Pc News

[Rasputin]

Sony Settles With FTC Over Rootkit Debacle

Sony BMG Music Entertainment has agreed to settle charges with the U.S. Federal Trade Commission related to the company's inclusion of problematic copy-protection software in music CDs, the FTC said today.

The proposed agreement, which FTC commissioners approved unanimously, will be open for public comment until March 1. Then the FTC will decide whether to make it final.

Sony Settles, Doesn't Admit It Broke Laws
The copy-protection software that Sony shipped with music CDs created security risks for users and monitored their listening behavior on their PCs without their permission, the FTC said.

The copy-protection software installed itself without users' consent, was complicated to uninstall, and limited the devices a CD could be played in, as well as the number of copies that could be made, the FTC said.

The FTC had alleged Sony BMG had violated federal law by selling music CDs with this type of hidden software.

Sony BMG agreed to settle the charges without admitting that it broke any laws. "We're pleased to have reached this agreement with the FTC," Sony BMG said in a prepared statement. A spokesman declined to comment any further.

Misguided DRM
An outcry erupted over Sony BMG's inclusion of copy-protection software in music CDs in late 2005, when a security expert charged that the XCP (Extended Copy Protection) software used "rootkit" techniques, which are normally only used by hackers, to conceal itself on Windows systems.

Although Sony initially defended its use of the software, it eventually reversed its position, ceased production of XCP-enabled CDs and issued a recall for them after malicious Trojan horse programs were written to exploit the XCP code.

Also at issue was Sony's use of another copy-protection software called MediaMax, which also installed itself on PCs without permission and surreptitiously collected and transmitted information about users' activities. Sony didn't recall MediaMax CDs, but issued a patch to remove the software. An earlier version of MediaMax offered copy protection but didn't create security risks or monitor user activity.

In all, Sony shipped about 16 million music CDs containing either XCP or MediaMax software. First 4 Internet made XCP, while MediaMax was created by SunnComm International.

Details of Settlement
Under the proposed settlement, Sony BMG agrees to clearly disclose limitations on consumers' use of music CDs and to never install software on consumers' PCs without permission. The company also agreed to let consumers exchange the CDs in question until June 31, 2007 and reimburse consumers for up to $150 to repair damaged caused by the software to their PCs. Consumers will be able to exchange CDs with the software purchased before December 31, 2006 for new CDs free of content-protection software.

The settlement further forces Sony BMG to refrain from using the consumer information the software gathered for marketing purposes, like delivering ads to those consumers' PCs. If Sony BMG CDs include this monitoring technology in the future, the company must clearly display on consumers' PC screens how the technology works and ask for permission before transmitting any data back to Sony.

Sony BMG must also refrain from installing hidden copy-protection software and must provide a "reasonable and effective way" to uninstall any content-protection software. Furthermore, Sony BMG must, for two years, provide an uninstall tool and patches to repair the security problems the rootkit software created.

Finally, Sony BMG must give financial incentives to retailers to return the affected CDs, and for affected CDs it hasn't placed with retailers yet, Sony BMG must disclose their restrictions and security vulnerabilities on the packaging.

[Rasputin]

Warning: Vista Marketing Tsunami Looming

If your reaction to all of the hype swirling around the launch of Windows Vista this week is less "Wow!" and more "Whoa! Enough already!" then 2007 could be a long year.

Microsoft plans to go all out this year, spending $500 million in 20 countries to market Vista, according to Advertising Age. (A Microsoft spokesperson refused to confirm that figure.)

In the next several months, Microsoft plans to place advertising in various forms of media totaling 6.6 billion impressions--enough ads, in theory, to hit every person on the planet. "I am sure we will be inundated by Vista ads, especially on the Web," said Chris Swenson, a software market analyst at the NPD Group.

The company's media-saturation strategy may seem like overkill, but as late as December, according to a Forrester Research survey, more than 60 percent of consumers had not even heard of Vista.

Evidently, Microsoft isn't looking to convince consumers that Vista is fun (as it did with the XBox) or sexy (as it has tried to do with its Zune music player) or even fresh (as it did 12 years ago with Windows 95). "In hindsight, Windows 95 was flaky, but there was so much pent-up demand, and Windows 95 was such a big improvement [over Windows 3.1] that it really was a paradigm shift," said Gartner analyst Michael Silver. "Today, you're more likely to see that sort of excitement over a cell phone."

How Will Buyers Get Vista?
Though Microsoft is placing high hopes on sales of downloaded copies of Vista and Office 2007 through its Windows Marketplace site, much of its marketing expenditures will benefit PC partners such as Hewlett-Packard and Dell. According to Microsoft's own figures, about 80 percent of of new Vista owners will get the operating system as preinstalled software when they buy new PCs. The rest are expected to buy Vista to upgrade or install themselves.

And while online sales and downloads continue to grow as a distribution model, most Vista sales will continue to occur through brick-and-mortar stores, according to Forrester analyst J.P. Gownder. That's because those environments tend to show off Vista's features to better effect than an online demo can.

