerConnect products can support between 10 and 24 connections and support Ethernet-based connections that run at either 10 megabits, 100 megabits or 1 gigabit per second.

LaCie Releases FireWire Based DVD-RAM/R Drive

Storage peripheral maker LaCie has announced the availability of a new external DVD-RAM/R drive equipped with FireWire connectivity. LaCie said the drive features the company's new two-chip single firmware FireWire interface. The combo drive is compatible with both rand-access 4.7GB DVD-RAM media and 4.7GB DVD-R General media. Working with DVD-RAM discs, the drive transfers data at up to 22.16Mbps. With DVD-R General media, the drive operates at up to 11.08Mbps. Seek times are 75ms and 65ms respectively form DVD-R, DVD-ROM or CD media. The drive can read and write 2.6GB, 5.2GB, 4.7GB and 9.4GB DVD-RAM media, and also supports CD-ROM, CD Audio, CD-R, CD-RW and video CD, as well as DVD-R and DVD-ROM formats. Because it supports DVD-R General media, the drive can produce discs that can be played back on conventional DVD-ROM players, much like Apple's "SuperDrive." LaCie president Scott Phillips suggested that the new DVD-RAM/R drive meets the needs of professional graphics and video production people. "With a single drive, they have high-capacity, removable storage and a choice of rewritability with hard drive-like random access, or secure write-once media that can easily shared," said Phillips. Look for the new drive in stores now for US$689. The drive ships with cables, Mac software, a 4.7GB DVD-R General disc and a 4.7GB DVD-RAM disc. LaCie also sells 4.7GB DVD-R General discs for $12, 4.7GB DVD-RAM discs for $25, and 9.4GB double-sided DVD-RAM media for $45.

SirCam Worm Continues to Top Most Active Lists

Almost seven weeks after it started spreading, the SirCam worm is still topping the watch lists of almost every antivirus company. Market analyst Computer Economics estimates that by the end of August, SirCam had infected 2.3 million computers and caused $1 billion in damages related to cleaning infected systems and to lost productivity. Although antivirus companies have released updates so that their scanning software can detect SirCam, the worm shows no sign of abating. The worm, discovered in mid-July, spreads in e-mail using tactics that are somewhat familiar. Arriving in a message apparently sent by a friend, the worm activates when the attachment is opened. The program infects the victim's computer, grabs a file from the "My Documents" folder, infects it, and sends the infected file to contacts in the computer's Microsoft Outlook address book. The worm also harvests e-mail addresses from Web pages temporarily stored in the computer's Internet cache. MessageLabs, which filters out malicious e-mail attachments detected in messages from the Internet, has discovered 20,000 copies of SirCam since the start of September. The worm has no competition for the top slot on the company's all-time list of commonly intercepted attachments: At 263,000 total copies and counting, SirCam easily beats out Magistr.A, which has infected almost 93,000 computers since the beginning of June.

Initially, SirCam sneaked by most antivirus companies' scanning software. Only after releasing updates to their virus definitions were the companies able to protect their customers against SirCam. Although corporate customers quickly applied the patch, many home PC users haven't downloaded the updates, Faris said. The answer is to have far more extensive scanning and filtering by the Internet service providers, Faris said. "We use three scanners and then a fourth," he added. "We're laying down a gauntlet." That sort of protection is hard for a consumer to duplicate. And unless home computer users are better cordoned off from the Internet, a worse epidemic will eventually hit the Internet, said Rob Rosenberger, editor of the Virus Myths Web site and normally a skeptic of the hype surrounding viruses. "A virus incident will come and it will be super-deadly," he said. "But that may not be such a bad thing--maybe it should come, I'm thinking philosophically."

Internet Explorer Redirecting "Page Not Found" Errors

The Web's once common "page not found" errors are themselves going missing, stripped from recent versions of Microsoft's Internet Explorer in favor of a search tool provided by--you guessed it--Microsoft. The software behemoth quietly introduced the change two weeks ago, updating Internet Explorer's autosearch function to launch whenever someone types a misspelled or nonexistent domain name into the browser's address bar. Now an MSN Search page appears by default, rather than one of several standard error pages. For example, a search for "" might draw a page suggesting alternate spellings or Web links for the mis-typed address, as well as direct Internet Explorer users to MSN Search. Microsoft said the update helps Web surfers by better directing them to places they want to go. The change is an effort "to make it a less disruptive experience to browse the Web," said Jim Cullinan, lead product manager for Windows XP, Microsoft's forthcoming operating system. "Instead of flashing an error message...this enhances and improves the experience for novice users." But some critics say the feature could be likened to a land grab on territory that has otherwise been the Antarctica of the Internet. Error pages are called up more than 14 million times a day worldwide via Internet Explorer, according to Microsoft.

