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Wednesday, 19 January 2005 19:00

News Roundup 19 January 2005


Purloined domain name: an unsolved mystery

Australian company - Melbourne IT has found out this week how vulnerable a company's brand name can be in the world of electronic commerce.

The New York Times says that, New York City's oldest commercial internet service provider, saw its name slip out of its control and become the center of an international cyberhunt to get it back. Whether maliciously or inadvertently, the company's main domain name - - had somehow been transferred to a company in Australia - Melbourne IT.

According to the NYT., mail to users with a address was suddenly being sent to a server computer in Canada that had no relation to the company. And in Vancouver, Washington, Panix's registrar - the broker responsible for securing rights to the domain name and administering its use - was completely unaware that the name had been pinched.

According to market watchers, the incident served as a reminder that, for all of the safeguards in place to protect one of the more valuable assets in online commerce - a company's domain name - those business addresses remain vulnerable to theft.

The incident follows other cases of Internet names being hijacked, including the temporary commandeering last fall of the domain name for eBay Germany (, by a 19-year-old German man who said he had done it "just for fun."

According to Icann's rules, should have received a notice that someone, somewhere - it is still unclear - had submitted a request to transfer the domain name. That would have set in motion a process that would have made the transfer happen automatically, unless Panix took steps to block it.

The NYT says that, whatever the sequence, over the weekend MelbourneIT found itself the new owner of the domain. MelbourneIT executives said they knew nothing about it until receiving calls from representatives. The two sides determined that the transfer had been initiated via an MelbourneIT affiliate in Britain, but that no one had yet figured out who actually submitted the request.

Intel reorganises business

Chip maker, Intel, has just announced a major overhaul of its business divisions in an effort to streamline marketing and development of microprocessors.

According to the New York Times/AP (18 Jan) the company divided its business lines into five product groups, including two new segments in areas where it hopes to make inroads this year - digital health care and worldwide distribution.

Intel, which last week reported fourth-quarter earnings that topped Wall Street expectations and announced a major push in research, development and capital spending, said the reorganisation would group complementary business segments and improve the way technology was used.

The paper says the best example of how the new groups would operate might come from Intel's introduction of the Centrino mobile chip, which combined the efforts of different areas like microprocessors, chipsets, communications chips, software capabilities and other tools.

Electronic Arts - ESPN sign 15-Year games deal

Electronic Arts, the largest independent video game publisher, is hoping to shore up its eroding dominance in the sports video game market, announcing that it has signed a 15-year deal giving it the exclusive right to use the ESPN brand in games.

The New York Times says (18 Jan) that under the agreement Electronic Arts will pay $US750 million to $US850 million for the right to use the ESPN brand for games based on at least nine sports, including baseball, basketball and football, according to people briefed on the contract's terms. Some of that money will pay for commercials promoting the games on ESPN channels.

The paper says that beyond the deal's length, which is substantial by industry standards, it comes at a significant juncture in the video game business. In the last year, Electronic Arts' long-dominant position selling sports games had come under assault amid heavy price competition.

The challenge came from Take-Two Interactive Software, which teamed up with Sega to sell sports titles at cut-rate prices, forcing Electronic Arts to lower its prices as much as 50 percent.

The NYT says the games from Take-Two and Sega were built around the ESPN brand name. But when the three-year relationship between ESPN and Sega ends in 2006, the rights to the use the sports network's brands will go to Electronic Arts.

Video game industry analysts said the deal indicated that Electronic Arts took the threat seriously and was responding like an awakened giant.

"It's an absolute show of strength and a consolidation of power," said William Lennan, an analyst with W. R. Hambrecht.

Accordiong to the NYT.,the deal with ESPN - a joint venture between the Walt Disney Company and the Hearst Corporation - comes one month after Electronic Arts announced an exclusive five-year deal with the National Football League to design games using its players, stadium and uniforms. That deal was worth more than $300 million.

Industry analysts said brand relationships were a crucial part of the success of video games because they lent authenticity to the playing experience. That could be good for Electronic Arts, but it may be bad for consumers.

