Bill Gates seeks patent for ad-rebate program

I don’t write a lot about Microsoft patent applications, as they’re often so vague that guessing their true intent is an effort in futility. But when it’s Microsoft Chairman Bill Gates’ name on the application, things get a little more interesting.

Gates and a Microsoft researcher applied for a patent in March 2006 for a advertising system that would use customer points to confirm transactions. (Thanks to Todd Bishop with the Seattle Post-Intelligencer for the patent link.)

The patent abstract:
“The claimed subject matter can provide a mechanism that facilitates a new advertising and/or referral architecture in the Internet advertising space, e.g., for advertising on search engine web pages and/or on content web pages. A mechanism is provided to confirm transactions even without monitoring them e.g., by issuing perishable, non-redeemable points to a merchant based upon an advertising budget. The points can then be issued as redeemable points to a customer, e.g., based upon the customer makes a purchase from the merchant. Points transferred to the customer can verify that a transaction occurred, and can be redeemed for products/services, including a convenient ‘micro-payment’ mechanism.”
This patent application is interesting for several reasons. First, it shows just how much time and energy Gates is putting into understanding the dynamics of the online advertising market. (And you thought all Gates cared about were perpetually up-and-coming technologies like Tablet PCs, voice-recognition software and IPTV….)

Gates has been mulling the role of points and micropayments in the e-commerce space for years. Anyone else remember Microsoft Wallet? As of late, like a number of other Microsoft brass, Gates also has been looking for ways to target advertising at specific consumers by using methods and technologies other than search engines and click-through rates (CTRs).
Could a point system, similar to a frequent-flyer rewards program, be a better and potentially more secure way to match advertisers and consumers? Playing the “anti-competitive” and “information monopoly” trump cards, the patent applicants argue:
“Conventional search engines providers usually sell the ad space to the highest bidder based upon a pay-per-click (PPC) scheme and/or set the fee for the ad space according to a click-through-rate (CTR). However, these schemes have proven to be counterproductive for both consumers and advertisers, and ultimately inefficient to the search engine industry as well. These schemes or business models are anti-competitive as evidenced by the extremely high profit margins of the top two search engine providers. However, the market share for these search engine providers continues to increase, establishing an ‘information monopoly.’ Moreover, these models do not account for the true value of the ad to consumers or compensate for click fraud, wherein a user clicks on an ad, perhaps numerous times, for the incentives provided rather than due to an interest in the advertiser.”

Another reason I found this patent application interesting was Gates’ co-applicant, Kamal Jain. Jain is a seven-year Microsoft Research (MSR) veteran. His current title is “Principal Researcher, Theory Group.” According to Jain’s bio, he started out as a member of MSR’s cryptography group. Now he’s part of MSR’s ACE (algorithms, computation and e-commerce) group.

Jain is listed as a co-inventor on a number of patents, “including some on contemporary areas related to ad display and ranking, dynamic ads in live games, ecommerce, wi-fi music sharing, peer-to-peer networking, water-marking, global and universal Turing tape, and ink-signature etc.” Besides Gates, Jain’s other co-inventors include Chief Software Architect Ray Ozzie and Distinguished Engineer Gary Flake.

According to the “SEO by the Sea” blog (a link also provided by the Seattle PI’s Bishop), Jain’s been a busy patent applicant and seems to be submitting patents on a variety of ad-referral- and ad-targeting-related inventions.
Any other observations about this patent application by Gates and Jain?

The Hidden Wealth in Domain Names

When will the ad industry and its clients wake up to the value of domains? When asked that question at 1:30 a.m. on the Domain Roundtable Conference's first night, conference chair Jay Westerdal responded: "They're going to wake up when it's too late." Most of those interviewed at the conference confirmed his views.

How to draw the advertising industry into the secondary market for domain names is preoccupying the domain name industry this year. Domain industry convocations have been grappling with the issue, seeing it as providing an opportunity for the secondary market to scale up and achieve sustained profitability and liquidity.

The most recent major conference was the Domain Roundtable Conference, hosted in Seattle by Name Intelligence Aug. 13-15. The Seattle conference highlighted the importance of the issue, and presented contrasting perspectives on why traditional advertising firms have largely stayed away from secondary markets for domain names.


Investing in Domain Names
Conference participants expressed agreement on the legal impediments that are seen as discouraging investment in domain names. Frank Schilling, a domain investor and panelist at the Seattle conference, advocates changes in intellectual property laws in the United States to provide increased security of title for registrants of domain names.

Schilling is alarmed at the prospect of trademark owners automatically assuming that they have the rights to every domain name that comes close to a variation or permutation of a registered trademark, regardless of whether a trademark and domain name are being used for related purposes.

"What is needed is reform of U.S. trademark laws that is fair to both sides," said domainer Gene Heu, speaking outside the auction session on the last day of the event. "Advertising agencies and their clients will be afraid to invest in domain names if they fear that another party will come after them."

Fairness for both sides was a theme echoed by Michael Zaugg of RevenueDirect, which provides parking services for domainers seeking to monetize their traffic with advertisements targeted specifically to individual domain names.

"In defense of trademark holders, they should not have to register thousands of typos and variations of their brands in order to have some protection, but yet the globalization of commerce has made it hard to find new domains that are not similar to those in use elsewhere," Zaugg said.

"The Internet has done what madmen and conquerors have tried to do throughout time: unify the world," said Heu. The unification of global commerce on the Web has forced all businesses and brand owners to compete on the same global platform for brand identity through domain names, Heu explained. Competition is fiercest for dot-com domains, which carry the most authority and prestige for branding purposes.

Domainers in Seattle suggested that new trademark rules could be accompanied by a domain name amnesty, whereby domain owners would be able to offer domain names to trademark holders in exchange for reimbursement of accumulated registration costs. Opportunities for trademark owners and domain owners to enter into non-adversarial discussions are seen as lacking from current dispute resolution systems.

Another suggestion was for the Internet Corporation for Assigned Names and Numbers (ICANN) to attach trademark rights information to domain names at the time of registration. Domain names being considered for registration could be flagged for potential trademark violations, thereby discouraging registrations that violate existing trademark rights. If a registrant decided to proceed, they would be provided with due notice of existing trademark restrictions governing the use of a domain name.

Do Advertising Firms Understand Domains?
The question of whether the advertising industry understands domain names did not elicit uniform responses at the conference. Speaking at the back of the auction hall on Aug. 15 after Rebate.com and Rebates.com had been sold together for US$1 million, Sahar Sarid outlined the "yes" position. Sarid is an Israeli-born domain investor and cofounder of the Recall Media Group.

Will old-media advertising firms become involved in the secondary market for domain names in the near future? No, Sarid answered.

"It's a conflict of interest," Sarid said. Why? "Because it works," he replied, explaining that the Internet is not good for old-media advertising agencies because it can make them look bad and cause their clients to fire them.

Sarid sees little or no accountability in ad spending on traditional media. As he described it, clients are encouraged to spend large amounts of money on television and print ads, without being able to accurately gauge the results -- either in terms of calculating the number of new clients or the amount of revenue generated by individual advertisements.

The purchase of domain names to attract customers through direct search and the purchase of advertising on domain-name landing pages allows advertisers to track incoming clients and revenue, Sarid pointed out, leading him to refer to those online methods as ROI, or return-on-investment, advertising.

ROI advertising is not restricted to direct search or domain-specific advertising, he said, but can extend to online advertising in general. Ad industry people are brighter than domain investors, Sarid said. Few domain investors know how to run a business, he said, only how to manage domain names.

Advertising Agencies Seen as Too Cautious
When will the ad industry and their clients wake up to the value of domains? When asked that question at 1:30 a.m. on the conference's first night, conference chair Jay Westerdal responded: "They're going to wake up when it's too late."

He added: "They are not going to know the value of those names until they are all locked up." Most of those interviewed at the conference confirmed his views.

Describing the position of technology firms, advertising agencies and investors who have already staked out a position in the domain industry, Yossi Goldlust of the online ad agency LookSmart said: "We have Internet jujitsu, we have first mover advantage."

On the question of when traditional advertising agencies would enter the domain name industry on a major scale, Goldlust said that they are not going to do it right away. He said that traditional ad agencies will need two to three years of experience in the domain industry first, experience that he says those agencies currently lack.

"The ad industry feels it is being pushed into a marriage [with the domain name industry], when it only wants to date a little," Goldlust said, speaking shortly after 2 a.m. on the first night of the conference. "Advertisers need to be educated on the value of domains and direct search traffic," he added.

"The domain industry has not found a way to translate its value proposition into terms that traditional advertisers can understand," said Goldlust. "We are in a 'Who's on first, What's on second, I Don't Know's on third' conversation now."

The gap between the domain industry and traditional advertisers is aggravated by two factors, according to Goldlust:


Lack of experience of domainers in traditional advertising.
The maturity of the traditional advertising industry and the fact that it is losing market share for total advertising dollars. This encourages risk-averse behavior.

"Contrary to how they like to position themselves, they are not open minded to new concepts and business opportunities," Goldlust said. "It's almost like a Greek tragedy."

He predicts that in 18 to 24 months the mainstream advertising industry will begin to establish a significant presence in the secondary market for domain names.

What is needed to bring the industries closer together? "Talk," Goldlust said. "Each side needs to learn each other's language. Each side needs to talk to each other."

Market Action Shifting Towards Registrars
Will the domain name industry and domain valuations stand still over the next two years? No, Sarid said, pointing to the new Domain Distribution Network (DDN) service being launched globally by the Australian company Fabulous.

The DDN allows domain name registrars to list domains available in the secondary market alongside query results for new domain name registration requests. The DDN enables registrars to quickly verify, sell and transfer ownership of domains in the secondary market, rather than merely referring buyers to legacy marketplaces such as Afternic and Sedo.

Sarid and Shilling suggest that the DDN could consolidate the primary and secondary domain markets into the hands of registrars, increase the number and speed of transactions in the secondary market and raise the asset value of domains that have preexisting commercial viability -- although not necessarily any traffic.

Auctions for premium domains will continue to serve as the centerpiece of upcoming domain industry conferences. Westerdal's plans for the next Domain Roundtable include lowering the starting bids for domains being auctioned and better tools for the auctioneer to instantly coordinate bids received from the conference floor with those received online.

The next Domain Roundtable is scheduled to be held April 18-20, 2008, in San Francisco. Westerdal's formula for the conference is: Domains + Ads + Web 2.0 = San Francisco 2008.

Incurable Viruses: How Real Is the Threat?

The only type of virus that is truly incurable is a physically destructive virus. If the virus is a Trojan, worm or other file infecter, it can be cleaned up. An incurable virus would be one that alters or damages the system in some way. The question is: If there is no damage to the hardware and you can reload the OS, is the virus truly incurable?

Pimply faced pranksters and lone profiteers who poison computer systems have been replaced by organized criminals of a different breed.

"These guys are professional organizations. They are fully funded and they're writing specifically for profit," David Frazer, director of technology services at F-Secure , told TechNewsWorld. "Notoriety virus writers are all but gone now."

This new wave of organized crime is churning out professional-grade, so-called "incurable viruses" that are leaving hundreds of thousands of victims in their wake.


Mouse Chases Cat
Malware writers are cunning, determined and largely undeterred by the security programs currently in play. Indeed, they find such programs helpful to their cause. "Malware writers have an advantage in creating viruses to get on the system without detection in that the virus writers use anti-virus products to test if their new virus is detected," Javier Santoyo, senior manager of development at Symantec (Nasdaq: SYMC) , told TechNewsWorld.

"The virus writers use packers to compress and obfuscate their threats until they find a combination anti-virus vendors don't support," he added. "This is a continuous cat-and-mouse chase between security vendors and malware writers."

The types of organizations behind threats today are highly organized.

"These organizations employ people who perform a typical 9-to-5 job. They have full quality assurance and testing before they try to infect," Frazer said. "Typically, they are targeting specific organizations or companies, and the infection is usually followed with a ransom demand."

"In the consumer segments they are using users' PCs as botnets in proliferating spam out to the Internet or using loggers to steal passwords, credit card and bank details from unprotected online banking and credit-card users," Frazer detailed.

The Incurable Lie
Malware writers do share one trait with their pimpled predecessors: arrogance.

"One interesting case was the Bagle / Netsky viruses. Each was authored by a separate virus writer, and they launched an ongoing war against each other in which they sought to remove the other's worms," confides Frazer. "In one day, F-Secure sent out 14 signature updates to keep up."

The viruses malware writers produce are far from the iron-clad monsters the creators purport them to be.

"Right now, there's no such thing as an incurable virus," said Frazer.

The only type of virus that is truly incurable is a physically destructive virus. If the virus is a Trojan, worm or other file infecter, it can be cleaned up. An incurable virus would be one that alters or damages the system in some way. The question is: If there is no damage to the hardware and you can reload the OS, is the virus truly incurable?

"A truly incurable virus would have to cause hardware damage," says Santoyo. "Very few viruses have existed that caused hardware damage with no chance of remediation."

However, that is not to say that the damage is not real or tangible.

"Ultimately, any malicious program can be wiped by re-imaging the hard drive; however, re-imaging may result in data loss unless you regularly back up data," Peter Firstbrook, research director at Gartner (NYSE: IT) , told TechNewsWorld.

There is also the problem of invisibility that allows malware to strike repeatedly without notice.

"Malware may be very well hidden so that users don't realize they have a virus," added Firstbrook.

Morph Morbidity
Viruses share a common mode of attack, according to Santoyo. First, if they can penetrate a system without being detected, they try to disable any security software from updating. This is one way that a virus can remain persistent on a system; the other is to use a watchdog process to re-launch or re-create themselves if they get deleted for any reason. Lastly, viruses also embed themselves in the operating system to be launched after a reboot.

Viruses that stop there are more easily caught and sterilized by anti-virus software. It is the more sophisticated and insidious generation that creates the most havoc.

"In general, metamorphic and polymorphic viruses are the most difficult to deal with," confided Santoyo. Both types, as their names suggest, change, mutate and move in order to avoid detection.

Zmist is a recent example of the serious threat posed by this class of viruses. Zmist replicated itself differently each time it infected a new computer. Zmist -- a.k.a. Zombie.mistfall -- is termed a metamorphic virus, one that recreates itself every time it is detected. Unless you have the exact signature, they're more difficult to detect.

"Zombie.mistfall was significant because it introduced code integration, a new vector of infection," explains Frazer. "This is where a virus would insert itself into a file and actually move code in a program out of the way and rebuild the executable that made it difficult to find within that file."

Tough to Track
Polymorphic malware has been around for awhile, but it is becoming more common.

"Packers and encryption software are useful for changing the characteristics of the malware each time it is distributed to avoid signature based detection mechanisms," said Firstbrook.

The latest round of metamorphic and polymorphic viruses includes Code Red, SASSER, NIMDA, the Melissa virus, and MS Blaster. "These were very destructive and propagated very quickly," says Frazer.

Rootkits can hide malicious programs from antivirus software so that they are difficult to detect.

"Some malicious programs have multiple components that have a heartbeat message every few seconds so that if one component is deleted in an attempt to remove the malware, the remaining component will create a new version of the deleted file, making it difficult to remove unless you delete both files simultaneously," says Firstbrook.

Then there is the garden variety of stealth viruses with a hefty new dose of aggressiveness finely aimed at specific victims.

"Targeted malware (vs. mass propagation) is also difficult to detect because it takes a while for the malware sample to get to the antivirus vendors for analysis and signatures," explained Firstbrook.

Horrors on the Horizon
As if viruses that jump to a different sector on a disk or move to another port of memory that has already been scanned are not difficult enough to deal with, there are other malware tricks breaching the horizon.

"In the spam community, the big trend has been sending malware in the forms of .pdf," says Frazer. "It's an accepted and universal standard and as such isn't filtered by most anti-spam software programs."

Mobile technology is also opening the door to new virus frights. Bluetooth enables mobile worms to spread by virtue of mere proximity, like an influenza virus. A Bluetooth-equipped phone can identify and exchange files with other Bluetooth devices from a distance of 10 meters or more.

As victims travel, their phones can leave a trail of infected bystanders in their wake -- although with current viruses, the recipients have to actively acknowledge the virus transmission before they can get infected.

That may soon change, however.

"Any event that gathers a large crowd presents a perfect breeding ground for Bluetooth viruses," warned Frazer.

With the advent of the iPhone, which delivers the Internet in its original glory, and the phones that will inevitably follow suit, malware writers will find new ways to exploit Bluetooth spreadability with their newly fortified arsenal of standard Internet deliverability.

It's enough to give security vendors more than just a few sleepless nights.

"The challenge is to stay ahead," said Santoyo. "Understanding the threat landscape is very important."

Researchers are busting it to bust the bad guys, however. So hope, too, is on the horizon.

Host-based intrusion prevention techniques are increasingly used in antivirus programs to detect new threats, Firstbrook said.

Some successful HIPS techniques include:

Memory access protection (buffer overflow), since 60 percent of malicious code depends on memory manipulation techniques to inject its payload;
Vulnerability shielding is a HIPS capability that protects known vulnerabilities from attack, regardless of the form the particular attack takes;
Genetic heuristics -- broad signatures of exploit families designed to detect variants by using higher-level characteristics of a malicious code rather than more-detailed signatures;
Application whitelisting/ blacklisting and "standard user" reduced privileges limit all new applications;
Sandboxing and virtualization techniques to run the unknown "gray" code in a restricted environment show promise, but Firstbrook says they are rare in current HIPS solutions.

However, the problem of stopping these crooks in their tracks is not solely of the technical realm.

"As far as regionally, we're seeing a lot of spamming, ID theft and even targeted attacks coming out of Asia, Russia and South America. The laws and challenges in working with different governmental bodies contribute to this," said Frazer. "By no means are these the only regions, but socioeconomic and legal challenges play a role here."

Indeed, the horizon shows the potential for a true "cyber-war."

User Armor
The best cure remains the same despite the many virus mutations: prevention. Firstbrook says there are seven steps to thwarting viruses before they can strike:

Use up-to-date antivirus and personal firewalls (not the Windows Personal Firewall),
Maintain all software (use auto update in windows) to current versions,
Do not use shareware or advertising sponsored software unless it comes from a very reputable source,
Do not add software to view Web content of questionable sources,
Do not use P2P networks,
Do not open e-mail or attachments from people you don't know (even from people you know but were not expecting),
Periodically scan your PC with an online scanner (i.e. not your incumbent AV vendor.)

He suggests using one of the following:

Webroot
Trend Micro
Symantec
McAfee

Microsoft Plans Canada Software Center

Microsoft has been a vocal proponent of increasing the number of visas granted to skilled workers from outside the U.S. At the same time, the software maker has repeatedly said the U.S. is not producing enough engineers to fill its chairs, and argued that the U.S. education system fails to place enough emphasis on math and sciences.

Microsoft Relevant Products/Services Corp. plans to open a software development center in Canada this fall to attract talent and avoid U.S. immigration issues.

The Vancouver, British Columbia location will be one of only a handful development centers outside the company's headquarters in Redmond, Wash., the software company said Thursday. It previously announced plans to build sites in Boston and Bellevue, Wash.

Microsoft says the Vancouver location will "allow the company to continue to recruit and retain highly skilled people affected by the immigration issues in the U.S."

Microsoft has been a vocal proponent of increasing the number of visas granted to skilled workers from outside the U.S. At the same time, the software maker has repeatedly said the U.S. is not producing enough engineers to fill its chairs, and argued that the U.S. education system fails to place enough emphasis on math and sciences.

"Microsoft is a global company, and our greatest asset is smart, talented, highly skilled people," said S. Somasegar, corporate vice president of the Developer Division at Microsoft, in a statement Thursday.

Microsoft Canada Co. was established in Mississauga, Ontario in 1985. The software, computer services and Internet technology development company has offices in Toronto, along with eight regional offices across Canada.

The company did not release any financial details on the new site, which is about 150 miles from Redmond.

Other centers are located in North Carolina, Ireland, Denmark, and Israel, while full research-and-development sites have been built in the U.K., India, China, and California's Silicon Valley.

Little Annoyances Still Big Vista Issue

Industry analysts say Windows Vista adoption is plodding along as expected, with most consumers and businesses switching over as they replace old hardware with new. IDC analyst Al Gillen said he expects Vista will be installed on the vast majority of computers in about five years, the time it took for XP to reach 84 percent of PCs.

Chris Pirillo leaned away from his webcam and pointed to his printer Relevant Products/Services/scanner/fax machine, which stopped scanning and faxing after he installed Microsoft Relevant Products/Services Corp.'s new Windows Vista operating system.

"I can't live in Vista if the software that I use in my life for productivity does not work," said Pirillo, in the third minute of a 52-minute video he posted on YouTube.

Nearly six months after it launched, gripes over what doesn't work with Vista continue, eclipsing positive buzz over the program's improved desktop search, graphics and security Relevant Products/Services.

With Vista now shipping on most new computers, it's all but guaranteed to become the world's dominant PC operating system -- eventually. For now, some users are either learning to live with workarounds or sticking with Vista's predecessor, Windows XP.

Pirillo is geekier than the average user. He runs a network of technology blogs called Lockergnome, and was one of several "Windows enthusiasts" Microsoft asked for Vista feedback early on.

Still, Vista tested even Pirillo's savvy. He fixed the hobbled printer and other problems by installing VMware, a program that lets him run XP within Vista. But when his trial copy expired, he decided the solution was too clunky -- and too expensive.

He "upgraded," as he called it, back to XP.

Users' early complaints aren't likely to threaten Microsoft's dominance in operating systems. The various flavors of Windows today run 93 percent of PCs worldwide, according to the research group IDC. Last fiscal year, Windows accounted for about a third of Microsoft's total revenue of $44.3 billion.

Industry analysts say Vista adoption is plodding along as expected, with most consumers and businesses switching over as they replace old hardware Relevant Products/Services with new. IDC analyst Al Gillen said he expects Vista will be installed on the vast majority of computers in about five years, the time it took for XP to reach 84 percent of PCs.

It's too early for industry watchers to know exactly how many people are using Vista. At the same time, it's hard to gauge Vista's success by comparing it to XP, because the PC market has grown tremendously in the last six years.

In early May, Microsoft said it had distributed 40 million copies of Vista, which costs $199 to $399 depending on the version. But it did not specify the number actually sold through to consumers, versus those shipped to computer makers like Hewlett-Packard Co. and Dell Inc.

Analysts noted that as many as 15 million of those copies could represent upgrade coupons given to XP buyers during the holidays, before Vista went on sale. Microsoft would not say how many of those customers installed the program, but Forrester Research analyst J.P. Gownder estimated just over 12 million U.S. consumers would have Vista by the end of the year, out of about 235 million PCs in the country.

As for the compatibility problems, 2 million devices -- such as cameras and printers -- now work with Vista, said Dave Wascha, a director in the Windows Client group.

