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October 31, 2006

Students rank companies for diversity

Posted by Kristi Heim at 3:25 PM

Minority students ranked Google as their ideal employer in a survey this year by Universum. The company polls undergraduate and MBA students every year to find out what they want in a future employer. Turns out that Google placed first overall, followed by Walt Disney, Goldman Sachs, McKinsey and Microsoft. The results are based on surveys of about 13,000 minority students from 115 schools in the U.S.

Five out of the top 10 companies were tech companies. See the full results here.

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The price of clean water

Posted by Kristi Heim at 2:51 PM

In his discussion here about how to make globalization work, Nobel laureate Joseph Stiglitz talked about the importance of assets like a clean environment. Because the environment isn't mobile, like money or factories, protecting it can help shore up a region's competitive strength and attract workers who value it. I remembered the story of a high-powered U.S. executive who kept getting sick on the polluted air in Shanghai and finally packed it in.

What if the value of nature could be quantified like any other asset? The Nature Conservancy, World Wildlife Fund and Stanford University are teaming up on a new project to calculate nature's economic benefits, looking at clean water and air, soil fertility and other factors.

Natural systems should be protected for their economic value, they contend. One study along those lines found that the economic benefits of conserving forests in Paraguay exceeded the benefits of farming the same land, for example.

The Natural Capital Project starts in three pilot areas -- the Eastern Arc Mountains of Tanzania, the upper Yangtze River Basin in China and the Sierra Nevada region in California. It aims to measure the economic value of "ecosystem services" and incorporate the data into policy decisions.

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MSFT talking to financial community in November

Posted by Benjamin J. Romano at 2:43 PM

Microsoft has at least three meetings with the financial community scheduled in November, in addition to its annual shareholders meeting.

Nov. 7: Peter Moore, corporate vice president, interactive entertainment business, in Microsoft's Entertainment and Devices Division, will speak to BMO Capital Markets Interactive Entertainment Conference at 6:30 a.m. Pacific time. Execs from Sony and Nintendo are on the agenda for this one, too.

Nov. 14: Microsoft's annual meeting of shareholders in Bellevue beginning at 8 a.m. Pacific time.

Nov. 17: Baris Cetinok, director of product marketing and management with Microsoft's Office Live, presents as part of the company's Live Meeting series. 11 a.m. Pacific time.

Nov. 29: Chris Liddell, CFO, speaks at CSFB Technology Conference beginning at 7 a.m. Pacific time.

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Wi-Fi is like a shot of espresso

Posted by Tricia Duryee at 2:28 PM

Wi-Fi is addictive, according to a new survey conducted online by Kelton Research among adults who have broadband Internet access at home.

The survey found out a number of, er, interesting things, such as:

-- Almost nine out of 10 Americans surveyed said they would rather go without Starbucks for a year than give up their Wi-Fi connection (89 percent vs. 11 percent).

-- 83 percent percent agree that using someone else's Wi-Fi without that person's knowledge is stealing.

-- Eight out of 10 said it would be worse to lose their Wi-Fi for a week than for their team to lose the big game this weekend. (81 percent vs. 19 percent).

The next logical question is: What if you get your Wi-Fi at Starbucks? Could you give up Starbucks for a year then?

Just to be clear, the survey was commissioned by the Wi-Fi Alliance, a global, non-profit industry association devoted to promoting wireless.

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Sinegal and others address entrepreneurs

Posted by Tricia Duryee at 2:07 PM

Costco's Jim Sinegal and Chase Franklin, the founder of Qpass, the company sold to Amdocs earlier this year, will be just two of the noteworthy businessmen addressing a crowd at the Northwest Entrepreneur Network's Entrepreneur University on Thursday.

The daylong event is designed to allow budding entrepreneurs to learn from some of the best. In addition to Sinegal and Franklin, others speakng include Nick Hanauer, the co-founder and chairman of aQuantive; Pete Higgins, partner at Second Avenue Partners; Jonathon Roberts, a partner at Ignition Partners; Dan Sheeran, senior vice president of music and video at Real Networks; and David Weld, CEO, SeaTab Software.

The event has two tracks, one focused on early-stage entrepreneurs just starting up and a second track for those ready to accelerate their business.

The event is Thursday at the Sheraton Hotel in Seattle. Members of the NWEN can attend for $275; non-members are $375.

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New RFID implant for humans

Posted by Kristi Heim at 1:48 PM

The latest scheme for RFID tags is another medical application for microchips implanted in humans. A St. Paul company says it received a U.S. patent last week for a "glucose-sensing RFID implantable microchip" that could allow diabetics to monitor their blood sugar levels.

The microchip injected under a person's skin has a glucose sensor, a passive transponder and an integrated circuit. It can be scanned with an RFID reader to determine blood sugar levels, avoiding the usual method of pricking a finger to measure a drop of blood.

The maker of the technology calls itself Digital Angel, a company best known for producing electronic tags for pets, fish and livestock. Digital Angel is a subsidiary of Applied Digital, the company that makes the VeriChip, the first FDA-approved human implantable microchip.

While it hails the patented chip as a breakthrough, the company says it has "extensive work" ahead before it can gain FDA approval. Digital Angel says it "foresees expansion beyond the human market" because apparently animals have a diabetes problem, too. Meanwhile, some humans are already experimenting with the chips on their own, while others are increasingly worried about such technology.

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Software parachutes into suburban Chicago

Posted by Benjamin J. Romano at 12:51 PM

In one of what will likely be a bounty of publicity stunts from Microsoft in the coming months, the company distributed 2,000 copies of its new accounting software to the good people of Willow Springs, Ill., population 6,000.

The Chicago Sun-Times offered this description of Microsoft's unorthodox delivery method:

Ed Hodina walked to the curb to pick up his newspaper early Monday and found dozens of miniature parachutes dangling from the trees lining his Willow Springs street.
"I was curious, that's for sure," said Hodina, owner of the 55-year-old Willow Springs Ace Hardware.
Attached to the toy-like parachute was a copy of Microsoft Accounting Express 2007.

It turns out Microsoft's elite airborne software marketing division didn't actually drop the small-business focused accounting program from a C-130, but tossed them from a car. Here's the rest of the story, which describes an advertising campaign highlighting the "entrepreneurial spirit of small town America." Willow Springs, with 85 small businesses, filled the bill.

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Halo postponed until the money comes in

Posted by Kim Peterson at 12:05 PM

Microsoft and its film partners have postponed a movie based on the "Halo" video-game series -- an effort that was the company's most ambitious foray into Hollywood to date.

The announcement comes two weeks after the film lost support from Universal Pictures and 20th Century Fox, who backed out of an agreement to fund the deal. Microsoft said in a statement that it postponed the movie because it wants to bring "a first-class film to the big screen." The company said that though it will take longer now to make the movie, the final film will be "well worth the wait."

Microsoft had said that it was looking for new backers for the project, and Variety reported last week that the company was talking to Warner Bros. and Paramount, as well as some private investors. One could guess that those talks didn't lead to anything, given the announcement today.

Variety also said that Universal and Fox had originally given the movie a $128 million budget, allowing Microsoft and the producers to collectively gross about 19 percent of the profits. That's a lot of take, especially for a movie with no star power and a first-time director, according to Variety.

The film's script has gone through some serious tinkering and is up for a second rewrite, Variety reported.

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Billionaire's son pleads guilty, but story isn't over

Posted by Kim Peterson at 10:46 AM

Michael Pickens, the son of legendary billionaire Boone Pickens, pleaded guilty to securities fraud on Monday and agreed to a sentence that could be four years and nine months at a minimum or a maximum of five years and 11 months.

Pickens sent hundreds of thousands of phony faxes across the country, each looking like a handwritten note with a hot stock tip on it. The idea was to convince people receiving the faxes that they were privy to a secret way to get rich quick, and apparently the scheme did work to some extent.

One of the companies Pickens promoted was Seattle-based Infinium Labs, a video game company that has since changed its name to Phantom Entertainment. The SEC has charged Infinium's chairman, Timothy Roberts, for authorizing the fraud and for making a $422,500 profit by selling his shares as the stock price increased.

The SEC estimated that Roberts paid Pickens $200,000 in cash and gave him 4 million shares of his own stock. That case is still ongoing in Florida, where Roberts lives.

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Avenue A | Razorfish buys Chinese agency

Posted by Kim Peterson at 10:29 AM

Seattle digital advertising firm Avenue A | Razorfish said today it has acquired e-Crusade, an ad and marketing agency based in Hong Kong and Shanghai. E-Crusade will become a subsidiary of the company, and marks AA|R's first real presence in China.

E-Crusade's clients have included Coca-Cola, Xbox, HSBC and Nike. It has 43 employees, is profitable and expects sales of $500,000 to $600,000 for the rest of this year.

Avenue A | Razorfish has made an initial cash payment of $2.95 million, and said the total purchase price will be paid in cash and based partly on how much profit e-Crusade makes over the next four years.

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October 30, 2006

Where did the Craigslist ads go?

Posted by Kim Peterson at 4:22 PM

Craigslist began charging people to place job ads on its Seattle site on Oct. 22. Job listings now cost $25. Already, there is a marked decrease in the number of ads.

Take the software jobs section, for example.

Friday, Oct. 20: 228 ads
Friday, Oct. 27: 24 ads

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Spring forward, Fall back, RTM Nov. 7?

Posted by Benjamin J. Romano at 3:32 PM

I was over on Microsoft's campus today and I poked my head into Building 9 just to see if the Vista "countdown clock" had been taken down, or perhaps reset at the end of daylight savings time Sunday morning.

It was still there and, in fact, it had a new message: "0008 Days Until Vista RTM!!!" (Two weeks ago it said "0009 Days Until Vista RTM!!!")

Release to manufacturing is the point in the development process when Microsoft hands over the final code for Windows Vista to be pressed onto disks and installed on computer hard drives for sale. Microsoft is aiming to get Vista to its large-volume customers, such as businesses, in November. Broader availability to consumers is scheduled for January.

Remember, the clock's been wrong before, so take its tantalizing message with a grain of salt. (By the way, it's not actually a clock, but rather a simple, one-line electronic reader board that scrolls other messages and trivia questions about Windows.)

If the clock's reading today is correct, that would put RTM -- essentially the end of Microsoft's years of work on the operating system code -- on Nov. 7. Earlier sources had pointed to Nov. 8. And before that, Paul Thurrott had suggested the target was between Oct. 25 (the date indicated when I first saw the clock two weeks ago) and Nov. 8.

In another development making the approach of Windows Vista and Office 2007 more tangible, Microsoft's PR firm said the company is posting images of its new product packaging here.

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Monday news roundup

Posted by Kim Peterson at 10:45 AM

A few items of note for today:

-- RealNetworks adviser Richard Wolpert has become a major investor in Los Angeles-based OGPlanet, a company bringing popular Asian PC games to the U.S. The games will be free, but will make OGPlanet money through in-game advertising and virtual economies, Second Life-style.

Another investor in the venture is Andrew Wright, formerly head of games at RealNetworks. Wright now runs the Redmond-based Smilebox, which is developing digital postcard, e-card and photo album services for users.

-- Zillow president Lloyd Frink discusses the complaint filed against his company by a nonprofit group in his blog. Zillow's "zestimates" are merely a starting point, and not an official appraisal, he writes.

-- Nintendo shows off its video games ... at an AARP event?

-- Fortune magazine spends a day with Costco chief Jim Sinegal, who decides to wear a coffee-stained $12.99 shirt for the occasion. This isn't exactly tech-related, but it's an interesting article nonetheless.

In the 23 years since Sinegal co-founded Costco with Jeff Brotman (now chairman), it has never reported a negative monthly same-store sales result. Yet he's modestly compensated -- Sinegal earned $450,000 in salary and bonus last year, chump change by CEO standards. Add in his stockholdings and he's worth $151 million.

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InfoSpace hires new CFO

Posted by Tricia Duryee at 10:26 AM

Bellevue-based InfoSpace said today that it appointed Allen Hsieh as chief financial officer.

Hsieh has served as interim chief financial officer since April, in addition to his role as chief accounting officer, which he held since 2003.

Most recently, Hsieh was vice president of finance at Terabeam, a provider of fiberless optics communications. Before Terabeam, he was a partner at PricewaterhouseCoopers in its accounting and auditing practice.

In January, CFO David Rostov resigned to pursue other opportunities, the company said. Rostov left following the departure of Victor Melfi, chief strategy officer, who left at the end of 2005.

And, as part of the restructuring announced earlier this month in which the company said it would lay off 250 employees following the loss of a major customer, the company said Chief Administrative Officer Edmund Belsheim Jr. will leave Jan. 1 after six years with the company.

He was the last of the company's leadership from the Naveen Jain era. Jain and other executives were accused of deceiving investors by making InfoSpace look more successful than it actually was at the height of the dot-com bubble.

The company will announce third-quarter financial results on Wednesday.

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October 27, 2006

So 10 minutes ago: A review of the week of Oct. 22

Posted by Mark Watanabe at 4:44 PM

Tech news, earnings edition
No blockbuster news events, but this was the big week for area tech companies to report their quarterly results. Here's a quick roundup: The company that typically draws the most emotional reaction to numbers, Amazon didn't disappoint. Profit was down, but it beat expectations. Both the reaction and the stock price shot up.

Getty Images: There's little doubt that the Internet has rocked the foundations of the advertising industry, and Getty's disappointing results are one testament to it. Kim Peterson explains how, with more dollars going toward online ads, Getty's specialty -- high quality images -- are in less demand, so it's finding it has to shift its business and institute some layoffs.

Microsoft: The numbers scored a trifecta, beating expectations in sales, profit and earnings per share, with Microsoft's server business giving a big push. But, as Ben Romano reports, the reaction was a touch muted because all eyes are on the road ahead, as the company rolls out a closet full of products over the next several months.

Amazon has been known to fiercely protect its intellectual property, especially its One-Click patent, but it's on the other end of two suits filed by IBM , which claimed the Seattle company infringed on five IBM patents. Part of the suit deals with one technology Amazon is known for: making recommendations based on past purchases.

You won't find these coupons in your Sunday advertising inserts. Ben reported that Microsoft, as expected, is offering upgrade discounts to customers who buy PCs before Vista rolls out . The exact amount is up to the PC maker or retailer. Whether they help spur PC sales during the holiday sales is the 64-bit question.

T-Mobile USA
The Bellevue wireless carrier may be in its competitors' shadows when it comes to being at the cutting edge, but it consistently carves out a niche. Now it's doing it with phones designed to kick between Wi-Fi and the cellular network. Tricia Duryee wrote about how the company is attempting to push more subscribers to give up the land line.

