Starcraft 2 next month

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It took a good day of calls and emails, but Blizzard just got back to us about the rumor floating around that Starcraft 2 will be announced next month during their World Wide Invitation in Seoul, South Korea.

According to a Korean website, StarCraft 2 is being developed in 3D with a new race and lots of changes for existing units. The site went on to say that additional details would be revealed during Blizzard's WWI on May 19th in Seoul.

When reached for comment today this was Blizzard's official response:

We do intend to announce a new product at the Worldwide Invitational next month in Korea, and we appreciate the enthusiasm and interest in getting an advance look at what that will be, but players will have to wait until May 19th to find out more. Also, we have a very strong connection with the characters and settings of StarCraft, and we do plan to revisit that universe at some point in the future, but we don't have anything new to announce in that regard at present.

So that's a yes on a StarCraft 2, eventually, and a yes to a product announcement next month. The only question now is are they one in the same. Mouse Pads

Congress may loosen noose on internet radio

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A bill introduced in Congress today could nullify the new rates set by the Copyright Royalty Board (CRB) which advocates say would put webcasters out of business.

Rep. Jay Inslee (D-WA) and Rep. Don Manzullo (R-IL) have headed the "Internet Radio Equality Act," which aims to stop the controversial March 2 decision which puts royalty of a .08 cent per song per listener, retroactively from 2006 to 2010 on internet radio.

Advocates have dreaded the CRB ruling, which they say could raise rates between 300 to 1200 per cent for webcasters. Earlier this month, the CRB threw out an appeal by commercial webcasters, National Public Radio and others to review the new rates and postpone a May 15 deadline for the introduction of the royalty schedule.

If passed, today's bill would set new rates at 7.5 per cent of the webcaster's revenue— the same rate paid by satellite radio. Alternatively, webcasters could decide to pay 33 cents per hour of sound recordings transmitted to a single user.

"The illogical and unrealistic royalty rates set by the CRB have placed the future of an entire industry in jeopardy," said Jake Ward of the SaveNetRadio coalition. "This bill is a critical step to preserve this vibrant and growing medium, and to develop a truly level playing field where webcasters can compete with satellite radio."

The bill would also reset royalty rules for non-profit radio such as NPR. Public radio would be required present a report to Congress on how it should determine rates for their internet streaming media.

Dell founder maybe rethinking of Dell's marketing strategy

Slashdot It! Michael S. Dell, the chairman and chief executive of Dell, who built his business by selling direct to his customers, is now thinking about changing the way the company markets its computers.

It is the first time that Mr. Dell or any other senior executive has publicly conceded that the business model that was crucial to the company’s success could — and should — be altered. Until now, the company responded with an adamant no when Wall Street analysts or customers asked whether the company would consider other ways of selling.

While Mr. Dell’s memo was short on specifics, he also told employees, “We will continue to improve our business model, and go beyond it, to give our customers what they need.”

As Dell faced slower sales and increased competition, it experimented with minor variations of the model. For example, late last year it opened a showroom in a Dallas mall that displays, but does not sell, computers, printers and TVs. The products still had to be ordered for delivery.

Mr. Dell took back the responsibility of running the company in late January in an effort to reinvigorate slowing sales. He put a new management team in place with some promotions and by hiring from outside. And while he encouraged employees to start thinking of new ways of doing business, he stopped short of discussing the basic business model.

He suggested that Dell team up with an existing electronics retailer to become the exclusive supplier of PCs and printers to that chain.

The Dell memo signals that the company is preparing to shift toward more full-fledged retail operations. Mr. Dell disclosed that the company is putting in place new manufacturing and distribution models in the United States and overseas. The plans are being overseen by Michael R. Cannon, the former chief executive of Solectron, a big electronics maker, whom Mr. Dell hired in February.

The direct sales model had been the key to Dell’s success. Taught in business schools and imitated by companies in other industries, the model enabled Dell to be the low-cost producer of computers and dominate an industry known for falling prices and low profit margins.

The key was building the computer systems only after they were ordered by phone or over the Internet. Having no retail stores enabled the company to lower its costs. Building to demand also allowed it to avoid products that were not in demand. And Dell could avoid an oversupply of parts inventory while it got price reductions from high-volume advance orders for parts.

Dell’s direct model came under pressure as the market for PCs shifted to notebooks from desktops last year. It is harder to custom configure notebook computers, so they had to be manufactured in advance, which lost Dell some of its cost advantage. In addition, consumers were showing a preference for touching and feeling a notebook PC before buying it.

As he has done since reassuming the helm, Mr. Dell pushed employees to feel a sense of urgency.

But the company is not abandoning the custom configuration of PCs. Mr. Dell wrote that the Inspiron models that go on sale in June can be personalized in various colors.

Most of Dell’s customers are other companies. Mr. Dell wrote in the memo that the company was trying to simplify the procurement of informational technology equipment.

Selling on eBay but shipping by Amazon

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Jeffrey P. Bezos, the chief executive of Amazon.com, is hoping smaller companies will pay for the privilege of having their packing and shipping work eased, giving Amazon a chance to make money from its expertise.

Your next eBay purchase could arrive at your door in a brown Amazon.com box

John Brown of Lafayette, Ind., sells rare books and other items through the Internet. Using Amazon’s services would save him money, but he doesn’t like the idea of his packages being sent in the Amazon.com boxes.

Amazon.com, the online retailer, is expanding a program designed to allow independent sellers to use its network of distribution centers to store and ship their products, according to Jeffrey P. Bezos, Amazon’s founder and chief executive.

Since last fall, the program, Fulfillment by Amazon, has allowed independent sellers who list their goods on Amazon.com to use its network of more than 20 distribution centers around the world to fill orders. Now Amazon, which is based in Seattle, is opening the program to vendors who list their items elsewhere on the Web — on their own site, through Google, or even on Amazon’s e-commerce rival, eBay.

The program is part of a broader set of tools called Amazon Web Services, an effort by the e-commerce pioneer to rent out complicated parts of its infrastructure to smaller companies that might benefit from its hard-earned expertise, and who will pay for the privilege of lightening their workload.

Think of as it Amazon 2.0. Though the company’s primary business appears to be booming — it announced a 32 percent increase in revenue this week, which sent its stock soaring 40 percent in the last two days — revenues will inevitably flatten as the company matures. If it wants to keep treating investors to torrid growth, the company needs to develop other ways to make money.

Wall Street has never liked Amazon’s 10 million square feet of shipping space, far preferring eBay’s frictionless role as a meeting place for buyers and sellers. But Mr. Bezos is now doubling down on his company’s gritty infrastructure. He thinks that one day Amazon could do the dirty work of storing products and fulfilling online orders for many of the e-commerce companies on the Web.

In a conference call with Wall Street analysts on Tuesday, Mr. Bezos said that the overall Amazon Web Services initiative was growing rapidly, but was not yet profitable. Another Web services program, Amazon Simple Storage Service, or S3, allows businesses to store their data on Amazon’s own computer servers. Mr. Bezos said S3 now held 5 billion “objects,” or pieces of data, up from 800 million last July.

Fulfillment by Amazon, in development for the last three years, is one of the oldest efforts in the company’s stable of Web services. Unlike S3 and other recent initiatives, Fulfillment by Amazon involves the movement of physical goods instead of digital information.