"We are way ahead with Windows Vista right now than where we were when we shipped Windows XP," he said.

Still, it's an uphill battle: Vista interacts differently with programs and peripherals than previous versions of Windows, and some companies have chosen not to spend time and money updating older products. Printer makers, Wascha noted, draw profits from ink cartridges and services, and have little motivation to invest in updating drivers for old hardware.

As a result, many early adopters have made a sport of grumbling about the one device or program they still can't get to work.

And they've ranted about other things, from how hard it is to open Vista's snap-together plastic retail box, to what they see as arbitrary decisions on Microsoft's part to hide some settings and features.

One of the most common annoyances: Microsoft's user account control feature, designed to protect unwitting Web surfers from spyware and viruses that would otherwise install themselves on the computer.

Dan Cohen, chief executive officer of Silicon Valley startup Pageflakes, bought a Vista laptop a couple of months ago. After one too many pop-up windows warning of possible threats from the Internet, Cohen switched the control feature off.

Now he gets pop-ups warning him that turning off UAC is dangerous.

"I feel more secure -- and more irritated," he said. When Cohen went to buy his wife a new computer in April, he stuck with XP on a laptop from Lenovo Group Ltd.

Some analysts say Microsoft hasn't put enough energy into marketing Vista's benefits to consumers. But it may also be the case that Vista's biggest benefits are ones that cause average PC users' eyes to glaze over, like improved security.

"Everybody wants there to be a repeat of Windows 98 -- the excitement, the sales volume, the rate of growth and everything else," said Michael Cherry, an analyst for the independent research group Directions on Microsoft.

At the time of Windows 98's launch, broadband access to the Internet was catching fire and consumers were pumped up about getting a faster computer.

There's no such compelling reason to buy Vista, said Gownder, the Forrester analyst.

Businesses, like consumers, are in no hurry to upgrade. Before the business version of Vista landed late last year, a Forrester survey of about 1,600 companies found that 31 percent planned to upgrade within a year, and 22 percent more planned to be running it within two years.

Most businesses think those plans now seem too aggressive, said Forrester analyst Benjamin Gray.

While corporate technology departments are looking forward to some of Vista's security features and easier administration tools, there's little reason to switch if the more secure PCs end up choking on a critical piece of software.

"They're waiting for Microsoft to bless it with a service pack," said Gray, referring to a major software update that fixes bugs.

The University of Pittsburgh Medical Center, a member of Microsoft's Vista Technical Adoption Program, started evaluating Vista in January 2006. Today, only 300 of the hospital's 30,000 desktop computers run the software.

Karen Malik, associate director of technical services, said the rollout is behind schedule because several key programs still aren't compatible, including patient scheduling software. Malik knows the software vendors will catch up to Vista -- someday. In the meantime, she's not rushing.

"We know eventually we're going to need to move to this operating system," Malik said. "It's not really an option."

Hacker Unlocks Microsoft's DRM Platform

Underlying the attack on Microsoft's Digital Rights Management (DRM) technology is the belief among members of the multimedia underground that they should have the ability to back up copyrighted media files that they have purchased in the event of a primary system malfunction. Microsoft, however, may see this as an open door to pirates and unlimited P2P sharing.

A member of the Doom9 Forum known only as "Divine Tao" claims to have defeated Microsoft Relevant Products/Services's Digital Rights Management (DRM) platform for securing the distribution of digital media files over the Internet. According to other Forum members who have already downloaded it, the new utility program for PCs running Windows XP and Vista not only works wonderfully but can even run on Microsoft's Zune player.

Divine Tao's exploitation of a chink in Microsoft's armor merely represents the latest clash between the software giant and members of the multimedia underground who believe they have the right to store archival copies of the copyrighted multimedia files they purchase in the event that their hard disks ever crash.

However, the same technology can also be used to illegally copy and distribute copyrighted programs for free. That potential for piracy is of grave concern to multimedia content vendors who depend on Microsoft's DRM platform to ensure that only those who pay for the privilege can download the multimedia files they offer.

Undermining Confidence

Though it is always dismaying when an attack occurs, the cracking of Microsoft's DRM platform is hardly the end of the world, according to one long-time Microsoft observer.

"Security overall is an ongoing battle and no one can ever declare total victory or relax their vigilance," Yankee Group research fellow Laura DiDio explained. In terms of their numbers and the time they can devote, there are more hackers than a security Relevant Products/Services team even as large as Microsoft's can deal with, she continued.

"It's just a fact of 21st century computer life, because nothing is hack-proof," said DiDio. "Microsoft just has to address the issue as fast as they can."

Growing Importance

"It's been a real cat and mouse game of late" between the hackers and Microsoft "and it's enough to give companies cause for pause," noted Jim Murphy, research director for content management at AMR Research.

"Enterprises are deciding right now which DRM approach they will take" for securing their documents and intellectual property, Murphy explained. But given that so many of them have already made an investment in Windows -- "and Office remains their lingua franca" -- coming to terms with Microsoft's DRM platform "is all but unavoidable in one way or another," Murphy said.

"There is no DRM system that is completely invulnerable to attack," Murphy added. "The question is: How will Microsoft stay on top of it and rectify the issues that come up?"

One possible solution suggested by Murphy would be to deal with DRM hacks in much the same ongoing way that antivirus software vendors now handle the onslaught of new viruses. This would involve "the ability to update the DRM platform on the fly by keeping a database of hacks and then patching as quickly as possible," Murphy explained.

Though it won't be easy to implement in comparison to how most antivirus offerings currently function, Murphy said he sees the need for DRM platforms that can not only update an enterprise's server Relevant Products/Services software, but also protect sensitive enterprise documents after they have been disconnected from a company's IT network.

An Ongoing Battle

Divine Tao's new upload to the Doom9 Forum is actually an update to a utility first posted by Forum member 'Viodentia' way back in April of 2006, after which Microsoft was forced to release two patches as a quick fix. However, Viodentia quickly broke the software giant's fixes.

Microsoft subsequently went to court, but was later forced to drop its lawsuit given that the software giant had been unable to identify or locate the utility's author.

"Lacking the source code to the extant programs, I can only offer this output of my own efforts," wrote Divine Tao in the hacker's initial posting at the Doom9 Forum. This is an apparent reference to Microsoft's prior claims that the source code for its DRM platform had been illegally accessed by a company insider.

No Green Light Yet for Vista Service Pack

Now that Microsoft has moved to a monthly update system -- commonly known as Patch Tuesday -- the pressure for getting Vista Service Pack 1 (SP1) quickly out the door has been reduced. All the same, analysts say many companies are waiting on Vista SP1 as an important milestone before they will adopt Microsoft's newest operating system.

Earlier this week, Microsoft Relevant Products/Services Windows watcher Winbeta.org posted an e-mail from the software giant's Windows Driver Kit team that ended up launching a media feeding frenzy on news sites around the world. According to Microsoft's e-mail to the site, the release of a beta version of the first service pack for Vista was available for download.

The resulting avalanche of press reports from around the globe forced Microsoft to clarify the report by saying that the earlier e-mail was actually designed to announced the availability of the beta of Windows Server 2008 instead of Vista Service Pack 1 (SP1), and that the confusion was due to a typo.

Michael Silver, research vice president in Gartner Relevant Products/Services's Client Computing group, said that although Vista SP1 is not yet ready to roll, the sooner Microsoft releases it, the sooner businesses that look at SP1 as an important milestone will start adopting Vista.

If Microsoft gets SP1 out this year, he said, it could buy Microsoft an extra quarter of adoption in businesses, Silver explained. "That may not fuel a lot of extra revenue, but it helps improve the perception of Vista," he noted.

No Impact on Mainstream Users

In its latest update on the software giant's compliance with antitrust issues, the U.S. Department of Justice noted that Microsoft had agreed to release the beta of Vista SP1 this year. Microsoft has confirmed its commitment to a beta release in 2007, but did not commit to a specific date.

It has been standard practice for Microsoft to issue service packs for fixing security Relevant Products/Services holes and other bugs that the company identifies after each operating system's official release. But now that the software giant has moved to a monthly update system -- commonly known as Patch Tuesday -- the pressure for getting Vista SP1 quickly out the door has been reduced.

On whatever date that Microsoft does release the beta version of Vista SP1, it will have no impact on mainstream PC users. The goal of the software giant's beta release will be limited to getting a selected audience of software developers and engineers to review the service pack before it goes mainstream.

Heading Google Off at the Pass

Microsoft is currently in the midst of making changes to Vista that are the outgrowth of a recent settlement with the Justice Department and the attorneys general of 17 states that tries, in part, to rectify a complaint filed by Google against the software giant.

The Instant Search functionality embedded in Windows Vista relies on an index that is updated whenever files on the computer change. Google complained that this was a new "middleware product" that violated the antitrust judgments that the Justice Department had already imposed on Microsoft.

Microsoft recently agreed to allow greater flexibility among users and equipment manufacturers to install completing search products, such as Google Desktop. However, the changes will not go into effect until the release of Vista SP1.

Microsoft Inks Deal with Linux Provider Linspire

Microsoft's agreement with Linux provider Linspire, much like the other similar deals, details a wide variety of technical projects to "enhance interoperability and expand the functionality of Linspire" for working with Microsoft products. One notable part of the deal is that Windows Live Search will now be the default search for Linspire 5.0.

Another day, another Microsoft Relevant Products/Services cross-licensing Linux deal. On Thursday, the software giant and Linux desktop provider Linspire announced an "interoperability, technical collaboration."

As with Microsoft's recent parade of similar deals with other companies, this one includes protection for Linspire's customers from Microsoft's claims of Linux patent infringements.

"Linspire will be providing its customers," said a joint press release, "with the option of acquiring a patent covenant from Microsoft for customers operating the Linspire desktop."

The patent covenants, which customers can choose whether or not to obtain, "provide customers with confidence that the Linspire technologies they use come with rights to relevant Microsoft patents."

'Enhance Interoperability'

Microsoft has said that Linux and related open-source software infringe on some 235 of its patents, a declaration that is adamantly opposed by members of the open-source community. In recent months, its legal department has been busy making cross-licensing deals with such companies as Novell, Samsung, LG Electronics, Xandros, and others, each of which has included protection for the partnering company's customers from Microsoft claims of Linux patent infringement.

The Linspire agreement, much like the others, details a wide variety of technical projects to "enhance interoperability and expand the functionality of Linspire" for working with Microsoft products.

These projects include document format compatibility, including open-source translators for OpenOffice and Microsoft Office. In instant messaging, Linspire will use a Microsoft codec for voice-enabled interoperability between Linspire's Pidgin instant messaging client and Microsoft's Office Communicator and Windows Live Messenger clients.

New releases of Linspire will support Windows Media 10 audio and video codecs, for better sharing of media files between the two customer bases, and Linspire will license several Microsoft TrueType fonts.

Another notable part of the deal is that Windows Live Search will now be the default search engine of Linspire 5.0. Microsoft, Google, and Yahoo have been vigorously battling for search engine placements with their partners.

Microsoft's Stages

The Microsoft-Linspire deal and the others are part of the end stage of how the Redmond, Washington-based company has been dealing with Linux, said Yankee Group analyst Laura DiDio. "First," she said, "there's deny, deny, deny. Then it's hostility: '[Linux is] a cancer.' Then you get marketing and counter-marketing, to convince you that my products are better."

Finally, she said, it's "pragmatic good sense, or 'co-opetition,'" which is where Microsoft is now, as illustrated by this deal with Linspire and others.

Chris Voce, an analyst at Forrester, offered a similar take. He said that this deal is more about bridge-building for Microsoft and the Linux camp than about walling off patent partners. It is also, he pointed out, about getting Windows Live Search and other Microsoft products or translators "into as many hands as possible."

He added that, as far as he can see, the I.T. directors at major enterprises are not worried about being sued by Microsoft if they use Linux.

Searching for the Open-Source Desktop

I've not been able to find anything that meets all of the necessary desktop criteria, but things are beginning to change. The newest releases of open-source operating systems and apps are almost good enough. I believe that 2008 will be the year when the open-source desktop reaches the point where a nonengineer can install and use it effectively.

Is 2008 the year of the open-source desktop? Red Hat Linux is now widely deployed on the servers in my data center. Users have no idea what operating system underlies our Web applications and databases, nor do they care, as long as those tools are highly available.

But the desktop is uncharted territory. Over the past year, I've been on a quest to find an operating system that balances ease of use, stability, low cost, and high functionality. My experiences were the subject of an article in CIO magazine that described how I tried to use my enterprise applications with Windows XP, Mac OS X, Red Hat, and Fedora. Recently, I've spent months running Novell's SUSE Linux and Canonical's Ubuntu, and I'll report on those efforts soon.

Based on these experiences, I think I can say when the open-source desktop will become a more widely deployed end user operating system: when it becomes a product and not a project. That will require the following:

* The open-source desktop should recognize my video chip set, my wired/wireless networking hardware Relevant Products/Services and all my storage devices without being custom-configured, which would require me to search the Web to learn how others have done the same thing with the same hardware. Searching the Web works, but even for a high-level engineer, a typical laptop requires a lot of trial and error.

* Wireless support should include the common security Relevant Products/Services protocols: WPA, PEAP, LEAP and EAP-FAST. The wireless client should roam as I change locations, associate with the most optimal access point, and work perfectly upon waking from hibernation.

* USB thumb drives should work seamlessly without having to manually mount a volume.

* The open-source desktop should include a browser, a robust e-mail client, an office productivity suite, a photo editing tool, and a GUI tool for setting my configuration preferences.

* It must be stable and reliable.

* Finally, the average user should be able to use it (which rules out all command-line operations).

I've not been able to find anything that meets all of those criteria, but things are beginning to change. The newest releases of open-source operating systems and applications are almost good enough. For the first time, I can consider using them as my primary desktop tools. I've run into a few issues with my e-mail client, my SSL VPN client, and wireless networking that require consultation with a high-level engineer, but day to day, my experience is positive. I believe that 2008 will be the year when the open-source desktop reaches the point where a nonengineer can install and use it effectively.

This is not about being anti-Microsoft Relevant Products/Services. I oversee thousands of machines that use Microsoft software, and many users need applications that are available only for the Microsoft environment.

It's not about being anti-Apple. I respect the user experience of Mac OS X, and I wish Steve Jobs would license the operating system to other hardware manufacturers, who could then offer choices that meet other needs, such as a 2 lb. subnotebook for road warriors.

What this is about is recognizing that the open-source desktop is nearly ready for select desktop users. Dell has begun to offer open-source options for its desktops and laptops. Lenovo is certifying and supporting SUSE Linux Enterprise Desktop on the ThinkPad.

Let's hope 2008 will be the year that the projects end and we can assess all the products based on their suitability for each user.

Microsoft Claims Vista Is More Secure Than Linux

In addition to comparing Vista to XP, Jeff Jones, director of Microsoft's Trustworthy Computing Group, compared Vista to Red Hat Enterprise Linux 4, which saw some 129 bugs during its first six months of availability. On the basis of these numbers, Jones concluded that Vista is more secure than its open-source counterpart.

According to Microsoft Relevant Products/Services's Trustworthy Computing Group, the software giant's latest operating system is far more secure than competing platforms -- or even previous Windows iterations.

"The Windows Vista Six-Month Day Vulnerability Report" offers insights into the total fixed and unfixed Vista vulnerabilities, plus a comparative view of Linux, OpenOffice, and other applications. The report is available as a PDF download on the blog of Jeff Jones, the security Relevant Products/Services strategy director in Microsoft's Trustworthy Computing Group.

"The results of the analysis show that Windows Vista continues to show a trend of fewer total and fewer high-severity vulnerabilities at the six-month mark compared to its predecessor product Windows XP (which did not benefit from the SDL) and compared to other modern competitive workstation OSs (which also did not benefit from an SDL-like process)," Jones wrote.

The "SDL" Jones refers to is Microsoft's "secure development lifecycle," a software-development process Microsoft adopted for creating software that can withstand malicious attack.

Six Months and Counting

During Windows Vista's first six months on the market, Microsoft released four security updates to address 12 total vulnerabilities. In the National Vulnerability Database, the National Institute of Standards (NIST) rated 10 0f these issues as "high" severity, one as "medium," and one as "low."

There were also vulnerability disclosures during Windows Vista's first six months that have not yet been addressed by a fix. The NIST rated only one of them "high" severity, while four have been rated "medium" and 10 have been rated "low."

How does that compare with the first six months of Windows XP? When Windows XP shipped, there were already three Internet Explorer vulnerabilities, which had been disclosed and fixed three weeks prior to market distribution. Consequently, new users had to apply an IE patch immediately to address them.

In addition, Microsoft fixed a total of 36 vulnerabilities in the first six months Windows XP was available. The NIST rated 23 of those vulnerabilities "high" severity. At the end of the six-month period, a total of three publicly disclosed vulnerabilities did not yet have a patch available from Microsoft, two of which (CVE-2002-0189 and CVE-2002-0694) were rated "high" severity and one which was rated "low."

"With respect to its predecessor product, Windows Vista seems to have a better initial six months, with one-third as many vulnerabilities fixed and with Windows Vista having only one high-severity issue outstanding at the end of the six-month period," Jones noted.

Open-Source Comparison

In addition to comparing Vista to XP, Jones compared Vista to open-source operating systems. Red Hat Enterprise Linux 4, the most downloaded GNU/Linux distribution, saw 129 publicly disclosed bugs during its first six months of availability. Forty of them were ranked "high" severity. Red Hat fixed a total of 281 vulnerabilities in Red Hat Enterprise Linux 4 Workstation in the first six months, 86 of which were rated "high" severity. On the basis of these numbers, Jones concluded that Vista was more secure than its open-source counterpart.

The value of the Microsoft SDL has been demonstrated in the past with applications such as Microsoft's widely used Internet Information Services (IIS), which has suffered fewer critical vulnerabilities due to increased security controls, according to Michael Sutton, a security evangelist with SPI Dynamics and former director of the Verisign iDefense labs.

Still, Sutton said he is not ready to declare a winner in this long-standing security debate. "It is encouraging to see that thus far Vista has faced fewer critical vulnerabilities," he said. "However, six months is not a sufficient time frame to pass judgment on the overall security of the operating system."

Sutton also pointed out that Vista has introduced many fundamental changes and said it will take some time before researchers have spent adequate time testing the new operating system.

What's the Value of Open Source?

A public MySQL could be a good buy as it fills the underserved market for an affordable database aimed at companies exploiting new, more interactive aspects of the Web. But can MySQL keep up the growth without adding hefty sales and marketing costs -- and getting squeezed by competitors?

For all the success of open-source software -- developers the world over flock to the code available freely over the Internet -- its purveyors able to thrive as public companies are few. Linux operating system seller Red Hat has generated billions in value for investors, but its shares have slipped 3% in the past year amid new competition. Novell, which supports a version of Linux, has been criticized for striking a cooperation deal with Microsoft Relevant Products/Services seen by many as a threat to the spread of Linux.

That small community of open-source stocks may soon be widening. MySQL, a fast-growing maker of database software used by some of the Internet's most recognized brands, is preparing to file for an initial public offering, perhaps as soon as late 2007.

The offering could value the company at between $600 million and $1 billion, according to sources, and inject some pep into a tech IPO market that's seen only a handful of successful offerings in the past year. Credit Suisse is a top contender to lead the underwriting of the transaction, BusinessWeek has learned.

Tough Mindset

An S-1 filing by the Swedish software company, which grew more than 50% in 2006, to about $50 million in sales, and broke even for the first time, also could give investors a new yardstick to measure the value of open-source software, which lets users modify its code to suit their needs. "Red Hat really is a bit of a lone wolf out there in terms of public open-source companies," says Jim Zemlin, executive director of the Linux Foundation, a trade group. "Fund managers are clamoring for other benchmarks to measure open-source software companies."

Outside investment and tech circles, though, most people haven't heard of MySQL, which closed an $18.5 million round of funding in 2006 to raise its total venture backing to $39 million from investors, including Benchmark Capital. Yet MySQL's fast, inexpensive software is used by such Internet heavyweights as Google and Yahoo!, and it's making inroads into more traditional companies.

Going public could give MySQL more credibility with brick-and-mortar shops, and furnish it with currency for acquisitions. "The open-source model, as Red Hat has proven, can be extremely profitable," says Kevin Harvey, a general partner at Benchmark Capital, and MySQL's chairman. "It's not a story of profits at first; it's a story of profits you'll generate as you grow."

And MySQL would like to see considerably more growth, even before selling stock to the public. It would do that in part by upping the percentage of paying customers. Of the roughly 11 million copies of MySQL in use, the company only gets paid for about 1 in 1,000, underlining the risks of the business model governing much of open-source software: Give it away for free over the Internet and then charge large commercial users for technical support. "There are many users who will just never, never pay," says MySQL Chief Executive Marten Mickos. "It's not like we can just go in there wholesale and change that mindset." Making matters tougher, Microsoft's affordably priced SQL Server database competes with MySQL. And database software vendor Oracle has made inroads into the small and midsize business market, helping it gain share.

Many Adherents

MySQL, which a few years ago rejected a takeover offer from Oracle, is undeterred by the challenges. "We're working toward an IPO," says Mickos, a sturdy, sandy-haired Swedish Finn who migrated to Silicon Valley in 2003, two years after he became CEO following a series of executive posts in Europe. Mickos, who conducts business fluently in English, German, Swedish, and Finnish, has known MySQL's founders, including Monty Widenius, since 1981, when they studied graduate physics together in Helsinki.

MySQL has already started courting investors. It held a 2007 pre-IPO road show in New York and Boston to talk about the company's brand recognition, sales, and the appetite in the public market for an open-source software company, Mickos says. "We've gotten good feedback from some of the biggest public investors," he says.

There's reason for the warm reception. Growth at MySQL has taken off the last few years as some of the Web's hottest companies have adopted its technology. Google's ad-serving software runs on MySQL's database, as does its YouTube video site. "MySQL is a terrific database," says Chris DiBona, Google's open-source programs manager. Yahoo's Flickr photo-sharing site runs on MySQL, and the company uses the software for its finance and games sites.

Other Web companies including Wikipedia, Facebook, Craigslist, and Linden Lab's Second Life are adherents as well. "The technology was crucial to us being able to deliver so much so quickly," says Scott Dietzen, president and chief technology officer at Zimbra, whose open-source e-mail software ships with MySQL inside.

Gaining Traction

Compared with database software from Oracle, Microsoft, and IBM, MySQL's product dispenses with many features aimed at running financial software and other business applications in favor of a stripped-down approach that serves up Web pages at blazing speeds. "We grew up with the Web companies," says Mickos. "People say, 'MySQL, will you ever grow up to be an IBM?' And we say, 'No, that's the old world.'"

