New iPhone Is Already Here

The launch of the next-generation iPhone promises to be Steve Jobs' greatest stunt yet.

Apple, Jobs' secretive computer and gadget company, has been quietly positioning millions of units of a mysterious new product--almost certainly the new iPhone--in key markets since March. And yet, incredibly, not one credible image of Apple's new product has yet been published.

If the new phone is a flop, it's going to be a doozy. Apple is promising to sell 10 million of the gizmos this year; many investors are betting the Cupertino, Calif., company will sell many more than that. Yet Jobs has managed to keep the look, the feel and a complete list of the phone's features under wraps.

It's almost certain Jobs will unveil the latest version of the iPhone June 9, when he speaks at Apple's annual Worldwide Developers Conference in San Francisco. The gadget will go up for sale shortly thereafter. Ryan Peterson, co-founder at start-up ImportGenius.com, was the first to get the details of how Apple will make this happen. Peterson--an iPhone fan himself--sells shipping data culled from a clutch of government and private databases.

Meanwhile, analysts have a good idea who is making the parts inside the phone. Apple's new model is likely built around new, burlier communications chips from Infineon, says Will Strauss, a veteran communications chip watcher at Forward Concepts. Global positioning systems will be another new capability, Strauss says.

The look and feel of the phone, however, remains a mystery. Security at Apple's headquarters is tight. Rank-and-file staff say sensitive projects are draped with cloth before they're even brought into work. Yet Jobs would have had to have let others in on the secret once they handed off the specs for the new phone to Quanta (and quite probably also to Hon Hai Precision Industry) for assembly in sprawling compounds in China's Guangdong province.

One clue: Jobs began racking up serious mileage on his corporate jet during the company's final quarter of 2007, as he likely finalized deals with distribution partners in Europe and Asia, and perhaps scrutinized the first 3G iPhone handsets to come from his partners' factories. Morgan Stanley's (nyse: MS - news - people ) Kathryn Huberty was the first to spot the enormous jump in Jobs' airplane expenses--to $550,000 from $203,000 during the previous quarter.

During the first quarter of 2008, however, the focus shifted back to Cupertino. Apple's engineers were scrambling to revise the phone's software, and the company delayed by a week a software development kit that would open up the iPhone to outside developers. It was all backed by a $100 million "iFund," launched by Kleiner Perkins to fuel developers crafting applications for the phone.

Less than two weeks later, in mid-March, the first shipments of the new devices began arriving. The first 20 containers arrived at the Port of Oakland, Calif., the third-largest port on the West Coast, March 19, according to ImportGenius.com. The containers were quickly trundled off the ships and trucked 27 miles south to a distribution center in Fremont, Calif. More shipments followed on March 27, April 28 and May 6.

On April 23, when Apple Chief Operating Officer Tim Cook told investors on Apple's quarterly earnings call the company would sell 10 million iPhones before the year was out, he knew that millions of the new phones were already on their way to retailers.

http://www.forbes.com/technology/2008/05/29/stevejobs-iphone-
apple-tech-intel-cx_bc_0530stevejobs.html

Israelis and Palestinians Launch Web Start-Up

Nibbling doughnuts and wrestling with computer code, the workers at G.ho.st, an Internet start-up here, are holding their weekly staff meeting — with colleagues on the other side of the Israeli-Palestinian divide.

They trade ideas through a video hookup that connects the West Bank office with one in Israel in the first joint technology venture of its kind between Israelis and Palestinians.

“Start with the optimistic parts, Mustafa,” Gilad Parann-Nissany, an Israeli who is vice president for research and development, jokes with a Palestinian colleague who is giving a progress report. Both conference rooms break into laughter.

The goal of G.ho.st is not as lofty as peace, although its founders and employees do hope to encourage it. Instead G.ho.st wants to give users a free, Web-based virtual computer that lets them access their desktop and files from any computer with an Internet connection. G.ho.st, pronounced “ghost,” is short for Global Hosted Operating System.

“Ghosts go through walls,” said Zvi Schreiber, the company’s British-born Israeli chief executive, by way of explanation. A test version of the service is available now, and an official introduction is scheduled for Halloween.
The Palestinian office in Ramallah, with about 35 software developers, is responsible for most of the research and programming. A smaller Israeli team works about 13 miles away in the central Israeli town of Modiin.

The stretch of road separating the offices is broken up by checkpoints, watch towers and a barrier made of chain-link fence and, in some areas, soaring concrete walls, built by Israel with the stated goal of preventing the entry of Palestinian suicide bombers.

Palestinian employees need permits from the Israeli army to enter Israel and attend meetings in Modiin, and Israelis are forbidden by their own government from entering Palestinian cities.

When permits cannot be arranged but meetings in person are necessary, colleagues gather at a rundown coffee shop on a desert road frequented by camels and Bedouin shepherds near Jericho, an area legally open to both sides.

Dr. Schreiber, an entrepreneur who has already built and sold two other start-ups, said he wanted to create G.ho.st after seeing the power of software running on the Web. He said he thought it was time to merge his technological and commercial ambitions with his social ones and create a business with Palestinians.

“I felt the ultimate goal was to offer every human being a computing environment which is free, and which is not tied to any physical hardware but exists on the Web,” he said. The idea, he said, was to create a home for all of a user’s online files and storage in the form of a virtual PC.

Instead of creating its own Web-based software, the company taps into existing services like Google Docs, Zoho and Flickr and integrates them into a single online computing system.

G.ho.st also has a philanthropic component: a foundation that aims to establish community computer centers in Ramallah and in mixed Jewish-Arab towns in Israel. The foundation is headed by Noa Rothman, the granddaughter of Yitzhak Rabin, the Israeli prime minister slain in 1995.

“It’s the first time I met Palestinians of my generation face to face,” said Ms. Rothman, 31, of her work with G.ho.st. She said she was moved by how easily everyone got along. “It shows how on the people-to-people level you can really get things done.”

Investors have put $2.5 million into the company so far, a modest amount. Employing Palestinians means the money goes farther; salaries for Palestinian programmers are about a third of what they are in Israel.

But Dr. Schreiber, who initially teamed up with Tareq Maayah, a Palestinian businessman, to start the Ramallah office, insists this is not just another example of outsourcing.

“We are one team, employed by the same company, and everyone has shares in the company,” he said.

At G.ho.st’s offices in Ramallah, in a stone-faced building with black reflective glass perched on a hill in the city’s business district, employees say they feel part of an intensive group effort to create something groundbreaking. Among them are top young Palestinian programmers and engineers, recruited in some cases directly from universities.

The chance to gain experience in creating a product for the international market — a first for the small Palestinian technology community — means politics take a backseat to business, said Yusef Ghandour, a project manager.

http://www.nytimes.com/2008/05/29/technology/29compute.html?_r=1&ref=
technology&oref=slogin

The mogul who would run Yahoo

He made his mark at Microsoft as head of the company's worldwide sales force at a time when it seemed everyone hated the company - most of all its customers. In 2 1/2 years Kevin Johnson achieved a miracle: He turned Microsoft's customer satisfaction numbers around.

After that, CEO Steve Ballmer gave Johnson a really hard job: Figure out what to do about Google, which now garners more revenue from online advertising than Microsoft does from Windows.

Plan A, which Johnson spearheaded, was to buy Yahoo, a company that for all its problems commands roughly twice as much online-ad revenue as Microsoft (MSFT, Fortune 500). Plan B, it would appear, is to acquire Yahoo's search business and leave the rest. In the middle of all this, while immersed in Yahoo talks "seven days a week," the affable Johnson, 47, known to insiders as KJ, agreed to talk to Fortune twice, once in April and once in late May.

"Online is a very, very significant growth opportunity for us," he says. It's also something of an obsession for his boss. It was the only part of Microsoft's business that Ballmer talked about in his presentation at the company's annual CEO summit in early May. He showed a PowerPoint slide that displayed approximate ad revenue for the largest media companies in the U.S.: GE/NBC (GE, Fortune 500) on top at $15 billion, Google (GOOG, Fortune 500) in the middle at $8 billion, Microsoft down near the bottom, with a measly $2 billion. Ballmer estimates that the $40 billion spent this year on online advertising will double by 2010. If Microsoft is ever going to approach the growth it achieved during the PC boom, it has to grab some of that action before Google takes it all.