Participants in the program, which is still in the experimental phase, can sign up on Amazon’s Web site and print out stickers that they put on their goods. They then send their products to Amazon, which stores the items commingled with its own. Amazon ultimately ships them to customers when they are ordered online (and charges the seller a variable fee based partly on the weight of the item and the shipping cost).

Sellers are effectively paying to ship their goods twice. But the program is aimed at small online retailers who have filled up the space in their basements and attics but want to avoid buying and managing their own warehouses.

It also can increase revenues: using Fulfillment by Amazon to sell on Amazon’s third-party marketplace qualifies products for the shipping discounts the company offers buyers, which typically improves sales. But the program’s biggest benefit, Amazon says, is to relieve sellers of one of the most laborious parts of their business — packaging products and getting them to customers promptly.

The program has some enthusiastic early customers. Barry Mark, who runs Treebeard Books from his home in Palm Beach County, Fla., buys surplus books and sells them on Amazon and other sites. Since he signed up for Fulfillment by Amazon last September, he says that his sales have jumped more than 30 percent, and a third of the orders that come in are from members of Amazon Prime, the company’s premium discount shipping program.

But he says he sees the biggest benefit in the reduction of his workload, on peak days when 200 packages have to go out the door. “Usually there’s not enough hours in the week to ship everything,” he said.

Mr. Mark is so enthusiastic, he says he bought stock in Amazon after it announced the program last year.

But not every online retailer is as excited. For two and a half years, John Brown of Lafayette, Ind., has sold rare books and educational audio and video programs on sites like Amazon, eBay’s Half.com and his own site, Shelfmasters.com. To handle orders, he rents a 4,400-square-foot warehouse and employs two full-time workers.

Shifting fulfillment to Amazon’s warehouses would save him $2,000 a month in rent and utilities for his warehouse, he estimates. But Mr. Brown has held back so far, in part because Amazon does not yet let Fulfillment by Amazon’s customers in the United States ship their products internationally, or by overnight delivery.

He is also bothered by the use of brown Amazon.com boxes for the merchandise he sells on the other e-commerce sites. “My other selling sites are not going to think well of that,” he said, because it could lead to consumer confusion. “And it’s not like I can afford to anger those other sources.”

An Amazon spokesman said that the company was considering using blank boxes when it shipped products purchased on other sites.

Fulfilling orders for other companies is not a new business for Amazon. In 2004, Toys “R” Us contentiously dissolved a partnership after saying that Amazon had broken their exclusive agreement by letting other parties sell toys on the site.

Last month, the bookseller Borders parted ways with Amazon to create its own Web site and take a larger part of the revenue from online purchases. Amazon still manages the online store and order fulfillment for Target, the retail chain.

Scott Wingo, chief executive of ChannelAdvisor, which makes e-commerce software, says smaller companies have the same reasons as larger players to fear partnering with Amazon on warehouse distribution. Amazon might give its own orders priority during the busy holiday season. And if packages are shipped late, the small retailer, not Amazon, would suffer in the eyes of customers.

Then there’s the unresolved question among many small retailers of whether Amazon has yet worked out the kinks in its fulfillment program.

DL Byron, the Seattle-based inventor of the Clip-n-Seal, a device that closes plastic bags, shipped several cases of products to Amazon last fall, but said the merchandise is currently lost in an Amazon facility. “To their credit, Amazon is working with us to resolve the problem and assigned us a person to talk to,” Mr. Byron said. “But somewhere in their giant warehouse sits our product, and if it’s not available to ship, it’s not available for sale and not making us money.”

Mr. Bezos and other Amazon executives stressed that the program was still in its early stages. “We will have to earn the reputation for doing this at such a high-quality way that people are willing to let us do it for them,” he said.

Even if he proves that to sellers, Wall Street may still respond with a shrug. Already many analysts who cover the company have expressed more frustration than interest in Amazon Web Services.

Expanding the fulfillment program to include non-Amazon sellers “almost suggests they are so confident with their core business that they can expend resources and management time on this,” said Safa Rashtchy, an analyst with the investment bank Piper Jaffray & Company. “But the core challenges have never been larger. To some degree this is a distraction.”

Mr. Bezos noted that in the past, new company initiatives such as selling electronics and the expansion into overseas marketplaces were viewed with similar skepticism. “We are willing to plant seeds that take time to grow,” he said.

Children hacks into AOL

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A New York teenager broke into AOL networks and databases containing customer information and infected servers with a malicious program to transfer confidential data to his computer, AOL and the Manhattan District Attorney's Office allege.

In a complaint filed in Criminal Court of the City of New York, the DA's office alleges that between December 24, 2006 and April 7, 2007, 17-year old Mike Nieves committed offenses like computer tampering, computer trespass, and criminal possession of computer material.

Among his alleged exploits:

* Accessing systems containing customer billing records, addresses, and credit card information

* Infecting machines at an AOL customer support call center in New Delhi, India, with a program to funnel information back to his PC

* Logging in without permission into 49 AIM instant message accounts of AOL customer support employees

* Attempting to break into an AOL customer support system containing sensitive customer information

* Engaging in a phishing attack against AOL staffers through which he gained access to more than 60 accounts from AOL employees and subcontractors

Nieves faces four felony charges and one misdemeanor charge. He was arraigned on Monday and remains detained, a DA's office spokesman said. His next court date is Friday for a procedural hearing to determine the next step in the case, the spokesman said. Nieves' attorney didn't immediately return a call seeking comment.

The alleged acts cost AOL more than $500,000. It's not clear whether customer data was stolen. AOL declined to comment. The DA's office spokesman said the investigation into Nieves' alleged acts continues. "It's too early to tell exactly what [data] he compromised or not," he said.

The complaint states that Nieves admitted to investigators that he committed the alleged acts because AOL took away his accounts. "I accessed their internal accounts and their network and used it to try to get my accounts back," the defendant is quoted as saying in the complaint. He also admitted to posting photos of his exploits in a photo Web site, according to the complaint.

One doesn't have to be a computer genius to carry out the alleged acts thanks to the free availability of multiple hacking tools, said Mark Rasch, managing director of technology at FTI Consulting. "Even a disgruntled kid working alone can throw a virtual tantrum and cause a significant amount of damage to a large technology corporation," Rasch said. "Welcome to the new world."

If the defendant was honest about his motivation in his reported confession, it's safe to assume that he wasn't interested in stealing data for financial gain, Rasch said. Still, it'll be interesting to find out what steps AOL is taking if customer data was in fact compromised, he said.

There aren't enough facts available to judge whether AOL could have done more to prevent the alleged intrusion. "We'll learn more as the case goes on," he said. "AOL has had pretty good security over the years."

Authorities arrested Nieves after AOL provided them with information from an internal investigation into the alleged acts. AIM subscriber information and IP address data involved in the acts led AOL to Nieves, whose address and phone number AOL had on file, according to the complaint.

Nieves lives in Staten Island and quoted his mother as saying that he is a special education student with behavioral problems. An anonymous source told the Post that Nieves has caused AOL problems for years.

A source close to the investigation told IDG News Service that Nieves is allegedly part of a "loosely coupled" group of hackers who have targeted AOL and other companies in recent years, but that Nieves focused specifically on hacking into AOL.