"Consumers have to see Aero to desire Vista," Gownder wrote in a report released Monday, referring to Vista's glossy new user interface.

Vista's Biggest Foe: XP
Despite Microsoft's claim that Vista supports 30,000 devices, many components such as video cards, input devices, and printers that work fine on XP don't work on Vista, according to Silver. He suggested that updated software drivers for many of those older components might not be coming anytime soon.

Moreover, he noted, many of Vista's consumer features "are just catching up to Apple OS X." And he said that a true killer application for Vista--as Excel was for Windows 3.1 and as Internet Explorer was for earlier versions of Windows--has yet to emerge. Vista and Office 2007 are "not a 'better together' story," Silver said. "Office 2007 will run on XP fine."

Silver agreed with other analysts that--despite the trendiness of Ubuntu Linux, the competence of Novell's SUSE Linux Enterprise Desktop, and the resurgence of the Macintosh platform--Vista's main competition is its own predecessor, Windows XP. Microsoft "has millions of people on XP that are happy with their computing experience," Swenson said. "They need to do everything possible to incent consumers to upgrade."

That endeavor will include talking up Vista's flashier features (like the Aero interface) and touting its under-the-hood improvements (such as improved security), without "badmouthing" XP, said Swenson.

How successful will Microsoft be? Early indications based on launch-week sales are mixed. Microsoft's traditional late-night launch of new Windows operating systems failed to draw a stampede of buyers this time around, according to most reports around the country.

At the same time, sales of Vista to businesses during December were just 3.7 percent below XP's first-month sales, said NPD's Swenson. "Given that Microsoft has spent little on advertising and promotion yet, I think it's done well," he said. "I am fully confident that, once Microsoft's advertising and marketing machine kicks in, you will see Vista sales either match or eclipse XP levels."

Success in the Long Run
Silver predicted that only 12 percent of computers in use worldwide by year's end will be running Vista, even though nearly three-quarters of consumer PCs will ship this year with the new OS. But he also predicted that consumer usage of Vista will eclipse Windows XP by 2009, when Vista will be running on 55 percent of nonbusiness PCs worldwide. In the United States, Forrester said, Vista should overtake XP in 2009, as well.

[Rasputin]

Microsoft Researcher Possibly Lost at Sea

The U.S. Coast Guard is conducting an extensive search for Jim Gray, a senior manager with Microsoft's Silicon Valley research organization, who failed to return from a sailboating trip Sunday off of San Francisco.

The Coast Guard said Tuesday that it was continuing to search 4,000 square miles of Pacific Ocean between San Francisco and the Farallon Islands, where Gray was reportedly headed in his 40-foot sailboat "Tenacious" Sunday morning. He was reported missing by his wife that evening when he failed to return to their home in San Francisco as expected.

More Productive Science
Gray, 63, was hired in 1995 to run Microsoft's Bay Area Research Center, also based in San Francisco, where he researches databases and transaction processing systems, according to a biography of him on a Microsoft Web site. His particular focus is on using computers to make scientists more productive in the fields of astronomy, geography, hydrology, oceanography, biology, and health care, the site explains.

Gray, who has also worked at such technology companies as IBM, Tandem Computers and Digital Equipment, won the ACM Turing Award in 1998 for his work on transaction processing.

Extensive Search
The Coast Guard said it has deployed a C-130 fixed-wing aircraft, an HH-65 Dolphin helicopter, three 87-foot coastal patrol boats, and other equipment to continue the search. It has been assisted by the Alameda County (California) Sheriff's Office. No signs of Gray or the vessel have been found, the Coast Guard said.

The phone at the eScience Group's office went unanswered when IDG News Service called for comment.

[Rasputin]

Another Spammer Goes Down

An Internet-based provider of sexually explicit entertainment has agreed to pay a $465,000 civil penalty for sending unwanted e-mail, the U.S. Federal Trade Commission announced Tuesday.

The settlement with TJ Web Productions is the fifth after the FTC announced a crackdown on sexually explicit e-mail spam in July 2005, when the agency charged seven companies with violating a U.S. law requiring warning labels on sexually explicit e-mail. Sexually explicit e-mails sent by TJ Web affiliates have been "widely distributed" since May 2004, according to an FTC complaint.

Including the TJ Web settlement, the FTC has collected more than $1.6 million in civil penalties from the five companies, the FTC said.

The FTC's Adult Labeling Rule and the CAN-SPAM Act, passed by Congress in late 2003, require commercial e-mailers of sexually explicit material to use the phrase, "sexually explicit," in the subject line, and to ensure that the initially viewable area of the message does not contain graphic sexual images. The rule and the law also require that unsolicited commercial e-mail give recipients a way to opt out of receiving future e-mail and provide a postal address.

Details of Settlement
Under the proposed settlement, TJ Web is permanently prohibited from violating the FTC's Adult Labeling Rule. The company also is permanently prohibited from violating the CAN-SPAM Act by initiating commercial e-mail without clearly and conspicuously displaying a physical postal address without also including an opt-out mechanism.