The company has carved a niche among Web companies that use its technology in conjunction with Linux and other open-source software to run their sites on the cheap. "That's the aspiration of these companies -- they want to grow big, but they don't want to spend a lot of money to do it," says Zack Urlocker, MySQL's executive vice-president of products. MySQL aims to sell its software for 90% less than its competitors, he says.

A public MySQL could be a good buy as it fills the underserved market for an affordable database aimed at companies exploiting new, more interactive aspects of the Web. And it's gaining traction at other companies, too. MySQL helps power Nokia's cellular network and Gap's checkout systems. NBC and The New York Times Co. are also customers. Cisco Systems, Symantec, and other tech vendors distribute MySQL with their products.

Valuation: Unknown

But can MySQL keep up the growth without adding hefty sales and marketing costs -- and getting squeezed by competitors? The company employs just 30 field sales staff out of a head count of 360 and strives to close deals more quickly than rivals. Most employees work from home. "Managing the cost of sales and marketing in an open-source company is the key to profitability," says Mickos, sitting in a small, spartan office adjacent to a sea of cubes in the company's Silicon Valley digs. "We're not just innovating in software, we're innovating in sales."

Rivals aren't taking the threat lying down. In 2005, Oracle bought a Finnish software company called Innobase, whose technology is used by MySQL. MySQL is building its own version of the software in a project code-named "Falcon," but for now must pay licensing fees to its bigger rival. And IBM and Sun Microsystems are backing an open-source database called Derby, which competes with MySQL.

How investors will value MySQL is another open question. Some reckon Red Hat, whose $4.55 billion market value is about 11 times its fiscal 2007 revenue, is a good starting point. Like MySQL, Red Hat also has millions of users and a low-cost sales model, says MySQL Chairman Harvey.

Jereme Le Blanc, vice-president at investment banker Boston Corporate Finance, says MySQL's 50%-plus growth for its size could catapult its market value well above $500 million -- if the company can convince users to keep paying for subscriptions. "That's pretty robust growth for a company that's already at $50 million," he says. MySQL's ability to keep selling service contracts for software that's also available free will affect its valuation, though. "A lot of people think the open-source market for database software is very lucrative," Le Blanc says. "It's too early at this point to gauge whether the model works."

Patch Tuesday Highlights Web-Based Malware

The number of updates Microsoft issued on August's Patch Tuesday dwarfs the number of patches released over the past several months and highlights the new frontier of Web-based attacks and next-generation media vulnerabilities, according to Amol Sarwate, manager of the vulnerability research lab at Qualys.

Get ready to roll up your sleeves. If you are in the I.T. department, you are going to be busy for a while. On Patch Tuesday yesterday, Microsoft Relevant Products/Services issued its second-largest set of updates this year with nine security Relevant Products/Services bulletins altogether.

The updates fix 14 vulnerabilities. Eight bugs are rated critical, four are rated important, and two are considered moderate. The patches fix holes in Windows, Windows Gadgets, Windows Media Player, Office, Excel, Internet Explorer, Visual Basic, Virtual Server, and Virtual PC.

"Many of the vulnerabilities addressed by Microsoft's fixes could be exploited if a Windows user simply visits a malicious Web site," said Dave Marcus, security research and communications manager at McAfee Avert Labs. "Microsoft's patches again underline the trend of malware writers seeking out the Web browser as a means of attack and reinforce the need of safe browsing habits."

Patch These First

With six critical flaws, I.T. admins are charged with targeting the most potentially dangerous of the bunch first. According to Sheldon Malm, a vulnerability researcher for nCircle, one of the most critical vulnerabilities is covered in security bulletin MS07-042, which describes the update for an XML services vulnerability. "XML is so pervasive -- it ships with so many different products and sits in so many different places on an enterprise network," he said.

Malm said he was most concerned about bulletin MS07-048, which describes three vulnerabilities in Vista gadgets. The RSS feed gadget vulnerability could allow a hacker that has gained control of a blog to create a malicious post and distribute it to everyone who subscribes to the RSS feed.

"RSS feeds have the potential to become the next big vector for worms or bots because it exploits an existing trust relationship. People place implicit trust in the security of the information source when they use RSS feeds," Malm said.

The New Frontier

This month's Patch Tuesday dwarfs the number of updates released over the past several months and highlights the new frontier of Web-based attacks and next-generation media vulnerabilities, according to Amol Sarwate, manager of the vulnerability research lab at Qualys. In total, August's updates address 14 vulnerabilities in Microsoft applications that touch all Windows users, from the home to the office.

Sarwate offered a different take on which patches are most critical to deploy first. "The most critical patch is MS07-046, fixing the Microsoft Graphics Rendering Engine in the core Windows operating system, or GDI," he argued. "Left unpatched, users that view malformed image files will open up their system to remote code execution."

In Sarwate's view, several bulletins, including MS07-044, MS07-045, and MS07-050, compete for second place as far as patching priority. Two of those patches relate to Internet Explorer and one to Microsoft Excel. All three are deemed critical because they affect extremely popular Microsoft applications.

"A typical exploit scenario would be for MS Office and Explorer users to receive and open a malformed Excel spreadsheet as an e-mail attachment or visit a Web site that hosts malformed Excel spreadsheets, at which point the machine can be compromised and overtaken by attackers," Sarwate said.

This month's release, he concluded, shatters the six-month pattern of smaller updates and is a reminder that Microsoft's Security Development Lifestyle that grew out of Vista's development is not infallible.

Citrix Challenges VMware with XenSource Buy

The Citrix acquisition of XenSource positions the companies squarely against VMware. XenSource's existing business allows Citrix to compete against VMware's Infrastructure 3 product today, and, looking forward, will serve as a cost-effective competitor to VMware's Virtual Desktop Infrastructure, analysts from The 451 Group said.

Hard on the heels of virtualization leader VMware's stunning IPO on Tuesday, Citrix Systems announced it is acquiring open-source virtualization company XenSource for $500 million.

Citrix expects the combined server Relevant Products/Services and desktop virtualization market to grow to $5 billion within four years. The purchase means XenSource will be able to compete aggressively in that market, XenSource CEO Peter Levine said. The deal is "about steering into the 90 percent white space that is wide open, both at the server and in new emerging opportunities at the desktop," he said in a statement.

XenSource's virtualization engine is licensed under the GPL and is developed by an open-source community, including engineers at RedHat, IBM, Intel, AMD, and HP.

"Game on now: it's CitiXen-Viridian versus VMware," William Fellows, Rachel Chalmers, and John Abbot, analysts for The 451 Group, wrote in a briefing on the deal, referring to Microsoft Relevant Products/Services's forthcoming virtualization software called Viridian.

The VMware Factor

At $500 million, the size of the deal -- the largest in Citrix's history -- was "undoubtedly inflated" by VMware's IPO, which valued the company at $19 billion, the analysts said. Currently, XenSource has just over 600 customers and $1 million in sales.

Even so, there are several reasons the deal was compelling for Citrix. First and foremost, the analysts said, the deal puts Citrix squarely in the virtualization game and saves Citrix "a couple of years' development."

Crucial to the deal, the analysts added, is XenSource's June 2006 pact with Microsoft, giving XenSource exclusive access to the source code for Microsoft's forthcoming virtualization offering, Viridian. "XenSource is betting the farm that exclusive access to the Viridian code will enable it to create a substantial business selling management tools."

The VMware IPO isn't the only good timing about the deal. XenSource had just released a new version of XenEnterprise that boasts substantially improved management, availability, and ease-of-use features.

The latest version marks "a major shift in strategy," the analysts said. XenSource will now focus on creating management tools for Microsoft's Viridian.

Next Up: Microsoft-Citrix?

While Microsoft won't enter the market for at least a year, the XenSource/Citrix combination positions the companies squarely against VMware. XenSource's existing business allows Citrix to compete against VMware's Infrastructure 3 product today, and, looking forward, "Xen will likely be used to underpin Desktop Server as a viable and cost-effective competitor to VMware's Virtual Desktop Infrastructure," the analysts said.

In addition, XenSource has solid connections with Symantec and Veritas, giving it a crucial link to the storage world, which might offset VMware's relationship with parent EMC Relevant Products/Services.

Could this deal be a prelude to Microsoft buying Citrix? Apparently, Citrix considered buying VMware back in 2003 but was too worried about antagonizing Microsoft to complete the deal. And Microsoft's deal with XenSource "might have" turned into a full-blown acquisition. The reason it didn't happen was likely intellectual property issues over XenSource's use of the GPL. "Open source remains a sticking point for the powers-that-be in Redmond," the analysts said.

But now that Citrix has brought in XenSource, Microsoft could acquire the larger company with fewer concerns about "the awkward GPL aspects of what XenSource does," jump-start its own slow-moving virtualization development, and "not least, get its hands on the lucrative $1 billion enterprise Windows revenues now generated by (Citrix's) Presentation Server," the analysts said. Other potential Citrix suitors include HP and Cisco.

Whether this scenario unfolds, for at least the next year VMware will be the most visible visitor to CIO offices around the country. "Citrix, XenSource, and Microsoft will likely be consumed with building out, integrating and plotting for at least a year once the deal closes, giving VMware time to concentrate on sales," the 451 Group said.

Can Linux Overtake Windows in OS War?

Microsoft execs have little reason to stay up at night worrying about Linux taking over, said Pund-IT analyst Charles King. Microsoft still has a commanding lead in the market, he said, but Linux growth is real and should continue to find adoption as a generation emerges that is more technically inclined and less attached to the Microsoft brand.


While Novell's CEO is calling for Linux to expand its market, the Linux Foundation's executive director is declaring that the open-source OS is moving into its second stage of growth.

At the LinuxWorld conference in San Francisco, Linux Foundation exec Jim Zemlin told attendees what they probably already knew: The battle for computing platform supremacy is ultimately between Linux and a certain software giant in Redmond, Washington.

"Windows is not going to go away," Zemlin asserted in his Wednesday speech. Moreover, he added, Microsoft Relevant Products/Services deserves respect. The way Zemlin sees it, Microsoft has done a good job executing public relations campaigns and creating doubt about open-source software and the legal issues related to its use.

The Second Stage

The Linux Foundation is combating that doubt by adding heavy-hitting legal experts to its arsenal. Karen Copenhaver and standards and consortium expert Andy Updegrove have joined the Foundation's legal team to provide leadership on legal issues affecting Linux.

"Promoting accurate and timely discussion of the legal infrastructure Relevant Products/Services supporting the adoption and deployment of open-source software is key to achieving our core mission," Zemlin said. This is one way the Linux Foundation is protecting the platform as the organization continues to promote and standardize the operating system during the second stage of growth.

The fact that Linux continues to gain market share on desktops, servers, and handsets is undeniable. There are two major reasons for that, according to Charles King, principal analyst at Pund-IT. Both the operating system and the applications that run on top of it are far more user-friendly than in times past.

Dell Lends a Hand

"On the consumer side, the work Dell is doing with Ubuntu is promising. Ubuntu is gaining a lot of mind and market share as being a user-friendly consumer, nontechnically-oriented Linux OS. It's got some solid basic productivity applications attached to it," King explained.

On the enterprise side, meanwhile, Red Hat is making moves with its JBoss acquisition and Novell and IBM are teaming up to deliver Big Blue applications that play well with SUSE Linux. All this translates to more choices for companies willing to explore the alternatives.

"With Vista, there have been a number of businesses exploring the options in the face of significant investments in hardware Relevant Products/Services to meet the operating system's requirements," King said. "Between Linux and the increasing sales of the Macintosh desktops and even Web-based applications like Google Apps, businesses have more choices today than they've ever had in the past."

Microsoft executives, employees, and shareholders have little reason to stay up at night worrying about Linux taking over, King added. Microsoft still has a commanding lead in the market, he said, but Linux growth is real and should continue to find adoption as a generation emerges that is more technically inclined and less attached to the Microsoft brand.

Acer Disappointed by Slow Vista Uptake

While Microsoft launched an early holiday push this week to encourage consumers to purchase Vista-enabled products from Dell, HP, Sony, and Toshiba, PCs from Acer are notably absent from the software giant's product promotions, likely due to Acer's president, Gianfranco Lanci, saying that the industry is disappointed with Vista.

The president of Acer told the Financial Times Deutschland this week that he thinks Microsoft Relevant Products/Services's newest operating system, Windows Vista, gives PC users little reason to upgrade.

"The whole industry is disappointed with Windows Vista," Gianfranco Lanci told the newspaper, while indicating that the new system's stability continues to be a worrisome problem. The president of the world's No. 4 PC-maker also suggested that Vista's current low adoption rates invite a discussion concerning possible alternatives.

"I do not really think that someone will buy a new PC right now because of Vista," Lanci said. "And that will not change in the second half of the year."

Style over Substance?

Microsoft launched an early holiday push this week to encourage consumers to purchase Vista-enabled products from Dell, HP, Sony, and Toshiba. By contrast, PCs from Acer are notably absent from the software giant's product promotions for this year's holiday season.

In particular, Microsoft applauded the aesthetics of PC products such as Dell's new Inspiron 1720 notebook PC, which features "personalized hues from midnight blue to crimson red, and pearl white to flamingo pink or spring green."

But in stressing style, is Microsoft drawing attention to Vista's apparent lack of a compelling killer app? "For home users, I'm not sure they know why they would want to upgrade," said Gartner Relevant Products/Services Client Computing research vice president Michael Silver. "Either the benefits are not there or Microsoft has not clearly communicated what they are."

Silver said that, for enterprises, he does not see Microsoft's Vista push to be significantly different from the one the company went through to get to Windows 2000. "For both enterprises and consumers, the benefits now are a bit more questionable, simply because Windows XP is a very good OS, as compared to the predecessors to Windows 2000, which had many issues," Silver explained.

Slow Adoption Not Surprising

During the company's earnings conference call with financial analysts last week, Microsoft said its OEM licensing grew by 11 percent in the year's second quarter, driven by demand for Vista. Moreover, CFO Chris Liddell said he sees PC growth ranging from 9 percent to 11 percent in the fiscal year ahead, with the company's client division -- to which Vista sales are posted -- poised to match anticipated market growth, step for step.

Following the conference call, two Wall Street financial analysts released client notes stating that Vista's adoption had been lower than they had expected, given that PC shipments had grown by roughly 12 percent during the second quarter, according to both Gartner and IDC.


Still, Silver said he does not find it surprising that Vista adoption has been slow thus far because it takes companies a good 12 to 18 months of testing and planning before they can bring in a new OS. "Also, the nature of the Internet has changed since 2001 and Windows XP, and there are many more venues for negative opinions to be circulated," Silver noted. "Windows Vista is likely suffering from this phenomenon."

Windows 7 in the Wings

Despite Vista's recent introduction, Microsoft is already talking about having its next-generation OS, known simply as Windows 7, ready to go in three years. "In terms of Windows 7, there's always something new around the corner," Silver noted.

Enterprises should not try to skip Windows Vista, advised Silver. "It increases the risk because Windows XP will be pretty old by 2011." Even if Microsoft is on time with a new release, he said, companies can't adopt that OS for 12 to 18 months after it ships.

Given all the work involved in upgrading from one OS to the next, is it likely that many PC users will simply stick with XP until the next OS rolls around? Microsoft has a pretty clear support timeline, Silver said. "They could come out with new features for Vista that they don't make available for XP, but it's pretty hard for them to reduce the XP support time."

HP Snaps Up Two Software Companies

HP's move to buy Opsware for $1.6 billion follows a strategic relationship the companies forged in 2003 in which Opsware provided its automation center to HP's Utility Data Center, a virtualization solution. In addition, the purchase of Opsware complements HP's acquisition last year of Mercury Interactive for approximately $4.5 billion.

Hewlett-Packard announced on Monday that it will acquire two companies expected to improve the Silicon Valley giant's business technology offerings. Opsware, a data center automation software company founded by Netscape creator Marc Andreessen and acquired for roughly $1.6 billion, will boost HP's data center portfolio, while NeoWare, acquired for $334 million, will help HP with thin-client technology.

HP plans to have Opsware CEO Ben Horowitz lead its business technology optimization group. Neoware will join HP's business desktop unit.

"This is an incremental opportunity for HP to help companies manage data centers more appropriately," said Brian Babineau, senior analyst for Enterprise Strategy Group. The purchase enhances HP's position by adding data center infrastructure Relevant Products/Services management to their existing expertise in process management, he said. Opsware gives HP "the ability to deploy servers, automate configuration, do patch management ... to automatically identify issues and take action," Babineau explained.

Complements Mercury Buy

The move to buy Opsware follows a strategic relationship the companies forged in 2003 in which Opsware provided its automation center to HP's Utility Data Center, a data center virtualization solution. In addition, the purchase of Opsware complements HP's acquisition last year of Mercury Interactive for approximately $4.5 billion. While Mercury's strength is in addressing performance bottlenecks and service-oriented architecture governance, Opsware's offerings will help HP get into "automated management of servers storage network," Babineau said.

Marc Andreessen founded Opsware as Loudcloud in 1999; it went public in 2001. The company was hit hard when the bottom dropped out of the tech market, and in 2002 sold off its managed network services business to EDS and reinvented itself as Opsware. It boasts 350 customers, including major financial and technology companies as well as the Defense Department.

Opsware's technology provides the ability to automate deployment and management of servers and storage. In combination with Mercury's offerings, if customers "want to deploy, they will be able to tune and optimize and deploy in an automated fashion," Babineau said. "Opsware can help deploy new servers and servers with configurations that comply with best operating procedures and internal or external rules."

Higher Scale Automation

In a statement announcing the Opsware acquisition, Thomas E. Hogan, senior vice president for HP Software, said the deal will enable HP to help customers resolve "one of their critical pain points: controlling the increasing complexity and cost of managing the data center."

Existing Opsware customers might see the acquisition as protecting their investment in the company's technology, Babineau said. "They'll have a much bigger company that owns the technology," he noted. For HP customers, the deal represents one more arrow in HP's quiver. "Customers will be able to do the majority of their data center purchasing through HP."

Announcing the news on his blog, Andreessen wrote that the deal means the company's vision will now get delivered at much higher scale. "Being part of HP's software business," he wrote, "will ensure that our software will be used by a much larger number of organizations and have an even more dramatic impact on the industry than we would possibly have been able to reach by ourselves over the next several years."

A Premium Valuation

While the Neoware deal is much smaller, Babineau said, it is also an important acquisition. "When you're trying to control and manage desktops as a customer, you might have outsourced that to a company like EDS," Babineau said. Customers now will be able to buy those services directly from HP.

HP paid $14.25 a share in stock for Opsware, a 39 percent premium on the pre-announcement stock price. "That's good for Opsware," Babineau said. "It's expensive in my opinion. Opsware had been treading water. They had a reasonably stable business but it hasn't been a rock star." It's especially good for founder Marc Andreessen. The Netscape creator will pick up a cool $138 million in the deal, on the basis of his ownership of 9.7 million shares.

Counting Clicks: Monitoring PC Usage at Work

If your business has started to find too many employees endlessly surfing the Web, constantly instant messaging their friends, or spending too many hours viewing the latest YouTube videos at work, it may be time to check out some of the software tools now available for tracking who's doing what with your company computers, on company time.

"Every key you strike, every site you surf, every note you send, every chat you start, we'll be watching you ..." The Police's timeless anthem to lovelorn paranoia and obsession could easily be turned into a catchy soundtrack celebrating employer eavesdropping on employee computer and Internet habits.

Employers who are tired of paying employees who fritter their working hours away surfing eBay for deals or managing their fantasy football squads are increasingly turning to monitoring software to track what employees do with their computers. Such software brings technological sophistication to the table that bosses love and workers fear.

The Web Giveth and the Web Taketh Away

There is no doubt the Internet has been revolutionary for corporate America, placing an incomprehensibly vast storehouse of information just a few mouse clicks and keystrokes away and contributing immensely to employee productivity. The problem is, the Internet is also a vast source of entertainment: from porn sites to online chat rooms to gambling sites, there is a Web site catering to just about every vice and time-wasting habit.

Naturally, employers are increasingly keeping tabs on what employees are doing online. The 2005 Electronic Monitoring and Surveillance Survey conducted by the American Management Association and the ePolicy Institute found 76 percent of employers monitor employee web surfing, and 65 percent use software to block inappropriate web surfing. And, statistics show the tried and true "I didn't know" excuse doesn't work anymore: over 80 percent of companies notify their employees they monitor content, keystrokes, and time on the keyboard, store and review employee files, and retain and review e-mail messages.

It might sound hypocritical, but most employers probably don't mind perpetuating workers' e-addictions, just as long as the information they're processing is work-related. The problems start when employees use their PCs, laptops, or mobile devices for "extracurricular" computing activities. This is why so many employers find monitoring software so appealing.

The Tale of the Tape

So, how do monitoring programs work? In general, monitoring software allows employers to capture and maintain an ongoing log of employee online and PC activities. Usually, these programs store information in a database which can then be used by employers to create reports summarizing employee activity.

For example, SpectorSoft's Spector 360, the company's "flagship" enterprise product, records Web site visits, inbound and outbound e-mail traffic, chats and IM, keystrokes, file transfers, and even documents printed and applications launched. One of the software's niftier features is the ability to screen capture employee activities.

Granted, nifty is in the eye of the beholder -- or the watcher -- but it's hard to deny the effectiveness of photographic evidence: after all, it's awful hard for a gaming addict to argue their case when the boss is armed with full color screen captures. (Memo to those who insist on a daily dose of gaming: do it at home or risk getting an unexpected permanent vacation.)

Spector 360 stores all this information in a database. Employers who want to see the results can access the information using more than 50 built-in reports, some with charts, summarizing the information. These reports can be used to zero in on a single employee's surfing habits or to provide an overall view of online usage patterns for an entire department or business.

Is online shopping universally popular across departments, or just a distraction in accounting? Is online poker only a problem in the manufacturing department, or is everyone from the boardroom to the mailroom preparing to go on the pro poker circuit? Inquiring employers now have the tools to know.

Filtering with Policies

Other types of employee monitoring programs work a bit more proactively by enforcing Internet usage policies and blocking employee access to sites blacklisted by administrators.

Websense Enterprise does this by enabling administrators to implement custom Internet usage policies from a centralized management console. The program also enables admins to filter Internet access using the Websense Master Database, with filtering actions such as Allow, Block, Continue, Quota, Block by Bandwidth, and Block by File Type.

Like other monitoring programs, Websense is armed with a wide variety of reporting options to give managers and administrators the summary information they need to monitor their policies and tweak them as necessary.

Spytech Software's SpyAgent is another example of a monitoring program that actively tracks employee activity. This software logs keystrokes, Web sites, applications launched, Internet connections, files opened and printed, chat conversations, e-mail sent and received, etc. The list goes on and on. As with other popular programs, SpyAgent records virtually everything and allows administrators to create extensive reports documenting employee online activities.