F5 Networks
The Seattle Internet traffic management company is one of dozens nationwide being investigated over practices surrounding options-granting. In a story by Kristi Heim, the company said it found errors and may be required to record compensation expense of $30 million over a period of six or more years.

Space shot
Charles Simonyi, one of the most distinguished engineers to come out of Microsoft, is heading to space with Russian cosmonauts on March 9. Brier Dudley reported on his press conference, held in the more terrestrial setting of the Museum of flight.

Another blow for the local biotech industry. Luke Timmerman reports that GlaxoSmithKline is shutting the vaccine-research operation in Bothell that it acquired almost a year ago from Vancouver, B.C.-based ID Biomedical.

Quote of the week
"I might be the first nerd in space."
-- Charles Simonyi in a made-for-sound-bite remark at his Thursday press conference. Not surprisingly, the Slashdot crowd disputes that.

If you missed it
If you have a sense that everything has a mobile component these days, you're probably not imagining it. In our quarterly venture report, Tricia discusses how more money appears headed to communications (read: wireless development) companies..

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Follow the money wirelessly

Posted by Tricia Duryee at 12:06 PM

I ran across a great follow-up to a story I wrote on Monday that detailed an increase in the level of investing in communications companies, which includes wireless, fiber and other telecom ventures, despite a five-year decline.

I wrote that the Venture One/Ernst & Young report showed Washington communications companies -- many of them developing wireless networks and services -- were on track to receive at least as much money this year as last, though there was a downtick this past quarter.

LightReading reported today that of the 39 digital media U.S. startups that received venture capital funding in the month of September, 15 are developing products and services around mobile devices.

That factoid, LightReading said, came from San Francisco-based Rutberg & Co. , which keeps tabs on venture capital and merger events involving digital media companies.

"The pace of venture capital investment in the digital media industry remained brisk in September," Rutberg analyst Peter Daley told Light Reading. "There was significant investor interest in the mobile marketing and advertising category."

The 39 funding rounds that took place during September raised $313 million, LightReading reported. Companies that develop technology that creates, enables, or delivers some kind of mobile content took $153 million of that.

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Zillow targeted with complaint

Posted by Kim Peterson at 11:30 AM

A nonprofit group has filed a complaint against Seattle-based, saying that the online real estate site is so inaccurate when it comes to home valuations that it is causing bigger problems.

The complaint came from the National Community Reinvestment Coalition, which works to try to bring more private money into low- and moderate-income neighborhoods. That group said it founded the Center for Responsible Appraisals and Valuations.

Zillow says the allegations are groundless. Here are some of the key portions in the complaint, which is online here.

Zillow says that most of its home valuations are within 10 percent of the selling price of the home as valued by the owner or a real estate professional, according to the group. But the NCRC did its own audit and found that Zillow came within that 10 percent zone less than a third of the time.

The group also said that Zillow overvalues homes in affluent areas and undervalues homes in neighborhoods that are primarily African American or Latino. That disrupts the NCRC's mission of bringing more private money into underserved areas.

The NCRC also said it was unfair that Zillow gets to freely give estimates while traditional appraisers have to deal with liability issues and reporting and record-keeping requirements.

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October 26, 2006

Gaming companies report earnings

Posted by Kim Peterson at 4:48 PM

This is an apples to oranges to, uh, grapes picture, but the financial reports out today from the three biggest gaming companies are worth looking at together.

First up, Nintendo. The company's profit was up 48 percent in the first half of its fiscal year because the handheld DS player is still flying off the shelves. Nintendo sold 10 million DS units in the first half of the year, up from 3.6 million during the same period last year. It plans to sell 20 million during its full fiscal year -- a shocking number if you think about it.

Nintendo's Wii debuts Nov. 19 in the U.S. for $250. It's pretty much a given that it will sell all of the 4 million it has allocated for the holidays.

Poor Sony. I know, it's weird to feel sorry for a multi-billion-dollar entertainment conglomerate, but the bad news just doesn't stop. The company's quarterly profit plummeted 94 percent for the third quarter, falling to $14 million. Sony was hit hard by the recall of some 9.6 million computer batteries that it made for some of the biggest PC makers out there. On top of that, the company is gearing up for a big price war on flat-screen TVs this holiday.

All of that has precious little to do with the PlayStation 3 system, which goes on sale Nov. 17 in the U.S. for $500 and $600. But Sony has a lot riding on the PS3 -- not just on sales, but on the hope that the console will lead to more money from sales of televisions, accessories and online content. The PS3 could be a bright spot for Sony over the next year, made brighter by the fact that so much else in the Sony universe is dark.

Microsoft announced solid quarterly numbers today, handily beating analysts' expectations with nearly $3.5 billion in profit on $10.8 billion in revenue.

The company said it has sold 6 million Xbox 360 units in the year that they've been on the market, and it's on track to sell 10 million by the end of December. By the end of March, the company is predicting it will have sold 13 million to 15 million.

Its Entertainment and devices Division, which makes the Xbox, is losing less money, with a loss of $96 million compared with $173 million a year ago. And the company reports that it is costing less to make the 360 these days, which is to be expected as component parts drop in price and manufacturing is streamlined.

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Mobile ads on the rise

Posted by Tricia Duryee at 1:25 PM

In September, I reported that wireless operators and content owners had started to roll out advertising campaigns to subsidize the cost of doing business.

A study released today by Jupiter Research said with more than 76 percent of the U.S. population owning cellphones, marketers are seeing mobile as an attractive highly personalized platform to target consumers.

Furthermore, it estimated that spending on mobile messaging and display ads will grow from $1.4 billion in 2006 to $2.9 billion in the U.S. in 2011.

Something isn't adding up. Another firm estimates that worldwide revenues for mobile ads will be much smaller this year than in the U.S. alone, and that by 2011, the numbers will be much higher.

Does that mean, the U.S. will make up a much larger percentage of mobile advertising to start?

In September, I reported from the CTIA wireless trade show that total mobile advertising market is expected to be $871 million, or 0.2 percent of the overall advertising industry by the end of this year.

In 2011, the research firm Informa estimates, it will reach $11.35 billion.

Still, even at that figure, mobile ads only represent 2 percent of the whole industry, said Informa analyst Nick Lane, who sees a majority of mobile ads coming in the form of mobile TV ads and text messages.

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How much memory for Vista?

Posted by Benjamin J. Romano at 12:02 PM

Bloomberg is quoting Dell CEO Kevin Rollins suggesting that 2 gigabytes of system memory "would be great" to run Windows Vista. Microsoft suggests "at least" 1 gig of memory to run premium Vista.

"I think they tell you maybe 1 gig of memory is OK," Rollins said today at Shanghai's Jiaotong University, according to Bloomberg. "No. Two gigs of memory would be great."

A machine capable of running bare-bones Vista requires 512 megabytes of system memory, at least.

The article goes on to describe the added cost of additional memory. For a Dell machine, upgrading from 512 megabytes to 2 gigabytes would cost $185, Bloomberg reported.

By the way, check out the vista on the main Vista site. Does that look like Klickitat County to anyone else? The Columbia River and just a bit of Mount Hood in the distance?

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More sources point to Nov. 8 Vista RTM

Posted by Benjamin J. Romano at 9:29 AM

DigiTimes and ComputerWorld have stories out suggesting that the release to manufacturing date for Windows Vista has been delayed to the second week of November after a significant bug was discovered in mid-October.

Both stories, and an earlier report from Paul Thurrott, suggest that the bug has since been fixed, but it was enough to push the RTM past Oct. 25 -- a date indicated by an electronic reader board I saw in a building on Microsoft's campus Oct. 16.

Microsoft's Jim Allchin debunked the Oct. 25 date last week. Other than that, Microsoft has kept mum on RTM dates and repeated the November-for-business, January-for-consumers availability drum beat.

DigiTimes cites unnamed Taiwanese PC manufacturers suggesting that RTM will occur the second week of November. ComputerWorld quotes a man at a Seattle company testing its products for Vista. He said the target date is Nov. 8.

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October 25, 2006

Mozilla gets Microsoft cake, and eats it too

Posted by Kim Peterson at 11:59 AM

Microsoft's Internet Explorer team sends the Mozilla guys a cake congratulating them on the release of competing Web browser Firefox 2. It wasn't poisoned, Mozilla reports.

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iLike goes into public beta today

Posted by Kim Peterson at 11:35 AM

The iLike service opens up to a public beta today, and you can check it out here. Although iLike is part of the San Francisco-based GarageBand, many of its developers work in the company's nondescript Capitol Hill office. Nearly everyone in that office has spent time at Microsoft, including Hadi Partovi, the former MSN portal boss who played a key role in the early days of Microsoft's strategy.

iLike hooks nicely into Apple's iTunes player and works with the massive list of songs you've listened to since you installed iTunes (yes, that list is out there). Plugging that list into its recommendation engine, it can suggest songs to you. Once you add friends, social networking style, to iLike, it tells you what your friends are listening to. It sends you to the iTunes music store or if you want to buy a song, and gets paid by Apple for doing so.

The service has a cute "are we compatible" test that looks at how well your music fits with someone else's, and that dating-oriented feature is sure to be a driver to the site.

How did a bunch of Microsoft guys end up working on an Apple feature? It's purely business, said Ali Partovi, Hadi's twin brother and the chief of GarageBand. Apple's iTunes dominates the digital media player market, so much so that people who don't even have iPods use it. If any other player came in a close second, iLike would have developed for it as well. But the team plans to have a Windows Media Player version in the future.

Here's GigaOM's review.

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Earnings report: Amazon and Getty

Posted by Kim Peterson at 10:48 AM

Amazon's share price is up nearly 12 percent this morning, the day after the online retailer reported third-quarter earnings. The company beat analysts' expectations, even though its profit fell by more than a third.

Getty Images reported "disappointing" quarterly earnings, according to Chief Executive Jonathan Klein. Layoffs are in the works, he said, but it doesn't look like the Seattle office will be hit very hard.

Getty's dealing with some very serious, and potentially long-term, customer issues. As more advertising and media moves to the Internet, the company is seeing more demand for cheaper images -- not the high-quality, ready-for-print imagery the company has made its name (and money) on. Getty has moved to meet that demand by acquiring Canadian company iStockphoto, but there are lots of competitors out there as well.

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GotVoice got money

Posted by Tricia Duryee at 10:38 AM

Kirkland-based GotVoice, which allows users to check voicemail from the Internet, said today that it received $3 million in venture capital.

The service allows users to manage all of their home and mobile voicemail, from virtually any carrier, in their e-mail inbox or on the Web.

In December, CEO Curt Blake said GotVoice decided to make the service free after conducting a survey among Microsoft Hotmail account users in Los Angeles last summer. The company determined the best way to use the software was to give it away and have an advertising-based revenue model.

Since making that decision, GotVoice has been adding about 500 users a day. The company said there are more than 30,000 active users nationwide.

Blake also said the company was going to add a professional version that will cost $4.95 to $9.99 a month to get the service without ads.

Ignition Partners and Second Avenue Partners participated in the round of funding. In today's release.

The new funding will be used for product development and marketing efforts.

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Inrix adds fuel prices to traffic data

Posted by Tricia Duryee at 10:31 AM

Inrix, which delivers predictive traffic information, has added gas station locations and fuel prices to its service.

The Kirkland company provides live traffic information on freeways, arterials and even side streets in most major U.S. cities, and also predicts traffic conditions minutes, days, or even a year into the future.

Today, the company announced the availability of Dynamic Fuel Prices, which provides location data for 140,000 gas stations and fuel prices for 100,000 stations in the U.S.

Inrix is providing the service exclusively in partnership with Oil Price Information Service, a petroleum pricing and news information.

Dynamic Fuel Prices integrates with navigation and local search to provide consumers and businesses with fuel price data by station for gasoline and diesel. The service, updated hourly, also includes the location, phone number and brand of the station.

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October 24, 2006

A brother to WiMax works like a charm

Posted by Tricia Duryee at 1:29 PM

Monica Paolini, an telecom analyst in Sammamish, e-mailed a newsletter today on her experiences with WiBro, a WiMax-like service commecially deployed in South Korea.

The service is supposed to be one of the largest wireless broadband networks based on the WiMax standard in the world. At an industry trade show earlier this month, there was a lot of skepticism on whether WiMax will deliver on its promises of speed, reliability and applications.

It sounds like Paolini's experiences with WiBro may dispell most, if not all, of those questions.

Paolini wrote: "Last week in Seoul I had the opportunity to try WiBRO and it was quite impressive."

She said one of the things that impressed her the most was that she could make a Skype call from the 19th floor of a hotel when coverage was promised only to floor four.

She also noted that within the coverage area, she clocked rates ranging bewteen 500 Kbps to 2 Mbps in the downlink, and 250 to 500 Kbps in the uplink.

That also was considered quite good.

"This is quite a good performance as many users like me kept the network busy trying out the service, so unlike in most demos this was an intensively used network," she wrote.

One factor she looked at was the applications aimed at the service and how they were different from traditional cellular phone networks.

"In addition to Internet and e-mail access," she said, "the most salient feature of the other applications supported is that they were mostly aimed at user-to-user communication, like blogging, messaging, and video calls."

Those applications, she added, are cheaper to deploy because they rely on user-generated content, rather than more expensive content generated by movie or TV studios. User-generated content also requires faster networks because most of them require a faster network on the uplink. For instance, if a user wants to film a short video and then upload it to YouTube, the process would take much longer on a cellular network than it would on a WiBro network.

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T-Mobile USA in Polish scandal

Posted by Tricia Duryee at 1:15 PM

T-Mobile USA did not only gain the spotlight today because of its new voice over Wi-Fi service.

It was also abruptly tied to a lawsuit filed by Vivendi, which charges that Deutsche Telekom conspired with a Polish man named Zygmunt Solorz-Zak to engage in racketeering activity and other fraudulent conduct, including U.S. wire fraud.

Vivendi charges that this misconduct allowed Deutsche Telekom, which is parent of Bellevue-based T-Mobile USA, to allegedly takeover Vivendi's $2.5 billion investment in the Polish telephone company Polsk Telefonia Cyfrowa.

A Wall Street Journal story today explains the connection between T-Mobile USA and Vivendi.

The paper reported that Vivendi has hired Lanny Davis, a former White House special counsel, to argue that the case deserves to be in U.S. courts because Deutsche Telekom has both a stock listing in the U.S. and significant U.S. business: T-Mobile USA.