TJ Web, based in Henderson, Nevada, did not send e-mail directly to consumers, but it operated an affiliate marketing program and paid others to send e-mail on its behalf, the FTC said. TJ Web operates "dozens" of adult Web sites containing sexually explicit photographs and videos, according to the FTC complaint.

The proposed settlement, which requires court approval, also forces TJ Web to obtain agreement from affiliates that they will comply with the terms of the court order.

Although TJ Web has a Web site, there is no contact information listed nor does the company have a published telephone number, so no one there could be reached for comment.

[Rasputin]

Honeymoon's Over: First Windows Vista Flaw

The honeymoon ended early for Microsoft's Vista operating system, after word spread about a flaw that could allow remote attackers to take advantage of the new operating system's speech recognition feature, a process nicknamed as "shout hacking."

Microsoft researchers are investigating the reports of a vulnerability that could allow an attacker to use the speech recognition feature to run malicious programs on Vista systems using prerecorded verbal commands, the company said in an e-mail statement.

The potential security hole was discovered after an online discussion prompted blogger George Ou to try out a speech-based hack. Ou reported on ZD Net on Tuesday that he was able to access the Vista Start menu and, conceivably, run programs using voice commands played over the system's speakers.

The speech recognition flaw is novel and notable for being the first publicized hole in the new operating system since the public launch of Vista on Tuesday.

Little Impact
The impact of the flaw, however, is expected to be small. Vista users would need to have the speech recognition feature enabled and have a microphone and speakers connected to their system. Successful attackers would need to be physically present at the machine, or figure out a way to trick the computer's owner to download and play an audio recording of the malicious commands. Even then, the commands would somehow have to be issued without attracting the attention of the computer's owner.

Finally, attackersa?? commands are limited to the access rights of the logged on user, which may prevent access to any administrative commands, Microsoft said in a statement.

Microsoft recommends that users who are concerned about having their computer shout-hacked disable the speaker or microphone, turn off the speech recognition feature, or shut down Windows Media Player if they encounter a file that tries to execute voice commands on their system.

Customers who believe they have been shout-hacked can contact Windows Product Support Services, the company said.

[Rasputin]

Do You Play Tag Online?

Tagging, the emblematic activity of the "Web 2.0" and social-computing era, appears destined for mainstream status, a new study concludes.

Among U.S. Internet users, 28 percent have tagged content online, such as blog entries, photos, Web sites, video clips, and news articles, The Pew Internet & American Life Project reports in a study released this week. On any particular day, 7 percent of users engage in this activity to categorize and label material that they upload or find on the Web.

By giving people the chance to organize online content they're interested in and share it with others, tagging helps with the perennial challenge of finding useful things on the Web. "Tagging is a kind of next-stage search phenomenon--a way to mark, store, and then retrieve the Web content that users already found valuable and of which they want to keep track," the report reads.

Because this is Pew's first survey about tagging, the study doesn't quantify how fast tagging adoption is growing, but it does point at the rising popularity of tagging sites like Flickr and Del.icio.us as an indicator that the practice is increasing in popularity.

Why Is Tagging Taking Off?
Tagging is catching on as people realize the convenience of categorizing sites and files online, and as large Internet players like Google and Yahoo--the latter of which owns Flickr and Del.icio.us--offer tagging features in their own services, including Web mail, search, photo and video sharing, and social bookmarking, according to Pew.

"The act of tagging is likely to be embraced by a more mainstream population in the future because many organizations are making it easier and easier to tag Internet content," the report says.

For its study, Pew surveyed adult U.S. residents in December 2006 and found that men and women are equally likely to tag content online. "Taggers" are more likely to be under the age of 40, to have high education and income levels, and to have broadband Internet access at home.

[Rasputin]

Apple, Cisco Extend Talks on iPhone Deal

In order to keep working toward a settlement over the iPhone name, Apple and Cisco Systems have pushed back a deadline in their legal battle.

Cisco sued Apple last month in U.S. District Court for the Northern District of California over its use of the iPhone name, which Cisco uses for some of its own products.

The companies have now agreed to give Apple more time to respond to Cisco's suit so the two parties can keep talking in hopes of reaching an agreement on trademark use and interoperability, they said in a brief joint statement today.

Cisco's Position
Cisco's Linksys consumer products division sells VoIP (voice over Internet Protocol) phones under the iPhone name, which the company said it acquired in its purchase of Infogear in 2000. Apple introduced its iPhone to great fanfare at the Macworld conference last month, and Cisco later said the companies had been negotiating use of the name before the show but never reached a deal.

According to published reports, Cisco would have been willing to license the iPhone name in exchange for Apple making the handset interoperate smoothly with Cisco's products. Linksys is the biggest seller of consumer Wi-Fi access points and is expanding its home product line into the voice and entertainment realms. Apple's iPhone is equipped with Wi-Fi and includes audio, photo and video player software.

Neither Apple nor Cisco could immediately be reached for comment.

[Rasputin]

Spring Forward: Headaches for IT?

With echoes of the Y2K scare, IT administrators in the U.S. face changes to Daylight Saving Time this year, prompting concerns about a potential IT crisis that must be recognized and resolved quickly.