For those who need to create a usage timeline, SpyAgent's Events Timeline feature lets administrators view logged events in chronological order. Think of it as a faithful chronicle of wasted time spent web surfing, e-mailing, and chatting. And yes, the company even promotes the use of its software for spousal monitoring. Now bosses can keep tabs on their spouses. What a deal!

There are many other examples of software designed to track, monitor, or filter employee PC and online habits, including PC Acme Professional, Realtime Spy, Spy Agent, and NetVizor.

Bottom line: when it comes to spying on employees, employers have a huge arsenal of tools at their disposal.

Is It Right?

Peggy Eisenhauer, founder of Privacy and Information Management Services, a law firm specializing in assisting industry with privacy and security Relevant Products/Services compliance solutions, says CEOs need to be sure their organizations are managing risks properly and detecting security threats and breaches.

"Appropriate employee monitoring," adds Eisenhauer, "is an essential part of this process."

But, employers should strive to strike the right balance between privacy and monitoring by considering all the factors, she adds. For example, employees in the financial services, healthcare, education, and other sensitive industries should expect monitoring commensurate with business risk, says Eisenhauer. In addition, employees with access to sensitive data, such as I.T. and H.R. personnel, should also be subject to monitoring with regard to the sensitivity of the information they handle, she adds.

Also, says Eisenhauer, employees should be informed about the level of monitoring with transparency, so they know what to expect. Multinational companies should understand that employee monitoring programs outside the U.S. are subject to many other legal requirements, she warns.

For employees, the calculation is straightforward. As Eisenhauer points out, employees should expect all activities at work or some other public place to be subject to some level of scrutiny.

"Employees should govern themselves accordingly; if you want to send a private message or enjoy adult Web sites, you should use your personal PDA or home computer," says Eisenhauer.

It's actually pretty simple: in a world where technology is plentiful and the legal climate is favorable (at least in the U.S.), employees should come to work with no presumption of privacy when it comes to online and computing activities. Workers who don't want to run afoul of the boss' Internet usage policy should police themselves and save their personal online activities for after-hours.

Windows Vista Hits the 60 Million Mark

With Microsoft's Kevin Turner saying that Microsoft sold more copies of Windows Vista in its first five weeks on the market than the entire installed base of Apple computers, Microsoft currently is feeling "very good" about the sales performance of the new OS, and in particular Vista Premium, selected by 68 percent of Vista buyers.

At Microsoft Relevant Products/Services's annual meeting with analysts, Chief Operating Officer Kevin Turner announced that the software giant had sold 60 million copies of Windows Vista since the product's launch in late January.

During the first five weeks alone, Turner said, sales numbers of Windows Vista exceeded the number of computers that Apple currently has as its total installed base.

But not everyone was impressed. "There were probably nearly 120 million PCs shipped in the first two quarters of 2007, so I'm not sure 60 million is that great," observed Gartner Relevant Products/Services Client Computing research vice president Michael Silver.

Microsoft is "trying to dampen Apple's latest quarterly results, which saw a significant increase in shipments," he said.

Lacking the Killer App?

Turner said he thinks Vista's prospects going forward are "huge" -- especially in emerging markets such as Brazil, Russia, India, and China. Nevertheless, the software giant has just reduced its Vista sales growth forecast to roughly 10 percent over the next 12 months.

The continuing popularity of Windows XP is one reason Vista sales haven't been as strong as some analysts had expected initially. In addition, Vista's lack of a "killer app" means that potential buyers have no compelling reason to migrate from XP aside from Vista's "coolness" factor, wrote analysts at Forrester Research on the eve of Vista's launch.

In addition, the research firm's analysts wrote, Vista needs to be seen and experienced to be fully understood by consumers. "Until must-have applications are available on the Vista platform, the purchase experience will play an important role in Vista adoption," they noted.

"We certainly expect businesses to continue installing Windows XP for some time, even on PCs they buy with Vista licenses," Silver said. "Especially in the enterprise, it takes a good 12 to 18 months until they can support a new OS in their environment," he explained.

Greater Reliability, Reduced Support

Microsoft is trying to encourage PC users to upgrade to its new OS by stressing Vista's improved performance over XP in both security Relevant Products/Services and customer support. During the past six months, only 12 "high-severity vulnerabilities" have been uncovered for Vista versus 25 for Windows XP, Turner told analysts. "I think you should also note that Windows Vista had far fewer than Apple, as well as any major desktop Linux distributor," he added.

Turner also played up the fact that the number of support calls for Vista was 21 percent lower than the number received for Windows XP during the past six months. "That's a big improvement for us as it relates to improving reliability Relevant Products/Services," he said.

Microsoft currently is feeling "very good" about the sales performance of Vista's higher-priced Premium Edition, which has been selected by 68 percent of the software giant's customers to date. "That's a 16-point year-over-year increase as it relates to our premium mix," Turner noted.

However, the relative success of Vista's Premium Edition is not all that surprising. When Forrester Research interviewed more than 4,000 online adults several months back, Vista awareness proved to be greatest among wealthy, style-conscious individuals -- the consumers most likely to buy an upscale notebook or desktop PC that can take advantage of the advanced features that the Premium Edition offers.

PowerPoint Now a Biz School Entrance Requirement

The University of Chicago's PowerPoint requirement for business school applicants could be called corporate America's final surrender to a technology that, in the name of promoting the flow of information, often gums it up by encouraging bureaucratic jargon. Nonetheless, PowerPoint has become the lingua franca of business meetings worldwide.

At business meetings the world over, PowerPoint-style presentations are often met with yawns and glazed eyes. But at one of the world's top business schools, such slide shows are now an entrance requirement. In a first, the University of Chicago will begin requiring prospective students to submit four pages of PowerPoint-like slides with their applications this fall.

The new requirement is partly an acknowledgment that Microsoft Relevant Products/Services Corp.'s PowerPoint, along with similar but lesser-known programs, have become a ubiquitous tool in the business world. But Chicago says so-called "slideware," if used correctly, also can let students show off a creative side that might not reveal itself in test scores, recommendations and even essays.

By adding PowerPoint to its application, Chicago thinks it might attract more students who have the kind of cleverness that can really pay off in business, and fewer of the technocrat types who sometimes give the program a bad name.

"We wanted to have a freeform space for students to be able to say what they think is important, not always having the school run that dialogue," said Rose Martinelli, associate dean for student recruitment and admissions. "To me this is just four pieces of blank paper. You do what you want. It can be a presentation. It can be poetry. It can be anything."

Online applications are already the norm, and it's not uncommon for colleges to let students submit extra materials such as artwork. Undergraduate and graduate applications also are beginning to ask more creative and open-ended essays.

Partly that's to better identify the students with a creative spark. Partly it's to fend off the boredom of reading thousands of grinding, repetitive responses to "Why is University X right for you?"

But asking for four electronic slides appears to be a new idea.

Chicago's new requirement may provoke groans from some quarters. It could be called corporate America's final surrender to a technology that, in the name of promoting the flow of information, often gums it up by encouraging bureaucratic jargon and making colorful but useless graphics just a little too easy to produce.

Nonetheless, PowerPoint has become the lingua franca of business meetings worldwide. Its 500 million copies are used (or misused) in 30 million presentations per day, Microsoft has estimated. PowerPoint is so common in the business world that "it's actually your word processor Relevant Products/Services," said Michael Avidan, a second-year Chicago MBA student, who reads applications for the graduate program and helped it do a dry run. His slides were a play featuring a Greek chorus questioning him about his application.

"When you apply to business school, he said, using a buzz word for the best a student has to offer, "it's only natural that your 'deliverables' be in PowerPoint."

Martinelli acknowledges one reason for the requirement is that students will inevitably have to master the technology in their jobs. But she says students won't be judged on the quality of their slides. Rather the slides are an outlet for judging the kind of creativity the business world needs.

Chicago's does have a few ground rules: no hyperlinks, and no video. Beyond that, "I really don't know what we're going to get," Martinelli said.

It's not surprising the first PowerPoint application is coming from the world of business schools. In an undergraduate admissions office there would likely be worries about the applicant pool's familiarity with and access to technology. Applicants to Chicago's MBA program generally already know Facebook and YouTube and are accustomed to presenting themselves online. They can also afford the $200 application fee. (True technophobes can fill out four pages in another fashion and mail them in).

Technology isn't a hurdle for most University of Chicago applicants, but "other schools might have to think about that," said Nicole Chestang, chief client officer for the Graduate Management Admission Council, a worldwide group of management programs that oversees the GMAT entrance exam.

It's also business schools that traditionally have the most boring essays, focusing on workplace accomplishments rather than passions or unusual talents, but which are increasingly interested in creativity.

Avidan predicts some applicants will be turned off by the requirement, but says it's an opportunity for clever students whose test scores and other application materials might not stand out to shine.

"If there's one foundation of business, it's innovation, and this is your chance to elevate yourself and show you can do something innovative," he said.

The PowerPoint presentations will be the last part of the application the admissions office considers its decision.

"This can determine whether or not you get admitted," he said. "Here you are. Show us."

Symantec Expands Small Business Services

The beta version of Symantec's Online Backup Service for small businesses -- part of the Symantec Protection Network -- will be introduced in the "near future," according to Symantec Senior Manager Mike Baldwin, who noted that the beta will be followed by other on-demand apps that make sense for Symantec to deliver in a SaaS format.

Symantec is planning to expand the offerings in its Symantec Protection Network, a software-as-a-service (SaaS) platform that the company initially announced in April, with a beta version of its Online Backup Service.

The Symantec Protection Network will offer a smorgasbord of technologies that are based on the company's current enterprise offerings in what the company deems a cost-effective, easy-to-use delivery model aimed at protecting small and midsize businesses (SMBs).

"Small businesses have the same needs around security , accessibility, information availability, and data protection as an enterprise organization might," said Symantec Senior Manager Mike Baldwin, "but without the wherewithal necessarily to staff up internally to handle those needs or to lay out large amounts of money for infrastructure and equipment."

Beta Backup

Symantec's moves in the SMB market are not solo. Google and Microsoft have begun to capitalize on the opportunities to offer applications and services to smaller organizations over the Web. Symantec is rolling out the Online Backup Service to address what the company has said is one of the most immediate and pressing problems for small and midsize businesses today: disaster recovery.

Symantec is assuring smaller organizations that subscribe to the Online Backup Service that they will be able to expand their disaster-recovery capabilities and stay current with advancements in backup and recovery technology without costly migration or upgrade processes.

"Small and midsize businesses, like their enterprise counterparts, are facing new and significant challenges pertaining to data protection," Doug Chandler, program director at IDC, said in a statement. "Symantec Protection Network - Online Backup Service leverages the software-as-a-service model to offer sub-enterprise firms a more affordable way to get access to proven data protection technology."

What's Next?

The beta backup service will be introduced to the market in the "near future," Symantec's Baldwin said, to be followed by Symantec's current technologies that "make sense to deliver in a software-as-a-service format." Those technologies should begin to roll out throughout 2008.

Baldwin declined to disclose a specific roadmap, but he hinted at things to come by suggesting SMBs take a look at the areas where Symantec offers market-leading products. That would include technologies for desktop security, e-mail security, archiving, messaging hygiene, remote access, and remote support. "It's not going to be a single-service solution in any sense," Baldwin clarified. "It will be a full one-stop shop where SMBs can have these needs addressed as a service."

What of Google and its recent acquisitions that put it smack dab in Symantec territory? Google recently acquired Postini, a vendor that offers Internet-hosted security software for e-mail and messaging, for $625 million. Google also snapped up GreenBorder Technologies, a company that offers security features akin to Symantec's Norton line of software products.

Baldwin said he is confident that what the Symantec Protection Network is doing is different from any other security offering on the market. "We have experience, we have market know-how, we have relationships with customers and partners," he said. "By leveraging all that and simply going to a service-based format with an integrated solution, we are going to be quite different from anything else that's out there right now."

Vista's First Service Pack Coming Soon

Windows Vista's first service pack is arriving on August 14 through Windows Update, roughly six months after Microsoft released Vista. It is not yet clear whether the Windows Vista service pack will include security fixes or merely update certain Vista components to improve Vista's performance and compatibility.

News outlets have been touting the rumored release of two big Windows Vista patches to beta testers, but the releases have been confirmed this week by a leak of those patches to various Web sites.

The Vista performance and compatibility packs reportedly address issues that some Vista users have been complaining about. Among other things, the fixes are designed to improve Vista's performance when copying or moving large files or large directories. Issues with Vista's memory manager -- which can cause the system to lose its default gateway address -- are also reportedly addressed in the packs.

The running theme of the fixes is to improve the performance and reliability Relevant Products/Services of Vista, as well as compatibility issues with printers, digital cameras, and other devices.

The official updates are expected to be available to the general public on August 14 as a 45-MB download over Windows Update, but impatient Vista users can instead choose to visit any of several sites to download the packs.

However, while the downloads are widely available, they are not yet official releases. That means the software might not contain the same contents as the publicly released Service Pack 1 that will be available over Windows Update next month.

Six Months, 60 Million

The first service pack is arriving six months after Vista's initial release. Microsoft Relevant Products/Services has sold 60 million copies of the operating system since it was introduced, according to Microsoft Chief Operating Officer Kevin Turner, who said last week that during the first five weeks of sales, copies of Windows Vista exceeded the number of computers that Apple currently has as its total installed base.

According to Microsoft's Trustworthy Computing Group, the software giant's latest operating system is far more secure than competing platforms -- or even previous Windows iterations.

During Windows Vista's first six months on the market, Microsoft released four security Relevant Products/Services updates to address 12 total vulnerabilities in Vista. In the National Vulnerability Database, the National Institute of Standards and Technology rated 10 of these vulnerabilities as high severity, one as medium, and one as low.

By comparison, when Windows XP debuted, there were already three Internet Explorer vulnerabilities, which had been disclosed and fixed three weeks prior to market distribution. Consequently, new users had to apply an IE patch immediately to address them. In addition, Microsoft fixed a total of 36 vulnerabilities in the first six months Windows XP was available.

Security Fixes in the Works?

Will these packs contain security fixes? "At this point it isn't clear if the hotfixes actually contain any security patches or are restricted to performance issues, so it remains to be seen what the updates truly contain," said Michael Sutton, a security evangelist for SPI Dynamics.

However, he added, Microsoft tends to stick to a monthly patch cycle for security issues, so the hotfixes might not patch any vulnerabilities, and none appear to be clearly listed in the release notes.

"In general, it is not advisable to release security fixes only to a select group, as binary patches can be reverse engineered to reveal the issues that they address," Sutton concluded. "Once patches are publicly available, they can and will be used by both white and black hats."

Phishing Scams Cost Consumers Billions

"What shocks me is that among the people who responded to our survey, about 8 percent said they actually provided personal information to a fraudulent e-mail," said Jeff Fox, the main author of the report and technology editor of Consumer Reports. "That means millions and millions of people are taken in by these phishing scams."

U.S. consumers lost about $7 billion over the past two years from online phishing scams, spyware and throwing out computers so infected by viruses they were deemed useless, according to a report by Consumer Reports magazine.

One of every four U.S. households with regular Internet users became the victim of cybercrime over the two years ending in May, according to the research done by the Consumers Reports' National Research Center. It surveyed about 2,000 people among the 80 million U.S. households with Internet connections.

Viruses that infect PC hard drives or software programs and render them useless continue to be such a problem that 1.8 million U.S. consumers chose to replace their personal computers in the past two years, citing infections as the reason, the report said. That includes 850,000 in the six months ending in May.

Phishing attacks -- in which cybercriminals send e-mails that appear to come from banks or employers or known merchants and direct recipients to update their personal information on what are bogus Web sites -- have climbed to 23,000 a month in the United States, the report said.

"What shocks me is that among the people who responded to our survey, about 8 percent said they actually provided personal information to a fraudulent e-mail," said Jeff Fox, the main author of the report and technology editor of Consumer Reports. "That means millions and millions of people are taken in by these phishing scams."

He recommended that people never follow an e-mail link to a purported bank or financial institution. The Consumer Reports article recommends activating firewalls that come in most operating systems and spam blockers available from most Internet service providers.

It also recommends turning off computers overnight. It recommended installing, and regularly updating, antivirus and antispyware software, ranking a security Relevant Products/Services suite from Trend Micro Inc. as the most useful and two from McAfee Inc. as also effective.

Google Is Watching Your Every Move

Many Web companies say privacy concerns are, in many respects, overblown. After all, the information collected online is tied to a number representing a particular computer, not to a person's name or Social Security number. They don't want to know someone's address, political views, or any other information that isn't tied to a potential purchase.


Kevin Bankston didn't think anyone would notice his little cigarette break. His family didn't know he sometimes snuck a smoke. So Bankston was surprised when a photo of him smoking outside his San Francisco office appeared online several years ago on Amazon.com's now-defunct A9.com map service. He was even more shocked when, in May, he found out he was caught again on candid camera -- possibly smoking -- this time by Google's new "Street View" map service.

Bloggers began buzzing about Bankston's double-lightning-strike luck, and the two photos now appear all over the Internet. A Web search for "Kevin Bankston smokes" reveals more than 20,000 links. "I felt somewhat embarrassed and a bit spied upon," says Bankston. "I am now thoroughly outed as a cigarette smoker."

Privacy Advocates Seek Protections

Coincidentally, Bankston also happens to be one of the leading advocates for digital privacy. An attorney for the Electronic Frontier Foundation, he's trying to turn his personal problem into a larger point: In the quest to fill the Web with information, online companies are often trampling on individuals' right to privacy, says Bankston.

Of course, the trade-off between privacy and Web innovation is nothing new. The Internet's most popular services enable people to do everything from research ailments to virtually tour Times Square -- for free. But when you type in a Web search, your words are stored by Google and other search providers, along with information tying those words to your personal computer. If you surf the Web, the pages you visit and what you do on them are tracked with "cookies," tiny text files that download to your computer so they can report back to their ad network owners.

But while Web services have long made their money tailoring advertisements to individuals based on their online doings, more users are paying attention, and some are starting to balk. Consumer advocates and privacy experts have renewed cries for stricter guidelines -- even new laws -- that would change the way many Web companies do business.

Curbing Data Retention

Government agencies in the U.S. and overseas are taking notice. The European Union's Data Protection Working Party has heavily criticized Google's retention of search data. In the U.S., the Federal Trade Commission is reviewing whether to allow a string of proposed acquisitions of ad networks by major search companies. Those deals -- Google's $3.1 billion takeover of DoubleClick, Microsoft Relevant Products/Services's $6 billion buyout of aQuantive, and Yahoo!'s $720 million purchase of Right Media -- would enable the big search providers to start tracking which Web sites individuals visit outside their own networks.

Already, some of the pushback has resulted in change. In June, Google said it would scale back how long it retains search data from 24 months to 18 months and would consider letting its cookies expire earlier. In response to complaints, Google also made it easier to have an image removed from its map services, which have captured people in compromising positions such as sunbathing and flashing underwear. Bankston's photo is no longer on the site.

Many privacy advocates want more concessions. Bankston would like Google to blur the faces of everyone in its map pictures. Others would like to see search words and data stored only for as long as it takes to deliver the immediate search results and related ads. Still others would like all companies that use cookies to alert users regularly and proactively give them the option not to be tracked.

Targeted Ads Rely on User Data

If the most stringent calls are heeded, more than mergers would be at risk. Over the next four years, $9.6 billion is expected to be spent on ads triggered by a user's online surfing activity, according to a June eMarketer report. While sites that feature auto reviews and fashion news would continue to attract ads, Web sites without such obvious draws would be hard hit by the loss of ads placed as a result of surfing behavior.

Many Web companies say the privacy concerns are, in many respects, overblown. After all, the information collected online is tied to a number representing a particular computer, not to a person's name or Social Security number. And the companies say they're only collecting the information to show say, a car ad, to someone who might be in the market for a car. They don't want to know someone's address, political views, or any other information that isn't tied to a potential purchase. They just want to deliver fewer untargeted ads.

There's reason for marketers to believe that people respond well to targeting. In his June report, eMarketer senior analyst David Hallerman found that users are more willing to receive ads related to things they like. "Although they are generally unaware that behavioral targeting is the cause, many consumers find ads that are systematically more relevant to their interests, preferences, or intentions to be more palatable or even welcomed," wrote Hallerman. That's not to say privacy is not a concern, he says. But it's not enough of a worry to give up free services and content. "People are used to the fact that, in order to get something for free, they will see ads," says Hallerman.

Trading Privacy for Free Service

Web companies say they are not running afoul of any privacy laws. Google, for example, says the photos for Street View don't capture anything that passersby couldn't see as well. "All the imagery is being collected on public streets It is just like what we are seeing walking down a street," says Stephen Chau, product manager of Google Maps.

More important, many Web companies argue that consumers are not willing to sacrifice the availability of free access to services in exchange for more privacy. This year, Amobee, a Redwood City (Calif.) company that delivers ads to cell phones ran a series of trials offering consumers the option to choose between a paid download service and a free ad-supported service that would track some of their mobile Web-surfing behavior. For every consumer who paid for the content, 50 more took the free version with targeted ads.

Roger Wood, senior vice-president for Amobee's Americas region, says people born after 1975 have completely different attitudes about privacy and are more receptive to the Web's trade-offs. "Where you live, how many times a day you shop, how many girlfriends you have -- they don't care about that level of privacy," says Wood.

But do younger generations care about privacy at all? Wood thinks today's teens and twentysomethings do jealously guard their thoughts and feelings. However, a scan of the Internet shows evidence to the contrary. After all, people share everything from what they ate for dinner to their political views on publicly searchable blogs. "Lifecasters" like Justin.tv's Justin Kan, who videotapes every moment of his day to stream live on the Web for public consumption, share their intimate conversations and moments. Likewise, millions have uploaded videos of themselves to Web sites such as YouTube and Metacafe.

Limits to Sharing

Despite all the sharing -- or perhaps oversharing -- privacy advocates maintain that many people do care. In her upcoming book, Privacy in Context, New York University professor Helen Nissenbaum argues that people expect varying amounts of privacy depending on where they are, even when online or in public. Nissenbaum points to the anger Facebook users showed when the social network installed a feature automatically updating all their approved "friends" to new posts. Clearly, she says, users expected that certain people would see the things they wrote, but that it would fly under the radar for most users.

Similarly, many AOL users were outraged after the company posted search records, identifiable only by a number assigned to individual computers, on the Internet. Online publications identified several users from the data and The New York Times came knocking on one user's door, showing her searches about her family and friends' health problems. Several people sued AOL.

Whether it's a topless sunbather tanning on her roof in the Netherlands or just a guy on his cigarette break, most people don't expect millions of Internet voyeurs to catch them in the act. Perhaps they'll need to get used to it.

FBI Uses Spyware To Track Bomb Hoax

The search warrant authorizing the use of the FBI's secret spyware application, called CIPAV, was sought in the case of Josh Glazebrook, a student at Timberline High School in Washington. The information collected by CIPAV led to the arrest of Glazebrook, who pleaded guilty to identity theft, felony harassment, and making bomb threats.