Therefore, the reasoning goes, Vivendi should be able to use the U.S. RICO law, designed to nab gangsters, on a situation that occurred outside the U.S.

Should the case be allowed to proceed, the WSJ wrote, Vivendi would gain subpoena and discovery powers that would give it access to internal documents of Deutsche Telekom and Solorz-Zak.

You can read the complaint here.

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T-Mobile launches Seattle Wi-Fi voice service

Posted by Tricia Duryee at 12:48 PM

T-Mobile USA is testing a new service in Seattle that allows users to roam from
T-Mobile's cellular network to a Wi-Fi network to make unlimited voice calls.

The service is being sold as an easy way to drop your landline phone while still getting good coverage indoors and not using your monthly bucket of minutes.

In an interview earlier this month, T-Mobile CEO Robert Dotson told me switching from land lines is a no-brainer.

"Land line displacement is the next logical place -- the most brain-dead place to go," he said. "There's a lot of discussion of what do you do when penetration rates [of cellphones] hit 80 percent. But let's look at the full telephony dollar that's being spent today. If the behavior exists today, how can we get it on a mobile device?"

The service, limited to a trial in Seattle, costs $20 a month when a subscriber has a monthly plan of $40 or more. The customer will have the choice of one of two phones, which will be sold for $50 after rebates and comes with a two-year contract. A wireless router for the user's home will be free after rebate.

To use the service, a subscriber will have to have a broadband connection to the home and use a specific wireless router. From there, the phone is supposed to easily roam from the wireless network -- outside the house -- to the Wi-Fi network in the house. T-Mobile Hotspots found in Starbucks and other locations can also be used.

T-Mobile said the service is being tested in Seattle because T-Mobile USA's headquarters are in Bellevue, and because the city ranks seventh when it comes to residents' dropping landlines.

For more information, check out

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Seattle will get speedier Sprint network

Posted by Tricia Duryee at 10:59 AM

Sprint has upgraded its cellphone network in San Diego to handle even faster data speeds.

For Seattle, the significance of that announcement today is that by the end of the year, Sprint plans to reach more than 40 million people in 21 markets, including Seattle, with those high speeds. The other cities are Denver, Las Vegas, Los Angeles, Kansas City, Mo., Sacramento, Salt Lake City, San Francisco, Pittsburgh, Washington, D.C., Detroit, Milwaukee, Boston, Buffalo, N.Y., Hartford, Conn., Newark, N.J., Providence, R.I., Baltimore, New York City and Philadelphia.

The new network is called EV-DO Revision A, and is an upgrade of its 3G network that's called EV-DO. The updated version allows for faster uplink speeds, meaning photos, emails and other large files can be sent much faster.

With new data cards and phones, users of the data networks could see faster average upload speeds of 300 to 400 kilobits per second, (compared with 50 to 70 Kbps of current EV-DO networks). Average download speeds should also increase to 450 to 800 Kbps (from 400 to 700 Kbps).

By the third quarter next year, Sprint says it expects to have completely upgraded to the faster EV-DO Revision A.

At the same time, the company says it will be rolling out an even faster data network called WiMax. This network is made exclusively for data, unlike EV-DO which also handles voice calls.

The main difference is that if tons of people start using the voicecentric EV-DO networks for data, the networks will become clogged and slow down or crash. WiMax will have the bandwidth and capabilities to stream lots of TV, music, while also uploading videos, and more.

Check out what people said about WiMax at a big industry event called WiMax World, which was held in Boston two weeks ago.

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October 23, 2006

Big Blue sues Amazon over five patents

Posted by Kim Peterson at 11:55 AM

IBM sued Amazon today, claiming the Web retailer has infringed on five of its patents that have to do with recommending products, serving up advertising and storing data.

IBM said that hundreds of other companies are using those patented technologies after paying license fees, and that it tried to negotiate a licensing deal at least a dozen times since 2002.

IBM files more patents than anyone, and certainly knows how to play this out. It filed its lawsuits in Texas, in districts known to be a little more patent friendly. The company isn't saying how much money it wants in damages. I have a call in to Amazon for comment.

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Layoffs at Getty Images

Posted by Kim Peterson at 11:44 AM

It's highly unusual for a CEO at one company to dish the dirt about a competitor's layoffs in his blog. But that's what Alan Meckler, the CEO of JupiterMedia, did on Friday:

A bonanza has landed at our frontdoor. We are always looking for talented individuals who have worked in the creative and tech space of the stock photo industry. Such individuals are difficult to find.
Recently, however, we have hit the motherlode. Our friends at Getty Images are terminating (as we hear it) 10% of their workforce worldwide. And thus the bonanza.

Today, a Getty spokeswoman confirmed "a very small reduction in some areas," but was quick to point out that the company is also hiring. The spokeswoman wouldn't give specific numbers, but we hear the offices in New York and London will be hardest hit.

More information on this will come from CEO Jonathan Klein tomorrow during the company's third quarter earnings call, scheduled for 2 p.m.

Update: According to Photo District News, at least 28 employees will be laid off.

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October 20, 2006

So 10 minutes ago: A review of the week of Oct. 15

Posted by Mark Watanabe at 5:14 PM

Tech news
First big week of heavyweight tech earnings news. Thumbs up: Google (big time), Apple Computer (though something else may be keeping Steve Jobs up at night), IBM, Intel. Thumbs down: Yahoo! This week: Microsoft, on Thursday.

Speaking of Redmond, Internet Explorer 7 -- the first upgrade of the software at the heart of Microsoft's landmark antitrust case since 2001 -- was launched last week. Not to be outdone, the increasingly competitive Firefox from Mozilla is expected with a new version next week. Ben Romano looked at and what's at stake.

Meanwhile, the spat between Microsoft on one hand and Symantec and McAfee on the other gets nastier by the day. And this war of the Montagues and Capulets over access to Vista's inner workings promises to keep going until Vista hits the street.

One of the poster companies of the local biotech industry has been Icos, which started 16 years ago, drew financing from high-profile investors including Bill Gates and developed a blockbuster in an impotence drug, Cialis. So it has to be a blow to Washington as a biotech center when it was announced this week that Eli Lilly, the Indianapolis-based pharmaceutical giant, is acquiring the company for $2.1 billion. Luke Timmerman provided insightful, comprehensive coverage of the landscape-shaking event.

Luke has had a busy week. He also reported that SonoSite, the Bothell maker of portable ultrasound machines, said it's missing sales and profit goals for the year, taking some wind out of its shares. And Trubion Phamaceuticals, which is developing drugs aimed at autoimmune diseases and cancer, gained 9 cents on the first day of trading after a $13-a-share intital public offering.

The Eastside biometric technology company, now based in Kirkland, has seen its share of ups and downs -- mostly downs -- in previous years. Kim Peterson reported on the company's announcement Thursday that it was cutting more than half its staff and narrowing its business focus.

At a time the winner of the Nobel Peace Prize is Muhammad Yunus, the Bangladeshi pioneer of microcredit, Kristi Heim looks at how the Bill & Melinda Gates Foundation and Redmond-based Unitus are attempting make this financing for the world's poor even stronger.

Quote of the week
For people content to stay with Microsoft's Internet Explorer browser, "that's great because they get a better browser in IE7. For others, there's going to be a realization that maybe I should look around ... and decide what the best browser is for me on the desktop. Who knows what will happen in the market?"
-- Mike Schroepfer, vice president of engineering of Mozilla, in what will have to pass for fighting words in the browser, um, war

If you missed it ...
On Monday, Brier Dudley looked at the YouTube-Google deal from a different lens, raising questions and thoughts about how being ahead of your time and how business is done in Puget Sound. More than water-cooler talk.

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Firefox 2 due out Tuesday; Opera fans sing

Posted by Benjamin J. Romano at 4:47 PM

Mozilla just told us the update to its browser, Firefox 2, will be available for download on Tuesday.

We covered Firefox 2 and the new version of Internet Explorer 7, which came out Tuesday, five years after IE6, earlier this week.

A few people wrote in after that story to ask, what about Opera? another small innovator and challenger to IE hegemony.

Opera Software was among them. "With the release of IE7, Opera Software welcomes back Microsoft to the ongoing competition in the browser wars, where healthy competition is fueling remarkable advances in Web technologies," the company's marketing communications manager, Michelle Valdivia Lien, said in an e-mail.

Opera has garnered only a sliver of the browser market -- 0.69 percent in October, according to OneStat -- but those who use it were offended that we didn't give it the same credit as Firefox for invigorating competition and innovation. Users of Apple's Safari, which has 1.61 percent of the market, wrote with similar complaints.

Particularly irksome to these folks is that Opera conforms best to open Web standards, something that IE is just getting around to. Valdivia Lien gives Microsoft credit for a "move in the right direction" with IE7. "And maybe even someday, standards tests such as the ACID2 [a test page that evaluates browser compatibility with standards] will smile back at IE. Until then, vive la différence!"

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Penny Arcade goes after the Zune

Posted by Kim Peterson at 4:24 PM

This came out a couple weeks ago, but it's a good Friday afternoon diversion: Penny Arcade takes on the Zune.

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Edelman flogs for Wal-Mart

Posted by Benjamin J. Romano at 2:22 PM

Two blogs that purported to be independent supporters of giant retailer Wal-Mart were written by employees of Edelman, the public relations firm that was just awarded a contract to handle the consumer launch of Microsoft's two biggest products.

Blogs posted on Working Families for Wal-Mart, which describes itself as "a group of leaders from a variety of backgrounds and communities all across America," were authored by an Edelman employee. Wal-Mart and WFWM are Edelman clients. A related site,, which ferrets out links between Wal-Mart critics and unions or other groups with skin in the game, also consists of blogs written by Edelman employees.

Until recently, the blogs did not carry the names of their authors, thus appearing to be the work of WFWM members rather than paid employees of its PR firm. A banner on the PaidCritics site says, "Had enough of the paid critics smearing Wal-Mart? Join Working Families for Wal-Mart today."

Here's coverage of the admission by Edelman -- the world's largest independent PR firm -- and Online Media Daily.

It came after Edelman CEO Richard Edelman acknowledged on Monday that not disclosing the whole story of another Edelman-backed Wal-Mart PR stunt was a mistake. In that case, it was Wal-Marting Across America, an online journal of RVers camped out in the big-box retailer's expansive parking lots.

Richard Edelman updated his blog today with a set of specific steps the company is taking to address the issue. These include: a thorough global audit of its programs; a mandatory class for all employees on ethics in social media; a hotline for employees to review social media programs before they're implemented; ethics materials to be distributed around the company.

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Marchex: A new face on the board

Posted by Kim Peterson at 1:50 PM

Marchex said today that director Rick Thompson has stepped down from the board to devote more time to his job as a vice president at Microsoft. Thompson is a corporate VP in a division at Microsoft that covers eHome, the Tablet PC and the hardware groups.

Marchex has replaced Thompson with Anne Devereux, an advertising exec who is currently chief of two divisions within monster ad agency Omnicom Group.

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"Halo" movie loses major backers, future uncertain

Posted by Kim Peterson at 10:47 AM

The movie based on Microsoft's "Halo" game hit a huge stumbling block this week when co-financiers Universal and Fox abruptly backed out of the project, Variety is reporting today.

Variety said there are rumors that the movie's price tag is inching to $200 million from the original $135 million. The two studios had tried to get Microsoft and the filmmakers to cut the profit they stood to make from the film, but that didn't happen, according to the report.

Ken Kamins, who represents executive producers Peter Jackson and Fran Walsh, told Variety that Universal waited until the last minute before asking that the filmmakers and Microsoft "significantly reduce" their profit deals. Jackson and Walsh conferred with Microsoft and its Bungie Studios division and came back saying no to any changes.

I asked Microsoft about the news and received this statement from a spokeswoman:

We are disappointed that Universal wanted to significantly renegotiate the financial points of the deal. But the Halo franchise is hugely popular and our goal remains the same -- to find a partner that shares our passion and will creatively collaborate with us to best represent the story and spirit of the Halo franchise. Peter Jackson, Fran Walsh and the rest of the creative team are dedicated to ensuring the Halo movie becomes a reality. We are already in discussions with potential partners who recognize the value of the Halo brand and its appeal to consumers worldwide.

So don't write the movie off as dead yet.

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October 19, 2006

Local company joins expanding BioIT Alliance

Posted by Benjamin J. Romano at 3:59 PM

A cross-industry group addressing data-management problems in biotechnology, the BioIT Alliance, is embarking on a second pilot project, and Seattle bioinformatics company Geospiza is joining the effort.

Microsoft, which launched the alliance with The Scripps Research Institute and several biotech and software companies in April, said today a second proof-of-concept project is under way.

The Biomarkers Project aims to "simplify the process for identifying and validating genomic biomarkers -- the characteristics that indicate the presence of a disease or the likely efficacy of a drug." More details are in this news release.

Here's our coverage of the alliance, and Microsoft's broader healthcare efforts, from April.

Another Seattle bioinformatics company, VizX Labs, is also a member of the Alliance.

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New RIAA lawsuits: 3 in Washington in legal trouble

Posted by Kim Peterson at 11:51 AM

If you think that the recording industry has stopped its hunt for piracy violations, you'd better stop downloading that copy of "SexyBack" immediately.

Today the Recording Industry Association of America announced a new round of lawsuits, including three against Washington residents. According to the association, the people named in the lawsuits illegally distributed copyrighted music through peer-to-peer services. The association got everyone's names by sending subpoenaes to Internet service providers.

Some of these people may not have even known they were distributing the music. The way some peer-to-peer programs work, users automatically share the music on their computers unless they specifically turn that sharing feature off.

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Sony says profit will drop, blames batteries, PS3

Posted by Kim Peterson at 11:40 AM

Sony just can't catch a break in this crucial time before the launch of the PlayStation 3.

The company cut back its fiscal year profit forecasts today by almost 40 percent, blaming that massive laptop battery recall and the price cuts it had to make on the PS3 in Japan even before the system came out.

The company didn't change its sales outlook, however. But it listed several ways in which its profits will be hacked, including the 20 percent price cut on the PS3 in Japan and the delay of the PS3 launch in Europe to next March.

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Cingular Wireless Q3 and 3G

Posted by Tricia Duryee at 10:37 AM

Cingular Wireless reported third quarter financial results today that set a record for net income.

The Atlanta-based company, a joint venture of AT&T and BellSouth, said it made a profit of $847 million for the third quarter, a 280 percent year‐over‐year increase. Revenue during the period totaled $9.6 billion.

