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Beyond The Music: Peer-to-Peer File-Sharing Web Sites Grow 300 Percent, Driven By Swapping Movies, Games And More
Tech News [01-26-2003] more news
SAN DIEGO, Jan. 23, 2003 - In the wake of Napster, peer-to-peer (P2P) networks have moved beyond trading MP3s into swapping anything from the latest episode of the "Sopranos" to popular video games, reports Websense Inc.
This diversity of content is not only driving the creation of new P2P Web sites and applications, but also creating bandwidth, legal and security issues for corporations worldwide. In fact, the number of P2P file sharing Web pages has increased more than 300 percent in the last 12 months, totaling more than 89,000 Web pages. In addition, there are more than 130 unique P2P applications, such as KaZaa, Grokster and others, according to Websense, the world's leading provider of employee Internet management (EIM) software.
"P2P networks have truly developed beyond the music to become a marketplace for users swapping videos, games and software packages," said Harold Kester, chief technology officer for Websense. "While this may be free to end users, it comes at a huge cost to corporations in the form of wasted bandwidth, gaping security holes and serious emerging legal issues."
While trading MP3s remains a popular activity among P2P users, other content is gaining and, in some cases, on par with music swapping. For example, more than 5 billion music files were downloaded from P2P networks last year, according to research firm The Yankee Group, yet more than 5 million video game downloads also occurred last year, according to game developer Trymedia. In addition, between 400,000 and 600,000 copies of movies are downloaded each day, according to consulting firm Viant, and approximately 3 million users download favorite TV shows, such as "Buffy the Vampire Slayer," from KaZaa every day.
Many employees use their office Internet connections to download P2P files, because less than 17 percent of Americans with Internet connections have high-speed access at home, according to Jupiter Media Metrix. For example, using a high-speed office connection, a full-length movie takes approximately one hour to download, which is considerably faster than the 23.5 hours that it would take to download the same file on a 56k dial-up Internet connection typically used at home. Yet, despite this problem, 64 percent of companies do not monitor music or video downloads, according to a recent CIO survey.
"Many corporate users may not be aware, or are completely ignorant, of the IT resource consumption associated with listening to online music or watching streaming media from their desktops," said Brian Burke, analyst for IDC. "In addition, applications acquired through insecure grid computing or P2P protocols often enter the corporate environment without being scanned for viruses or malicious code." P2P applications carry security risks because they communicate directly with other users' computers and often bypass a company's firewall. Many P2P applications tunnel through port 80 and other open ports, effectively allowing employees to create their own VPNs. And because port 80 is typically left open for Web traffic, virus-infected files and other malicious code can slip past a company's traditional defenses.
Once stored on a corporate network, P2P files can create legal issues that are becoming more serious every day. According to IDC, "As most new computers ship with CD and DVD burners, companies may be crossing new legal boundaries as employees burn downloaded videos or music onto discs using company owned assets… While it is true that in certain business situations, grid computing, commonly known as P2P, represents an innovative way of maximizing resources dynamically, today it is primarily used for swapping copyrighted material."
Recently, the Recording Industry of America (RIAA), Motion Picture Association of America, and other groups warned CEOs of the nation's 1,000 biggest companies that corporations could be liable for violating copyright laws if employees use company networks to download, store or distribute music or movies illegally. One early RIAA lawsuit - against an Arizona-based company for storing illegal MP3s on company servers - was already settled out of court for $1 million.
"Companies must be aware that they might be held responsible for employees who illegally swap materials – including everything from movies to video games – using company resources," said Jennifer Kearns, a labor and employment partner at Brobeck, Phleger & Harrison LLP., a global law firm with offices in the United States, London, Oxford and Munich. "Managing employee access to controversial technology and content - such as file-sharing applications - is one way to control legal risk."
Websense Enterprise currently enables companies to manage P2P file sharing by blocking employee access to P2P Web sites. The next-generation of Websense software v5, to be released in March 2003, will provide dynamic protocol management tools, enabling IT managers to manage or block employee access to P2P protocols. The protocols will be updated daily via automatic database downloads. In addition, Websense Enterprise v5 will also offer an add-on module called Client Application Manager (CAM) that allows IT administrators to select and manage which applications can run on individual desktops, helping employers curb the launch of P2P applications on employee workstations.
UPDATE - US music stores band together for online market
Monday January 27, 11:36 am ET
By Ellis Mnyandu
(Recasts; adds analyst comment, details; changes dateline from LOS ANGELES)
NEW YORK, Jan 27 (Reuters) - Major U.S. music retailers on Monday launched a service to deliver music via the Internet, a step they hope will save them from piracy that has raged on even after the demise of the Napster online song-swapping service.
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The partnership, which comes as the music industry also battles growing pressure from discounters like Wal-Mart Stores Inc. (NYSE:WMT - News), consists of Best Buy Co. (NYSE:BBY - News), Hastings Entertainment Inc. (NasdaqNM:HAST - News), Tower Records, Trans World Entertainment Corp. (NasdaqNM:TWMC - News), Virgin Entertainment Group and Wherehouse Entertainment Inc.
The six retailers said in a statement that their venture, called Echo, will enable them to "effectively compete in the digital music market place".
But Bernstein analyst Colin McGranahan said he sees Los Angeles-based Echo as merely a step by the stores to band together as the direct music distribution model continues to evolve and music labels gain the upper hand.
In the past year, a number of major music labels have been seeking ways to distribute their content directly to the consumers in one attempt to steer clear of the retail downturn.
"This does not seem intuitively a slam dunk," said McGranahan. "Clearly there may be another story behind (this move). It could happen that the music labels are working on something that's leading music retailers to feel they need to get together to have some kind of a united voice."
Just last Tuesday, Wherehouse Entertainment filed for bankruptcy protection for a second time in less than 10 years. The Torrance, California-based company, which along with its peers has been struggling to gain a foothold with consumers, said it will close 120 more stores.
MUSIC INDUSTRY BLUES
The music industry's troubles also forced Best Buy, the top U.S. consumer electronics chain, to shut 107 of its Musicland stores earlier this month.
The retailers said they will each back Echo with in-store marketing. Each participant will independently market and price its digital entertainment offering.
Echo officials were not immediately available to provide details about whether the new venture would be subscription-based or how it would compare with services like Pressplay, an online music subscription joint venture backed by Vivendi Universal (NYSE:V - News) and Sony Corp. (Tokyo:6758.T - News).
Pressplay, for example, agreed in November to provide content from Warner Music, expanding its online subscription library to include music from all five major labels.
Users of Pressplay can download songs to their computer and then copy them to portable devices or burn them onto CDs.
The company competes with MusicNet, which is owned by record labels Bertelsmann AG (BERT.UL) BMG, EMI Group Plc (London:EMI.L - News), AOL Time Warner Inc. (NYSE:AOL - News) and RealNetworks (NasdaqNM:RNWK - News).
Last April Best Buy Chief Operating Officer Allen Lenzmeier told Reuters his company was working with other retailers to devise ways to prevent wholesale copying of CDs without antagonizing customers.
Some music industry watchers predict that as many as 500 music stores out of thousands could close this year after CD sales fell by nearly 9 percent in 2002.
Industry experts also point out that the retailers are caught up in a bind since some of them, including Best Buy, also sell MP3 players and CD burner drives -- the very same gadgets that makes illegal copying and downloading music easy.
I think they will eventually but they will have to settle for slightly lower prices for the music they sell. Notice I said prices not margins because in the end their margins will probably be higher not lower. Digital distribution has rocked their world (pun intended) and their complete inability to even see and understand the threat would be comical if it didn't hurt our investment here so much. They will eventually get everything locked down again and restart their oligopoly (right venieris) but the consumer is just SO MUCH smarter and more savvy now that they will have to give up profits somewhat to lure us all back to the music for pay system. In the end, they have got what we want and that gives them the edge. The next crop of stars is not rising out of internet postings and downloads. The expertise of the big labels is unfortunately still "needed".
Music Chains Try To Top Kazaa Et Al.
Penelope Patsuris, 01.27.03, 1:10 PM ET
NEW YORK - The music industry has identified another means by which it can fend off free digital downloads, and this time six major record retailers are leading the charge.
Best Buy (nyse: BBY - news - people ), Tower Records, Virgin Entertainment, Wherehouse Music, Hastings Entertainment (nasdaq: HAST - news - people ) and Trans World Entertainment (nasdaq: TWMC - news - people ) have teamed up in a joint venture called Echo that will sell downloadable music tracks, both online and in stores.
The effort faces considerable challenges but, though it is only just getting started, it looks to be the most promising pay-to-play business on the horizon thus far. There will be critical differences between the download service Echo plans and those currently being offered--without much success--by the record labels.
The primary problem with both MusicNet--owned by AOL Time Warner (nyse: AOL - news - people ), Bertelsmann and EMI Group (nyse: EMI - news - people )--and Pressplay--owned by Sony's (nyse: SNE - news - people ) Sony Music Group and Universal Music, a unit of Vivendi Universal (nyse: V - news - people )--is that they are subscription services. On those Web sites, a consumer pays a monthly fee for access to a certain number of downloads. But people don't like being forced to buy a certain number of tracks per month, says Forrester Research analyst Josh Bernoff. Echo will sell individual tracks.
Perhaps Echo's biggest advantage will be its ability to cross-promote downloads to consumers in retailers' stores. "I might buy a Sheryl Crow album and then get two or three more downloadable bonus tracks for free," says Yankee Group analyst Michael Goodman. He expects to see prepaid cards issued in stores so that teens who don't have credit cards can make purchases online. Echo will further differentiate itself from the free services, as well as the labels' online efforts, by offering plenty of sneak peeks and bonus tracks that can't be found elsewhere. "Retailers are looking at models that will supplement sales, not undercut them," he says.
The labels' online efforts have been dogged by regulatory scrutiny. Goodman says Echo won't face that kind of examination from the Federal Trade Commission, which watches carefully for industry collusion. "A third party will have much more flexibility with its business model," he says.
The gaping hole in Echo's strategy is that it has yet to cut any deals with the record labels that control the content it plans to sell. It will take another six months, but they'll eventually climb aboard, if only out of desperation.
All things being equal, the labels would certainly prefer to control digital distribution via Pressplay and MusicNet--but all things are not even close to being equal. Those services are foundering and CD sales are plummeting, down 9% in 2002.
"The retailers are the labels' best customers," says Goodman. "The labels need [retail] distribution--this is where their revenues come from."
Bernoff cautions that while working with Echo would be in the labels' best interests, "giving a consortium of retailers power over both physical and digital distribution will definitely give them pause." He adds, "The more flexible labels, like EMI, will sign on, but there won't be a flood. It will take time to negotiate the terms."
Another wrench in the works hinges upon the Jan. 24 news that Andersen Merchandisers, which is Wal-Mart Stores' (nyse: WMT - news - people ) music distributor, will purchase the download technology of Liquid Audio, which also holds licenses to sell 350,000 songs. Although it has no deal in place, Andersen plans to sell downloads through the Web sites of its retailers, including Wal-Mart, which happens to be the country's biggest music retailer.
Radio reaches digital age
Henry Norr Monday, January 27, 2003
------------------------------------------------------------------------
The digital revolution is finally coming to radio.
Until now, high tech has had surprisingly little effect on the way radio programming is delivered. Nor has it changed the listening experience for the average consumer, although increasing numbers of tech-savvy enthusiasts have begun to receive radio and radio-like programming through cyberspace rather than thin air.
A flurry of recent developments, however, suggests that 2003 could be the year that efforts to revamp the century-old medium for the digital age move out of the labs and into the mainstream.
The first form of digital broadcasting, known as digital satellite radio, went live last year, in the form of competing systems offered by XM Radio and Sirius. Their services are still too expensive for me, but they seem to be gaining a foothold: XM predicts that it will have a million subscribers by the end of this year, and General Motors plans to offer the technology in 75 percent of its 2004 models.
Meanwhile, the Federal Communications Commission a few months ago chose a standard for digital broadcasting in the AM and FM bands. The Feds gave the nod to a system developed by a Columbia, Md., company named iBiquity Digital, with backing from ABC, Clear Channel, Viacom and other radio heavyweights.
Known technically as IBOC (in-band on-channel) but now branded as HD Radio, iBiquity's technology promises improved audio quality and a variety of new, interactive services such as on-demand traffic reports, weather alerts, news updates and program information.
What the industry likes about IBOC is that it's supposed to be relatively inexpensive to implement -- the extra equipment required will cost each broadcast station only about $80,000, according to iBiquity -- and unlike satellite radio, it doesn't disrupt existing business arrangements. (Whether that's a good thing from the listener perspective is of course debatable, considering the quality of most of today's broadcast fare, but the decision has been made.)
Listeners will need new receivers to take advantage of HD Radio, and consumer electronics companies by the dozen are lining up to produce them. Broadcasters are apparently planning to switch the service on even before the new sets arrive. According to a recent iBiquity press release, it will go live in 40 markets, including San Francisco and San Jose, within the next few months. By the end of this year, some 300 stations are supposed to be using the technology.
For its part, Microsoft has found yet another use for digital broadcast radio: The whiz-bang wristwatches, alarm clocks, refrigerator magnets and other SPOT ("smart personal object technology") devices Bill Gates has been showing off lately will have tiny FM receivers built in. Using a technology Microsoft has dubbed DirectBand, the little gizmos will get the time, sports scores, weather reports and other types of simple data beamed at "subcarrier" frequencies along the edges of regular FM transmissions.
It's clearly too early to pass judgment on SPOT, but my guess is that it's likely to end up alongside Microsoft Bob, the company's ill-fated attempt to make Windows friendlier by supplying animated guides, in the Gallery of Failures in Redmond, Wash. (For an interesting critique by a better-informed observer, check out two articles in longtime wireless commentator Alan Reiter's Wireless Data Web Log, at reiter.weblogger.com/2003/01/09 and reiter. weblogger.com/2003/01/14.)
AUDIO TAKES TO THE WEB
Aside from these emerging digital-radio technologies, high tech and radio have already combined to produce "Internet radio," the transmission of a digital version of broadcasters' programming, plus broadcast-like audio streams by other content producers large and small, over the Internet.
I've always been fascinated by this phenomenon -- one of the first reviews I did when at the Chronicle in 1998 was of an obscure program that let you tune into such transmissions, before such capabilities were incorporated into mainstream media players and Web browsers. (The program, the name of which I don't even remember, didn't work very well, and it disappeared just a few months after I wrote about it.)
Internet radio doesn't get a lot of publicity -- some would say because its decentralized model and low barriers to entry represent a long-term threat to the big corporate media -- but the movement appears to be picking up momentum, at least in terms of listenership. Most commercial radio stations now seem to stream their programming online, and Internet-only "broadcasters," operating independently, via commercial aggregators such as Live365 or through the free Shoutcast and Icecast systems, number in the thousands.