A recently released FBI affidavit in the prosecution of a suspected bomb hoaxer has revealed the development and deployment of an FBI spyware program called the Computer & Internet Protocol Address Verifier (CIPAV).

According to Special Agent Norm B. Sanders, Jr., who applied for an affidavit authorizing the use of CIPAV, the program is capable of secretly sending to the FBI information about a computer's IP and MAC addresses, other environment variables, and certain registry-type information.

Lauren Weinstein, cofounder of People for Internet Responsibility and moderator of the Privacy Forum, said he was not surprised by the information contained in the affidavit.

"Look, many people have known or suspected for a significant time that various agencies are using this technique for surveillance," he said. "It was inevitable that this type of software tool would be developed by law enforcement, particularly given the advances in techniques for concealing and encrypting electronic information."

Bomb Hoax Investigation

The search warrant authorizing the use of CIPAV was sought in the case of 15-year-old Josh Glazebrook, a student at Timberline High School in Washington who was suspected of making bomb threats. A handwritten note containing a threat was discovered on May 30, and the high school subsequently received e-mail threats and was hit by a denial-of-service attack.

A week later, another student reported receiving an invitation from a MySpace account with the handle "Timberlinebombinfo," asking her to post a link to the bomb threats on her MySpace page. She reported the invitation to local law enforcement, which subsequently learned that 33 students had received a similar invitation.

When the FBI traced the IP address of the e-mail and MySpace accounts, they were led to a hijacked computer in the National Institute of Nuclear Physics in Italy. Having reached a dead end, they determined that the next step was to send CIPAV to the e-mail address from which the bomb threats were sent.

The information collected by CIPAV led to the arrest of Glazebrook, who pleaded guilty on Monday to identity theft, felony harassment, and making bomb threats. He was sentenced to 90 days in juvenile detention.

CIPAV a Powerful Weapon

While noting that the Glazebrook case is not particularly remarkable, Weinstein said that it does raise concerns about the power of CIPAV and what types of information is being gathered by law enforcement. "Once you've got something like this on someone's computer," he noted, "you can basically do anything and learn everything about what that person is doing."

The recent revelations about the scope of the FBI's use of National Security Letters, Weinstein said, undermines the overall confidence in security Relevant Products/Services and law enforcement agencies, and raises questions about whether a program like CIPAV will only be used as the FBI says it is being used. National Security Letters are subpoenas allowing FBI agents to require phone companies, banks, credit agencies, and ISPs to turn over customer records.

"If techniques like this are going to be used by the FBI and other agencies," Weinstein said, "then we need to have 100 percent trust in the agencies about when such tools will be deployed and under what circumstances. That's the challenge for this society."

World's Largest Software Piracy Ring Busted

Microsoft estimates that the software piracy of an international counterfeiting syndicate, over the past six years, cost the company at least $2 billion in lost software revenue. Microsoft said that key information in the investigation came from its Windows Genuine Advantage program, an antipiracy system that can check whether an OS is legit.

American and Chinese authorities said Monday that they have taken down what was reportedly the world's largest software piracy syndicate. The two-year-old operation, code-named Summer Solstice, was a joint effort by the FBI and China's Ministry of Public Security (MPS).

The sting resulted in 25 arrests and seizures by the Chinese authorities of more than $7 million in assets, including over 290,000 counterfeit software CDs and certificates of authenticity. The fraudulent software had an estimated street value of about $500 million. In two-dozen searches and asset seizure raids, FBI agents in Los Angeles seized an additional $2 million in counterfeit software and assets worth over $700,000.

J. Stephen Tidwell, assistant director in charge of the FBI in Los Angeles, said that "the buying and selling of counterfeit goods amounts to stealing the ideas of others and is no different than common theft."

Busting the Counterfeiters

According to the FBI, Summer Solstice involved several investigations in LA and China. One such investigation focused on a Shanghai-based organization headed by Ma Ke Pei, who has been accused of providing counterfeit products to U.S. distributors.

In 2003, Ma Ke Pei was indicted in New York for criminal copyright and trademark violations relating to imitation Microsoft Relevant Products/Services products. But Ma fled to China, where he resumed his operations and expanded to include imitation Symantec software.

With assistance from the FBI, the MPS arrested Ma Ke Pei and 10 of his coconspirators in China. More than $500,000 and five real estate properties were frozen, and equipment for manufacturing pseudo-Symantec products was seized.

Another group composed of 14 major producers and distributors was based in Shenzhen. It made counterfeit software, of which more than 70 percent was shipped to the U.S., according to investigators. In the cooperative effort between the two countries, 14 members of the Shenzhen group were arrested, six manufacturing and retail facilities were dismantled, and raids seized 47,000 counterfeit Microsoft CDs and eight high-quality Microsoft master CD replication discs.

Billions in Lost Revenue

Microsoft's associate general counsel, David Finn, pointed out to PC World that the typical maximum sentence for piracy in China is about seven years. He said that there has never been a case this big, and added that it "will have an appreciable and noticeable impact on the volume of pirated software on the marketplace."

The Redmond, Washington-based company estimates that the piracy of these operations, over the past six years, cost the company at least $2 billion in lost revenue. Microsoft said that key information in the investigation came from its Windows Genuine Advantage program, which is an antipiracy system that can check whether an operating system is genuine.

About 1,000 customers who suspected that their copies of Windows XP were not valid had the discs submitted to the Genuine Advantage program, and they were linked back to the syndicate, according to Microsoft.

Google Now on a Collision Course with Microsoft

With Google now offering Sun Microsystems' StarOffice as part of the Google Pack of free software apps, it's getting harder and harder for Google to say it's not competing directly with Microsoft in terms of the office suite, said analyst Greg Sterling. "Google is moving onto a collision course with Microsoft," he said.

At an investors' conference in March, Google CEO Eric Schmidt told analysts eager to see the search giant diversify beyond advertising that several new revenue contributors were in the works. "The next really big one is actually an extension of Google Apps," he said.

Google Docs & Spreadsheets, as the service is now called, offers much of the basic functionality of Microsoft Relevant Products/Services's Word and Excel office applications -- with the advantage that they're free and online.

Over the weekend, Google upgraded its Google Pack download bundle to include Sun Microsystems' StarOffice, a full-featured competitor to Microsoft Office. The bundling is the result of deal the companies announced in 2005, but has been slow to bear fruit. "They announced this a long time ago; the surprising thing is they didn't do it sooner," said Greg Sterling, principal analyst with Sterling Market Intelligence.

Sun sells the software for $70 but the New York Times reported that Google is paying Sun to be able to offer it for free. Google said in a statement that it's making StarOffice available for free because it "always believed that users should have choice in their online and PC experience."

Collision Course with Microsoft

"It's getting harder and harder for Google to say it's not competing directly with Microsoft in terms of the office suite," Sterling said. "They will continue to say Google Docs has different functionality, and in some ways it does," he said, but Google clearly sees the enterprise as a big revenue producer.

"Google is moving onto a collision course with Microsoft," Sterling added.

The addition of StarOffice to Google's offerings indicates that the company is targeting small and midsize enterprises, which might need more sophisticated features and the better performance of a desktop app. "Google's spreadsheet is not as rich as Excel," Sterling noted. "But it offers collaboration and being able to get your information from any computer, which has a certain value. People like the idea of a plug-and-play application," he said.

For the moment, offering Sun's StarOffice likely will not put a serious bite in Microsoft's Office market share. But clearly, Google is putting together the pieces for the same sort of software-plus-service offering that Microsoft is readying.

Tighter Integration Coming

"In the future (Google Docs and StarOffice) will be more tightly tied together," Sterling said. "You'll see more integration of Internet- and desktop-based applications." A key enabling technology for this integration is Google Gears, an open-source browser extension that lets applications run offline. Using JavaScript APIs, developers can write applications that cache and serve local application resources and store data locally in a relational database.

Microsoft has announced it will launch its own hosted, collaborative service, although no dates have been offered. Speaking at Microsoft's Worldwide Partner Conference in July, CEO Steve Ballmer said, "The fundamental transformation to software-plus-service ... is upon us."

And he left no doubt that Microsoft is well aware of the importance of that transformation. "I guarantee you Microsoft will lead during this next generation of computing and user interface," he said in his speech. "We will be out there with betas, previews, and feedback. It's time to engage."

Can Open Source Beat Google Search?

Among those looking for alternatives to Google, the Wikia search project might gain some traction, said analyst Greg Sterling, noting that the bottom line is that the Wikia search engine -- a collaborative project built on open-source software -- has to work as good or better than Google and Yahoo. "That's a pretty tall order," Sterling said.

On Friday at the O'Reilly Open Source Convention, Wikia, a Web 2.0 company cofounded by Jimmy Wales, gave the world an update on its progress toward building a new search platform based on open-source software and human collaboration.

In a morning keynote address, Wales discussed his vision and business models for building search from a set of open-source software tools known collectively as LAMP. LAMP is an acronym for the Linux operating system, Apache Web server Relevant Products/Services, MySQL database management system, and PHP programming language.

"We've had a tremendous response from very interesting commercial players in the search space," Wales said in a statement. "The desire to collaborate and support a transparent and open platform for search is clearly deeply exciting to both open source and businesses."

Getting Grub

Wales promised new announcements in the months ahead as Wikia works to "free the judgment of information from invisible rules inside an algorithmic black box." Wikia's Grub acquisition is part of what will make that vision possible.

Grub is the first distributed-search project from LookSmart. It operates under a model of users donating their personal computing resources toward a common goal. Grub, which Wikia has released under an open-source license, is designed with modularity so developers can extend and add functionality to improve the quality and performance of the entire system.

Wikia executives said that by combining Grub with the power of a wiki to form social consensus, the Wikia search project has taken the next major step toward a future in which search is open and transparent.

"As the people's search engine, the Wikia project might have some traction with some segments of the user community," said Greg Sterling, principal analyst at Sterling Market Intelligence. "The opportunity may be political as much as anything else. Some people are uncomfortable with the power of Google and are interested in alternatives."


Google Power

The Search Wikia Project wouldn't be the only alternative. Beyond the big names with which most people are familiar, there are niche engines looking for a big breakthrough, including image-based search engines such as Like.com. Sterling said that with more visual information making its way online, these efforts are gaining some attention.

Nevertheless, Google has been entrenched in the top position of search engine rankings for years. Microsoft Relevant Products/Services's Live Search recently registered some gains, but analysts believe its Live Search Club gaming site is behind the boost. Yahoo holds steady in second place, while Ask.com continues to hover in fourth or fifth place, despite heavy investments in marketing and innovation.

"It's very hard to dislodge the top search engine," Sterling concluded. "To his credit, Wales succeeded against conventional wisdom with Wikipedia. Nobody would have predicted it would have succeeded. But the bottom line is that the Wikia search engine has to work as good or better than Google and Yahoo. That's a pretty tall order."

PayPal Founder Banks on Web Widgets

As widgets are melded into more sites, they are becoming a more attractive target for advertisers looking to connect with consumers who are spending less time watching TV. The initial list of major advertisers hoping to get their commercial inserted into Slide's widgets include Paramount Pictures, AT&T, and the Discovery Channel.

Max Levchin already changed electronic commerce as a co-founder of PayPal, an online payment service that is expected to process more than $40 billion in transactions this year.

Now, he's tinkering with a new way to make money off Internet widgets -- high-tech shorthand for the mini-applications planted on the personal pages of online social networks and other popular Web sites like Google.

Levchin's latest startup, Slide Inc., has emerged as the No. 1 widget maker so far, largely because its programming tools have made it easy for people to add more pizazz to the pictures and videos decorating trendy hangouts like MySpace, Facebook and Bebo.

Hoping to cash in, the 32-year-old Levchin will push Slide down a potentially slippery slope Monday when he injects advertising into the mix for the first time.

"On the surface, it seems like a risky idea because what if (users) don't want advertising in their widgets?" Levchin said. He concluded his idea would only work by making all the ads "user-initiated" -- that is, the marketing messages only appear if users voluntarily choose to blend a marketing campaign into their own personal widgets.

Levchin and Slide's senior advertising director, Sonya Chawla, insist the approach isn't as kooky as it might sound. After all, they point out that consumers for years have willingly become walking billboards by buying clothing promoting the brands of major corporations like Nike Inc. and Coca-Cola Co.

Given that behavior, Chawla doesn't think it's that much of a leap to assume people will turn their widgets into platforms for showing off a trendy cell phone or attaching links to hot movies and television shows.

"We are really good at getting people to take things and include them on their social networking pages," Chawla said. "We think we can persuade our users to become brand ambassadors."

Lisa Weinstein, a managing director of ad agency MindShare, said Web surfers have proven they will distribute advertising online by steering their friends and family to commercial clips posted on YouTube.

For the approach to work with widgets, advertisers and their agencies "will have to do it in a way that adds value to the experience, rather than interrupting or disrupting it," Weinstein said.

The initial list of major advertisers hoping to get their commercial inserted into Slide's widgets include Viacom Inc.'s Paramount Pictures, AT&T Inc. and Discovery Communications Inc.'s Discovery Channel.

As widgets are melded into more Web sites, they are becoming a more attractive target for advertisers looking to connect with consumers who are spending less time watching television, listening to the radio, and reading newspapers and magazines.

In May, 221 million people worldwide saw at least one Internet widget, according to the latest data from the research firm comScore Media Metrix. Slide's toolbox of widgets, bearing names like "Slideshows," "Funpix," and "Skinflix," was the market leader with nearly 129 million viewers worldwide.

San Francisco-based Slide largely is piggybacking on the rapid growth of social networks, where its widgets are commonly deployed. News Corp.'s MySpace attracted 114 million worldwide visitors in June, a 72 percent increase from last year, while Facebook drew 52 million, more than tripling from the prior year, Media Metrix said.

Levchin launched Slide in early 2005, a couple of years after online auctioneer eBay Inc. bought PayPal for $1.5 billion in a deal that turned him into a multimillionaire.

Slide hasn't turned a profit yet, subsisting so for on an undisclosed amount of money raised from a group of investors that includes PayPal's former chief executive, Peter Thiel, and one of Silicon Valley's best-known venture capitalists, Vinod Khosla.

If Slide's advertising ambitions pay off, Levchin hinted that the company might be in a position to sell its stock in an initial public offering as early as next year.

"Widgets aren't just about fun and games," Levchin said. "This is a big step toward maturity for us."

Battling Click Fraud One Click at a Time

While Google and Yahoo are trying to curb pay-per-click fraud, some say their solutions are not enough. In the meantime, quality publishers are taking control in the war against click fraud by bringing inventory management in-house rather than syndicating ads to large ad networks. By providing a source of traffic and positive ROI, publishers are able to prove their value directly to online advertisers.

It's an issue that is costing search engine marketers millions of dollars each year. Click fraud is the act of repeatedly clicking an online advertiser's pay-per-click ad with sinister motives. Since the advertiser has to pay for each click the ad receives, fraudulent clicks can be very costly when foul play is involved. Take, for example, the competitive vendor who wants to bleed his rival's ad budget dry. Or, it could be an angry customer who is trying to get even with a merchant.

Whatever the motive, the costs can mount quickly when the intent is malicious. An estimated average of 14.6 percent of billable pay-per-clicks are fraudulent, according to Outsell Inc., an information industry research group. Outsell estimates that advertisers wasted over $800 million on click fraud in 2005. This nemesis of search engine marketing (SEM) has prompted nearly 30 percent of advertisers to stop spending on search-engine click-based initiatives, the firm reported, and losses to Google and Yahoo total more than $500 million to date.

So what is being done to stop the money drain? Web analytics vendors and software makers are running to the firing line with their own solutions designed to eliminate -- or at least curtail -- click fraudsters. But is it enough to get to the root of the issue, or will these money-motivated schemers find a way around the technology? What roles do search engine marketers and ad networks play?

The answers to those questions demonstrate that click fraud is a complicated issue that may mean the unwanted traffic is here to stay. Let's take a look.

Sources of Click Fraud

Techniques for click fraud fall into two broad categories: automated and user initiated, which we will discuss in a moment.

It is also important to point out that some unwanted clicks may come from spiders and robots. These crawlers are not part of the click-fraud problem. They merely collect information to use in their search engines, and as part of the process, they generate clicks to test the links on a Web site. Despite the harmless intentions, there can still be a cost for advertisers, although online publishers usually have ways to reduce or eliminate the impact of these spider clicks.

The bigger issue is the money-motivated offenders, said Nils Winkler, managing director of digital marketing firm AdTech US. "Click fraud is a major problem that comes from several different directions," he explained. "Fraud clicks, for example, are generated by click engines to increase click rates. Actual human users in third world countries," he said, "get paid to click by hand."

Winkler also cited a major problem that is not often talked about: cost-per-view or forced-click paradigms at online gaming portals. Cost-per-view eliminates the need to click on the ad. The ad is displayed regardless of the user's intentions. Gamers who only have a few points on their score account can earn extra points to play more games by clicking on banners, according to Winkle. These clicks earn money for the gaming portal, but the gamer may not be at all interested in what the ad is selling. That means an automatic loss for the advertiser.

The Role of Search Engines

Considering click fraud class action suits against both Google and Yahoo, it is clear that search engine marketers and search engines are also paying the price. Google and Yahoo have put practices in place to prevent click fraud, but some anti-click fraud vendors do not believe these actions are enough to stop the problem.

Google recently released click fraud rates. The search giant reported fraudulent clicks account for just 0.02 percent of all activity. But some industry experts argue that the number is misleading because it accounts only for the percentage for which Google has agreed to reimburse advertisers and the company has declined to allow independent audits.

Of course search engines claim they have click fraud under control, said Tom Cuthbert, CEO of ClickForensics, an anti-click fraud technology vendor that publishes the Click Fraud Index quarterly.

"It reminds me of what Bill Gates said in December 2004 about spam. He said that the industry would have the problem solved by 2006. But in 2006, Postini reported that spam increased 147 percent and that 94 percent of all e-mail sent was spam. So, not only was the problem not solved, it got worse," Cuthbert said, noting that fraud cannot be obliterated when there is significant economic incentive to commit it.

This type of click fraud can only be mitigated, he said, with sophisticated detection systems that continually adapt to new techniques. Tackling click fraud, Cuthbert added, will take an industry-wide effort among search engines, advertisers and third-party monitoring companies.

Taking Their Business Elsewhere

John Linden, CTO of the Think Partnership, a performance-based marketing company, said quality publishers can take control in the war against click fraud by bringing their inventory management in-house rather than syndicating ads to large advertising networks.

By signing-on their own advertisers, he explained, and providing these advertisers with a source of traffic and positive ROI that is independent of their pay-per-click search-engine marketing campaigns, online publishers can prove their direct value to advertisers.

On the flip side, Linden pointed out, advertisers can also get vocal about their demands for a solution to thwart click fraud by pulling their budgets out of ad networks that are allowing it and placing those budgets elsewhere. Linden said he is already beginning to see this happen.

"Advertisers won't ever be very effective at preventing click fraud because they won't ever have enough transparency from the search engines due to security Relevant Products/Services reasons to see what traffic they are being charged for and what they aren't," Linden argued. "Advertisers can simply watch their ROI on a keyword level and adjust their PPC bids accordingly." The ultimate solution may come from networks that have the ability to see traffic on both the publisher's Web site and the advertiser's Web sites. Employing technology at the network level is the only way to detect all types of click fraud and completely eliminate it, Linden said.

Protect Yourselves, Marketers

Web analytics software can also help advertisers audit the effectiveness of their advertising campaigns, with an eye toward identifying click fraud. ClickTracks offers robust click-fraud measurement in its Web analytics package and niche players like ClickDetective, ClickFacts, AdWatcher and WhosClickingWho are also springing up to serve the needs of search-engine marketers.

These programs offer features such as the ability to validate the clickstream from end to end and assess the total online spend holistically across many platforms, not just per click by search engine. Some programs even allow the user to block a fraudster after as few as two clicks.

Marketers sometimes blindly trust their ad agencies and analytics firms to "do the right thing" and protect them against click fraud, according to Michael Caruso, CEO of ClickFacts. Or, he said, they might not suspect that a search engine would allow this sort of fraudulent activity.

"We propose that marketers take back control and run their business by the numbers, not by blind faith," he said. "They need to demand full accountability for the money being spent on search marketing campaigns, as well as total transparency by the search engines to show both legitimate and bad traffic."

Click Fraud Over-Hyped?

Despite the cage rattling, not everyone in the search engine marketing space sees click fraud as a major threat. Miki Dzugan, president of Internet marketing firm Rapport Online, said she has been managing pay-per-click advertising since Yahoo Search Marketing was GoTo.com. From her perspective, companies that sell analytics tools are making a mountain out of a click-fraud molehill, and climbing that mountain could be an expensive undertaking.

"Just like spammers, the click fraudsters have a financial incentive to learn ways around detection, so obsessing over whether each and every click is real or fraud can become more costly than the loss due to fraud," Dzugan said.

"While advertisers should be aware of the problem," she advised, "measuring the pay-per-click program based on the result of the leads or sales from the ads should be the primary concern."

Of course, no business -- large or small -- wants to see its advertising dollars go down the drain. And ultimately, a combination of caution and careful monitoring will be key to protecting ad dollars spent on any pay-per-click program.

Skype Network Suffers Global Glitch

Skype has nearly 220 million accounts, with usually 5 million to 6 million users online at given time, but is is unclear how many users have been affected by the current outage. "Our engineering team has determined that it's a software issue," according to a site maintained by Skype. "We expect this to be resolved within 12 to 24 hours."


Skype, the popular computer program that lets its users make long-distance phone calls over the Internet, said Thursday that software problems have left many of its millions of users without service worldwide.

The company, a division of online auction company eBay Inc., said on its Web site that many users cannot log on to the free service. It was not immediately clear how many users were affected, but Skype users in Colombia, Brazil, Germany, Finland and the United States reported difficulties logging on.

"Our engineering team has determined that it's a software issue," according to a site maintained by Skype. "We expect this to be resolved within 12 to 24 hours."

Judging from the timing of comments to that posting, some users had been without service for as long as 14 hours.

Stefan Topfer, chief executive and chairman of WinWeb, a London-based provider of software for small businesses, including Skype, said the outage "is not going to stop us from working with Skype in the future."

"What I am a little bit upset about is the way this is being handled," he said, adding that despite Skype's communications to users, he's not entirely sure what had happened. "I just hope that they will learn themselves to handle situations like this better in the future."

Skype has nearly 220 million accounts, with usually 5 million to 6 million users online at given time. In January, Skype reported that it had counted 9 million users online at one time.

Skype urged users to allow the program to continue running and said they would automatically be logged on when the problem is resolved. It also temporarily disabled new downloads for the program.

