Profit rises sevenfold at Google

Finding more ways to make money from its spot as the world's most popular internet search engine, Google topped Wall Street expectations yesterday and posted a sharply higher profit in the third quarter, reports The New York Times (22 October).

The results even exceeded the expectations of the company, reports the newspaper, with Google earning US$381 million, or US$1.32 a share, in the third quarter, up more than sevenfold from its US$52 million, or 19 cents a share, a year ago. Last year's results were depressed by a US$201 million noncash charge related to settling a patent dispute with Yahoo.

A company spokesman said the strong growth did not come from more users, as traffic slowed in the summer, but from Google's growing ability to earn more money from internet searches.

The newspaper reported that part of the increase, the spokesman said,is coming from higher demand for search advertising, especially among larger companies, which in turn raises the bidding for advertisements.

One analyst said one driver of the strong results was that Google had been able to convince major marketers that search engine advertisements - which are mostly short snippets of text - are good ways to promote brands rather than simply to consummate immediate sales.

Google said it was working to develop graphical advertising and had expanded ways for marketers to promote their brands, according to the NYT.

Google's revenue in the quarter was US$1.6 billion, up 96 percent from US$805.9 million a year ago.

Nearly half of European local government bodies are using open source software while nearly a third don't know that they are using open source at all.

The Register reports (21 October) that a Maastricht University survey of 12 counties has reportedly found 49 per cent using Free/Libre/Open Source Software (FLOSS) while 70 per cent said they expect usage to increase.

In a comment on the viral nature of FLOSS, it turned out that 29 per cent of authorities who said they did not use FLOSS actually do use open source software such as operating systems, databases and web servers.

According to The Register, the results were presented by the Maastricht Economic Research Institute, which has been tracking open source, at the O'Reilly Open Source Conference in Amsterdam. The institute surveyed some 900 respondents.

The Register says that a separate FLOSS report from 2002 named performance, flexibility and localisation - the ability to easily adapt software programs to local languages - as three key reasons for uptake of FLOSS. The joint report, from the University and International Institute of Infonomics, found performance was top for 83 per cent, security for 75 per cent, and low license fees important for 71 per cent.

Open source advocates are doing what was once unthinkable - giving the thumbs up to a Microsoft source code licensing program, reports The Register (22 October).

The Register says that the Free Software Foundation has said new licenses for Microsoft's pseudo open source program, the Shared Source Initiative, appears to satisfy the four requirements defining Free Software.

This early support is a sharp contrast to the criticism levelled by the open source movement at Sun Microsystems when it launched its Common Development and Distribution License (CDDL), to cover the release of Solaris and its middleware

The Register says that, while any improvement to Microsoft's Kafka-esque source licensing will be welcomed by developers and enterprises, this latest set of options represents a continued, if somewhat predictably limited, evolution in Shared Source.

Microsoft has introduced three top-level licenses which dictate the terms and conditions under which code for Microsoft technologies are released through Shared Source. The three are Microsoft Permissive License (Ms-PL), the Community License (Ms-CL) and the Reference License (Ms-RL).

The Register says that Microsoft is also introducing two sub-licenses, Limited Permissive License (Ms-LPL) and Limited Community License (Ms-LCL).

Microsoft, already under government scrutiny over its behavior toward competitors, told manufacturers of iPod-like portable audio devices that under a new marketing program they would not be allowed to distribute rivals' music player software but pulled back after one company protested.

The Associated Press reports in The New York Times (21 October) that the Justice Department said that the incident was ''unfortunate,'' but that government lawyers decided to drop the issue because Microsoft agreed 10 days later to change the proposal. The government disclosed details of the dispute in a federal court document made available Thursday.

According to AP., the disputed proposal described in the court document as a ''draft specification'' would have affected portable music players that compete with Apple Computer's wildly popular iPod. The plan would have precluded manufacturers of those devices from distributing software to consumers other than Microsoft's Windows Media Player in exchange for Microsoft-supplied CDs.

AP says that legal and industry experts said Microsoft's demands probably would have violated the landmark 2002 antitrust settlement between the company and the Bush administration. They expressed astonishment that Microsoft was not more careful, given its mandatory legal training for employees about antitrust rules and continued monitoring by the Justice Department and a federal judge over its business deals through late 2007.

Microsoft said it recanted its proposal after lawyers reviewed it and after an unspecified industry rival complained.