Kodak VS HP

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As part of its long, rocky journey from film to digital photography, Kodak just introduced a line of home inkjet printers. The company has decided to go after its rival Hewlett-Packard, which dominates consumer inkjet printing.

Kodak's main weapon in this new war is cheaper ink. Traditionally, H-P and other makers have sold the printers for relatively little, then made most or all of their money on the ink cartridges.

So, Kodak decided to reverse that business model. Its three new printers start at $149.99, not sub-$100 bargain prices. But its black ink cartridges cost just $9.99, and the color ones -- which combine five color inks -- just $14.99. And these are standard-capacity cartridges, not small or starter versions. Comparable H-P cartridges vary in price, but can easily cost double that, or more.

Kodak hopes consumers will be willing to spend more upfront for the printer to save later on the ink.

In a counter-move, H-P announced Tuesday that it will also be introducing new lower-price cartridges. But these new low-end cartridges will work only on future printers (and a few very recent models). And they will hold less ink than today's standard. Plus, they will still cost more than Kodak's cartridges: $14.99 for black and $17.99 for the combined color versions. H-P will also start selling larger-capacity "value" cartridges for the new printers that will cost about twice as much as the low-end ink, but print up to triple the number of pages.

How good are Kodak's new printers? After all, cheaper ink isn't really a bargain if the printer is lousy. To find out, I've been testing Kodak's midrange model, the EasyShare 5300, which costs $199.99. It's an "all-in-one" machine that combines a printer with a flatbed copier and scanner.

I compared this new Kodak with a roughly comparable all-in-one H-P model, the Photosmart C6180. This particular H-P model costs $100 more than the Kodak, because it includes some additional features. But H-P says that this printer has the same printing, scanning and copying quality and speeds, in the typical scenarios I tested, as H-P's C5180, the direct competitor of the Kodak 5300, which costs the same.

My conclusion was that the Kodak EasyShare 5300 is a pretty good printer, with a good enough combination of quality, speed and functionality to satisfy people attracted by the lower ink costs. In my tests, it was better than the H-P at some things and worse at others.

One caveat: I didn't try to verify Kodak's claim that, overall, its printouts cost a lot less than H-P's. Such claims depend on very specific sorts of test files produced and tested in labs. H-P disputes Kodak's testing methodology and claims that Kodak's printout costs are "about the same or only slightly lower than H-P's."

Also, the particular H-P models with which the Kodak printers most closely compare use a different ink system than most other H-P home inkjet printers. Instead of using one combined color cartridge that can cost over $30, they use five smaller separate ones that cost $9.99 each.

I decided to avoid settling this technical dispute and to just judge the printers using home photos and text pages from Microsoft Office that I considered typical. I used both printers at normal quality levels and didn't enable any special quality or speed settings. I tested them with a Windows XP computer, though both printers also work with Macs and with the new Windows Vista.

In general, the H-P was a little faster, but not dramatically so. And the H-P has built-in networking, while the Kodak doesn't. The H-P also has a better user interface, in my opinion. Kodak's can be clumsy.

But the Kodak has a cool scanning feature the H-P lacks. You can place three or four photos on its glass plate at once and the printer will separate them automatically into individual images and scan them as separate files -- as long as they aren't aligned too crookedly. To do this on the H-P, you must manually draw lines around each photo with the H-P software.

When I compared plain-paper printouts, in black and white, and color, the printers were about equal in quality. The H-P was a tad faster, but the Kodak was plenty quick.

On photos, I had a mixed result. The 4x6 snapshots of family scenes came out better, to my eye, on the Kodak. They seemed sharper and brighter than the same files printed on the H-P. But I had just the opposite result when scanning several 20-year-old photos into the two machines. The resulting files produced by the H-P seemed sharper and brighter. The Kodak scans, while warmer, seemed fuzzier.

The worst feature of the Kodak is the way it switches between its plain-paper feed tray and its special separate tray for 4x6 snapshot-size photo paper. On the Kodak, you must manually push in and pull out the photo tray to switch between types of paper. The H-P handles this switch without any pushing or pulling.

Overall, however, the Kodak is a good enough first effort to get the company into the game.

Google pulls out the malicious sponsored links

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Google has removed paid links that advertised seemingly legitimate Web sites but actually tried to install nefarious programs on PCs.

The links were displayed as "sponsored links" after visitors entered specific queries into Google's search service. Clicking the links would ultimately go to a legitimate site, but by way of another site that attempted a "drive-by installation" of password-stealing software. Miscreants placed the links using Google's AdWords service for advertisers.

"Google identified and canceled AdWords accounts displaying ads that re-directed users to malicious sites," a company representative wrote on a corporate blog on Thursday.

The malicious links appeared after people searched for terms related to the Better Business Bureau and cars, according to Exploit Prevention Labs, a security company. All the paid-for links masqueraded as legitimate sites and redirected Google users to the actual sites after sending them to smarttrack.org, which served up the malicious code, Exploit Prevention Labs said.

"We detected about 20 different search strings that resulted in links to smarttrack.org," said Roger Thompson of Exploit Prevention Labs. "There were multiple ads linking to a single site, a high level of planning, and cunning by the bad guys."

Web threats are on the rise. Security firm Trend Micro predicts that by next year, Internet users can expect more cyberattacks to originate from the Web than via e-mail. The threat hasn't gone unnoticed by the security industry. Tools such as Google's Toolbar for Firefox or Google Desktop, Exploit Prevention Labs' LinkScanner and McAfee's SiteAdvisor can offer protection by blocking known bad sites or rating search results.

Google is looking at its AdWords practices to prevent similar incidents in the future, the company said. "This is an issue we've taken very seriously and will continue to monitor," it said. "We are also evaluating our systems to ensure that the appropriate measures are in place to block future attempts."

Microsoft providing information for hackers

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How's this for a new twist on the old responsible disclosure debate: Hackers are taking advantage of information released in Microsoft's pre-patch security advisories to create exploits for zero-day vulnerabilities.

The latest zero-day flaw in the Windows DNS Server RPC interface implementation is a perfect example of the tug-o-war within the MSRC (Microsoft Security Response Center) about how much information should be included in the pre-patch advisory.

Using clues in the workarounds section of the advisory, Errata Security researcher David Maynor said he was able to pinpoint the source of the vulnerability without much trouble.

"It took about an hour from setup to shell on Windows 2000," Maynor said in an interview. "On Windows 2000, there are only five functions accessible over RPC. You combine combine that with their [Microsoft's] description of it being a stack overflow, it narrows the time to find down greatly."

"This is such an easy bug — most of the people I talked to already had it figured out as well," Maynor added. "It was simple to find and Microsoft screwed up by giving out too much information in the advisory."

Maynor wasn't the only hacker paying attention to Microsoft's description of the vulnerability. Over the weekend, several different exploits providing step-by-step instructions to launch attacks surfaced on well-known security research sites and hacking tools.

An exploit module has already been added to the Metasploit point-and-click attack tool and Dave Aitel's Immunity CANVAS pen-testing platform now includes a reliable exploit for Windows 2000 and Windows Server 2003.

Over at Milw0rm.com, there are three different exploits (all remote) available for free, including one by hacker Andres Tarasco that pinpoints a brand new attack vector against Port 445.