According to Arbitron measurements, the top-rated Internet radio network, MusicMatch, attracted more than 370,000 unique listeners during the week of Jan. 6-12, and together those listeners spent spent more than 1.2 million hours listening (www.arbitron.com/webcast_ratings/home.htm). On the Shoutcast system (created by AOL-owned Nullsoft) Digitally Imported, a station specializing in such genres as European Trance, Techno and Hi-NRG, tops the charts with more than 2 million listener-hours a month.
Most Internet-radio providers, though, are still struggling to cover their costs, according to Paul Maloney, editor of the Web-based Radio and Internet Newsletter (www.kurthanson.com). The problem, he said, is that advertising is the only source of revenue for most providers, and "the advertising industry just hasn't embraced Internet radio."
"Getting an audience isn't the problem," he said. "The problem is getting some money in. By itself, a bigger audience just means more bandwidth costs."
The Small Webcasters Settlement Act, passed by Congress last fall, averted an immediate threat to low-revenue stations, by allowing them to negotiate alternatives to a prohibitive per-play music royalty plan that had been set by the Copyright Office and Librarian of Congress under the infamous Digital Millennium Copyright Act. Still, the drop-out rate, especially among small stations, remains high, Maloney said.
Despite the financial uncertainties, the variety of audio content -- news, opinion, but especially music -- available online remains mind boggling. (Beyond the big networks mentioned above and the listings at Real.com, AOL's oddly named Radio@Netscape Plus (formerly Spinner) and all the major Web portals, you can find directories of what's available at such sites as www. radio-list.com, www.radio-locator.com and www.web-radio.fm.)
TIVO FOR RADIO
Not least among the benefits of Internet radio is that it's easy to record, which means you can listen to content you're interested in on your own schedule.
For example, my favorite news show, Amy Goodman's "Democracy Now" on the Pacifica network, is broadcast locally, by KPFA, at 9 a.m., when I'm usually on BART headed for the office.
But Pacifica's Los Angeles outlet, KPFK, broadcasts the show over the air and streams it over the Web at 6 a.m. That's a little early for me, so I have my PC set up to wake up automatically and record the show every morning. It creates an MP3 file, which I then copy to my Pocket PC (an iPod or any other MP3 player would also do) and listen to it as I walk to and ride the BART.
For me, that's way cool.
This option, however, isn't included in the major media players -- Microsoft's Windows Media Player, the various RealPlayers, etc. -- and it seems that a lot of people are not aware of the possibility. Last month, in my Mac Q&A column, I answered a question about how to do it on the Mac, and I was promptly swamped with messages from Windows users asking how to do it on that platform.
In fact, there are numerous inexpensive utilities that do the job on the PC -- search any library of downloadable software, such as www.download.com, for "record streaming audio" and you'll get several dozen possibilities. A free, open-source program called Streamripper32 seems to a good job with Shoutcast and some other MP3-based streams.
The other options, mostly shareware priced between $10 and $30, let you capture audio in any format, including RealAudio and Windows Media, and save it in MP3 or other standard formats. Most of them include a scheduling feature,
so you can arrange to have your favorite shows recorded automatically.
I haven't sampled all the alternatives, but I did look at three of them: Applian Technologies' $30 Replay Radio ($30 -- www.applian.com/pc/ReplayRadio),
Blaze Audio's Power Record ($20 -- www.blazeaudio.com/products/powerrecord. html) and High Criteria's Total Recorder ($12 or $36 for the Professional version -- www.highcriteria.com).
All three seemed to do the trick, but I ended up paying for Replay Radio, even though it's the most expensive of the three, just because I found its user interface the simplest and clearest.
I asked RAIN editor Maloney whether the record industry was likely to go after the developers, or even the users, of these utilities -- after all, like Napster and Kazaa, they make it easy for users to collect and share vast libraries of music without paying a penny to copyright holders. With MusicMatch's Artist on Demand system (a feature of its $5-a-month subscription service), you can zero right in on your favorite performers.
Maloney, however, doesn't anticipate any problems, mainly because the files the recording utilities produce are doubly compressed -- first by the server sending out the stream, then by the program recording it. "It's analogous to making a tape from an FM broadcast," he said. "The quality isn't even close to what you get when you make an MP3 directly from a CD."
He must be right, but to my tin ear even these second-hand recordings sound pretty good. Considering the vast variety of content available, and the convenience of automatic recording and time-shifting, I think it all adds up to a very slick new stage in the century-long history of radio.
Tech21 appears every Monday in The Chronicle. Send your comments and tips to Henry Norr at hnorr@sfchronicle.com.
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MORE BIZ / TECH
Norr: Radio reaches the digital age.
Consumers rush to join CD settlement.
NFL doesn't utilize high-tech enough.
Einstein: How to stay connected on downloads.
Wi-Fi alternative looks promising.
When windows turn into TV screens.
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Former outsider Linux goes mainstream
By Nicolas Mokhoff
EE Times
January 26, 2003 (7:40 a.m. EST)
NEW YORK — Last year saw Linux earn credibility as an operating-system contender in servers. If the LinuxWorld conference here this past week is any indication, this year could propel the open-source OS across a spectrum of computing devices — from handheld PDAs to supercomputers.
The diverse platforms shown at the conference advanced the notion that supplementing the open-source code and then retargeting it for the next wave of platforms and applications amounts to a better value proposition, and a stronger basis for development, than reliance on a proprietary OS for each new product category.
"Early and open collaboration with partners and customers is the critical driver of true innovation," Advanced Micro Devices Inc. president and chief executive officer Hector Ruiz said in his Wednesday (Jan. 22) keynote address.
The words echoed a theme expressed earlier this month at the Consumer Electronics Show, where Sony and Matsushita said they will discontinue support for their respective proprietary OSes in favor of a jointly-developed version of Linux for digital consumer products. Samsung, Philips and LG Electronics are said to have signed on to that effort. The impetus behind it, said Paul Liao, CEO at Matsushita Electric Corp. of America, is that "we just can't keep on developing different software for every new product."
Ruiz praised the Linux community's commitment to compatibility and open standards as design objectives that put the customer first. "We in the semiconductor industry cannot continue to operate on a 'business as usual' basis," he said. "I think we have to consider a new business model, one that is more collaborative and more connected."
Gone global
Ruiz cited Linux's global acceptance, describing how companies including Dow Benelux; DaimlerChrysler; Rambler, Russia's most popular Internet portal; and Rackspace, the world's second-largest Web hosting company, use AMD Athlon MP processors running in Linux clusters for mission-critical server and workstation applications.
"Linux is not an exclusive American phenomenon," confirmed Jon Hall, executive director of nonprofit organization Linux International (Amherst, N.H.) and a globe-trotting evangelist for open-source computing. The OS was developed in Finland, Hall noted, and European developers have taken to it "much faster than they would a proprietary OS like Windows."
Ruiz announced beta availability of the 64-bit version of IBM DB2 database software for systems based on AMD's upcoming Opteron processor. "Playing well with others" in the Linux community, he said, has allowed AMD to deliver solutions that maximize revenue opportunities for Linux-based businesses and their customers.
Lauren Flaherty, vice president of marketing for IBM Data Management Solutions, said IBM "is committed to support the efforts of its partners to enhance the scalability and reliability of Linux for the enterprise. The combination of DB2 and AMD Opteron processors will enable customers to maximize their 32-bit applications and take advantage of native access to DB2's 64-bit environment." DB2 was demonstrated at the show running on a server with beta Opterons.
AMD also announced a joint development program with Motorola company Metrowerks (Austin, Texas) to develop a software platform that will allow device manufacturers and application developers to create Linux-based handheld computing devices based on the AMD Alchemy Solutions Au1100 processor. Berardino Baratta, chief technology officer and vice president of Linux solutions for Metrowerks, said that close to 10 percent of the company's engineering efforts are dedicated to the Linux platform — not small potatoes, given that the company is the third-largest OS applications development tool vendor.
AMD is also collaborating with the Numerical Algorithms Group and SuSE Linux to give developers the infrastructure support to equip AMD's 64-bit computing platform with Linux.
All aboard
LinuxWorld served notice that virtually every major computing company is seeking ways to profit from Linux and its underlying open-source philosophy.
Dell Computer Corp. showed server-node configurations made up of its PowerEdge 1655MC blade servers running Red Hat Linux. Up to 84 servers fit in a standard rack. A six-node certified configuration starts at $42,000.
Dell recently formed a network of partners for high-performance computing to deliver servers for specialized requirements in such vertical industries as life sciences, energy and manufacturing. The program marshals the efforts of solutions integrators, consultants, independent hardware vendors and independent software vendors. Founding members include the Cornell Theory Center, Cray, Dell Professional Services, Emulex, Extreme Networks, Fluent, Intel, Microsoft, MPI Software Technology, MSC Software, Myricom, Platform Computing, QLogic, Red Hat, Scali and Turboworx.
IBM announced technology that could help extend the use of open, standards-based Linux and Java software to consumer electronics products, such as PDAs. The company announced a reference design centered on the PowerPC 405LP microprocessor and complemented by power-saving software, including MontaVista Software's Linux Consumer Electronic Edition and embedded middleware from IBM. The solution will initially be available through IBM Microelectronics, with the IBM Engineering & Technology group helping OEMs tailor it to their requirements.
IBM demonstrated the reference platform at LinuxWorld with common office productivity tools downloadable through an Opera Web browser and with MPEG-4 movies played back on the PDA screen. "Our next step is to incorporate speech and handwriting recognition, said Michael McGinnis, program director strategic marketing for IBM Microelectronics' Pervasive Computing group.
MontaVista Software (Sunnyvale, Calif.) announced availability of the first carrier-grade Linux that is fully compliant with the Open Source Development Lab's Carrier Grade Linux Specification 1.1. MontaVista's Linux Carrier Grade Edition 3.0 enhances standard Linux with high-reliability and high-availability features for deployment in carrier-grade environments. It is said to deliver optimized support for telecommunications platforms from leading providers such as Force, IBM, Intel, Motorola and RadiSys. Linux CGE 3.0 advances the company's initial CGE 2.1 product.
HP announced that, starting in February, it will offer Red Hat Linux pre-installed on its XW line of personal workstations. HP also launched Linux Academy, through which professionals within the global HP Services organization will be certified in Linux.
SGI showed the recently announced Altix 3000 servers. Altix is a supercomputer architecture based on Intel Itanium processors and Linux. Entry-level servers with four processors will be available this quarter for $70,000. A supercluster model, with 64 processors (scalable to 2,048), starts at $1,130,000.
OT Loudeye Announces Special Meeting of Stockholders to Approve Reverse Stock Split
SEATTLE, Jan. 24 /PRNewswire-FirstCall/ -- Loudeye Corp. (Nasdaq: LOUD), a
global leader in Webcasting and digital media solutions, today announced that
its Board of Directors has unanimously approved and recommended to
stockholders a proposal that would give the Board of Directors authority to
effect a reverse stock split of Loudeye's common stock.
A special meeting of Loudeye's stockholders will be held on March 11, 2003
to consider the following proposal:
-- An amendment to the Company's Amended and Restated Certificate of
Incorporation, as amended, to effect a reverse stock split of the
Company's Common Stock, $.001 par value per share (the "Common Stock"),
and to grant the Company's Board of Directors the authority, in its
sole discretion, to (i) set the ratio for the reverse stock split at up
to one-for-twenty, or (ii) not to complete the reverse stock split.
Stockholders of record on February 17, 2003 will be entitled to vote at
this special meeting. The affirmative vote of a majority of shares of common
stock will permit the Loudeye Board of Directors to effect a reverse stock
split at a ratio of up to one-for-twenty at any time prior to December 31,
2003. Should a reverse split be approved as well as effected, the actual
ratio will be determined by the company's Board of Directors at an appropriate
level intended to result in a common share price over $1.00 per share, among
other considerations.
Loudeye believes the ability to effect a reverse stock split is in the
best interests of the Company and its stockholders and will help increase
the market price of its common stock above the minimum bid requirement of
$1.00 per share required by The Nasdaq Stock Market, Inc. ("Nasdaq").
Loudeye's common stock is currently quoted on the Nasdaq SmallCap Market.
In order for Loudeye's common stock to continue to be quoted thereon, the
Company is required to comply with various listing maintenance standards
established by Nasdaq.
"This proposed action is designed to improve the price per share of our
common stock and enable us to comply with Nasdaq's listing requirements," said
John T. Baker, Loudeye's chairman and chief executive officer. "We believe a
higher price per share will also serve to broaden the base of potential
investors and enhance the marketability of our common stock for long-term
institutional and individual investors."
"We are highly supportive of the proposed reverse stock split and believe
it is a positive step to maximize liquidity and value for OVP Venture Partners
and other Loudeye shareholders," said Chad Waite, Loudeye board member and
general partner with OVP Venture Partners which through its funds is one of
the largest shareholders of Loudeye.
As of January 15, 2003, Loudeye had approximately 46.4 million shares of
common stock outstanding.
Additional Information and Where to Find It
Loudeye intends to file a preliminary proxy statement regarding the
reverse stock split proposal with the Securities and Exchange Commission, and
it intends to mail a definitive proxy statement to its stockholders regarding
the proposal. Investors and stockholders of Loudeye are urged to read the
definitive proxy statement when it becomes available because it will contain
important information about Loudeye and the reverse stock split proposal.
Investors and stockholders may obtain a free copy of the definitive proxy
statement (when it is available) and all of Loudeye's annual, quarterly and
special reports at the SEC's web site at http://www.sec.gov. A free copy of the
definitive proxy statement and all of Loudeye's annual, quarterly and special
reports may also be obtained from Loudeye by directing a request to Investor
Relations. Loudeye and its executive officers and directors may be deemed to
be participants in the solicitation of proxies from Loudeye's stockholders in
favor of the reverse stock split proposal. Information regarding the security
ownership and other interests of Loudeye's executive officers and directors
will be included in the definitive proxy statement.
About Loudeye Corp.
Loudeye is a global leader in Webcasting and digital media solutions used
by some of the world's leading corporations for training, sales and marketing,
corporate communications, events/conferences and media/entertainment. For
more information, visit http://www.loudeye.com.
Forward-Looking Statements
This release contains forward-looking information within the meaning of
the Private Securities Litigation Reform Act of 1995, including statements
from Loudeye's chairman and chief executive officer as well as from Loudeye's
significant investor and board member; statements announcing a special meeting
of Loudeye's Shareholders on March 11, 2003; statements regarding any outcome
of a vote of a majority of shares of common stock to permit the Loudeye Board
of Directors to effect a reverse stock split at a ratio of up to one-for-
twenty; and statements regarding the actual ratio of the reverse split if the
Board of Directors determines to pursue these actions. These statements are
based on current expectations and actual results may differ materially due to
risks and uncertainties, including the possibility of adverse consequences
resulting from the reverse stock split of Loudeye's common stock; adverse
changes in the market for Webcasting or the distribution of digital media; any
redundancy problems or failures in connection with our hosting infrastructure;
the complexity of our services and delivery networks; failures by third party
telecommunication and network providers to provide required transmission
capacity; our capacity to scale and support third party technologies; and
other risks and uncertainties set forth in our most recent Form 10-Q,
Form 10-K and other SEC filings which are available through EDGAR at
http://www.sec.gov . We assume no obligation to update the forward-looking
statements.