Because Internet Explorer is the most widely used Web browser, critics say the change could unfairly influence competition among search engines on the Internet. "Microsoft always can have a plausible customer service justification in making the service easier--and they can maintain that with the straight face. But the net effect of this is to push to the max every possible way to leverage the Windows monopoly," said Andrew Jay Schwartzman, president of nonprofit law firm Media Access Project, a group that has worked with organizations such as Consumers Union in examining issues around Microsoft's monopoly in desktop operating systems. Technically, Microsoft added a feature that resolves DNS (domain name system) errors to its autosearch tool, exploiting a function of the Web browser that lets operators wire the address bar to a search engine. Normally, when a Web surfer misspells an address or looks for an unregistered domain name, the Internet service provider will search for the appropriate server to deliver the page. If it can't find the server, an error page will be sent. Rather than default to an error page, Microsoft can deliver another page in its place.

Thursday September 6, 2001 Top

Justice Department Will Not Pursue Microsoft Breakup

In a bid to "streamline" the next phase in the Microsoft antitrust case, the government on Thursday said that it would not seek to break up the software giant. The Justice Department also will not seek a rehearing on the tying claim--that Microsoft illegally integrated its Internet Explorer Web browser with Windows 95 and 98. The agency said in a statement Thursday that it is "taking these steps in an effort to obtain prompt, effective and certain relief for consumers." Even as the agency removed those issues from consideration, however, it opened the door for others, saying it wants the court "to investigate developments in the industry since the trial concluded"--which could include the forthcoming Windows XP operating system. The announcement also could be part of settlement discussions or an effort to bring Microsoft to the negotiating table as a new judge gets set to resume hearings in the case. Microsoft, the Justice Department and 18 states are scheduled to meet over the next two weeks with U.S. District Judge Colleen Kollar-Kotelly.

The U.S. Court of Appeals for the District of Columbia Circuit last month ordered the case returned to the district level, upholding an earlier ruling that Microsoft had engaged in anti-competitive business practices but requesting reconsideration of the remedies imposed, which included breaking the company into separate operating systems and applications businesses. "I'm not really surprised the new administration (of President George W. Bush) would drop the breakup," Gavil said. "Philosophically, it was not their bag, and the Court of Appeals made it clear it would be difficult if they would continue to press for it." The abandonment of the tying claim is more of a surprise, but probably stems from the government's quest for speed. "What I think is they thought the new judge was going to have protracted proceedings before any further trial on remedy on the tying," said Emmett Stanton, an antitrust attorney with Fenwick & West in Palo Alto, Calif. "They probably calculated the remedy they could get in two years would be no more severe than the remedy they could get quickly."

By removing breakup and tying, Stanton said, "the government has made it more unlikely for Microsoft to turn this into a protracted process." Thursday's announcement marks a turning away from the government's saber rattling after the appeals court's June 28 ruling that upheld eight separate antitrust claims against Microsoft. State attorneys general for Connecticut, Iowa and New York, among others, earlier made it clear that a breakup was still an option. They also raised concerns about new technologies integrated into Windows XP. At one point, the government appeared ready to seek an injunction against the operating system, which is expected to appear on new PCs on Sept. 24 and at retail on Oct. 25.

Windows XP Expected to Boost to Wireless Networking Adoption

Microsoft's Windows XP may give the lagging market for home networking the jump-start it needs. The company's forthcoming Windows operating system will support a technology standard known as Wi-Fi, or 802.11b, a wireless protocol that allows people to connect their computers and laptops so they can share the same Net connection. That way, people can roam through the house and still surf the Web or check e-mail. "It's huge anytime Microsoft endorses a protocol or a service like home networking because they basically legitimize it," said Ross Fujimoto, strategic program analyst at Linksys, which makes home-networking kits. For years, technology companies have touted the virtues of home networking, through which people might do everything from starting their ovens via the Net to downloading movies on demand. So far, the smattering of consumers who have created home networks have done so for more routine tasks, such as connecting PCs so they can share the same Net connection, files, printers and other peripherals. Although the federal courts could still delay XP's planned release in October--and Microsoft doesn't yet have a strong track record with networking technology--analysts and technology executives say Microsoft's promotion of Wi-Fi in XP could educate consumers and spur interest in the hyped but still emerging market for home networking.