The proposal, part of a campaign Microsoft called ''easy start,'' affected one of the rare technology sectors where Microsoft is not already dominant: handheld music players and online music services. The software giant and others have struggled to match the runaway success of Apple iPod player and iTunes music service.

AP reports that Microsoft wants consumers to use its media software to transfer songs onto their portable music players from internet subscription services, such as those from Napster, RealNetworks and Yahoo!. Each company currently offers its own media software.

BSkyB has agreed to shell out 211 million pounds to acquire broadband ISP Easynet in a deal that catapults the satellite broadcaster into the UK's telecoms sector.

The Register reports (21 October) that the deal, which still needs shareholder approval, gives BSkyB the opportunity to offer its punters the all important "triple play" of TV, phone and internet in a move to rival merging cablecos NTL and Telewest.

In a statement, BSkyB said that the acquisition of Easynet would give it "an established presence in UK broadband" and a "leading position" in local loop unbundling (LLU)".

According to The Register, Easynet has already installed its kit in 232 local telephone exchanges enabling it to offer services direct to end users and cutting out BT. It has plans to increase the number of unbundled exchanges and to offer "differentiated and innovative products" to end users.

BSkyB's chief exec James Murdoch: "Today's offer reflects the exciting opportunities that now exist to combine quality entertainment with significant high-speed connections.

IBM's blade server plans for 2006 include a new Infiniband-boosted chassis, improved management software and better iSCSI support.

The Register reports (21 October) that, sometime in 2006, IBM will roll out a second blade chassis meant to complement the existing BladeCenter enclosure. This product should address a pressing concern held by customers for better I/O and bandwidth performance on certain applications. Old and new blade servers will be able to slot into either the standard BladeCenter chassis or the new one, said Doug Balog, IBM's VP in charge of blade servers, during an interview.

According to The Register, also in 2006, IBM will outfit blades with Intel's dual-core Dempsey chip. It has decided against putting Paxville into Xeon blades for the moment, which is probably a safety measure for customers, the publication adds.

On the software front, IBM will move away from its proprietary manager module toward a "standards-based" set of code that has improved failure detection and logging tools. In addition, IBM expects that customers will be able to use an iSCSI software initiator in 2006. IBM has done the initial work on this code and believes that Microsoft and Linux makers will support the software in their OSes, says The Register.

The insatiable beast that is EMC's mergers and acquisition department has fed again - this time gorging itself on Captiva Software.

EMC will pay close to US$275 million in cash for the "input management solutions" company, Captiva Software.

The Register reports (21 October) that Captiva's software can pull data from paper records, digitise it and then help store and manage the information.

A sokesman told The Register that, together, Captiva and EMC enabled customers to either eliminate paper or automate its digital capture and integrate the information with electronic business processing for competitive advantage.

Captiva has been in business since 1989 and worked with EMC over the past ten years. It claims particularly prominent financial services and health care customers such as Prudential, Cigna and BlueCross BlueShield, says The Register.

In its most recent financial report, Captiva reported revenue of US$20.2 million - a record for the second quarter and a 20 per cent year-over-year rise.

The open source community has taken a further step towards unseating Microsoft's Office productivity hegemony, with the release of its latest suite, according to The Register in a 21 October report.

OpenOffice 2.0 has been released featuring a new interface and a standards-based XML architecture intended to tempt even more governments, companies and individuals to convert from Office.

The Register reports that OpenOffice 2.0 uses OpenDocument Format, from the Organisation for the Advancement of Structured Information Standards (OASIS), as its default file format to improve the exchange of text, spreadsheets, charts and graphical documents between suites.

OpenDocument Format is used in Sun Microsystems' StarOffice 8.0 and the KOffice suite and is supported by the European Union and the US Commonwealth of Massachusetts. So far, Microsoft does not plan to support OpenDocument Format in the up-coming Office 12 suite, expected next year.

The Register says that two big changes to OpenOffice 2.0 include the simplified creation and management of both web forms and cross-platform database applications.

Macromedia is to acquire Mobile Innovation, a privately-held design and integration house in the UK with around 50 staff, for an undisclosed sum.

The Register reports (21 October) that what makes this deal noteworthy is that Mobile Innovation designs phones as well as user interfaces. It's an integrator, and Tier One handset manufacturers devolve a lot of design decisions to MI.

According to The Register, it's similar to Apple's relationship with Tony Fadell's design shop which created the iPod - only on a larger scale. MI declines to mention which companies it works with because of confidentiality agreements with phone OEMs.