Electronic Arts had about 63 percent of the $1.23 billion United States market for sports games in 2004 according to figures from NPD Funworld, a research firm. founder: a trip to the edge of space

The New York Times, in an 18 January report, says that Jeff Bezos sells books and practically everything else through, the company that made him a multibillionare, but that he has now announced that he would build an "aerospace testing and operations center" for his space company, Blue Origin in Texas, on 165,000 acres that he has bought.

The paper says technology zillionaires have already bolstered the privately financed space race. Paul Allen, a co-founder of Microsoft, paid the bills for aircraft designer Burt Rutan to develop SpaceShipOne, the craft that won the $US10 million Ansari X Prize last year for reaching suborbital space. Others, including John Carmack, a legendary game designer, and Elon Musk, creator of PayPal, have formed ventures of their own.

But few have been watched as closely as Blue Origin, which Mr. Bezos founded in Seattle and which has operated in deepest secrecy. The company says flight operations could begin in six to seven years with a planned "sub-orbital space vehicle that will take off and land vertically to take three or more astronauts to the edge of space. Blue Origin says its facilities could help make West Texas a center for private, space-related activities.

Verizon and Yahoo team up to offer broadband service

In the US, Verizon Communications, the country's largest telecommunications company, has announced that it plans to work with Yahoo, the internet search engine, to introduce a portal for its high-speed internet service.

The New York Times reports (18 Jan) that the venture comes as competition for broadband customers between telephone and cable companies continues to heat up. It says Yahoo is also looking for ways to attract visitors to its web sites and reduce its reliance on advertising revenue.

In the multiyear deal, Verizon's 3.3 million broadband customers will be able to use the co-branded portal at no additional charge. Yahoo will receive an undisclosed share of Verizon's broadband subscription fees, and Verizon will get a share of the advertising revenue generated by the portal.

The Yahoo venture comes on top of a similar arrangement Verizon has with MSN, the Microsoft portal.

The paper says that When the Yahoo portal is introduced this summer, Verizon customers will be offered a choice of Verizon, Yahoo or MSN portal as their home page, with the arrangement a less ambitious version of the venture Yahoo has had with SBC Communications since September 2002, where SBC invested $300 million in Yahoo.

According to the NYT., SBC and Yahoo are also expanding their partnership. Yahoo is now designing portals for SBC's IP television service and mobile phone service. This will let customers use one ID and password on a variety of electronic devices.

In the meantime, Yahoo hopes to increase revenue from its premium services by making a more direct connection to millions of Verizon customers. Yahoo currently charges fees for e-mail accounts with extra storage and antispam software, commercial-free Internet radio and video services streamed to consumers' computers.

Another satellite problem for Intelsat

The satellite operator Intelsat has lost a satellite after an electrical power problem, less than two months after electrical problems ruined another satellite.

The New York Times and Reuters reeport (18 Jan) that the event is the latest blow for Intelsat after a satellite malfunction in November threatened to abort the company's planned $US3.1 billion sale to private-equity investors.

The equity group, Zeus Holdings, which has the right to pull out of the deal because of the latest event, is evaluating the impact of the satellite failure, accordsing to Intelsat.

Intelsat said it and the Lockheed Martin Corporation, the maker of the satellite, were working together to identify the cause of the problem, but Intelsat said that it thought there was no connection between the latest event and the loss of its IA-7 satellite in late November, because the two satellites were made by two different companies and had different designs.

Microsoft's Gates wants meeting with Brazil's Lula

Microsoft is lobbying Brazil's government to agree to a meeting between the company's chairman, Bill Gates, and President Luiz Inacio Lula da Silva at the World Economic Forum next week.

The New York Times reports (17 Jan) that Brazil has taken a prominent role in the so-called free software movement, an effort that champions free computer operating systems like Linux as an alternative to Microsoft's Windows program.

The paper says that, tired of paying costly licensing fees to companies like Microsoft, Brazil, the world's eighth-most wired nation, has told agencies in its sprawling federal bureaucracy to move to Linux and free software programs that run on it.

