June 8 2002 Modern PC News

Technical, Business and Product News from the Modern Computer World... Updated Once Per Month

SAN JOSE, Calif. (AP) - Shares of Intel Corp. plunged more than 18 percent Friday, a day after the company cut its second-quarter revenue forecast.

The world's largest semiconductor maker announced it expects sales for quarter ending June 29 to be between $6.2 billion and $6.5 billion, down from its estimate of $6.4 billion to $7 billion unveiled in April.

On Thursday, Intel blamed the lower-than-expected sales on soft demand for PC processors in Europe.

"In my mind, we got a little aggressive in our forecasts," said Andy Bryant, Intel's chief financial officer.

Intel shares closed down $5, to $22, in Friday trading on the Nasdaq Stock Market.

Analysts were expecting second-quarter sales of $6.7 billion and net earnings of 15 cents a share, according to Thomson Financial/First Call. Last year, the company recorded sales of $6.3 billion and profits of 12 cents for the period.

Santa Clara, Calif.-based Intel blamed the shortfall on softer-than-expected demand in Europe. It also said sales of high-end microprocessors are at the low end of the normal seasonal pattern while its less expensive chips were stronger.

Sales to customers in enterprise, communications and mobile businesses are in line with expectations, the company said.

Intel also estimated its gross margin percentage to be about 49 percent, compared to the previous forecast of 53 percent, due to a lower-than expected revenue and product mix.

"The real issue and the reason the stock is trading off is not the revenue — it's the gross margin," said Merrill Lynch analyst Joseph Osha. "The gross margin target is well below where people thought it was going to be."

The quarter is typically slow for Intel, as there are no major holidays or back-to-school sales to boost sales. There also is little evidence of major increases in business computer sales after last year's tech slump...

PC makers, facing higher inventories in retail, are likely to begin spring cleaning soon to sweep out older PCs.

April was one of the worst PC sales months in recent years, with sales down 22.5 percent for U.S. retailers, leaving the largest retail PC seller, Hewlett-Packard (news - web sites), with 10 weeks of inventory for Compaq (news - web sites) PCs and seven weeks for HP PCs, according to NPD Techworld. Normally, three weeks is considered ideal.

Sony's inventory was also slightly higher in April at five weeks, up from 4.5 weeks a year ago.

With little improvement seen in May sales, analysts expect PC manufacturers and retailers to begin aggressively discounting PCs to clear inventory of current PCs and prepare for new back-to-school models.

PC makers have already begun to take action by adding a new round of rebates, given to customers who buy a PC bundled with a monitor and printer.

HP has lowered some desktop models up to $100 in the past two weeks, while others such as Sony have made more modest $50 cuts, according to ARS, a firm that tracks retail sales. These new lower prices are a direct reversal of the round of PC price hikes seen earlier in the year.

But if these price cuts and rebates don't motivate demand, manufacturers will be forced to use a more aggressive measure--the instant rebate, said Toni Duboise, desktop analyst at ARS.

So far, manufacturers "haven't taken the extra step...where we're seeing instant rebates," she said. But "that's the next step we'll probably see in the next few weeks."

Instant rebates, which haven't been seen much since the 2001 holiday selling season, typically reduce the price of a PC by $50 or $100 at the time of a sale....

BetaNews - Windows XP SP1 Beta 1 Released to Testers
By Nate Mook, BetaNews

Microsoft on Wednesday made available to testers the first beta of Service Pack 1 for Windows XP Home and Professional editions. Company officials downplayed reports of a radical upgrade, calling SP1 "in most ways a traditional service pack" that is slated to include security fixes, compatibility updates and new drivers issued since XP's launch last October. Over 10,000 beta testers will be given access to download the SP1 beta starting today.

"Of note, included in the security updates will be fixes developed during the security push done by the entire Windows division as part of Microsoft's renewed emphasis on security for customers," a Microsoft spokesperson told BetaNews. "In addition to these traditional elements, Microsoft is fulfilling its commitment to implement the changes required by the consent decree signed with the Department of Justice and nine settling states."

Like Windows 2000 SP3, Windows XP SP1 will included four options to override Microsoft's default applications as defined in the antitrust settlement. Customers will be able to remove, customize, or replace Internet Explorer, Outlook Express, Windows Media Player, Windows Messenger and Microsoft's Java Virtual Machine with middleware of their choice.

Mira and Freestyle will each make their first appearance in SP1, however the additions will be transparent to most users. Mira enables support for detachable monitors, such as Tablet PCs, but only on Windows XP Professional. Unfortunately for consumers, Freestyle -- a new extra-large XP interface for accessing music, video and photos from across the room via remote control -- will only be accessible to OEMs installing the update on new computers.

The final release of Windows XP Service Pack 1 is set for late this summer, but the schedule could change depending on feedback from beta testers.

BetaNews - Mozilla 1.0 Hits the Streets
By Nate Mook, BetaNews

An announcement that has sent many venturing outside to look for the passing pig, mozilla.org today released the final version of Mozilla 1.0. In development for over four years, the open source cross-platform browser suite was built by a community of thousands of programmers. At the core of Mozilla lies Gecko, a powerful rendering engine that is already used in many third party applications. A notice on the Mozilla Web site summed up what the masses have been waiting to hear: "Stick a fork in it. It's done."

