Microsoft challenges Google and Yahoo for ads

Microsoft is expected to offer a first look today at some features of a new advertising system on the MSN search engine, part of the company's effort to match the success of Google in the paid internet search business.

The New York Times reports (16 Mar.) that the service, called MSN adCenter, is yet to be tested, but executives say it could allow Microsoft to catch up to the top two web search engines, Google and Yahoo, in search-based advertising by creating a system with broader scope.

The paper reports that the executives said the MSN adCenter software would appeal to advertisers by giving them the ability to fine-tune their purchases based on audience demographics. For example, on a search results page, men might be shown ads different from those shown to women.

Microsoft now relies on the Overture service owned by Yahoo to place text advertisements on the results pages of the MSN search service, the paper says.

The company says it generates about US$1.5 billion annually from internet advertising, though it does not publicly disclose how much of that revenue comes from paid searches on MSN.

The NYT says that in a telephone interview on Monday, the chief executive, Steven A. Ballmer, said the new advertising system could successfully compete with Google and Yahoo and having an independent advertising system was strategically vital.

The company plans to begin limited tests of the adCenter system in France and Singapore in the next six months.

Google adds new local search tool

Google has released a free tool that allows businesses to add or update business listing information, such as operating hours and addresses, that appears within its local search results.

The New York Times/Reuters report (15 Mar.) that Google, the leader in the web search sector, said its new Local Business Center tool is available to US businesses, including those that do not operate an internet site, potentially expanding the reach of its service.

The paper says search providers aim to have consumers use local search to find nearby restaurants, stores or service providers, like dry cleaners or plumbers. Local search is currently one of the most competitive markets in the booming internet search industry as providers eye potential profits from search advertising.

The NYT says that the Kelsey Group forecasts the US local advertising market will reach US$5.1 billion by 2009, with local search accounting for US$3.4 billion, or two-thirds of the total. Local search advertising hit US$162 million in 2004, according to the market research company.

Google would not quantify the company's investment in the segment but said it had recently stepped up efforts, adding a local search tab to the Google.com home page and integrating maps and business information, says the paper.

According to the paper and Reuters, Google last year authorised BellSouth's online Yellow Pages unit RealPages.com to sell Google's web search ads to small and mid-sized businesses in the Southeastern United States.

Former WorldCom chief convicted

Bernard Ebbers, the former CEO of WorldCom, has been convicted ofengineering the largest corporate fraud in US history -- an US$11 billion accounting scandal that capsised the big telecom company three years ago.

SiliconValley.com reports (15 Mar.) that the verdict marked a colossal fall for Ebbers, who had turned a humble Mississippi long-distance provider into a global telecommunications power, swallowing up companies along the way and earning the nickname ``Telecom Cowboy.''

The SV.com report said a federal jury in Manhattan returned guilty verdicts on all nine counts, including securities fraud, conspiracy and lying to regulators -- a decision that could send Ebbers, 63, to prison for the rest of his life. Sentencing was set for 13June.

According to SV.com.,he former chief executive reddened deeply when the jury announced its verdict after eight days of deliberations, and his wife, Kristie, burst into tears in the courtroom's front row. Later, as his lawyer spoke outside, promising an appeal, Ebbers and his wife -- nearly toppled by the enormous crew of cameras and reporters camped outside the federal courthouse -- made their way to a nearby street, hailed a cab and drove away.

In a six-week trial, prosecutors painted Ebbers as obsessed with keeping WorldCom stock high, and panicked about pressure he was getting over US$400 million in personal loans that were backed by his own WorldCom shares, SV.com reported.

The nine criminal counts against Ebbers -- securities fraud, conspiracy and seven counts of making false filings to the Securities and Exchange Commission -- carry up to 85 years in prison. He will be free on bail until sentencing, the online publication reports.

Ebbers still faces civil litigation, including from the company, which backed up his $400 million in personal loans when Bank of America demanded more and more collateral as the stock price fell, says SV.com.

TiVo reaches deal to make version for Comcast

TiVo has concluded a deal to adapt its popular digital video recorders for Comcast cable subscribers in what the company says is only the first of the partnerships the struggling pioneer hopes to forge with cable operators.

SiliconValley.com reported that Comcast, the US's largest cable TV system operator, expects to begin marketing the TiVo-branded DVRs by mid-to late 2006. The companies refused to release financial details in announcing the eight-year, non-exclusive deal.

Analysts hailed the agreement as a lifeline for the Californian-based company.