That's where Johnson comes in. He holds an unwieldy portfolio at Microsoft. On one hand, he's in charge of the company's core Windows monopoly - for better or worse, it was on his watch that the company released the much criticized yet highly profitable Windows Vista. With his other hand he runs Windows Live Services - a division whose failures he described bluntly in a May 18 memo to his staff: "The fact is we are not where we want to be in [online services] yet, and we've been in this position longer than we'd all like."

There's an important link between these two seemingly unrelated businesses. Ballmer wants Johnson to take Microsoft's so-called platform business - its PC-based Windows software franchise - and migrate it toward what Microsoft calls "software plus services." Just as Windows was the framework on which software ran in the PC era, Windows Live Services could be the framework for Internet computing. It's unlikely that Microsoft will ever create the kind of monopoly on the web that it enjoyed in PCs, but the company is deploying its considerable resources to control as much of it as possible.

During a long conversation, Johnson draws a simple chart on a whiteboard. Four vertical rectangles represent industries that profit from online advertising: search, information and content, communications and social networking, and online productivity services (e.g., word processing on the web rather than on the desktop with Microsoft Word).

Underneath all four is a horizontal box - the revenue-generating ad platform on which the other industries rely. That box is key to Microsoft's online aspirations. "There will be a small number of big-scale players in that underlying platform," Johnson says. Microsoft has been building its platform though acquisitions, but before its $50 billion bid for Yahoo, the most it had ventured was $6 billion last year for aQuantive's system for buying and placing ads.

But for a platform to work properly, Johnson says, it needs scale. "The more ad inventory you can get, the better job you can do to target ads, drive efficiency, and deliver better yield for publishers." Google has scale; Microsoft doesn't. But it does have a lot of money. Thus the Yahoo pursuit.

http://money.cnn.com/2008/05/26/magazines/fortune/tech/kirkpatrick_johnson.fortune/

Will Windows 7 prove deadly to Vista? (Or how many times can you kill the dead?)

Lots and lots of material clogging up the internet pipes today about Windows 7.

It follows the first public demo of the technology yesterday at the All Things Digital conference in San Diego. You can read Maggie Shiels' piece here.

Putting aside issues about the touch technology itself for one moment, the biggest question about this public demo of Windows 7 is: what harm will its promise do to sales of Vista?

I just received an interesting note about Windows 7 from the Microsoft PR team. In it, it states: "Microsoft absolutely recommends customers deploy Windows Vista today."

In other words, Microsoft are telling XP customers not to wait for Windows 7 but to grab Vista now. Despite issuing more 140 million licenses for Vista worldwide, it's seen by many as a failure.

And given that Windows 7 is supposed to be launched in 2010 that's close enough for many customers, including IT buyers in companies, simply to keep on using Windows XP and wait for Windows 7.

Microsoft itself is only too aware of this problem.

As Chris Flores writes on the Vista blog: "With Windows 7, we're trying to more carefully plan how we share information with our customers and partners."

If Microsoft reveals too much about Windows 7 it's only going to make XP customers more likely to wait, and if the firm once again over promises on what 7 will deliver, the launch itself could be as flat as the one that greeted Vista.

http://www.bbc.co.uk/blogs/technology/2008/05/will_7_prove_deadly_to_vista.html

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Apple patent filing suggests solar powered iPhone

The battery life of portable gadgets has always been a source of frustration. But Apple may have found an eco-friendly way around the problem – by integrating a solar panel behind, say, the iPhone’s LCD display.

Apple has filed a patent application for the integration of a layer of solar cells below a gadget’s LCD display. Essentially, sunlight passing across, say, the iPhone’s screen could be soaked-up by the solar panel beneath the LCD and then turned into useable power for the phone.

The firm's "Solar cells on portable devices" patent application states that “solar cells embedded into the device then provide the electrical power to charge the batteries. The power generated from the solar cell can also directly power the operations of the device”.

It’s not clear at this stage which devices Apple may consider using solar power for, although the iPhone would be an obvious guess because battery life on the phone has been panned since day one.

The patent also states that information about solar-power generation could be displayed on the device’s main screen, allowing users to monitor the amount of mains-sourced power left versus the level of solar charge available.

Apple isn't the first manufacturer to consider integrating solar cells directly into gadgets though. In 2007, Motorola developed a screen allowing around 75 per cent of light to radiate through, meaning a solar cell could be placed behind to soak-up the light and turn it into useable power

http://www.reghardware.co.uk/2008/05/27/apple_solar_power_patent/

Chicago demands ticket taxes from eBay, StubHub

The City of Chicago is suing eBay and its secondhand ticket outfit StubHub, claiming they've failed to collect millions of dollars a year in city taxes.

On Monday, as reported by The Associated Press, the city filed separate suits against eBay and its subsidiary, demanding records of their Chicago-area ticket sales. A Chicago ordinance requires businesses to collect taxes on the resale of all tickets to "sporting events, cultural events, and other amusements taking place in the city," and the dual-suits allege that the two online outfits refuse to do so.

eBay did not respond to multiple requests for comment. But according to Jennifer Hoyle, a spokeswoman for the Chicago Department of Law, the company has told the city it's immune to the ordinance. It has also refused to provide records of its online ticket sales, she says.

"One of the big issues is that we don't exactly know what we're losing in taxes. The companies involved have not provided the paperwork that would tell us what we're missing out on," Hoyle told us. "They claim that the ordinance isn't applicable to them."

In addition to asking for records, the suits asks for money. Chicago demands that the two online outfits start collecting and remitting its amusement tax - and fork over some back taxes as well.

As Hoyle points out, the Chicago Municipal Code requires all ticket resellers and all ticket reseller agents to collect the city's amusement tax. The agents bit includes websites, but that wasn't added until September 2006, says Donal Quinlan, a spokesperson for the office of Chicago alderman Edward Burke, who was instrumental in revising the ordinance.

Burke's office estimates that Chicago is missing out on $16m a year in taxes just on the resale of tickets over the net. Or at least, that was the estimate back in 2006.

A pre-Internet-era Supreme Court case says that online businesses aren't required to collect sales taxes unless they have a physical presence in the state where the customer resides. StubHub has offices in Chicago and that may mean that eBay has a physical presence in Illinois as well.

http://www.theregister.co.uk/2008/05/22/chicago_sues_ebay_and_stubhub/

First Microsoft says they and then they won’t

Open source advocates have questioned Microsoft's commitment to using open document standards in the future.

The computer giant has said it will implement use of the Open Document Format (ODF), "sometime next year".

The Free Software Foundation Europe said: "It's a step in the right direction but we are sceptical about how open Microsoft will be."

The European Commission, which has fined Microsoft for monopolistic practice, welcomed the move.

"The Commission would welcome any step that Microsoft took towards genuine interoperability, more consumer choice and less vendor lock-in," it said.

The Commission added that it would look into whether Microsoft's announcement "leads to better interoperability and allows consumers to process and exchange their documents with the software product of their choice".

Governments will be looking for actual results, not promises in press releases. Open source software advocates have long criticised the file formats used by Microsoft's Office suite of programs because they are not genuinely interoperable with software from third parties.

Microsoft has said it will add support for ODF when it updates Office 2007 next year. Promises, promises....

http://news.bbc.co.uk/2/hi/technology/7414547.stm

‘Big Brother’ database for all phones and e-mails

Is this a paranoid fantasy or what? A massive government database holding details of every phone call, e-mail and time spent on the internet by the public is being planned as part of the fight against crime and terrorism. Internet service providers and telecoms companies would hand over the records to the Home Office under plans put forward by officials.

The information would be held for at least 12 months and the police and security services would be able to access it if given permission from the courts.

The proposal will raise further alarm about a “Big Brother” society, as it follows plans for vast databases for the ID cards scheme and NHS patients. There will also be concern about the ability of the Government to manage a system holding billions of records. About 57 billion text messages were sent in Britain last year, while an estimated 3 billion e-mails are sent every day.