"It's the first time Microsoft will come out and push the benefits of home networking," Cahners In-Stat Group analyst Mike Wolf said. "Microsoft is trying to hold on to their relevance and take control of the digital home. And to do that they have to control the connection of devices." For Microsoft, new built-in networking features in XP could help the software giant in its quest to become the heart of the networked home, where every PC, handheld and consumer-electronic device, such as TVs and stereos, is linked to the Internet. For PC makers, such as the newly combining Hewlett-Packard and Compaq Computer, Microsoft's new operating system could breathe new life into PC sales. They're touting the appeal of connected PCs in the home, where people can use the same Net connection, play multiplayer video games, share music files and hold videoconferences.

Intel Reorganization Providing Technological Improvements

After nearly two years of product delays, bugs, shortages and recalls, Intel says it has rooted out its operational problems--just in time to deal with potentially thornier pricing and market issues. "You had some particular causal events that drove us to the situation of a year and a year and a half ago," Paul Otellini, general manager of the Intel Architecture Group, said in a recent interview. Struggles with Rambus problems and chip shortages were just some of the issues on Intel's plate at that time. "We went back to basics on basic engineering disciplines, and we're now doing the stuff that for all but two years of our 31-year history we did very well." Analysts agree, but caution that problems may still lurk. A 900MHz Xeon chip for multiprocessor servers, for instance, was pulled off the market in July because of a bug. The processor re-emerged last week. "They still are having some problems, but they sound more like design problems rather than process (manufacturing) issues," said Kevin Krewell, an analyst with MDR/Instat.

"So far it looks OK. Part of it, though, is the recession. When demand is slack, you don't push your yields. It is not the time to detect flaws in the system." "From an execution standpoint, they have pretty much resolved their problems. There's been a focus on it and some heads have rolled," said Joe Osha, an analyst at Merrill Lynch. "But the big question is pricing...Prices are just going to keep going down." In 2000, the groups were realigned by product categories. Engineers designing chipsets and processors for notebooks were put in the same group, for instance, while server and desktop chip development were reorganized in a similar fashion. "The execution got better because the chipset guys talked to the processor guys," he said. "You've seen us execute like clockwork on the Pentium 4." Unexpectedly, reorganization led the way toward a form of technological cross-pollination. Energy-efficiency technology from the notebook group, for instance, is ending up in servers. "There are architectural techniques that were invented out of need that are yielding circuit technology that can be used across the line," Otellini said. "That is a second-order effect that we are now just getting to touch."

New Cable Internet Standard Will Triple Speeds

A new cable Internet standard slated to be finalized later this year could boost cable modem speeds, clearing the way for a raft of new services. Denver-based CableLabs, the cable industry's research and development arm, announced recently that it will certify a new version of DOCSIS (Data Over Cable Service Interface Specification), the technology protocol cable operators use to deliver high-speed Net access using cable modems. The latest version, which will be called DOCSIS 2.0, significantly increases cable bandwidth, or network capacity, particularly for so-called upstream transmissions, according to CableLabs. The standard, which will be finished by year's end, is designed to triple the speed at which cable modem users may send data and Internet traffic. But equipment--certified as being based on the standard--is unlikely to be ready for more than a year, some analysts say. Using new techniques, cable networks based on the standard will be capable of sending data as much as three times faster than previously possible. DOCSIS 2.0 uses A-TDMA (advanced frequency agile time division multiple access) and S-CDMA (synchronous code division multiple access) to accomplish the gain in speed. According to one manufacturer, S-CDMA is not based on the CDMA technology born a decade ago by Qualcomm for wireless networks.

Today's cable networks, experts say, generally deliver data with download speeds roughly between 500kbps (kilobits per second) and 2mbps (megabits per second). But cable modem customers frequently are limited to only a fraction of those speeds--experts estimate about 128kbps--when sending data. As a result, some cable companies and cable modem services put restrictions on the amount of data that customers may send. Similarly, Excite@Home forbids customers from running Web servers connected via their cable modem connections and limits upstream speeds to 128kbps. Uploading data at 128kbps is sufficient for Web surfing, sending e-mail and other files, but critics complain the upstream speed limits hamper their ability to send larger files or take advantage of advanced Internet services. Based on previous versions of the cable modem standard, DOCSIS 2.0 won't be widely available anytime soon. After all, DOCSIS 1.1 was approved in 1999, but no equipment has yet to be certified by CableLabs as compliant with that earlier version of the specification. CableLabs is expected to complete its first round of testing later this month, Schwartz said. The company will begin testing equipment to determine whether it adheres to the new DOCSIS 2.0 specification and works with other manufacturers' gear early next year, he said. Insiders say certified equipment based on the new specification is unlikely to be commercially available before late 2002 or early 2003.

