Fixing Sprint May Take More Than Layoffs

It's January, and at Sprint Nextel (S), that means layoff time. In each of the past two years, the No. 3 U.S. wireless service provider kicked off the new year with an announcement that thousands of jobs would be eliminated.

This year is no exception. On Jan. 26, Sprint said it will eliminate as many as 8,000 employees. Investors welcomed the announcement, boosting the shares 2% to 2.51 on the news.

But some analysts say there may be little reason in the long run to revel in this latest attempt to reduce expenses. In spite of about 9,000 jobs eliminated in the previous two years, the company has suffered losses in four of the past five quarters and margins have been narrowing. "Cost-cutting measures like this are akin to a tourniquet," says Craig Moffett, an analyst at Sanford C. Bernstein & Co. "They can help stave the bleeding, but they can't save the patient."

Handing out pink slips may help reduce costs—Sprint will cut expenses by $1.2 billion a year in this recent round of cuts—but the moves aren't doing too much to address the company's biggest challenge: keeping subscribers from disconnecting service and switching to rivals including AT&T (T) and Verizon Wireless, which is owned by Verizon Communications (VZ) and Vodafone (VOD) of Britain.

Narrow Margins

Investors and analysts will get a clearer view of Sprint Nextel's challenges on Feb. 19, when the company is due to release fourth-quarter results. In that period, Sprint likely lost 1.1 million to 1.3 million traditional wireless customers, according to analysts' estimates. Subscriber losses may continue through late 2010, says Michael Gary Nelson, an analyst at Stanford Group Co..

Fourth-quarter revenue may have dropped 13% to $8.55 billion, the sixth straight decline, and margins may keep narrowing, in part because of costs related to the elimination of jobs, according to analysts surveyed by Thomson One. In Sprint's main wireless business, gross margins may slip to 21% in 2009, from 24% in 2008, according to UBS (UBS). Net losses may also continue through 2010.

For CEO Dan Hesse, the task of retaining customers is made more difficult by stiff competition, an already saturated market, and an economic environment that's causing consumers to tighten their belts. "The deck is stacked against them," Moffett says. What's more, as one of the biggest providers of wireless service to bankers, managers, and engineers, Sprint may lose out as Corporate America slashes jobs and other spending.

Rivals, meanwhile, are picking off the few new subscribers by offering devices and services Sprint Nextel lacks. AT&T, for instance, is the exclusive U.S. provider of the Apple (AAPL) iPhone. To its credit, Sprint has snagged an exclusive on the much anticipated Palm (PALM) Pre. But the 3.1-inch touchscreen phone isn't expected to hit stores until May.

Revamping Incentives

Sprint Nextel is taking several steps to stem losses and reverse course. It has stepped up spending on marketing. And on Jan. 26, the company tied its executive and employee incentives directly to subscriber retention and operating income metrics.

The company could also offer deeper discounts, such as bigger phone subsidies and cheaper calling plans, but that's a risky move for a company whose margins are already under pressure. In January, Sprint subsidiary Boost began offering unlimited calling, texting, and other services for $50 a month, paid in advance. The danger is that some current post-paid subscribers paying Sprint an average of $56 a month could switch to this lower-cost plan.

Further cost reductions may be in order. Sprint could hire an outside firm like Nokia Siemens Networks to manage its network, says Walter Piecyk, an analyst with Pali Research. And additional customer-care operations could be relegated to offshore call centers.

Fortunately for Sprint Nextel, the company has plenty of cash—about $4.1 billion at the end of the third quarter—and isn't expected to face a cash crunch imminently. But big debt eventually will come due, and investors' patience may wear thin even sooner. "Sprint still has a relatively long runway to turn this around," Nelson says. "But every quarter it's getting shorter."

Software Bugs Are Mobile Phones' 'New Reality'

Has your smartphone ever locked up? Have you ever found it difficult to navigate? Or is it just downright crash-prone?

If so, you'd better get used to it.

That's the take of Jim Balsillie, co-CEO of BlackBerry maker Research in Motion (RIM). Balsillie told the Wall Street Journal that software snafus are part of the "new reality" facing phone makers and their consumers as new, increasingly advanced products are rushed to market.