But, says The Register, it's well known amongst industry insiders that Mobile Innovation was responsible for the Nokia 9300 Communicator design and other high-end Symbian smartphones, Nokia's Series 90 user interface, and Hildon, the GUI for Nokia's Linux tablet.

Adobe has recently received regulatory approval to acquire Macromedia.

In a widely expected move, Warner Brothers Entertainment said yesterday that it would produce high-definition DVD's in the Blu-ray format championed by Sony in addition to the standard being promoted by Toshiba and a rival group.

The New York Times reports (21 October) that the move by Warner, a unit of Time Warner, comes nearly three weeks after Paramount Pictures made a similar announcement. Universal Studios, the third studio that agreed to make movies in Toshiba's format, is expected to follow.

A spokeswoman for Warner said the company joined because it felt assured that the copy protection software and other technology it preferred would be included in the Blu-ray format.

The newspaper says that the studios are also hedging their bets by agreeing to make DVD's in both formats. Sony, Toshiba and their allies have been locked in a battle to become the dominant standard for the discs and players, which promise sharper images, improved sound and more storage. Since both sides have promised to release players in the coming year, the studios do not want to lose potential sales.

Sony Pictures, Disney, Fox and Lion's Gate have sided with the Blu-ray group, but have not shown any inclination to make DVD's in Toshiba's format. This has led industry analysts to say the Blu-ray camp has gained an advantage over Toshiba.

According to the NYT., the studios have thrown their weight behind the Blu-ray group because it expects to produce DVD's with more storage space than Toshiba's discs. The extra capacity is expected to allow studios to add interviews, games and other content to entice customers. The studios also believe the Blu-ray group has more marketing firepower because it includes Sony, Panasonic, Samsung and other major consumer electronics companies.

Toshiba's technology, however, is largely an extension of the current generation of discs so it is expected to be cheaper and easier to produce. Toshiba expects to release HD DVD players early next year, the newspaper adds.
 

AT&T said yesterday, in what might be its last earnings report in its 128-year history, that it earned US$520 million in the third quarter.

The New York Times reports (22 October) that SBC Communications is awaiting regulatory approval to buy AT&T, which was formed when Rutherford B. Hayes was president. SBC expects its US$16 billion purchase of AT&T to conclude before the end of the year.

The newspaper says that though AT&T's stature has withered under pressure from local Bell phone companies and cable providers, it remains the biggest seller of telecommunications services to corporations. SBC pursued AT&T to break into that market and expand beyond its primary business serving residential customers.

AT&T said that despite steep competition, its income, which came to 64 cents a share, reversed a loss of US$7.1 billion, or US$8.99 a share, in the third quarter of 2004.

The NYT reports that AT&T said it improved its performance in the quarter partly through cost cuts, including the elimination of nearly 2,100 jobs. Prices for long-distance calling and data services had stabilised after several years of declines.

As a result, AT&T's revenue fell a less-than-expected 13.3 percent, to US$6.6 billion, compared with a year earlier. Sales to businesses, which make up three-quarters of AT&T's revenue, declined 9.5 percent, to US$5.1 billion. Sales to consumers fell 24.3 percent, to US$1.5 billion.

The newspaper reports that the declines in AT&T's retail business have accelerated since last summer, when the company said it would no longer market its services to consumers. AT&T said it had 19 million local and long-distance customers at the end of the third quarter, compared with 29.2 million in the second quarter last year - the last full quarter before it stopped marketing to consumers.

A glitch with Microsoft's PC to mobile device synchronisation software is preventing users from synchronising their device as normal. Microsoft has issued a software update designed to resolve the issue.

The Register reports (21 October) that some users of Microsoft ActiveSync 4.0 have reported problems when using the USB connection of their PC to connect to a device with Windows Mobile 5.0. These challenges are "likely caused by interoperability with desktop firewall applications or applications that manage network traffic," according to Microsoft.

The glitch only affects users with devices running the latest version of Microsoft's mobile device software, Windows Mobile 5.0 software, and only when synchronising directly to a PC using a USB connection. Wireless synchronisation via either Bluetooth or infra-red is not affected. Nor is direct server synchronisation.

The Register says that an update for ActiveSync is scheduled to be available in late November.

A federal court in the United States on Friday refused a request from Research in Motion to freeze a patent infringement lawsuit while it appealed the case to the Supreme Court.