Internet Explorer 6 Receives Quick Adoption

Microsoft's recently released Internet Explorer 6 has taken 2.4 percent of the browser market, quickly closing in on AOL Time Warner's Netscape 6, according to a new study. IE 6, released Aug. 27, showed a fast adoption rate in the week after its launch, StatMarket, a division of audience measurement service WebSideStory, said Wednesday. StatMarket would not release the figures for Netscape 6, but it said that the browser was used by less than 2.5 percent of Internet users worldwide in its first week. StatMarket said that although IE 6 had a "strong" start, it expects a low adoption rate compared with its predecessor, IE 5. Launched in 1999, IE 5 gained between 2 percent and 3 percent of the browser market in its first week. Although IE 6's initial adoption was similar to IE 5's, the research group predicts that the new browser's rate will slow. Johnston said he expects IE 6's market share will level off between 20 percent and 30 percent in about six months. In contrast, IE 5 had more than 50 percent of the market after six months, ahead of both IE 4 and Netscape 4. Johnston said he expects slower adoption of IE 6 because there are few significant improvements from the earlier version, despite additional features. New features include an image toolbar, which lets people save, e-mail and print photos, and a media tool bar, which plays music and videos without the hassle of opening a separate window. Johnston, however, said that most of the enhancements are related to back-end technologies rather than usability.

Friday September 7, 2001 Top

Intel Sues Via Over Pentium 4 Chipsets

Chipmaker Intel has filed a patent-infringement lawsuit against Via Technologies and will seek to have Via's new Pentium 4 chipsets pulled off the market. Santa Clara, Calif.-based Intel on Friday filed suit in U.S. District Court in Delaware. The lawsuit alleges that Via's P4X266 and P4M266 chipsets, which were released earlier this month, infringe on five Intel patents. S3 Graphics is also named as a defendant. S3 Graphics is a joint venture created by Via and Sonicblue--a graphics chipmaker turned consumer electronics company--to help develop chipsets. Via's two chipsets essentially allow computer makers to put DDR DRAM, a high-speed form of standard computer memory, inside computers with Pentium 4 chips. Currently, only Rambus memory can be used inside Pentium 4 computers, although chipsets that let PC makers use ordinary SDRAM will come out Monday. The complaint seeks damages, as well as a permanent injunction that would effectively prevent Via from selling the chipset.

The two companies are no strangers to each other when it comes to lawsuits. Intel filed a similar series of lawsuits against Via in 1999 after the company came out with a Pentium III chipset. Via, which saw its sales zoom with the new chipset, alleged that Intel was merely trying to clamp down on a successful competitor. That suit was effectively settled in July 2000. In the new lawsuit, Intel has alleged that Taipei, Taiwan-based Via does not have a license to build a Pentium 4 chipset. For its part, Via has said several times that the chipsets do not violate any of Intel's patents. Although Via has steadfastly refused to publicly explain its legal theory, sources say the company believes it has legal insulation because S3 Inc. signed a limited chipset license with Intel. The legal intricacy can be tough to follow. Intel originally signed a license with S3 Inc., which morphed into Sonicblue. Subsequently, Sonicblue and Via created a company in the Cayman Islands called S3 Graphics.

Via is said to own roughly half or more of S3 Graphics and controls its management. The suit will likely hinge on whether the chipset license survived the legal transformations. Typically, however, technology licenses cannot be transferred or granted to other parties. Chuck Mulloy, an Intel spokesman, said that neither Via nor the Sonicblue-Via joint venture has a license. "We believe these parts do infringe on our patents," he said. In addition, the two Via chipsets do not "meet the requirements of the S3 license," said Mulloy, without specifying further. S3 Inc. was likely licensed a right to make Pentium 4 chipsets with integrated graphics, a feature the Via chipsets don't have. Theoretically, Intel could also sue any computer maker or motherboard manufacturer that incorporates the new chipsets into PCs, Mulloy added.