Skype, founded by Niklas Zennstrom and Janus Friis, uses peer-to-peer technology to connect phone calls, instant messages and videos between its users. It runs on a variety of operating systems, including Windows, Mac OS X, PocketPC and Linux.

Besides computer-to-computer calls, Skype users can also use the program to connect to cell phones and traditional land line telephones.

The company was acquired by eBay in October 2005 for about $2.1 billion.

Google Charges for Extra E-Mail Storage

Google already offers plenty of free storage with its online services, but that hasn't been enough for some users, prompting Google to roll out extra storage that can be purchased to use with several Google products. Google's extra storage offerings begin with Picassa and Gmail, but will soon expand to other apps, such as Docs & Spreadsheets.

Forget the battle between Microsoft Relevant Products/Services Word and Google Apps for a minute, and set aside the notion of search engine supremacy. Microsoft and Google are now battling for technology enthusiasts in yet another area: online storage.

This week, Microsoft came out with a twist in the online-storage game, renaming its storage service Windows Live SkyDrive and relaunching it with a revamped interface. Google, meanwhile, is offering extra storage options on both Gmail and Picasa.

"As someone who tests Google products daily, I know that the simplest solution is often the one that works best," Ryan Aquino, software quality assurance engineer lead for Picassa, wrote in the Google blog. "In the case of online storage, whether it's a picture, a video, or an e-mail, you should just, well, be able to store it without having to worry about whether you've got enough space in each particular product."

Busting Through the Cap

On Thursday, Google rolled out extra storage that consumers can purchase to use with two Google products. It begins with Picassa Web Albums and Gmail, but will soon expand to include other applications, such as Google Docs & Spreadsheets.

Google already offers plenty of free storage, and in fact has been increasing the storage limit steadily, launching in 2004 with 1 GB of storage space and doubling that figure in 2005. Today, the free storage limit is 2.8 GB.

But the latest bump in storage will cost consumers. Plans start at $20 a year for 6 GB of space and peak at 250 GB for $500, making Gmail and Picasa together a bona fide online storage solution.

"The fact of life is that every hard drive will fail. You can't put a cost on the value of your photos and your memories, and that's why people are looking for online backup," said Samir Bhavnani, a research director at Current Analysis West, noting that with the new storage offerings Google is attempting to generate a new revenue stream from its existing user base.

Google's Gmotive

Online data backup isn't the sexist of technologies, but Bhavnani said he expects it to be one of the most talked-about sectors in 2008, thanks to the rise of digital media use. There is plenty of competition in various forms. There are free services out there, as well as more robust offerings from large players such as Symantec.

Of course, Microsoft is a player in this area, as is Apple. The global market for managed security Relevant Products/Services services, which includes online backup, is expected to climb from $2.9 billion in 2006 to $3.7 billion in 2008, according to VerticalScope.

As far as e-mail storage options go, Google's main competitor is Yahoo, and Yahoo might have an advantage.

"The Yahoo e-mail program has undergone a lot of good changes over the past couple of years. It offers the online storage, and it offers more of an Outlook-like feel than Gmail," Bhavnani said. "The Gmail program feels very much like an Internet mail program and the Yahoo program feels more like a desktop application."

Microsoft One-Ups Google with Hotmail Makeover

Over the next few weeks, Microsoft will be pushing out its new Hotmail offering to e-mail users in waves, so anyone who hasn't yet seen the new version can rest assured it will soon be coming. One nice touch, in addition to the bump in storage capacity, is Hotmail's new dashboard, which allows more e-mails to be displayed on the page.


Microsoft Relevant Products/Services is boosting the amount of free storage space that Hotmail users receive to 5 GB. Paying Hotmail users will see their e-mail storage capacity, which costs $15 per year, grow from 4 GB to 10 GB. In contrast, Google currently provides 2.8 GB of free Gmail storage space and sells 6 GB of extra capacity for $20 per year.

When it comes to storage alone, Yahoo remains on top with its unlimited storage offering. But Microsoft is banking that its latest moves to rev-up the Windows Live Hotmail engine and give the service an edgy new dashboard will be enough to keep it ahead of the pack.

"Speed is one of the most important aspects of a Web-based e-mail service," wrote Microsoft Live Hotmail program manager Ellie Powers-Boyle in a recent blog. "We've spent more time in this release identifying what parts of the product are slowest and fixing those."

Makeover Highlights

Over the next few weeks, Microsoft will be pushing out its new Windows Live Hotmail offering to e-mail users in waves, so anyone who hasn't yet seen the new version can rest assured it will soon be coming their way.

One nice touch is Hotmail's new streamlined dashboard, which compresses the header so that more e-mails can be displayed on the page. The new format gives users the ability to automatically tell friends when they will be away on vacation, which has long been a prized feature of Outlook.

Hotmail now blocks images and links in e-mail messages from unknown senders, and provides a one-click way for users to report suspected phishing attacks. Moreover, a contacts de-duplication function is on tap to give users a one-click way to update information for anyone already listed as a contact.

Hotmail subscribers will be able to view their e-mail in either the new or classic versions of Windows Live Hotmail, with the classic version perhaps more appropriate for users with less speedy Internet connections who need a simple way to read and manage e-mail. Moreover, Hotmail users who would prefer to go straight to their e-mail inboxes upon login now have the option of turning off the MSN Today page, Powers-Boyle said.

Looking for the Best Deal

Yankee Group research fellow Laura DiDio said she thinks that Microsoft will have to ensure that Hotmail continues to evolve. "If you are Microsoft, it's not enough to just keep up with the Joneses when Mr. Jones is really Google and he's going after your businesses," DiDio said.

These days, the average consumer is just as likely to have a Gmail account as a Hotmail account, DiDio noted. However, many consumers no longer believe in customer brand loyalty and will go to the vendor that gives them the best deal and the best support, she said.

So Microsoft not only has to do everything it can to keep the customers it already has, but also must continue to play one-up with Google, DiDio explained. The happy result is that consumers will continue to benefit from the contest, she concluded.

Google's AdSense To Distribute Videos

Google announced Thursday that videos will be distributed to numerous Web sites served by AdSense, which places targeted advertising across the Internet. AdSense signed a similar distribution deal last year with MTV Networks. Media Rights Capital will work with Google to target Web sites most appropriate for its content, the company said.

Short Internet videos from the creator of the animated TV show "Family Guy" and Raven-Symone, star of the Disney Channel show "That's So Raven," will be distributed over Google Inc.'s AdSense network, it was announced Thursday.

Media Rights Capital, the financing company that backed last year's film "Babel," is supporting the two projects. Terms of the deal were not disclosed.

The programs will appear in a video box that a user would click on to start. The box will be packaged with banner advertising and video ads that will appear either before or after the programming.

The videos will be distributed to numerous Web sites served by AdSense, which places targeted advertising across the Internet. AdSense signed a similar distribution deal last year with Viacom Inc.'s MTV Networks.

Media Rights Capital will work with Google to target Web sites most appropriate for its content, the company said.

"We feel this partnership answers the question of how best to reach viewers online, because the Web is fragmented into millions and millions of viewing destinations," said Asif Satchu, co-chief executive of Media Rights Capital.

Seth MacFarlane, creator of "Family Guy," will produce short videos featuring new characters, while Raven-Symone will be in a "how-to" show, the company said.

The company said the distribution deal was preferable to aggregating content on one site. Distributing content through AdSense means the videos reach a broader audience, which would include new sites as they pop up.

Cyber-Vigilantes Shine Spotlight on Blogging Pedophile

Seattle resident and self-described pedophile Jack McClellan caused outrage over a Web site he created for the purpose of directing men to places to meet children and displaying photos of young boys and girls on the site. While many may view McClellan's material as offensive, authorities maintain that he has not broken the law. Several cyber-vigilantes are creating Web sites to combat McClellan's efforts.

Ron Tebo was watching Fox News Channel recently when he saw an interview with Jack McClellan, a self-described pedophile from the Seattle area.

McClellan was defending his Web site that guided other men to the best spots to meet young children and included photos he'd taken of boys and girls in public spaces.

"I was immediately disgusted over it, and I knew something constructive needed to be done about it," said Tebo, a West Seneca resident who works as a webmaster for the Professional Bartending Schools of America.


Grabbing National Attention

Tebo decided to try to stop McClellan by turning the Internet against him.

He set up his own Web site, www.jackmcclellan.com, which calls McClellan "a ticking pedophilia time bomb," carries warnings aimed at parents, and urges readers to write whenever they spot McClellan.

Tebo's anti-McClellan site has gotten national media attention, including a live interview Monday on CBS' "The Early Show."

"Thank you for this site, and thank you and God bless you for trying to help the communities of the world look out for sick people like this," wrote one visitor from Apple Valley, Calif.


Cyber-Vigilantes Unite

Tebo has a personal reason for going after McClellan. He said he was abused by a neighbor when he was 6.

Tebo is one of a growing number of Internet users who are targeting pedophiles online.

While disturbing language on the Web can enjoy constitutional protections, cyber-vigilantes are using high-tech methods to make life uncomfortable for people who covet children.

"There are a lot of well-meaning and frustrated people out there who want to take things into their own hands," said Parry Aftab, executive director of WiredSafety.org, a nonprofit organization that seeks to keep children safe online.


Blogging on a Thin Line

This raises ethical and legal questions on both sides, and illustrates the fundamentally unmanageable nature of the Web.

McClellan was relatively unknown until earlier this year, when a Seattle-area newspaper did a story on him that later was picked up by Fox News.

McClellan has said publicly he doesn't think there's anything wrong with adult men showing affection toward children as young as 3. He said he's never sexually abused a child.

"I term it more of an erotic appeal with female, prepubescent children," McClellan told The News in an interview Monday from Los Angeles, where he is living in his car. "It's the whole package of these girls. Their playfulness. Their anarchy. Their irreverence."

His Web site served as a how-to guide for fellow pedophiles in Washington State. He rated the best places where they could find children -- municipal swimming pools, school recitals and other public places.

McClellan also posted photos of kids he'd taken at the venues.

He's not a convicted sex offender, so he isn't barred from places where children gather; police in the area said nothing on his site was illegal.


McClellan Still Determined

Watching the Fox News segment in April, Tebo was upset that McClellan was able to peddle his ideology online, so he registered the domain name for his anti-McClellan Web site.

"My intention was to take the traffic from that pedo site and divert it," said Tebo, who has a Web site, iPranked.com, that collects prank and blooper videos and was the subject of a Buffalo News article in May.

"Parents are writing me, 'Thank God, thank God, thank God for your site. I didn't know about this man,'" Tebo said.

McClellan's Internet service provider took down his original site, but he doesn't shy away from publicity, and he's found other forums for his views.

The attention forced him to move from Washington State to Los Angeles, but he continues to spend time around children and he hopes to start up his blog again.

"I feel maybe I have an opportunity to educate people," McClellan said. He added that he's seen Tebo's site and wonders why someone in New York has taken an interest in him.


Web Site Angers Father

Tebo is a father of 10-year-old twin boys, but he has another reason for launching the site.

Tebo said he was abused by a neighbor when he was 6 years old and living with his family in the Town of Boston.

He and a younger family member were abused over the period of a year, until they moved, he said.

He never told anyone about the abuse at the time because he felt ashamed that it happened and guilty that he wasn't able to protect the family member.

However, he wants to make sure McClellan and people like him don't get the chance to do that to any other children.

"It's difficult. I think that motivates me in the back of my mind," Tebo said.


Offensive but Not Illegal

Law enforcement officials are limited in what they can do, because unless the site contains pornographic images, it's usually protected speech, said Paul M. Moskal, a spokesperson for the FBI in Buffalo, N.Y.

"The public doesn't want the FBI abridging people's First Amendment rights. No matter how offensive someone's point of view may be, that doesn't necessarily make it illegal. And it's not up to the FBI to make that judgment," Moskal said.

The inability of police and prosecutors to take action is frustrating to Aftab, Tebo and others who worry about kids' safety.

Though Moskal said police agencies are "very leery" of citizens intervening in potential law enforcement matters, frustration is driving Tebo and others to act on their own.

In some cases, Web watchdogs have hacked into pedophiles' Web sites, stolen their identities, or conducted scams that target pedophiles, Aftab noted.


Fighting Speech With Speech

Civil liberties advocates say they find McClellan's comments offensive, but they have some concerns about these tactics.

"It underscores that the only response we have to the most disturbing speech is more speech," said John A. Curr III, who heads the regional office of the New York Civil Liberties Union.

That said, Curr added, when the comments on a Web site shift from advocacy to stirring someone to physically act against a pedophile, that's when it could cross a legal line.

Tebo said he's been contacted by numerous media organizations since Monday's "Early Show," including producers for Larry King and Paula Zahn.

He said he does plan to keep up the Web site as long as necessary. He's also taken out a second site in a pedophile's name, www.lindsayashford.net.

He's setting up another site, pedoscum.com, that would have a broader reach.

"We want to put pedophiles on notice. We want to put child abusers on notice," Tebo said.

IT Managers and the Web 2.0 Challenge

Web 2.0 is important to records and information management professionals because it is accelerating and changing the way people work and the way records and documents are created. In fact, Andrew McAfee, an expert on technology trends, and others have suggested an even more dramatic term, "Enterprise 2.0."

The tremendous surge in Web-based services and applications, known as "Web 2.0," and their corresponding influence on how people create, exchange and use information are producing an array of new challenges for records and information management (RIM) professionals -- including how to use these tools effectively and how to manage the creation, integrity, storage Learn how SAN/iQ technology works with VMware., access and dissemination of such dynamic information.

The term "Web 2.0" originated about three years ago and still lacks a formal, agreed-upon definition. Wikipedia Latest News about Wikipedia defines it as "a perceived second generation of Web-based services -- such as social networking sites, wikis, communication tools and folksonomies -- that emphasize online collaboration and sharing among users."


How to Spot Web 2.0

Web 2.0 is participatory, collaborative, inclusive, creator-/user-centric, unsettled and very information-intensive. It has these traits:

* Workstyle: A style of collaborative working through online communities that stresses encouraging knowledge workers to be creative and innovative, to contribute to initiatives and projects, and to build on each other's work toward an outstanding collaborative end product or service
* Applications: A set of agile, versatile tools/platforms/applications that support interaction by online communities, such as blogs and wilds
* Software: An array of software that connects people and applications to help draw out and organize collective intelligence; some of this software has been produced by small to mid-sized companies, but larger firms such as Microsoft (Nasdaq: MSFT) Latest News about Microsoft, IBM (NYSE: IBM) Latest News about IBM and Google (Nasdaq: GOOG) Latest News about Google also offer new or refined products.

A 'Massive Phenomenon'

Over the past few years, at least four trends have accelerated the upsurge of Web 2.0:

1. The development and popularity of online social networks for exchanging personal information, photos, videos and other information (e.g., MySpace Latest News about MySpace, YouTube Latest News about YouTube, Flickr, and Second Life).
2. The broadening availability of easy-to-use software. This and the first trend, in particular, led Time magazine to declare the user to be 2006's "Person of the Year." According to Time's cover story, "you control the information age." Jeff Howe's article "Your Web, Your Way" described three types of online collaborative communities:
1. The toolmakers: users building and customizing their own tools for convenience and versatility. Examples include Wikipedia (an example of "crowdsourcing"); Google (search engine built around a "social function" -- counting links between Web sites -- and adding features like maps); MySpace (120 million users, maximization of individuality); and eBay (Nasdaq: EBAY) Latest News about eBay (online sales Email Marketing Software - Free Demo; customer ratings weed out dishonesty).
2. The gatherers: users gathering, filtering and commenting on blog posts and photographs and finding an audience for them. Examples include Technorati (searches and ranks topics in the blogosphere); del.icio.us (allows users to share their Web-browser bookmarks; Digg (the crowd rates news stories); Flickr (sharing photos); and Bloglines (lets users subscribe to various sites and receive updates from them).
3. The entertainers: movie, music, book, and video-game industries on the Web. Examples include Amazon.com (Nasdaq: AMZN) Latest News about Amazon.com (customer reviews/evaluations of books); YouTube (anyone can be in the entertainment field); and Second Life (imaginary world where users interact and can spend real money).

3. The search for techniques to foster more productive use of information. A recent study by the research/consulting firm Basex asserts that overwhelming amounts of e-mail and other information frustrate knowledge workers and distract from more productive work. Managers, weary of spam, employee time lost dealing with unneeded or inappropriate e-mail and other problems, welcome the potential benefits of the new tools' self-organizing, self-policing aspects.
4. The rising importance of knowledge workers, who, according to Tom Davenport in Thinking for a Living, "have high degrees of expertise, education or experience, and the primary purpose of their jobs involves the creation, distribution and application of knowledge." Knowledge workers are heavily dependent on information systems and tools to create information and also to access, analyze, exchange and synthesize the information that is the essential precursor of knowledge.

Web 2.0 Tools
Three types of Web 2.0 collaborative tools are particularly important:

1. Blogs: user-generated Web journals that offer opinions and information and that may include text, images and links to other blogs and Web pages. Some blogs are confined to personal expressions, but others make provision for reactions and comments from readers.
2. Mashups: Web sites or other applications that integrate content from more than one source into an integrated application (e.g., combining data on a topic of interest with geographical data).
3. Wikis: according to Wikipedia, a wiki "is a Web site that allows visitors to add, remove, edit and change content, typically without the need for registration. It also allows for linking among any number of pages. This ease of interaction and operation makes a wiki an effective tool for mass collaborative authoring. The term wiki also can refer to the collaborative software itself ... that facilitates the operation of such a site."

Web 2.0 is important to RIM professionals because it is accelerating and changing the way people work and the way records and documents are created. In fact, Andrew McAfee, an expert on technology trends, and others have suggested an even more dramatic term, "Enterprise 2.0," to describe platforms that organizations use to "make visible the practices and outputs of their knowledge workers." A recent Information Week survey confirmed the rising popularity of instant messaging, collaborative content tools, wikis and blogs: "Within a few years, rich, collaborative software platforms that include a slate of technologies like wikis, blogs, integrated search and unified communications will be the norm. ... Employees will expect to work that way, and it'll be up to IT to solve the significant problems and deliver."

An international study by consulting firm Booz Allen called Web 2.0 a "massive phenomenon," based on interactive and participatory applications such as blogs and virtual meeting places that engage virtual users as content codevelopers and urged businesses to adopt the new tools where strategically advantageous.
Management Issues

Collaborative, social networking technologies and platforms require appropriate management strategies that balance spontaneity with structure, encourage and reward originality, but also foster pooling of knowledge and information and team approaches. These information-sharing devices can promote efficiency, reduce costs, broaden business applications, and provide competitive advantage. In some settings, blogs and wikis are already upstaging e-mail as internal communications, tracking and management tools, but management needs to ensure that the newer tools work compatibly with the older ones.

Software investment costs may be modest, but metrics for return on investment have not been developed. Managers need to be concerned with training and upgrading employees' skills and expertise to make optimal use of the new Web tools. Some managers worry that employees need incentives and motivation to use the new Web 2.0 tool.

Others assert just the opposite: The tools are so relatively easy to use, the software so relatively easy to get, and the advantages so obvious, that employees may adopt them on their own, download software, share files and set up collaborative systems outside of the regular business structure if managers delay too long.

Euan Semple, a British consultant on social computing, writes:

"The 100-percent guaranteed easiest way to do Enterprise 2.0? DO NOTHING ... your bright, thoughtful and energetic staff will do it for you. Trouble is, they will do it outside your firewall on bulletin boards, instant message exchanges, personal blogs ... and you will have lost the ability to understand it, influence it and integrate it into how you do business.

"The second easiest way is to find ways of allowing this to happen inside the firewall, which can be as simple as sticking in some low-cost or free tools and then making sure your existing organization can GET OUT OF THE WAY [and then] KEEP THE ENERGY LEVELS UP."

Managers prefer to purchase and install a full suite of Web 2.0 tools for entire programs or the enterprise as a whole to having individual employees or groups procure their own, which would introduce the potential for silos and incompatibility. Managers worry about security Webroot AntiSpyware 30-Day Free Trial. Click here. with so many online participants. Confidential information needs to stay behind the firewall and be used appropriately within the company. There is a broader issue of monitoring content for accuracy Free Trials. eCommerce Data Solutions, Tax Rates, Address Verification & more. and appropriate language. It is useful to require that every entry contain identifying information on the creator, set guidelines and assign editors to monitor content and weed out inappropriate material when needed.
Web 2.0 Challenges for RIM

Web 2.0 poses several issues in the area of records and information management. Records are created in the course of business, document transactions, decisions or legal obligations, and have other traits, regardless of format. However, applying these and other records criteria to the applications of Web 2.0, with its population of "live," organic documents, is a challenge. Records management focuses on retention/disposition, classification and appraisal issues -- all are a challenge in this volatile environment Some issues require the creative application of traditional RIM techniques; others may occasion the invention of new approaches.

Eight of these issues are discussed below.

1. Assigning responsibility for managing and being custodian of the information. Web 2.0 applications are multimedia and information-intensive; they may demand unprecedented bandwidth and storage space on servers. Their products have multiple creators from across the enterprise and even beyond, when customers and users are involved, necessitating a policy on custodianship of the information when the work is complete. There is a broader set of responsibilities involving integrating the Web 2.0 work into enterprise information policies and the organization's strategies, developing performance measures to assess return on investment, and developing debriefing and assessment procedures to learn from both successes and failures. All this involves, at minimum, close cooperation among the organization's program offices, the chief information or technology officer, and the records management office.
2. Managing the creation, collection, storage, and dissemination of vast amounts of unstructured and constantly changing information. Web 2.0 applications such as wikis and blogs encourage creativity and innovation, including using multiple formats, platforms and media. Changes to a wiki over the course of a couple of hours, for instance, might include a text posting, additions to that posting, edits of the posting and its additions, links to multiple Web sites, excerpts from books and journal articles, links to sites on YouTube or MySpace, and a mashup involving, for instance, customer and geographical data. Policies must be developed to determine:
* How much of this is a "record" and how to accommodate that information in a record keeping system
* How much metadata or other detail should be captured for retrospective analysis of who-contributed-what
* Whether there is a need to refer back to the information in the application as it was on a specific date in the past
* How to deal with copyrighted material
* How to deal with hyperlinks (including the situation where the Web site linked to changes or becomes defunct)
* How long to retain the information

3. Controlling access to particular levels and types of information. The spirit of Web 2.0 is diverse and inclusive; the strengths of its applications come, to a large degree, from willing contributions of people's knowledge and insights. The posting and pooling of ideas generate sparks of creativity as others react, reflect, have their insights deepened or changed and, in turn, contribute something new. This process necessitates broad, easy information availability. However, that, in turn, imposes the need for policies about making available sensitive internal documents and proprietary information.
4. Protecting the security and integrity of the information. This is a related issue: ensuring that the information is not changed (either inadvertently or deliberately) so it becomes inaccurate or misleading or destroyed through human action or natural or man-made disaster such as arson or terrorist attack. Organizations need well worked-out policies to determine who can access systems and change information and means of tracking who changed or added what, if appropriate. Web 2.0 applications not only embody critical information, they are also a platform for everyday work in many settings, so downtime means not only potential information loss but also interruption in enterprise work. There need to be secure, robust servers with off-site backup and other security measures as part of an overall disaster prevention/preparedness/response plan that covers all critical information, not just Web 2.0 applications. All this must be embodied in a plan with clear assignment of responsibilities.
5. Providing access tools. Web 2.0 platforms are useful -- and used -- only if they are easily accessed. A versatile, sophisticated search engine is essential. Generating access terms that flow out of the information, rather than being imposed on it as in traditional indexing and taxonomies, is another challenge. The new-style access term sets are called "folksonomies" -- literally, taxonomies generated by the "folks" who collaborate in the Wikipedia, which defines a folksonomy (at the time of this writing) as "a user-generated taxonomy used to categorize and retrieve Web pages, photographs and Web links, using open-ended labels called tags. Typically, folksonomies are Internet-based, but their use may occur in other contexts. The folksonomic tagging is intended to make a body of information increasingly easy to search, discover and navigate over time. A well developed folksonomy is ideally accessible as a shared vocabulary that is both originated by, and familiar to, its primary users."
6. Assessing the legal implications of vast amounts of information in scattered systems and databases. RIM professionals recognize the critical nature of this because they are attuned to the issue of the use of information in litigation, particularly during the early or discovery phase when, under court rules, opponents in litigation are required to turn over to each other documents and other information pertinent to the issue at hand.