The New York Times reports (22 October) that the decision by the United States Court of Appeals for the Federal Circuit in Washington leaves the door open for NTP., a patent holding company, to ask a lower court to impose an injunction granted two years ago against Research in Motion.

According to the newspaper, the injunction would stop Research in Motion from selling BlackBerry e-mail devices in the United States and would force the company to stop providing e-mail services to all American customers except government account holders. That measure had been suspended to allow an appeal by Research in Motion, which the federal appeals court rejected in early October.

Research in Motion, which is based in Ontario, and NTP, whose only assets are some wireless e-mail patents, announced in March that they had reached a US$450 million settlement in the three-year-old case. But the deal subsequently collapsed with each side accusing the other of adding unacceptable conditions.

After failing in the appeals court, Research in Motion asked for the stay on the lower court judgment to continue while it appealed to the Supreme Court. The company has acknowledged, however, that the highest court rarely hears patent cases.

In the US., the former chief executive of a company accused of secretly installing adware and spyware on millions of home computers agreed to pay US$750,000, the New York attorney general, Eliot Spitzer, said Thursday.

The Associated Press reports in The New York Times (21 October) that in April, Mr. Spitzer sued Intermix Media of Los Angeles, saying it was responsible for sending software tens of millions of times to computers throughout the United States. The company subsequently agreed to pay US$7.5 million in penalties to settle the case.

Adware and spyware deliver nuisance pop-up advertisements, and Mr. Spitzer said such programs threaten to discourage e-commerce.

The AP report says that shortly after filing the suit, Mr. Spitzer's office began investigating Intermix's founder and former chief, Brad Greenspan, a spokesman for Mr. Spitzer, Brad Maione, said. Mr. Greenspan, 32, was chief executive from July 2002 to October 2003.

Mr. Greenspan did not admit to any wrongdoing in the settlement. In a statement, he blamed the company's current management for increasing the amount of adware attached to Intermix's offerings and with deceiving investigators, reports P.

In Germany, Bertelsmann said Friday it will launch a new service that uses the technology made popular by file-swapping businesses for legal downloads of music and movies.

The Associateed Press reports in The New York Times (21 October) that the service, dubbed GNAB, or ''bang'' in reverse, is set to be used in Germany by the end of this year, with an eventual rollout to other countries through 2006 and beyond, the company said.

According to AP.,unlike Bertelsmann's previous foray with the original Napster -- which led to a bevy of lawsuits over violations of copyright law -- GNAB uses a decentralised peer-to-peer network to offer downloads whose original content is hosted on centralised servers.

Unlike other file-sharing programs, a spokesman said, GNAB will be licensed to partners who can use it to sell their own downloads, meaning consumers will only get to use it if they go through a particular partner or company.

Arvato has agreements lined up with several labels, particularly Sony BMG, of which Bertelsmann has a 50 percent stake, giving it access to about 1 million songs.

AP reports that the service comes amid heightened competition by other companies, notably Apple Computer's ubiquitous iTunes, which is popular in the United States and has local versions operating throughout Europe.

In the US., the federal government, vastly extending the reach of an 11-year-old law, is requiring hundreds of universities, online communications companies and cities to overhaul their internet computer networks to make it easier for law enforcement authorities to monitor e-mail and other online communications.

The New York Times reports (23 October) that the action, which the government says is intended to help catch terrorists and other criminals, has unleashed protests and the threat of lawsuits from universities, which argue that it will cost them at least US$7 billion while doing little to apprehend lawbreakers. Because the government would have to win court orders before undertaking surveillance, the universities are not raising civil liberties issues.

According to the newspaper, the order, issued by the Federal Communications Commission in August and first published in the Federal Register last week, extends the provisions of a 1994 wiretap law not only to universities, but also to libraries, airports providing wireless service and commercial Internet access providers.

It also applies to municipalities that provide internet access to residents, be they rural towns or cities like Philadelphia and San Francisco, which have plans to build their own Net access networks.

So far, however, universities have been most vocal in their opposition, says the NYT.

The newspaper says that the 1994 law, the Communications Assistance for Law Enforcement Act, requires telephone carriers to engineer their switching systems at their own cost so that federal agents can obtain easy surveillance access.

Recognising the growth of internet-based telephone and other communications, the order requires that organisations like universities providing internet access also comply with the law by spring 2007.

The NYT reports that the Justice Department requested the order last year, saying that new technologies like telephone service over the internet were endangering law enforcement's ability to conduct wiretaps "in their fight against criminals, terrorists and spies."