Signed into law in August 2005, the federal Energy Policy Act of 2005 moved the start of DST from the the first Sunday in April to the second Sunday in March and delayed the return of standard time in the autumn by a week, to the first Sunday in November. The idea: Shifting the time change by a few weeks can save on energy use.

Gartner Says Disruptions Are Likely
For IT, that means every software and hardware system relying on time stamps should now be checked, evaluated, and tested--and, if need be, patched with software updates or modified to work properly. But with a wide range of security issues, compliance requirements, spam-fighting efforts, and other concerns already on their to-do lists, many IT administrators are only now evaluating what the DST change will mean and how they need to respond.

Gartner issued a statement today urging companies to take the issue seriously, saying "disruptions at an IT infrastructure and application level are likely" and "will have significant implications for organizations around the world." The Stamford, Connecticut-based research firm said interruptions could affect calendaring applications, billing software, and security programs as well as travel and trading schedules.

"This is a minor problem compared to the big code changes required in the recent past for issues like Y2K or the euro conversion," said Will Cappelli, an analyst at Gartner. "However, significant business damage and liabilities, as well as nuisance, could occur from applications performing their processing at the incorrect time if organizations do nothing."

In the meantime, the clock is ticking.

Java Runtime Environment Vulnerable
Complicating the effort is the fact that not all vendors have said whether and how their software and hardware might be affected. That's been one of the challenges for Rudy Ebisch, the assistant director of the infrastructure group at a large global manufacturer of home and office products, who asked that his company not be named.

With nine major software platforms to deal with, Ebisch and his staff have been working for about a month to determine what they need to do to prepare for DST. During their investigation, they found that more than 100 older, unsupported applications are based on the Java Runtime Environment, which has to be patched to properly reflect the time changes.

"There are a thousand things that are going to fall through the cracks," Ebisch said. "Everything is running JRE. It's pervasive. Who is going to look at all of that and figure out what needs to be patched? There was stuff we knew we had to check [for JRE use], but now there's a hundred other things we have to check."

Although some vendors have posted information online about the issue, many have been mum, so Ebisch said he's reaching out to them. "I have 150 vendors. They're not going to contact me, so I'll have to contact them," he said. "We've got to come up with a comprehensive list."

While the time shift shouldn't be a major issue at his company, Ebisch said it could be critical for many other businesses, including banks, investment companies, hospitals, airlines, communications systems, and utilities that have time-sensitive systems. His solution--and his recommendation to other companies--is to designate an IT staffer to evaluate JRE use in all applications, determine what versions are in place, and decide who will oversee the various problems likely to arise.

"That's what I'm trying to do," he said. "Every day, someone brings up a new area we did not think about that has to be checked, and hopefully there is a patch."

[Rasputin]

Viacom Demands Video Removal From YouTube

Media conglomerate Viacom International today upbraided YouTube for continuing to host throngs of Viacom videos without permission and demanded that over 100,000 of its clips be removed from the popular video-sharing site owned by Google.

Viacom, whose properties include Comedy Central, MTV, Nick at Nite, Nickelodeon, Paramount Pictures, and VH1, ran out of patience after months of discussions with Google and YouTube, the company said in a statement.

This could mean the end of second-day looks at comedy clips from The Colbert Report and The Daily Show With Jon Stewart.

"It has become clear that YouTube is unwilling to come to a fair market agreement that would make Viacom content available to YouTube users," the statement reads.

YouTube and Google have failed to deliver efficient filtering tools, so that "vast amounts" of unauthorized Viacom video exist on the video-sharing site, the company said.

YouTube acknowledged receiving a DMCA (Digital Millennium Copyright Act) request from Viacom to remove the videos. "It's unfortunate that Viacom will no longer be able to benefit from YouTube's passionate audience which has helped to promote many of Viacom's shows," YouTube said in a statement, adding that it will comply with the request.

Viacom's move is the latest from copyright owners who are upset over the unauthorized uploading and streaming of their videos on YouTube, which is one of the most popular Web sites in the world. Japanese video content producers, for instance, have also complained.

Consequences?
Viacom's action could establish a precedent and have serious consequences for YouTube, which would see its value to users and advertisers shrink, IDC said in a research note. "If Google and media companies cannot come to an agreement on the fair market value of content, Google may be left with the long tail of content--paying the hosting and streaming costs for a huge catalog of content, each piece of which does not drive much traffic, wrote analysts Rachel Happe and Susan Feldman.

Meanwhile, Viacom could also be affected, if its position angers consumers, the IDC analysts wrote. "Unlike the RIAA, Viacom is not going after individuals, but that may not matter to users," they wrote. Viacom also risks missing out on the momentum of online video if access to its clips is too restricted. "Ultimately, ita??s not good for anyone that consumers cannot access content in multiple different ways, including on YouTube," Happe and Feldman wrote.

Background
The copyright issue has long been a known liability for YouTube. Founded in early 2005, YouTube quickly became the world's most popular video-sharing site, beating established players including America Online, Google, MSN (Microsoft's Internet unit), and Yahoo.