What was interesting was the company's increase in ARPU, or average revenue per user. It increased slightly to $49.76 a month from $49.65 in the year‐ago period. But most of the growth came from selling more data services. Data ARPU increased 46 percent year‐over‐year and 10 percent sequentially to $6.32.

Cingular said the growth came from the increasing popularity of downloadable games, ringtones, mobile instant messaging, mobile e-mail, photo messaging, and media bundles. In addition, text messaging continued to grow. In the third quarter of 2006, Cingular had 28 million active data customers, and delivered 138 million multi‐media messages and 10 billion text messages.

The increase came as the company's roll-out of its high-speed data network called HSDPA. The 3G service, which offers speeds averaging 400 to 700 kilobits per second, is available in 115 cities in and 52 major markets in 28 states and the District of Columbia.

Customers can use the 3G connections to access e‐mail and information services or watch streaming video clips using Cingular Video.

At WiMax World last week, the success of 3G was the subject of hot debatey. Detractors said 3G will not take off because the business models aren't there. The equipment is too expensive to spur widespread adoption, whereas WiMax promises greater speeds and capacity at lower costs.

But it seems that consumers are interested in 3G data services if Cingular's customer is spending $6 a month on average. But for the carriers to make money on the billions invested in the new networks, I imagine it will have to grow much higher than that.

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October 18, 2006

Allchin: Vista won't RTM Oct. 25

Posted by Benjamin J. Romano at 6:27 PM

Jim Allchin, co-president of the Microsoft division building Windows Vista, said the company will not be released to manufacturing on Oct. 25. I reported seeing an electronic reader board inside Microsoft's Building 9 on Monday that said "9 Days Until Vista RTM!!!" Microsoft would not comment for that story, other than to reiterate its launch schedule of November business availability, January consumer availability.

Allchin contradicted the information on the reader board in an interview with Mary Jo Foley.

"We won't RTM (release to manufacturing) in a week," Allchin told Foley on October 18. "We are in pretty good shape. And there are still months before (the January 2007) launch."

He gave no RTM date.

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Frazier investment is on the shelf -- sort of

Posted by Tricia Duryee at 12:30 PM

Seattle-based Frazier Technology Ventures said today that it participated in a $12 million investment in W5 Networks of Fremont, Calif.

Frazier Technology Ventures led the round along with previous investors, including Thomas Weisel Venture Partners and U.S. Venture Partners. The latest round brings W5 Networks total amount raised to $22 million.

W5 Networks develops wireless technology for the retail industry by replacing paper shelf labels with small displays that can be updated wirelessly.

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Seattle residents dropping landline phones

Posted by Kim Peterson at 10:33 AM

A growing number of Americans are getting rid of their landline phones, and Seattle is in the top 10 list of cities where this trend is happening the fastest.

Detroit has the highest rate of "wireless substitution" among the 20 largest cities in the U.S., according to Telephia, with 19 percent of its households now wireless-only. Minneapolis-St. Paul was second with 15.2 percent. They were followed by Tampa, Atlanta, Washington, D.C., and Phoenix.

Seattle ranked seventh, with 13 percent of households going wireless. San Francisco, traditionally an early-adopter city, didn't make the top 10, and Telephia researchers guessed this might be because of the low mobile network quality in the area.

The Telephia study doesn't include people who have dropped their landline phones in favor of digital voice -- a service that has been readily adopted by Washington residents, according to Comcast.

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October 17, 2006

Why globalization has failed

Posted by Kristi Heim at 4:08 PM

Update: If you want to read the whole discussion, stay tuned for reporter Al Scott's Q&A with Stiglitz this Sunday.

Nobel Prize-winning economist Joseph Stiglitz stopped by here for a brief interview this morning to talk about the state of the global economy. I had a chance to meet Stiglitz a few years ago at Columbia University, where he teaches, and he was every bit as dynamic today.

Joseph Stiglitz

In town to promote his book "Making Globalization Work," reviewed here, Stiglitz said he was interviewed this morning by a radio host at KEXP who was one of the protesters at the "Battle of Seattle," marching in the streets against the World Trade Organization in 1999. The foes of free trade might think they've found a new messiah, but actually Stiglitz supports globalization in principle. He just opposes its mismanagement, which has exacerbated the fundamental inequalities between rich and poor countries.

Countries like China and India have succeeded in spite of those obstacles, he said, because they have resisted pressure to float their currencies by the World Bank, IMF and the rest of the so-called Washington concensus. Brazil developed its own alcohol fuel industry, one initially discouraged by the World Bank, and now has achieved energy independence, he noted.

Lack of a level playing field in behind-the-scenes WTO negotiations has traditionally hurt the developing world. But in some ways it could come back to bite the U.S., too. Without multilateral trade agreements that include environmental protection, for example, a country that pollutes without restriction has a cost advantage over one that doesn't.

While globalization isn't pretty, it does seem permanent. At least Stiglitz is proposing some solutions for making it better.

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Windows virus gets into iPods

Posted by Kim Peterson at 3:59 PM

D'oh! Who let the Windows virus into the iPod factory? Apple Computer said today that a tiny number of video iPods that shipped after Sept. 12 contained a Windows virus named RavMonE.exe.

On its technical support page, Apple said it has received fewer than 25 reports of the problem. Still, the company takes the opportunity to get a little dig in at Microsoft:

As you might imagine, we are upset at Windows for not being more hardy against such viruses, and even more upset with ourselves for not catching it.

The virus affects only Windows PCs and current anti-virus software should get rid of it, Apple said.

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MSFT spending more on R&D this year

Posted by Benjamin J. Romano at 2:19 PM

Microsoft CEO Steve Ballmer told an audience in Spain that the company will spend $7.5 billion on research and development in the current fiscal year, Reuters reported.

And, according to Bloomberg, Ballmer said: "I would estimate off the top of my head approximately half a billion of that will be spent in Europe.''

The R&D figure represents about a $1 billion increase over the $6.58 billion Microsoft spent in the 2006 fiscal year ended June 30.

In April, Microsoft projected R&D spending that turned out to be about $2.7 billion above expectations at the time. That caught investors by surprise and sent Microsoft shares on their biggest one-day dive in half a decade. The company's shares have since recovered and are up about 9 percent on the year.

Ballmer discussed the company's R&D spending in answer to a question at a business lunch in Madrid, Reuters said. Microsoft shares finished the day down a penny at $28.44 after trading as low as $28.17 earlier Tuesday.

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Google Kirkland gets an IM rockstar

Posted by Kim Peterson at 1:55 PM

From the InsideGoogle blog comes news that Google has stolen Justin Uberti away from AOL. Uberti was the lead developer of AOL Instant Messenger and had been with the company for 10 years. He started work Oct. 9 out of the Kirkland office, which had a big part in developing Google's own IM service.

In his new blog, Uberti said that during Google's orientation he was asked what word he would use to describe Google. He chose the word colorful.

"More than just the choice of palette, everything (and everyone) at Google seems to have a bit of a whimsical bent."

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New Xbox already in development

Posted by Kim Peterson at 1:20 PM

Microsoft is already working on the successor to the Xbox 360 video game console, according to an interview with European boss Chris Lewis on the gaming site Kikizo.

"Of course we're thinking about that ... we're constantly thinking about the next thing, we have to. It's my point about complacency -- you can't sit back on your laurels in this business -- the consumer won't let you, the developers certainly won't let us. So that's happening right now."

It makes sense. Microsoft began thinking about the Xbox 360 almost immediately after the original Xbox launched. But how long will the 360's life cycle be? Lewis said he thinks the 360 will live longer than the original Xbox, which, although still around, pretty much lasted four years.

The 360 was built to last a long time, with the ability to upgrade the hard drive and add accessories as technology develops. And if the Microsoft-preferred HD-DVD format beats Blu-Ray technology for next-generation video, then even better. The 360 could become a standard HD-DVD player for households for years.

Let's say that the Xbox team is banking on at least a five or six-year window for the 360. That means that they're sitting down now to plan a console that comes out in 2011 or 2012. That's gotta be a tough job.

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Amazon analysts getting grumpy

Posted by Kim Peterson at 12:50 PM

Only two of 22 analysts have a "buy" recommendation on, although the company's stock price is steadily climbing from the depths of August.

Analysts at ThinkEquity Partners piled on with a Monday report giving a "sell" recommendation on the online retailer and predicting a 10 percent share price drop. (Link here, second item.)

"Glitches, frustrations and outright goofiness remain all too common on Amazon's site ... and in its distribution," wrote Edward Weller and James Maher, analysts with the San Francisco-based firm, about Amazon's new video download service, called unbox.

The analysts went on to say they were "too trusting" of Amazon management.

"We are almost embarrassed to admit that we would have expected something substantial to emerge from the current 'investment' cycle," they wrote.

Not a good note for Amazon to be entering the holiday shopping season on.

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October 16, 2006

Should I work for MS or Google?

Posted by Kim Peterson at 12:12 PM

A poster at Slashdot sets the forums afire with a simple question: With job offers from both Microsoft and Google in hand, which one should I work for?

The comments are surprisingly thoughtful. This one comes from someone who claims to be a Microsoft employee:

Perhaps the most damning thing I can say about Microsoft is that I always wonder which is the real face of Microsoft, and which is dictated by necessity. Is Microsoft a large corporation that paints a false face of camaraderie and caring, or a fraternal group of motivated engineers who have grudgingly accepted the need for large corporate structure?

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Steve Jobs talks about the Zune

Posted by Kim Peterson at 12:05 PM

Steve Jobs is utterly unfazed by the Zune. Or so he says in this Q&A with Newsweek. Some excerpts:

Microsoft has announced its new iPod competitor, Zune. It says that this device is all about building communities. Are you worried?

In a word, no. I've seen the demonstrations on the Internet about how you can find another person using a Zune and give them a song they can play three times. It takes forever. By the time you've gone through all that, the girl's got up and left! You're much better off to take one of your earbuds out and put it in her ear. Then you're connected with about two feet of headphone cable.

Do you think that it's fair to the customer that the songs they buy from Apple will only work on iTunes and the iPod?

Well, they knew that all along.

At one point you were saying, "When our customers demand it, that's when we'll consider interoperability."

Nobody's ever demanded it. People know up front that when they buy music from the iTunes music store it plays on iPods, and so we're not trying to hide anything there.

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Sony's new e-book reader reviewed

Posted by Kim Peterson at 12:00 PM

Slate takes a look at Sony's new $350 electronic book reader and says that it's spiffy if all you want to do is read books. But if you want to search through the book or write in the margins, this is not going to be your product.

The reader is reportedly going to start showing up at Borders stores later this month. Sony is also opening up an online e-book store with some 10,000 titles.

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It's official: Loudeye is gone

Posted by Kim Peterson at 10:01 AM

Loudeye is no longer a Seattle-based public company. Cellphone giant Nokia said today it has completed its acquisition of the digital media company, and as a result trading of Loudeye's stock has been suspended.

Shareholders will receive $4.50 in cash for every share of Loudeye they own. The company will go on to be mostly a European-focused unit of Nokia. Loudeye had only a handful of employees in Seattle at this point; most were in Europe.

The press release announcing the closure is here.

And for old times' sake, here's a writeup of Loudeye's $72 million initial public offering in 2000. Loudeye's stock would lose most of its value in that first year, and founder and chairman Martin Tobias went on to quit the company in October 2001. The company began crumbling in a very public way by 2003, and it became a matter of time before something more dramatic and final were to happen.

By the way, Tobias blogged his reaction to the news when the acquisition was announced.

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October 13, 2006

So 10 minutes ago: A review of the week of Oct. 9

Posted by Mark Watanabe at 4:24 PM

Tech news
Back in February, Kim Peterson posted a Tech Tracks item on the mysterious Origami project that Microsoft was thought to be working on. In that post, she noted how a viral-marketing video about the project had been pulled, but had reappeared on an under-the-radar site called YouTube. Hardly eight months later, Google swoops in and buys that eyeball-drawing site for $1.65 billion. And Origami? That story is still unfolding -- under the radar.

The Bellevue company still hasn't officially identified the customer that decided to take a big chunk of ringtone business in-house, but the consequences were felt this week. InfoSpace said it was laying off more than a third of its workforce -- 250 out of 670. The customer in question is widely believed to be Cingular Wireless. .

Will it make the launch when it said it would or not? Microsoft seemed to answer that a bit more definitively today when it said it had -- from its perspective -- worked out competition concerns over Vista that were lodged by European and South Korean regulators, and that it was moving ahead with launching the new operating system in November to business customers and in January to consumers.

Wireless broadband
Any broad-based new technology is guaranteed to set off the hype machine. Such was the case in Boston this week, and the technology showered with attention was WiMax, the wireless broadband technology some have called Wi-Fi on steroids. Tricia Duryee's stories from WiMax World captured some the industry's excitement and reservations.

More fallout from stock options backdating investigations. Top executives from McAfee and Cnet resigned, and none other than Steve Jobs One could say it was a bad week for McAfee, as even the team that plays in the Oakland stadium that carries the virus fighter's name pretty much resigned the first two games of the American League Championship Series. (As this is being written, the A's just lost the third game, 3-0.)

T-Mobile USA
It's not often that T-Mobile USA CEO Robert Dotson speaks to the press, but Tricia, who had a busy week, got him to sit down long enough to for an interview -- in a car navigating the streets of Manhattan, no less.

Quote of the week
"Ray was one of the innovators of the Utah Miracle. He launched what would become Utah's technology sector. He has left behind a monumental legacy and we are all in his debt.." -- Utah Gov. Jon Huntsman, speaking of Ray Noorda, the Novell founder called the "Father of Network Computing," who died this week at 82.

If you missed it ...
Few stories get as much reader interest in what we produce as those that involve working at Microsoft. In May, addressing concerns over employee recruiting and retention, the company implemented a new compensation and benefits program. Ben Romano this week wrote an engagingprofile of Lisa Brummel, the senior executive behind those changes.

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October 12, 2006

Missed out on PS3? Wii pre-orders tomorrow

Posted by Kim Peterson at 4:16 PM

Sony's PlayStation 3 sold out in a matter of minutes earlier this week when the retailer GameStop began taking pre-orders. Wonder if Nintendo's Wii gaming console wil get the same treatment Friday, when pre-orders go on sale. A $50 deposit is required.

Nintendo expects to get 4 million Wii consoles to stores by the end of the year, compared with 2 million PS3's. Still, you'll probably see some early-morning lines at the handful of GameStop and EB Games stores around town.

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WiMax World: Floor goodies

Posted by Tricia Duryee at 4:10 PM

BOSTON -- As the final day of the conference was winding down, I took a quick walk through the WiMax World show floor featuring 140 exhibitors.