The availability of these exploits have significantly changed the threat landscape, especially for businesses operating Intranets were domain controllers (which store passwords) are running DNS, says Ken Dunham, director of the rapid response team at Verisign's iDefense.

Dunham explains the potential risks:

These servers also store all the passwords for a Windows network. It is feasible that a bot may incorporate an Intranet spreading routine to exploit vulnerable computers within the network to help it spread. For example, a bot may be programmed to spread through the recent ANI exploit to infect clients with bots and then use the zombie to exploit DNS RPC against the local domain controller to gain complete control over the entire network.

Malicious actors that compromise DNS servers will likely reconfigure the server to silently redirect web traffic to compromised websites for monetary gain or corporate espionage.

In the wake of Maynor's comments above, I asked the MSRC if there's a legitimate gripe that about the level of details included in its advisories and was told that it's a "delicate balancing act" to avoid giving too much clues while ensuring customers have adequate pre-patch protections.

MSRC director Mark Miller said the company's priority is to provide a solid workaround that could help protect Windows users from exploitation.

"We have those internal conversations all the time… trying to strike the right balance. In this particular case, we need to make sure that customers have these workarounds and this included all the possible attack vectors and vulnerable servers."

But, as the rash of public exploit code shows, the mitigation information provides too many clues for hackers — and confirms that striking that perfect balance is near impossible.

Dell brings SSD to it's range of laptop

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Not to be outdone by laptop rival Sony, Dell yesterday announced the availability of SSD (solid-state drive) technology for its Latitude D420 and D620 notebooks.

Aimed at enhancing the durability and performance of Dell's "ultra-mobile" laptop offerings, the move comes on the heels of a similar SSD announcement Sony made for its Vaio Type-G earlier this month.

As opposed to the traditional HDD (hard disk drive), which relies on spinning discs and read/write heads, the SSD is a flash-based drive that requires no moving parts. As such, it can withstand twice as much force as an HDD, according to Dell impact testing, which also showed that notebook hardware breaks before the drive does.

The 1.8-inch 32GB SanDisk SSD, which SanDisk announced in January, increases performance by as much as 23 percent and is three and a half times less likely to fail when compared with HDDs currently available for the Latitude line, Dell said.

The drive, currently available in North and South America, costs $549 -- on par with the 32GB drive Sony is offering exclusively in Japan for the Type-G Vaio.

SanDisk will expand SSD availability to Europe and Asia in the near future.

As for Dell's SSD plans going forward, CTO Kevin Kettler said the company is committed to offering the SanDisk SSD option across its next generation of Latitude laptops.

Vista upgrades at a cheaper price

Slashdot It! Windows Vista is starting to look like those Persian rug stores which are always having a 'closing down' sale. 'Full' prices are set laughably high only to make you think you're getting an amazing discount, because no-one pays the marked price. All stock has been slashed, save $$$, why pay more?

The latest from Sultan Bill's House of Software is that anyone running any pre-release version of Vista code -- from the creaky Beta 2 to the slicker Release Candidate builds and assorted Customer Preview Program (CPP) editions -- is eligible for upgrade pricing on the full version of Vista.

It's the silver lining on the cloud for anyone still using pre-release code, which was made widely available during the long run-up to last year's launch of the uber-OS but stamped with a use-by date of May 31st, 2007.

Microsoft says that users of those builds will "begin to receive warning notifications about the upcoming expiration on May 18th". After the clock strikes midnight on May 31 tardy test-drivers will have access to their PC for only two hours at a time, during which they can retrieve their data. "After two hours of use, the PC will automatically reboot without providing the opportunity to save data."

Those two-hour timed sessions will end on August 28th, after which your beta test PC will be the functional equivalent of a beta VCR, except that it won't be able to record or play TV shows (which sorta gives the beta VCR a killing edge).

The missive from Microsoft ends on a slightly pleading note: "Please, do yourself a favour and upgrade to any edition of the RTM version of Windows Vista before May 31".

As we noted last year, those upgrade prices are generally $150-$180 cheaper than the full package. Most people running any Vista preview will be likely to head for the Home Premium, Business or Ultimate skews -- which sell on their own for $455, $565 and $751 but are offered as upgrade deals for $299, $379 and $495 respectively. [Australian prices.]

So we're moved to ask if Microsoft set these sky-high prices -- especially the ouch-inducing $751 tag for Vista Ultimate -- knowing that while almost no-one bar a few retail shopping suckers would pay that much, the apparent discount on the upgrade version would look just too good to refuse.

Want to save $256? Spend just $495 on Vista Ultimate instead of $751. Our special price for you, sir and madam, today at Sultan Bill's House of Software!

Unsecured WIFI is not your defense against child porn

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The merits of leaving your wireless access point (WAP) open have been discussed and debated at length, especially when it comes to law enforcement. There is a growing belief that file sharers can protect themselves against lawsuits by keeping their wireless access points open. The problem is, it won't necessarily.

A Texas man who was convicted of possessing child pornography tried to use his open WiFi network as a defense, saying that someone else could have used the same network to traffic in pornographic images. The US Court of Appeals for the Fifth Circuit didn't buy his argument and upheld the conviction.

Here's the story: "famclpe," a Yahoo member using an IP address assigned to Javier Perez in Austin, TX, sent an instant message to a New York woman. Sent over Yahoo's network, the IM contained a sexually explicit picture of a minor. The wheels of justice began turning, and after a subpoena was issued, the FBI fingered Perez as the owner of the account in question.

The FBI says it found CDs with child porn in Perez's room, the only one it searched. An open-and-shut case? No, because there's a twist: the Yahoo account used to send the message belonged to a Mr. Rob Ram, according to Yahoo's records. Perez had a roommate named Robert Ramos and an open WiFi connection, but that was not enough to convince a federal judge to keep the seized CDs from being used in his prosecution. Perez entered a conditional guilty plea to the charges and received a sentence of four years and nine months.

During his appeal, Perez focused on his open WAP. Given the fact that anyone within a couple of hundred feet could have been accessing it, it's impossible to say that the original IM originated from him. As a result, the search warrant was issued in error, Perez argued, and his conviction should be thrown out.

Open WAP could equal probable cause

A District Court, and now the US Court of Appeals for the Fifth Circuit, disagreed. In the Appeals Court's opinion, the judges wrote that the evidence seized in the raid should not have been suppressed. In particular, they didn't buy Perez's arguments that a "mere association between an IP address and a physical address is insufficient to establish probable cause" and that the officers' discovering that he had roommates should have led them to extend their search to cover them.

And the big stack of CDs with child pornography on them kind of sealed the deal.

Keeping an open WAP won't always keep you off the hook

Open WiFi networks represent a potential maelstrom of scum and villainy, according to some people. SCO chairman Ralph Yarro recently told the Utah legislature that the state should regulate WiFi networks, even to the point of banning free and unintentionally open networks. (He's also the guy who proposed moving porn off of port 80.) In cases where people have been arrested for leeching off of an open network, one of the justifications given is the possibility that their freeloader could have been using the free access point for illegal activities.

The "my WiFi network was open" defense has even been raised in the context of filesharing. If I have an open WAP, the reasoning goes, then no one can pin the file-sharing on me. That's a risky strategy, due in no small part to the recording industry's reliance on IP addresses to identify its targets. You may be able to demonstrate down the line that it actually was someone else downloading The Carpenters' Greatest Hits over your open network, but doing so may prove to be a very expensive proposition.