Home Office officials have discussed the option of the national database with telecommunications companies and ISPs as part of preparations for a data communications Bill to be in November’s Queen’s Speech. But the plan has not been sent to ministers yet.

Industry sources gave warning that a single database would be at greater risk of attack and abuse.

Jonathan Bamford, the assistant Information Commissioner, said: “This would give us serious concerns and may well be a step too far. We are not aware of any justification for the State to hold every UK citizen’s phone and internet records. We have real doubts that such a measure can be justified, or is proportionate or desirable. We have warned before that we are sleepwalking into a surveillance society. Holding large collections of data is always risky - the more data that is collected and stored, the bigger the problem when the data is lost, traded or stolen.”

David Davis, the Shadow Home Secretary, said: “Given [ministers’] appalling record at maintaining the integrity of databases holding people’s sensitive data, this could well be more of a threat to our security, than a support.”

http://business.timesonline.co.uk/tol/business/industry_sectors/telecoms/article3965033.ece

Microsoft! offers! Yahoo! less!

Guess who's b-a-a-c-k and still all hot and bothered?

Microsoft said yesterday that a deal with Yahoo!, but not a full-blown acquisition, is still very much on the table.

Although it refused to rule out a possible buyout, Microsoft issued a statement saying it was discussing alternative deals with Yahoo!.

Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo! Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties.

Yahoo! is under pressure from Carl Icahn, who is pushing to replace its board of directors in favour of one which supports the takeover. It has a shareholder meeting 3 July. Clearly the pressure is intensifed if Microsoft's deal, or a version of it, is still on the table. Anonymous sources associated with Microsoft said the software giant had not held talks with Icahn.

Yahoo! issued its own statement in response to Microsoft's:

Yahoo! has confirmed with Microsoft that it is not interested in pursuing an acquisition of all of Yahoo! at this time. Yahoo! and its Board of Directors continue to consider a number of value maximizing strategic alternatives for Yahoo!, and we remain open to pursuing any transaction which is in the best interest of our stockholders. Yahoo!'s Board of Directors will evaluate each of our alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximizing stockholder value.

Yahoo! is already talking to Google about working together in online advertising - discussions which Steve Ballmer, Microsoft's CEO, blamed for ending the original discussions. Another possibility is that the two companies combine their search engine technology and audiences.

http://www.theregister.co.uk/2008/05/19/microsoft_yahoo_still_talking/

Jerry Yang prepares troops for proxy battle

With Carl Icahn launching a proxy fight Thursday to unseat Yahoo's board of directors, Yahoo CEO Jerry Yang issued a letter to employees, as the Internet pioneer gears up for battle. This letter is likely to be the first in a string, as the proxy fight heats up at a rapid pace. Yahoo's shareholder meeting is less than two months away.

* * *
To: All Worldwide Employees
From: Jerry
Subject: today's news

Yahoos,

Today, Carl Icahn announced his intent to nominate a slate of 10 directors to take control of our board of directors at this year's annual meeting. We sent him a letter in response, which we made public in a press release. I'm attaching a copy of that press release, including the full text of our letter, and you should read it carefully.

We always want to hear the views of our stockholders, but you should know that Mr. Icahn's letter reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal.

We believe our board has the independence, knowledge, experience, and commitment to maximize value for all of our stockholders. Yahoo is a great company with a truly unique set of highly valuable assets that is growing, profitable, and executing well on its strategic plan to enhance our leadership position in online advertising. Our solid results for the first quarter of 2008 are a testament to this.

Today's events will undoubtedly draw a lot of media attention, and there will be lots of speculation about what happens next for Yahoo. I ask all of you to put aside the rumors and speculation, and stay focused on the business at hand and what we do best--transforming the online experiences of our users, advertisers, publishers, and developers.

I know you all have a lot of questions, and so I've also attached some FAQs that will address some of your questions. As we've said before, we'll do our best to continue to update you as new information becomes available. Thank you again for your continued hard work, as we work together to make Yahoo a stronger leader in the online marketplace and an even better company.

Jerry

FAQs:
Can stockholders nominate directors to the board?

Stockholders, as equity owners of the company, have the ability to nominate one or more directors for election to a board at the company's annual meeting, as long as they comply with the requirements contained in our bylaws. Under our bylaws, today was the last day that a stockholder could nominate a candidate for director.

How long will all this take?
We can't speculate on how events will develop at this time, but we plan to hold our annual meeting in a couple of months.

I ask all of you to stay focused on the business at hand and what we do best--transforming the experiences of our users, advertisers, publishers and developers, all while enhancing our leadership position in the online marketplace.

What's our next step?
We will file preliminary proxy materials with the SEC that will describe the matters to be voted on, including the company's nominees for election to the board, and the board's recommendation. Once those materials are cleared by the SEC, we will mail them to our stockholders.

In the meantime, we should remain focused on doing what we do best--transforming the experiences of our users, advertisers, publishers and developers, all while enhancing our leadership position in the online marketplace. We will continue to update you as information becomes available, but please remember that we are subject to various legal restrictions on what we can say and when we can say it.

What can employees do
We ask you to continue to put aside all rumors and speculation you may be hearing. None of us should allow external reports to shift our focus away from doing what we do best--transforming the experiences of our users, advertisers, publishers and developers, all while enhancing our leadership position in the online marketplace.

* * *
And here's what Yang wrote to all Yahoo senior vice presidents and executives of higher ranking, outlining not only what the company has done to respond to Icahn but also highlighting "talking points" for employees.

Yahoos looking to get a jump on what your manager may be saying to you on all of this, take note.

To: All SVPs and Above
From: Jerry
Subject: our response to carl icahn

Leaders,

As you know, Carl Icahn today announced his intention to nominate 10 directors to take control of our board of directors at our 2008 annual meeting.

This afternoon, we issued our response to Mr. Icahn and are sending an e-mail to all employees, updating them on these recent developments. A copy of our response, including the letter to Mr. Icahn, is attached. I urge you to read it.

As we outline in our letter, we believe our independent board has more than demonstrated the fact that it has the knowledge, experience, and commitment to maximize value for all Yahoo stockholders.

I will be scheduling a call with you soon. In the meantime, please find below some talking points for you to use with your teams.

Jerry

Talking Points:

* Carl Icahn today announced his intention to nominate 10 directors to take control of our board of directors at our 2008 annual meeting.

* We believe much of what Mr. Icahn said today reflects a significant misunderstanding of the facts about how hard our independent board has worked--and continues to work--to maximize stockholder value. We believe our independent board has the knowledge, experience, and commitment to maximize value for all Yahoo stockholders.

* Soon, we will file preliminary proxy materials with the SEC that will describe the matters to be voted on at the annual meeting, including the company's nominees for election to our board of directors, and the board's recommendation. Once those materials are cleared by the SEC, we will mail them to our stockholders.

* Stockholders, as equity owners of the company, have the ability to nominate one or more directors for election to the board at the company's annual meeting, as long as they comply with the notice requirements contained in our bylaws. Under our bylaws, today was the last day that a stockholder could nominate a candidate for director.

All Yahoo stockholders of record, as of the closed of business on June 3, 2008, the record date for the annual meeting, are entitled to vote on the election of directors at the annual meeting of stockholders.

* There will be lots of media attention and speculation about what happens next for Yahoo. We ask that you put the rumors and speculation aside and stay focused on the business at hand. We are at a very important time in our company's history.

* Yahoo is strategically positioned for accelerating growth and profitability because of our powerful combination of assets: our global brand and scale, unmatched audiences, global leadership in online advertising, strategic positions in Asia, leadership in mobile and emerging markets, and world-class people and technology.

* The company continues to execute well against its strategic and financial plan.

* Our board has explored, and continues to explore, a variety of strategic alternatives and remains committed to considering any alternative intended to maximize stockholder value.

* We'll do our best to continue to update you as new information becomes available, but please remember we are subject to various legal restrictions on what we can say, and when we can say it, as we work through this situation.