Tricia Duryee
Posdata, a South Korean company, is developing a line of devices called Flyvo shown at WiMax World. ...

To be honest, most of the stuff wasn't too exciting, especially from a consumer perspective. In large part, the equipment on display included antennas, which look like mini-satellite dishes, and base stations, which look like a computer's hard drive.

But two things caught my attention.

The Motorola booth was particularly large and flashy, which is a little unusual for equipment-makers, but matches the company's sense of style, a la Razr.

What was noticeable in particular was the sign. It said, "Motorola welcomes NextNet Wireless," the equipment manufacturer that Motorola purchased from Clearwire in the summer for an undisclosed amount of money.

A former NextNet engineer, who was manning the booth as a new Motorolan, said the ink was still drying on his business cards, but so far, the acquisition was going smoothly.

... Each device has Wi-Fi and WiBro, a version of WiMax used in South Korea. ...

In the background, you could see the evolution of NextNet's modems. The newest model, which had a signature "M" stamped on it, incorporates both NextNet's proprietary wireless broadband technology and the new mobile WiMax standard yet to be formally completed.

The hybrid modem, about the size of a laptop, will help in the transition as people move from NextNet's networks to standardized WiMax networks.

Motorola also had some pretty sexy devices, which they wouldn't let me photograph. But to give you an idea, instead of a clunky modem, the Motorola folks have packed the same technology into a stylish cylinder that looks a little bit like a miniature CP30.

... Some of the devices look like phones while others look more like PDAs or music players.

Another booth that caught my eye was a company called Posdata from South Korea. It was showing off a line of products branded Flyvo, made for the Korean market, which has rolled out a WiMax network called WiBro. The brand's tagline is appropriately "Flyvo makes the Internet fly."

The devices on display were the only ones I saw at all at the show, and illustrated the concepts I introduced earlier on Tech Tracks called "personal broadband"
or "open Internet."

Some of the devices looked like phones, while others looked more like a music player or a PDA. What they all have in common is that they have WiMax and Wi-Fi.

Some of the devices are currently being tested in South Korea.

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MSFT hits 52-week high

Posted by Benjamin J. Romano at 3:13 PM

Microsoft shares rode the continuing bull market up 68 cents, 2.5 percent, to a new 52-week high of $28.22 Thursday. Broader market indices were also up. Microsoft is a component of several of these, including the Dow Jones Industrial Average (up 0.81 percent), the S&P 500 (up 0.95 percent) and the Nasdaq 100 (up 1.61 percent).

Alan Davis, an analyst with D.A. Davidson & Co., said the scant news on Microsoft Thursday -- a small acquisition and new labels for Vista-ready products -- didn't seem to be catalysts for the stock's performance. He did see solid numbers out of consumer stocks such as McDonald's and broadening positive expectations about Microsoft's forthcoming new products, Vista and Office 2007.

Davis, who has a "buy" rating on MSFT and last week bumped up his price target to $32, said shares of the company have tended to rise in advance of the launch of major operating systems as investors factor their expectations about future sales into the price.

He also noted that the tech-heavy Nasdaq traditionally does well in the fourth quarter.

"If history repeats itself, that's another tailwind" for Microsoft, Davis said.

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WiMax World: Muni Wi-Fi debate

Posted by Tricia Duryee at 11:44 AM

BOSTON -- The city of Seattle has been researching the future of Internet access for its residents for some time.

A while ago, it decided that a municipal Wi-Fi system would not be enough to fullfill our future bandwidth needs. Instead, it found that laying fiber to the home would be best.

Since then, it has asked companies that may be interested in such a plan to submit letters explaining how they would build a network.

Kirkland-based Clearwire, which is at WiMax World this week, submitted a letter. I asked Ben Wolff, Clearwire's chief executive, whether it was interested in working with municpalities on broadband networks.

The answer was a clear "yes." Followed by details on how it was working with Fairfax, Va., on a hybrid WiMax-like and Wi-Fi network. Wolff didn't have all the details -- it was unclear if Clearwire was building both the Wi-Fi and WiMax components and whether it would operate them.

But he explained his reasoning as to why it made sense for there to be two wireless broadband networks in one city and how he could still attract customers when Wi-Fi might be cheaper, if not free.

He explained that Wi-Fi is good for outdoor coverage and basic service. But if people are looking for indoor coverage, faster speeds and a certain level of quality, they will have the option of upgrading to Clearwire's WiMax-like service.

"There's a place for muni-Wi-Fi and Clearwire in the world. They are complementary," Wolff said.

Needless to say, Clearwire was not one of the 11 companies picked by the city to go through a second phase of planning.

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WiMax World: Can't we all get along?

Posted by Tricia Duryee at 11:36 AM

BOSTON -- Hold on to your seats, this is going to be a lesson on intellectual property rights, which I will explain to the best of my ability.

One reason why WiMax is predicted to be so much cheaper than traditional cellular networks is patents.

In the cellular world, many patents are held by a few individuals, which gives them a lot of power to set the market price. One example: Qualcomm. It owns a majority of the patents for CDMA networks, which both Sprint and Verizon Wireless operate. And observers say it charges steep royalties for licenses.

It sounds as if Sprint Nextel is doing everything in its power to avoid that scenario with WiMax and the vendors it has chosen to work with -- Motorola, Intel and Samsung.

Fred Wright, Motorola senior vice president, said Sprint Nextel was really aggressive in negotiating intellectual property rights with Motorola.

"They are very demanding when it comes to price-performance expectations," he said. "They were very demanding around the licensing of technology. They are very careful not to create another Qualcomm situation."

He added: "Samsung, Motorola and Intel all have agreements on licensing that will keep things much cheaper."

The issue, although technical and hard to summarize, was an underlying theme of the show this week at WiMax World, with lots of sessions on how the industry can work together to keep costs down and not create a concentration of power with one company.

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WiMax World: New business model

Posted by Tricia Duryee at 11:21 AM

BOSTON -- Based on explanations offered at WiMax World this week, an entirely new business model is forming around the technology Sprint Nextel is so eager to implement.

The model is called open Internet access, and it provides a simplier structure than the cellular industry has today.

Today, cellular operators act as gatekeepers, approving every application and all the content available on a phone. The result can be less innovation. But WiMax is attempting to build simple cost structures and an open platform for any developer.

What that means is a much faster pace of innovation. For cellular handset manufacturers, such as Nokia and Motorola, it also means a chance to produce new consumer products outside of their traditional domain -- phones.

Fred Wright, senior vice president of Motorola, said it's exciting.

He compares WiMax right now to the early 1980s when the cellular industry was just taking off. He remembers one of the main industry events held at the Westin in Palm Springs that had a very similar vibe as this week's WiMax World in Boston.

"It is deja vu all over again," he said. "In looking at the cellular industry, I expect the same thing to happen with WiMax."

With that big of a future expected, he said: "There is a huge transformation opportunity for Motorola, It will be a rebirth of our company and all the products we can bring to market."

Nokia, the largest handset manufacturer in the world, had the same thing to say.

It held up its Nokia Tablet 770 as an example of something that could be developed for a WiMax network. Today, the device, which is about the size of paperback book, has Wi-Fi and no chip for a phone and runs on Linux.

Mark Slater, Nokia's vice president of sales and marketing for North America, said he believes the devices that will use WiMax first are laptops. Then, he says he sees all sorts of devices that won't necessarily be a phone or even be capable of making voice calls.

A lot of this innovation will be supported by the new business model. In the open Internet model, he said, operators will stop subsidizing the price of a phone, which is good for Nokia. Now he said the value of the device can stand on its own, and people don't expect it to be free.

"We are excited about the open Internet model," he said. "We are in favor of no subsidizes.

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Microsoft helps holiday shoppers buy for Vista

Posted by Benjamin J. Romano at 7:00 AM

In a move to help consumers pick products during the holiday shopping season that will work with Vista, Microsoft announced new product logos at an event this morning in New York City.

The "Certified for Windows Vista" or "Works with Windows Vista" logos will be affixed to games, hardware, software and PCs produced by some 50 companies.

"This certification ensures that our customers will have a great experience with these products now, and an even better one when they are using them with Windows Vista," Mike Sievert, corporate vice president of Windows Client Marketing, said in a statement.

Vista is scheduled for a broad release in January and Microsoft has been subject to criticism for delaying shipment of the product until after the holiday shopping season. Analyst Gartner estimated the computer industry will miss out on $4 billion in sales this year as a result.

Products undergoing testing to get the logos include cameras and camcorders; graphics cards; mice, keyboards and other controllers; and software. Microsoft said the testing is independent and checks compatibility, reliability and security, among other things. Products that make use of Vista technologies such as the Aero interface get the "Certified" logo, while those that are merely compatible get the "Works with" logo.

Microsoft already has "Windows Vista Capable" and "Premium Ready" logos for PCs able to run basic and premium editions of the new operating system, respectively. No word yet on a Vista coupon or rebate program for people who buy PCs before the operating system launches. (This CRN article from last week quotes unnamed industry sources saying a free or discounted upgrade coupon will go out with XP computers sold between Oct. 28 and March 15.)

In addition, Microsoft said it will make available "two Windows Vista features," Internet Explorer 7 and the latest version of Windows Media Player to Windows XP users in a bid to entice them over to the new system. The final version of IE7 will be available for free download within the next two weeks; the media player comes Oct. 24.

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October 11, 2006

Microsoft touts video game safety

Posted by Kim Peterson at 9:00 PM

Microsoft is making a 20-city bus tour to promote video-game safety.

Tomorrow in New York City, Microsoft is planning to launch a campaign and a 20-city bus tour aimed at teaching parents how to make video and computer games safer for children.

It's definitely a big area of concern for parents, what with stories of hidden sex scenes and rampant violence showing up in video games. Microsoft says it will be reaching out to parents, educating them about video game ratings (do you know the difference between an "M" and a "T"?) and touting the parental controls feature of the Xbox 360 video game console.

Inside the video-game bus.

It's no coincidence that the campaign is timed to the holiday sales season, where parents could be choosing between the Xbox 360 and new consoles by rivals Sony and Nintendo. Bach said he hopes that Microsoft's business will benefit from the campaign as well.

But the campaign is scheduled to last beyond the holidays and into 2007, and the tour stops in Seattle sometime next May. All campaign events are being held at local Boys & Girls Clubs of America, which is a partner in the effort along with Best Buy. The tour has the rather unmemorable title of "Safety is no game. Is your family set?"

Microsoft is unveiling the bus at the DigitalLife consumer technology conference in New York. For more information you can access the company's site here.

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Loudeye shareholders approve merger

Posted by Kim Peterson at 12:52 PM

Class-action lawsuits be damned: Loudeye shareholders met today and approved the company's acquisition by Nokia. About 58 percent of shareholders were present in person or by proxy, and here's how the vote went down:

For: 52 percent of shareholders (90.6 percent of votes cast)
Against: 5 percent of shareholders (7.8 percent of votes cast)
Abstain: 1 percent of shareholders (1.6 percent of votes cast)

The official closing of the deal could take place by Monday, Loudeye said in a regulatory filing.

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Devenuti to retire from Microsoft

Posted by Benjamin J. Romano at 12:38 PM

Microsoft said today that its longtime head of services and IT, Rick Devenuti, is planning to retire at the end of the year.

Devenuti's staff was informed this morning, a company spokesman said. The 48-year-old, who has been with Microsoft since 1987, is leaving to spend more time with his family. He will stay on to aid in the search for his successor.

Devenuti is a Federal Way native and University of Washington graduate who joined the company after helping it go public when he was with the accounting firm that later became Deloitte & Touche. See Brier Dudley's profile of Devenuti from 2003 for more details.

He spent a signficant chunk of his career as Microsoft's chief information officer, in charge of keeping the company's own IT systems up and running.

Devenuti, a senior vice president, is the second veteran Microsoft executive with Washington roots to end his career at the company in recent months. Brian Valentine left for in September.

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The death of cursive

Posted by Kim Peterson at 10:38 AM

Did the computer keyboard kill cursive handwriting? This Washington Post story reports that children are taught keyboarding at an early age and that cursive has fallen out of favor.

When handwritten essays were introduced on the SAT exams for the class of 2006, just 15 percent of the almost 1.5 million students wrote their answers in cursive. The rest? They printed. Block letters.
And those college hopefuls are just the first edge of a wave of U.S. students who no longer get much handwriting instruction in the primary grades, frequently 10 minutes a day or less. As a result, more and more students struggle to read and write cursive.

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WiMax World: Press room jinx

Posted by Tricia Duryee at 10:30 AM

BOSTON -- It is inevitable. I have come to expect that every trade show I travel to will have problems with its wireless network, especially in the media room.

This is especially true if it is a wireless conference. It happens nearly twice a year at both CTIA shows, it has happened at 3GSM, an international wireless show in Barcelona, and it is now happening here at WiMax World.

It clearly demonstrates how fickle Wi-Fi is, and how unlikely that the technology could be used on a large scale with many users in a concentrated area.

At least, this is exactly the argument presented by the WiMax industry, and why it believes WiMax will be different -- it can handle higher capacity, while at the same time encountering less interference because it uses licensed spectrum.

Because I can understand how this might happen, I travel with a 3G card from Verizon Wireless. It typically delivers fairly fast speeds, and doesn't kick me off every few minutes, as Wi-Fi does.

But the additional hurdle that the fine folks at WiMax World added this year, which I didn't prepare for, was assigning the press room to the basement -- three floors down from the main level. Signal strength for a phone is weak at best.

I hope WiMax really can pull off all its promises, especially at the industry's own conferences.

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WiMax World: Clearwire gives updates

Posted by Tricia Duryee at 9:44 AM

BOSTON -- This morning at WiMax World, Ben Wolff, co-chief executive of Clearwire, offered a rare glimpse into the Kirkland company.

Since October 2003, the company has building WiMax-like networks in select U.S. cities and some European countries. It is currently building fixed WiMax services, which compete with DSL and cable in the home. Customers who sign up for the service buy a modem that can fit in a briefcase and plug it into a wall connection on one end and into their computer on the other to get Internet access. The service is considered portable because it can be accessed anywhere in a given service territory, as long as electricity is available. The service costs roughly $30 to $37 a month, depending on desired speeds. That doesn't include a $5-a-month modem fee.

During this morning's keynote, Wolff unveiled a series of facts and figures about the company.

Some of the details are interesting primarily to industry insiders, but some give a little insight to the service.