Mozilla includes a Web browser, e-mail reader and chat client. It additionally serves as a cross-platform toolkit that can be utilized by developers to create Internet-centric applications - from Web browsers to anything that uses HTML or XML. Netscape, the company that founded mozilla.org, has based its own browser around the open source project and Netscape version 7.0 will mark the commercial release of Mozilla 1.0.

"As the browser has become the main interface between users and the Web over the past several years, the goal of the Mozilla project is to innovate and enable the creation of standards-compliant technology to keep content on the Web open. As more and more programmers and companies are embracing Mozilla as a strategic technology, Mozilla 1.0 signals the advent of even further dissemination and adoption of open source and standards-based software across the Web," said Mitchell Baker, Chief Lizard Wrangler at mozilla.org.

Like many browsers these days, Mozilla prides itself on standards compatibility. It currently features the self-proclaimed best support for CSS2, DOM2, and XHTML. SOAP 1.1, XSLT, XPath 1.0, MathML and FIXptr are supported for XML data exchange and manipulation. JavaScript 1.5, the most popular scripting language, is also supported in Mozilla 1.0.

To celebrate the gigantic accomplishment, a party will be held at the DNA Lounge in San Francisco on June 12. Additional parties for Mozilla 1.0 are being planned at 126 locations worldwide.

Downloads are available for many platforms and languages. Mozilla 1.0 for Windows, Linux and FreeBSD is available on FileForum. For more information and to review the Mozilla 1.0 Guide, visit mozilla.org.

Oracle Corp. is in discussions with Hewlett-Packard Co. to buy its middleware assets, a move that could provide a much-needed boost to Oracle's application server business, industry sources said.

HP disclosed Tuesday during a meeting with financial analysts in Boston that it plans to "retire" its middleware assets as part of an effort to achieve profitability in its software group. HP officials declined to elaborate, saying the company will provide details about its software strategy at a customer event scheduled for later this month in Seattle, Washington.

HP's middleware includes products it acquired from Bluestone Software Inc. in 2000, including a J2EE application server, transaction server, messaging server, and various XML tools, in a deal valued at the time at approximately $470 million. HP's middleware also includes its eSpeak software for building network-based services and its Process Manager business modelling tool.

Oracle is in talks with HP over a potential acquisition of its entire middleware product line, according to a source at HP familiar with the company's plans. In particular, "they really like the app server," said the source, who asked not to be identified. Another industry source also said that HP is in talks with Oracle over a possible middleware acquisition...

In a move that could distance Microsoft from the heavily supported Liberty Alliance Project and its goals, the company announced a new Windows identity protection technology code-named TrustBridge. The company intends to integrate the technology into its entire product line beginning in 2003. Just as Microsoft's Passport technology authenticates and identifies consumers to Web and online services, TrustBridge is designed to allow businesses and organizations to exchange user identities across XML-based Web service applications.

One of TrustBridge's technology cornerstones is the Kerberos 5.0 user authentication software. Kerberos is already supported in Windows as well as a variety of Unix platforms and will be built into Apple's upcoming Jaguar operating system. It's also an open standard for authentication, overseen by the Internet Engineering Task Force. Microsoft claims that any business user running an operating system that supports Kerberos 5.0 will be able to recognize and share online identities with other businesses, just as consumers use Microsoft's Passport authentication technology to identify themselves to various Web services.

TrustBridge and Kerberos are only parts of Microsoft's overall online identity protection and security effort, though. Microsoft is also forming partnerships to implement several other standards, and through those partnerships, Microsoft is increasingly squaring off with the Liberty Alliance Project.

The Liberty Alliance Project—formed last year when tech giants such as AOL and Sun Microsystems joined forces and—supports open standards for online-identity protection. The group's membership is growing rapidly, and many large companies, including American Express, Bank of America, Nokia, and NTT DoCoMo, are supporting its efforts. When Novell signed on to back the Liberty Alliance Project in February, Justin Taylor, Novell's chief directory strategist, said this about the consortium's efforts in an interview with PC Magazine: "We see this as a federated group effort to implement a standard, and there's no reason Passport can't interoperate with that standard."

Taylor's choice of the word "federated" was mirrored in Microsoft's announcement of its TrustBridge effort, which was accompanied by a product roadmap that Microsoft is calling the Microsoft Federated Security and Identity Roadmap. That roadmap calls for incorporating not just TrustBridge technology into Microsoft's entire product line, but also tools and services built on the WS-Security specification that Microsoft is supporting in conjunction with IBM and VeriSign.

Introduced by IBM, Microsoft, and VeriSign in April of this year, WS-Security is a security specification that defines a standard set of Simple Object Access Protocol (SOAP) extensions, or message headers, for exchanging secure, signed messages in Web service applications. Among the Microsoft products and services that will initially inherit WS-Security technology are Microsoft .NET Passport, VisualStudio.NET, and all of Microsoft's enterprise infrastructure products.

In announcing the TrustBridge product roadmap, Sanjay Parthasarathy, corporate vice president of the Platform Strategy Group at Microsoft, said, "Early on, Microsoft recognized that the key to taking the success of XML Web services to the next level hinged on the industry's ability to 'federate' or establish cross-company trust."

Clearly, though, a single, universal standard for cross-company trust and online identity protection is becoming increasingly unlikely. Microsoft's online identity and security efforts and the efforts of the Liberty Alliance Project are likely to be based on different technology standards and will be backed by different partners. That may very well mean that in a world of Web services, consumers and enterprise users alike won't have just one online identity, but many.