• Thank you again for your continued hard work.

http://www.news.com/8301-10784_3-9945766-7.html

Billion dollar buyout: CBS saves CNet from activist investors

CBS is buying CNet Networks - the web publisher behind ZDNet, gamespot.com, tv.com, mp3.com, news.com and techrepublic. These sites will now be combined with CBS's websites.

CBS is paying $1.8bn for CNet - a 44 per cent premium on its share price. The combined properties will have 54 million unique users per month in the US and 200 million worldwide.

Quincy Smith, president of CBS Interactive, said: "The core businesses of CNET Networks and CBS Interactive represent near perfect category symmetry in premium online content". He said the deal would allow the two companies to "build new verticals" as well as grow their existing businesses.

The deal is good news for CNet which has been under pressure from shareholders. In January two institutional investors were pushing to get extra people on the board of directors to reverse CNet's falling share price which has been on the slide since January 2006.

CBS has also been criticised for "not getting the net" - its early stategy of driving viewers to one site - CBS.com - were abandoned for a more shotgun approach.

CBS did a round of deals with various web publishers including AOL, Bebo, Comcast, Joost and CNet in 2007 to get its shows distributed more widely online. CBS also bought London based music site last.fm for $280m in 2007.

CNet's board has unanimously approved the offer and recomends CNet shareholders do the same. It is expected to close in the third quarter.

http://www.theregister.co.uk/2008/05/15/cbs_buys_cnet/

Yahoo! Icahn! launches! proxy! war!

Yahoo! might not have escaped Microsoft's clutches after all. But don't hold your breath

Even though he admits he knows nothing about technology or Silicon Valley, activist investor Carl Icahn has confirmed he will fight to take over Yahoo!'s board of directors in order to force through a takeover by Microsoft.

Icahn, who succeeded in getting board seats at Motorola, today named the ten people he would like to see replace Yahoo's current board of directors.

He described Yahoo!'s recent decision to reject Microsoft's offer for the company as "irrational". The letter, addressed to Yahoo!'s chairman Roy Bostock, said: "It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft’s bid of $33 per share is a superior alternative to Yahoo’s prospects on a standalone basis." He said that he, and many shareholders, believed that a combined Microsoft/Yahoo would be a dynamic company and strong enough to compete with Google.

Icahn has now bought 59m Yahoo! shares and asked the Federal Trade Commission for clearance to acquire up to $2.5bn of Yahoo! stock.

What is not clear from the letter is whether Icahn has spoken to Steve Ballmer or anyone else at Microsoft. Microsoft withdrew its offer of $47.5bn because Yahoo! demanded another $5bn. In his letter Ballmer ruled out taking the offer directly to Yahoo! shareholders - the strategy which Icahn is now banking on, and according to insiders the company has moved on. Rots of Ruck, Carl, baby.

http://www.theregister.co.uk/2008/05/15/yahoo_proxy_battle/

Apple's HBO deal means shift in iTunes pricing; Whatever the market will pay

Tough-guy Tony Soprano and the frisky femmes from "Sex and the City" are now available for viewing for non-HBO subscribers through download purchases on Apple's online iTunes store, the companies announced Tuesday.

The agreement, which includes different prices for TV shows, marks a shift for the Cupertino company, which has resisted pressure from the entertainment industry to change its pricing model.

HBO episodes from "Sex and the City," "The Wire" and "Flight of the Conchords" will cost $1.99 per episode, the iTunes standard price for individual TV shows. But other shows - "The Sopranos," "Deadwood" and "Rome" - will command premium prices of $2.99 per episode.

The pricing shift represents the reality that not all content is equal, said Rob Enderle, founder and principal analyst at the Enderle Group, a technology consulting firm.

"I think this is the way it will go," he said. Such a system could eventually pave the way for consumers to download movies while they are still in theaters. "Maybe a first-time movie will sell for $30. It's not going to sell for $2," Enderle said.

Apple CEO Jobs has resisted such price variations for fear of driving costs too high. "He thinks the content people are clueless, and he wants to make sure they don't destroy the market. But there has to be a balance," Enderle said.

Music downloads, though, most likely won't see price variations. "They are competing with subscriptions. They can't allow music to go up," he said.

HBO and Apple hope to benefit from the buzz around the "Sex and the City" movie, which opens in theaters May 30. All 94 episodes from the show's six seasons will be available through iTunes.

http://www.mercurynews.com/businessheadlines/ci_9253750

MySpace wins bumper spam payout

MySpace has won a $234m (£120m) legal judgement over junk messages sent to members of the social networking site.

Victory in the case was awarded to MySpace after Sanford Wallace and Walter Rines, the men behind the junk mail, failed to show up in court. The judgement is thought to be the largest ever given against senders of unsolicited commercial e-mail. However, anti-spam experts said MySpace had little chance of getting the cash it sought.

"Anybody who's been thinking about engaging in spam are going to say 'Wow, I better not go there,'" said Hemanshu Nigam, MySpace chief security officer to AP.

"Spammers don't want to be prosecuted. They are there to make money. It's our job to send a message to stop them," he added.

The two junk mailers worked together to create MySpace accounts or took over existing ones by stealing passwords.

Using these accounts the pair e-mailed MySpace members to make the mail look like it came from trusted friends. Typically the e-mail asked recipients to view a video or visit a website.

"When you go there, they were making money trying to sell you something or making money based on hits or trying to sell ringtones," said Mr Nigam.

MySpace said the duo sent 735,925 messages to its members.

In court papers, MySpace said sending the junk mail cost it money and generated complaints from hundreds of users. MySpace also said that some of the external websites contained pornographic material, potentially harming teenagers who use MySpace.

http://news.bbc.co.uk/2/hi/technology/7399868.stm

Silicon Valley opens a Texas Branch: HP pays $13.9bn for EDS

Updated Hewlett Packard has bought EDS for $13.9bn, doubling its services business at a stroke. The Silicon Valley giant will pay $25 a share for Texas-based EDS, over 25 per cent more than the services firm's shares were trading at when news of the deal first leaked yesterday.

It will finance the deal through a combination of cash on hand and new debt. HP's had $9.9bn cash in the bank at the end of last quarter. The price is still barely half the size of HP's Compaq buy back in 2001.

EDS will become a business group within HP – branded EDS - an HP Company. The unit will be headed by EDS boss Ron Rittenmeyer, who also joins HP’s executive council. He will report direct to HP boss Mark Hurd.

Once the deal is concluded, HP will have a services business with revenues of $38bn a year and 210,000 employees. It will be in a strong second place in the IT services market behind IT leader IBM.

While EDS has dragged itself away from the abyss it was staring into a few years back, its financial performance has not exactly been stellar. Asked whether he thought HP could drag up EDS’ performance further, Hurd said “We wouldn’t do the deal if we didn’t think we had opportunity to improve the operating level that EDS currently has."

HP is banking on squeezing more value out of the combined firm using the trusty two-pronged weapon of synergy and leverage. Just that alone would deliver shareholder value, according to Hurd. If the companies can use the deal to grow their revenues beyond their existing rates, that would complete the “triumph” he said.

On job cuts, EDS' Rittenmeyer said the firms had very little overlap. He added EDS was already cutting its workforce and this would continue, but added that as part of a bigger company there would be more opportunities for employees. The ones that aren’t laid off obviously.

Hurd delivered on expectations that he would be relying on using machines to replace people to boost margins, saying that every time the firm automated server management, a datacentre, etc, that there was a “cost effect” as well as a “customer delight effect.”

Asked where the deal left TSG boss Ann Livermore, Hurd said “it’s early, but she should be in her office real quick.” Later he elaborated, saying that Livermore would remain in charge of TSG, and the deal essentially consisted of HP “putting our outsourcing business into EDS.”

“You should think of this as the bulk of of HP being operationally unaffected,” he claimed.

http://www.theregister.co.uk/2008/05/13/hp_buys_eds/

Doom and Gloom: Sprint Nextel Profits Nosedive

Sprint Nextel has received plenty of attention recently for its plans to roll out a new kind of high-speed wireless Internet service. But in light of its earnings report on Monday, some analysts are saying that what it needs more is customers.

