IBM PC Division No Profits in nearly 4 years

IBM said this week that the personal computer business it was selling to the Lenovo Group of China had not made a profit for three and a half year,
with a loss of $US139 million in the six months ended 30 June.

The New York Times/Bloomberg report that IBM's PC division had losses of $258
million in 2003, $171 million in 2002 and $397 million in 2001, according to a
filing with the Securities and Exchange Commission. During that period, the
PC division had sales of $34.1 billion.

The paper says IBM does not typically reveal results for its PC division, which is part of its hardware group, which includes more profitable servers.
I.B.M. wants to improve its profit margin by selling the PC unit to Lenovo for $1.25 billion, vaulting
Lenovo to third from eighth among global personal-computer makers.

Dell, the world's biggest maker of PC's, has said it is the only large company that is consistently profitable in the computer business. I.B.M. is the third-largest PC maker, behind Hewlett-Packard.

Shares of I.B.M. had climbed 12 cents to close at $98.30 on the New York Stock Exchange and had risen 6.1 percent in 2004. Shares of Lenovo, China's biggest PC maker, dropped 5 cents to close at 2.38 Hong Kong dollars, or 31 cents, on 30 December. The shares had fallen 11 percent since the deal was announced on 7 December.

Oracle Fires Top PeopleSoft Executives

Oracle has fired PeopleSoft's co-president and chief financial officer, Kevin T. Parker, and three other top executives, a day after assuming control of the rival software maker in a $S10.3 billion takeover.

The New York Times/Bloomberg report that Oracle terminated W. Phillip Wilmington, co-president; Nanci Caldwell, chief marketing officer; and James Shaughnessy, general counsel, according to a regulatory filing. Oracle named its co-presidents, Charles E. Phillips Jr. and Safra A. Catz, and its chief financial officer, Harry L. You, to the PeopleSoft posts.

The paper says Oracle officially took control last Wednesday, ending an 18-month takeover battle, with the merged company now having more than 22,750 customers and more than 53,800 employees.

Internet Use Cuts Into TV Viewing and Socialising

The average internet user in the United States spends three hours a day online, with much of that time devoted to work and more than half of it to communications, according to a survey conducted by a group of political scientists.

The New York Times reports that the survey found that use of the Internet has displaced television watching and a range of other activities. Internet users watch television for one hour and 42 minutes a day, compared with the national average of two hours, according to the Stanford Institute for the Quantitative Study of Society, a research group that has been exploring the social consequences of the internet.

A 2000 study by the researchers that reported increasing physical isolation among internet users created a controversy and drew angry complaints from some users who insisted that time they spent online did not detract from their social relationships. However, the researchers said they had now gathered further evidence showing that in addition to its impact on television viewing, internet use has lowered the amount of time people spend socialising with friends and even sleeping.

According to the study, an hour of time spent using the internet reduces face-to-face contact with friends, co-workers and family by 23.5 minutes, lowers the amount of time spent watching television by 10 minutes and shortens sleep by 8.5 minutes.

The paper says that the researchers acknowledged that the study data did not answer questions about whether internet use itself strengthened or weakened social relations with one's friends and family, and the latest study also found that online game playing has become a major part of internet use.

Overall, 57 percent of Internet use was devoted to communications like e-mail, instant messaging and chat rooms, and 43 percent for other activities including Web browsing, shopping and game playing. Users reported that they spent 8.7 percent of their Internet time playing online games.

The NYT report that the study found that as much as 75 percent of the population in the US now has access to the internet either at home or work, and also found that junk e-mail and computer maintenance take up a significant amount of the time spent online each day.

The study, the latest in an annual series, was based on a survey of 4,839 people between the ages of 18 and 64 who were randomly selected. Respondents were asked to create detailed diaries of how they spent their time during six randomly selected hours of the previous day.

AT&T teams with Sprint to deliver mobile phone services

AT&T is expected to shortly announce details about how it plans to offer mobile phone service using Sprint's cellular network, according to The New York Times.

The paper says that Sprint, which said earlier this year that it would work with AT&T to offer cellphone service to AT&T's business customers, is fast solidifying its position as the top reseller of telecommunications services. Because it is not affiliated with the regional Bell companies, it has been able to build a strong business as a wholesaler of network capacity to the Bells' rivals.

AT&T plans to start marketing Sprint's cellphone service as its own in the first half of 2005, after it wins back the rights to use the AT&T Wireless brand from Cingular Wireless, which acquired AT&T Wireless in October. Some of the particulars of how it will handle billing and operations for the new mobile service will be spelled out soon, according to executives from Sprint, but AT&T is not expected to announce pricing for its plans yet.

The NYT says buying services from Sprint is a natural choice for AT&T and other companies needing to expand into cellular or fixed-line phone service, but not wanting to invest in building a new network. Sprint has an abundance of wireless spectrum space to sell and a national fiber-optic network that can carry Internet-based phone calls and data.