Impressed with that popularity, Google bought YouTube last November for $1.65 billion in an all-stock transaction, but put 12.5 percent of the amount in an escrow account for one year to, it said, "secure certain indemnification obligations."

Since the acquisition, Google and YouTube have been busy negotiating with video content owners and developing technology to detect and remove copyrighted videos uploaded by users without permission.

Google Actions
Beyond its attempts to strike deals with corporations, Google has recently also indicated its intent to share revenue with individual content owners. It has also begun integrating YouTube with the similar Google Video service.

"We're pushing very, very hard for the success of YouTube as a brand. It has tremendous traction with the demographic that we care about. An awful lot of people are now using YouTube every day in their daily lives," said Google Chief Executive Officer Eric Schmidt this week during the company's quarterly earnings conference call.

Schmidt said Google's primary focus with YouTube is user adoption, while it also experiments with advertising models. YouTube is growing its user base and advertising very fast, to the point that it's now clear to Google that the price it paid for YouTube is justified, Schmidt said.

In its statement, Viacom complained that Google is benefiting from its content without providing Viacom with adequate compensation. "YouTube and Google retain all of the revenue generated from this practice, without extending fair compensation to the people who have expended all of the effort and cost to create it," Viacom said.

[Rasputin]

Super Bowl-Related Web Sites Hacked

The Web sites of Dolphin Stadium and the Miami Dolphins team, host to Sunday's Super Bowl football game, have been hacked, and malicious code on those sites have been attempting to infect PCs for at least a week, security experts said today.

The breach on the stadium site was discovered by automated tools at Internet security firm Websense on January 26, but the engineers at the company were not alerted to the problem until this week, when Websense customers complained that they were unable to visit the site. It was corrected this afternoon.

Websense published an alert on the hack earlier today, after first notifying the Miami Dolphins, said Dan Hubbard, Websense's vice president of security research.

The www.dolphinsstadium.com and www.miamidolphins.com sites were affected by the attack, as were mirror copies of those sites, such as www.proplayerstadium.com. Security experts strongly advised Web surfers to avoid these sites until the compromise was contained.

The NFL's Superbowl.com Web site was not affected by the hack, according to Roger Thompson, chief technology officer with Exploit Prevention Labs.

The Dolphins' technicians had the Web sites cleaned up by this afternoon, but visitors who had visited the sites over the past week could have had their computers infected, said Hubbard. Miami Dolphins spokesman George Torres confirmed that the Web sites had been hacked and subsequently corrected, but he had no further details on the breach. "We are working on the technology side to review all the code and do whatever we need to, on a security basis, to prevent this from happening again," Torres said.

The Indianapolis Colts face the Chicago Bears in the National Football League's championship game, one of the most anticipated sporting events of the year in the United States.

Malware Details
The Dolphins' sites were serving up malicious JavaScript code that exploits two known Windows vulnerabilities, Hubbard said. It then attempted to connect with a second Web server that installs a Trojan horse downloader and a password stealing program on the victim's computer. The Trojan horse program would allow the attackers to install malicious software at a later date, he said.

The Web site that loaded the malicious software is based in China, according to Thompson.

The Microsoft flaws that were exploited by hackers on the sites were both patched by October, but the breach was significant, he said.

"It's a pretty big deal," he said via instant message. "A lot of people check out football stuff at work, and I bet lots of companies are not patched, even through October."

[Rasputin]

Dell Investors Sue PC Maker Over Accounting Practices

Shortly after the resignation of its chief executive, Dell reeled from another blow as a group of investors filed a lawsuit alleging that the company had used illegal accounting methods to hide secret kickback payments paid by Intel.

The payments from Intel were meant to ensure that Dell used only Intel processors in its PCs, according to the suit. The investors filing the suit Wednesday asked the U.S. District Court in Austin, Texas, to give the case class-action status, saying that Dell shareholders were harmed when Dell inflated its profits.

The investors claim that Dell's profits were inflated by hundreds of millions of dollars, The Wall Street Journal reported today.

Intel Denies Charges
Intel denies the charges. A Dell spokeswoman said the company did not comment on pending litigation. In May, Dell announced it would also began selling PCs and servers using chips from Intel's rival, Advanced Micro Devices.

The new accusation echoes several ongoing lawsuits against the two companies. In August, regulators from the U.S. Securities and Exchange Commission (SEC) and the U.S. Attorney for the Southern District of New York launched an investigation of Dell's accounting practices. Since then, Dell has failed to file its quarterly earnings numbers for the periods ending August 4, 2006, and November 3, 2006, leading the Nasdaq stock exchange to decree it will drop Dell from its listing board unless the company opens its books by March 14.

In December, a U.S. judge ordered Intel to share information about its overseas business practices to answer charges by AMD that it paid illegal cash rebates and discounts to dissuade PC vendors and retailers from using AMD's processors. That case is scheduled to be argued in court in April 2009.

Intel said the Dell lawsuit allegations were merely a copy of the AMD case, and that it had already refuted those charges.