Virus writers targets Google sponsored links

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Virus writers have been gaming Google's "sponsored links" -- the paid ads shown alongside search engine results. They are aiming to get their malicious software installed on computers whose users click onto ad links after searching for legitimate sites such as BBBonline.org, the official Web site of the Better Business Bureau.

Sponsored links allow customers to buy advertisements attached to a particular search term. When a Google user enters a term into the firm's search engine, the ad belonging to the advertiser that bid the highest price for that search term appears at the top of the list of search results.

According to a report at Exploit Prevention Labs, while the top sponsored links that showed up earlier this week when users searched for "BBB," "BBBonline" or "Cars.com" appeared to direct visitors to those sites, they initially would route people who clicked on the ads through an intermediate site. The intermediate site attempted to exploit a vulnerability in Microsoft Windows to silently install software designed to steal passwords and other sensitive information from infected PCs. The attackers exploited a flaw in Microsoft's Internet Explorer Web browser, a problem that the company issued a patch to fix last June.

As Exploit Labs's Roger Thompson notes in his blog, the bad guys behind the attack appeared to capitalize on an odd feature of Google's sponsored links. Normally, when a viewer hovers over a hyperlink, the name of the site that the computer user is about to access appears in the bottom left corner of the browser window. But hovering over Google's sponsored links shows nothing in that area. That blank space potentially gives bad guys another way to hide where visitors will be taken first.

According to Thompson, Google has taken down the offending sponsored links. In fact, searching for "betterbusinessbureau" in Google no longer turns up any sponsored links at the moment.

This certainly is not the first time virus writers have used ads to spawn their wares. Last summer, Security Fix discovered that more than a million Windows users had been infected with spyware thanks to a malicious banner advertisement shown for several days on high-traffic sites like MySpace.com and Webshots.com.

Office and Vista boosted Microsoft's sales

Slashdot It! In the first quarter to include consumer sales of Windows Vista and Office 2007, Microsoft reported earnings that topped Wall Street estimates.

Microsoft said Thursday that it earned $4.93 billion, or 50 cents per share, on revenue of $14.40 billion for the three months ended March 31. That compares with net income of $2.98 billion, or 29 cents per share, on revenue of $10.9 billion for the same quarter a year earlier.

The quarter's earnings were boosted by a 2 cent per share tax benefit and legal charges that dented per-share earnings by a penny. Excluding those items, the company would have posted earnings of 49 cents per share, ahead of the 46 cents that analysts were projecting, according to First Call.

In January, Microsoft said to expect revenue between $13.7 billion and $14 billion and per-share earnings of 46 cents or 47 cents.

Microsoft's revenue and profits included some money that was deferred from earlier quarters as part of a Vista upgrade program. The deferred money accounted for $1.67 billion in revenue and accounted for 12 cents per share in earnings.

For the current quarter, Microsoft said it expects revenue to be in the range of $13.1 billion to $13.4 billion, with per-share earnings expected to be from 37 cents to 39 cents. Wall Street was projecting earnings of 40 cents a share on revenue of $13.31 billion, according to First Call.

Microsoft shifted some costs from the past quarter to this quarter, accounting in part for the fact the company's outlook is below what some analysts were expecting, Colleen Healy, Microsoft's general manager of investor relations, said in an interview.

The company also offered its first estimate for the new fiscal year, which begins in July. Microsoft said it expects revenue in the range of $56.5 billion to $57.5 billion, with per-share earnings in the range of $1.68 to $1.72. That's roughly in line with what many analysts had been projecting.

Microsoft said its online services business, which includes its MSN and Windows Live efforts, saw revenue grow 11 percent, with advertising revenue up 23 percent from a year earlier. Healy said Microsoft also saw, for the first time, its homegrown AdCenter ad-serving engine produce higher revenue per search than Microsoft had been getting when it used Yahoo's Overture service. Last quarter, Microsoft cut its outlook for the online business and said it was "not happy" with its search business results.

On the Xbox front, Microsoft said it sold 500,000 units. "We're just really delighted with where we are relative to the competition," Healy said.

PC sales for the industry grew about 1 percentage point more than Microsoft had been projecting, Healy said, with Office and Vista being well-received. "The reception they've received thus far really puts us off to a nice start."

Microsoft said that seven in 10 PCs shipped with a premium version of Windows in the quarter, as compared with about five in 10 under Windows XP. However, much of the shift was to Vista Home Premium, which carries far less extra profit, compared with Home Basic, than do Vista's business versions. All in all, the shift to higher-end versions of Windows accounted for 1 percentage point of the growth Microsoft saw in its sales of Windows for new PCs, Healy said on a conference call with analysts.

Microsoft told analysts it expects Vista to account for 85 percent of sales in fiscal 2008, with XP still amounting to 15 percent of sales. "We're optimistic, but we don't want to get ahead of ourselves," Healy said.

Office 2003 Service pack 3

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Microsoft plans to make some of the security improvements and features it built into Office 2007 available for Office 2003, a company representative said.

Service Pack 3 for Office 2003 will be focused on security, said Joshua Edwards, a technical product manager for Office at Microsoft. "We're trying to take what we learned from building Office 2007 and bring as much as we can to Office 2003," Edwards said in an interview.

Microsoft hasn't yet set a release date for the Office 2003 update, which like other service packs will be available as a free upgrade. Also, there are no details of what will be in the update, other than that Microsoft is "backporting" work it did for Office 2007.

Many of the changes will be invisible to users, hardening the applications and file parsers against attacks, Edwards said. Such changes under the hood could help protect against attacks that exploit security vulnerabilities in Office applications. Such attacks appear to be on the rise, in particular where specific organizations are targeted.

However, some user features may also make it to the older version, including the ability to select a preferred encryption mechanism. For example, in Office 2007 it is possible to replace the standard AES encryption with another, such as Suite B, which is a feature the U.S. government requested, Edwards said.

The last service pack for Office 2003 was released in September 2005 and also was aimed at beefing up security, enhancing application stability and adding support for Microsoft SQL Server 2005 and Microsoft Visual Studio 2005.

Office 2007 became broadly available earlier this year. Major changes include new file formats and a radically revised user interface. Microsoft also combined security features in a new "Trust Center" interface. So far at least one apparently serious security bug in Office 2007 has been reported.

Sony announces video chat add-on for PS3

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Sony Computer Entertainment America has announced a new accessory for its PlayStation 3 console that is designed to improve and enhance in-game communication.

Called the PlayStation Eye, the device is a camera-microphone hybrid that connects to a PS3 through one of its USB ports so that gamers can engage in voice and video chat as well as experience new gaming capabilities enabled by speech- and picture-recognition technology. Sony considers the newly announced peripheral the next step up from its EyeToy camera, which it sold for use with its PlayStation 2 console.

Pricing information for the Eye, which is slated for a summer release, has not yet been disclosed.

Sony is touting a number of next-generation features on the new peripheral that it hopes will elevate the device above third-party cameras and microphones designed for gaming. With a frame rate of up to 120 frames per second at a 320x240-pixel resolution, it's not exactly a high-definition camcorder. But it comes with some gaming-specific features--the camera is designed for low-light conditions, and has two zoom options, for close-up and full-body

The microphone, attached to the bottom of the camera, promises to eliminate the need for a headset through noise-canceling and speech-recognition technology designed to enable clear audio chat.