Outlook Worsens for PC Makers

The outlook for the PC industry has taken another turn for the worse. On Friday, market researcher IDC said it now sees global shipments of PCs declining this year and offered a sharply lower growth rate in 2002 than it had previously forecast. Reflecting continued weakness in demand, IDC said that unit shipments worldwide will decline by 1.6 percent this year to about 130 million units. In June, IDC had slashed its forecast for 2001 to 5.8 percent growth in shipments, down from a forecast of 10.3 percent. As PC makers wage a price war in hopes of gaining market share, revenue is also sinking. IDC now projects a 10.8 percent drop in revenue this year worldwide. The researcher also lowered its expectation for unit growth in the United States to a decline of 13 percent, greater than its previously anticipated decline of 6.3 percent. For 2002, IDC slashed its growth forecast for global unit shipments to 6.9 percent, or 138.6 million units. That compares with its previous forecast of 12.2 percent growth, or 155.9 million units. IDC also sees 2002 revenues declining by 2 percent, instead of growing 2 percent.

AOL Makes Bid for AT&T Broadband

AOL Time Warner has made an undisclosed bid to buy AT&T's cable business. Liberty Media Chairman John Malone, a cable industry luminary and major investor in AT&T, told Liberty Media shareholders gathered at the company's quarterly investor meeting Friday in New York that AOL Time Warner has offered to purchase AT&T Broadband, according to a report by financial Web site Malone said AT&T has two bids for its cable unit--the previously announced bid by Comcast and another by AOL Time Warner. Representatives for AOL and AT&T declined to comment. Liberty Media, an AT&T Broadband spinoff that sells TV programming to cable operators, could not immediately be reached. A senior executive-level cable industry source believes AOL's reported interest is "not so real" and speculates that Malone may be trying to "stir the pot." Another media industry source speculates that Malone's intentions are self-serving, and that he hopes for a bidding war. Thus far, Comcast, a Philadelphia-based rival cable operator, is the only confirmed suitor for AT&T Broadband. Comcast made an unsolicited $45 billion bid in July. Other companies rumored to be interested in AT&T Broadband include Disney and Microsoft.

A Comcast representative couldn't be reached for comment. A potential merger of AT&T Broadband and AOL Time Warner would likely draw intense scrutiny from the Federal Communications Commission. AT&T, the largest U.S. cable operator, is up against a cap on the number of the nation's households it is allowed to serve. A combination with Time Warner Cable, the No. 2 cable company, would put the merged company well over the limit. Besides scrutiny from the FCC, the deal would likely face more serious regulatory concerns by the Federal Trade Commission or the Department of Justice. When AOL acquired Time Warner, both the FTC and the FCC imposed restrictions on the deal. But the two companies have a variety of similar interests and links, including their high-speed Internet ambitions, a desire to offer local phone service over cable networks, and AT&T's ownership stake in Time Warner Entertainment. There also is a history of opposition between AOL and Excite@Home, the AT&T-controlled cable modem service, over broadband Net access regulations. If AT&T Broadband were to be sold, the new owner would assume a majority voting stake in Excite@Home. A spokeswoman for Excite@Home declined to comment on the AOL-AT&T Broadband rumor.

A New Tool Could Help To Contain DDOS Attacks

While DDOs attacks have become more prevalent and more varied, users' defenses have changed littleŃshut off the flow of traffic, call your service provider and ask for filters, then hold your breath and hope it works. But a new breed of tool is being prepared to help enterprises thwart attacks by stepping away from simple packet analysis and taking a behavior-based approach to stopping insidious distributed denial-of-service assaults. Startup security vendor Reactive Network Solutions next week will launch its FloodGuard software tool, which the company said will take much of the burden for DDOS defense off network administrators and security specialists. The tool was designed to stop so-called Syn flood attacks and other DDOS techniques in which the IP addresses of the attacking machines are spoofed and routers, Domain Name System machines and other sensitive network gear are assaulted. FloodGuard comes at a time when DDOS attacks, especially those targeting network infrastructures, are on the rise, experts say. FloodGuard comprises two components: detectors and actuators. The detectors sit downstream of the network bottleneck, viewing an attack as it happens. Once the software identifies an incoming DDOS attack, the detectors send a message to the actuators, which in turn communicate with the network routers and switches and instruct them to install filters to choke off the attack traffic.