DVRs let viewers record TV programs on hard drives, dispensing with the hassles of videotape. Users may pause live TV, do instant replays and begin watching programs even before the recording has finished. DVRs make it easy to skip over commercials, credits and other potential annoyances.

SV.com says TiVo, which has more than 3 million subscribers, helped pioneer the DVR concept, and its brand quickly became a verb -- as in, ``I've TiVoed all episodes of 'Friends.''' The company controlled roughly one-third of the DVR market in 2004.

But, SV.com says TiVo has struggled to find a business strategy that would increase its subscriber base and withstand withering competition from generic DVRs offered directly by big cable companies. In the quarter that ended 31 January, TiVo lost US$33.7 million, wider than the US$12.4 million loss in the same period a year earlier.

The online publication says deep-pocketed cable and satellite operators could afford to subsidize hardware costs and market DVRs to tens of millions of existing customers, and they began undercutting TiVo's prices and status. Comcast charges DVR subscribers only US$9.95, three dollars less than TiVo.

The Comcast deal calls for TiVo to adapt its software to work on Comcast's existing DVR platform, and it allows TiVo to extend to Comcast subscribers the advertising it sells as interactive video clips that automatically appear in the TiVo menu, says SV.com.

SVcom says the agreement gives TiVo access to Comcast's 21.5 million cable customers, including 8.6 million digital cable customers who can take advantage of DVRs. Comcast has not released DVR subscription figures but it is estimated in the hundreds of thousands.

Survey: digital music player sales to grow 57 Pct

Sales of portable digital music players are set to grow 57 percent this year after more than doubling in 2004, results of a global survey showed on Tuesday.

The New York Times and Reuters report (15 Mar.) that over the next five years, shipments of MP3 music players will expand to 132 million units in 2009 from 36.8 million in 2004, market research group iSuppli said.

Shipments of MP3 players, of which Apple's iPod is the best known, rose by 116 percent in 2004, says the paper and Reuters.

According to the NYT and Reuters, most of the current media players use flash memory chips to store limited amounts of music but there will be more players with higher storage capacity as a result of small built-in hard disk drives (HDDs).

The iSuppli report says that sales of HDD-based players will increase to 56.2 million units in 2009, up from 9.8 million in 2004. By that year, HDD players will be 43 percent of the total MP3 market, up from 27 percent in 2004.

The research group said electronics producers stood to benefit from consumers' willingness to pay more for "cool" products, which Apple has exploited and which Sony is targeting with its new line-up of Walkmans, the paper and Reuters add.

European PlayStation portable launch delayed

Sony is delaying the European launch of its hotly anticipated PlayStation Portable gaming device by several months to ensure it can supply enough units for its US launch, reports The New York Times/Reuters (15 Mar.).

The paper and Reuters says that the PSP, a sleek multimedia gadget that Sony hopes will be its first big success in consumer electronics since the PlayStation 2 five years ago, is already on sale in Japan and will hit US stores on 24 March.

The report says that Sony's factories have been unable to churn out enough PSPs to launch them simultaneously across the world. The company will wait to see whether it can keep up with demand in the US before setting a date for Europe.

The PSP, which Sony hopes will be as big of a hit as Apple's iPod music player, launched in Japan last December and remains in extremely limited supply there after the shipping of about 1.2 million units, report the NYT and Reuters.

When the PlayStation 2 console was in short supply last Christmas, Sony resorted to the costly option of shipping units to the United States from China via air freight.

The paper and Reuters say that Sony games guru Ken Kutaragi, known as the father of the PlayStation, took on a diminished role at the company last week as part of a corporate shake-up that installed US Sony head Howard Stringer as CEO of the entire company.

Vodafone buying mobile assets

The Vodafone Group, the world's largest mobile telecommunications company, is buying US$3.5 billion worth of Romanian and Czech mobile assets from Telesystem International Wireless of Canada, the companies have just announced..

The New York Times reports (16 Mar.) that Vodafone is picking up a 79 percent stake in MobiFon of Romania, which serves about half of the country's nearly 10 million mobile customers, and all of Oskar Mobil, which has 1.8 million customers in the Czech Republic. Vodafone already owned 20 percent of MobiFon.

The paper says the purchases are Vodafone's latest inroads into Central and Eastern Europe. Its high cash flow and low debt give Vodafone plenty of money for deals, but attempts to make big purchases in the United States have been unpopular with shareholders and the expansion opportunities in Western Europe are limited.

Instead, Vodafone has been seeking acquisitions and partnerships in Albania, Greece, Lithuania and Poland, among other countries, reports the paper.