This year, the government will try to get private citizens to make the switch. It will partially subsidise the purchase for lower middle-class people of 1 million computers running Linux along with 25 other open source programs.

The NYT says an effort by Microsoft to arrange a meeting between Gates and Lula could mark a shift in strategy for dealing with Latin America's largest country.

Last year, it sued Amadeu for saying the company was like a drug pusher who gives free samples to get consumers hooked and then starts charging for the product. Microsoft dropped the suit after Amadeu said he was just repeating what he learned in economics textbooks.

Google releases photo organising software

Search engine leader Google has just released free software for organising and finding the hundreds or thousands of digital photos often stored on a computer's hard drive,using technology developed by Picasa, which Google bought last year.

The New York Times/AP report (18 Jan) that the new software will try to make keeping a photo collection and editing pictures simple even for beginners. Rather than requiring users to import individual photos from their drives, the Picasa software automatically detects them as they are added -- whether sent via e-mail or transferred from a digital camera.

The paper says Picasa tries to do away with complexities such as file names and folders. Photos are dumped into one bucket, sorted by date, but the software can quickly pull photos from date ranges or events as requested. In the new version, users will be able to mark the best pictures with a gold star and search only for those.

Picasa initially cost $US29 but became a free download after its acquisition by Google. Version 2 of Picasa will also be a free download.

Accordsing to the NYT., Picasa is not Google's first venture onto the desktop. Though the company got its start as an internet search engine, Google released in October a desktop search tool that automatically records e-mail, Web pages and chat conversations and finds Word, Excel and PowerPoint files stored on the computer.

Picasa 2 is available only for Windows computer and requires Microsoft's Internet Explorer browser, version 5.01 or higher, or Mozilla Firefox.

Computer worm exploits Tsunami to spread virus

A mass e-mail posing as a plea for aid to help the victims of last month's Asian tsunami disaster is actually a vehicle for spreading a computer virus, web security firm Sophos has warned..

The New York Timesa/AP reports (18 Jan) that the worm appears with the subject line: ``Tsunami donation! Please help!'' and invites recipients to open an attachment called ``tsunami.exe'' -- which, if opened, will forward the virus to other Internet users.

It could also initiate a denial-of-service attack against a German hacking Web Site, accordiong to Sophos, in which the site's server would be bombarded with messages, putting it out of action.

Sophos added that it had so far only received a small number of reports of the worm, which it said was not the first to try to take advantage of the Indian Ocean catastrophe in order to spread.

Sophos recommends recipients delete the mails and do not open the attachments.

AMD'S $US30 million Q4 loss - Still Lagging Intel

Advanced Micro Devices (AMD) has posted a fourth-quarter loss, as the chip maker converted and retired debt and faced stiff competition and low prices in its business that supplies flash memory chips for cellular phones. reports (18 Jan.) that the loss capped a year in which AMD found itself leading Intel in the development of advanced microprocessors -- the brains of computers -- but could not make a dent in its much larger rival's market dominance or profitability.

Still, AMD reported strength in its processor unit, with sales increasing 26 percent over the fourth quarter of 2003. reports that for the three months ended 26 December, AMD lost $US29.96 million, 8 cents per share, compared with a profit of $US43.19 million, or 12 cents a share, in the same period in 2003. However, fourth-quarter sales rose 5 percent to a record $1.26 billion from $1.21 billion in 2003.

Last week, Intel reported record sales, though company executives said it also found the flash memory business to be challenging. Intel wasn't as badly bruised because flash makes up less than 7 percent of its revenues, compared with about 50 percent for AMD.

For the year, AMD earned $91.16 million, or 25 cents per share, on sales of $5 billion, compared with a loss of $274.5 million, or 79 cents per share, on sales of $3.52 billion.

Yahoo's Q4 profit nearly triples on ad sales

Internet giant Yahoo's fourth-quarter profit nearly tripled and easily beat Wall Street expectations, reflecting a worldwide boom in online advertising and the addition of some 800,000 new paying customers. reports (18 Jan.) that Yahoo,which it says operates the world's most popular internet destination, has announced that it earned $US373 million, or 25 cents per share, for the three months ended 31 December. Excluding profits from the sale of some investments, the company earned $187 million, or 13 cents per share, up 149 percent from $75 million or 5 cents per share in the same quarter of 2003.