The software can install the filters automatically or send an alert to the administrator warning of the incoming attack and suggesting a remedy. And, unlike other anti-DDOS solutions, FloodGuard does not rely on a database of known attack signatures. Because packets sent during DDOS attacks can be encrypted or given a junk payload that throws off signature-based detection, Reactive's software looks for unusual traffic patterns and packet behavior in relation to their protocols to identify attacks. FloodGuard is not an inline device; instead, it uses network taps to read the traffic. It then communicates with the routers and switches on the network management interface, which is typically reserved for maintenance and other management tasks. As damaging and frustrating as DDOS attacks can be, some administrators still see them as a minor threat in comparison with other problems. "If I were a network administrator for a major Web site or search engine, probably I would see DDOS as a big threat," said Gary Moore, assistant dean for IS at Hofstra University School of Law, in Hempstead, N.Y. But numerous Internet service providers report that up to 15 percent of their network activity at any given time is attack traffic, said Reactive officials in Redwood City, Calif. And those service providers are often unprepared to deal with the attacks, making it more difficult to analyze the assault.

HP-Compaq Deal Could Be Blow to Lexmark

One of Lexmark International's big customers is about to disappear, but that shouldn't cripple the printer maker. For all the bombast from Hewlett-Packard and Compaq Computer about competing against the likes of IBM, stock market players on Tuesday decided that the biggest loser in an HP-Compaq merger wouldn't be a seller of PCs, servers or "big iron" hardware, nor a software peddler, nor a consulting and technology services provider. Instead, Wall Street turned a collective glare upon the main rival for HP's most profitable division. Shares of printer maker Lexmark opened Tuesday's trading almost 12 percent below their previous close and finished the regular session down 9.4 percent on fears that the company would suffer from the defection of one of its leading customers. If the HP-Compaq deal gains regulatory approval, HP, the No. 1 printer maker, is likely to end Compaq's dealings with Lexmark, the No. 2 printer company. Fortunately for Lexmark, even a top-ranked customer doesn't amount to much of the overall sales slice. In fact, no single company generates a large portion of Lexmark's business. Compaq and Lexmark in May 1998 announced a deal that called for Lexmark to build Compaq-branded printers. Although Lexmark now counts the Houston-based PC maker as one of its largest clients, it also builds printers for Samsung, Xerox, Fujitsu and Kodak, which sell them under their own names. Such manufacturing deals generate less than 15 percent of Lexmark's total inkjet printer sales, estimates Marco Boer, consulting partner with IT Strategies.

But landing Compaq as a customer helped establish Lexmark's manufacturing reputation, said Jim Forrest, managing editor of Hard Copy Supplies, a printing-supplies trade journal published by market research firm Lyra Research. "That was a feather in Lexmark's cap, signing that Compaq deal," Forrest said. "But I don't think (HP merging with Compaq) is going to hurt Lexmark a lot." Assuming the HP-Compaq merger is approved, earnings and revenue next year for Lexmark could be hurt as Compaq shifts its printers to HP's inkjet business. "As all of (Lexmark's) earnings are driven by cartridge revenue, any earnings impact would be delayed for a year or two, but 2002 revenue could be reduced," Huske wrote in a research note. "We will adjust our model when the timing and specifics of the deal become clear." But in the long run, whatever Compaq generates can be easily replaced by business from other PC sellers that bundle printers with their machines, analysts said. "Over time, we believe that the HP-Compaq deal will only drive more additive partnerships to Lexmark as other PC makers (such as Dell) look to expand offerings to increase competitiveness," Reitzes said. "However, in the more immediate term, it seems there could be modest downside to 2002 earnings-per-share estimates as the Compaq situation sorts itself out."

Weekend September 8 & 9, 2001 Top

Intel Introducing 802.11a Based Wireless Products

Wireless technology being pushed by Intel will get a massive dose of speed later this year. Intel in November plans to ship new wireless networking products that are five times faster than current technology that lets people wirelessly link their desktop computers and laptops. The technology, based on the new 802.11a wireless standard, is a faster successor to the popular 802.11b standard that has become popular in offices, homes, cafes, hotels and airports that have built untethered high-speed Net connections. The new 802.11a standard, which has data-transfer rates of 54 megabits per seconds, provides enough network bandwidth to connect more computer users to the network, Intel executives said. The fivefold speed increase will also allow people to access Web sites faster and exchange bigger files with each other faster, they said. Intel executives are targeting the new 802.11a products at small and midsized businesses that want to use cutting-edge technology, although consumers will also be allowed purchase them. The giant chipmaker joins Proxim and Enterasys Networks, two companies that also plan to release their first 802.11a products later this year. Analysts believe 802.11b products will remain the big seller for a few years before 802.11a becomes popular. The two wireless standards are not compatible, but the network-equipment makers are building hardware devices that will allow businesses to build wireless networks where both standards can coexist. "We'll pretty much see all the (companies) enter the 802.11a market by the end of 2002 and see it take off in 2003," predicted Cahners analyst Gemma Paulo. "We're thinking that 802.11a will probably overtake 802.11b with the majority of sales in 2004."