Additionally, the Eye comes bundled with a piece of software called EyeCreate, a basic photo- and video-editing tool that lets PS3 users save photo, video and audio content to their consoles' hard drives and add visual effects. Sony also said that future PS3 gaming titles and services will make use of the Eye's technology.

AT&T Chief retiring

Slashdot It! When Edward E. Whitacre Jr. joined Southwestern Bell in 1963 as a facilities engineer, the land-line telephone was the state of the art and the Bell operating companies were dominant.

Yesterday, Mr. Whitacre announced that in June — after 44 years climbing the corporate ladder — he would retire as chief executive and chairman of AT&T.

The industry he leaves is markedly changed from the one he joined, given the breakup of the Bell System, the reconsolidation of the industry and the now-powerful influence of cellphones and the Internet. The land-line telephone business is in its decline.

Mr. Whitacre, 65, has not only survived the changes, but helped drive them by means of an aggressive acquisition strategy that turned AT&T into the world’s largest telecommunications provider.

AT&T said Mr. Whitacre would be succeeded by Randall L. Stephenson, currently the company’s chief operating officer. Mr. Stephenson, 47, began his own career with Southwestern Bell in 1982 in information technology and has held positions in finance, performance assurance and marketing.

Despite Mr. Whitacre’s prominent role in shaping AT&T, Wall Street investors and analysts appeared to take his departure in stride. They said AT&T under Mr. Whitacre’s leadership had been preparing employees and investors for a passing of the torch.

Mr. Stephenson inherits a company with a $240 billion market capitalization, one that Mr. Whitacre has built into a multifaceted telecommunications giant through an aggressive acquisition strategy. Its multibillion-dollar deals — most recently the acquisition of BellSouth — have been in keeping with Mr. Whitacre’s philosophy that his industry demands immense size and scale.

The change in command was announced at AT&T’s annual shareholder meeting in San Antonio, where the company is based.

Industry analysts said Mr. Stephenson tended to be more detail-oriented than his predecessor and had the kind of skills that would be in demand as AT&T sought to focus on execution, not acquisition.

The transition to Mr. Stephenson should be smooth, said Christopher C. King, a telecommunications industry analyst with Stifel Nicolaus.

Mr. Whitacre will leave AT&T with a lucrative retirement package, according to a proxy statement filed last month. He has a pension valued at $84.7 million and has $73.8 million of previously earned pay in a deferred compensation plan.

A native Texan, Mr. Whitacre has been credited with transforming Southwestern Bell, the smallest of the seven Bells when he took it over in 1990, into SBC, a giant that acquired AT&T and took its name.

Mr. Stephenson echoed that sentiment in an interview yesterday, after the announcement of his promotion.

Wall Street has backed Mr. Whitacre’s acquisition strategy by sending the stock on a steady two-year rise to the high $30s from the low $20s. The stock finished regular trading yesterday on the New York Stock Exchange at $38.64, down 32 cents.

The company still faces considerable long-term challenges in light of fundamental changes overtaking the industry. Thanks in large part to Internet and mobile technology, which is allowing less expensive and more versatile communications, AT&T and its competitors have been forced to find new ways to maintain a growing chunk of the lucrative monthly fees Americans pay to stay connected and entertained.

The fiercest competition now comes from cable companies, which have bolstered their traditional television service with Internet and phone service.

One aspect of AT&T’s response has been the introduction of a television service called U-verse that it has just begun introducing around the country. It has only 20,000 customers and is adding 2,000 a week.

Mr. King said a crucial question facing AT&T and Mr. Stephenson was whether that product, which relies on sending programming over broadband lines, would be an effective competitor in the future.

Mr. Stephenson said in the interview yesterday that he saw his own greatest operational challenge as making a success of U-verse. “That’s absolutely critical,” he said. “We have really just begun.”

Mr. Stephenson said he was “humbled” to be following Mr. Whitacre.

AT&T has 66.5 million land-based telephone lines, 61 million wireless subscribers, 12 million broadband lines, and sells local phone service in 22 states. Its market capitalization is double that of the nearest American competitor, Verizon Communications, at $110 billion.

Mr. Whitacre took home about $31.5 million in pay last year, according to the recent proxy filing, about 94 percent more than the $16.2 million that he earned in 2005. AT&T shareholders, on the other hand, saw a total return of about 53 percent, including reinvested dividends.

His compensation has rankled some corporate watchdogs who have said Mr. Whitacre was overpaid during the telecommunications downturn that followed the dot-com bust. Mr. Hodulik, the analyst from UBS, defended Mr. Whitacre’s retirement package, saying it reflected a career of contribution.

Court questions Zale's use of trademark in paid search text

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A federal court judge has ruled that referencing a trademarked term in ad text generated by a Web search may violate trademark rights.

John Hamzik, who holds the trademark for "The Dating Ring," filed suit alleging that Zale jewelry company violated his trademark by purchasing the keywords "dating ring" for purposes of advertising via paid searches on Google, Yahoo and other search engines. He also alleged that Zale violated his trademark because jewelry items were displayed when a user searched on "dating ring" on the Zale Web site.

Zale filed a motion to dismiss on the grounds that it never placed the trademarked term on any of its products or used the term "dating ring" on its Web site. The court said the fact that the Zale Web site displayed back results on the search phrase does not transform Zale's action into a use of the trademark under law. However, the court let stand the trademark infringement claim with respect to the purchase of the keyword phrase "dating ring" on search engines; when a searcher typed in "dating ring" on Google or Yahoo, results were returned under paid listings that displayed "Dating Ring-Zales."

While other plaintiffs have lost on trademark infringement claims involving rivals purchasing keywords using their trademark, this lawsuit differs because the plaintiff's trademark is referenced in the ad copy. "In this case there may be facts demonstrating that plaintiff's trademark does appear on the displays associated with the good or documents associated with the goods or their sale," the court said.

So, Judge Thomas J. McAvoy in U.S. District Court in New York last week granted in part and denied in part the trademark infringement claims. The court also denied the defendant's motion to dismiss a counterfeiting claim, but granted a motion to dismiss a false advertising claim.

Also last week, U.S. District Court Judge Jeremy Fogel in San Jose, Calif., refused to dismiss a lawsuit filed by American Blind & Wallpaper Factory that alleges that Google's AdWords pay-per-click advertising system violates trademark law by allowing rivals of a company to buy ads that appear when people search for information on American Blind & Wallpaper Factory.

Google has prevailed in prior trademark lawsuits filed against its pay-per-click ads over trademarks used in ad keywords--involving auto insurer GEICO and a suit filed by computer repair firm Rescuecom. Those outcomes are in accordance with another case not naming Google as a defendant in which a judge said the purchase by Canadian pharmacies of keywords using the name of rival Merck's "Zocor" drug did not constitute trademark infringement.

However, Google lost a related case in a European court last summer. A French court of appeals affirmed a lower court ruling that Google infringed on Louis Vuitton's trademark by selling search-related keyword ads to competitors of the fashion company.