Balsillie said RIM (NASDAQ: RIMM) and its carrier partner, Verizon Wireless, managed to ship the BlackBerry Storm only "by the skin of their teeth," even after delaying the product launch by a month. Bit he admitted that the close timing later played a role in user complaints, ranging from sluggish performance to keyboard snafus after its launch.

The news illustrates some of the challenges facing smartphone players and wireless carriers, who are facing unprecedented pressure to deliver the next big device: Competition is at an all-time high, while manufacturers and networks struggle to cope with rock-bottom margins and users who demand devices of ever-increasing complexity.

As a result, the effort to ship the latest crop of devices on time and ahead of the competition often means that quality suffers.

A survey by J.D. Power and Associates late last year found that business users feel beset by software problems with their mobile devices, like frozen applications, system reboots and touchscreen glitches. Kirk Parsons, senior director for wireless services at J.D. Power, told InternetNews.com at the time that such problems could be expected, since that today's smartphones are really mini-computers -- and are prone to the same sorts of errors and crashes.

Software problems aren't alone in proving a headache for users. Apple's popular iPhone 3G experienced network glitches and received upgrades after last June's launch.

Navigating a Storm

But in the BlackBerry Storm's case, reviewers complained about problems navigating its user interface.

RIM did not respond for comment by press time.

The Storm arrived on Black Friday in 2008, a month later than had been initially planned, and was quickly christened by industry watchers as a top rival for the iPhone due to its touchscreen and unique keyboard approach.

The 3G-enabled device was RIM's first-ever model to sport a touchscreen, dubbed SurePress, which replaced the traditional QWERTY keyboard. Users have a on-screen, tactile keyboard that simulates the "clicking" experience of pushing BlackBerry keys. Just like iPhone users, Storm owners also can use a fingertip to sweep screens and to tap between applications.

But problems implementing those features brought a boatload of complaints from users and reviewers. RIM and Verizon Wireless ultimately issued a software update soon after launch that improved touchscreen accuracy and navigation.

A new reality?

Industry observers said that handset makers and carriers need to avoid repeats of such problems if they want to maintain market share.

"I think by [Balsillie] saying this was a new reality is undermining what this actually does to the consumer," Ryan Reith, IDC senior research analyst, told InternetNews.com. "A negative device experience (especially on an expensive device) can turn off a customer forever."

Reith said Storm user complaints tied to software bugs were the results of rushing the device's testing during development.

"Devices are so highly publicized these days that every day matters, and manufactures are cutting corners that they shouldn't be cutting in order to cut down time to market," he said. "I think this will change as operators find this to be way too big a headache, and ultimately a bad reflection to their client base."

Other handset manufacturers are sure to be tested in coming months, especially as vendors angle to quickly roll out new designs and features that can curb the Apple (NASDAQ: AAPL) iPhone's growing share of the market.

One of the most closely watched launches of the near future is likely to be from Palm, which is slated to debut its new Pre smartphone -- and its radical new software, dubbed WebOS -- by June.

But to show off the Pre and WebOS at the annual CES event earlier this month, the pioneering mobile device manufacturer had to scramble to get the offering demo-worthy, and continues to make tweaks to the offering despite a looming deadline.

Roger McNamee, a managing director and co-founder of Elevation Partners -- one of Palm's major investors -- acknowledged in a recent interview with Yahoo Finance Tech Ticker that Palm raced to introduce the Pre at CES since Apple was not making a big splash at the tech show.

Since its moment in the limelight at CES, Palm has not provided review units nor further details about the operating system or the device. Palm has told InternetNews.com both are still in development and that it would not comment further until it has a formal announcement date.

It's not surprising that Palm wants to take as much time as it can to get the Pre right. Analysts have stated that the phone's debut must be perfect, given Palm's shaky stance in the market.

Long Droughts, Rising Seas Predicted Despite Future CO2 Curbs

Greenhouse gas levels currently expected by mid-century will produce devastating long-term droughts and a sea-level rise that will persist for 1,000 years regardless of how well the world curbs future emissions of carbon dioxide, an international team of scientists reported yesterday.

Top climate researchers from the U.S. National Oceanic and Atmospheric Administration, Switzerland and France said their analysis shows that carbon dioxide will remain near peak levels in the atmosphere far longer than other greenhouse gases, which dissipate relatively quickly.

"I think you have to think about this stuff as more like nuclear waste than acid rain: The more we add, the worse off we'll be," NOAA senior scientist Susan Solomon told reporters in a conference call. "The more time that we take to make decisions about carbon dioxide, the more irreversible climate change we'll be locked into."