Excluding so-called ``traffic acquisition costs,'' Yahoo revenue was $785 million for the quarter, still 54 percent more than the final quarter of 2003 and substantially higher than analysts' expectation of $756.14 million. ``Traffic acquisition costs'' are revenues Yahoo shares with advertisers who reach the company's web properties through search engines other than the company's own.

Annual revenue in 2004 was $3.575 billion, a 120 percent surge from 2003. After subtracting traffic acquisition costs, sales were $2.6 billion, a 77 percent increase from 2003.

Analysts said Yahoo's performance last quarter could be a precursor to a strong 2005 -- not only for Yahoo but for other companies that rely on online advertising. reports that nalysts say Yahoo is still a high-risk investment as young company in an emerging niche. But, they also commented that the world's largest companies now consider online advertising as important as television, newspaper and magazine advertising, which could minimize the boom and bust pattern of e-commerce companies in the last half-decade.

The report says analysts believe 2004-2005 will prove to be an inflection point for Yahoo and the online advertising industry in general that finally pushes internet marketing into the mainstream and sets the stage for robust growth, expansion, and market share gains.

And, Yahoo senior executives were particularly bullish about advertising outside of the United States. Foreign revenue in the fourth quarter was $303 million, a 156 percent increase from the same period of 2003, and nternational revenue for the year was $921 million, a 241 percent increase from 2003.

The reported that Yahoo, with 7,600-employees, ended the year with 345 million unique users, up 24 percent from the fourth quarter of 2003. It had 8.4 million customers who paid for ``premium'' services such as expanded e-mail storage, up 800,000 from the third quarter and up 3.5 million from the same time a year ago.

Oracle: Few losses among PeopleSoft customers

Oracle's CEO Larry Ellison has predicted that the company will retain at least 95 percent of the customers swept up in its $US10.3 billion takeover of PeopleSoft, reflecting his belief that the contentious deal will result in a happy marriage. reports (18 Jan.) that the perennially confident Ellison drew the rosy picture during his first meeting with reporters since Oracle completed its acquisition of PeopleSoft earlier this month.

The report says the optimistic forecast is based largely on Oracle's historical customer retention rate -- a trend that the racle CEO doesn't expect to change despite the misgivings that many of PeopleSoft's 12,750 customers expressed during the 18 months that Oracle stalked its rival. says the often strident objections of PeopleSoft customers spurred the US Department of Justice to file a lawsuit seeking to block the takeover -- a challenge that Oracle overcame in a dramatic trial that highlighted the company's prickly rivalry with PeopleSoft. The online publication says the tensions resurfaced again last week when Oracle announced plans to fire 5,000 employees, or about 9 percent of the combined work force. The long anticipated cuts prompted many PeopleSoft employees to don anti-Oracle buttons that became staples during the takeover battle.

Reportedly, Oracle is counting on the PeopleSoft takeover to become a financial springboard to higher earnings -- something that won't happen unless it can retain virtually all of the affected customers, says

The company already has promised investors that it will boost its earnings by about $US400 million in the fiscal year ending in May 2006. That projection assumes the company will continue to collect a steady stream of revenue for upgrading and maintaining the products sold to PeopleSoft customers in previous years. further comments that the stakes for PeopleSoft customers are high, too, because they have millions of dollars tied up in the business applications software that help manage their finances, personnel, suppliers and customer relationships. Hoping to offer some more reassurance, Oracle this week hosted a conference devoted to customer concerns, which drew about 400 customers to Oracle's campus and another 19,000 people listened in to a live broadcast providing on the internet and phone lines.

FBI stops using Carnivore wiretap software

The online news service reports (18 Jan.) that the FBI has effectively abandoned its custom-built internet surveillance technology, once known as Carnivore, designed to read e-mails and other online communications among suspected criminals, terrorists and spies, according to bureau oversight reports submitted to Congress.