-- Wolff said when the cellular industry was first launching, forecasts placed growth rates at 1 to 2 percent. That's the speed at which Clearwire is growing every quarter or two, Wolff said. "We are we seeing tremendous demand for our services," he said.

-- At the end of 2005, the company had 50,000 subscribers. Nine months later, Wolff said it had 162,000. That's out of the 5.6 million people who could have access to Clearwire's service in 31 markets.

-- It currently has enough spectrum today to reach 210 million people in the U.S., or two-thirds of the nation's population.

-- In surveys of customers, Clearwire has found that 10 percent had no Internet access before; 32 percent switched from dial-up; and 58 percent had wireline broadband.

-- Wolff said the top three reasons consumers buy the service were simplicity, portability and speed. "Two-thirds of customers are selecting us because of portability," he said. "It can fit in briefcase, and has to be plugged into power, but when chips are built into devices and PC cards, the portability and mobility aspects will go through the roof."

UPDATE: In my conversation with Ben Wolff later in the day, he corrected me on one of these points. He clarified that when the wireless industry was just getting started it predicted 1 to 2 percent penetration rates in total, as in forever, not each year as I had originally stated.

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WiMax World: First mobile WiMax trial

Posted by Tricia Duryee at 7:07 AM

BOSTON -- Intel's Sean Maloney made another first while on stage this morning at WiMax World.

Through a live camera feed to Oregon, where it was 7 a.m. and the sun was just rising, he showed footage of a Motorola base station being installed.

That now becomes the site of the first mobile WiMax trial being conducted in North America through a partnership with Intel, Motorola and Kirkland-based Clearwire.

That makes sense, given that Intel and Motorola are both investors in Clearwire, which is led by Craig McCaw. Intel invested in Clearwire years ago, and most recently the two invested $1 billion in July.

"Its been a big year for WiMax," said Maloney. "Its good to look back on the progress that's been made, and see the clear establishment of WiMax in most countries now."

Still, he stressed the challenges that lie ahead, including getting the cost down of equipment, and solving roaming problems between the various networks to make it an easy service for consumers to use.

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WiMax World: The need for speed

Posted by Tricia Duryee at 6:39 AM

BOSTON -- The momentum continued at WiMax World today, the first official day of the annual conference, with more announcements and first-time demonstrations.

During an early morning press conference, Nokia announced something completely unsexy, but promises that it is equally as important as a flashy high-end phone. The Finnish mobile phone giant unveiled a small base station that resides at a tower and provides WiMax. It can be installed by one person, making it cheaper to deploy.

Nokia said it already has secured sales of the base station and will have trials as soon as early 2007 and deployments by the end of the year. On the device side, it confirmed that it will have WiMax phones and tablets by 2008.

The first keynote this morning was by Intel Executive Vice President Sean Maloney, who said there has been a lot of momentum in the WiMax industry since Sprint Nextel announced about a month ago that it is adopting the technology.

"It has been a great year for WiMax, and we have a lot of work to do over the next four years," he said.

He asked, "Why is all of this is happening, what is driving the enormous capital commitments that the industry is making?"

His answer: the Internet.

"All of the outrageous hyperbole has either happened or exceeded our expectations," he said. "There was a boom and then a bust and then the thing is lifting up again over the last few years."

Intel then completed the first-ever demonstration of its WiMax "mobile compliant" chipset.

The demonstration showed off Internet access, live streaming Internet TV, and voice over Internet Protocol.

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October 10, 2006

InfoSpace layoffs announced

Posted by Kim Peterson at 3:45 PM

InfoSpace said today it is laying off 250 employees, or more than a third of its 670-person workforce, through the middle of next year as part of a broad restructuring.

The layoffs, announced in a regulatory filing, were not a surprise. The company said last month it had lost a big piece of business from one of its major customers, a wireless carrier that uses InfoSpace services to sell ringtones. Infospace didn't name the customer, but most observers guessed it was Cingular Wireless.

At the time, InfoSpace said its sales would be hurt and that it would undertake cost-containment measures.

As part of the restructuring, the company is losing its second director in a week. Chief Administrative Officer Edmund Belsheim Jr. will leave the company by Jan. 1 with a $1 million severance payment and a year of paid health insurance in hand.

Last week, the company announced the resignation of Rufus Lumry III, who left the board "for personal reasons."

The restructuring will cost InfoSpace about $6.5 million for severance costs, $1.5 million to get out of some facilities and between $4.5 million to $5.5 million to terminate certain agreements. Those numbers also include charges related to the previously announced closure of InfoSpace's office in Hamburg, Germany. There could be as much as $2 million in other restructuring charges through next year, the company said.

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Hard bargaining at RealNetworks

Posted by Kim Peterson at 2:36 PM

RealNetworks said last month it was acquiring South Korean company WiderThan for $350 million. Today in a regulatory filing it revealed a little of the back-and-forth negotiating over the price, which ended up at $17.05 per common share.

According to the filing, representatives of Real and WiderThan talked by phone on Sept. 9, and WiderThan said it was not pleased with Real's original asking price of $16 per share. WiderThan was hoping for something more in the range of $17.50 a share.

Later, Real said it would go as high as $16.75 a share, but WiderThan was still angling for more, saying its board would not be able to accept such a low price. No deal was reached.

The following day, WiderThan said it would only consider offers above $17 per share. After more discussion, both sides settled on a price tag of $17.05 per share.

WiderThan helps carriers sell ringback tones and full-track music download services. Ringback tones are songs a person hears while waiting for a call to be answered.

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PS3 pre-orders sold out

Posted by Kim Peterson at 12:02 PM

GameStop and EB Games stores in the area began taking pre-orders for Sony's PlayStation 3 today, and if you weren't one of the lucky ones waiting in line this morning you're out of luck.

Four stores reported being sold out of the system, and the GameStop in Bellevue Square said it filled its pre-orders in less than three minutes.

Two versions of the PS3 go on sale Nov. 17 in the United States for $500 and $600. To deal with demand, retailers are generally accepting pre-orders with deposits.

GameStop may be adding an online pre-order sale later, according to reports. And worst case scenario: there's always eBay.

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Ballmer on GooTube

Posted by Benjamin J. Romano at 10:50 AM

Microsoft CEO Steve Ballmer has been quoted in a couple of stories on the implications of Google's deal to buy YouTube for $1.65 billion.

Is YouTube worth the money? "If you believe it's the future of television, it's clearly worth $1.6 billion," Ballmer said in this New York Times story. "If you believe something else, you could write down maybe it's not worth much at all."

BusinessWeek hashed out the implications of the deal for Google's competitors, including Microsoft. Ballmer happened to be meeting with the magazine's editors Monday.

Ballmer said Google could emerge from the YouTube deal an even stronger rival. If Google can work out a good advertising model with YouTube, he said, it makes Google a stronger competitor to Microsoft. It will have a larger share of the growing online ad market, and can use the cash to create more products like the free online spreadsheet software, calendars and word processors it already offers. But Ballmer said Microsoft has a long-term strategy, not to mention a history of coming from behind to overtake rivals such as Netscape, the early leader in the browser market. "We're very long-term. We've got a stick-to-it-iveness, a tenaciousness that I would argue is unmatched," he said.

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Another class-action suit against Loudeye

Posted by Kim Peterson at 10:37 AM

Loudeye said today that it is the target of another class-action lawsuit. We reported last week that the company had been sued in federal court for allegedly portraying its business as more healthy than it actually was.

The second lawsuit was filed Friday in King County Superior Court against Loudeye and Nokia, which is buying Loudeye for $60 million in cash. The suit claims that Loudeye and its executives breached their duties, with help from Nokia, in negotiating and entering the buyout deal. The suit is asking that the merger be stopped.

Loudeye said in a regulatory filing today that it will vigorously fight the lawsuit.

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WiMax World: facts for starters

Posted by Tricia Duryee at 7:14 AM

BOSTON -- In the pre-conference day before WiMax World really kicks off in Boston, a number of interesting facts and figures about the emerging technology surfaced during a presentation by Berge Ayvazian, Yankee Group's chief strategy officer and Philip Marshall, a Yankee analyst.

First off, Yankee talked about its first-ever forecast for the WiMax industry. With both Kirkland-based Clearwire and Sprint Nextel announced their intentions to build nationwide WiMax networks, Yankee is predicting there will be 7.3 million subscribers of WiMax by 2010. That does not include subscribers of 3G wireless broadband networks.

Yankee said 200 WiMax trials have been launched in 65 countries worldwide, with 35 commercial fixed service offerings already up and running.

And, during some of his final comments, Ayvazian offered this piece of gossip: DirecTV and EchoStar had been invited to participate in a panel discussion about the quadruple and triple play (Internet, voice, wireless and TV), but "Unfortunately they were not willing to accept our invitation," Ayvazian said.

DirecTV and EchoStar are looking at using WiMax to provide voice and Internet connectivity that they cannot offer today with a satellite network. In fact, the two had been bidding on spectrum that was up for auction recently, but bowed out after prices went too high. Now, DirecTV and EchoStar are rumored to be working on developing a partnership with a WiMax provider, such as Clearwire, to provide these services.

"Rather than obtain licenses, they'll joint venture with others," Ayvazian said.

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October 9, 2006

Post-Woz video footage

Posted by Kim Peterson at 1:10 PM

Steve Wozniak hit town late last week, stopping at RealNetworks, Microsoft and other places to promote his new book, called "I, Woz," and talk about the good ol' pre-iPod days at Apple.

I wasn't able to make it, but was OK with that, having caught up with Wozniak at the University of Washington in April and in San Francisco last month at Apple's iPod announcement event.

Sounds like he got quite the reception at Microsoft, where he received a 15-second standing ovation, according to this blog.

Sam Ramji from Microsoft's Open Source Software Lab recorded an interview he did with Wozniak and posted it here.

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RealNetworks' new music player unboxed

Posted by Kim Peterson at 12:52 PM

Engadget gets hold of one of the new Sansa e280 digital music players, and has lots of pictures of the "unboxing." This is the player that SanDisk has been developing with RealNetworks, and it has Real's Rhapsody brand on the packaging and the device.

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WiMax World next up

Posted by Tricia Duryee at 12:29 PM

BOSTON -- I just arrived in Boston in time for WiMax World, which kicks off tomorrow and perhaps is the largest gathering for the new and upcoming technology.

I would have posted this blog item while on the train, but my trusty Verizon Wireless EV-DO card, failed to work. It's up and running now.

Here's what you need to know about WiMax in order to get the context of what will be happening this week.

WiMax is similar to Wi-Fi in that it provides wireless broadband access, but it is distributed more like cellular technology. A signal is be broadcasted from a tower and cover an entire town -- unlike Wi-Fi, which typically covers a single coffee shop. Plus, WiMax chips are supposed to be cheaper than cellular phone radios, allowing the technology to be included in laptops, handheld game players, cameras and all kinds of other devices..

In the past few months, the technology has progressed to a point where some major players are starting to make huge bets on it. Kirkland-based Clearwire and Sprint Nextel are both building national networks, and Intel and Motorola are backing the technology with a committment of hardware and billions of dollars.

The first day of the conference is tomorrow, but the big day is Wednesday when some of the industry leaders will keynote, including Sean Maloney of Intel, which is investing billions in the technology, and Ben Wolff, co-CEO of Clearwire, which was started by wireless guru Craig McCaw. After Wolff, Motorola Executive Vice President Gregory Brown will take the stage.

What a coincidence that those three will all talk one after another. Intel and Motorola were the lead investors in a $1 billion financing round that Clearwire received recently, Plus, Motorola purchased Clearwire's equipment subsidary NextNet for an undisclosed sum.

What could they possibly say next?

On Wednesday, Wolff will also participate in a roundtable discussion called "The Clearwire Partnership and the Future of Wireless Broadband." Sitting alongside him will be Motorola's Brown and Scott Richardson, vice president of Intel's mobility group.

Other sessions Wednesday will include WiMax in emerging countries, mobile TV and WiMax, and WiMax's role in the triple and quadruple play.

On Thursday, the last day of the conference, keynoters include Berg Ayvazian, chief strategy officer of the Yankee Group; Ron Resnick, the WiMax Forum's chairman, who will discuss whether mobile WiMax is ready for global deployment; and Peter MacKinnon, WiMax general manager of the LG-Nortel Joint Venture, who will be discussing 4G or the "Next G."

Stay tuned for more.

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Nokia recommends Fat Beats

Posted by Tricia Duryee at 12:18 PM

NEW YORK -- A music fan may scan the Internet for new undiscovered music, or go to an independent music store where the experts know what's hot, but now Nokia is bringing that vibe to the mobile phone.

In a service called Nokia Recommenders, the world's largest handset maker has gathered the best independent record shops around the world to write music reviews, with David Bowie as the leading the way as the key recomender. Nokia is launching the service in conjunction with a new music strategy that leans heavily on Seattle-based Loudeye, which it acquired not too long ago.

So far, the mobile music download business has not been as successful as everyone had imagined, but Nokia thinks with this personal approach, where people will be able to discover new songs, it could change. We'll see.

As far as I can tell, the problems have mostly revolved around the business model -- wireless operators want to make money on the sale, but consumers are unlikely to pay much more than the 99 cents, and those pennies are already accounted for.

So, while in New York, I decided to drop in on one of the independent music stores Nokia has designated a recommender -- Fat Beats. It officially represents the hip-hop scene in the New York area.

Record albums at Fat Beats store in New York. Fat Beats is a "recommender" in Nokia's new music service.

The store, in Greenwich Village, would be considered underground by any measure if it weren't for the fact that it is on the second floor. The stores below it -- Bagel Buffet and LifeThyme Natural Market -- are no indication of what lies above. The only giveaway is a little sign over the door leading to the stairs.

But the steep staircase gives way to a cave of what could only be a vinyl hip-hop collectors dream come true. The walls are covered from floor-to-ceiling with albums from both undiscovered artists and the classics. Only a small corner is dedicated to CDs.

The three clerks look like they are from the Beastie Boys with bandanas tied around their foreheads and hats tilted to the side. They spend their time shuffling through an iPod of music, listening to their favorites -- everything from Eminem to Al Green. For them, this is a part-time job, with most their time spent as MCs and producers. The authenticity bleeds from the low ceiling where glossy photos of well-known artists are signed and hung. From the looks of it, Xzhibit, who hosts the MTV show "Pimp My Ride," has visited at least twice.