Precedent-setting court cases over the past few years and new guidelines (e.g., the December 2006 amendments to the U.S. Federal Rules of Civil Procedure) provide for broad discoverability of electronically stored information but with a counterbalancing provision for exclusion of material that can be shown not to be reasonably accessible because of undue burden or cost. The new rules were developed through a careful, deliberative process, but their development process time approximately parallels the upsurge of Web 2.0 with all the attendant complexities of its applications. Legal implications need to be considered as applications are planned; consultation among organization counsel, IT experts and records managers is essential. How much of the information in Web 2.0 applications such as blogs and wikis is discoverable in litigation? It will require court cases over the years to answer this question.
7. Deciding how much information to make public. This issue arises, for instance, with blogs: some are internal, for project management, information exchange, and other purposes, but some may be public, meant to share information about the company's products and strategies, explain policies, enlist assistance with particular research/development initiatives, demonstrate thought leadership, contribute to professional dialog and forums, or for other purposes. Allowing, or even encouraging, creative employees to have a public blog can be a positive factor when recruiting new staff and a motivating factor for existing staff. Encouraging a dialog and openness is laudatory, but protecting the organization's secrets and shielding it from public embarrassment are also worthy goals. Many large corporations, consulting firms and news media companies now have public blog sites -- IBM, Sun Microsystems (Nasdaq: SUNW) Latest News about Sun Microsystems, Microsoft and General Motors (NYSE: GM) Latest News about General Motors are outstanding examples.
8. Using the tools and techniques for RIM programs. Web 2.0 tools boost productivity and efficiency. RIM professionals should find ways of using them for their own programs. A blog may be a useful way for a program director to share and receive information. A wiki may be a versatile tool to keep track of a records management project or initiative, develop a retention schedule, or draft new policy guidelines.

Familiar Challenges

RIM professionals will recognize in the Web 2.0 phenomenon some familiar challenges:

* Hype sometimes overshadowing reality
* Technology outdistancing policy
* Defining a "record" in a complex electronic environment
* Putting information to work for the enterprise
* Getting the right information to the right people when they need it
* Deriving measures of efficiency and return on investment
* Gauging legal responsibilities
* Cooperating with other offices to get things done

Addressing these challenges and capitalizing on the benefits of Web 2.0 will add one more dimension to the excitement of RIM work in the years ahead.

Kicking Around Open Source

"Blogs allow more expansive discussions," noted Michael Goulde, senior analyst with Forrester Research, adding that the give and take of a blog and its associated comment area can make for the sophisticated collaboration necessary among open source developers. However, "they also allow more ego to show through," he said.

Sure, you can walk into any big-box bookstore and see several shelves full of volumes about open source software -- about why you should use it, how to use it, and what to do when you stumble on problems. Likewise, the Web sites of Linux-related companies and organizations are chock-full of white papers and articles analyzing one or another's position on open source hot topics.

However, the real action for discussion of Linux and the hundreds of other open source software packages out there occurs in real time among ordinary people unconstrained by the limits of print publishers or Web site approval processes. Blogs and podcasts are the preferred communication channels for open source enthusiasts, and that comes as no big surprise.

"The very nature of open source development is driven by collaboration," Michael Goulde, senior analyst with Forrester Research, told LinuxInsider. "What really is needed is a vehicle for 24/7/365 communication."


Ego and the Blog

One thing's for sure: Open source advocates long have been labeled as renegades, whether that's an apt generalization or not. It's just a short hop from rebel to other personality traits that bloggers in general often share.

"Blogs allow more expansive discussions," Goulde noted, adding that the give and take of a blog and its associated comment area can make for the sophisticated collaboration necessary among open source developers. However, "they also allow more ego to show through," he said.

Ubuntu founder Mark Shuttleworth, for example, uses his blog to express views about goings on in the open source community and other news. One recent entry was his vehicle for expressing strong opinions about Microsoft's (Nasdaq: MSFT) Latest News about Microsoft efforts to make agreements with open source software providers regarding alleged intellectual property violations.


Keeping the Secret

To be sure, many blogs are simply the public relations mouthpieces of the companies or individuals that publish them. Not surprisingly, those in the open source community are particularly wary of these and tend to avoid them. They've had too much of that from the "closed source" world. For example, a range of Microsoft blogs do not allow comments from readers, and some only recently have begun accepting feedback.

"Proprietary products are tied to a company, and around the company is wrapped secrecy," Rob Enderle, principal analyst with Enderle Group, told LinuxInsider. Makers of proprietary software don't want competitors to know what they're doing, he noted. "Given enough time, you can get around any patent or copyright, so a proprietary company lives on secrets," said Enderle.

This is not to say that developers of proprietary software ignore new technology for distributing information through blogs and forums.

"Enterprise developers may have internal blogs, but not so much on the Web," said Goulde. "Companies have policies about how much their employees talk about internal activities in public."

By contrast, he explained, "developers participating in open source projects -- which may include a small number of corporate developers -- have much more motivation to share their thinking about development in general, express their views about their work and the work of others in a project, and want to educate other developers about their work."

"What works in the open source world is not to contain information, but to share it -- all the things that a proprietary software company typically would be very nervous about," noted Enderle. Thus, companies operating in the open source world must balance the needs of developers for open communication with their own commercial interests.


Corporate Balance

Linux distributor Red Hat (NYSE: RHT) Latest News about Red Hat has a whole section of its corporate Web site dedicated to the blogs of various Linux users, and users of Red Hat distributions in particular. Fedora World aggregates a large collection of blogs published through other sources, such as social networking site Live Journal.

Other aggregate blogs are sponsored by non-profits or organizations dedicated to particular open source tools or applications. Planet Apache gathers blog entries from a wide range of writers focusing on Apache news and opinion. Planet Gnome follows in its footsteps, as does Planet Debian.


Public Service and the Donate Button

Not all blogs serve as the personal soapbox of a particular company executive or the offering of a formal organization, though. Some, like the Linux App Finder, offer a tool first and a blog or forum section as a secondary consideration. The Linux App Finder database allows users to locate applications to run on a Linux-based system Manage remotely with one interface -- the HP ProLiant DL360 G5 server. in a wide range of categories, such as graphics and engineering. It also has an associated blog where site administrator "chadm" writes posts on topics such as "Ripping DVDs to MPEG4 with K9Copy." Another area of the site offers forums for discussion of topics such as multimedia and Linux.

Rather than relying on a corporate parent, sites such as these depend on user donations and paid advertisements. The Linux App Finder has a "Donate" button prominently displayed on many pages. It also sports an ad for the Linux World conference at the top. Many independent blogs have Google (Nasdaq: GOOG) Latest News about Google ad sections to generate revenue.

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Remember back when the primary use for the VCR was recording television shows playing at one time to watch them at a more convenient hour? Time-shifting has long been a technique of gadget lovers, and open source software advocates are no exception.

"Open source participants are spread around the world and need to have a means to communicate," explained Michael Goulde, senior analyst, Forrester Research. "E-mail is good, but e-mail Email Marketing Software - Free Demo list protocol is to keep messages short and to the point."

So, what's a wordy open source expert to do? Part 1 of this series explored how blogging is one way to reach a broader readership. However, those in the audience who might prefer to take their learning on the road appreciate the portability of podcasts.

The "Linux Action Show," for example, has produced more than 50 weekly episodes. Hosts Bryan and Chris offer reviews and comments on happenings in the Linux realm; the July 1 show treated Vista security Webroot AntiSpyware 30-Day Free Trial. Click here. and new Dell (Nasdaq: DELL) Latest News about Dell Linux systems, among many other topics. The show also takes listener questions, much like a broadcast radio talk show.

That particular podcast boasts a sponsor: Internet domain service provider GoDaddy.com. As podcast software becomes ever more sophisticated, such independent podcasts will be able to run streaming advertisements throughout the audio portion of their shows, noted Mike Goodman, director with the consumer research group of Yankee Group.

Advertising revenue will add more fuel to the fire of specialized shows aimed at narrow audiences, he told LinuxInsider. This bodes well for the proliferation of podcasts aimed at the open source community.


Real-Time to Pod-Time

One of the earliest Linux-related podcasts has its roots in real-time Webcast. The "Linux Link Tech Show" saw its first broadcast in 2003 and bills itself as "The Oldest Continually Running Linux Show on the Planet." It was started by the founders of the Lehigh Valley Linux Users Group and counts among its co-hosts several academics.

When podcasting came along, the Tech Show was among the first to adopt the new medium. It's 60- minute to 90-minute weekly show still broadcasts live through a Webcast. However, archives of shows now are available in several formats for those who don't wish to be constrained by its 8:30 p.m. Eastern Time on Wednesdays airing.


Newbies Listen Up

Not all podcasts are aimed toward developers or even advanced users. A quick search on Podcast Alley yields 154 hits on the key word "Linux." One entry, "Linux Reality," describes its target audience as "the new Linux user." The show posted its first episode in February 2006 and currently is up to nearly 70 broadcasts.

One recent episode of "Linux Reality" featured an interview with an attorney specializing in corporate social and environmental responsibility. The discussion centered on why and how a small business would choose to implement open source software.

Among "Linux Reality's" sponsors is a big name: O'Reilly Media, publisher of a long-standing and popular line of software books. The show and related site is hosted by Chess Griffin, a self-described technology hobbyist who now works in an unrelated field while staying active in the open source community.


Don't Fade Away

The list of podcasts with Linux as their subject is littered with those that have experienced "pod-fade." "Linux Noob" is one example of many programs whose hosts put up one or two episodes and then fade into oblivion. Pod-fade certainly is not unique to the technical world or the open source community. In fact, podcasting is a field that has been built largely on open source software. However, the reality is that podcasting rarely pays the bills for those that spend the enormous time and energy putting shows together, and they often have to quit the project to turn to other priorities.

"Lotta Linux Links" by contrast, is a show with staying power. Independent podcaster Dave Yates is on his 39th episode since December 2005. Like some of the more popular blog sites, "Lotta Linux Links" is first an online tool for finding Linux-related resources. The site sports a banner ad for Linux Laptop Company.


Going Mainstream

Like all cutting edge communication channels, though, podcasting is slowly gaining acceptance in the corporate world. Software maker Novell (Nasdaq: NOVL) Latest News about Novell now has its own series of podcasts called "Novell Open Audio." Each show features an interview with a Novell employee on a particular topic. The June 27 episode, for example, spotlighted Martin Buckley, chief evangelist and director of product management for Novell's ZENworks along with Tim Cranny, chief architect with Senforce, discussing ZENwork's endpoint security management.

The likelihood of the discussion of open source software being co-opted by corporate concerns is slim, though, Laura DiDio, research fellow with Yankee Group, told LinuxInsider.

"This market was born in a collegial atmosphere," she stressed, "beginning back with Linus Torvalds when he was a 19-year-old college student."

Chinese Blogger Jailed for Giving Stock Advice

Wang Xiujie, a blogger who made a business out of selling stock tips that would be delivered to subscribers via instant message, has been detained by Chinese authorities. Stock tip gurus have thrived in China's two quickly growing stock markets; however, the nation's government has recently criminalized the act of recommending stocks without a license.

A blogger who sold stock picks to thousands of subscribers has been detained in northern China, as regulators try to reign in freelance operators amid a booming stock market.

Wang Xiujie, known to his readers as "Big Brother Leader 777" could face charges of running an unlicensed business and illegally raising funds, the official Xinhua News Agency reported Friday.


Whereabouts Unclear

Starting in February, Wang sold subscriptions for tips sent by instant message, boasting his predictions had a 90 percent accuracy Free Trials. eCommerce Data Solutions, Tax Rates, Address Verification & more. rate, Xinhua said.

It said Wang had been placed "under control" by the police's Internet investigations squad in the northeastern province of Jilin and officers were applying to formally arrest him. Police confirmed the detention on Wednesday, though it wasn't immediately clear when or where he had been taken.

Officers at the Jilin provincial police headquarters said no spokespeople were available to comment.


'Let's Make Friends Through Stocks'

Wang's blog was last updated on July 1st. Its home page displayed a message from Wang thanking supporters and lashing out at "garbage" whom he accused of attacking him.

On a mini-resume posted beneath a picture of himself posing as super spy James Bond, Wang claimed that he had 17 years experience in the stock market. He described himself as a professional investor in stocks, bonds, postage stamps and antiques.

"Let's make a connection through stocks, let's make friends through stocks," the message said.


Illegal Recommendations

Stock tip gurus and informal fund managers have thrived as China's two stock markets more than doubled last year and surged a further 46 percent this year. The growth has attracted millions of small investors, many of them with only a hazy understanding of how the market works.

The government has registered its concern over operations such as Wang's, with the Public Security Ministry in late May, designating "illegally recommending stocks" as a crime, focusing especially on operators distributing tips via the Internet.

The government earlier this month also announced stock advisers needed to gain permission from the securities regulatory commission.

Bloggers' Greatest Hits

Just a few years ago, blogs were looked down upon by many media professionals and even bloggers themselves. However, it's not unheard of for a blogger to be the one breaking the news on a big story. Here are half of the top 10 biggest stories ever broken, leaked or developed not by the traditional news community, but by what appears to be a new and emerging breed of journalist.

Since they hit the Web in the mid-1990s, Web logs, more commonly known as "blogs," have matured from simple journal entries cataloging the day-to-day goings-on in the lives of Net dwellers to, in some cases, serious enterprises. Today, corporations, political parties and their partisans, the media and everyday citizens use blogs as means to send out the word on their favorite causes.

Blogging will peak in 2007, according to a Gartner (NYSE: IT) Latest News about Gartner report. The company estimates that there are already more than 200 million ex-bloggers. Given the life span of a blogger and the current growth rate of blogs, the company expects the number of bloggers to top off at around 100 million. There are currently so many blogs that Google (Nasdaq: GOOG) Latest News about Google gave the format its own search engine. Another blog search engine, Technorati, tracks and ranks more than 71 million blogs.

So what are all these people blogging about? Well, bloggers write about anything and everything, from their favorite film character to their jobs or politics. In the realm of real news, bloggers over the last 10 years have proven their chops and on occasion even scooped the mainstream media.

Just a few years ago, blogs were looked down upon by many media professionals and even bloggers themselves. However, it's not unheard of for a blogger to be the one breaking the news on a big story. Blogs such as Perez Hilton, the Wonkette, the Daily Kos and others have changed the way people get their news and the way the media covers news.

"There is an endless debate about whether bloggers are journalist," B.L. Ochman, a blogger and president of WhatsNextOnline.com, told TechNewsWorld. "Yes, we are and we have in fact uncovered stories. Bloggers covered the [I. Lewis 'Scooter'] Libby trial, and that was the first time anything like that had happened."

This two-part series presents our picks of the top 10 biggest stories from bloggers -- the most important news events to come out of the blogosphere. As one might expect, the stories center around politics, the media and technology. They've derailed a senate campaign and brought down a prominent news anchor, but have also led to improvements in the way companies interact with consumers.


No. 10: The iPhone, Origami and Zune

While no single blogger can take credit for breaking much news on these new products, their dogged pursuit of rumors to glean the smallest detail affects the way companies, in particular technology companies, market their products.

Both Apple (Nasdaq: AAPL) Make the Mac a 1st Class Citizen in a Windows Shop Latest News about Apple and Microsoft (Nasdaq: MSFT) Latest News about Microsoft have begun building hype for new products through both their own product-specific blogs as well as bloggers in the wild. Company blogs, such as Microsoft's Zune blog, keep consumers up-to-date on the product as it moves through the development process, and tips to independent bloggers help generate buzz for the iPhone and Origami.


No. 9: Jeff Gannon and the White House Press Corps

On January 26, 2005, amidst the fight over privatizing Social Security, credentialed White House reporter Jeff Gannon asked President Bush the following question: "Senate Democratic leaders have painted a very bleak picture of the U.S. economy. Harry Reid was talking about soup lines. And Hillary Clinton was talking about the economy being on the verge of collapse. Yet in the same breath they say that Social Security is rock solid and there's no crisis there. How are you going to work -- you've said you are going to reach out to these people -- how are you going to work with people who seem to have divorced themselves from reality?"

Was Gannon was a plant put there to lob friendly questions at the President? A group of liberal-leaning bloggers who pursued the story and discovered that Gannon's real name was in fact James Guckert. Far from being a honed White House reporter, he was a graduate of the Leadership Institute Broadcast School of Journalism's two-day seminar created for "conservatives who want a career in journalism."

In addition, Gannon's paper, the Talon News, was a virtual organization owned by ultraconservative site GOPUSA. Also revealed was Gannon's Web history, which included naked pictures of him on a slew of gay escort sites.

The scandal brought the White House's press credential policy under sharp scrutiny and marked one of the first times bloggers drove a national news story.

"It showed that bloggers are indeed journalists, capable of digging up stories 'real journalists' miss," Ochman explained.


No. 8: The Firing of U.S. Prosecutors

The allegedly unjustified firings of eight U.S. prosecutors in December 2006 has rattled the White House and the Department of Justice, and the story continues to develop. The affair has kicked off a battle between the Democratic-controlled Congress and the White House and has led some to call for the dismissal of U.S. Attorney General Alberto Gonzales.

In terms of the story's importance and the "blogginess" of the news-breaking, JupiterResearch analyst Barry Parr ranked the story as the biggest story out of all the events on this list. "No contest," he said. "A major story still playing itself out in congress and the national press. Developed, though not originated, by bloggers, if I remember correctly."


No. 7: Dell Hell

With his Dell (Nasdaq: DELL) Latest News about Dell Hell blog, Jeff Jarvis, a long-time blogger and journalist, exposed what appeared to be Dell's appalling level of customer service Get Automated Customer Contact Solutions Powered by West Interactive after he purchased a Dell laptop in 2005. His BuzzMachine blog attracted the attention of other dissatisfied Dell customers and bloggers. It was covered by the national media, including Newsweek and The New York Times; and eventually led to major changes in the way Dell dealt with its customers, as well as the blogosphere.

The Dell Hell debacle is largely credited for Dell's decision to create its Ideastorm Web site, through which it communicates with its customers.

"That really changed things for Dell," Todd Watson, e-relationship manager at IBM Software Group, told TechNewsWorld. "Dell was listening to us or respecting our service contract. When they held their annual meeting last year, [Dell] said we have a problem with our customer service and now they have IdeaStorm and made a team of people who respond to bloggers."


No. 6: George Allen and "Macaca"

At a re-election campaign stop in Breaks, Va., Senator George Allen used the word "macaca" twice when referring to S.R. Sidarth, a volunteer for Democrat Jim Webb and a Virginia native of Indian heritage. Sidarth was taping the event for the Webb campaign. Pointing at Sidarth, Allen said at one point, "So welcome, let's give a welcome to Macaca here! Welcome to America and the real world of Virginia."

Video footage of the incident made it onto YouTube Latest News about YouTube, and Democrat bloggers pounced on the senator. The use of the word, a commonly used French term for dark-skinned people, dealt a blow to Allen's campaign from which it never recovered. Allen contended that the remark was not intended as a racial slur and that he had learned the word from his mother, who was raised in a French-colonial Tunisia. He said he was not aware of its meaning.

As a result of the attention, though, national media and online news organizations began probing Allen's background and found several incidents that could indicate the Senator was a racist, while others claimed he was simply misunderstood. In the wake of the scandal, Virginia's voters opted not to re-elect Allen, instead voting to send Jim Webb to Washington.


No. 5: Wal-Mart and Truth in Blogging

On September 27, 2006, retail behemoth Wal-Mart (NYSE: WMT) Latest News about Wal-Mart launched "Wal-Marting Across America," a blog chronicling the travels of Wal-Mart customers Laura and Jim as they embarked on a cross-country trip in their RV. The trip would take them from Las Vegas to Georgia, and along the way the couple would be able to park for free in the parking lots of local Wal-Mart stores. In the first post, Laura described herself and Jim: "We are not bloggers, but since our lives have always been more journey than destination, we are explorers at heart. ... We figured we'd give it a go."

The only problem? Well, no, they weren't bloggers. They were a Washington, D.C.-based photographer (Jim) and freelance writer (Laura) who had an idea to write a blog as they traveled across the country parking for free at Wal-Mart stores. When the couple approached Working Families for Wal-Mart to gain their permission, the company did them one better: It sponsored the entire trip in an attempt to generate some positive press for the discounter.

Jim and Laura were flown out to Las Vegas, where they found an RV (sporting the Working Families for Wal-Mart logo) gassed up and ready to go. Edelman, the PR firm behind the pro-Wal-Mart organization, paid for the couple's gas, established a blog site and paid Laura a fee for each blog entry which cataloged a seemingly unending procession of Wal-Mart workers just pleased to be at Wal-Mart.


No. 4: The Monica Lewinsky Scandal

Without a doubt the most controversial entry on the list, the revelation that President William Jefferson Clinton was secretly having an affair with a 21-year-old White House intern by Matt Drudge of the Drudge Report scooped serious journalists at both Newsweek and Time. President Clinton's assertion that he had "not had sexual relations with that woman" -- sworn to in an affidavit and before the American public in an January 1998 network address -- became the basis for impeachment hearings against the sitting president. Clinton was eventually acquitted of the perjury and obstruction of justice charges by the Senate.