Sun looking at the Internet TV sector for profits

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Sun Microsystems' bread and butter is selling general-purpose servers, but the company began selling a product extremely specialized to cram as many streams of video onto the Internet as possible.

The Sun Streaming System consists of a video-streaming software, a handful of ordinary Sun servers, Sun Fire X4500 "Thumper" storage systems and the highlight, the X4950 Streaming Switch. In a top-end $8 million configuration, the X4950 holds 2 terabytes of memory, 32 10 gigabit-per-second Ethernet ports, and can pump out 160,000 simultaneous video streams onto the network.

Most TV shows today are broadcast over the air or cable distribution networks, but Sun's new system lets people select which shows they want to see and when they want to see them. This "video-on-demand" world resembles ordering DVDs through the mail with Netflix or watching recorded video using TiVo, only the TiVo is a server that doesn't run out of hard drive space and the movies are sent nearly instantly over the Internet through a technology called IPTV--Internet Protocol television.

Although the Sun Streaming System is on the fringe of Sun's product line, it once was the core product of a start-up, Kealia, that Sun acquired in 2004. That wasn't just any old acquisition: it brought to the company its general-purpose "Galaxy" line of x86 servers and returned to Sun one of its co-founders, Andy Bechtolsheim.

People want their video delivered on their own schedules, Bechtolsheim said, and Sun is intercepting that trend.

Frank Dickson, an analyst with iSuppli, called Sun's product "an impressive system. The design is very well thought through," and the price is reasonable. However, he said, video-on-demand hardware is a "niche market," with spending estimated to reach only $60 million this year.

The prime candidates for Sun's product are telecommunications companies, he said. "Telco is anxious to be in the video-viewing market," he said. Cable companies' infrastructure is less amenable to video on demand, he added, because many subscribers share the same bandwidth, an issue that has limited current video-on-demand offerings.

Sun's streaming system employs several features desirable to consumers, including the ability to fast-forward or rewind at various speeds. It requires a set-top box that can communicate with the central servers, but it's designed to work with inexpensive models. Alternatively, a PC can be used to receive the video streams.

Bechtolsheim recognizes that merely having the hardware and software to send video streams is only one part of an overall video-on-demand ecosystem that must be built. Other aspects include relationships between content suppliers such as movie studios and those who control the network to houses, chiefly cable TV or phone companies.

And it's taking time to build that system. Bechtolsheim pitched his technology to potential customers in 2003 and 2004, and they said they'd be deploying video on demand on a broad scale in 2005 and 2006. That proved premature.

Paula Patel, head of Sun marketing for the video system, argues that it's better to store video information in central servers than on personal video recorders that run out of capacity. A single standard-definition movie typically takes about 4GB of space, so it would take about 10 24-terabyte Thumper systems--few enough to fit into a single six-foot rack--to hold Netflix's current 60,000-title library, Bechtolsheim said.

Sun's system pumps data onto other switches from Cisco Systems, Nortel Networks or others that ultimately handle routing it to individual destinations. However, many Internet subscribers today don't have the capacity to handle 2 megabit-per-second standard-definition video or 8-megabit-per-second high-definition video.

But iSuppli's Dickson said the network should be able to keep up with the new burden of video streaming.

Sun's Streaming Switch name could imply that the Santa Clara, Calif.-based company is getting into competition with networking switch giants such as Cisco, but it's not really accurate to call the product a switch, Bechtolsheim said.

Intel Unveils Virtual Marketing Storefront And Google Advertising Program For Reseller Channel

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Intel announced a new program that will help resellers worldwide market innovative Intel-based products in a more quick and cost-effective manner. The company has created a new virtual marketing storefront for its reseller channel and has also collaborated with Google to create an advertising program where resellers can place online ads.

The new initiative will provide qualified members of Intel's reseller channel network the resources and support to plan and execute marketing campaigns for their businesses. The online marketing storefront allows select resellers to place print ads, order merchandise and services, and easily customize collateral with their company information or logo. There will also be a suite of tools to support online advertising with Google, allowing reseller customers to go online and order ads by filing out a simple order form. Intel and Google will then facilitate the production and execution to simplify the process for the customer.

"We are listening to our customers who have asked for the ability to use online resources such as those offered by Google, in creative ways to help grow their business," said Steve Dallman, general manager, Intel Worldwide Reseller Channel Organization. "Many resellers are small businesses that have limited resources and expertise in marketing. Intel's virtual storefront will help customers overcome this challenge and equip them with the tools to be innovative in reaching and communicating to their customers."

The new virtual marketing storefront is being offered to Track Two licensees of the Intel® Inside program. It eliminates out-of-pocket expenses for Intel's channel customers through Intel Inside co-marketing funds. It also eliminates administration costs that were previously incurred by customers when applying for co-marketing reimbursements.

"We are excited about working together with Intel to bring the scale, relevancy and measurability of online advertising to Intel's small- to medium-sized channel partners around the globe," said John Topping, director, Technology BtoB Vertical, Google. "In leveraging Intel’s co-op marketing expertise, we have built tools and services to help Intel's channel partners more effectively manage their online advertising programs and generate better results from their marketing dollars."

Established in 1991, the Intel Inside program has always been a core element of Intel's worldwide marketing programs. The program has continued to evolve to better serve Intel's customers. The online advertising program established with Google reflects the growing importance of online ads in the marketing mix, especially for businesses customers.

The Intel Inside program is one of the world's largest co-operative marketing programs, supported by thousands of PC makers who are licensed to use the Intel Inside logos. The Intel brand is one of the top ten known-brands in the world, in a class with Coke*, Disney* and McDonalds*, according to various rankings.

Asus recalls notebook batteries

Slashdot It! Acer asked owners of some of its laptop computers to send in their batteries for replacements. The recall was not based on any actual incidents with Acer computers, the company said, but rather complaints made to the U.S. Consumer Product Safety Commission concerning recalls of other manufacturers that used Sony cells similar to the ones found inside some Acer notebooks. With the announcement Acer is just the latest system manufacturer to recall the batteries produced by Sony. Dell was the first to do so in August 2006, with Apple, Toshiba, Panasonic and Lenovo quickly following suit.

Batteries Not Included

The recall was not a result of complaints from Acer's customers, according to the company, but a result of the 16 complaints the U.S. Consumer Product Safety Commission (CPSC) had received that were connected to the earlier recalls by other notebook computer manufacturers whose systems contained the Sony cells.

The voluntary recall includes Acer's TravelMate and Aspire series of notebook computers. The systems were sold between May 2004 and November 2006. More information is available at a company Web page.

Acer said it will replace affected batteries at no cost to the customer. In the meantime, the company stated, customers may continue to use their notebook PCs by turning off the system, removing the battery, and powering the system via AC adapter and power cord until the replacement battery is received.

Low Battery

Dell recalled nearly 4 million batteries from its Inspiron line on last August, followed two weeks later by Apple. September brought a second round of recalls from Toshiba and Panasonic. Acer's recall comes some six months after Sony issued its own battery recall for its Vaio notebook computers in late October. Altogether, nearly 10 million batteries have been recalled since the problem first came to light.

The gap between the second set of recalls and Acer's recall Wednesday has many wondering whether the company purposely waited to issue a recall and, if so, why.

In the U.S., Acer is a much smaller organization, David Daoud, an analyst at IDC, told TechNewsWorld, with a much smaller market share, though it is growing.