Sprint, the nation’s No. 3 carrier, is facing stiff competition from AT&T and Verizon Wireless after its floundering merger with Nextel. In the first quarter, the company lost 1.1 million subscribers; the total number dropped to 52.8 million. Churn, or customer turnover — a measure of how unhappy customers are — is on the rise, climbing to 2.45 percent from 2.3 percent in the previous quarter.

To make matters worse, said Craig Moffett, an analyst at Sanford C. Bernstein & Company, Sprint is losing its best and biggest-spending customers, which will only make it harder to turn the company around.

“Sprint’s management is taking an admirably sober approach, and it is at least talking about the core issues — lax credit standards, high involuntary churn, lack of a compelling consumer value proposition, weak customer service, a subpar network, and, well, you get the idea,” Mr. Moffett wrote in a research report. “There’s a lot wrong. But even if they work on this daunting list of problems, new problems keep intruding.”

Daniel R. Hesse, Sprint’s new chief executive, was candid about the company’s customer service issues, which have persisted for more than a year. “The issues haven’t changed,” he told analysts on a conference call after the release of the earnings report.

But whatever steps Hesse has taken have not yet been enough to stem the tide of losses that has plagued Sprint for more than a year. The company said it had a loss in the first quarter of $505 million, or 18 cents a share, compared with a loss of $211 million, or 18 cents a share in the period a year earlier. This year’s number included one-time costs related to Sprint’s merger with Nextel in 2005, which so far has proved to be a costly failure for the two companies.

Without the charges, Sprint had first-quarter income of 4 cents a share, compared with 18 cents a year ago. That was above the expectations of Wall Street analysts, who had expected a profit of 2 cents a share and revenue of $9.4 billion, according to a survey of 26 analysts by Thomson Reuters.

The company said revenue fell 8 percent, to $9.33 billion from $10.09 billion in the first quarter of 2007.

http://www.nytimes.com/2008/05/13/technology/13sprint.html?ref=technology

And now for something completely different: Drunk Darth Vader escapes jail sentence

Arwel Wynne Hughes was given a suspended sentence at Holyhead Magistrates Court after he attacked the founders of Britain's first Jedi church.

The 27-year-old was dressed in a black bin-bag and Darth Vader's trademark shiny black helmet when he leapt over a garden fence in Holyhead and proceeded to attack two Star Wars fans with a metal crutch.

"Darth Vader! Jedis!" Hughes shouted as he approached.

Jedi church founder Barney Jones — also known as Master Jonba Hehol – was hit over the head and Mr Jones' 18-year-old cousin, Michael Jones — or Master Mormi Hehol – suffered a bruised thigh in the March 25 attack.

Hughes claimed he couldn't remember the incident, having drunk the best part of a 10-litre box of wine beforehand. But the incident was recorded on a video camera that the cousins had set up to film themselves in a light saber battle.

Frances Jones, Hughes' lawyer, told the court: "He knows his behaviour was wrong and didn't want it to happen but he has no recollection of it."

District Judge Andrew Shaw sentenced Hughes to two months in jail but suspended the sentence for one year. He also ordered Hughes to pay £100 to each of his victims and £60 in court costs.

http://www.telegraph.co.uk/news/newstopics/howaboutthat/1952260/
Drunk-Darth-Vader-escapes-jail-sentence.html

Will Jobs launch the iPlay in June?

The web is alive with rumours that Steve Jobs is going to stand before the world and deliver the much anticipated 3G iPhone on 9 June.

But what if there's something even more exciting unveiled? What if it is Apple's first real foray into the mobile gaming market that Jobs actually holds up to the amazed gasps of the globe's press?

Cue rumours of the "iPlay", a handheld gaming console that builds on the capabilities of both the iPod and iPhone.

The rumours stem from MacRumours' interpretation of website Switch To A Mac's prediction last month that Apple will announce the 3G iPhone in May, and Jobs will show off a completely different mobile device at June's Worldwide Developers Conference.

Could this be an Apple-flavoured handheld console to take on the likes of the PlayStation Portable and Nintendo DS Lite?

Apple has the name, it will just need a brilliant design and fantastic third party apps, and where better to get people on board than the 2008 world wide developers conference, where the aforementioned keynote will be given?

http://www.pocket-lint.co.uk/news/news.phtml/14602/15626/iPlay-handheld-
games-console-Apple.phtml

Powerset Debuts With Search of Wikipedia

Powerset is undoubtedly among the most ballyhooed startups in Silicon Valley. The company’s mission is as improbable as it is daring: just like like Google did a decade ago, Powerset wants to come up with a better way to search.

On Monday, the company will make its public debut, opening up to the masses its search engine, which uses “natural language” to organize and search documents. But Powerset won’t be searching the entire Web, at least not initially. In its debut, it will be confined to Wikipedia.

By using language rather than keywords, Powerset’s demos suggest the company has developed powerful new capabilities. Powerset created an index of Wikipedia by studying the meaning of entire sentences rather than the relationship between words. Similarly, it allows users to type queries as fully formed questions. That allows it to do certain things that many search engines cannot do.

Ask “Who did Henry VIII marry?” or “What did the FDA ban?” or “What did Bill Clinton sign?” and Powerset will come up with remarkably good answers. (Incidentally, Google does a decent job of answering the first of these questions but not the other two.) Powerset also has other nifty features, like its ability to create mini-dossiers that summarize the information it finds and to take users directly to a section of a document that is most relevant to their search.

But Powerset remains a long way off from its promise and faces a seemingly intractable problem: for a very large fraction, if not the vast majority, of searches, keywords work just fine.

“They have a new and interesting technology that most people don’t really need right now,” said Danny Sullivan, a search expert and editor of Search Engine Land. Mr. Sullivan also said that analyzing the meaning of pages, as Powerset does, demands so much computing power that the company is unlikely to be able to index the entire Web any time soon.

Powerset is well aware of that and plans to increase its scope gradually by indexing other “data sets” beyond Wikipedia. News articles and blog posts are likely to be next, the company said.

Given Powerset’s combination of usefulness and limited appeal, it is not surprising that the company is unveiling its product amid rumors that it may be up for sale, with Microsoft mentioned as one possible buyer.

http://bits.blogs.nytimes.com/2008/05/12/powerset-debuts-with-search-of-wikipedia/?hp

Windows Cockup: XP SP3 sends PCs into endless reboot

Microsoft's service pack three (SP3) for Windows XP has caused havoc on hundreds of PCs, just hours after it was released as an automatic update.

Angry customers have vented their spleen on the firm's Windows XP message board, posting complaints that include spontaneous PC reboots and system crashes after the service pack installs.

Poster Dan said: "I installed SP3 this morning but when rebooting it loops between startup screen and restarting screen. I can boot into safe mode. Is uninstalling XP service pack 3 the only resolution?"

Doug W complained: "After three attempts [to install XP SP3] with different configurations each time, System Restore was the only way to get me out of deep shit."

Similar problems were reported by frustrated customers throughout the message board.

Microsoft finally released XP SP3 on Tuesday this week. It was supposed to be available last week, but an eleventh hour FAIL between the service pack and its point-of-sale application – Dynamics Retail Management System (RMS) – forced Microsoft to put the cork back in the bottle while it sorted out the problem.

The cock-up also affected Windows Vista SP1.

Earlier this week Microsoft said it had deployed a band-aid filter for the automatic Windows Update to block RMS customers from getting the service packs while it scurries to fix the glitch.

Whether the latest issues will be patched remains to be seen. But it's likely the Microsoft Windows teams will spit out further updates to address the system reboots and crashes being reported in XP SP3.

http://www.theregister.co.uk/2008/05/09/windows_xp_sp3_reboots_crashes/

After the Yahoo abortion is Microsoft looking at $15bn takeover of Facebook?

Some people just don’t know when enough is enough. Microsoft is believed to have approached Mark Zuckerberg, the founder of Facebook, over a possible acquisition of the social networking site.