SOURCE Loudeye Corp.
Web Site: http://www.loudeye.com
Man Running Song-Swapping Web Site Fined
The Associated Press, Fri 24 Jan 2003
OSLO, Norway (AP) — A Norwegian man who operated a song-swapping Web site that let users download copyrighted music was fined for operating it, but not for downloading the music.
Frank Bruvik, 24, set up the site in 2001, but took it down after the International Federation of the Phonographic Industry's Norwegian office, the copyright group TONO and music companies EMI, BMG, Sony Music and Universal Music filed suit.
The case marked the first time anyone in Norway was sued for downloading copyright material without the owners' approval. The companies sought 500,000 kroner ($72,460) in compensation for copyrighted music they said was downloaded.
The court ordered Brunvik to pay 100,000 kroner ($14,490) to Sony, EMI and Universal. Each side has a month to file an appeal.
In a 40-page ruling released Wednesday, the district court in Lillehammer, 115 miles north of Oslo, said Bruvik violated copyright law by providing direct links to sources of illegal MP3 music files on the Internet. Brunvik's site was modeled after the site operated by the defunct Napster.
``The court assumes that Bruvik understood that the music files he linked to were posted in violation of copyright laws on exclusive rights,'' the ruling said. ``When he provided direct links, rather than reference links, his responsibility for compensation is not in conflict with free expression.''
The court said the MP3s Bruvik downloaded were for his own use and not profit.
Both sides claimed victory in the test case.
``The most important thing is that Norway has had its first test of the legality of MP3 links. We got proof that passing on (links) is a violation of copyright law,'' TONO's legal adviser, Inger Elise Mey, told digi.no, a technology news Web site.
Bruvik's lawyer, Magnus Stray Vyrje, said the ruling is a vindication for the public's right to download copyright products for personal use.
RIAA site attacked again
By Scarlet Pruitt
January 24, 2003 12:46 pm PT
THE U.S. FEDERAL Bureau of Investigation (FBI) and the U.S. Secret Service are investigating the latest attack on the Recording Industry Association of America (RIAA)'s Web site, which has been offline for days.
"We are working to get our site restored so the press and public can continue to get the information they want and need from the RIAA," spokeswoman Amy Weiss said in a statement released Friday.
Although the RIAA did not say when it first noted the attack, IDG News Service staffers have been unable to access the group's site, at http://www.riaa.org, for at least three days.
The RIAA site has repeatedly come under attack in recent months, apparently due to the group's efforts to stamp out online piracy.
However, Weiss added, "We will continue to fight theft on the Internet and work hard to make sure songwriters, artists and other copyright holders continue to get paid for their work."
Consumers Oppose Congressional Action On Online Copyright Disputes, According To New Survey
Entertainment companies that argue the technology industry should do more to crack down on piracy get little support from consumers who also say they don't trust Congress to develop a workable solution to preventing Internet piracy, according to a new survey of consumer attitudes.
Almost 60 percent of consumers who responded to the survey said Congress' top priority should be protecting consumers fair use right to access, copy and enjoy content they acquire legally. More than 53 percent fear that Congressional mandates intended to limit piracy would only end up making an already complicated problem worse.
About the same number, 54 percent also believe that Congressional mandates might have the unintended consequence of stifling technological innovation and restricting law-abiding consumers access to entertainment content on the Internet.
"Much has been made of Hollywood's powerful lobbying voice in the Digital Rights Management debate. This survey shows that the technology community could greatly benefit from waking the real sleeping giant in this debate: consumers," said Lesley Gold, Managing Partner at SutherlandGold, a marketing communications firm that conducted the survey.
Despite a host of legislation pending in Congress to address online copyright issues, only 18 percent say it's important that Congress make addressing the issue of online piracy a priority this year.
A sizable majority also believes that allowing the entertainment industry to dictate the terms of new laws intended to protect copyright would have highly negative consequences. More than 53 percent of consumers agreed with the statement, "that if allowed to make the rules, the entertainment industry will treat us all like criminals in their attempt to crack down on piracy. Congress has to make sure that new laws protect our rights to use, copy and share content we acquire legally while at the same time cracking down on piracy."
"Constituents appear to be saying that Members of Congress don't have their priorities straight," said Scott Sutherland, managing partner at SutherlandGold. "Clearly, consumers feel protecting their right to access content is a far greater priority than protecting the interests of copyright holders."
The survey was conducted earlier this year and is based on 1,000 responses from consumers who answered an online questionnaire. The survey also revealed a wide generation and technology gap. Younger, more tech savvy consumers feel far more strongly that Congressional solutions would stifle innovation and negatively impact the Internet. Older consumers are more concerned with policing piracy and somewhat more receptive to Congress passing new laws that would protect copyright holders.
Other key findings from the survey include:
Few Consumers Trust Policing Internet to Congress ...
-- Only 4 percent of consumers believe the federal government should be responsible or get actively involved in preventing online piracy. Also,
-- 40 percent said individuals are most responsible for their policing themselves online
-- 35 percent said entertainment companies should do more to protect their content.
-- While only 11 percent said technology companies and Internet Service Providers should do more to limit piracy.
Consumers Want Access to Content
-- 28 percent of consumers said it was important that individuals be able to freely download copyrighted contents such as music or movies without paying for them as long as the content is only used personally and not distributed to others
-- Only 2 percent thought it important to make sure people who steal content online are prosecuted to the fullest extent of the law.
NAB, Future Of Music Coalition To Face Off At Senate Hearing?
Sources close to the situation tell R&R that NAB President/CEO Eddie Fritts and FMC Exec. Director Jenny Toomey are both slated to appear before the Senate Commerce Committee's upcoming hearing on radio consolidation, joining a list that also includes Clear Channel Chairman/CEO Lowry Mays, singer Don Henley and former WRDS-FM/Syracuse owner Robert Short. an NAB representative contacted by R&R confirmed Fritts' scheduled appearance, but despite her group's constant criticism of NAB Toomey may miss the hearing since she's reportedly out of the country; An FMC spokesperson was not immediately available to comment on whether someone else would fill in if Toomey is unable to attend. The hearing, tentatively scheduled for Jan. 30, is slated to be the first in a series focused on the media industry. This one will be simply dubbed, "Media Ownership: Radio." Commenting on the hearing, Sen. Russ Feingold - long a critic of the radio and concert industries - said, "This hearing is an important first step in my effort to pass legislation, which I will be introducing in the coming days, that reduces concentration and cracks down on anticompetitive practices, such as the new pay-to-play system."
Music chiefs step up piracy war
LONDON (Reuters) - Music industry officials on both sides of the Atlantic have vowed to keep up the fight against online music swapping, piling pressure on Internet service providers (ISPs) to police their networks.
The issue of whether Internet and technology companies should be compelled to assist the major music labels in the fight against piracy, which is blamed for slumping CD sales, was headline news this week at the music industry's annual confab in the French resort town of Cannes.
At the conference, Internet executives reacted sharply to comments made by Recording Industry Association of America (RIAA) Chief Executive Hilary Rosen who said ISPs should be held more accountable in monitoring illicit song-trading.
On Friday, Rosen told Reuters the RIAA would continue to work with lawmakers and the industry to root out song traders.
She said the trade body has no plans to develop compulsory licensing arrangements or impose fees on ISPs to recoup sales lost to file-trading. "That would be a dramatic departure (from the RIAA's strategy)," she said.
BATTLE IN EUROPE
In Europe, the International Federation of the Phonographic Industry (IFPI), a global trade organisation, has been waging a war of its own, battling to push forward the Copyright Directive, EU legislation that has stalled at the state level.
If passed, the Copyright Directive would require Internet service providers to play a more vigilant role in the protection of copyright-protected materials. The ISPs have challenged the directive on ground that it puts them in the costly role of having to police their customers.
Only two of 15 EU member countries have ratified the directive. ISPs, telecommunications companies and now manufacturers of hardware devices such as CD-burners, have sought to have protections afforded by the directive limited, to the chagrin of the music industry.
"This directive was the subject of a hard-fought compromise at the EU level between all the players. It is really bad faith that certain parties are trying to renegotiate this directive at the national level," Frances Moore, European regional director for the IFPI, told Reuters.
The IFPI said it faces the biggest opposition in Germany, Finland and the Netherlands.
The recording industry believes it has little time to spare. CD sales are expected to fall again this year, the fourth consecutive year, as the popularity of so-called peer-to-peer (P2P) trading networks such as Kazaa and Grokster grows.
A study released on Friday by U.S. software firm Websense said file-sharing sites continue to proliferate with more than 130 unique P2P applications and 89,000 Web pages dedicated to file-sharing, representing a 300 percent rise from a year ago.
The industry did win a major victory in the United States this week when a federal court judge said telecoms giant Verizon Communications must identify a prolific song downloader, an individual who pulled more than 600 songs per day off file-sharing sites.
In Europe, the IFPI intends to step up pressure on state and EU lawmakers so that national laws are strengthened to curtail downloading practices.
The world's major music companies include Vivendi Universal, Bertelsmann's BMG, EMI Group, Sony's Sony Music and AOL Time Warner's Warner Music.
ADVERTISEMENT
my bad.eom
sky56 it's always better to regret something you HAVE done than something you HAVEN'T done....LOL
Notice 20th Century Fox also not on the list.eom
Next Stop: Free Wireless Broadband?
1 hour, 25 minutes ago
Kimberly Hill, Wireless.NewsFactor.com
Wireless hot spots -- hubs that let PC users access a broadband Internet connection without telephone lines or cables -- are popping up all over the place. But experts predict it will be a long while before wireless broadband is free to all. Obstacles include rapidly shifting business models and a lack of public commitment to the goal.
In the meantime, people in select groups will enjoy free, fast, wireless access to the Internet, and everyone else will have to pay, according to Aberdeen Group analyst Isaac Ro. "There is a growing perception that it will be free if you're the right person," he told NewsFactor.
First on the Block
So far, some college students and professors are among the privileged few. The University of Akron in Ohio is one of the first public universities in the United States to establish a campus-wide, entirely wireless network. CIO Tom Gaylord told NewsFactor that through a partnership with networking equipment manufacturer Cisco (Nasdaq: CSCO - news), the university launched a pilot implementation at a branch campus located in a rural Ohio county in 2000. Next came the law school and, in 2001, the entire main campus.
As part of the project, the university stocked its central library with several hundred wireless-equipped laptops that students can check out. Akron student Ann Donkin told NewsFactor that even though her own laptop does not have a wireless card -- true for many students -- she can use a university machine to conduct research on the go.
Infrastructure Savings
Student and faculty response to unfettered Internet access has been unanimously positive, Gaylord said. The campus computer store is stocking specially priced IBM (NYSE: IBM - news) ThinkPads, he noted, along with wireless cards so that students can equip their own machines.
Although the first implementation was based on the 802.11b wireless networking standard, Akron is currently upgrading its access points to handle multiple bandwidths and connection types -- collectively called Wi-Fi.
As an added benefit, Gaylord explained, the university is using wireless broadband technology to provide Internet access to areas that are not cabled for Ethernet. For example, the study cubes in the main library have no network access and are located in an area where it is difficult to provide enough A/C power. To bring the Web to the cubes, the university installed laptops with dual battery packs and wireless cards. The networking portion of the project -- which involved 200 machines -- cost Akron only US$80,000.
"That's an ROI of 10-to-1 compared to the $800,000 it would have cost to get to the same point with hardwire and electricity," said Gaylord.
Archos MP3 player 3 devices in 1
The Archos Jukebox FM Recorder 20 is billed as the first product to combine an MP3 player, recorder and FM radio with a 20-gigabyte hard disk.
The Jukebox is packaged in a slick 4.5-inch-long by 3.1-inch-wide by 1.2-inch-thick metallic casing.
It sports a graphic backlit LCD screen along with several carefully laid out control buttons, and audio input and output jacks.
This baby can record an amazing 300 hours of CD-quality MP3 music or up to 700 hours of voice recording. Any sound can be recorded via the Jukebox's built-in microphone or plug in an external mike into the unit's input jack. All of the MP3 encoding is done in real time, meaning you never have to waste time converting your audio sound files into MP3 files.
In addition, the Jukebox has a 20-gigabyte hard drive, which means you can use it to store just about any computer data— even Word documents and PowerPoint presentation files. All you have to do is connect the Jukebox to your computer and access it as you would any other hard drive. An icon of the drive will appear when you connect it to your PC or Macintosh.
Connecting the Jukebox to your computer is a snap via its high-speed USB 2.0 connection, which is also downward compatible with the slower USB 1.1 standard. At up to 480 Mbps, you can transfer an hour-long recording in a few moments.
Price is a drawback, however. It retails for $269.99.
— Knight Ridder
Last changed: January 24. 2003 12:56AM
And so it will come to pass with write back/time shifting of radio "events" ....
TiVo Goes 'Beyond the Huddle' With NFL Legend Steve Young
Young Gives Best Berman Impersonation, Discusses His Date With Osmond, Dreams
Of Springsteen on the 50 Yard Line
Funny, Entertaining Look at Football, Celebrity and Life From Former QB
Delivered Exclusively to TiVo Subscribers in Advance of World Championship
Contest
SAN JOSE, Calif., Jan. 24 /PRNewswire/ -- NFL legend Steve Young shows his
witty, laugh-at-life side in an interview that will be delivered this week as
an exclusive pre-Super Bowl package to TiVo subscribers across the country.
TiVo will deliver a Super Bowl Showcase to its subscribers today that
features the interview with Young and a special highlight reel of his career
compiled by NFL Films. The Super Bowl Showcase is the latest in the company's
long running efforts to add to the entertainment experience for its
subscribers. Unlike other network pre-game fare, the TiVo Super Bowl Showcase
is stored on the hard drive so that viewers can recall it for viewing at
anytime.
"The Super Bowl is one of the biggest television events of the year and we
like to augment that experience by adding additional entertaining content that
our viewers can watch in anticipation of the big game," said TiVo CEO Mike
Ramsay.
Young responds candidly and with great fun to a list of entertaining
questions offered by TiVo. Among the highlights of the interview:
His Impersonation of Chris Berman:
This has to be heard to be appreciated.
His Dream Half Time Performer:
His response in two words -- "The Boss." Young said he and his family
usually take time out for chips and dip during the halftime of the big game.
But if Springsteen were ever to appear at halftime, Young says he'd "drop the
Salsa."
His First Brush with Fame:
Young says fellow BYU Quarterback Jim McMahon was the first celebrity he
ever met. But Young said he didn't fully realize how different famous people
can be until his bowling date with Marie Osmond, who wore an evening gown to
the lanes.
His Super Bowl Prediction?