The NYT says the deal will add US$1.275 billion in revenue, Vodafone said, and a strong foothold in the two countries. MobiFon is Romania's largest mobile operator, and Oskar is the third largest in the Czech Republic. Vodafone is assuming about US$950 million in net debt along with the purchase.

Europe ends inquiry into ContentGuard purchase

The European Commission haa ended its inquiry into the joint acquisition by Microsoft and Time Warner of ContentGuard, an antipiracy software company, after a third buyer joined the purchasing group.

The New York Times says (16 Mar.) the two companies dropped their original deal and informed the commission's competition officials that Thomson, the French technology company, would become a partner in a new three-way deal to buy ContentGuard.
The paper says that as no single shareholder would have control over ContentGuard, the three-way deal would not be subject to European Union merger rules, the commission said in a statement.

According to the NYT., until Thomson formally became a partner in the deal, the commission was concerned that the deal would allow Microsoft to dominate the market for antipiracy, or digital rights management software.

SEC hits ex-Qwest execs with fraud charges

The Securities and Exchange Commission has charged former Qwest Communications CEO Joseph Nacchio and six other executives with orchestrating a "massive financial fraud" at the US telecommunications company that concealed the source of billions of dollars in revenue later wiped off the books.

SiliconValley.com reports (15 Mar.) that the civil lawsuit blamed Nacchio and others for creating a ``culture of fear'' and putting enormous pressure on employees to meet revenue and earnings goals through bogus sales procedures that became an addiction.

The suit is the most dramatic development yet in the government's three-year investigation of Denver-based Qwest Communications International, the primary local phone provider in 14 Western states. It was filed hours after former WorldCom CEO Bernard Ebbers was convicted in New York of engineering a multibillion-dollar accounting scheme at his Mississippi telecom, said SV.com.

The SEC said the fraud at Qwest occurred between April 1999 and March 2002, allowing it to improperly report approximately US$3 billion in revenue that was later restated and helping its 2000 merger with US West, the online publication reported.

Attorneys for the other former executives could not immediately be reached for comment. A Qwest spokesman, Steve Hammack, said the allegations involve long-ago events that no longer concern the company, SV.com says.
Motorola cites Apple for non-show of iTunes phone

Motorola did not show upcoming phones designed to work with Apple Computer's iTunes digital music service at a recent tech show because of the pair's differing approach to launching new products, executives from Motorola said on Tuesday.

The New York Times/Reuters report (16 Mar.) that Motorola, the world's No. 2 mobile phone maker, also revealed its plans for delivering phones to Sprint, and its hopes for selling its popular RAZR phone to more US companies.

The paper says that in response to a question about why Motorola did not show its upcoming iTunes phone at the Cebit technology fair in Germany Motorola said it tends to display its products before they go on the market but Apple's Chief Executive Steve Jobs does not.

Motorola says it is on schedule to deliver two phones that can play music downloaded from the iTunes service this year, with one coming on the market in the first half of the year and another in the second half, reports the NYT.

Many analysts believe that phones that can play and store music will be hugely popular among consumers because of the popularity of Apple's stand-alone iPod music player. But others say such phones will be less popular with carriers because they believe consumers will be more likely to download music to their phones via their computer rather pay more to operators by downloading directly over a wireless connection, the NYT reports.

The NYT says Motorola hopes to deliver three phones to Sprint in the fourth quarter for the No. 3 US operator to begin testing them for use on its network.

WTO backs S.Korea's Hynix against EU-source

The World Trade Organisation has rejected in an interim report European Union allegations that South Korea provided subsidies to chip maker Hynix Semiconductor, a source familiar with the situation said on Wednesday.

The New York Times and Reuters report (15 Mar.) that if the decision is confirmed in a final ruling, expected in one or two months, it would be the second time the WTO has ruled in favor of the world's No. 2 memory chip maker after its dispute panel rejected complaints raised by Washington late last year.

A source told Reuters that a WTO panel rejected claims by the European Union that the South Korean government provided subsidies to Hynix.

The EU imposed anti-dumping duties of 34.8 percent and US regulators nearly 45 percent on Hynix, after both alleged Hynix received state subsidies in the form of bail-outs led by creditors and that imports of its DRAM chips had damaged US and European rivals, says the paper.

The NYT also reported that a WTO dispute panel, however, said in December the United States had not presented sufficient evidence to back up its claim Seoul had subsidised Hynix by ordering banks to provide loans.