It is believed that Microsoft has sought to gauge Facebook’s level of interest about a potential bid after $47.5 billion (£24.3 billion) takeover talks with Yahoo!, the online search engine, failed on Saturday. It is not thought that there are any active talks between Microsoft and Facebook.

In October, Microsoft took a $240 million stake in Facebook, which valued the site at about $15 billion. Although Mr Zuckerberg has resisted selling the entire company, indicating instead that he would prefer to float the group, it is not known what his response to Microsoft has been.

Any bid to take over the social networking site would attract the wrath of Facebook's staunchly anti-Microsoft community

In March, Li Ka-shing, one of Asia’s most successful investors, doubled his stake in Facebook, underlining the site’s implied value of $15 billion. The site is regarded as a prize asset because of the loyalty of its 70 million users.

The Hong Kong billionaire’s investment was made through the Li Ka-shing Foundation, which spent $60 million to increase his stake to 0.8 per cent of the company. That matches the $60 million that he invested last year and is valued on the same terms as the $240 million stake that Microsoft took in October.

In previous rounds dating to 2004, Facebook has taken about $40.7 million from venture capital investors, including Peter Thiel, the PayPal co-founder and former chief executive, Accel Partners, Greylock Partners and Meritech Capital Partners. Facebook competes with the larger MySpace, which has 100 million users. It is thought that Mr Zuckerberg intends to prepare his company for flotation.

Rupert Murdoch, the chairman and chief executive of News Corporation, parent company of The Times and owner of MySpace, has, in the past, ruled out buying Facebook, saying that it was overvalued. News Corp bought MySpace for $580 million in 2005.

Microsoft is looking for an alternative acquisition after Steve Ballmer, its chief executive, walked away from Yahoo! on Saturday.

Shares in Microsoft closed at $29.63, down nearly 7 cents, in New York last night. Microsoft and Facebook did not immediately return calls.

http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article3890497.ece

Jobs forced into iPhone contracts U-turn

Italy has become the first country to sell the iPhone on a non-exclusive basis, suggesting that Jobs' strategy of tying its device to one network in each territory may be unravelling.

This morning Vodafone and Telecom Italia announced that they had both won contracts to bring the iPhone to Italy later in the year - ending a year-long stretch in which only one operator had the right to the iPhone in each country.

Vodafone also said it had won the right to distribute the device in nine other countries, including Australia, New Zealand, and India - a mobile market which is growing rapidly, but where the majority of customers are pre-pay rather than contract - a situation that does not suit Apple's revenue model.

Jobs now faces the prospect that operators in other countries may revolt against its onerous terms, which are understood to involve the network sharing 10 per cent of revenues in return for the right distribute the iPhone exclusively for a two-year period.

"This is definitely a sign Jobs is capitulating," Will Draper, an analyst at Execution, said. "The initial model was that Jobs would give the iPhone to a network on an exclusive basis, but in Europe, where you have the likes of Nokia and Sony Ericsson selling sophisticated 3G devices, the iPhone simply isn't seen as such a premium product."

Apple is expected to announce a faster, 3G version of the iPhone next month.

Apple is understood to have shipped 600,000 iPhones to the three European operators which have won contracts to distribute the device - O2 in the UK, Orange in France, and T-Mobile in Germany - but so far demand has been disappointing, analysts said.

http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article3879419.ece

How to Get Microsoft Office at 91 Percent Off

J.D. Biersdorfer, who dispenses advice to Times readers on everything electronic, passed on this tip for anyone who is thinking about buying Office Ultimate, the tricked-out version that costs $680.

The semester may be ending, but that doesn’t mean the educational discounts have dried up for the summer — yet. Actively enrolled college students with .edu e-mail addresses (and carrying at least a 0.5-credit course load) have one more day to snag a copy of Microsoft Office Ultimate for a mere $60 at www.theultimatesteal.com. The 91-percent-off deal ends May 16th at 11:59 p.m., and Microsoft has full details for the offer at www.microsoft.com/education/ultimatesteal.mspx.

Here is the really cool part, and I got this straight from the Microsoft senior vice president selling the software, Chris Capossela: anyone with a .edu address can get this deal. Most college alumni offices give their graduates .edu addresses.

(And yes, because we’ll get 100 comments if I don’t mention this: OpenOffice.org has open-source word processing software for free.)

http://bits.blogs.nytimes.com/2008/05/08/how-to-get-microsoft-office-at-
91-percent-off/index.html?ref=technology

Windows XP SP3 leaps into the tubes

Second verse, same as the first

Microsoft is giving the automatic web release of Windows XP Service Pack 3 another go today, after an eleventh hour muck-up ruined its scheduled availability last week.

The truant XP service pack is ready for download via Microsoft's Download Center or alternatively, Windows Update if using Internet Explorer. Here's the ISO CD image file too for good measure while we're trolling hyperlinks.

Microsoft had pulled the mass download last week when it uncovered an incompatibility issue between SP3 and its point-of-sale application, Dynamics Retail Management System (RMS). The issue in question — and they've yet to specify what the problem is — also affects Windows Vista SP1.

Redmond is still apparently knuckling down over the issue. Customers with RMS are being advised against installing either service pack until the error is resolved. In the meantime, it has deployed a band-aide filter for the automatic Windows Update to block RMS users from getting it. Microsoft said a permanent fix is currently in beta and will be available later this month.

http://www.theregister.co.uk/2008/05/06/windows_xp_sp3_updater_release/

Does Jobs Need A Raise? Apple CEO Out of Top 10 Best Paid CEOs

It’s official! Steve should ask for a pay raise! According to Forbes, Oracle’s Larry Ellison came first in 2007 as the best paid CEO (although he doesn’t seem to need his salary, since he is no. 14 among the world’s billionaires, with an estimated $25 billion of assets), topping big names such as Apple’s Steve Jobs (no wonder, the poor man is paid $1 for the job!).

The top 10 best paid CEOs are as follows: Larry Ellison (Oracle) - $192.9 million, Nabeeb Gareel (MEMC Electronic Materials) - $79.6 million, John Cambers (Cisco) - $54.8 million, Mark Hurd (HP) - $27.6 million, Jen-Hsun Huang (NVIDIA) - $24.6 million, Samual Palmisano (IBM) - $24.3 million, Wendell Weeks (Corning) - $22.6 million, Joseph Tucci, EMC - $20 million, William Sullivan (Agilent) - $17.4 million, Paul Otellini (Intel) - $16.3 million.

Jobs not only didn’t make it on the top 10 list, but 2007 was far less productive than 2006: this time he took home an estimated $14.6 million in compensation, compared to 2006 when he took compensations estimated at $646 million (oh, it’s nice to have stocks!).

The secret to making it to Forbes' top list: don’t lose your job! Yahoo’s former Chief Executive Officer Terry Semel didn’t make it this year, and neither did Michael Dell, the founder of Dell, who is currently working hard to bring Dell to the light (however, he does have some pretty good savings, in case things don’t work out so well; Forbes estimated his value at $16 billion, making him the 40th richest person in the world).

Jeff Bezos from Amazon.com was last year’s best performing boss, with an annualized total return during his career with the company of 40%, although his earning got him a number 467 spot. However, he does rank 110th in the world’s billionaire list, Forbes says, thanks to his 24% of the company’s stock.

http://www.efluxmedia.com/news_Steve_Jobs_Needs_A_Raise_Apple_
CEO_Out_of_Top_10_Best_Paid_CEOs_17106.html

Yahoo Ready For A Black Monday

As everyone digests yesterday’s extraordinary news around Microsoft’s withdrawal of their Yahoo bid, the big rumor around the valley is that Yahoo is frantically trying to negotiate a deal with Google to outsource search advertising and get it announced before the markets open tomorrow and the stock nosedives

It’s not clear that Google still wants to do such a deal now that the immediate threat of a Microsoft/Yahoo deal is gone. The reason - the almost certain regulatory review (even Congress has taken note). And even if they are still willing to talk, Yahoo has lost the lions share of negotiating leverage. That means a lower revenue share, a shorter term deal, etc.