At the moment, carbon concentrations in the atmosphere stand at 385 parts per million. Many climate scientists and the United Nations' Intergovernmental Panel on Climate Change have set a goal of stabilizing atmospheric carbon at 450 ppm, but current projections put the world on track to hit 550 ppm by 2035, rising after that point by 4.5 percent a year.

The new study, published in the Proceedings of the National Academy of Sciences, projects that if carbon dioxide concentrations peak at 600 ppm, several regions of the world -- including southwestern North America, the Mediterranean and southern Africa -- will face major droughts as bad or worse than the Dust Bowl of the 1930s. Global sea levels will rise by about three feet by the year 3000, a projection that does not factor in melting glaciers and polar ice sheets that would probably result in significant additional sea level rises.

Even if the world managed to halt the carbon dioxide buildup at 450 ppm, the researchers concluded, the subtropics would experience a 10 percent decrease in precipitation, compared with the 15 percent decrease they would see at 600 ppm. That level is still akin to mega-droughts such as the Dust Bowl. The already parched U.S. Southwest would probably see a 5 percent drop in precipitation during its dry season.

Mary-Elena Carr, associate director of the Columbia Climate Center, called the new projections "very sobering." She noted that while societies can try to adapt to reduced precipitation with better farming techniques and other measures, there is a limit to the ability to cope with severe drought.

"When it's drought, that is hard, because we have a finite amount of water and a growing population we need to feed," Carr said, adding that the severe storm surges associated with higher sea levels also pose a dangerous challenge to large populations.

The rising sea levels anticipated under a conservative projection, the authors wrote, would cause "irreversible commitments to future changes in the geography of the Earth, since many coastal and island features would ultimately become submerged."

The scientists noted that the world's oceans are already absorbing an enormous amount of carbon, but over time this will reach a limit and they will no longer absorb as much. As this happens, the atmospheric temperature will remain nearly constant.

Most previous scientific analyses, including the U.N. panel's summary report for policymakers, have assessed climate change impacts on a 100-year time scale. A few researchers, such as Ken Caldeira of the Carnegie Institution's Department of Global Ecology, have argued that it makes more sense to look at a time scale of at least 500 years.

In an e-mail yesterday, Caldeira wrote that he had debated this point with other contributors to the U.N. reports in 2001, adding, "If you took our long term climate commitment seriously, you would not use 100-year [global warming projections] to compare effects of different gases."

Carbon dioxide emissions account only for about half of human-induced global warming, but the several other gases that play a role, including methane, dissipate more quickly. Solomon said policymakers could take this into account when deciding how best to reduce greenhouse gases overall.

"We ought to be extra careful about how much carbon dioxide we put out in the future," she said, adding that politicians often focus on the less certain but potentially disastrous impacts of climate change but would do well to focus on the more predictable consequences. "The parts that we don't know, that are possible but very uncertain, shouldn't get in the way of what we do know."

A separate study in the same journal yesterday suggests that the iconic emperor penguins of the Antarctic could be headed to extinction by 2100 if the sea ice shrinks by the predicted amounts. That paper -- written by scientists from the Woods Hole Oceanographic Institution, National Center for Atmospheric Research, the National Snow and Ice Data Center in Boulder, Colo., and France's Centre National de la Recherche Scientifique -- projects that the number of breeding pairs in a colony in Terre Adelie, Antarctica, will decline from about 6,000 to 400 by the end of the century because the animals depend on sea ice for breeding, foraging and molting habitat.

Emperor penguins would have to migrate or change the timing of their growth stages to avoid extinction, the authors write, but "evolution or migration seem unlikely for such long-lived species at the remote southern end of the Earth."

HP's ProCurve Now an Open Network Blade

The thin line between networking hardware and application servers is getting even more blurry, thanks to HP's latest move.

HP's (NYSE: HPQ) network equipment division is launching a new initiative called the HP ProCurve Open Network Ecosystem (HP ProCurve ONE), which enables applications to run inside of a network blade.

HP ProCurve has signed up Microsoft (NASDAQ: MSFT), Avaya, McAfee, F5 and Riverbed as partners for the program, which could help HP to compete more effectively against networking giant Cisco (NASDAQ: CSCO).