"We've conducted a preliminary review of the matter, and at first glance it appears that some of the allegations with regard to Intel may be made up," said Intel spokesman Chuck Mulloy. "While they rehash antitrust allegations from other cases, there is no [new] antitrust claim. Intel denies the plaintiffs' allegations and plans to move quickly to defend itself."

As evidence that it has no connection to Dell's accounting practices, Mulloy said that Intel has not been contacted by investigators from the SEC or the Department of Justice.

Not Dell's Best Year
Dell is struggling through a brutal series of events, culminating in the resignation Wednesday of CEO Kevin Rollins after just two years at the helm. The company's founder and namesake, Michael Dell, will resume that job, taking up the fight to convince Wall Street that he can turn around sinking profits. After missing its earnings targets for recent quarters, Dell lost its mantle as the world's largest PC vendor to its surging rival Hewlett-Packard.

Lawsuit Details
The shareholders' lawsuit also leveled charges that were far more personal than mismanaging a public company. According to the 335-page suit, 15 senior executives of the company took huge financial payouts by using an insider-trading strategy to push Dell stock to high levels, then selling their shares and options.

During a period from February 2003 to September 2006, the executives pushed Dell stock from $22.59 per share to $42.57 before selling a total of $3.3 billion worth of shares, according to the lawsuit, which was brought by the firm of Lerach Coughlin Stoia Geller Rudman & Robbins, of San Diego.

"Why--if Dell's business was actually performing as wonderfully as the Dell defendants said it was and if its future prospects were as good as they forecast they were--would these insiders sell off so much of their stock?" the lawsuit asks.

"The true reason for Dell's reported superior operating margins was, in large part, the hundreds of millions of dollars of secret and likely illegal rebate/kickback payments Dell was receiving from Intel at the end of each quarter in return for purchasing 100 percent or virtually 100 percent of its microprocessor requirements from Intel," the suit says.

[Rasputin]

Word Gets Open XML Tool

Companies have completed the first phase of a Microsoft project to create software that can convert Microsoft Word documents between Open XML and Open Document Format for Office Applications file formats.

The Open XML Translator is now available for download in version 1.0 from SourceForge.net, a site that acts as an online repository for open-source projects. The software also can be found on Microsoft's Web site.

Microsoft Approved
Microsoft funded the work on the translator, but did not contribute any code to the project, said Jason Matusow, senior director of intellectual property and interoperability at Microsoft. The company provided architectural guidance and management to the project, he said.

A French company called CleverAge contributed the code and built most of the Open XML Translator, while Aztecsoft in India and Dialogika in Germany did the quality assurance and testing.

The Open XML Translator allows Microsoft Word documents based on Open XML to be translated into ODF and vice versa, Matusow said. Once downloaded, it can be used as a plug-in for Microsoft Office 2007, the documents of which are based on Open XML. Developers also can build it into software they are developing.

The Open XML Translator for Word documents is the first phase of the project. The team is currently working on translation between ODF and Open XML for spreadsheets written in Microsoft Excel 2007 and presentations developed in Microsoft PowerPoint 2007, Matusow said.

Customer Interest Cited
Much has been made of the fact that Microsoft did not provide native support in Microsoft Office 2007 for ODF, though it provides support for 30 other file formats and uses Open XML as the default document file format. Matusow defends that decision by saying Microsoft tries to meet its customers' wishes, and there was no customer demand for ODF--largely supported by rivals IBM and Sun Microsystems--when development on Office 2007 began. IBM and Sun both use ODF as the default file format in their own rivals to the Microsoft Office suite.

"A standard is about a stack of paper--market adoption is the ultimate driver of activity," Matusow said. "What gets built and used is the defining element. That's why we look at the customer discussion as being so important."

However, government customers that may be required to use only industry-standard technologies in their IT infrastructure requested that Microsoft provide a way to translate between Open XML and ODF. ODF recently was approval by the International Organization for Standardization (ISO) as a global standard, while Open XML is awaiting approval.

Third Party Alternatives
Matusow said the reason Microsoft let third parties be the primary creators and caretakers of the Open XML Translator is because of the input of government customers who wanted Microsoft to provide a free, open way to translate between ODF and Open XML--one that was not strictly overseen by Microsoft but was more of a community effort.

To its credit, Microsoft did try to include native support for another company's document format--a standard implementation of Adobe's PDF--in Office 2007, but Adobe balked at the idea and asked Microsoft to pull that support, which it did. Adobe recently submitted PDF to the ISO for global standardization, and Matusow said Microsoft would again be "open to conversation" with Adobe about including PDF as a native file format in a future version of Office.

Microsoft is also working with Novell so the OpenOffice.org suite can support Open XML.

[Rasputin]

Power-Efficient Chip Ships

A startup chip company is introducing a power-efficient processor it has been developing for three years, just as the market clamors for energy efficiency.

For Network Gear
P.A. Semi is offering a dual-core, 64-bit processor today that it claims uses only 5 watts to 13 watts of electricity running at 2GHz, making it 300 percent to 400 percent more power-efficient than comparable processors.