If Yahoo and Google reach a deal, it’s possible they could at least argue for a case that Yahoo’s value should increase to $37/share (but the markets won’t buy it): based on analyst projections, Yahoo could increase cash flow by $1 billion or more by outsourcing, and increase revenue per thousand search queries to as high as $90 from the current $40 or so. Combine that with massive headcount reductions (Yahoo won’t need their search marketing employees any more, possibly 2,000 employees), and Yahoo could have short term bottom line gains of well $1.2 billion or more/year.

With a trailing P/E of almost 40, That extra cash could, theoretically, boost their market cap by more than enough to reach their goal of $37/share.

That’s the theory anyway. In reality, even if a deal is announced, the markets will factor in the risk of regulatory veto, as well as the long term negative effects of giving away the search marketing business to their biggest competitor.

And Yahoo’s true market value today remains in the $19/share range, or about $26 billion, now that the Microsoft crutch has ben removed. A good chunk of that - $10 billion or so - is actually from their Alibaba and Yahoo Japan holdings.

So Yahoo and Google may do a deal or they may not - but either way it isn’t going to help Yahoo’s share price as much as they hope.

Angry Shareholders

We also expect Yahoo to announce their delayed annual shareholder meeting early this week, and actually hold it as early as late June. When it’s announced, shareholders have ten days to propose an alternate slate of board members. Microsoft says they are sitting on the sidelines, but a group of angry stockholders may now emboldened enough to make their own effort to change company management.

To say that shareholders are angry is an understatement. They made it clear to anyone who’d talk to them that they would be more than happy with Microsoft’s $33/share final offer. Legg Mason, Capital Research, T. Rowe Price and others all reportedly strongly wanted the Microsoft deal to happen.

http://www.techcrunch.com/2008/05/04/yahoo-prepares-for-a-black-monday/

America's grim newspaper story

Extra, extra, read all about it. Newspaper circulations in freefall. Readers desert to the internet. Abandon hope, all ye who enter print journalism.

Newspaper circulation has been dropping steadily in most of the developed world for many years, but the armageddonists are firmly in the ascendancy, particularly in the US, where they have taken to specifying a date on which the last newspaper will be printed in the country. (October 2044 on current trends, according to the American Journalism Review.)

The latest round of grim circulation data, which was published by the Audit Bureau of Circulations this week, showed such a sharp acceleration in the downtrend that the date might have to be brought forward. The ABC survey of 534 of the largest daily newspapers found a 3.6 per cent decline in the six months to 31 March, compared to the same period a year ago. In the previous six-month period, the year-on-year decline was 2.6 per cent. A year ago it was 2.1 per cent. Papers in the biggest metropolitan areas are hurting most; Sunday editions are dropping most steeply of all. The august New York Times, which is distributed across the country, lost 9.3 per cent of its Sunday readership in the last six months. The figures looked bad enough to make newspaper executives choke on their cereals when they appeared in yesterday's editions.

Only here's the real scoop: this is not all bad news for the industry, and in many cases, the figures are exactly what managers wanted and worked towards.

Eh? Rick Edmonds, media business analyst at the Poynter Institute, a Florida school for journalists, explains that - while many former newspaper readers are indeed now satisfied getting their news from the internet – this is only part of the story.

"It is 50-50 between the rise of the internet and what Gary Pruitt, chief executive of [the regional newspaper company] McClatchy described last week as 'managed circulation reduction'. He said that they were no longer sending papers out into the boondocks, where distribution is expensive and it is an area that advertisers do not really care about."

n short, newspaper executives are making a hard-headed judgement that not all readers are created equal, at least not in the eyes of advertisers.

"There is a lot of 'ego circulation', but with newsprint prices going up, with transportation costs going up, anyone looking at the business model will say that there are copies that they don't have to print," says one analyst at a fund management firm. "Paid newsstand sales and home delivery, these are the prized readers. Now companies are thinking about trimming superfluous distribution. Many companies have previously been reluctant to touch circulation, because all it does is throw gasoline on the fire. They are all being accused of being dinosaurs, of having their heads in the sand. Deliberately cutting back on circulation simply generates another story about how bad the business is, but it can in fact be a much more rational business decision."

The New York Times, for example, said its Sunday sales drop was deliberate, since it was not renewing special offers such as giving the paper away to daily subscribers. Throughout the industry, over the past few months, executives have been explaining that saving money – and therefore saving newspapers – requires sacrificing some readers.

No less a person than Rupert Murdoch was persuaded. When he was bidding for The Wall Street Journal, the nation's No 2 paper by circulation, he said he expected to scrap subscription fees for the paper's website (whose paying subscribers are included in the ABC figures), and believed he would make up the lost revenue when advertisers flocked to reach the new, bigger audience. When he finally got his hands on the paper, four months ago, it was clear that more readers would not equal more revenue, and he declared the subscription fees will stay.

Not all industry-watchers are convinced that ditching less profitable readers works in the long run if it means more people fall out of the habit of reading a paper, just as other cost-cutting measures could also prove short-sighted. The New York Times is on the verge of making its first newsroom redundancies; its sister paper The Boston Globe is typical among smaller papers cutting back on overseas reporters. In the past two years, both the Times and the Journal have shaved inches off the size of the paper to reduce newsprint costs.

"The cuts made at so many papers, in the news staff and in the space dedicated to news, may not be good for the business over time," says the Poynter Institute's Mr Edmonds. "This perception about whether the industry is 'hot or not' extends to media buyers, and they are under pressure to move advertising budgets from old media to new media."

Optimists point out that former newspaper readers are not straying very far. In many cases, they are simply browsing the paper on the web for free. That is painful as far as circulation revenues goes, but it also presents an opportunity. "Advertising rates on the internet are, for the most part, up, and newspaper websites are usually the number one or number two most trafficked sites in their region, which bodes well for the economic upturn," says the fund management firm analyst. "It's just that it is harder to identify in a cyclical downturn when it is difficult for your real estate and employment advertising to be up."

Of course, there is the economic downturn to navigate first, and it is already looking brutal for some in the newspaper industry. Sam Zell, the property magnate who took over Tribune Group, publisher of the Chicago Tribune and the Los Angeles Times last year, has found himself in danger of defaulting on his massive debts unless he sells some smaller papers, and he has told staff to brace for cuts. Circulation and advertising revenues are falling faster than he and his backers budgeted for little more than a year ago. Credit rating agencies downgraded the creditworthiness of several other newspaper companies in the past few weeks, and warned that they will likely downgrade still more.

It will take time to see who is right, the armageddonists or the newspaper executives who are claiming "managed reduction". Paul Ginocchio, analyst at Deutsche Bank, says it will take another year of adjustment before the ABC figures show the "true" rate of readership decline, but he urged investors to treat the sector with extreme caution. "We think the industry was expecting an improvement in trend and thus we view this result with some degree of alarm."

http://www.independent.co.uk/news/business/analysis-and-features/
americas-grim-newspaper-story-818071.html

Yahoo: Ballmer Blew It

Finally Ballmer’s body has developed a resistance to whatever meds he’s been overdosing on.. One investor summed up what is likely to be a somber reaction among Microsoft’s supporters on Wall Street as the implications of the abandoned Yahoo talks sink in: “This is a black eye for Steve Ballmer.”

In spite of offering what appeared to be an overwhelming takeover premium and spending three months stalking Yahoo, the Microsoft chief executive has been left empty-handed, at least for now.

Mr Ballmer was already working over the weekend to counter the idea that the failure of the deal will leave his company’s internet strategy in disarray.

“Although the acquisition of Yahoo would have accelerated our ability to deliver on our strategy in advertising and online services,

“I remain confident that we can achieve our goals without Yahoo,” he wrote in an e-mail to employees on Saturday.

Yet some observers were already claiming the failure represented a big setback in Microsoft’s efforts to create a counterweight to Google in the fast-growing internet advertising business.

“It’s clearly a disappointment,” said Martin Sorrell, chief executive of advertising group WPP, who had earlier welcomed the idea of a Microsoft-Yahoo deal as the best chance of creating a significant rival.