"HP is the largest IT provider on the planet," Marius Haas, senior vice president and general manager of HP ProCurve, said during a Webcast press conference today.

"So the kind of depth and breadth of coverage that we have at HP is something that outweighs anything that has presented itself in the networking space as a true alternative to what Cisco provides."

Cisco has its own application server on a network blade effort called the AXP, which was announced in April of 2008. Cisco is also reportedly expanding its application delivery capabilities with a new server lineup.

Like Cisco's AXP, HP will use Linux as the core underlying operating system on which application vendors will deliver their solutions. A Linux 2.6 kernel will sit on top of HP's new ProCurve ONE Services zl Module, which is a blade that plugs into the ProCurve Switch 5400zl and 8200zl series switches.

An HP spokesperson explained to InternetNews.com that the Linux OS is being used as a service OS to provide application installations, diagnostics and the checking of application licensing credentials. The applications themselves bring their own OS, just as if they were an appliance.

Microsoft, which is one of HP's launch partners for the ProCurve ONE service, shrugged off the Linux aspect of ProCurve ONE.

"From the Microsoft perspective the boxes running in my office are running Windows Server 2008 and they're doing just fine," Tim Sinclair, a general manager with Microsoft, said in response to a question from InternetNews.com. "In the spirit of choice, if customers have solutions that they need to run on Linux and they are set for that, it enables customers' choice. But for the solutions we have it is running Server 2008."

Resident Evil 5 Demo Out for Xbox 360 Gold Members Only

Zombie buffs rejoice, Capcom's Resident Evil 5 demo is available now for Xbox 360 "Gold" members in the U.S. Presumably similar to the surprisingly mediocre Japanese demo – reviewed here – it looks like the U.S. version may in fact sport an extra level and a few new weapons.

Here's the salient bit from Capcom's press note:

As part of the demo launched today, fans will be able to get hands-on with new "Resident Evil 5" features including three new levels of single- and two player co-op play (limited to Gold members), characters, weapons and environments. In this latest installment of the renowned survivor-horror franchise, returning "Resident Evil" hero Chris Redfield is joined by new partner Sheva Alomar to take on the frightening effects of the latest bioterrorist attack in the depths of Africa.

There's a catch: If you want the Resident Evil 5 demo today, you'll have to pay for it. Really. How much? What Microsoft charges for an Xbox Live "Gold" membership -- $50 a year – if you don't already have one. Freebie "Silver" members have to stand at the window looking in until Thursday, January 29th. And PlayStation 3 owners are out of luck until sometime next week.

Which raises the question: Should demos be timed exclusives? It's one way to distance yourself from the competition, sure, all other things being equal in a multiplatform scenario. And it's certainly Capcom's prerogative.

But I'd personally rather see Microsoft and Sony hammer out post-release exclusivity deals, like downloadable content (DLC) only available on one or the other. There's nothing special about the Resident Evil 5 demo, save for its early availability. While time is a commodity, I'm disappointed when it's the only one a company can come up with to tilt the playing field.

I've also made no secret of my disdain for Microsoft's annual Xbox Live membership fee for online multiplayer and matchmaking. It's too bad Microsoft's attempting to distinguish its pay-for "Gold" service from the Xbox 360's default "Silver" by turning a demo (not really "premium" content by itself) and co-op play into a membership drive.

To clarify: I have no beef with annual membership fees, when they're justified. But early demo access and online multiplayer capabilities don't make the grade.

AMD launches new low-power Opterons, announces design wins

AMD released a group of new, low-power Opteron HE processors today, with parts immediately available from HP and, um, Rackable Systems (we discussed that company's concept of server "physicalization" recently). Dell, Sun, and "other solution providers" are expected to launch SKUs based on the new processors within the first quarter.

AMD is launching three new HE (aka, low-power) flavors of the 2376, 2374, and 2372, at 2.1GHz- 2.3GHz, and one "SE." The "SE" parts are cutting-edge Opteron parts with a correspondingly higher power consumption. In this case, the new part in town is the 2386 SE, at 2.8GHz and a 105W ACP. Typically, CPUs that are classified as SE at the beginning of a launch cycle are later relaunched as standard parts with a lower ACP/TDP.