However, does the Drudge Report even count? Not everyone thinks so. Drudge is "not a blogger," B.L. Ochman, a blogger and president of WhatsNextOnline.com, told TechNewsWorld. "At that point, he was a fishmonger. It was very, very early in blogdom, and so I don't think this one really counts."

Drudge "pre-dates blogging by several years," concurred Todd Watson, E-Relationship Manager at IBM (NYSE: IBM) Latest News about IBM Software Group. "You can put him in that camp, but I wouldn't put him the traditional blogosphere camp because he was more of a headline enabler than he was someone actually commenting on this stuff."

However, liking the messenger or his methods does not negate the fact that Drudge beat the mainstream media to break a story that has had a fundamental impact on the American presidency and both the Democratic and Republican parties.


No. 3: Engadget's Apple iPhone and Leopard OS Flub

Just last May, the business world learned once again how influential blogging sites and their reports can be when technology blog Engadget posted a story claiming that Apple (Nasdaq: AAPL) Make the Mac a 1st Class Citizen in a Windows Shop Latest News about Apple would announce another delay of its anticipated Leopard operating system Manage remotely with one interface -- the HP ProLiant DL360 G5 server. as well as a delay for the iPhone, easily the most hyped gadget to come out this year.

"This one doesn't bode well for Mac fans and the iPhone-hopeful: we have it on authority that as of today, the iPhone launch is being pushed back from June to ... October(!), and Leopoard is again seeing a delay, this time being pushed all the way back to January," the site reported.

Apple refused to confirm its report, but the damage was already done: Apple's stock almost immediately dropped some 5 percent from US$108.83 to $103.43, costing the company and investors about $4 billion.

The team over at Engadget quickly updated the story. Within 20 minutes of the initial post the site said Apple's public relations had indicated there would be no delay. In the hours that followed, it was revealed that the e-mail Email Marketing Software - Free Demo forwarded to the blog and several Apple employees was a fake. Apple then sent out a real e-mail explaining that it was not delaying either the OS or the iPhone. Engadget promptly updated its site with the headline "False alarm: iPhone delayed until October, Leopard delayed again until January."

The story was an example of "blogging at its worst" JupiterResearch analyst Barry Parr, told TechNewsWorld, calling it "lame and pathetic."

The story should rank highly on the list, said Ochman. It proved -- if anyone still needed proof -- that blogs can move markets.


No. 2: Trent Lott at Strom Thurmond's Birthday Celebration

While at a 100th birthday party for Republican Senator Strom Thurmond of South Carolina on December 5, 2002, then Senate Republican Majority Leader Trent Lott of Mississippi said, "When Strom Thurmond ran for president, we voted for him. We're proud of it. And if the rest of the country had followed our lead, we wouldn't have had all these problems over the years, either."

What could have been an innocuous and supportive statement designed to recall Thurmond's glory days instead became a major scandal for Lott when his comments became public. Thurmond ran for president in 1948 on the Dixiecrat ticket built on a platform supporting racial segregation.

Lott originally dismissed the remarks as intended to support Thurmond's platform on national defense. However, his assertions that he was not attempting to support racial segregation were for naught. Calls came from both sides of the aisle for Lott's resignation, and on December 20, 2002, he stepped down from his post as Senate Republican Leader.

While this is not a case where the blogosphere broke the story, bloggers kept alive long enough for the mainstream press to pick it up, Joe Laszlo, an analyst at JupiterResearch told TechNewsWorld.

It was lots of "seething outrage" in the blogosphere that kept the story going and eventually led to Lott's downfall, according to Parr.


No. 1: Dan Rather and Memogate

Clutching a folio of papers in his hands on September 8, 2004, some two months before the 2004 presidential election, veteran CBS journalist Dan Rather aired a report on the venerable news magazine "60 Minutes Wednesday" he claimed exposed valuable information on President George W. Bush's stint in the Texas Air National Guard during the Vietnam War. The service records were discovered among personal paper of the president's then commanding officer, Lt. Col. Jerry B. Killian, according to Rather.

The documents alleged, among other things, that Bush had been found unfit for flight status after failing to take a mandatory physical exam and subsequently grounded, and that he asked to be excused from drill because he did not have time to fulfill his National Guard duties while working on the Senate campaign of Winton M. Blount of Alabama. Another note that claimed Blount was being pressured from military leaders to bump up his grades on Bush's yearly evaluations.

Following the report, a firestorm of withering criticism and questions of the documents' authenticity flooded the blogosphere from bloggers on the left and right of the political spectrum. Rather himself launched a concerted defense of the documents. However, on September 20, CBS retracted the story after it was revealed that the news organization had not been able to authenticate the documents and that their source, former Texas Army National Guard officer, Bill Burkett and not been truthful about how he had obtained the supposed personnel files.

The incident led to what appeared to be an earlier-than-intended retirement for Rather, who conducted his last broadcast on March 9, 2005.

This is another example of bloggers' dogged pursuit of a story. They drilled down until CBS was forced to admit it could not authenticate the documents.

It was, according top Parr, "a marginal story in the grander scheme of things. An embarrassing failure by CBS News, but [bloggers] didn't break a story, so much as kill one. However, [it was] a very nice job of research by bloggers."

However, the story ranked at the top of the list for Ochman "because it took down a mainstream media leader," however unfairly it may have been. "It raised the credibility of bloggers in the eyes of the mainstream media," she added.

Nokia Pushes for Qualcomm Chip Ban as Patent Battle Builds

Qualcomm is facing more difficulty in the legal world, this time a request by Nokia that the United States International Trade Commission ban some Qualcomm chipsets from being imported. The request stems from a patent dispute between the two companies that's been going on for nearly two years, and has involved lawsuits and complaints in both directions.


Nokia (NYSE: NOK) Latest News about Nokia has thrown another punch in its longstanding patent battle with Qualcomm (Nasdaq: QCOM) Latest News about Qualcomm by asking the government to block imports of some Qualcomm products.

In a complaint filed with the United States International Trade Commission (ITC), Nokia alleges Qualcomm engaged in unfair trade practices by infringing on five Nokia patents in its CDMA (code division multiple access) and WCDMA/GSM (wideband code division multiple access/global standard for mobile communications) chipsets.
Calling for a Ban

Nokia wants the ITC to launch an investigation and ban the import into the United States of certain Qualcomm chipsets and products, such as cell phones, that contain them.

"Qualcomm's unfair trade practices include importing products, selling products for importation, and/or selling products after importation and inducing others to import products such as handsets, that infringe Nokia patented technology in certain Qualcomm GSM/WCDMA and CDMA2000 chipsets," asserted Nokia.

Qualcomm and Nokia have been fighting over patent licensing for almost two years. The tiff has included ITC complaints and lawsuits, including a complaint filed by Qualcomm against Nokia in 2006 related to GSM patents.
Once Friends, Now Enemies

A patent licensing pact between the companies expired earlier this year, and disputes about its renewal led Qualcomm to file a lawsuit in which it accused Nokia of patent infringement. Nokia responded with a countersuit alleging similar wrongdoing on Qualcomm's part.

Last year, the ITC found that Qualcomm infringed on some Broadcom (Nasdaq: BRCM) Latest News about Broadcom patents; two months ago, it banned the importation into the United States of some Qualcomm chips and phones that used them. Qualcomm said it will appeal a jury's decision to award Broadcom nearly $20 million for patent infringement.

Ramping It Up

Nokia and Qualcomm aren't likely to end their hostilities any time soon, observed Yankee Group analyst John Jackson.

"I see this as another step in a series of escalations that ultimately are going to only serve to prolong this status of this dispute," Jackson told the E-Commerce Times. "It's another manifestation of what promises to be a protracted series of disputes."

Despite its filing of the new complaint, Nokia is trying to hash out its differences with Qualcomm, Nokia Chief Financial Officer Rick Simonson said. "We continue to negotiate with Qualcomm. Our intention is reaching a mutually acceptable agreement. We'd like that to be on a timely basis, but it takes two parties to make that happen," he said.

Qualcomm did not immediately respond to a request for comment.


Playing Field or Battlefield?

Nokia wants a level playing field, Simonson said. "We don't believe Qualcomm can play by different rules and can set unfair rules for the industry."

The patents in question "relate to technologies that improve the performance and efficiency of wireless communication devices as well as enabling lower manufacturing costs, smaller product size and increased battery life," Nokia said. The company stressed the technology at issue allows Nokia products to have competitive advantages over those made by other mobile device vendors.

"There is significant evidence to warrant an ITC investigation into Qualcomm's business conduct," said Simonson. "We are taking this action to stop Qualcomm's practice of copying Nokia's patented technology without permission, and making these innovations available to its chipset customers."

Is 'Personalized Merchandising' Becoming an E-Commerce Reality?

While a dynamic, personalized storefront will automate some aspects of the online merchandising process, the role of the online merchandiser will become even more critical. There will always be a need to overlay the right set of business rules to align personalization with the key needs of the retailer.


Brick and mortar merchandisers' shift from a product-centric to a customer-centric mentality is examined in a recent report from Gartner (NYSE: IT) Latest News about Gartner. By starting backwards from the known profiles of shoppers in every ZIP code, merchandisers can create extremely granular assortments for each store -- even down to sizing and color choices -- to increase sales Email Marketing Software - Free Demo and create loyalty.

What struck me most about this report was that merchandisers in the offline world are personalizing their strategies in spite of the serious constraints working against them: supply chain complexity, marketing costs, shelf-space limitations and the like. Yet retailers are doing it. So, why do online retailers -- who face none of these limitations -- still struggle to present a truly personalized, dynamic shopping experience for each and every shopper?

One reason is the explosion of online catalogs. Freed from supply chains, printing costs and shelf space limitations, online retailers' product catalogs have ballooned. With widely expanded catalogs comes the challenge of presenting the right products and merchandising messages at the right time to each shopper.


'A Formidable Hurdle'

As Forrester Research concluded in a recent report, "Given the sheer breadth of merchandise available online, search engines, comparison-shopping engines and retail sites face a formidable hurdle of connecting the millions of consumers who are searching with the millions of products available online."

Online retailers have taken several different approaches to try to personalize assortments and marketing messages for online shoppers. Some use site registration to customize what the shopper sees based on his known demographic data and expressed interests. Others have shoppers explicitly rate products they like the most so that they receive "similar item" recommendations. However, more than any other approach, nearly every online retailer has implemented the tool that lets shoppers personalize their own shopping experience: site search.

Online storefronts with advanced site search and faceted navigation allow shoppers to instantly filter hundreds of thousands of SKUs (Stock Keeping Units) to just the five or 10 products they are interested in. Every dynamically generated search results page is an opportunity for an e-tailer to present contextualized merchandising messages that match the shopper's expressed intent. However, are e-tailers actually using search to personalize merchandising?


Searchandising: An Unmet Promise

For years, e-commerce Free Trials. eCommerce Data Solutions, Tax Rates, Address Verification & more. search vendors have been touting the fusion of search and merchandising, or "searchandising." Conversion rates and average order values will skyrocket, say the vendors, when merchandisers utilize the "conversation" of search to tailor promotions for each shopper. However, for all the demos and ROI (return on investment) justification, most online retailers are simply not searchandising.

It's not because of a lack of tools. Leading search vendors provide tools that allow online merchandisers to create search-based promotions on the live storefront. These tools have their value in that they enable retailers to capitalize on the most commonly searched keywords. (If I search for a "TV" on a consumer electronics site, for example, a retailer can dynamically display a "10 percent off" sale on TVs.) However, the sheer breadth and unpredictability of shoppers' searching habits (which change every hour, day, week, month and year) makes it impossible to manually searchandise the thousands of search queries that are entered every day on major sites.

While searchandising has value, it is clearly not the answer to personalized merchandising. Instead of trying to predict and react to searches with custom merchandising messages, a truly personalized storefront records each individual shopper's searches and combines them with other "facts" about him: what products he viewed after a search, what purchases he made, what reviews he read along the way, and any other information he explicitly or implicitly provided about himself (e.g. where he lives, how old he is, etc).

With a partial or complete picture of every shopper, the storefront itself can become personalized. The homepage will display recommendations based on related items and previous searches. Category and landing pages will show personalized product selections and promotions. Most importantly, search relevancy and navigation will become personalized (meaning you and I will get different search results because we're different people with different interests).

If this sounds like a picture of the future, think again. One needs to look no further than the 800-pound online retail gorilla to see that personalized merchandising is becoming a reality today.


Amazon: A Micro-Store for Every Shopper

Just as offline merchandisers are thinking in a customer-centric mindset, Amazon (Nasdaq: AMZN) Latest News about Amazon.com has created a complete customer-centric experience by building -- in a sense -- a micro-store for each and every customer. (Note: Amazon is not a Fast customer.) Everything about the Amazon experience is dynamic -- not static -- and becomes more personalized the more you shop.

I recently visited Amazon after getting a new computer. With no stored cookies or a registered profile, nothing on the store appeared personalized for me at first. As a test, I ran a few searches: one on kids toys (I have two under 10), one on Michael Crichton (my favorite sci-fi author) and one on iPhone (you want one too). Then, I returned to the site a few hours later to find the following promotions on the home page (in order):

* A "Recommended for You" box spotlighting "King Kong" and "Terminator 2" DVDs (Merchandising message: If I like Crichton, I must like sci-fi movies.)
* An Xbox 360 Latest News about Xbox 360 bundle promotion (Merchandising message: If I'm searching for iPhone, I must be a gadget hound.)
* A promotion for Braun shavers (Merchandising message: I'm male.)
* A "Find Fun for Under $5" promotion for kids toys (Merchandising message: I'd better buy my kids something if I'm buying myself something.)
* A "Customers With Similar Searches Purchased" promotion (Merchandising message: There are others like you here, and they buy these things.)

Mind you -- this is the Amazon homepage. It's the most coveted merchandising real estate on the site, and it's completely automated, dynamic and personalized -- just for me.


Can You Be Like Amazon?

Two fifths of U.S. consumers now expect retailers to offer them personalized promotions, according to research from Gartner. Yet only 16 percent of retailers are using personalized recommendations tools, according to Forrester. Now is the time to get personal before your competition does.

Like Amazon, you should be focused on building a personalized online shopping experience that is based on personalized search, navigation and recommendations. What's important, though, is that you look at personalized merchandising as a cohesive strategy. The personalization piece parts -- your search engine, navigation engine and recommendations engine -- must work together as one. Only then can you ensure true personalization and have a single point of management.

While a dynamic, personalized storefront will automate some aspects of the online merchandising process, the role of the online merchandiser will become even more critical. There will always be a need to overlay the right set of business rules to align personalization with the key needs of the retailer. The benefit of the personalized storefront is that it allows you to merchandise for future conditions instead of reacting to past trends and data.

The Big Fat Hole in Apple's Desktop Line

It doesn't make sense to suggest that Apple build a computer that is so exotically fast that its price point would only appeal to a few percent of the population. We're well familiar with the steep curve associated with the fastest and the best hardware, and climbing that curve means pricing the computer out of the range of target customers. SGI tried that and got into big trouble.


I am going to argue that there is an emerging hole in Apple's (Nasdaq: AAPL) Make the Mac a 1st Class Citizen in a Windows Shop Latest News about Apple desktop line of computers. That hole is growing larger because of the change in the way we use our desktop systems. In this case, however, it's not just me with that thought.

This column is a first for me because it is based on a recent TMO forum discussion. Several wise and thoughtful people contributed to a discussion, and so I will do my best to transform this essay from one person's experienced opinion into an opinion that has been crafted by experienced and articulate Apple customers.

Here is the crux of the argument: Both ordinary home and technical professional users who use a desktop Mac are transitioning from a productivity workflow into a video and interactive workflow. In concert with this, our broadband pipeline is slowly growing. As a result, there is a growing gap between the iMac, engineered for home users, and the Mac Pro, engineered for pro-level work in Hollywood video production and scientific computing.

The new iMacs introduced on Aug. 7 don't do anything to change the situation.

Apple's Side

I'm not going to argue that Apple isn't aware of its customer patterns. They know a lot about their customer needs and preferences. They also have the analysis of their sales Email Marketing Software - Free Demo down to a fine art. At some point, Apple's fine-tuned understanding springs forth into exciting products. Of course, if Apple doesn't get the guidance it needs, because customers don't understand the technology, then we end up with reality distortion fields (RDFs) instead of what we really wanted.

As we all know, the sales of notebook computers are off the charts. Everyone loves MacBooks and MacBook Pros for their great design and portability. They're just plain sexy, and for a mobile society of technical professionals, they're perfect.

The desktop systems, on the other hand, have grown passe. Apple has transitioned the G4 PowerMac into the G5 as a high-end tower for people who want certain features, such as better video cards, expandability and more memory space. In time, however, the Mac Pro has transitioned into a severely high-end work station that doesn't make sense for users who want the features of a powerful, expandable desktop but can't justify the cost of a Mac Pro. So far, that's been okay with Apple because most users simply settle for an iMac, propelled by a little Apple RDF. Equally important, Apple must continue to cater to Final Cut Pro and CS3 (Adobe's Creative Suite 3) power users, and so there is no clear idea of how a third desktop (like the dreaded Cube) would fit into Apple's lineup. Even more doubtful is the sales potential of such a system Manage remotely with one interface -- the HP ProLiant DL360 G5 server., given that even Mac Pro sales are not stellar while MacBook sales are astronomical.

So I will grant all that. Yet ...

The Customer's Side

One of the keys to this discussion is the current state-of-the-art in CPU (central processing unit) design. We all know that as processors got faster and faster -- around 2003 -- an effect called "transistor leakage" cropped up. It was related to the fact that as the clock speeds of the single core CPUs increased, there was increased heat generated due to an inefficiency of the electrical current flowing through each transistor. When you have hundreds of millions of transistors, it all adds up. We ran out of cost effective cooling capacity.

These days, IBM (NYSE: IBM) Latest News about IBM and Intel (Nasdaq: INTC) Latest News about Intel have made improvements that reduce that effect, but not so much that it doesn't make sense to add processing power with more cores and less clock, so to speak.

As a result, we've moved into a valley of death, a plateau in the 2-plus Ghz range, where the major chipmakers add cores for the sake of competition and exotic benchmarks, but everyday developers are hard-pressed to keep up with designing software that can exploit four or eight cores.

As a result, the eight-core Mac Pro is essentially designed for very expensive production software or custom research software that can exploit such a monster. If you look at the typical benchmarks that don't take into account extensive threading, you'll find that the Mac Pro's Xeon processors aren't exactly smoking the Core 2 Duo.

This doesn't mean a lot for the average home user or even the mobile professional who surfs in the evening, trades e-mail with colleagues, updates LinkedIn.com, and may even catch up with an episode of "Lost" on ABC.com.

It does mean something for younger people who have grown up on PC games and YouTube Latest News about YouTube. It means something to people who are sizing up the HD industry and deciding what role their home Mac is going to play in a future of a 1080p video library. It means something to technical professionals who do work at home. It means something to those customers who have their own display, sometimes multiple displays, thank you, and want a very fast computer for the sake of the sex appeal of a very fast computer.

Face it, the Mac Pro is an ugly beast of a computer.

The (Intel) PowerMac Returns

It doesn't make sense to suggest that Apple build a computer that is so exotically fast that its price point would only appeal to a few percent of the population. We're well familiar with the steep curve associated with the fastest and the best hardware, and climbing that curve means pricing the computer out of the range of target customers. SGI tried that and got into big trouble. They're not out of business, but they're on life support. We don't want to go there.

Even so, I will add my voice to those in the recent forum discussion and suggest that Apple has ignored some of the more muscular CPUs from Intel, compromised the memory bandwidth (to save on cost) in preference to the obvious hoopla of eight cores in the Mac Pro, ignored the fact that many power users find it psychologically difficult to buy a computer with a built-in display (which is seen as a less capable, consumer machine), and has held on to the G5 cheese grater design for far too long.

There is another problem, and it has to do with positioning the product. An Intel PowerMac with a balanced architecture, optimized for video and optimized for the most typical desktop applications that can only exploit two or four cores might end up with benchmarks that could borderline embarrass the MacPro. That would create a perception problem regarding the differentiation Apple's desktop line.

On the other hand, Apple seems to want it both ways. They keep the price of the Mac Pro barely within reach of the power user -- too expensive to justify compared to a nice MacBook Pro but not so expensive that it's dismissed out of hand. Then, there's that nagging necessity to retain the perception that the best Macs are no more expensive than the best PCs. If Apple added US$500 to the price of the Mac Pro to eradicate some engineering compromises, the PC world would jump down Apple's throat and many users might not notice the difference with their typical software. No win there.

All the above may sound like I've talked myself out of the proposition, but I haven't.

Boldly Going ... Out of the Comfort Zone

Right now, Apple is in a comfortable spot. They like their Mac Pro's acceptance in business, government, research, science and professional video editing. Consumers are buying iMacs and loving them. The new ones are spectacular looking. What's not to like?

Intel is in a comfortable position as well. They've figured out how to add more cores, and it won't be long before we see 16 core CPUs, all scrambling for memory access, straining the limits of an SMP (symmetric multiprocessing) system. No matter, just jazz up a few benchmarks and lead the consumer down the path of "twice as many cores means oh so yummy goodness and, ahem, twice as fast." Sure.

By and by, the general population is going to stop buying that story. A general perception could ensue that the iMac remains an exotic toy for John and Mary Doe to file their taxes and read grandma's e-mails because Apple has steadfastly deprecated games, raw power and Blu-ray on their consumer desktop.

In that scenario, the coarseness (for Jobs, read simplicity) of the Apple desktop line could become a weakness in the very near future, and a weakness in Apple is just what some competitors would like to find now that Apple appears distracted by the iPhone and strained by getting Leopard out the door. The path is not without difficulties. I mentioned a lot of them above. Yet change is inevitable. Apple knows we are all dreamers. Apple loves to be the best at everything. There's a big fat hole in Apple's desktop lineup that's been conveniently glossed over in all the buzz surrounding Apple's success.

The Dream

It would be oh so easy to give up on the dream. The dream of of an ultra-sleek, beautiful, designed-by-Ive, quad core, Blu-ray, omigod-gotta-have-it personal desktop. Fast FSB (front side bus). Game-class video card. eSata interface.

Giving up is so easy to do, after all.

Customers would want the Intel PowerMac to have expandability and flexibility. Those of modest means would want to get one for a reasonable sum, yet let the more affluent load it up. This would be the next generation desktop that we've all been waiting for, and the Mac Pro would remain in its rightful place as the ugly, behemoth, put-it-under-the-desk workhorse pro machine it has evolved into. Downward price pressure and engineering compromise in the Mac Pro would be eliminated. Maybe Apple will sell fewer Mac Pros, but they'd sell a lot more digital hub desktops. An Intel Power Mac.

Notebook computers and iMacs have their uses, but managing our terabyte video lives is not one of them.