July 28, 2006 10:22 AM PDT

Week in review: Intel's 'revolutionary leap'

Intel celebrated a major milestone this week, officially closing the books on the Pentium era with its launch of the Core 2 Duo, the company's most important product to come out in 13 years.

"This is not just an incremental change; this is a revolutionary leap," Intel CEO Paul Otellini said at a launch event in Santa Clara, Calif., on Thursday. The last time the company held such an event at its headquarters was when it introduced the Pentium processor in 1993.

The Pentium went on to become one of the computer industry's most recognized brands, albeit during a time when the PC market was a fraction of its current size.

The Core 2 Duo launch comes as rival Advanced Micro Devices narrows the gap between the two companies with better-performing products for desktops and servers. At the same time, the PC industry is searching for a boost after a bad financial quarter and yet another delay in the launch of Microsoft's Windows Vista update.

With Microsoft's Windows Vista not ready to make an appearance until 2007, the PC industry needs an Intel pick-me-up.

And while Redmond continues to look toward Vista's launch, it's also expending considerable effort on its Zune-branded MP3 player. On Thursday, the company said it plans to spend hundreds of millions of dollars to catch up to Apple Computer in the music business, but expects the effort to take several years.

The software giant plans to have one music player in the U.S. this year, expanding into other devices and regions next year, Robbie Bach, president of the Entertainment and Devices Division at Microsoft, said at the company's financial analysts meeting in Redmond, Wash.

"We think of this in the hundreds of millions of dollars of investment" over several years, Bach said. "It is something that is going to take time. This is not a six-month initiative."

Microsoft confirmed plans for its Zune-branded player and service last week, but has offered scant details beyond the fact that it will have a hard drive-based music player with a built-in Wi-Fi connection on the market this year.

IE 7 tagged 'high priority'
Also at the analyst meeting, Microsoft CEO Steve Ballmer said that his company is moving rapidly to create products that can be funded by ads and served up over the Internet.

"Software is becoming a service," Ballmer said. "Embracing advertising and subscription-based models and Internet-based delivery across Microsoft's product line is an important part of what we will do."

Ballmer likened Microsoft to a multicore processor, saying the company is trying to add two new cores, entertainment and Internet services, to its existing cores, desktop and server software.

Meanwhile, the company plans to automatically push Internet Explorer 7 to Windows XP users when the browser update is ready later this year.

IE 7 will be delivered in the fourth quarter as a "high priority" update via Automatic Updates in Windows XP, Gary Schare, Microsoft's director of IE product management, said in an interview Tuesday. Automatic Updates is a Windows feature typically used for security updates, but Microsoft has also used it to push its antipiracy tool WGA Notifications.

"The justification, of course, is the significant security enhancements in IE 7," Schare said. Microsoft recommends that all Windows users install the new browser when it ships, he added.

CONTINUED: MySpace takes the heat…
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