Suffice it to say, Young is coy. But predicts that if the Tampa Bay
offense can continue it's scoring ways, the Raiders will be hard pressed to
compete.
The Super Bowl Showcase featuring Young kicks off TiVo's Super Bowl
offerings. In addition to exclusive content delivered in the Showcase, TiVo
will also be releasing its annual audience measurement analysis that will
demonstrate how viewers use TiVo during the game, and which commercials were
their favorites. The report on TiVo viewership will be released Monday
morning.
"The water cooler moments of the new Millennium consist of discussing how
we watch TV, as much as what we watch on TV," said Ramsay. "TiVo is raising
the bar on entertainment, and evangelizing how this change is impacting
viewers and the television landscape."
About TiVo
Founded in 1997 with the mission to dramatically improve consumers'
television viewing experiences, TiVo is the creator and leader in television
services for digital video recorders (DVR). TiVo's leadership has defined and
inspired the entire category, earning the company patents for pioneering
inventions associated with DVR software and hardware design. TiVo was the
first to deliver on the promise of consumer choice and control over TV
viewing, building a loyal and passionate subscriber base with over 97% of
customers surveyed recommending TiVo to a friend. This enthusiasm has
contributed to overwhelming growth over the past year, and the total
subscriber base exceeds 510,000. TiVo is headquartered in San Jose, CA.
Additional information can be found at http://www.tivo.com.
This release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements relate to, TiVo's business, services, business development,
strategy, customers or other factors that may affect future earnings or
financial results. Forward-looking statements generally can be identified by
the use of forward-looking terminology such as, "believe," "expect," "may,"
"will," "intend," "estimate," "continue," or similar expressions or the
negative of those terms or expressions. Such statements involve risks and
uncertainties, which could cause actual results to vary materially from those
expressed in or indicated by the forward-looking statements. Factors that may
cause actual results to differ materially include delays in development,
competitive service offerings and lack of market acceptance, as well as the
"Factors That May Affect Future Operating Results" and other risks detailed in
our Annual Report on Form 10-K for the period ended January 31, 2002, and the
Quarterly Reports on Form 10-Q for the periods ended April 30, 2002,
July 31, 2002 and October 31, 2002, filed with the Securities and Exchange
Commission. We caution you not to place undue reliance on forward-looking
statements, which reflect an analysis only and speak only as of the date
hereof. TiVo disclaims any obligation to update these forward-looking
statements.
NOTE: TiVo is a registered trademark of TiVo Inc. in the United States
and other jurisdictions. All other company or product names mentioned may be
trademarks or registered trademarks of the respective companies with which
they are associated.
SOURCE TiVo Inc.
Why Microsoft was right about Linux
By Charles Cooper
Special to ZDNet
January 24, 2003, 5:53 AM PT
COMMENTARY--What do you know? Microsoft was right about Linux all along.
Back in 1998, when lawyers for the software company tried to debunk the federal government's monopoly charge against it, they argued that the dynamics of an operating system market were inherently fluid.
That was good for a chuckle.
Then Microsoft's attorneys began to talk about the competitive threat posed by the Linux open-source operating system as proof the government was talking out of its hat.
That brought the house down.
Cynics dismissed the argument as a transparent ploy to convince a doubting judge. The thrashing then being meted out to Microsoft by lead government attorney David Boies came close to constituting a crime against humanity. Any argument was worth a shot, but this one was the equivalent of a "Hail Mary" pass in the waning moments of a game.
However with the passage of years, it's clear that--whatever the original motivation--Microsoft's strategists had more insight into Linux than most of the critics.
Linux on Intel-based computers is now likely to become the dominant platform in corporate data centers, according to a recent report from investment bank Goldman Sachs. That puts even more pressure on Microsoft to persuade Unix users to stick with its Windows operating system on Intel systems rather than move to Linux. (That's no easy feat these days.) Indeed, if it fails to stop the groundswell, Microsoft may be forced to radically rethink its strategy as none of the company's server platform products now run on Linux. One scenario offered by analysts at First Boston has Microsoft switching gears and supporting Linux on key subsystems like Exchange and SQL Server and the .Net framework.
And then there's the IBM factor to consider.
Windows trounced OS/2 in a furious operating systems battle back when George Bush Sr. was president and Lou Gerstner was still busy at RJR Nabisco trying to sell folks more Velveeta and Tang.
Smartly retiring from a contest it had little chance of winning, IBM left the field to Microsoft, which cemented its desktop dominance and emerged as the most powerful software company in history.
There things stood for over a decade, but--F. Scott Fitzgerald aside--there are second acts. In this rematch with Microsoft, Big Blue has the stronger hand, owing to its very public embrace of Linux three years ago.
IBM is bent on making a commodity out of Intel-based hardware with an operating system derived through the open-source process. Its pitch to corporate Unix customers running Sun Microsystems' Sparc or other proprietary chips is that Linux on Intel offers virtually the same performance--but at a far lower hardware price. Once they bite, that then opens the door for IBM to rake in the money selling middleware and services.
If IBM pulls it off, Microsoft risks getting cut out of a lot of corporate business. The various responses out of Redmond suggest that management does not have an obvious answer to the open-source question.
Bill Gates once derided the "Pac-Man-like nature" of the General Public License (GPL) that governs the distribution of open-source code. His trusted associate, Jim Allchin, even suggested it was "an intellectual-property destroyer."
All that played poorly in the press and even worse with customers who couldn't fathom how it was relevant to their business. Microsoft has since dropped the smear campaign in favor of technology comparisons that focus on a discussion of tools, the .Net framework and ways to make a company's developers more productive. Execs also are playing up what they see as the benefits of a tight integration model with a single sign-on, a common management infrastructure and a consistent user experience.
Corporate customers hearing of Microsoft's new company line at LinuxWorld in New York this week won't make up their minds about all this overnight. But with spending still tight, the question of whether to buy an integrated offering or a service solution gets trumped by a simpler consideration: The stuff has to work and not cost an arm and a leg.
And that is simply music to the ears of the penguinistas.
Charles Cooper is the executive editor of commentary at CNET News.com.
Creative likely returned to black in Q2
Thursday January 23, 9:55 pm ET
By Jennifer Tan
SINGAPORE, Jan 24 (Reuters) - Creative Technology Ltd (NasdaqNM:CREAF - News), the world's largest computer sound card maker, is expected to have returned to the black in the December quarter, but its outlook appears fragile as consumer spending founders.
ADVERTISEMENTA Reuters poll of six analysts showed the company posting a net profit of between US$12 million and $16.3 million in the three months ended December 31, 2002, its fiscal second quarter, next Wednesday.
Creative, known for its Sound Blaster sound cards and Nomad JukeBox portable music player, posted a net loss of $5 million, or six cents a share in the first quarter.
The Singapore-based company, whose fortunes are closely tied to the U.S. consumer market, said in late October it expected a 50 percent quarter-on-quarter jump in revenues for the key Christmas quarter of $225-$240 million, and earnings per share of 16-21 cents.
"The million dollar question is how Creative did in the Christmas quarter," said Kim Eng Ong Asia Securities analyst Dharmo Soejanto, who forecast a net profit of $13.7 million.
"U.S. retail sales data for December showed the country suffered its weakest Christmas quarter in many years, and that's going to impact Creative."
Excluding autos and parts, December retail sales in the world's largest economy were flat, confirming consumers had curbed spending, leaving shopkeepers with the most disappointing holiday shopping season in years.
DECLINING TREND AHEAD?
Creative's high-end sound card, the Sound Blaster Audigy, could have suffered dismal sales in the December quarter, some analysts suggested.
"Most consumers were looking for cheaper, bread-and-butter products, and holding back on buying gizmos, so Creative might see its retail channels returning unsold Christmas inventory for the Audigy," said an analyst with a European brokerage, who has pencilled in a net profit of $12.2 million.
Lacklustre PC sales in the last three months of 2002 could also be another dampener, analysts said.
Global PC shipments grew four percent to 38.4 million units in the fourth quarter, according to figures released by research consultancy International Data Corp (IDC).
"We see a declining sales trend for Creative going forward," said Kim Eng's Soejanto, who rates the stock a "sell". "It's hard to get enthusiastic about the company until consumer spending reverses its decline."
Analysts like Soejanto are expecting Creative to post weaker earnings in the January to March quarter, as demand typically slows after the holiday season.
According to Multex Global Estimates, Creative is expected to unveil a net profit of S$52.58 million ($30.36 million) for the year ending June 30, 2003.
Creative shares, which have lost about a third in value over the last 12 months, were unchanged at S$13.10 on Friday morning.
Analysts were divided on whether Creative's stock price would see an uptrend in the coming months.
Some were forecasting a six-to-12 month price target of S$15.50 to S$16.50, but the European brokerage analyst sees the stock sinking to S$8.50 in the same time frame. ($1=1.732 Singapore Dollar)
"I poisoned P2P networks for the RIAA" - whistleblower
By Andrew Orlowski in San Francisco
Posted: 17/01/2003 at 13:00 GMT
"Gobbles", the German hacker who improbably claimed to have infected peer-to-peer file sharing networks and to "0wn" your computer this week, has confirmed that his brag was a hoax. That much, you probably suspected, as Goebbels (as we must now call him) failed to offer a shred of evidence in support of the notion that the RIAA was engaged in widespread intrusion of personal computers.
But meet Matt Warne. He has an interesting tale to tell.
For two years Warne worked for the global version of the RIAA, the IFPI which represents 1500 labels in 76 countries, with headquarters in London. The IFPI's primary mission is to "fight music piracy", and Warne worked with the RIAA and the biggest labels in implementing technologies to document and thwart file sharing. The IPFI co-ordinated efforts to glean detailed information about who was sharing what, and where. The organization, backed by the labels, was responsible for providing detailed evidence to the legal teams fighting Napster, Aimster and mined information about the burgeoning peer to peer networks, such as Gnutella. IPFI is responsible for trawling the world's web, ftp and irc channels and runs the automated system that sends warning letters to ISPs and webmasters.
"We had to act quickly. EMI would ring up ask 'What's this FreeNet?' and want to know how many of their artists were on the network".
Napster provided the first taste for the music industry in measuing the level of file sharing and was a war of attrition, says Warne. IPFI developed a custom version of a program called "Media Enforcer" which grew in sophistication.
"The RIAA were very precise about what they wanted," says Warne. When Napster said it couldn't say what was on its network, the IPFI were able to provide file names. When users scrambled the names (using the pig encoder) and Napster said these were too hard to decipher, the IPFI was able to provide the real names.
Poison Pill
The technologies he worked on stayed on the right side of the law - just about - but Warne's most interesting claim to fame is that he suggested that the networks "poison" the emerging p2p networks with trash.
"I was one of the people who suggested the 'rogue file' scheme on the file sharing services," he told us.
"I suggested that they should put out files with legitimate titles - and put inside them silence or random noise - and saturate the file sharing networks with those files. That did start the poisoning."
The goal was to discredit the networks so that casual users would quickly give up trying to download music.
And so the plan went into action. The IPFI created a computer system that appeared to be many unrelated nodes, a network with many members that in fact resided in one location.
A former record label employee also confirmed this week that the industries do order multiple DSL feeds to one location to simulate a P2P network.
For the IPFI however, the poisoned network grew too expensive to justify. Before he left, says Warne, the IPFI's original poisoned system was closed down. The body wanted to concentrate its attentions on large scale copying outfits.
However, more recent evidence suggests that the technique is being used by major labels in-house, instead, and the sheer quantity of junk files found on the peer to peer networks today - purportedly residing on individual's PCs - points to continuing "poisoning". Why? Because users abort a junk download, or quickly delete a file. The alternative explanation for the persistence of this noise material is that users are extremely inattentive, and that's difficult to believe.
Missing the boat
Warne left the music industry in disgust he says, "because the record industry is stuck in the past," and he vows never to return.
Back in 1997 and 1998, the industry had the chance to develop online music services, he says. It saw what was coming. Which is true: at that time, the major labels were paralyzed by fear of online music and were downsizing accordingly, but refused to alter their business models, or extend into new areas.
"Once Napster came along," says Warne, "people got used to getting stuff for free. They've introduced Emusic but people just ask 'why isn't it free?' If they'd introduced it in 1998, they wouldn't have this problem,' he thinks.
"I've seen how they've destroyed talent. The greatest talent is from independents." He cites Eva Cassidy, and Mariah Carey as examples, who were forced into styles by unsympathetic executives.
So as you can see, the RIAA may not - strictly speaking - be "hacking you back". But the industry is extremely active in many other ways, and unlike so much of the trade press which sees an RIAA denial as the end of the story, their activities are only just beginning to emerge.
Since Monday, we've also received a number of reports of some very curious IP traffic. If you're in a position to do so, can you please check your logs, so we can piece together the rest of this mystery? ®
Fujitsu To Develop Intel-Based Linux Servers
Sparc Licensee To Add Xeon, Itanium Lines; Both Companies To Develop Linux Mainframe OS
By Mark Hachman
Discuss this now (1 posts)
Fujitsu Ltd., which has been the primary licensee of Sun's Sparc architecture, has decided to build a line of Linux-based servers using Intel's line of enterprise processors.
The implications of the agreement will not be apparent for some time. Fujitsu executives said they did not plan to eliminate their UltraSparc-based server lines, but whether the company will phase them out over time is not known.
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"I guess what you could say is that this is good deal for Itanium," said Kevin Krewell, an analyst for In-Stat MDR, the publisher of The Microprocessor Report newsletter. "You know, these guys were a candidate to use the (forthcoming AMD 64-bit) Opteron, and I guess this locks them up for Intel."
Fujitsu, plans to make dual-processor and multi-processor systems using Intel's Xeon processors available by the end of 2004, followed by systems based on future versions of Intel's "Montecito" 64-bit processor by the end of 2005. These Itanium servers will scale up to 128 processors and beyond, according to Intel and Fujitsu executives.
The two companies will work together to develop a version of the Linux operating system for mainframne-class computing, using Intel's developer tools, said Richard Dracott, group director of Intel's enterprise marketing group. By Intel's estimates, the Linux market will be worth $10 billion in 2006, Dracott said.
Update: Intel Adds Dual-Core Chip To Itanium Roadmap
Sub-$3,000 Notebook Uses UltraSparc, Solaris
Sun Expands Linux, Open-Source Offerings
Sun to Ramp Up Support for Linux
Judge Bars Itanium Sales, Then Suspends Order
"It's significant from Intel's perspective, as it represents a further endorsement of Intel-based systems and a growing momentum behind the Intel architecture," Dracott said.
The announcement is a dramatic shift for Fujitsu, which has enjoyed unusually close ties to Sun and its microprocessor offerings. Fujitsu was even one of the few companies that signed on to license the picoJava, an embedded Java coprocessor which Sun later discontinued.
However, Fujitsu executives said they had no plans to swap out the company's established Sparc line for a series of products based upon Intel's architecture.
"We are fully committed to developing to Sparc processors through the years to come," said Tak Katayama, general manager of enterprise products and group vice-president of Fujitsu's global marketing group, in an interview. "That strategy won't change. We will protect customers' assets."