Cisco, Agere and 3Com representatives said their companies are developing new wireless technology based on the faster 802.11a standard, but declined to state when they will release the products. Intel's forthcoming 802.11a products will come in three forms: a tiny device that can be plugged into a desktop computer; wireless PC cards for laptops, and a hardware device called an "access point" that connects the computers to a high-speed Internet connection. To ease the transition to faster technology, Intel's access point will support both 802.11a and 802.11b, allowing businesses to support both wireless networking standards at the same time. Intel, which is using 802.11a chips made by start-up Atheros Communications, is also releasing new software that allows businesses to easily manage and install the wireless networks, said Brandi Frye, marketing director for Intel's Wireless LAN operation. Intel executives plan to market technology that uses both wireless standards, but eventually they see 802.11a as the eventual winner. Like most emerging technologies, Frye believes 802.11a products will first become popular in the corporate market before entering the home. "We believe everyone will go with 802.11a from the home to the corporate market," she said. "But we're now primarily targeting the small and medium-sized businesses and (expect to) have the early adopters drive this adoption."

Frye said prices of 802.11a products will be comparable to 802.11b products. An 802.11a wireless PC card will cost $179, about $69 more than the older technology. The company's 802.11a access point will cost $449; the older 802.11b technology ranged from $299 to $699. The new 802.11a standard does not address the growing concern over wireless networking security, but new technology standards are being built to address those security concerns for wireless Net connections. Researchers have found holes in wireless networks based on 802.11b that allow hackers to intercept and alter transmissions passing through the wireless networks. Tech companies and an industry standards group are working on a stronger encryption standard for 802.11a and 802.11b that could be completed by next year, an Intel spokesman said. Proponents of 802.11a say the newer standard is also better because it operates in the less-used 5GHz frequency, so there won't be any interference. The older technology, which has data-transfer rates of 11mbps, operates in the 2.4GHz frequency, where cordless phones, microwaves and other electronic devices operate. They can cause interference because they're using the same portion of the airwaves.

Intel Expects to Hit its Third Quarter Revenue

Intel announced Thursday that chip sales are on track for the current third quarter, after an extremely rocky first half of the year, although the final results still hinge on what happens in September. The Santa Clara, Calif.-based chipmaker issued a mid-quarter update stating that quarterly revenue will be within previously stated estimates of $6.2 billion to $6.8 billion but will fall "slightly below the mid-point of the range," said Andy Bryant, Intel's chief financial officer. The midpoint is $6.5 billion. Expenses will be lower than expectations and will come to approximately $2 billion to $2.1 billion rather than $2.1 billion to $2.2 billion. The company will also see a $90 million loss in investments rather than break even. Further, the company lowered tax estimates by $100 million. "The microprocessor business continues to follow seasonal patterns," said Bryant. Excepting the third quarter of 2000, the current period "looks exactly like the last three or four years," he added. Manufacturing costs didn't drop as much as the company hoped but cost reduction efforts will continue. "We went to the factories and said, 'Reduce costs by hundreds of millions of dollars.' They did about 80 percent of it," Bryant said. During the company's second-quarter earnings conference call in mid-July, Intel CFO Andy Bryant said third-quarter revenue should remain the same or improve slightly. At that time, the company predicted third-quarter revenue of $6.2 billion to $6.8 billion, compared with second-quarter revenue of $6.3 billion.

Congress Mulls Over Easing High-Performance Computer Export

The Senate began debate Tuesday on how to ease Cold War restrictions on the export of high-performance computers. The first bill on the Senate floor following the August recess would remove export controls on high-tech items that have both military and commercial uses but are readily available in mass markets. The legislation, an update of the Export Administration Act of 1979, would also give the president new authority to restrict exports of those items that could pose a serious threat to national security and would increase penalties for violations. The Export Administration Act hasn't been renewed since 1994 and both presidents Clinton and Bush have had to use executive authority to extend temporary restrictions on exports of high-technology goods. Sen. Mike Enzi, a Wyoming Republican and a leading sponsor of the bill, said the old law was written a decade before the Berlin Wall came down and doesn't reflect today's high-tech markets, where "a tourist coming into the country can go to a store, pick up the item, put it in their suitcase and take it home." The bill is widely supported by senators from both parties, the administration and the high-tech industry. President Bush last April said current law couldn't keep up with changes in technology. "With computing power doubling every 18 months, these controls had the shelf life of sliced bread. They don't work," he said. The Senate defeated, 74-19, a Thompson amendment giving the Pentagon and other agencies up to 60 extra days to review complex license applications to determine national security risks. Under the bill, related departments have up to 30 days to make recommendations to the Commerce Department. If there is no agreement on an application, it goes to an interagency dispute resolution committee that has 90 days to send its conclusion to the president.