"In the current economic environment, data center managers are under more pressure than ever to reduce costs without compromising the latest features or performance," said Patrick Patla, general manager, Server and Workstation Business, AMD. "The new Quad-Core AMD Opteron HE series processor offers unrivaled performance-per-watt and cost-efficiencies for a wide range of configurations without a potential front-side bus bottleneck. In the second quarter AMD plans to take energy-efficiency to the next level in introducing even lower ACP processors for the unique demands of cloud computing environments."

ACP, TDP, and SPEC_power

ACP, or average chip power, is a standard AMD introduced when it launched Barcelona in the fall of 2007. A processor's ACP value is meant to be a much more accurate reference point when comparing processor power consumption; AMD now promotes ACP over TDP when it refers to its processors' power draw.

ACP was meant to close (or at least reduce) the known chasm between how Intel and AMD measure TDP. Intel defines TDP as a measurement that "should be used for processor thermal solution design targets. The TDP is not the maximum power that the processor can dissipate." Intel also offers its own average power metric, defined as: "measured CPU power while running BAPCo MobileMark'05 Office Productivity suite on Microsoft Windows XP for a period of 90min at 50°C."

AMD's TDP, on the other hand, has always been a theoretical amount of power that the processor in question could draw. The company compares and contrasts the two in its original ACP white paper (PDF). "With AMD Opteron processors, the TDP... was used to represent the maximum power for the processor." Because this was an engineering design specification, it was significantly easier for AMD to report to customers. But that didn't help customers accurately assess the power required for the processor, because a processor with a 115W TDP may not break the 70W mark under extremely high workloads."

AMD's ACP values are calculated based on power consumption in a series of benchmarks, described as including "floating point, integer, java, Web, memory bandwidth, and transactional workloads... These workloads were Transaction Processing Performance Council (TPC-C), SPECcpu2006, SPECjbb2005, and STREAM. The geometric mean of measurements, taken during these workloads, is the ACP...The ACP value for each processor power band is representative of the geometric mean for the entire suite of benchmark applications plus a margin based on AMD historical manufacturing experience."

AMD also notes that it measures ACP conservatively, and deliberately chooses parts that run slightly hotter-than-average when measuring ACP for any given processor series.

Whether or not you believe AMD's ACP and Intel's TDP are equivalent (Intel denies it), ACP is a much better indication of Opteron's power consumption under load in real-world conditions. If you're curious to see how much power various CPUs individually consume (as opposed to system power as measured at the wall), Lost Circuits Deneb review has a comprehensive chart.

SPECpower (full name: SPECpower_ssj2008) is a reasonably new power consumption benchmark developed by the Standard Performance Evaluation Corporation, or SPEC. SPECpower_ssj2008 is designed to "provide a view of a server system's power consumption running Java server applications." The goal of the test is to provide a standardized framework for comparing measured performance to measured power consumption; details on the benchmark are available here (PDF). Pre-Shanghai, Intel was a far more enthusiastic proponent of SPECpower_ssj2008 than AMD. There were practical reasons for this--SPECpower's focus on Java server applications was practically a worst-case scenario for AMD both in terms of Barcelona's performance differential vís-a-vís Yorkfield/Kentsfield and the processor's performance-per-watt. Shanghai improves on both points, particularly power consumption, and we may see AMD making more use of SPECpower as a result.

SPEC has developed and released a methodological guide (PDF) to benchmarking power consumption It states, "It is not possible for a single benchmark to represent the energy efficiency for all of the possible combinations of an IT environment." The takeaway here is that it's impossible to declare one methodological standard (AMD ACP, Intel TDP, Intel AP, or SPECpower_ssj2008) categorically better than another. The only standard that ranks definitely "below" these four is AMD's TDP, which makes absolutely no attempt to provide any information that's useful in the real world.

AMD will probably release more SPECpower_ssj2008 results now that Shanghai has debuted and it wouldn't be surprising if Intel's own average power values became a bit more prominent as well. Truly comparative power consumption values/rations between the two companies remain a pipe dream, but the water should be a bit less muddy now than in previous years.

Camera Click Sound to be Legal Requirement

The US is reportedly readying the "Camera Phone Predator Alert Act" to protect citizens from being photographed illegally, without their knowledge.

While the topic has been mulled over for years, it is only now that the country is planning to put forth a legislation to make the camera click sound audible when a picture is clicked. While some cell phone manufacturers already have compliant devices in place, there are others where simply putting the phone into silent mode would let voyeuristic photography go undetected. Even for those phones on which the camera click sound cannot be turned off, users have been able to hack into the phone's firmware and remove the sound.