Instead, according to, the FBI has said it has switched to unspecified commercial software to eavesdrop on computer traffic during such investigations and has increasingly asked internet providers to conduct wiretaps on targeted customers on the government's behalf, reimbursing companies for their costs.

The online publication says the FBI performed only eight internet wiretaps in fiscal 2003 and five in fiscal 2002; none used the software initially called Carnivore and later renamed the DCS-1000, according to FBI documents submitted to Senate and House oversight committees. The FBI, which once said Carnivore was ``far better'' than commercial products, said previously it had used the technology about 25 times between 1998 and 2000.

Experts said the life span of roughly four years for the bureau's homegrown surveillance technology was similar to the shelf life of cutting-edge products in private industry.The experts said the FBI originally built its own surveillance system because commercial tools were inadequate.

New phones help Motorola's profits

Motorola rode strong sales of its 20 new cell phones to a 34 percent increase in fourth-quarter profits, capping a resurgent year under new CEO Ed Zander, reports (18 Jan.)

The online publication says that both earnings and sales just reported by the world's second-largest handset maker behind Nokia handily outpaced Wall Street's expectations.Net earnings for the last three months of 2004 were $US654 million, or 27 cents per share, compared with $489 million, or 20 cents per share, a year earlier.

Excluding results from discontinued operations -- the money-losing chip business it spun off into Freescale Semiconductor last month -- earnings were 28 cents per share, which was 4 cents better than the consensus estimate of analysts.

In addition,revenues rose 27 percent to $8.84 billion, easily topping the $8.46 billion predicted by analysts. A year earlier, revenues were $6.94 billion.

The company report an``enthusiastic'' reception to the new portfolio of products, particularly its much-advertised, ultra-thin Razr handset, which has greatly exceeded sales expectations.

Motorola said the company hadpicked up about three percentage points of market share in the quarter, solidifying its No. 2 position behind Nokia and giving it a five-point lead over No. 3 Samsung Electronics Co. Ltd. reportys that analysts have said that both Motorola and Nokia appear to have gained at the expense of No. 3 Samsung, where profits fell 2 percent in the fourth quarter as it was slow to get new handsets to market.

For the full year, Motorola had a net profit of $1.54 billion, or 64 cents a share, up 72 percent from $893 million, or 38 cents a share, a year earlier. Revenues climbed 35 percent to $31.3 billion from $23.2 billion.

IBM finishes strong in 2004

IBM topped fourth-quarter expectations by a healthy margin, with strong overseas sales and a weak dollar helping to generate a profit of $US3.04 billion, repoerrts (18 Jan.)

The profit, which amounted to $1.80 per share, was up sharply from a year ago, when IBM posted a net income of $2.71 billion or $1.55 a share for the final three months of 2003. says IBM's fourth-quarter revenue rose 7 percent to $27.67 billion compared with the year-ago tally of $25.91 billion. About 4 percentage points of the gain was driven by the rising value of the euro and other currencies against the dollar -- which makes US products less expensive overseas and foreign sales more valuable when converted back to dollars.

The report says IBM hardware revenues increased 4 percent to $9.5 billion, including $3.5 billion from the personal computer business which IBM agreed to sell to China's Lenovo Group in December. As part of that deal, IBM will hold a 20 percent stake in a new company combining Lenovo's PC business with IBM's.

Adobe's new president, growth continues unabated

Adobe Systems has just promoted one of its longtime executives, Shantanu Narayen, to president and chief operating officer, with the shift in duties designed to free the executive up to focus on long-term strategies and growth -- and specifically to spend more time meeting with corporate customers as Adobe seeks to boost sales to large businesses.

The Mercury News reports (18 Jan.) that Adobe has not had a COO since 1998.

The paper says that in his previous roles and under Narayen's leadership, Adobe had bolstered sales by bundling software offerings such as Photoshop and Illustrator into the single Creative Suite product.

Adobe is reportedly looking for growth in selling document-management services to large corporations through its ``Intelligent Documents Platform.'' In its 2004 fiscal year, the Intelligent Documents business grew 50 percent to account for about $US100 million of Adobe's $1.67 billion in sales.

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Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.





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