However, Katayama said developing and deploying Linux on the Itanium architecture made the most sense.
"We see significant demand asking us to deliver Linux-based mission critical systems," Katayama added. "We consider Intel Itanium the most suitable for a Linux implementation."
Intel's Montecito will be the first Itanium-class processor deployed, Katayama said. Although the two companies have disclosed plans to ship Itanium-based servers with 128 processors, the Linux development effort will take into account several future generations of Intel processors, Dracott said. Montecito, as Intel executives disclosed recently, will use two discrete processor cores on a single die and will first appear in 2005, Intel executives have said.
Sun's UltraSparc IV, due in the second half of this year, will also contain dual-core capabilities, Sun executives have said.
Although Sun executives couldn't be reached for comment, the company issued a statement. "Itanium is the most expensive disaster in the history of high tech and to hitch your wagon to it is asking for it," said Shahin Khan, chief competitive officer at Sun. "It's a big risk."
Fujitsu's venture with Siemens, Fujitsu-Siemens Computers, already sells a line of low-end Primergy servers, which primarily use a single Pentium 4 processor. But Siemens' PrimePower mid-range UNIX servers use the Sparc64. Fujitsu's GlobalServer GS8900, uses 16 processor clusters, each containing up to 16 of Fujitsu's CPUs, for a total of 256.
In October 2002, the processor roadmap shown by Fujitsu executives only extended through 2002, out through the current generation of Fujitsu's Sparc64 V. At the Microprocessor Forum then, Fujitsu said the core would be compliant with the Sparc V9 architecture, but did not disclose clock speeds.
IBM demos Linux reference platform for handhelds
By Nicolas Mokhoff
EE Times
January 22, 2003 (11:41 p.m. EST)
NEW YORK — IBM Corp. demonstrated a Linux-based reference design for PDA manufacturers at LinuxWorld here Wednesday (Jan. 22) as part of its effort to move open standards-based Linux and Java into consumer electronics, personal digital assistants and other handheld devices. The move comes on the heels of a similar PDA reference design that Advanced Micro Devices Inc. and Metrowerks announced at LinuxWorld.
IBM's design includes IBM's PowerPC 405LP microprocessor, MontaVista Software's Linux Consumer Electronics Edition, and embedded middleware from IBM. It will be available initially from IBM Microelectronics. IBM's Engineering & Technology Services operation will help manufacturers modify the reference design to meet their specific requirements, the company said.
"The reference design we are showing at LinuxWorld reemphasizes IBM's commitment to open standards and Linux and provides companies with a robust and efficient way to extend their enterprise to consumer electronic products," said Lisa Su, director of PowerPC and emerging products at IBM Microelectronics.
Michael McGinnis, program director strategic marketing of IBM Microelectronics' Pervasive Computing group, said the reference design's combination of hardware and software can reduce processor and memory power consumption by as much as 50 percent, which translates to an estimated 20 percent power savings at the system level. "The algorithm we use allows us to power down after loading each video frame — the MontaVista kernel keeps very good watch on actual work that is being done and reacting when power is not required," McGinnis said.
Aimed at supporting both enterprise and consumer applications, IBM's software includes a J2ME certified Java run-time platform for devices, as well as support for multimedia, data connectivity, speech recognition and handwriting recognition. "The next application for the reference design is to incorporate speech recognition for a PDA," McGinnis said.
To meet the needs of enterprise markets, the reference design also includes IBM's Service Management Framework, DB2 Everyplace, Tivoli Device Management and other software to support life cycle management and enterprise connectivity. Third-party software includes Trolltech AS' Qtopia mobile office applications suite and Opera Software's Web browser.
Elements of the software are available now, with an integrated platform scheduled to be made available in the second quarter. "We are targeting an under-$1,000 price point," McGinnis said.
Japanese manufacturers back off proprietary OSes
By Junko Yoshida
EE Times
January 23, 2003 (4:18 p.m. EST)
LAS VEGAS — Japanese consumer electronics manufacturers are backing away from efforts to push proprietary operating systems into wider use and are turning instead to open-source OSes, specifically Linux. The retreat underlines the failure of proprietary OS strategies for consumer electronics.
Sony Corp. and Matsushita Electric Industrial Co. made it clear in separate interviews at the recent Consumer Electronics Show that they no longer plan to invest in maintaining their once-prized homegrown OSes: Aperious by Sony, and Pie by Matsushita.
The companies also revealed that industry-wide initiatives they once pursued eagerly, such as HAVi or the Java TV application programming interface, are no longer top priorities. Support for such consumer electronics alliances are dwindling, and the leaders of those alliances are now back-pedaling.
Sony's and Matsushita's alliance to develop a consumer electronics version of Linux indicates their changed stance, and other CE manufacturers are expected to join their effort. "A number of major consumer electronics manufacturers such as Samsung, Philips and LG Electronics, except for Toshiba, are joining this open platform initiative," said Kunitake Ando, Sony's chief operating officer, at the Consumer Electronics Show here.
Development costs and interoperability problems have given CE manufacturers a new impetus to develop a unified software platform, the companies said. Today's patchwork of protocol stacks and APIs have done a poor job and manufacturers are no longer willing to supporting so many OSes. "We just can't keep on developing different software for every new product," said Paul Liao, chief technology officer at Matsushita Electric Corp. of America.
"As a [consumer] system becomes more complex, functions are converging, and boundaries of existing boxes are blurring," said Leon Husson, executive vice president of consumer business at Philips Semiconductors. That leaves CE manufacturers little choice but to select a real-time OS capable of offering "an open platform," he said.
Efforts to develop a common OS is "a step in the right direction for major consumer electronics engineering," Husson said. But he cautioned that it would be a slow, ongoing process.
End to a dream
Consumer electronics companies could have opted for a closed architecture such as Microsoft's Windows OS, but many Japanese companies are wary of paying "a disproportionate amount of money" to an OS supplier, Husson said. The turn to an open-source OS marks the end to a dream Japanese companies nurtured for many years of creating a proprietary OS that would dominate the living room and dictate the development of next-generation digital consumer electronics.
Sony and Matsushita have already assembled a team of engineers to design a CE-oriented version of Linux. Still, the initiative will face a number of hurdles. One is uniting thousands of software engineers behind a single platform. Earlier this year, MontaVista Software Inc. introduced the Linux Consumer Electronics Edition, aimed at mobile gear and CE products.
Is Microsoft Spread Too Thin?
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Microsoft (Nasdaq: MSFT - news) has been extremely successful, if not entirely sportsmanlike, in establishing a dominant hold over its core market. However, the company's ventures into new territory generally have had less stunningly positive outcomes. And when a software company starts to offer watches, one has to wonder if it is starting to lose sight of its core business.
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In fact, many industry observers are wondering whether Microsoft is stretching beyond its capabilities. Certainly, the company has deep enough pockets to manage its disparate business ventures, but does it have sufficient expertise and imagination?
Is Microsoft Slowing Down?
The company recently announced that it will issue a stock dividend for the first time in its history. While stockholders are busy celebrating the news, some industry observers think the move may indicate the company is slowing down.
For example, Forrester Research analyst Ted Schadler told NewsFactor that Microsoft is starting to hit the profit wall. "If you plot their revenue growth, it's definitely matured," he said. Not that Microsoft's profits are anything to sneer at. "It's been low teens, mid-teens ... not bad for a company that size."
Still, the company faces shareholders' expectations of robust growth. Since it already has dominated its core markets, Schadler said, Microsoft will have to seek new revenue streams to keep growing, "asking every customer to double their investment in Microsoft."
Even Microsoft recognizes that its profit margins are shrinking. At the 2002 Microsoft Financial Analyst Meeting, the company's CFO, John Connors, warned shareholders that profits will trend downward in the future.
"It will not be possible for the company to move forward and grow our diverse businesses, maintaining our historical gross profit margins," Connors said. "This is probably a year in terms of absolute change in percentage that is as extreme as you'll see, due to us launching Xbox (news - web sites), but we will see our gross profit margin tick down over time."
The Blocking Game
This predicted decline in margins is not surprising, considering that some of Microsoft's efforts make little sense from a pure profit standpoint. Financially, the company stands to gain little, particularly in the short term, from Xbox or MSN. In fact, of its seven business areas, only three are profitable. Specifically, the company makes money on Windows, Microsoft Office and server offerings, but it loses money on MSN, Xbox, mobile and business solutions.
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Rob Enderle, a research fellow with Giga Information Group, told NewsFactor that Microsoft ventured into these unprofitable areas to protect itself against incursions from competitors. "It's a large game of Monopoly -- a game Microsoft plays incredibly well," he said.
For example, Schadler said, MSN is central to Microsoft's business. "It's not a moneymaker, but a part of their consumer reach. They have … dumped a lot of money in that business so they can establish that relationship to the consumer." He noted that whenever a customer signs up for MSN, Microsoft has prevented another service provider from forging that relationship.
The Wireless Gambit
Another area that Microsoft is eyeing is the wireless market. Unlike the game console or ISP (Internet service provider) market, the wireless sector is still evolving. Philip Marshall, director of wireless technologies at the Yankee Group, told NewsFactor that this relatively slow evolution may work against Microsoft. "They're going after a market that is really very new," he said. "Therefore, it's going to take a lot of time before it creates the market they're looking for."
While Microsoft and other wireless companies wait for the mobile market to pick up, Marshall said, there is "an opportunity for the incumbents [in the wireless market] to sort of lock up the environment" and keep the software giant at bay.
He added that it is hard to predict how Microsoft will ultimately fare in the wireless arena. "It's too far in the future. Basically, it's the incumbents' business to lose."
Is it Paranoia If Everyone Is Out To Get You?
Indeed, it is no secret that companies in the computing industry and adjacent markets do not harbor warm and fuzzy feelings for Microsoft. But is it a stretch for the company to branch into the console, wireless and ISP businesses in order to protect its Windows and Office mainstays?
Not according to Enderle. "Xbox is a good example," he said. "Sony was going after a PC displacement strategy. They made it very clear that the PlayStation 2 (news - web sites) was going to completely displace the PC." The goal of the Xbox was "to have a hedge against Sony (NYSE: SNE - news). It's successful even if it never makes a profit."
Enderle added that Microsoft also has been successful partly because Bill Gates (news - web sites) has been "incredibly blessed by competitors that are more inept than he is."
But is the company paranoid? Enderle said it is, at least to some degree. "It's always been paranoid. If you're the guy at the top of the heap, most of your time is spent ... stomping the other guys down."
He also noted that Microsoft's position as top dog is tied to Gates' tenure at the company. "They've been pretty smart so far, but historically you're not at the top indefinitely."
Let private sector fight piracy, tech firms say
Thursday January 23, 3:28 pm ET
By Andy Sullivan
WASHINGTON, Jan 23 (Reuters) - Technology companies said on Thursday they would fight government efforts to require copyright protections in computers, CD burners, and other products and vowed to work out a solution on their own.
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High-tech firms including Apple Computer Inc. (NasdaqNM:AAPL - News), Microsoft Corp. (NasdaqNM:MSFT - News), Dell Computer Corp. (NasdaqNM:DELL - News), and Intel Corp. (NasdaqNM:INTC - News) said that while they were committed to developing copy-protection methods, they did not want Congress to dictate what those methods should be.
Movie studios and other media companies have lobbied Congress to stop rampant digital copying of their works, and in some cases have accused Internet providers and other technology firms of profiting from piracy.
South Carolina Sen. Ernest Hollings introduced a bill last year that would have required technology firms to include anti-piracy features in their products, setting off alarm bells across the industry.
Hollings has not decided whether to reintroduce the bill this year, an aide said.
At a hotel near the White House, tech firms, trade associations and several consumer groups said they had formed a group called the Alliance For Digital Progress to fight the Hollings bill or any other similar efforts.
"The answer to piracy lies not in politics. It lies in private-sector cooperation," said Fred McClure, a former official with the Reagan and first Bush administrations who now serves as spokesman for the group.
The movie industry's top lobbyist issued a statement saying that the two sides have been in private discussions and objected to the coalition's adversarial tone.
"We are not the enemy. We are not at war with the IT community," Jack Valenti, president of the Motion Picture Association of America, said in regard to information technology companies.
Many of the same companies and trade associations, including the piracy-fighting Business Software Alliance, announced a similar agreement with recording companies last week.
A spokesman for the Recording Industry Association of America declined to comment on the new coalition.
Also absent from the agreement were consumer-electronics manufacturers, who have pressed Congress to bolster consumer "fair use" rights to make limited copies for personal or academic use. A spokesman for the Consumer Electronics Association said it was in discussions with the coalition.
McClure said the coalition would not tackle fair use or other copyright issues.
The argument comes from the fact that e.Digital is geared toward the business of secured systems (a la IFE). Our DRM integration capabilities are a perceived strength. I can't really see us making (or convincing others to mfg.) a device GEARED toward making UNSECURED high quality digital copies of the celestial jukebox as broadcast in real time. I can see us using our strength in making a closed or DRM contained system that directs the user to a portal from the broadcasting company to purchase that product at a later date.
No not really it's only faster after their servers have cached your first visit as I understand it.
cheers
SSI, yes it does. I used it in their initial trial and it really works pretty good particularly for going back to the same sites over and over again a la IHUB or RB. I am losing my DSL shortly (DirectTV) and I haven't convinced myself (or my wife) that we "must have" DSL just yet so I may go back to using Artera and a software internet answering machine called CallWave.
cheers
lickily, I highly doubt that the recording features will be above 56 kbps or so i.e. "FM quality" but I'll bet that they might also incorporate a watermark to prevent sharing. This is just too obvious an application for the OEMs to have ignored IMO.
Microsoft plans CD technology that will protect copyrights
SEATTLE (AP)Posted 1/23/2003 9:35 AM — By Christmas 2003, some recording companies expect to be selling compact discs wrapped in technology from Microsoft and other companies — in an effort to protect both copyrights and the bottom line.
But depending on how restrictive the record labels choose to be, consumers may not be buying the CDs. And ultimately, Microsoft's latest move to help drive adoption of its newest version of Internet audio and video software risks falling flat, analysts say.
Microsoft's new CD copyright technology is expected to be released in final form in the next few weeks. Already, it has been getting some attention from record labels who are eager to stop unlawful copying of CDs — a practice the industry contends costs it billions of dollars a year. EMI Recorded Music and Universal Music Group plan to test the technology, with EMI planning to offer some CDs with new copyright protections later this year.
But the companies are largely keeping quiet about how they will use Microsoft's new Windows Media Data Session Toolkit or other products from companies including Microsoft rival RealNetworks.
"To most consumers, they won't even realize there is a limitation," said Jay Samit, EMI's senior vice president for digital distribution, although he declined to give specifics on how EMI may use the technology.