Record Label Being Sued Over Copy Protected CD

A California woman has filed a lawsuit against an independent record label for embedding technology in CDs that blocks people from listening to songs on a computer. The suit, filed in California Superior Court in Marin County, alleges that Denver, Colo.-based Fahrenheit Entertainment misled consumers by failing to include an adequate disclaimer on CDs encoded with digital copyright-protection software. The suit also cites SunnComm, the Phoenix-based software company that created the protection program as a preliminary measure to prevent people from distributing digital copies of the songs over the Internet. The lawsuit said the protected album, "Charley Pride: A Tribute to Jim Reeves," does not offer a disclaimer that it will not operate on computer CD players. It also requires a consumer to register personal information in a proprietary Web site before downloading the songs onto a computer, raising privacy concerns, the suit says. "The law requires companies who are selling products to give the consumer material information that is relevant to making decisions about whether to buy the product or not, and Fahrenheit did not do that," Ira Rothken, the attorney who filed the suit, said Friday. The practice of embedding copyright-protection technology in CDs is gaining popularity, as record labels seek to protect music from file swappers. The recording industry, including Bertelsmann's BMG Entertainment, is suing file-sharing service Napster for copyright infringement.

Despite successful measures to cripple Napster through the courts, other file-trading clones continue to find ways to distribute MP3-encoded songs online. SunnComm's technology prohibits people from listening to a CD on a computer without registering on a separate Web site first, making it difficult to freely copy the album. The company already has a revenue deal with German media giant Bertelsmann. Executives from Fahrenheit and SunnComm said they had not seen the complaint filed by Rothken. Nevertheless, Fahrenheit maintains it has adequately provided a disclaimer on its CD case informing buyers of the copyright protection embedded in the disc. There's a disclaimer on the outside, and we're not preventing anyone from doing downloads," said Peter Trimarco, the chief executive of Fahrenheit. "But we're saying you have to go to the Web site to do it. It's not being designed to be a distraction." A photocopy of the CD's packaging faxed by Trimarco to CNET includes a disclaimer that reads: "This audio CD is protected by SunnComm MediaCloQ Ver 1.0. It is designed to play in standard audio CD players only and is not intended for use in DVD players. Licensed copies of all music on this CD are available for downloading. Simply insert CD into your computer to begin." However, Rothken criticized the disclaimer for what it left out, such as the inability to play the CD on a computer and the inability to transfer songs onto portable MP3 devices.

CueCat Barcodes Removed From Major Newspapers

Newspaper publisher Belo said Thursday that it will drop a technology that linked its newspapers and TV broadcasts to Internet sites with a mouse-like device called a CueCat. Belo said too few people used the CueCat, which Belo introduced Oct. 1 on the pages of The Dallas Morning News. Belo declined to provide numbers. The Dallas-based company invested about $37.5 million in privately held Digital Convergence, the Dallas company that developed the technology. Belo wrote off the investment. Belo said The Morning News, The Providence (R.I.) Journal and ThePress-Enterprise in Riverside, Calif., would stop using the technology with Thursday's editions. The newspapers had printed bar codes alongside some stories that, when scanned by the CueCat, linked the reader's computer to a Web site for additional information and advertising. Belo's WFAA-TV in Dallas used a related technology that used electronic signals transmitted to viewers' computers if they were attached to the television with a special cable. But readers and viewers skipped over the cues and preferred to go directly to the newspaper and TV station Web sites, said Belo senior vice president Skip Cass. Newspaper and online columnists ridiculed the CueCat as an unwieldy device that assumed people read newspapers while seated at their computers. Privacy groups warned that it could be used to track readers' online behavior because each unit has a unique identifier. Belo executives said they would not track individual CueCat users but would gather anonymous information grouped by age, gender and ZIP code. Digital Convergence was embarrassed, however, when a security breach last year exposed the names and e-mail addresses of about 150,000 CueCat users.

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