Microsoft shuffles leadership

Microsoft reshuffled its management team yesterday in an effort to make it more nimble as the company tries to lift its growth and compete with fast-moving rivals like Google.

The New York Times reports (21 September) that under the plan, seven business units will be collapsed into three divisions, each led by an executive who will carry the title of president.

The newspaper says that the idea is to push more decision-making down into the businesses, and that means that the company's two longtime leaders - Bill Gates, co-founder and chairman, and Steven A. Ballmer, chief executive - will have to delegate more authority to their chief lieutenants.

Microsoft portrayed the reorganisation as a step to exploit the growth opportunities of the coming year, when the company will introduce a flurry of new products including a new version of the Windows operating system, an upgrade of its Office productivity suite, developer tools and the next generation of its Xbox video game console.

But, the NYT says that the move also comes at a time when Microsoft is facing many challenges from competitors who are not like the traditional software companies that Microsoft has consistently beaten back over the years.

The newspaper says that Google, for example, has made Microsoft look sluggish as it has consistently outpaced its larger rival in Internet search and seems to have taken an early lead in new technologies like satellite mapping services and desktop search. And much to Microsoft's irritation, Google, the Silicon Valley start-up turned powerhouse, has successfully wooed some of Microsoft's leading engineers.

The Linux operating system, developed by programmers freely sharing code, is a very different sort of challenger from what Microsoft has faced, says the newspaqper. Other newcomers, like Salesforce.com, are delivering technology used by businesses to do things like track customers over the Web instead of as a software product, it adds.

Sun Microsystems announced an upgrade to several server computers yesterday, hoping to overtake IBM and Hewlett-Packard, its rivals in the market for powerful Unix systems sold to large corporations.

The New York Times reports (21 September) that, with its five new servers, all part of its Sun Fire line, Sun is hoping to gain momentum in the market for high-performance systems, where it long ago gave up its market-leading role to competitors selling more open systems for far less. One of the Sun Fire systems that was announced this week offers as much as a fivefold increase in performance over its predecessor for the same price as before, according to the company, the newspaper reports.

The newspaper says that prices of the new systems, which use the UltraSparc IV+ processor produced for Sun by Texas Instruments, start at about US$31,000, the company said. Customers of existing systems can upgrade by inserting a new circuit board, a feature Sun says will be attractive to corporate customers.

According to the NYT, Sun's latest announcement comes just a week after it introduced a line of servers based on the Opteron microprocessor from AMD, a strategic move to adopt industry standard technology rather than more proprietary chips like the UltraSparc.

The Intel Corporation, the largest semiconductor maker, announced on Tuesday a new manufacturing process to make chips for cellphones and other mobile devices that use far less power than is currently possible, thus helping extend battery life.

The New York Times reports (21 September) that the company said the new process, which will run parallel to Intel's current manufacturing process, would produce chips that can reduce power "leakage," or battery life drain, to as little as one-thousandth of current levels. Intel said it expected the chips to be used in cellphones, hand-held computers and eventually even some notebook computers where power conservation is more important than speed.

The new process, which is in the development phase and has been successfully tested, could be used commercially by early 2007, the company said.

According to the newspaper, the low-power approach will require a trade-off in performance, in some applications reducing a chip's speed by half. But Intel executives said there were plenty of markets in which processor speed was not the most important factor.

The NYT report says that Intel's approach includes important modifications to the designs of the transistors that are part of chips. The low-power variant will affect only Intel's 65-nanometer manufacturing process, the company's most advanced to date. Power consumption, and the associated problem of electrical leakage, have become huge challenges for the semiconductor industry as it tries to enhance the performance of chips used in electronic devices.

Intel's announcement Tuesday coincided with an announcement by Texas Instruments that it was also reducing power consumption in some of its mobile chips. Other chip companies are also working on solutions to the problem, says the NYT.

Dell, the world's largest direct computer seller, on Tuesday launched a new flash-memory digital music player designed to compete with the iPod Shuffle.