Sprint already provides cellphone service to 2.8 million customers in the US through wholesale agreements with Virgin Mobile, Qwest Communications and other carriers. The agreements generate more than $US400 million in revenue a year for Sprint, according to its chief operating officer.

eBay Drops Microsoft's Passport

The Mercury News/Reuters report that Microsoft has announced that that eBay will soon drop support for its Passport service, originally intended to make the world's biggest software maker the gatekeeper of web identities.

However, the paper reports that Microsoft has said it will keep Passport up and running, despite the loss of one of its earliest and most important partners. eBay said in a message to users last Wednesday that late this month it will stop allowing them to sign on to its web marketplace through Passport.

The paper says Passport allows users to store such things as passwords and credit card information for use across the web, and with its launch in 1999, Microsoft aimed to to insert itself in a key position in e-commerce transactions. But, the service has since fallen short of that goal due to several significant hurdles -- including security and privacy concerns.

The Mercury News says the move by eBay, far and away the most popular U.S. shopping web site, ends a partnership forged in 2001 and underscores consumers' unwillingness to embrace Passport outside Microsoft's own MSN internet network.

The competitive response to Passport came in the form of the Liberty Alliance, a consortium of companies including Sun Microsystems, Hewlett-Packard, American Express and Sony. The group's aim was to create standards for identifying people on the web and to promote services to rival Passport.

The paper says privacy groups and antitrust regulators weighed in with concerns, and in 2003 security experts unearthed a flaw that could have allowed scam artists to hijack older Passport accounts. Retailers also balked at the prospect of having Microsoft at the centre of online transactions and worried that it might one day try to take a cut.

Passport currently has 200 million users, many of whom use it to sign on to Microsoft's e-mail and instant messenger products.

Electronics Industry Battles for the Living Room

The Mercury News/Reuters repoprt that the Consumer Electronics Show (CES) starting this weekin Las Vegas will set the agenda of what's in store in 2005 for the digital home-owner -- from ultra-high-definition television screens to music and video recorders and other networked appliances.

In previewing the show, the paper says that with the living room - once the most technologically simple part of the average home - is now a high-tech battleground as the consumer electronics industry seeks to digitise home entertainment and make it available anywhere, anytime.

According to the paper, the four-day conference, the high-tech industry's largest annual gathering in the United States, will draw 120,000 technologists and retailers for a vast display of devices, from 102-inch-wide flat-panel TVs -- the world's biggest -- to postage-stamp-size hard-disks for music players or phones.

Market experts say the big trends are home improvement, in-your-pocket-entertainment and personal video choice. Home improvement refers to the increasingly affordable home-theater systems that combine flat panel displays, surround-sound audio and personal video recorders.

The Mercury News reports that in recent years, the Consumer Electronics Show has seen an explosion of innovation from computerised wristwatches to satellite radios and internet-enabled ovens to digital frying pans, with Samsung, Toshiba and RCA also among those showing the first true, 1086-pixel high-definition flat-panel TV screens

The paper says at stakeis a chunk of the flat-panel television market, which is expected to grow to $US15 billion in 2005 from $10 billion. Market opbservers also say that rival camps of manufacturers will square off at the show over the next-generation DVD video standard -- a replay of the Betamax vs. VHS videocassette wars of the 1970s, with the future of the home video industry, increasingly crucial to Hollywood's bottom line, at stake.

The Mercury adds that consumers also face potential confusion as new home entertainment appliances incorporate features that once were sold as separate devices.Flat panel displays may include a personal video recorder, or come with an insertable access card for cable television, instead of a cable converter set-top box, reducing living room clutter.

Blogs gaining ground in US

The Mercury news/AP report that readership of online journals known as blogs grew significantly in 2004, driven by increased awareness of them during the USpresidential campaign and other major news events, according to a study justreleased.

Twenty-seven percent of online adults in the US said in November they read blogs, compared with 17 percent in a February survey by the Pew Internet and American Life Project. Blogs that covered the Asian tsunami disaster and relief efforts were bound to boost readership further,according to the project's director.

In the past week, blogs have shared information on giving money and finding missing family members, and several posted first-person narratives and photos from the affected areas. The web of links that are fundamental to blogs made it possible to quickly disseminate information that otherwise would have remained obscure.

Earlier in the year, politics was what drove readers to blogs, and Time magazine even named its first Blog of the Year, crediting the Power Line blog created by three lawyers for challenging mainstream media and questioning the validity of documents behind a ``60 Minutes'' report on President Bush's National Guard service. CBS News anchor Dan Rather later apologised for airing the report.

The Mercury reports that though blog readership jumped, the percentage of online Americans who write blogs grew only slightly -- to 7 percent in November, up from 5 percent early in the year. The survey showed that blog creators tend to be male, affluent, well-educated and young; 70 percent of them have high-speed connections at home, and 82 percent have been online at least six years.