P.A. Semi is making its PA6T-1682M PWRficient processor available to companies that will test it for possible use as an embedded processor in networking equipment for telecommunications, military or aerospace customers, said Dan Dobberpuhl, co-founder and chief executive officer.

The chip is based on Power Architecture technology, which the company has licensed from IBM. P.A. Semi claims the new product has a better performance-per-watt rating than an IBM 670MP processor, an Athlon 64x2 processor from Advanced Micro Devices and the Core 2 Duo from Intel. But P.A. Semi won't be directly competing with AMD and Intel because it won't be selling into the server or personal computer markets with its initial product.

P.A. Semi's performance measures were not independently verified. The company unveiled the chip at In-Stat/MDR's Fall 2005 Processor Forum.

Power Management Plan
P.A. Semi has improved power efficiency through advanced dynamic power supply regulation, Dobberpuhl said. In older chip design, power coursed through the processor continuously. About ten years ago, chip designers introduced dynamic power supply regulation in the processor block to start and stop the flow as needed, a process also called "clock gating." But P.A. Semi gets more granular, clock gating not at the block level, but at the registry level within a block.

"That level of fine grain clock gating inside the block, no one else has really done," Dobberpuhl said. "In our chips we have more than 25,000 gated clocks; most chips that do [block level] clock gating have maybe a few hundred."

Although the 1682 is targeted only at networking equipment, the company has plans to later introduce other members of the PWRfficient family, including single-core processors that could find a wider market in blade servers and some portable devices.

But even just in networking equipment, the chips could be a big help in energy efficiency, said Richard Wawrzyniak, senior market analyst with Semico Research.

"For all the people who are concerned with their power budget, or they have run out of power budget, and they are trying to figure out some way to increase their performance, this makes a lot of sense," Wawrzyniak said.

Energy Interests
Dobberpuhl was previously a vice president at chip maker Broadcom, which acquired his company, SiByte, in 2000. He also spent 20 years at Digital Equipment developing microprocessor technology. Other cofounders and executives of P.A. Semi, based in Santa Clara, California and founded in July 2003, worked with Dobberpuhl at Broadcom, or SiByte.

Engineering samples of the 1682M sell for $700 apiece while an evaluation kit carries a price tag of $8500.

Power efficient operation of servers and other computers has become a top concern of data-center managers because of rising energy costs. It has long been a focus of P.A. Semi and its embedded processor development. "We were doing this before it was cool," Dobberpuhl said.

[Rasputin]

Kodak Announces New Multifunction Inkjet Printers

Though Kodak has recently released several 4-by-6-inch snapshot printers (the EasyShare Photo Printer 500, for example), the company is now set to launch its first full-size printers in roughly five years.

The $150 EasyShare 5100 All-in-One and $200 EasyShare 5300 All-in-One printers are due in early March, while the $300 EasyShare 5500 All-in-One (equipped with 100-sheet memory, 33.6-kbps fax capability, and 35-sheet legal-size automatic document feeder) is slated to appear in May.

Each has two USB ports to print directly from a USB thumb drive or digital camera. To further simplify printing without a PC, the EasyShare 5300 and 5500 also have built-in media card readers and LCD displays (3 inches and 2.4 inches, respectively).

For paper handling, each model in the EasyShare All-in-One (or AiO) line has a 100-sheet input tray, a 20-sheet 4-by-6-inch photo-paper feeder, and a 50-sheet output tray. The duplex attachment (for two-sided printing) bundled with the EasyShare 5300 will be an optional extra for the other two models.

Another option--a Bluetooth 2.0 attachment--will enable wireless printing from Bluetooth-equipped notebooks, PCs, camera phones, and digital cameras. All models will feature the same printing speeds and letter-size CCD scanner for copying; they will also support the Windows XP, Windows Vista, and Mac OS X operating systems.

Besides being available directly from Kodak itself, units in North America will be sold exclusively through consumer electronics retail giant Best Buy. (Kodak also plans to release the printers in certain European countries in May and in Australia and New Zealand later this year.)

Why It's Taken So Long
I recently met with Eastman Kodak to discuss the announcement and asked Bob Ohlweiler, marketing manager for inkjet systems, why the company had waited until now to produce full-size inkjet printers again.

His reply: "Inkjet photo printing at home has only recently gone mainstream with consumers. Our entry into the home inkjet printing market makes a truly unique contribution by solving the three key problems with inkjet printing: high ink prices, photos that don't hold up to lab quality standards, and ease of use."

Here's how the company plans to address these issues.

Ink Cartridges and Pricing
Each new EasyShare AiO printer uses the same dual-cartridge system: one black and one five-ink color tank. The color cartridge features true photo black, cyan, magenta, yellow, and a protective ink designed to cover clear spaces on a print to provide uniform gloss and improved stain protection. Interestingly, the colors, and not just the black, are all pigment-based (as opposed to dye-based); pigments generally produce darker text and more vibrant and longer-lasting photos. A full-capacity color cartridge (which will retail for $15) and full-capacity black cartridge ($10 at retail) will be included with each printer.