The Associated Press reports (20 September) that Dell billed its DJ Ditty as a better value than the Shuffle. Both devices are US$99 and come equipped with 512 megabytes of memory, but because the Ditty uses an audio format that compresses digital music files more efficiently, Dell asserts the Ditty can hold up to 220 songs while the same-sized Shuffle stores about 120.

The AP report in the NYT says that the biggest difference between the devices is the Ditty's 1-inch LCD display screen, which helps users navigate their music lists. In addition, the Ditty can receive FM radio.

The report says that, like many electronics companies, Dell is trying to chip away at Apple Computer's enormous lead in the digital-music player market. For every 10 digital music players bought in the US, seven are iPods.

The Shuffle -- Apple's least expensive model -- is likely the most vulnerable of any of the iPod products to competitive pressure, says Nitin Gupta, analyst with Yankee Group, reports AP.

Microsoft streamlined its businesses into three divisions on Tuesday to compete more effectively against Google, Oracle and the Linux operating system.

Reuters reports in The New York Times (20 September) that the three divisions are aligned along Microsoft's core Windows product and its MSN internet arm that is going head-to-head with web search leader Google, a business division that will focus on Office and other business software products, and a division that will include the company's Xbox, consumer and device businesses. Each is headed by its own president.

According to Reuters, the newly formed Platform Products and Services division will be led by co-presidents Jim Allchin and Kevin Johnson, who most recently served as Microsoft's top sales executive. Allchin, a 15-year company veteran, will retire at the end of 2006, Microsoft said.

Jeff Raikes, currently in charge of the division that includes Office and other business software products, will become president of the Business Division.

Robbie Bach, responsible for launching the Microsoft's Xbox video game business, will become president of the Entertainment and Devices division that will also include the company's cell phone software business.

Reuters says that the changes come as Microsoft faces threats from competitors that are delivering software-based services over the web, such as Google. Longtime business software rival Oracle has been on an acquisition spree while Linux remains a threat in the server software market.

Apple CEO Steve Jobs today claimed the world's biggest recording companies have begun to demand the iTunes Music Store raise its prices.

But the Mac maker is responding with the spectre of a return to the days of mass online music piracy.

The Register reports (21 September) that, slamming the labels' "greed", Jobs said: "The labels make more money from selling tracks on iTunes than when they sell a CD. There are no marketing costs for them.

According to The Register, rumours that the music labels are pushing for higher prices have been doing the rounds ever since ITMS was launched in the US in April 2003. A year later, in May 2004, for example, it was claimed Apple had been forced to accept differential pricing for some tracks by the then five major labels: Universal, EMI, Warner, Sony and BMG (now Sony-BMG).

The Register says that to this day, the vast majority if not all of songs available on the UK store remain priced at 79p. Album prices do rise above £7.99, but typically for longer records only. Some albums sell for considerably less than the cost of an equivalent number of single-track sales. Apple has never pledged to offer albums at a single price-point, unlike single-song downloads.

The outlook is good for the PC market, with the market expected to stay strong in 2005 and long-term growth expected to remain stable at nine per cent, according to a Report in The register (21 September).

The Register says that, following strong international demand that led to increased growth in the second quarter, total PC shipments for the second half of 2005 are expected to reach almost 110 million units.

According to IDC, the market is expected to grow 12.9 per cent for the period, a revised figure from May's prediction of 10.4 per cent, the publication reports.

South Korean regulators have fined electronics giant Samsung for obstucting investigators looking for evidence of price fixing and dodgy contracts with suppliers.

The Register reports (21 September) that the Fair Trade Commission accused Samsung of working with a chip subsidiary Semes to forge or destroy relevant documents.

The report says that a spokesman for the FTC said: "Samsung Electronics has obstructed our investigation into unfair contracting practices with its subsidiary, Semes, by destroying or fabricating documents.", AFP reports. The regulator also accused Samsung of issuing secret guidelines for staff on how to handle investigators.

The Register says that the company is also accused of deliberately crashing its internal computer network to slow down the work of investigators. The fine is for 60 million Korean Won, about US$58,000.