Microsoft's new technology allows record labels to create a "second session" on CDs. The CDs are like any other music CDs, except they also include files — formatted in Microsoft's Windows Media technology — that consumers can download onto computers for playback or copying onto other devices or blank CDs. The toolkit would leave decisions on how many times a consumer could copy a song or CD up to the recording company.
"It's up to the record labels themselves to decide what rules they want to use," said Michael Aldridge, lead product manager in Windows Digital Media division. "You want it to be compelling for consumers in order for it to be successful, not a turn off."
So far, copyright protections have been more of a turn-off, analysts and consumer advocates said.
Copyright protections have already resulted in such problems as preventing consumers' fair use of music, such as blocking their ability to copy songs from a CD onto personal digital devices, said Fred von Lohmann, a senior staff attorney for the Electronic Frontier Foundation. He said other efforts, including Microsoft's, will likely cause the same frustrations.
"It's all going to drive people to use alternate means to get a hold of the music that they legitimately purchased," he said.
Consumers want the ability to create their own CD mixes, copy (music) onto portable devices and other flexibility, said Michael Gartenberg, director of research at Jupiter Research. "It's going to be a very, very uphill battle to get consumers to willingly adopt this, even with the compromises Microsoft has made."
And getting people to turn to Microsoft's technology over the dominant format for digital music — MP3 — is going to be a tough sell, said Richard Doherty, of Seaford, N.Y.-based Envisioneering Group.
Microsoft, despite its dominance on the desktop, is in a catch-up role, he said. Not only do consumers turn to MP3, the "lingua franca" of digital media, he said, but Seattle-based RealNetworks already launched its own digital rights management technology earlier this year and supports multiple formats including MP3.
"They (Microsoft) need and they crave larger consumer adoption of Windows Media Technologies," he said, comparing Microsoft's bid to be adopted by record labels to the story of Dolby Laboratories, whose sound technology has over the past few decades won the company lucrative deals with Hollywood studios.
There can be a balance, said Dan Sheeran, vice president of media systems for RealNetworks. "The burden is on us, the tech companies and record labels, to make this consumer-friendly and respectful of rights holders," he said. "When we get there, the consumers are going to be just fine."
DVD Group To Promote Recording, Music Options
By Joseph Palenchar
TWICE
1/22/2003 12:38:00 PM
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Los Angeles - The DVD Entertainment Group will focus its efforts this year on promoting awareness of DVD-Video recording and DVD music.
DVD music comprises the DVD-Audio format and concerts and music videos on DVD-Video discs.
Meeting during CES, the group's board of directors agreed to develop programs to educate consumers about the advantages of recording video onto DVD 'while protecting prerecorded content from unauthorized use,' the group said. The group also said it will create trade and consumer outreach programs 'to communicate the benefits of music on DVD.'
Joe Stinziano, Sony's home video GM, will chair the DVD Recording Committee, which will be co-chaired by Toshiba marketing director Jodi Sally. The DVD-Audio committee will be chaired by John Beug, Warner Strategic Marketing's senior VP of film/video production and marketing.
More than 2,000 DVD-Video music videos are available along with about 300 DVD-Audio titles in the U.S. and more than 500 worldwide, the group said. Most DVD-Audio titles are priced comparably to CDs, the group added.
Delphi, Eclipse, Sanyo Get Aggressive
By Amy Gilroy
TWICE
1/20/2003
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LAS VEGAS— Several existing players in the car audio arena are planning to aggressively step up their market presence. The companies, including Delphi, Sanyo and Eclipse, all showed some of the most advanced products in car audio to be seen at International CES this month.
After launching the leading XM product to date, Delphi is planning other aftermarket products including a hands-free car communications center for shipping in May, and a navigation system called SkyNav, which will share the same basic design as the XM SkyFi system. Also expected is a cartridge-based HDD system slated for June or July shipping.
Delphi's OEM division showed at CES a prototype broadband radio that can operate over 3G and 4G cellular networks as well as other broadband networks. It allows users to access 4,500 Internet radio stations, said a Delphi spokesman. It also lets users stream MP3 files from their computer and stream video from Internet TV stations to rear-seat video systems.
Delphi also showed a prototype OEM DVD-Audio system developed in conjunction with Polk Audio, and two Bluetooth-enabled car radios that allow voice control of cellular phone calls through the unit. It also showed a production-ready HD radio. One of the Bluetooth systems is expected to be offered in a Saab 9-3 in the United States by mid-year.
Delphi general director of Mobilemulti Media Dr. Robert Schumacher said, "I look at the aftermarket as a way to help us get products out faster. My goal is to get the OE side on a 12-month cycle."
As part of its effort to re-establish itself as a leading brand among 12-volt and A/V specialists, Eclipse announced an aggressive product offering featuring DVD-Audio, the industry's first hard-drive recorder, the first head unit with built-in digital pre-amp and new lower price points.
In addition, Eclipse appointed industry pioneer Rich Coe to the position of senior engineer and Matt Overpeck as eastern regional sales manager. This follows last year's return of industry veteran Ray Windsor as sales and marketing VP.
Among the new products unveiled at CES was a top-of-the-line CD8053 CD tuner with a digital pre-amp. The unit is one of the first to offer a 24-bit audio D/A converter and 16-volt balanced line output with 55 ohm impedance, said the company. It also has a "harmonizer" to restore dynamic range to compressed music such as MP3. Suggested retail is $549.
Eclipse is also showing the industry's first outboard hard-drive recorder that can record from any source including radio, satellite radio and a CD changer. The HD1213 is expected to ship in February at a suggested retail price of $499.
The company also showed an aggressively featured DVD head unit with motorized 7-inch screen, DVD Audio, 5.1 DTS, Dolby Pro Logic II and all-digital processing, and it dropped the price of its leader model CD player to a competitive $199.
Sanyo said it is preparing an aggressive push into autosound. The company showed a full line of products at very competitive price points, including an MP3-ready head unit at $149 and a basic head unit with CD-R and CD-RW capability, 40 watt x 4 power and two pairs of RCA line-level outputs and front auxiliary at $119. The company also expects to offer a 16GB HDD head unit that can record off the radio or CD player late in 2003 at about $700.
Massive Crowds Jam Vegas For CES
By Steve Smith and Bob Gerson
TWICE
1/21/2003 9:35:00 AM
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Las Vegas -- Ignoring lackluster holiday sales and a sluggish economy, 116,687 attendees flocked to International CES, here, topping 2002’s 97,962 attendance and approaching 2001’s 126,000 number, according to the show organizer’s the Consumer Electronics Association (CEA).
While the amount of attendees was surprising to many, it wasn’t to CEA president/CEO Gary Shapiro, who predicted as much in his opening morning remarks: '[CES] is almost certain to be 2003’s largest annual trade show of any type in America.'
The event featured more than 2,283 exhibitors, as well as a record 25 technology and product showcase pavilions, and will attract more than 10,000 international visitors from 128 countries, making CES 'the World Cup of Technology,' according to Shapiro.
Manufacturers and retailers who TWICE spoke with during CES were generally relieved that 2002 was over and that the new year has the potential to be a good one on the business side.
CES attendees took the long view and acknowledged the promise and excitement of such categories as HDTV and new types of video displays, recordable DVD decks and camcorders, home networking, mobile electronics, broadband, wireless technologies, digital imaging and a myriad of other products.
And the show drew top names in technology and government, from perennial CES eve keynoter, Microsoft’s founder Bill Gates and first time show keynoter Sony Corp. president Kunitake Ando, among several top execs who spoke at the show, to FCC Chairman Michael Powell.
He topped a list of more than 100 government officials who attended CES to discuss such issues as copyright, spectrum management and broadband policy.
Despite the nation’s economic recession, Shapiro said, industry factory sales last year were up an estimated 3.7 percent to a record $96 billion last year, and is forecast to approach the $100 billion mark in 2003.
The ongoing growth, Shapiro said, is being driven in part by three major technological areas: wireless, connectivity and digital.
Wireless, he stated, accounts for nearly $9 billion in hardware sales. While some feel wireless has hit a plateau, 'I believe this sector will grown in fits and starts as more people rely on it for many uses beyond voice transmission,' Shapiro said.
The current area where digital 'may be having the most immediate and decisive impact,' is video, Shapiro said, adding 'we sold over 2.5 million' HDTV units last year, well up from the projection of 2.1 million.'
Amazon Seeking Early Adopter Devices
By Alan Wolf
TWICE
1/21/2003 10:22:00 AM
LAS VEGAS — Taking advantage of its inherently upscale and tech savvy customer base, Amazon.com will begin emphasizing early adopter products within its CE offering this year.
CEO Jeff Bezos said here during CES that the company plans to make a "big push" in 2003 to offer cutting-edge products that represent a huge leap in technology or are "qualitatively or quantitatively different by a factor of 10."
Bezos noted that his company’s emphasis at the show was to seek out new electronic exotica and to work with manufacturers on launch dates in order to allow online afficionados to pre-order the products.
"We have the world’s largest concentration of early adopters and can communicate with them," he said, citing Amazon’s proprietary personalization technology. Amazon will create an "early adopter score" for target customers, which would help determine which products would be included in tailored offers.
Amazon’s VP of consumer electronics Frank Sadowski cited Samsung’s new hard disk Digital Gadget and networking products for home entertainment as the kind of early adopter devices the e-tailer would seek.
Amazon’s high-end emphasis will also carry over into TV. Although HDTVs by Samsung, Zenith and Toshiba already represent "the majority" of Amazon’s television sales, Sadowski said it shipped its first plasma unit last month and would expand its selection of flat-panel displays and HD brands this year.
In other Amazon news, Bezos said that the company is talking to vendors about selling direct to consumers through its site, and has already conducted tests of the business model in which orders would either be drop-shipped by Amazon or fulfilled by the manufacturer.
He added that the company’s partnerships with brick-and-mortar retailers are "working out well," and described the percentage of Amazon’s CE sales via Circuit City, Target, Office Depot and J&R Music World as "substantial."
Day Trader Who Posted Fake Lucent Release Sentenced
Wednesday January 22, 5:59 pm ET
By Colleen DeBaise
NEW YORK -- A Houston day trader convicted of posting a phony Lucent Technologies Inc. (NYSE:LU - News) profit warning on the Internet during the height of the dot-com boom was sentenced to the two months in prison he has already served.
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Fred Moldofsky, 46 years old, who now holds a $30,000-a-year job at a Texas refinery, could have received a six-year prison sentence. The Manhattan U.S. attorney's office argued that the fake press release, posted in March 2000, sent Lucent's shares tumbling by 3.6% and harmed investors.
In handing down the sentence, U.S. District Judge Robert P. Patterson noted Mr. Moldofsky's otherwise clean criminal record and the fact he didn't make any money off the bogus release.
The judge imposed a $4,000 fine, though, to send a message that "you can't have people posting messages on the Internet willy-nilly." The judge also ordered Mr. Moldofsky to be confined to his home, when not working, for a period of six months.
Mr. Moldofsky, who wore jeans, sneakers and appeared unshaven, told Judge Patterson he didn't realize he was breaking any law when he posted the fake release on Yahoo Inc.'s (YHOO) message board. "I deeply regret what happened," he said. "There was never any intent to defraud investors."
Mr. Moldofsky had been detained for two months following his arrest. He was convicted of one count of securities fraud in March 2001.
In asking for a lenient sentence, his court-appointed attorney, Elizabeth Fink, said the posting was more of a "crazy anti-social act" and pales in comparison to the past year's corporate scandals.
"What are you going to do with Andrew Fastow? Give him the death penalty?" she asked, referring to Enron Corp.'s (ENRNQ) former chief financial officer who has been indicted on fraud charges.
Lucent's stock was trading at about $62 in March 2000 when Mr. Moldofsky posted the messages. The company has struggled with profitability in recent years as the telecom industry has declined. Its shares were at $1.81 at 4 p.m. EST Wednesday on the New York Stock Exchange. Regulators also are investigating the company's accounting practices.
-Colleen DeBaise, Dow Jones Newswires, 212-227-2017, colleen.debaise@dowjones.com
Web Vulnerability Puts Internet Users, Sites At Risk
By David Worthington, Freelance Writer, special to ExtremeTech January 22, 2003
Discuss this now (1 posts)
Editor's Note: This story comes to ExtremeTech from David Worthington, one of the principals at Beta News, and details a potentially damaging threat to web servers worldwide. This threat was discovered by application security research firm WhiteHat, and is detailed in David's story below. White Hat Security was started by a former CTO from Ungermann-Bass, and an Information Security officer at Yahoo!.
After months of extensive research, San Jose California-based WhiteHat Security has unmasked a flaw in one of the Web's cornerstone protocols which places all e-commerce sites, as well as scores of Internet users, in jeopardy.
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The attack, dubbed Cross-Site Tracing (XST), involves a method whereby a programmable engine or common client side scripting language, such as JavaScript, accesses and obtains Web authentication credentials on a target system regardless of how well the information is stored and protected. This in turn can be used by a hacker to assume the identity of a victim on an array of sites ranging from Web mail, to online banking, to auction sites.
Popular client-side technologies, including Flash, VBScript, and Java, may also be utilized if they contain the right kind of cross-server security hole. All of the above can bypass an SSL connection under the auspices of XST.
"This is even more powerful than a "man in the middle" attack, which is foiled through the use of strong SSL encryption," said David Freund, a senior analyst at Illuminata. Freund continued, "But since this cross-server trace exploit uses the client browser itself to obtain its desired information, it's more of a "man on both ends" attack--the browser and server communications over the Internet are secure, but together they provide information to the malicious site unencrypted."
Audio File Vulnerability Threatens XP Systems
Two Vulnerabilities: Solaris & RealNetworks Helix Server
Linksys Vulnerabilities Linger
Tracing Down a Hunch
A flaw in the TRACE request, a rarely used portion of the HTTP standard akin to a "ping," makes XST possible, broadening its scope well beyond buggy Web browsers, and painting a sobering picture: all Web servers have TRACE switched on by default. The affected servers power the Web's day-to-day banking transactions and fuel the engines of e-commerce, as well as more mundane tasks.
Immediately upon receiving the TRACE command, any Web server will simply echo back what is sent to it. Although this was originally intended to be a harmless and obscure function, the HTTP header information bounced back incorporates sensitive elements such as cookies and credentials for accessing protected sites. When used in tandem with scripts, information once deemed totally secure by network architects is left out in the open.
WhiteHat's work began when Internet Explorer 6 Service Pack One was released on the heels of Bills Gate's ballyhooed trustworthy computing initiative. The browser update introduced a protective security measure known as "httponly" to ward off emerging cross-site scripting (XSS) attacks.
The addition of this feature spawned research at WhiteHat to investigate further, leading to today's disclosure after attempts to mitigate the issue.
XST lies in close quarters with cross-site scripting (XSS) vulnerabilities – a relatively new form of attack that has plagued efforts to secure the Web. Such attacks entail a process wherein an unauthorized script is passed to a Web server for execution even if the server is secured against running such scripts. Cross-site tracing opens the floodgates to overwhelm existing Web security with XSS attacks.
