April 16, 2004 10:06 AM PDT

Week in review: Real's deal for Apple

RealNetworks' overtures to Apple Computer on the iPod and digital music suggest that the company may be looking for a dance partner. But Real just might end up with longtime foe Microsoft.

A leaked e-mail allegedly contains a private appeal from RealNetworks CEO Rob Glaser to Apple CEO Steve Jobs, suggesting that Apple open up the iPod music player in a partnership of the two companies in the digital music business. According to The New York Times, the leaked message hinted that Glaser might be forced to consider joining forces with Microsoft, should his offer of a technology alliance be rebuffed.

RealNetworks' proposal seems to underscore the digital media pioneer's growing sense of isolation in a market it once dominated. Glaser's efforts to recruit a high-level digital media partner highlight RealNetworks' deepening danger in the face of clear strides forward by both Apple and Microsoft.

The past year has seen scores of digital device makers support Microsoft's technology, with few doing the same for that of RealNetworks. Perhaps even more frustrating for Real, Microsoft has begun winning the support of big-name content companies, including record labels, Major League Baseball, Walt Disney and Time Warner, in large part because of content protection guarantees that RealNetworks hasn't been able to match.

Apple's apparent cold shoulder to the proposal has once again put the company's "go it alone" strategy in the spotlight. With the Macintosh, Apple decided to keep its operating system proprietary, licensing it out only on a few rare occasions and keeping control of both hardware and software.

Apple has taken some major steps to avoid past mistakes. For example, it has made the iPod compatible with Windows PCs, dramatically expanding its potential market. Sales of iPods last quarter helped Apple triple its earnings, compared with the same period a year ago.

Calling security
Microsoft released fixes for at least 20 Windows flaws, several of which could make versions of the operating system vulnerable to new worms or viruses. At least six of the flaws could make the OS susceptible to programs similar to the MSBlast worm and its variants, which have infected more than 8 million computers since last August.

The software giant released four patches to cover the 20 security issues, as part of its monthly update schedule. Microsoft wouldn't comment on the level of risk the flaws present, instead maintaining that companies that apply the fixes won't be in danger.

The crush of millions of Windows users trying to patch their computers overwhelmed Microsoft's update service for several hours after new security fixes were made available. Immediately after the release, traffic to Microsoft's Windows Update site spiked higher than seen during any previous update, reaching a sustained download rate of more then 50GB per second.

Past patches have resulted in 2 million people visiting Microsoft's Windows Update site every hour to download fixes. This time, between 3 million and 4 million people came to the site. As a result, many customers found that the scan didn't work properly, and they were not able to download the latest patches.

The academic community may have some security holes to fill, too. Academic supercomputing labs continue to clean up Linux and Solaris servers targeted by unknown attackers over the last month, as law enforcement officials investigate the crimes.

The attacks compromised servers at several supercomputing labs and universities, including the San Diego Supercomputing Center, Stanford University and the National Center for Supercomputing Applications. While the attacker, or group of attackers, had access to many of the computers that act as nodes on distributed high-performance computing networks, the intruder was more interested in access to computing power than sabotage, laboratory staff maintain.

Staff members from the laboratories were closemouthed, for the most part, citing an ongoing FBI investigation into the attacks. The attacks represent one of the widest-spread infiltrations of computer systems in years.

Google on the go
Google says it is "batting about" possible changes to its Gmail Web-based e-mail service, which launched last month to a chorus of privacy concerns. The search engine giant plans to offer Web surfers up to 1GB of storage for free, subsidized by advertising based on keywords scanned from messages and delivered over the service.

Google's plans have drawn a sharp reaction from privacy advocates, who worry about potential abuses of a system that might allow the company to permanently store millions of e-mail messages and scan their content. On Monday, California state Sen. Liz Figueroa, a Democrat from Fremont, said she was drafting legislation that would prevent Google or any other company from examining the content of e-mail in order to serve up ads.

A chief concern is how the service will be received in Europe. Gmail probably won't run into legal issues in Britain, as long as the company doesn't deceive customers about how their personal information will be treated.

Last week, Privacy International urged Britain's information commissioner to take action against the service. But the latest word from the commissioner's office is that, as long as Google is upfront about its plans, the company should have no problem offering the service in the United Kingdom.

However, Google may encounter opposition to its plan to stop limiting sales of trademarks in its popular keyword advertising program. The search giant quietly notified customers in an e-mail message last week of coming changes to its trademark policy.

Google said that in the next two weeks, it will begin allowing U.S. and Canadian advertisers to bid on any keyword, including trademarked terms, sold as part of its sponsored-listings service.

Earnings season
Some of tech's biggest names reported earnings this week:

• Sun Microsystems reported a loss and announced that it has changed the top executives in charge of its core server products, the latest major upheaval, as the company seeks to turn around 12 consecutive quarters of revenue declines.

• Intel reported quarterly earnings that represented double-digit increases over the same period a year ago. But it missed analysts' expectations by a penny, due to charges related to the settlement of a patent suit Intergraph filed against it.

• Aided by continued strong sales of its iPod digital music player, Apple posted second-quarter sales and earnings that topped expectations.

• Tech industry bellwether IBM reported first-quarter earnings that met expectations amid solid revenue growth in its hardware, software and services divisions.

• Advanced Micro Devices reported first-quarter earnings that exceeded expectations, due to strong sales across all its product lines, including its microprocessors and flash memory.

Also of note
McDonald's has chosen Wayport as its sole supplier of Wi-Fi Internet service in the United States...A cell phone trade group objected to a proposal that would force broadband Internet providers to rewire their networks to support easy wiretapping by police...Amazon.com quietly launched a test version of its long-awaited search engine, aiming to challenge industry stalwarts Google and Yahoo with new tools to navigate the Web...Some longtime broadband customers are complaining that they're getting the cold shoulder, as service providers fall over themselves to offer deals and discounts aimed exclusively at new subscribers.

 

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