Despite the attention to blogging, a large number of Americans remain clueless -- only 38 percent of Internet users know what a blog is: online agglomerations of ideas, information and links, usually presented with the most recent postings on top, and often offering a mechanism for visitors to post comments.

The survey, based on random telephone calls with 1,861 internet users conducted in November, has a margin of sampling error of plus or minus 3 percentage points.

Spyware, worms plague internet

Computer worms raced around the world, leaving behind tools that spread spam, scammers sent e-mail to trick bank account holders into revealing passwords,rogue programs known as ``spyware'' hijacked web browsers and crippled computers -- these were among the top internet threats of 2004 as the perpetrators grew smarter and more sophisticated, driven more than ever by economic gains, reports The Mercury News/AP.

And while technology to combat such threats has improved, experts concede that's not enough to address what's bound to emerge in 2005, reports the paper.

The Mercury says that 2004 saw more industry attention to security: Microsoft upgraded its flagship Windows XP operating system, closing many loopholes and turning on a built-in firewall to thwart attacks. America Online gave away free security tools, and computer makers began installing software to combat spyware.

Dozens of products and services were developed to attack ``phishing'' -- e-mail pretending to be from trusted names such as Citibank or Paypal, but directing recipients to rogue sites.

However, the Mercury says security experts say that developers of malicious code have gotten better at automating their tools, as well as sharing information about vulnerabilities and techniques to exploit them through underground message boards and chat rooms. The experts say no longer are bragging rights the primary motive, with today's worms and viruses far more detailed, and with specific attacks directed at individuals and businesses for the purpose of economic, ill-gotten gains.

The report says that Virus writers have found new ways to infiltrate computers and networks, bypassing the protections inspired by their earlier methods of attack. For instance, with more network administrators blocking attachments to stop viruses from spreading via e-mail, hackers managed in June last year to covert popular Web sites into virus transmitters by taking advantage of known flaws with Microsoft products.

Spyware infections, once limited to careless downloads of free software, proliferated in 2004 as security gaps in Microsoft's Windows operating systems and internet Explorer browser were exposed and exploited. These holes were used to slip in programs which can change a browser's home page or pop up endless ads. Some security experts recommended using a non-Microsoft browser like Mozilla Firefox to reduce spyware and other threats.

However, the Mercury says that in 2005, flaws with those alternatives are likely to emerge as they become more popular and more heavily scrutinized. The year could also mean more threats via cell phones, instant messaging software and Internet-based phone systems, as well as desktop search utilities being developed by Microsoft, Google Inc. and others.

Silicon Valley firms lag broader market

The Mercury News reports that in 2004, investors humbled Silicon Valley once again, with shares of the 150 largest local companies dipping -- even though their earnings rose and the broader stock markets finished the year higher.
The paper says the rebuke stung because it came just as Silicon Valley's tech economy appeared to be recovering from the dot-com meltdown with a rebound in stocks in 2003.

Many analysts attributed 2004's poor performance to a sea change in the way investors view technology stocks. These investors increasingly see tech as a mature industry promising only modest growth -- an industry that must be
carefully picked over to find high-fliers like eBay or Google, according to the paper.

Last Friday, the Nasdaq composite index closed at 2,175.44, up 8.6 percent in 2004. The Dow Jones industrial average finished at 10,783.01, up 3.2 percent for the year. And the broader Standard & Poor's 500 index ended at 1,211.92, up 9 percent.

By contrast, the Mercury News' index of the largest 150 companies in Silicon Valley fell 1.9 percent in 2004, and followed a blistering rise of 73 percent in 2003.

The paper says this occurred even as tech companies delivered record sales and profits. During the first three quarters of 2004, the combined profits of the 150 largest companies in the valley grew 515 percent to $US22.2 billion, from $3.6 billion during the same period in 2003.

JVC preps dual DVD/Blu-ray disc

Japanese consumer electronics company JVC has created an optical disc that contains both regular DVD and Blu-ray Disc zones.

The Register in the UK reports that the announcement comes a month after Toshiba and Memory Tech, both members of the rival HD DVD camp, unveiled a similar dual-format disc

Windows XP users hit by new Trojan

A new Trojan horse - named Phel - that punishes users of Microsoft Windows XP operating system has hit, according to UK online publication The Register.

The Register reportys that security software firm Symantec has issued a bulletin warning Windows XP users to be on the look out for the program, which is distributed as an .html file. The malicious code can attack systems running XP Service Pack 2. The vulnerability was first found in October, and Microsoft is busy trying to catch up to it.

Microsoft has said it is taking this vulnerability very seriously, and an update to correct the vulnerability is currently in development. The security update will be releasedwhen the development and testing process is complete, and the update is found to effectively correct the vulnerability."

Symantec warns that users will see two Internet Explorer windows pop up when an .html file with Trojan.Phel.A is opened. If the code does its worst, the Trojan will automatically be executed every time a Windows user turns on his machine.