According to WhiteHat CEO Jeremiah Grossman, XST, first confirmed and disclosed by the CERT Coordination Center December 10th of last year, allows for the ability to, "XSS just about anything, from just about anywhere," including some Web-enabled DSL routers and printers. The impact on aligned wireless devices such as cell phones, PDAs, and even coffee shop access points is unknown at this time.
Millions at Risk
By simply visiting a rogue Web site or by reading an HTML formatted e-mail coupled with an active component; users can become the unwitting victims of malicious hackers. For the benefit and safety of users, increasingly paranoid email clients are less likely to allow script execution: even if the exploit is spread via worm technology. On the downside, the XST attack is browser-agnostic, meaning users of both Internet Explorer and Netscape are equally at risk to the same vectors of attack.
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Software suites offered to subscribers of popular ISPs also fall prey. AOL's popular Web access software has surpassed 34 million customers, and is currently based upon Internet Explorer technologies. While MSN dial-up and broadband subscribers weigh in at nearly 7.7 million strong.
In another turnabout, Web servers for single sign-on services such as Microsoft's Passport.com and AOL Time Warner's ScreenName service currently respond to the TRACE request. Single sign-on consolidates a broad array of usernames and passwords into convenient "one basket" solutions that often carry varied personal information between affiliated sites.
If compromised, every site used by a single sign-on customer ends up in the hands of a hacker barring re-authentication. For instance, a customer buys CDs at site A and a book at site B, the potential is that both sites would be susceptible to online fraud.
Audio File Vulnerability Threatens XP Systems
Two Vulnerabilities: Solaris & RealNetworks Helix Server
Linksys Vulnerabilities Linger
WhiteHat and Vendors Scramble for a Fix
Leading providers of Internet services such as Microsoft have long advised customers to "avoid promiscuous Web browsing." However, the client side fixes are ostensibly a small part of what it will take to shore the Internet's lines of defense against this very serious attack. The TRACE exploit is part of the HTTP specification, making a fix all the more difficult.
WhiteHat has assembled recommendations that go well beyond patching browsers for domain restriction bypass flaws. These include suggestions on the server side such as: disabling the TRACE request on all production and development Web servers; having vendors update Web server packages to disable TRACE out of the box; and complete disclosure by vendors to inform customers how to disabled TRACE on existing servers.
Microsoft's URL Scan, included in the most recent Service Pack to IIS, can be used as an effective deterrent to XST, locking down IIS servers. Still, URL Scan is not the sole solution--Apache requires a source code modification, and Netscape's iPlanet must be edited to remove unwanted request methods.
To protect the client side WhiteHat suggests marking ActiveX controls supporting arbitrary HTTP requests as unsafe, and implementing greater security mechanisms disallowing unauthorized HTTP requests in technologies such as Flash, Java, and VBScript. Disabling active scripting is also a helpful option despite yielding undesired impact on the functionality of Websites.
Since notification, vendors have scrambled to abate this entirely new method of attack. However, ExtremeTech was unable to obtain comment on the steps being taken by vendors to protect customers by press time. AOL, Apache, and CERT/CC all declined to comment. Microsoft and Netscape were still looking into the issue at deadline.
In summation, Illuminata's Freund chimed in, "as the folks at WhiteHat Security and elsewhere have been saying for years, the browser and related plug-in vendors must strive to improve the security of their products, especially where protocol-level access is concerned."
He continued, "closing all of the holes in all of the combinations of browsers and plug-ins would solve this problem. But unless and until that day comes, owners of production web servers would be well-advised to disable the TRACE function on their systems."
A detailed whitepaper is available on the WhiteHat Security Website.
OT Microsoft loses showdown in Houston
By Byron Acohido, USA TODAY
HOUSTON — The people who run this city recently heard a familiar pitch from Microsoft: Sign up for a multiyear, $12 million software licensing plan or face an audit exposing the city's use of software it hadn't paid for.
Microsoft demonstrates new projects and upgrades as it tries to boost sales.
By Elaine Thompson, AP
Microsoft warned that the city could be slapped with stiff fines for using any Microsoft software for which it could not produce receipts.
Scores of other businesses and public agencies, facing a similar dilemma, have agreed to the new licensing deals — a linchpin of Microsoft's growth strategy.
Not Houston.
The nation's fourth-largest city rebuffed the offer and has embraced an obscure competitor called SimDesk. SimDesk delivers software over the Internet at a fraction of the cost of Microsoft's Office, a software suite used on 94% of America's office personal computers. Houston is giving SimDesk to tens of thousands of residents and businesses, free. And it has begun using SimDesk as an Office substitute on at least half the city's 13,000 PCs. (Comparison: SimDesk vs. Office)
SOFTWARE POWER
Microsoft's dominant Windows operating system software and its dominant Office software suite remain key to Microsoft's profitability with high profit margins...
Q1 20031 Profit margin
Windows 85.3%
Office 78.8%
... as its revenue growth slows
Year percentage growth2
1992 50%
1993 36%
1994 25%
1995 29%
1996 49%
1997 32%
1998 28%
1999 29%
2000 16%
2001 10%
2002 12%
1 — fiscal year; 2 — year to year
Source: Microsoft
Houston's moves could have a profound impact not only on Microsoft, but on the computing industry. If SimDesk proves to be a cheaper, workable Office alternative here, it could help achieve what Microsoft's rivals and antitrust busters could not: puncture Microsoft's monopoly and give tech buyers more choices.
"It's very cool technology," says retired software analyst Peter Lowber, who led the Gartner research firm's review of SimDesk last fall. "It works."
SimDesk isn't perfect. It lacks many sophisticated features of Office, such as the ability to customize spreadsheets, do slide presentations or work databases. The glaring shortfall: It has no track record, making it risky for companies hesitant to bet on unproven technology.
Yet, right behind Houston, Chicago, the nation's No. 3 city, recently launched a pilot program putting SimDesk on 150 PCs in 18 community centers. And about 50 public agencies in 27 states are checking out the technology.
To get this far, SimDesk weathered one of the messiest political firestorms Houston has seen in years. Over the course of eight months, SimDesk would be taken to the brink several times. A city official's career would implode and a big city mayor's vision would be fulfilled.
In the end, Microsoft would land in an unusual position: on the defensive. And big tech buyers would have a test to watch. If Houston can make SimDesk work, could they? "I see this thing exploding," says Michael Chernoff, a Houston city computer analyst and tech project manager.
It took an improbable chain of events to position Houston and SimDesk to tilt at Microsoft's windmill. A chance encounter drew together entrepreneur Ray Davis, fast-talking city official Denny Piper, now awaiting trial on unrelated embezzlement charges, and Houston Mayor Lee P. Brown, who was looking to leave a legacy.
What began as Brown's goal to use SimDesk as an affordable way to give poor residents access to basic computer functions broadened into a plan to use SimDesk as a cheaper alternative on some city PCs, too.
Davis, 47, a Houston-based tech entrepreneur, set out in 1999 to make common software — word processing, spreadsheets — available affordably over the Web. Not an original idea. Tech giants from Microsoft, with its .Net strategy, to IBM and Sun Microsystems are working on the same thing.
Davis raised $12 million to fund a small band of developers, and SimDesk was born a year later. Its breakthrough was in finding a way to control millions of simultaneous PC users via a single computer server. Its potential attracted Robert Knowling, who had recently resigned as CEO from struggling Covad Communications. He invested in Davis' start-up, then named Internet Access Technologies. He saw it as a .Net precursor and became CEO to try sell SimDesk to America Online to help AOL battle Microsoft. Davis also brought in business consultant Wendy Haig, 46, ex-daughter-in-law of former secretary of state Alexander Haig.
But the dot-com collapse ran deep, and cash for acquiring promising technology was disappearing. Negotiations with AOL failed, as did talks with Yahoo, AT&T and others. SimDesk's options were thinning.
On a flight leaving Houston, a discouraged Haig found herself, by coincidence, seated next to Piper. Then 39, Piper had hit Houston the year before like a West Texas tornado. The new chief information officer had wrested control of a $100 million tech budget, consolidated 14 e-mail systems and revamped the city's Web page into an award winner.
Haig showed Piper a SimDesk news column and jokingly chided him for not knowing about technology in his backyard. They exchanged business cards.
Bullied by Microsoft?
Piper had other things on his mind. Awaiting him in Houston was a new contract Microsoft wanted him to sign. The software giant had recently announced a plan, referred to as "Software Assurance," to get more companies and agencies to upgrade to Office and other software every two to three years instead of a more typical four years or more. Almost 50% of companies upgrade software every four years or more vs. 23% every two years, said a 2002 survey of 1,500 companies by The Yankee Group research firm.
Microsoft set fall 2001 as a deadline for customers to sign up. Those who did would pay $239 to $380 per copy for Office XP, the latest version.
Those who passed would pay $479 a copy when they did upgrade.
Microsoft says the plan cuts software costs and improves service. That's especially true for companies that upgrade every three years — typically bigger companies. But research firms Gartner and Yankee say the plan will raise costs for companies that upgrade less often, usually medium and smaller ones.
With no viable Office alternatives, some companies, like the 25-member Clendon Feeney law firm in Wellington, New Zealand, felt bullied.
"Microsoft gets nice, steady cash flow from their big users, and then they get the real cherry on the cake when all the businesses who choose not to upgrade now have to go out and buy at full price later," says managing partner Craig Horrocks.
Microsoft also sent letters to 500 school districts in 30 states giving them 60 days to produce receipts accounting for every copy of Microsoft software being used. Failure to do so could result in an audit and penalties, the letters warned. In the same envelope came a sales brochure about the new licenses.
Microsoft says it prohibits audit threats and did not consider such letters threats. Sales reps are encouraged to make customers aware of options, the company says. But 6% of 1,400 worldwide corporations surveyed in 2002 said they had been threatened with an audit if they didn't sign up for a new license, says researchers Yankee and Sunbelt Software. Another 26% said Microsoft alluded to the possibility.
Customers proved so recalcitrant that Microsoft was forced to push back the sign-up deadline three times, finally to August 2002, after which quarterly revenue shot up a robust 26% from the year before as customers signed up. Microsoft "really damaged its relationships with a lot of customers who perceived this as a money grab," says Paul DeGroot, software analyst at research firm Directions On Microsoft.
Houston finds SimDesk
Houston was one of the unenthused customers. Office 97 and Office 2000 were in wide use on city PCs. To upgrade to Office XP would mean acquiring higher-powered PCs, too. "We'd be paying for something we wouldn't be able to use," Piper says.
So Piper decided to follow up his meeting with Haig. He checked out SimDesk and was impressed. He arranged a meeting between SimDesk and Mayor Brown. Piper's idea: test SimDesk on public PCs in libraries. If it worked, the city could pay for it by using SimDesk on some city PCs, too.
Piper also theorized that by storing files on SimDesk's server, instead of on individual PCs, city workers could get to them anywhere via the Internet. The city wouldn't need new PCs and could slash spending for Office. Piper estimated savings of $1.6 million the first year and $7.1 million a year indefinitely if SimDesk replaced Office on 50% of city PCs.
Brown latched onto the benefits for low-income citizens, small businesses and civic groups. "My interest has always been to bridge the digital divide in a way that pays for itself," says Brown, a former Clinton administration drug czar.
A week later, the first copies of SimDesk were loaded on 470 computers in 37 branches of the Houston library. As long as SimDesk appeared designated for low-income users, and the city was experimenting with it for free, SimDesk posed no threat to Microsoft.
SimDesk wows users
That changed when Piper began to move ahead with plans to use SimDesk on city PCs.
When Piper brought the SimDesk proposal — a three-year, $5 million contract for the library PCs and 50% of the city PCs — to the city council in May 2002, Councilman Bruce Tatro, a frequent Brown critic and former accountant, opened fire. He contended cheaper alternatives were available and expressed doubt workers could use SimDesk to do city work.
"We had a dot-net start-up company with no track record, no customers, providing us with an unproven product," says Tatro. "The risk for the city was huge. We were being asked to beta test untried software."
Tatro's argument might have swayed the majority, had SimDesk flopped. Instead, during nine months of the pilot program, more than 30,000 users had written and stored resumes, school papers, legal statements, poetry and other files on the SimDesk server. They couldn't do complex data sorting or many other chores Office does well. Even so, lines formed at the library's SimDesk terminals. Civic leaders rallied behind it. "SimDesk lowers the barriers for the low-income community," says Brian Stevens, executive director of The Telecom Opportunity Institute, a non-profit that guides at-risk youth.
Despite Tatro's criticism, a council subcommittee voted 6 to 5 to put the contract before the full council.
Microsoft says it was misled
That got Microsoft's attention. Microsoft sales rep John Haines and his manager, Andrew Wise, traveled to Houston from their Austin offices. They asked council members to delay voting on the SimDesk contract for 18 months, council members say.
Haines and Wise said Microsoft was unfairly left out of the loop on the contract bidding process, initiated shortly after the library test got underway.
Haines complained to Tatro and other council members, they say, that Piper misled him by not spelling out that the city was looking for an Office replacement. Microsoft spokeswoman Stacy Drake, in a recent interview, called the proposal process "controversial and questionable." She would not be more specific. Haines declined interview requests.
City officials say it is a contractor's responsibility to analyze bid requests, which usually don't specify that a product or service will replace something else. More than 20 companies studied the bid request. Six attended a pre-bid conference, city records show. Microsoft was not among them. Only SimDesk submitted a bid. The proposal called for a suite of desktop software for a variety of sites as well as on "up to 15,000 desktop computers."
Piper denies Microsoft's allegations. Some council members, in turn, were upset by Microsoft. "They (Microsoft) took it for granted they had the best software in the world and everybody's just going to buy it," says Councilman Carroll Robinson.
Cicely Wynne, an aide for Councilwoman Annise Parker, who met with Haines and Wise, says the 11th-hour lobbying "was not a smooth move by Microsoft. It was very late in the game, and they were caught with their computers down."
Tatro says he met several times with Haines and Wise, and maintains an arm's-length relationship. "I weigh their input just like I would from any other expert source, " says Tatro. "Microsoft has played no part in my pursuit of terminating this contract. It's just not a good piece of software. It is a bad, bad deal."
Before the final vote, Davis had to refute allegations, submitted anonymously on a now defunct Web site devoted to city politics, that SimDesk stole computer code from another software company, Citrix. Tatro raised the allegation in public council discussions. He backed down after Davis offered to produce Citrix officials to refute the accusation.
On June 5, the council approved the SimDesk contract, 8-7.
Two days later, Piper announced his resignation to take a higher-paying job as chief technology officer for San Diego County. Council members Parker and Ada Williams, who voted for SimDesk because of Piper's assurances that the city would save money, said in interviews they felt duped when he resigned.