Those replacement cartridge costs are quite competitive, and Kodak will also aggressively seek to lower the cost per photo by selling two types of value packs. Along with a full-capacity color cartridge, the $18 Standard pack will include 180 sheets of standard 4-by-6-inch glossy paper (for a cost per photo of 10 cents), while the $20 Premium photo pack provides 135 sheets of slightly thicker 4-by-6-inch glossy paper (for a cost per photo of 15 cents).

To put that into context, the current industry average cost per photo is about 25 cents. For instance, HP's $36 02 Series 150-sheet Photo Value Pack includes the six custom cartridges required by models such as its full-size PhotoSmart D7160 printer, for a per-photo cost of around 24 cents. Canon says that its CL41/CL52 ink tanks combined with 50 sheets of Canon Photo Paper Glossy produce photos at a cost of about 28 cents each. For its compact P350 Photo printer, Lexmark's $29, 100-sheet 4 X 6" PerfectFinish Photo Printing Kit includes a #45 color cartridge and produces photos for about 29 cents each. Similarly, Epson's $38 PictureMate 200-Series Print Pack produces 150 glossy 4-by-6 prints for about 25 cents each.

With Kodak's system, per-photo costs would rise that high only if you use its top-of-the-line, thicker, and more porous Ultra Premium paper. This paper is sold only on its own, in packs of 100, for $21. You'd need to buy the $15 color cartridge separately, which, on Ultra Premium Paper, produces 105 4-by-6 photos. Bottom line: Printing on Kodak's Ultra Premium Paper costs 35 cents per photo, while its value packs produce prints for 10 or 15 cents each--half the industry average.

For text, Kodak claims the individually available black cartridge can produce about 350 pages of normal mode text on a letter page (based on industry-standard 5 percent coverage). That comes to roughly 3 cents per page for ink costs alone.

Print Quality and Speed
When I met with Kodak to check out these new models, I wasn't able to use my own image files, but the test prints we produced together--mostly borderless 4-by-6-inch photos--had bright, natural colors. Because the glossy photo paper Kodak will be offering is porous, it also dries quite quickly, which keeps prints from sticking together on an output tray. Kodak also claims that its pigment inks produce photos that won't fade for 100 years.

Overall, the photos the new EasyShare AiO printers produced during my briefing looked quite strong. (I intend to test a unit, compare its output against that of other models, and report these findings to you as soon as I can.)

Though final independent tests remain, Kodak seems confident. Susan Tousi, Kodak's research and development manager for Inkjet Systems, claims that each model "produces Kodak Lab-quality photos that are equal or higher in quality to traditional silver-halide prints."

Tousi also explains that each new model uses the same print engine and the same permanent print head a user installs once for the life of the printer. The print head produces prints in 6.5-picoliter droplets for the black, yellow, and protective inks, and 2.7 picoliter droplets for the remaining colors.

The small size of the color droplets reduces the need for light cyan and light magenta inks, which many other photo printers employ to help create smooth color transitions. However, rivals such as Canon have used a combination of 1-picoliter droplet sizes and light/photo cyan and magenta inks in a single printer before. Our current second-ranked multifunction inkjet printer, Canon's $400 MP960, is one example.

The print head also uses a large number of ink nozzles--3840--which makes for increased printing times. Kodak claims its AiO models can print 32 pages of draft-mode text on plain paper per minute, and deliver a 4-by-6-inch borderless photo (at default maximum settings) in 28 seconds.

[Rasputin]

Transmeta Turns to Technology Licensing

Transmeta Corp. will stop offering engineering services in order to focus entirely on developing and licensing intellectual property, the Santa Clara developer of chip technologies said on Monday.

The move follows a restructuring in early 2005 that cut its chip sales business in order to focus on engineering services and intellectual property licensing.

"Over the past year, the level of activity for engineering services has declined dramatically due to the completion of programs and our customers' declining staffing requirements," said Les Crudele, president and CEO of Transmeta, during a conference call to discuss the change. "As a result, the billable time for our engineers has declined to the point that the projects are no longer sufficient to cover the costs associated with that business."

On Friday, Transmeta laid off 75 employees, mostly engineers in the services business, and expects to let go another 25 to 55 people in the next few quarters.

The majority of Transmeta's engineering business came from Microsoft Corp. and Sony Corp. Last year, Sony reduced its deal with Transmeta and its contract ends in March.

Transmeta has also completed a services contract with Microsoft on the FlexGo project, a program that enables customers in developing economies to buy computers and software on a pay-as-you-go basis. Transmeta plans to retain some staff in order to support that program as it progresses past the trial phase.

Transmeta also plans to close its sales and support offices in Taiwan and Tokyo.

Without the drag of the engineering services business, Transmeta hopes that it can build its licensing business by attracting more customers. Currently, companies including NEC Corp., Fujitsu Ltd., Sony and Toshiba Corp. license technology from Transmeta. The company has been talking to chip makers outside of Japan about licensing deals but isn't ready to make any announcements yet, Crudele said.