Mobile phone network Orange today launched in the UK, France and Switzerland its anticipated take on the HTC Universal clamshell form-factor smart phone, the SPV M5000.

The Register reports (21 September) that, as Orange's first 3G-enabled PDA, M5000 will become the flagship model of the company's business-oriented Signature device line-up, a range of corporate-oriented handsets from a range of manufacturers and aimed at volume buyers. According to Orange, the Signature phones provide a consistent user experience and ease of management, regardless of manufacturer, price or form factor. That, it said, results in reduced deployment costs.

Five months after announcing its first Google-branded hot spots, covering San Francisco's Union Square and main public library, Google is enhancing the service. The ad giant briefly made a beta of a proxy server, Google Secure Access, available for limited download today before withdrawing the link, reports The register (21 September).

The Register says that the proxy is intended to protect 802.11 wireless users at Google hot spots from casual packet sniffing. But it also gives the ad broker the advantage of knowing what you're looking at, and exactly where you are geographically - a huge advantage to its core advertising business.

Oracle has announced its second acquisition in two weeks with a deal that expands the vertical-sector expertise of Oracle's e-business software. Oracle has snapped up privately held G-Logic, a UK-based specialist in logistics and transportation management software. Financial terms of the deal were not disclosed, reports The Register (21 September).

The Register says that the database and applications giant said that ownership of G-Logic would enable it to offer a comprehensive supply chain and logistics management portfolio.

According to the publication, the focus on logistics and transportation follows the highly publicised bidding war with enterprise resource planning (ERP) rival SAP for retail software specialist Retek and Oracle's decision in August to take a majority stake in India-based banking and financial services ISV I-flex.

The Register says that G-Logic chief executive David Cairns said in a statement that the deal would enable Oracle to respond effectively to industry trends that are driving demand for complex logistics offerings.

Three authors filed suit against Google yesterday contending that the company's program to create searchable digital copies of the contents of several university libraries constituted "massive copyright infringement."

The New York Times reports (21 September) that the lawsuit, filed in United States District Court in Manhattan, is the first to arise from the Google Print Library program, the fledgling effort aimed at a searchable library of all the world's printed books.

Google intends to make money from the project by selling advertising on its search pages, much as it does on its popular online search-engine site.

According to the newspaper's report, the plaintiffs, who are seeking class-action status, also include the Authors Guild, a trade group that says it represents more than 8,000 published authors. Listed as plaintiffs in the suit are Daniel Hoffman, a former consultant in residence at the Library of Congress and the author of many volumes of poetry, translation and literary criticism; Betty Miles, an author of children's and young adult fiction; and Herbert Mitgang, the author of a biography of Abraham Lincoln as well as novels and plays. Mr. Mitgang is a former cultural correspondent and editorial writer for The New York Times.

The report says that each of the plaintiffs claim copyright to at least one literary work that is in the library of the University of Michigan, according to the suit. Michigan is one of three universities, along with Harvard and Stanford, that agreed last year to let Google create searchable databases of their entire collections. The New York Public Library and Oxford University also entered into agreements with Google, but only for the works in their collections that are no longer covered by copyright.

The NYT says that Google has said from the beginning that its program is covered by the "fair use" provision of the copyright law, which allows limited use of protected works. In a statement issued in response to the suit, Google also said its program respected copyrights.

In the US, Qwest Communications International and Microsoft said yesterday that they would offer internet phone service to small and medium-size businesses, starting in 2006.

Reuters reports in The New York Times reports (21 September) that the service will combine Microsoft's internet telephony technology with Qwest's OneFlex internet phone service. Qwest said that it was the first service provider to integrate the Microsoft technology into internet telephone services.

Also yesterday, Time Warner said that it would introduce a web phone service early in October.

Reuters says traditional phone calls use dedicated lines. Internet calls share the line with web traffic and e-mail messages.

According to Reuters, United States phone operators, including Qwest's rivals Verizon Communications and SBC Communications, are also considering the Internet phone market. Private companies like Vonage and Skype, which is being bought by eBay, have drawn attention to internet telephony with their services.