But Piper didn't last long in his new job. Shortly after Piper arrived in San Diego, Tatro alleged that he had rigged the bidding to assure a SimDesk win. That triggered an investigation by Houston's Inspector General, who found the allegations groundless. The county District Attorney, in a separate probe, examined Piper's financial records and stumbled into evidence that Piper may have embezzled $200,000 from his previous employer, Reliant Energy. On Dec. 11, Piper was indicted on felony theft charges and jailed. He has since been released on bail and is awaiting trial. He has not entered a plea.
Microsoft, city count software
To replace Piper, Mayor Brown turned to Richard Lewis, a former Houston finance director. The contrast was acute. Piper was the shake-it-up outsider; Lewis the consummate insider.
Microsoft had earlier proposed shifting the city to a three-year, $12 million contract for all Microsoft software, including Office. Soon after the council approved the SimDesk contract, Haines revived the offer. Haines approached Lewis' deputy, Coy Baskin. According to Baskin, Haines pointed out that the Business Software Association, an industry group co-founded by Microsoft, could levy penalties of up to $150,000 for every unlicensed user of any Microsoft product. Baskin says he took that as a friendly reminder. "I don't feel he ever threatened me."
But word spread that Microsoft could audit the city's software use. "It was general knowledge from the department heads on down that Microsoft was putting pressure on the city to try to stop SimDesk," says Chernoff, the Houston tech project manager.
While not an audit, Haines produced data purporting to show the city owed Microsoft $1.1 million for software he said was being used illegally by city workers, Lewis says.
Like many companies and organizations, Houston had haphazardly acquired software over the years. Each city department had several ways to acquire, deploy and track it.
Microsoft's Drake insists that Haines was engaged in a routine "inventory review" unrelated to SimDesk. Such reviews "are really a cooperative process to ensure accuracy and clarity relating to the licensing of our software," she says.
Lewis decided to do his own count of Houston's software. Discrepancies soon cropped up. Microsoft's data showed the public works department to be short 252 Office licenses. But the city's check revealed it had 135 more Office licenses than it needed.
By Microsoft's count, another big department, the library, looked to be short 450 Office licenses. But Houston rounded up documentation covering all of those copies, including 111 donated by Microsoft Chairman Bill Gates' charity foundation.
Houston said it owed Microsoft, at most, $500,000.
Haines responded with two new contracts, both for less than the original $12 million, Lewis says, although neither side will release details.
Microsoft is checking Houston's count. Lewis hasn't indicated interest in Microsoft's revived offers and says he's committed to the SimDesk deal. "If we owe Microsoft anything, we're prepared to pay," he adds.
SimDesk faces long road
SimDesk's future is far from certain. Distribution to Houston residents and businesses is planned next month. Chicago is seeking grants to extend SimDesk to libraries and schools. Proposals for similar rollouts exist in Denver and New York.
Brenda Hopkins, operations manager in Houston's finance department, has used SimDesk for several months. She says it was easy to learn and use. "It meets all my needs," she says.
Gartner tech analyst Mark Margevicius sees Houston and Chicago as aberrations. He says big tech buyers won't switch to SimDesk because it is so unproven. Gartner says other fledgling Office rivals, the free OpenOffice and StarOffice, backed by Sun Microsystems, have a better chance against Microsoft.
Davis says he isn't aiming at Office yet. Springing off Houston, he's peddling SimDesk as a low-cost way for cities to spread computing to welfare moms, students, workers and small-business owners. He has raised another $38 million and has enough funding to last the year with no more new contracts. He's engaged computer maker Unysis as a marketing partner. Lou Waters, former CEO of waste giant Browning-Ferris Industries, recently replaced Knowling as SimDesk's CEO. SimDesk now has 100 employees.
Eventually, Davis hopes, SimDesk will draw corporate customers. "We can't afford to go toe-to-toe with Microsoft," says Davis. "So we have to wait until the business comes to us."
OT RealNetworks Creates Industry's First End-to-End Open Source Media Delivery System with Release of Helix DNA Server Source Code
Over 10,000 Developers Join Helix Community Since July
RealNetworks Public Source License Receives OSI Certification
Rob Glaser Webcast Presentation and Live Developer Chat Starts at 11AM PST
Today at http://www.helixcommunity.org
LinuxWorld, NEW YORK, Jan. 22 /PRNewswire-FirstCall/ --
RealNetworks(R), Inc. (Nasdaq: RNWK), the global leader in Internet media
delivery, (Booth #363), today announced the third source code component of the
Helix(TM) platform, the Helix DNA Server, is now available to software
developers through the Helix Community at http://www.helixcommunity.org. With Helix
DNA Server, developers for the first time have source code access to a major
end-to-end media delivery platform, consisting of producer, server and client
components. Helix DNA Server is the core source code of RealNetworks' Helix
Universal Server, the 9th generation, multi-format digital media server that
thousands of webcasters already use to deliver content on the Internet.
RealNetworks also announced that more than 10,000 software developers have
joined the Helix Community since its launch in July, and that the Open Source
Initiative (OSI) has certified the public source license used by the Helix
Community.
"Today we deliver on the commitment we made in July to create a complete,
open media delivery platform and source code community," said Rob Glaser,
founder and CEO, RealNetworks, Inc. "With 10,000 members and proven
foundational technology, the Helix Community is ready to take flight!"
Helix DNA Server source code will enable developers to build multi-format
products for live and on-demand streaming, web collaboration, mobile media
delivery, in-home streaming, and many other applications. Helix DNA Server
streams MP3, RealAudio(R) and RealVideo(R). RealNetworks intends to add
support for MPEG-4 after the MPEG-4 systems license terms have been released
by the MPEG-4 licensing body, MPEG LA. Developers can create extensions for
other media types such as Windows Media and QuickTime, or they can license
these extensions from RealNetworks through the Helix Community. The Helix DNA
Server is available for AIX, HP-UX, Tru64, FreeBSD, Linux, Solaris, Windows NT
and Windows 2000 operating systems.
Video testimonials supporting the Helix DNA Server from Cisco, HP, and Red
Hat are available at http://www.helixcommunity.org
Helix DNA Server is the third release of source code into the Helix
Community. In October, RealNetworks released the Helix DNA Client source
code, which enables developers to build playback applications that support any
format. In December, RealNetworks released the Helix DNA Producer, which
enabled developers to build encoding applications that support any format.
The Helix platform has already received wide industry support from the likes
of Cisco, HP, IBM, Network Appliance, nCUBE, Nokia, Oracle, PalmSource,
Pinnacle Systems, Red Hat, Sun Microsystems, Symbian, Virage, Volera and many
others.
Helix DNA Server Features
The Helix DNA Server offers a robust source code base for developing
digital media delivery products including:
-- 9th generation media server
-- Industry standard streaming media protocol and transports including --
RTSP, RTP, SAP and SDP
-- Live and on-demand broadcasting
-- Native MP3 support
-- RealVideo and RealAudio codec/file format support *
-- Administration, monitoring and logging
-- Full client authentication support, such as for pay per view services
*Available for free under the RPSL, included in the RCSL royalty for
commercial distribution.
Helix DNA Server Licensing
The Helix DNA Server will be licensed under both a public source license
and a commercial community source license. Both licenses are free of charge
for research and development use. The public source license has no royalty
for use or distribution; the RealNetworks Community Source License (RCSL)
includes a $500/unit royalty for commercial use of the Helix DNA Server with
RealAudio and RealVideo support.
RealNetworks' Public Source License (RPSL) has been certified by the Open
Source Initiative (OSI), a non-profit corporation dedicated to the management
and promotion of the open source community. This certification is a part of
the OSI Certified Open Source Software certification mark and program.
"RealNetworks has crafted a license which meets the rules and standards of
the OSI Certified Open Source Software certification program," said Russ
Nelson, vice president, Open Source Initiative. "We recognize RealNetworks in
achieving this milestone and look forward to great open source contributions
from the Helix Community."
About Helix
Helix is the open multi-format digital media platform. The Helix platform
consists of source code developed by RealNetworks over the past nine years for
the creation, delivery and playback of digital media, as well as a set of
interfaces for building media-enabled applications. With over 10,000 members,
the Helix Community uses this source code to build media-capable products with
industry-leading technology, intellectual property and commonly used
interfaces. The Helix Community offers source code of the Helix platform under
two source licenses, the RealNetworks Community Source License and the
RealNetworks Public Source License -- available at http://www.helixcommunity.org.
RealNetworks has also released a family of products built on top of the Helix
platform, including the Helix Producer, Helix Universal Server, Helix DRM and
RealOne(TM) Player.
About RealNetworks
RealNetworks, Inc. is the global leader in Internet media delivery. It
develops and markets software products and services designed to enable users
of personal computers and consumer electronic devices to send and receive
audio, video and other multimedia services using the Web. Consumers can access
and experience audio/video programming and download RealNetworks' consumer
software on the Internet at http://www.real.com. RealNetworks' systems and corporate
information is located on the Internet at http://www.realnetworks.com.
NOTE: RealNetworks, Helix, RealOne, RealAudio and RealVideo are
trademarks or registered trademarks of RealNetworks, Inc. All other
trademarks are the property of their respective owners.
SOURCE RealNetworks, Inc.
Web Site: http://www.real.com
OT Major Enterprises and Service Providers Worldwide Embrace RealNetworks' Helix Universal Server for Multi-Format Digital Media Delivery
Enterprises, Service Providers, Government and Education Institutions
Including Boeing, Harvard University, Freeserve and MasterCard License the
Helix Universal Server
LinuxWorld, NEW YORK, Jan. 22 /PRNewswire/ --
RealNetworks(R), Inc. (Nasdaq: RNWK), the global leader in Internet media
delivery, (Booth #363), today announced that leading service providers,
enterprises, government and educational institutions worldwide have licensed
the Helix(TM) Universal Server to enable high-performance streaming of multi-
format content. The Helix Universal Server, which drastically reduces the
cost of digital media delivery by streaming all major media formats including
RealAudio(R), RealVideo(R), Apple's QuickTime, MPEG-4, MP3 and Windows Media,
is based on the Helix DNA Server source code that was released to the Helix
Community today (see separate release).
"Whether for corporate communications, distance learning or external
broadcasting, the Helix Universal Server provides the feature and performance
that our customer needs," said Dan Sheeran, vice president, Media Systems,
RealNetworks, Inc. "These customers are embracing the Helix Universal Server
because it gives them what they need: the delivery of all media formats and
applications through a single product."
Service Provider Support:
"With over four million unique users, managing our streaming services
effectively is imperative for us," said John Gisby, managing director of UK-
based Freeserve Portals. "Content is key to our growth, but only profitable
if the media delivery can be made cost-effective. With the Helix Universal
Server we are able to provide up to four times the performance at a lower cost
than the separate server equivalents. This drastically cuts the management
workload."
Other leading service providers who have licensed Helix Universal Servers
include Akamai, AT&T Mexico, Avantel, Cable & Wireless, EsMas.com, Geoline
Communications, JStream, Speedera, Terra-Lycos, Trama Promocoes, Tokyo
Telecommunication Network Co. Inc. (TTNet) and Yahoo!Broadcast.
Enterprise Support
"MasterCard's collaboration with RealNetworks has enabled new
communications channels for us, both to employees and external audiences,"
said Linda Locke, Vice President of Communications, MasterCard International.
"We appreciate the high quality and performance that RealNetworks technology
provides."
Fortune 500 companies such as Boeing, BMW Group, Fujitsu, Hewlett-Packard
Mexico, MasterCard and NEC have also licensed the Helix Universal Server from
RealNetworks.
Government and Education Support
Government agencies and educational institutions deem the use of leading-
edge technology at a reduced cost as a top priority.
"Here at Texas A&M University, we use Helix servers to stream our various
conferences and course content to our graduate, undergraduate and continuing
education classes. Now that Helix supports all the major streaming formats, we
can give our customers whatever they want without the hassle of maintaining
different operating systems distributed across multiple servers," said Aaron
Brender, director of Internet Media Services, Texas A&M University. "This
also allows us to write applications making it less complex for clients to
manage their multiple media formats. Helix takes a great deal of the "fear
factor" out of future expansion. It has loads of scalability and redundancy
features that can be incorporated in practically any network environment."
In addition to education institutions, government agencies have also
licensed the Helix Universal Server, such as Indiana's Department of
Education.
"For the Indiana Department of Education, streaming media plays an
essential role in communicating messages of school accountability and
performance not only to school personnel, but to the general public as well,"
said Mike Huffman, special assistant for technology, Indiana Department of
Education. "The Helix Universal Server provides the best of all worlds. It
allows us to serve media, both live and stored, and reach users in their
environment, whether it is RealNetworks, Windows Media or QuickTime formats.
We have been using streaming media for nine years to get the message across to
citizens of the state. The Helix Universal Server provides a welcomed Linux-
based solution that gets the job done."
Other universities and government agencies and institutions who have
licensed the Helix Universal Server include California State University-Long
Beach, Harvard University, NorthWestern University, Universidad Anahuac,
Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM),
Universidade de Sao Paulo, Universidade Federal do Rio Grande do Sul, United
States Army, United States Navy, NASA and the National Institute for Standards
and Technology (NIST).
The Helix Universal Server is built on the revolutionary Helix DNA
platform and provides the highest level of flexibility and extensibility of
any digital media server available today. With support for more than 55 media
types, including RealAudio, RealVideo, MPEG-4, Windows Media and QuickTime,
the Helix Universal Server offers a substantial cost savings to enterprises
and content delivery networks. RealNetworks is the only company that offers
an end-to-end redundant system -- with built-in redundancies between encoder
and server, server and server, and server and client -- ensuring superior
consumer expenses. Advanced server features include live stream convergence,
forward error correction between servers, unicast and multicast splitting and
broad server operating system support such as AIX, HP-UX and Tru64, FreeBSD,
Linux, Solaris, Windows NT and Windows 2000.
About Helix
Helix is the open multi-format digital media platform. The Helix platform
consists of source code developed by RealNetworks over the past nine years for
the creation, delivery and playback of digital media, as well as a set of
interfaces for building media-enabled applications. With over 10,000 members,
the Helix Community uses this source code to build media-capable products with
industry-leading technology, intellectual property and commonly used
interfaces. The Helix Community offers source code of the Helix platform under
two source licenses, the RealNetworks Community Source License and the
RealNetworks Public Source License -- available at http://www.helixcommunity.org.
RealNetworks has also released a family of products built on top of the Helix
platform, including the Helix Producer, Helix Universal Server, Helix DRM and
RealOne(TM) Player.
About RealNetworks
RealNetworks, Inc., based in Seattle, is the global leader in Internet
media delivery. It develop and markets software products and services
designed to enable users of personal computers and other consumer electronic
devices to send and receive audio, video, and other multimedia services using
the Web. Consumers can ACCESS and experience audio/video programming and
download RealNetworks' consumer software on the Internet at
http://www.real.com. RealNetworks systems and corporate information is
located on the Internet at http://www.realnetworks.com .
NOTE: RealNetworks, RealOne, RealAudio, RealVideo and Helix are
trademarks or registered trademarks of RealNetworks, Inc.
SOURCE RealNetworks, Inc.
Web Site: http://www.real.com