On the door to the back room is a sheet of paper listing the 10 recommendations for October. True to the Nokia service's nature, they aren't anything you'd see in the Top 10. Artists include: Visionaries, Akrobatik, AG, Loer Velocity, Jayib, Jedi Mind and 9th Wonder. The instructions on the paper tell the store's employees to keep reviews positive and clean, and mention any guest appearances, and who the producer and label are because people are unlikely to know anything about them.

Eclipse, the store's manager and also a radio DJ and member of a group called Non Phixion, said beyond getting money from it, he likes participating in the program for other reasons.

"It's cool that Fat Beats was chosen to represent New York," he said.

Also, to have some role in mobile phones could be a good source of new revenue for the store.

"The record business is declining; anything we can do is great," he said.

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10-second tech review: Sony Ericsson w810

Posted by Tricia Duryee at 12:13 PM

NEW YORK -- While traveling, I decided to bring along the new Sony Ericsson w810 from Cingular Wireless. Besides obviously being good for making phone calls, it also has a stellar music player and a 2 megapixel camera for shooting fairly high-quality pictures for the tourist in me.

In doing so, I learned a few things about the phone -- good and bad.

First off, I wanted to load a fairly sizable music collection on it because I'd be flying from Seattle to New York, and then taking a train to Boston, and then flying back home from there.

I thought it would be as easy as taking the 1 gigabyte memory card out of the phone, sliding it in my card reader and dragging and dropping the music. Unfortunately, that wasn't the case. Sony Ericsson doesn't use SD cards; it uses a Memory Stick Duo, which did not fit in my card reader. That meant, I had to connect the phone to my laptop with a cable.

The second disappointment involved Motorola Bluetooth stereo headphones I brought with me. I figured they would be super helpful on a flight because they are cordless and I could tuck the phone into the seatback in front of me while listening to music. I discovered early on, however, that it did not work. It impossibly difficult to get the phone to discover the headphones, and once it did, it would not play the music. My initial suspicions that the phone does not support stereo Bluetooth seem to be the reason why -- so this setup will never work. Why would you build a music phone without being able to use stereo Bluetooth?

That left me the choice of bringing a pair of earbuds. I was forced to bring a set out of the box; once again, the input cable had a funky plug, not the usual earplug adapter.

Despite all those setbacks, the music player does work well, and easily fit more than 80 songs -- the extent of my digital music collection -- and room to spare for pictures.

Next up was the camera functionality. My first shots were taken in the Fat Beats store in New York, which has a partnership with Nokia.

After that, I headed downtown to check out the World Trade Center site. Here, I was impressed. I took my time adjusting the contrast and zooming in and out to get the exact shot I wanted.

At the World Trade Center site in New York.

The clarity of the shot was fairly good even when using the zoom. My only complaint here -- and I might just be missing it -- is that I don't see a shortcut to getting to the camera. I have to through the menu and select camera.

And, for whatever reason, the phone is always asking me what language I want to use: English, Spanish or Portuguese.

Other than that, I love the size, the candy-bar shape with the black and orange signature colors, and the user interface, which uses smart-looking icons and pictures.

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T-Mobile USA and Apple?

Posted by Tricia Duryee at 11:50 AM

NEW YORK -- If you have missed them, I've written two fairly comprehensive stories out of the press conference that T-Mobile USA and its parent, Deutsche Telekom, held on Friday here.

You can read about the Bellevue company's plans for rolling out a 3G broadband network here, and you can read a rare interview with T-Mobile CEO Robert Dotson here.

Now, there's something else that just didn't seem to fit anywhere in the coverage that may still be of some interest to you. Already, I see rumors flying about Dotson's comments -- sometimes characterized as "at some length" -- about Apple.

So here's the complete story.

In Dotson's prepared comments for the press conference, he mentioned Apple. He was talking about how e-mail may be a killer application for the mobile phone because only 5 percent of current consumer e-mail is accessed through a mobile phone.

"And as can be seen with Apple's new Leopard operating system -- the richness of the e-mail communications is just beginning to discover elements beyond the printed word ... -- moving to dynamic and personally tailored image-rich communications."

Then, he dropped the interesting statistic that 30 percent of the Web browsing traffic on T-Mobile Sidekick devices was to

That was it.

Or at least until a reporter asked whether T-Mobile was working closely with Apple, and could perhaps be working any products with them. I emphasize that the reporter did not even ask specifically about speculation of an "iPhone" that Apple may be developing.

Dotson's response: "I won't speak specifically to one area." But he said he highlighted Apple because it is a sign of where the marketplace is going, especially with 3G.

"No one is on the forefront of understanding consumers more on the desktop services [than Apple], " he said, adding that if you look at Apple's forthcoming operating system, you can see how it is changing the e-mail experience to match consumer behavior today. The Leopard system integrates video and voice into usually text-only e-mail.

He finished his comments with: "It is a good precursor for how this marketplace will evolve and how you can start to make money on products and services in the mobile environment. That's why I highlighted Apple. We'll always continue to look at good strong brands we can leverage in social networking, and look for opportunities for a deployment on services on top of desktop applications, but I'm declining to say anything about a specific brand."

I wonder how Microsoft -- T-Mobile's neighbor -- feels about that statement more than I wonder about whether the iPhone will launch with T-Mobile. Microsoft, too, is launching a new operating system, which is supposed to have a lot of new multimedia functions.

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Google's music deals

Posted by Kim Peterson at 11:50 AM

A month ago, YouTube turned industry heads by announcing it had received the rights for its users to use copyrighted content from Warner Music Group. Warner would upload all of its videos to YouTube and let users loose on a free-for-all to do what they wanted with the content. They could use Warner's music in their videos, for example, without fear of retribution.

It was a fascinating deal that seemed to be a boon for both companies. YouTube gets out of what could have been a nasty copyright infringement suit and Warner gets tons of exposure and goodwill.

Imagine the fun people could have mixing Gnarls Barkley's "Crazy" video with their own, or competing in a contest similar to Stephen Colbert's current Green Screen Challenge.

Today, Google matched YouTube's deal with Warner and raised it one with Sony BMG.

Right now, Google users can stream Warner's music video collection and buy those online for download for $2 each. Google said it's working on technology that will let users incorporate Warner content in their own videos that they upload. The Sony deal seems a little more conservative -- no talk of selling videos for download, for example -- but it promises to also give users content to play with.

Speaking of Google and YouTube, the New York Times is reporting that Google could announce a deal to buy the video-sharing darling for $1.6 billion as early as this afternoon. Some critics have said that anyone who buys YouTube will be facing copyright infringement lawsuit chaos. The music deals cut seem to take some of that pressure away.

Update: Google did make its move this afternoon, buying YouTube for $1.65 billion in an all-cash deal.

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October 6, 2006

So 10 minutes ago: A review of the week of Oct. 1

Posted by Mark Watanabe at 4:01 PM

Tech news
Late in the week -- namely today -- rumors heated up about the future of YouTube, that it was in talks to be acquired. Could we have a GoogleTube, or maybe a YouGoogle, in our future?

The annual proxy statement came out this week. For those keeping score, Bill and Steve's salaries got a little bump, a bit more than ("a bit" being a relative term here) $600K, but they each took a $50K cut in bonuses. One interesting thing to emerge is the recurrence of a vote on human rights issues, which Ben Romano nicely detailed.
With some fanfare, Amazon introduced some pretty cool features on its fledgling search engine, including one that returned street-level photos related to search results. With much less fanfare, it has pulled the plug on that feature and others.

With all the attention showered on the giants, RealNetworks edged its way into the digital music player business with a SanDisk Sansa that works with Real's Rhapsody service. What's more, megaretailer Best Buy is opening a Rhapsody-powered music store.

T-Mobile USA
Nearly a year and half ago Tricia Duryee wrote an insightful piece on how T-Mobile USA had fallen behind its quickly consolidating rivals not only in subscriber counts, but in leading edge technology. Just today, it broadly outlined its plan to catch up.

Quote of the week
"It's damn cheap for a company that already has a global presence, YouTube's brand identity is no less than Google's and is no less than Coke's,"
-- Trip Chowdhry, an analyst with the San Francisco-based Global Equities Research, speaking (a tad hyperbolically, no?) of YouTube and a reported asking price of $1.6 billion.

If you missed it ...
Every once in a while, some tech thing comes out of nowhere and soon can be found just about everywhere. Such is the phenomenon of user-generated video, popularized by YouTube (see above). These videos ...quot; and some of their commercial counterparts ...quot; actually have been on the Web awhile, but attention gloms on to them these days, as the giants start getting serious about them. Kim Peterson's piece from early this week surveys the landscape quite nicely.

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Head of MSFT Germany says auf Wiedersehen

Posted by Benjamin J. Romano at 3:23 PM

Bloomberg is reporting that Juergen Gallmann is leaving Microsoft over a dispute about "future direction" of the company in Germany.

The 44-year-old chairman of Microsoft's operations in Germany and vice president the Microsoft EMEA (Europe, Middle East & Africa), Gallmann . Here's his company bio. It's in German. Paste the Web address into Babel Fish for a translation.

According to Bloomberg, Gallmann asked Microsoft to terminate his contract and will leave at year's end. He's been in his current position since November 2002. Microsoft said Klaus Holse Andersenwill was appointed to lead the German operation in the interim.

Bloomberg cited a report in Manager Magazine earlier this year saying Gallmann missed sales growth targets.

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More T-Mobile details

Posted by Tricia Duryee at 5:11 AM

NEW YORK -- T-Mobile USA's press conference with parent Deutsche Telekom today in New York will detail how the companies expect to proceed after spending close to $4 billion for rights to airwaves in a recent government auction.

According to materials provided early this morning, the companies plan to discuss how they expect the Bellevue-based U.S. division to compete as the fourth largest carrier in the U.S., and how the spectrum purchased will allow it to close the gap between it and its larger competitors. The announcement will include its plans to roll out a 3G wireless broadband network. T-Mobile will also defend its position as the last nationwide carrier in the U.S. to start deploying 3G.
The network build-out was not possible until it purchased more spectrum.

The companies also will outline how critical T-Mobile USA is critical to the larger Deutsche Telekom organization.

The 3G roll-out is scheduled to start in the fourth quarter of 2006 and most of the work will be completed in 2007 and 2008, according to the release.

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T-Mobile USA talks it up

Posted by Tricia Duryee at 5:00 AM

NEW YORK -- T-Mobile USA is holding a press conference with its parent company Deutsche Telekom today in New York to present details on how it expects to proceed after spending close to $4 billion for rights to airwaves in a recent government auction.

Participating will be T-Mobile USA President and Chief Executive Officer Robert Dotson, Deutsche Telekom Chairman and Chief Executive Kai-Uwe Ricke, Deutsche Telekom Chief Financial Officer Dr. Karl-Gerhard Eick and T-Mobile International CEO René Obermann.

T-Mobile USA, the fourth largest U.S. carrier, is expected to announce that it will begin to roll out 3G services, which provides high-speed wireless broadband data to phones and laptops. T-Mobile is the last of the nationwide carriers to begin the network upgrade because it did not have sufficient airwaves to do so until now.

T-Mobile USA was created when Deutsche Telekom purchased VoiceStream Wireless, based in Bellevue, in 2001. Since the acquisition, the U.S. group has been a highlight of T-Mobile International's growth. By the end of last year, the U.S. division had expanded its customer base by 25 percent for the year, to 21.7 million subscribers.

In February, T-Mobile International's chief marketing officer, Ulli Gritzuhn, detailed how Bellevue's T-Mobile and the international division -- both subsidiaries of Bonn, Germany, telecommunications giant Deutsche Telekom -- have started to work together closely. That has included negotiating handsets discounts and sharing perspectives on the industry.

T-Mobile International was expected to help T-Mobile USA with the roll out of 3G since it had already begun to install the networks in some European countries. In the interim, while T-Mobile was waiting for the government auction, the company upgraded its network to a technology called EDGE, which is considered a fast, 2.5G technology, but not true broadband.

At the press conference, the company is expected to field questions from the mostly European media, which came to meet executives of the U.S. operations. Topics likely to be covered included whether T-Mobile USA is partnering with other telecom companies or when it will launch voice over Wi-Fi. Customers who sign up for the service can roam on to a Wi-Fi network to make calls in order to get better indoor coverage.

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October 5, 2006

Loudeye hit with class-action lawsuit

Posted by Kim Peterson at 5:23 PM

Shareholders filed a class action lawsuit against Seattle-based Loudeye and its executives in federal court Wednesday, claiming that the digital media company misrepresented the state of its business. You can view the lawsuit here.

Between May 2003 and November 2005, the suit claims, Loudeye reassured investors about its business when in fact it was "suffering from a host of undisclosed adverse factors." It was only after this period that investors learned of the real troubles at Loudeye, the suit claims. Loudeye's share price tumbled during the period the suit refers to.

The suit seeks unspecified damages. Loudeye, which is in the process of being sold to cellphone giant Nokia for $60 million in cash, has not responded to the filing yet in court.

Update: Loudeye submitted a regulatory filing today that said it intends to "vigorously defend against the claims and allegations in the complaint," and that doing so may require significant attention and resources of management.

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Starbucks on iTunes

Posted by Kim Peterson at 3:19 PM

Starbucks did not pay Apple Computer to get some prime real estate on the iTunes Music Store.

The two companies announced today that artists from Starbucks' Hear Music catalog will be featured in a special "Starbucks Entertainment" area within the iTunes store.

There was no mention of any collaboration between the two companies when it comes to Starbucks' in-store experience. Starbucks spent two years testing the feasibility of CD-burning kiosks in 45 stores in Seattle and Austin, Texas, only to pull out of most locations in May.

Perhaps today's announcement is a step toward having iTunes-enabled kiosks in stores for people who want to plug in their iPods. The big problem with that scenario would be giving the iPods permission to transfer the music back from the device to a user's home PC -- something Apple has been reluctant to do in the past.

Brier Dudley's take on the announcement is here.

Update: A Starbucks representative called to say that the company did not in fact pay Apple for the iTunes placement. But the company would not elaborate further on what kind of deal took place.

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Google CEO's incredible truth-sniffing machine

Posted by Kim Peterson at 11:54 AM

Google Chief Executive Eric Schmidt has been on tour in England, meeting with politicians and journalists. On several occasions, he has been talking about the idea of a truth-telling machine.

He forecast that, within five years, "truth predictor" software would "hold politicians to account". Voters would be able to check the probability that apparently factual statements by politicians were actually correct, using programs that automatically compared claims with historic data, he said.
Politicians "don't in general understand the implications" of the Internet, Mr Schmidt argued.

The Financial Times story mentions a remark this summer by deputy prime minister John Prescott: "I think it's called the Internet or something -- blogs is it? -- I don't know, I've only just got used to letters."