For its part, Acer said that it has been working in cooperation with the CPSC. Before the agency could issue a recall, it had to make sure that Acer had the necessary logistics, including phone support, a Web site and a fix available for consumers at the time the recall was announced, Scott Wolfson, a CPSC spokesperson.

Battery Backlash

Acer is the fastest-growing computer maker in the market. The company's first quarter 2007 sales increased 46.1 percent from the year, according to a Gartner report. The 4.28 million PCs sold in the first three months of 2007 enabled Acer to pass China-based Lenovo to take over the No. 3 spot.

Daoud does not expect the battery recall to negatively affect Acer's sales.

Repercussions for Sony are another thing entirely, Daoud explained. Sony is under considerable pressure to fix its technology and manufacturing processes. Meanwhile, PC makers will have to look for alternative suppliers -- Sony's competitors.

Over time, Daoud said, the recalls will result in improved technology for batteries so that they are more efficient and safer.

Microsoft releases public beta of Longhorn Sever

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Microsoft said it is releasing its first public test version of Windows Server 'Longhorn' as the company works to get the release out the door.

Microsoft said it still plans to finalize the code this year--a stage known as releasing to manufacturing--though the launch event for the product may not come until next year.

"The odds are the launch will be in 2008, but we haven't signed up for a specific launch date," said Ward Ralston, a senior technical product manager in Microsoft's Windows Server group.

Businesses will be able to download the code once Microsoft releases it to manufacturing, though most enterprises go through a fairly lengthy testing process with new server releases. Server makers set their own schedule for adding the software onto new systems. Ralston said that the company feels it is on track with the product and is looking to get a broad array of testers to try out the new test version, Beta 3.

Beta 3, like a recently released private test version, is "feature complete," Ralston said, including new features just added to the program such as the PowerShell command line interface and several new server roles. Microsoft released Beta 2 of Longhorn Server to developers last May. The next milestone, after Beta 3, would be a near-final "release candidate" version, Ralston said.

One analyst said recent test builds of the product appear to be in remarkably good shape. "I'm very impressed with how stable it is," said Directions on Microsoft analyst Michael Cherry. Cherry said it was important that Microsoft has been able to add in PowerShell, noting that Microsoft has many technology initiatives, some of which have been slow to find their way into products.

Not everyone is convinced the product will be wrapped up this year, however. Even with Microsoft shipping the broadly available beta, Gartner analyst John Enck said that his firm believes there is a 40 percent chance Microsoft will release the software to manufacturing this year and a 60 percent chance it won't happen until next year.

PS creator leaves Sony

Slashdot It! It appears the disappointing PlayStation 3 has claimed its first executive victim inside Sony.

Sony and PlayStation creator Ken Kutaragi made a joint statement Thursday saying Kutaragi would retire from his position as chairman and group CEO of Sony Computer Entertainment as of the company's next shareholders meeting on June 19, and that he has "been considering this decision for some time."

Kutaragi is one of the most celebrated figures in consumer electronics history, having shipped more than 200 million PlayStation and PlayStation 2 consoles, as well as the PlayStation Portable. Some analysts believe that had the PS3 been perceived as a hit or even a mild hit, there's a good chance he would be sticking around for the full 10-year lifecycle Sony gives its consoles.

But the PS3 is widely seen as a commercial flop, given its third-place position among next-generation video game consoles, trailing Microsoft's second-place Xbox 360 and the surprising leader, Nintendo's genre-busting Wii. The PS3 is even trailing sales of the venerable PlayStation 2 at this point.

The "PlayStation 3 has been a huge disappointment, No. 3 out of three in terms of console sales," said Rob Enderle, principal analyst at the Enderle Group. "It's been a huge embarrassment for the firm, and a huge hole that money has been pouring into."

Console sales in March Number of next-generation video game consoles sold in March in the U.S.
Nintendo Wii	259,000
Xbox 360	199,000
PlayStation 3	130,000

Enderle said despite Kutaragi's massive success with previous iterations of the PlayStation, he probably couldn't survive the very public drubbing the PS3 has gotten in the market so far.

Enderle said the biggest of those mistakes--the pricey inclusion of the Blu-ray player in the PS3--may well have been forced on Kutaragi by others at Sony.

The Blu-ray player added hundreds of dollars to the console's cost, making it, at a top price of $599, far more expensive than the $399 top-end Xbox and $250 Wii--and also making it much later to market than planned.

At the same time, Nintendo's Wii has stolen the video game industry's thunder, leading the next-generation console wars with 259,000 sales in March, according to The NPD Group, largely on the strength of its innovative motion-sensitive controller. By comparison, the Xbox 360 sold 199,000 units in March, and the PS3 trailed far behind, with only 130,000 sales.

Yet for some, it may even be surprising that Kutaragi survived the Sony restructuring that saw the ascendance of CEO Howard Stringer. Kutaragi in many ways represented the "old" Sony. He was big on vision--he saw the PlayStation line as a vehicle that would allow Sony to take over electronic entertainment in the home--but the projects sometimes didn't live up to the vision.

Ken Kutaragi unveils the look for the PS3 controller in May 2006.

The PlayStation 2 was instrumental in accelerating demand for DVD players and discs. The player, however, didn't become an all-encompassing media server. The long-anticipated console vs. PC war never materialized in the way many expected. People bought PlayStations, but continued to go to their PCs when they wanted to get on the Internet or send e-mail.

The PlayStations have also proven expensive to produce, largely because of elaborate, customized silicon. In 1999, the processor and the graphics chip inside the PS2 took up 239 and 279 square millimeters in surface area, respectively, which made them relatively large (and hence relatively expensive) chips for their time. Sony often spoke of how the processor inside the PS2, called the Emotion Engine, would be used in other computers.

The constant chip improvements defined by Moore's Law allowed Sony to drop the cost of its components. By 2004, the two chips were condensed into one that took up only 87 square millimeters, almost one-sixth the size of the prior chip. But neither the Emotion Engine nor Sony's graphics chip threatened Intel's or anyone else's chip markets. Computer makers did not pick it up.

Similarly, the Cell processor inside the PS3 is an elaborate, expensive piece of silicon that took several years to create. Although the chip--designed in collaboration between Sony, IBM and Toshiba--provides excellent performance in many areas, Sony remains the chief buyer. The so-called SIT trio has only lined up a few other computer makers to use it.

Despite that, Kutaragi leaves Sony as a heralded software guru, and to some, his legacy at the company will outlive any perceived faults.

"Ken is probably the richest living Sony employee in history, and I know he's going to be a senior adviser to Sony," said Richard Doherty, president of the analyst firm Envisioneering. "Ken Kutaragi probably knows how software should define hardware better than any other person on Earth other than Steve Jobs."

Doherty, who said he was personal friends with Kutaragi, though he never did business with Sony, thinks it's too early to say Kutaragi is leaving because of the PS3's bad start.

Doherty also said that despite the poor early performance, he still expects the PS3 to outsell the Xbox 360 by year's end.

But if that comes to pass, it will be too little too late, and, in retirement, Kutaragi may find himself forever blaming the Blu-ray player for his demise.

In the end, however, it doesn't matter that the Blu-ray player was forced on Kutaragi, Enderle said.