The failure would confirm Google’s position as the dominant online advertising business, he added. For a company that has historically refused to contemplate big mergers, seeing them as a move best left to companies in more mature industries with no other options to grow, the unsolicited bid was an indication of Microsoft’s growing sense of urgency in its attempts to catch the search giant.

In spite of investing hundreds of millions of dollars in its own search business over the past five years, Microsoft has actually lost ground in the search business against its arch-rival.

That dented the software company’s confidence in its ability to catch up on its own and contradicted its familiar “fast-follower” strategy, which in the past has seen it often catch up with market leaders by copying their approach, despite entering markets late.

Other recent discussions with AOL and MySpace could lead to alternative deals to boost Microsoft’s presence online.

However, a combination of the Microsoft and AOL online advertising activities would not represent the sort of balance to Google that a Microsoft/Yahoo deal would have, said Mr Sorrell.

For Mr Ballmer, meanwhile, the abandonment of the Yahoo deal represents one of the most prominent failures of his tenure as CEO..

http://www.ft.com/cms/s/0/ecfbef38-1a0a-11dd-ba02-0000779fd2ac.htm

WSJ: Miscrosoft Pulls The Bad Cop / Not-So-Bad Cop Routine

Microsoft is now leaning towards a hostile takeover of Yahoo, the Wall Street Journal reports today, citing "people familiar with the matter." But it also quotes CEO Steve Ballmer as saying, sure, he can organically build a competitive ad network without Yahoo -- it "could just take more time." And, believe me, I'm as willing as ever to buy Yahoo for a fair price.

Phew. So as of late last night, anyway, WSJ's bad-cop sources were signaling that a newly-empowered Ballmer is inclined to take the gloves off and the man himself wants us to know he can take it or leave it and is not married to a price that may have made sense only three months ago -- sorry for the misunderstanding.

In a speech to staff -- comments served up to WSJ by a spokesman -- Ballmer left a little wiggle room about not going a dime above the original and only official offer of roughly $29.

The WSJ reports that Ballmer told the assembled he wouldn't pay "a dime above" what he thought Yahoo was worth. "I will go to what I think it's worth if that gets a deal done, Ballmer was quoted as saying.

Microsoftees this week privately indicated a willingness to go as high as $33. Yahooligans are looking for at least $35. First quarter earnings are conveniently out already so the cards, as they say, are all on the table.

Anyone else feel the room getting a little smaller?

But wait -- there's more.

Reuters reports that a non-exclusive partnership that would involve Yahoo carrying Google advertising alongside Yahoo's Web search results could be announced next week. That wouldn't preclude a Microhoo deal, but it could muddy the waters even more -- and it sure makes it look like Yahoo isn't getting the vapors yet over a possible tie-up with Microsoft.

http://blog.wired.com/business/2008/05/wsj-miscrosoft.html

Your personal data just got permanently cached at the US border

Fact or fiction? US Feds won't say

Now that US customs agents have unfettered access to laptops and other electronic devices at borders, a coalition of travel groups, civil liberties advocates and technologists is calling on Congress to rein in the Department of Homeland Security's search and seizure practices. They're also providing practical advice on how to prevent trade secrets and other sensitive data from being breached.

In a letter dated Thursday, the group, which includes the Electronic Frontier Foundation (EFF), the American Civil Liberties Union and the Business Travel Coalition, called on the House Committee on Homeland Security to ensure searches aren't arbitrary or overly invasive. They also urged the passage of legislation outlawing abusive searches.

The letter comes 10 days after a US appeals court ruled Customs and Border Protection (CBP) agents have the right to rummage through electronic devices even if they have no reason to suspect the hardware holds illegal contents. Not only are they free to view the files during passage; they are also permitted to copy the entire contents of a device. There are no stated policies about what can and can't be done with the data.

Over the past few months, several news reports have raised eyebrows after detailing border searches that involved electronic devices. The best known of them is this story from The Washington Post, which recounted the experiences of individuals who were forced to reveal data on cell phones and laptop devices when passing through US borders. One individual even reported some of the call history on her cell phone had been deleted.

"The Fourth Amendment protects us all against unreasonable government intrusions," the letter, which was also signed by the Center for Democracy and Technology and security expert Bruce Schneier, states. "But this guarantee means nothing if CBP can arbitrarily search and seize our digital information at the border and indefinitely store and reuse it."

Several of the groups are also providing advice to US-bound travelers carrying electronic devices. The Association of Corporate Travel Executives is encouraging members to remove photos, financial information and other personal data before leaving home. This is good advice even if you're not traveling to the US. There is no reason to store five years worth of email on a portable machine.

In this posting, the EFF agrees that laptops, cell phones, digital cameras and other gizmos should be cleaned of any sensitive information. Then, after passing through customs, travelers can download the data they need, work on it, transmit it back and then digitally destroy the files before returning.

The post also urges the use of strong encryption to scramble sensitive data, although it warns this approach is by no means perfect. For one thing, CBP agents are free to deny entry to travelers who refuse to divulge their passwords. They may also be able to seize the laptop.

If it sounds like a lot of work, consider this: so far, the federal government has refused to reveal any information about border searches, including what it does with the electronic data it seizes. Under the circumstances, there's no way of knowing what will happen to, say, source code or company memos that may get confiscated. Or the email sent to your lawyer.

http://www.theregister.co.uk/2008/05/01/electronic_searches_at_us_borders/

iPhone: Jobs’ bid for total world domination?

Even as Research in Motion and Palm target Apple's touch-sensitive wonder phone, the broad outlines of Steve Jobs' grand strategy for wireless domination are coming into focus. Apple is knitting together a broad coalition of companies around a vision of computing that goes far beyond today's hot-selling iPhone and toward a future that combines wireless broadband and touch-sensitive interfaces with built-in motion sensors.

Cisco is experimenting with software that will allow users to "flick" documents from their iPhones to their desktop computers. Intel (nasdaq: INTC - news - people ), which supplies the processors for Apple's desktop and laptop computers, is experimenting with ways to tie motion sensors to maps, allowing users to "fly" through the landscape. Electronic Arts and Sega are building games that can be manipulated by players waving their phones through the air.

And more companies are piling in, too, drawn by a promise from venture capital firm Kleiner Perkins Caufield & Byers to pump $100 million into start-ups building software ready to take advantage of the iPhone's quirky assortment of capabilities.

All of this hints that Jobs and team Apple are thinking two moves ahead even as they plot the rollout of a third-generation version of the iPhone. Analysts are betting the new phones will be unveiled June 9 at the annual Apple Worldwide Developer's Conference in San Francisco, or later in June, on the first anniversary of the original iPhone's launch.

Most analysts believe the new phones will add higher-speed connections to wireless carriers and satellite-navigation capabilities to the phone/media player/digital camera/Web browsing gizmo.

Touch sensitivity has been a part of notebook computers for many years, thanks to the trackpad. But on smaller devices where there is no room for a keypad or a wide screen, building a smart, touch-sensitive interface is key, argues Roger Kay, president of tech-tracker Endpoint Technologies. "Touch gives you more virtual real estate--you feel like you can see more because you can zoom in and out," Kay says.

Meanwhile, it's already possible to get glimpses of an even wider lineup of devices built around the iPhone's gesture-based interface. A flurry of patents filed by Apple in recent years outline an increasingly detailed vision for the future of wireless gizmos. The company is also quietly snapping up technology that will allow it to build powerful--and power-sipping--wireless devices . The end game: futuristic gizmos controlled by gestures that are tied wirelessly to the world around them, protected by a broad portfolio of patents, and perhaps even running proprietary Apple silicon.

Expect more to come, with Apple opening up the ability to write applications for the iPhone to outside software developers. Developers were previously limited to working with the Web browser built into the phone. Now developers will be able to use tools familiar to any OS X developer, such as Instruments, Xcode and Interface builder, alongside a new tool, the iPhone simulator, to craft applications. That means the iPhone, as well as the iPod Touch, will be moving in unexpected new directions, even as Apple's Steve Jobs works on a few surprises of his own.

http://www.forbes.com/2008/04/30/apple-iphone-3g-tech-wire-cx_bc_0501apple.html