Not that some U.S. politicians are any better informed...

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Twango on tap

Posted by Kim Peterson at 11:13 AM

The GigaOm blog has a writeup of Redmond startup Twango (not to be confused with Seattle's Dwango Wireless, which changed its name to Dijji last year and is now out of business).

Twango builds on a digital-locker concept and adds social sharing capabilities. Its free service offers unlimited storage and 250 MB per month of uploads.

The company was founded in 2004 by five former Microsoft employees.

We wrote about the niche, which has drawn several area startups, including Twango.

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RealNetworks partners with SanDisk, Best Buy

Posted by Kim Peterson at 10:38 AM

RealNetworks is expanding its partnership with Best Buy. Working with music player maker SanDisk, the companies are going to debut a new music system based on RealNetworks' Rhapsody music service.

Best Buy is opening a Rhapsody-powered digital music store. SanDisk is launching the Sansa e200R Rhapsody digital music players on Oct. 15. The players are designed to work seamlessly with the Rhapsody service, and ultimately make a competitive run against Apple Computer's dominant iPod/iTunes combination. RealNetworks will also have to compete against Microsoft's upcoming Zune music system on store shelves.

It doesn't hurt to have one of the biggest electronics retailers in your corner for that fight.

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October 4, 2006

Craigslist to start charging for Seattle job postings

Posted by Kim Peterson at 5:12 PM

The Seattlest blog links to an announcement from Craigslist that the online classifieds site will start charging for employment ads in Seattle, San Diego, Boston and Washington D.C. later this month.

Part of the reason, according to Craigslist, is the incredible amount of spam, fraudulent schemes and overposting on the job boards for those cities. Ads for odd jobs and small projects will remain free.

Job postings will cost a $25 flat fee.

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T-Mobile "Stick Together" gets more

Posted by Tricia Duryee at 2:06 PM

William Ho, an analyst with Current Analysis, e-mailed me regarding my Monday story on T-Mobile USA, which detailed how the company was ditching its spokeswoman, Catherine Zeta-Jones, in favor of a people approach. Itl also its replacing its tagline, "Get More," with "Stick Together."

In the story, Tole Hart, an analyst with Gartner, said he wasn't sure why T-Mobile was changing its marketing approach since its celebrity campaigns have been successful.

He said: "It's a shift in terms of the marketing message. You only hear so much about them [T-Mobile]. I thought celebrities gave them some notoriety. We'll see what happens; I liked their existing strategy."

Ho said he disagreed. A people approach, he said, fits better with what T-Mobile is doing, including the launch of myFaves -- a service that allows unlimited calling to five people.

"MyFaves is complementary to what they're doing/trying to do in terms of youth and family focus," he wrote. "The spokesperson strategy did get T-Mobile traction and attention for sure. I even have e-mail debates with one of my colleagues on this with one guy favoring keeping [Zeta-Jones]. So we'll see down the road on who is ultimately right."

He said the upcoming release of "T-Mobile@home," a service that allows you to roam on to a Wi-Fi network when in your house to ensure better coverage, also fits with the people approach.

"The impending launch of T-Mobile@Home fits in to that whole keeping connected/sticking together to your 'community' messaging," he said. "This adds value to T-Mobile as a carrier."

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Medio's competition beefs up

Posted by Tricia Duryee at 1:29 PM

Cambridge, Mass.-based JumpTap, a competitor to Seattle's Medio Systems, has received $22 million in funding.

The round was led by Valhalla Partners with participation from existing investors General Catalyst Partners, BCE Capita, and Redpoint Ventures.

JumpTap said it will use its the funding to support further product development of its mobile search and advertising product, increase staff and "meet increased customer demand in the US. and Europe."

JumpTap has a deployment with Alltel, while Medio has a deployment with Verizon Wireless.

I included JumpTap in a story while I was at the CTIA IT and Entertainment Show that detailed advertising on the mobile phone.

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Vidiator launches Stan Lee

Posted by Tricia Duryee at 1:10 PM

Bellevue-based Vidiator said today that its Stan Lee POW! Mobile channel has launched on the Sprint network.

The mobile channel features animations from Stan Lee's "Accuser," "The Drifter" and "Stripperella."

Vidiator is the exclusive distributor of POW! Mobile content. Stan Lee is the co-creator of many recognized superhero franchises, including Spider-Man, X-Men, The Fantastic Four and The Incredible Hulk. Stan Lee POW! Mobile can be accessed by Sprint Power Vision subscribers for an additional $4.99 per month. Standard data charges apply.

Vidiator is owned Hutchinson Whampoa, a multibillion international company based in Hong Kong that's one of the world's leading wireless operators. The company develops products that helps carriers stream content to the mobile phone.

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Google's new playground: SearchMash

Posted by Kim Peterson at 11:22 AM

Google has launched a new site called SearchMash where it can anonymously test out ideas, reports SearchEngineWatch.

Danny Sullivan at SearchEngineWatch notes an uncanny resemblance between SearchMash and Amazon's service -- both seem like an R&D playground for the companies that own them. The link between the two could be Udi Manber, the former CEO of who jumped ship for Google in February.

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MSFT Wednesday morning roundup

Posted by Benjamin J. Romano at 9:44 AM

Pack-leading Wall Street analyst Rick Sherlund of Goldman Sachs is out with a research note expressing his opinion that Microsoft's Windows Vista operating system is more likely to launch on time -- meaning November for businesses and January for consumers. Sherlund, whose employer does investment banking business with Microsoft, wrote that he's expecting Release Candidate 2 (an even more complete version) of Vista to go out later this week or next.

"The Vista development organization has made rapid progress delivering improvements to Vista's performance, reliability, and compatibility," Sherlund wrote. He had long built into his expectations a later launch of Vista, which is already more than two years behind schedule.

Whenever the operating system does come out, it will be protected with an anti-piracy program, which Microsoft detailed today. The company announced a Software Protection Platform that will apply to Vista and "Longhorn" Server, and later to other products. Certain features in Vista, including the Aero Glass display, memory boost, some security measures and other extras, will not work in non-genuine copies of the software. Copies of the software not activated with a legitimate product within 30 days of being installed will operate in "reduced functionality" mode. Mary Jo Foley has a deeper look at the implications of the new program.

Microsoft filed its annual proxy statement early this morning. It scheduled its annual shareholders meeting for Nov. 14 at Meydenbauer Center in Bellevue.

Of note in the proxy: Chairman Bill Gates and CEO Steve Ballmer both drew an annual salary of $616,667 up slightly over last year, but both saw their annual bonuses decrease by $50,000 to $350,000 each. They're still doing OK, though. Gates and Ballmer hold company stock worth $26.2 billion and $11.2 billion, respectively, at yesterday's closing price.

But it's interesting that their bonuses were reduced, while 900 other top executives saw handsome rewards under the company's shared performance stock awards program. The two programs are not directly related and Gates and Ballmer do not participate in the shared stock award program.

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October 3, 2006

E-mail not a priority for college students

Posted by Kim Peterson at 2:58 PM

The Chronicle of Higher Education on a trend that MSN executives have been talking about for a while now: Teens and college students don't use e-mail.

College officials around the country find that a growing number of students are missing important messages about deadlines, class cancellations, and events sent to them by e-mail because, well, the messages are sent to them by e-mail.

Now it's all about instant messaging and text messaging.

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People are responding to wireless ads

Posted by Tricia Duryee at 1:50 PM

A study released today said people are responding to broadcast and print advertising that asks viewers or readers to send text messages to a number code -- considered a form of mobile advertising..

At this year's CTIA Wireless IT & Entertainment show in Los Angeles, I wrote about how wireless carriers, application developers and media owners were all talking about taking their first steps into mobile advertising, which some estimate will generate more than $11 billion in revenue in five years. Some were thrilled by the early response rates to many forms of mobile ads. They said, for instance, more people were clicking ads on mobile phones than they do on the Internet. This report will likely fuel their interest even further.

Seattle-based M:Metrics said the highest number of people responding to ads with so -called "short codes" occurred in Spain at 29.1 percent, followed by the U.K. at 18.5 percent. France came in at 10.1 percent; the U.S. was 7 percent and Germany came in last with 3.4 percent.

"These numbers are not unlike what we saw in e-mail response during the mid-1990s as the Web emerged an advertising medium," said Will Hodgman, M:Metric's CEO. "The growing adoption of major brands using SMS and the substantial consumer response rates indicate a couple of important trends: Mobile as a commercial medium is on steroids; and multimedia convergence is real."

M:Metrics found the highest response rates came from ads appearing on television. In the U.S., 4.5 percent of the responses were in regards to a television ad; in Spain, it was as high as 21.7 percent.

In addition, contests were the leading driver of short-code usage, such as games or reality TV shows, or chances to win free merchandise. Spain was the highest at 17.8 percent, followed by the U.K. at 10.6 percent. Of the responses in the U.S., 2.5 percent were tied to a contest.

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How safe is your browser?

Posted by Mark Watanabe at 1:35 PM

Chris Borowski, who is contributing to The Seattle Times' D.C. coverage as part of Northwestern University's Medill News Service, went to a Symantec news conference this morning on the company's most recent Internet Security Threat Report. Here's Chris' report:

WASHINGTON -- Firefox may not be as safe as many users had hoped, according to a report released by Symantec and discussed at a news conference here today.

In the first half of 2006, Firefox and its Mozilla siblings had the highest number of possible vulnerabilities, or potentially exploitable holes in its software, with 47, the report said. That's almost three times the number reported in the second half of last year. Symantec mostly blamed the rise on Firefox's growing popularity.

The number of vulnerabilities in Microsoft's Internet Explorer, used by more than four of five Internet users, rose 52 percent to 38.

Apple lovers also have reason to worry. There were 12 holes reported in the Safari browser.

But vulnerabilities do not necessarily lead to security breaches and are usually fixed with patches. Here's where Mozilla stands out. Mozilla's window of exposure -- or the time between the announcement of the vulnerability and a vendor-supplied patch (minus number of days before an appearance of an exploit) -- was just one day. Microsoft lagged behind with nine days, still a great improvement over the 25 days it took to patch holes in the second half of 2005.

There is another bright spot for Microsoft in Symantec's report. Among operating system vendors, it had the shortest patch development time with 13 days, tying Red Hat. Sun trailed far behind with a whopping 89 days, according to Symantec.

For the full report, click here.

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October 2, 2006

Digeo sues Gemstar-TV Guide

Posted by Kim Peterson at 4:36 PM

The interactive program guides (IPGs) used in cable systems are big business. The In-Stat research group estimates that the worldwide IPG market will grow to $1 billion by 2008.

Kirkland-based Digeo has developed its own IPG for use in its set-top box system for cable companies, but Los Angeles-based Gemstar-TV Guide International is the big gorilla in the industry. Microsoft, by the way, has developed its own IPG for its television software products.

The rivalry between Digeo and Gemstar surfaced Thursday in federal court in Seattle, where Digeo filed a lawsuit claiming that Gemstar violated federal and state antitrust laws.

Digeo said that it asked to license a subset of the 249 patents in Gemstar's IPG portfolio, but that Gemstar insisted Digeo license the entire portfolio. That likely would cost quite a bit more than Digeo wanted to pay. If Digeo didn't sign that licensing agreement, the suit said, it would be sued by Gemstar for patent infringement.

Digeo is seeking damages in court and an order that stops Gemstar's licensing practices. Gemstar hasn't responded to the lawsuit yet. When asked about the issue, a Digeo spokeswoman read a company statement saying that Gemstar is hindering innovation and reducing consumer choice.

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Stanton invests in BelAir

Posted by Tricia Duryee at 3:01 PM

BelAir Networks, which builds wireless broadband solutions, said today that it has raised $21.4 million, in part, from Trilogy Equity Partners, the Bellevue-based fund started by former T-Mobile USA Chief Executive John Stanton.

The lead investor of the Ontario-based company's fourth round was Ventures West Management.

"Trilogy Equity Partners looks for innovation, passion, and execution excellence -- BelAir Networks and its management team deliver on all three," said Trilogy's Tim Wong, former T-Mobile USA chief technology officer. "The company's proven and cost-effective mobile broadband mesh networks are differentiated by their carrier-class capacity, reliability and scalability. Only BelAir is applying its technology today to backhaul live cellular traffic."

The capital will be used to roll out municipal wireless networks in cities where it recently won contracts, including Minneapolis, City of London and Toronto. The funds will also be used to continue sales and marketing activities in the cable and cellular industries, and to further expand into international markets. Today, the company's wireless broadband technology is used in more than 150 networks worldwide.

Existing investors Comcast Interactive Capital, T-Mobile Venture Fund, Panorama Capital (formerly JPMorgan Partners), VenGrowth Capital Partners, BDC Venture Capital, and MMV Financial also participated in this round.

In addition to the equity financing, MMV Financial also provided a $5 million venture loan.

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Cray files to sell $80 million in stock

Posted by Benjamin J. Romano at 12:35 PM

Supercomputer maker Cray is planning to sell up to $80 million in stock, plus up to $12 million for its underwriters. In a regulatory filing Friday, the Seattle company said it will use the funds raised from the offering for general corporate purposes, product development and capital expenditures.

At the stock's current price, $10.83, the company would have to sell about 7.4 million shares to raise $80 million, plus 1.1 million to cover over-allotments for underwriters, including Thomas Weisel Partners and Needham & Company.

Cray's shares were trading down.

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Amazon's redesigned search engine

Posted by Kim Peterson at 12:24 PM

Greg Linden points out today that has redesigned its search page.

It now appears to be a metasearch engine, like Dogpile or Metacrawler, that gives a lot of control over which seach engines are used.

Greg says he likes the improvements, but I found myself a little confused at the categories. What is the "Web Booster" option? The engine also gives you the choice of searching books by Amazon, all of Amazon and then eight additional categories under the Amazon tab.

Here's Amazon's breakdown of the changes.

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A Zune logo Microsoft might not like

Posted by Kim Peterson at 10:42 AM

Defective by Design, a group tied to the Free Software Foundation that has complained about the rights management systems used by Microsoft and iPod, is starting to get fired up about Microsoft's new Zune player. This is the same group that protested Microsoft at this year's WinHec convention.

Click here to see how the group is tweaking the Zune logo. (Warning: Alludes to language that might be NSFW).

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Tricia Duryee
Tricia Duryee

Angel Gonzalez
Angel Gonzalez

Kristi Heim
Kristi Heim

Benjamin J. Romano
Benjamin J. Romano

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