The proposed bill would fall under the domain of the Consumer Product Safety Commission and is expected to be provided the status of a "safety requirement". Additionally, the draft of the legislation also mentions that the click sound should be audible within a "reasonable" distance.

Similar laws are already in place on countries like Japan and Korea and most device manufacturers have been able to comply with the same.

Cisco launches major green push with EnergyWise

green initiative today that includes free software to help customers use their networks to automatically turn off computers and network gear at night and whenever they aren't being used.

By next year, Cisco is aiming to expand the new technology, EnergyWise, to allow building managers to control lights, heat and other systems as well, said William Choe, director of Cisco's Ethernet switching group.

The software has been in development for three years and will run on the Cisco Catalyst switching line, available as a free download now for existing Catalyst users, or available with new Catalyst purchases.

Cisco also said today it will be acquiring Richards-Zeta Building Intelligence Inc. of Santa Barbara to provide the intelligent middleware used by EnergyWise.

Inbar Lasser-Raab, a senior marketing director for network systems at Cisco, said the software could be used in a variety of businesses, from helping shut off power to empty guest rooms in hotels to controlling bank branch usage of wireless access points, switches and IP phones.

Because the software puts Cisco in a large market for building systems controls, analysts said it could be an important new direction for Cisco.

"I think it could be huge, honestly," said Zeus Kerravala, an analyst at Yankee Group Inc. "It shows that more and more things are going to be connected to corporate networks, including intelligence from building systems to make better decisions [about energy conservation.]"

For example, the software could be used to track how many employees have left a plant or office complex at the end of a shift based on the number of workers with badges who were still inside. If everybody has left, "why keep the systems working?" Kerravala said. "It has a lot of benefits."

Kevin Smith, CEO of Global Access Point, said he implementing the EnergyWise software to cut energy uses on Global's data center operations, which are used by third parties for off-site storage and data recovery.

"It will give me broader ... energy information than I could have had myself," Smith said. He expects the software can be used to cut his electricity usage by one-third, or even by half, when rewards for energy conservation from his energy suppliers are included. He now pays about $38,000 a month for energy costs.

Apple awarded key "multi-touch" patent covering the iPhone

Apple last week was awarded a monstrous 358-page patent covering the touch screen, graphical user interface, and methods that combine to define the iPhone user experience.

Dating back to September of 2007 and granted last Tuesday, U.S. Patent No. 7479949 lists many inventors; notably, Apple co-founder and chief executive Steve Jobs, iPhone software director Scott Forstall, and FingerWorks co-founder Wayne Westerman. (FingerWorks was responsible for gadgets with an opaque surface that could respond to gesture controls before being acquired by Apple to aid its multi-touch efforts several years ago.)

The filing is essentially a summary and overview of all the technologies that come together in the iPhone. In the patent, Apple claims coverage for the device itself, the way gestures like pinches and zooms are detected, and the software the device runs. Also mentioned are many other different details and aspects of the multi-touch user interface, such as a finger swipe, a two-thumb twist, and a method of determining which object was intended when a touch seems to cover both.

Apple interim chief executive Tim Cook recently promised to aggressively pursue any company or person who "rips off" Apple's intellectual property, and this patent affords the Cupertino-based iPhone maker the footing it would need to mount any such defense.

In detail

In setting a tone for the filing, Apple described how portable phones received more and more pushbuttons to control new features, but the inability to adapt the input methods to match the application running is a problem. Thus, a touchscreen device is a better choice; however, gestures can be difficult to interpret or translate into the commands the user actually wants the device to perform.

"Accordingly, there is a need for touch-screen-display electronic devices with more transparent and intuitive user interfaces," the filing reads. These improved devices can take input and interpret it as "precise, intended commands that are easy to use, configure, and/or adapt. Such interfaces increase the effectiveness, efficiency and user satisfaction with portable multifunction devices."

Future features?

There are also some interesting aspects of the filing that may hint at future plans for the iPhone and iPod, such as "a blogging application" and "a digital video camera application" -- both of which have been mentioned in previous coverage of the patent. Similarly, voice-activated dialing could someday be a feature, as the document refers to audio circuitry that "converts the electrical signal [from human sound waves] to audio data and transmits the audio data to the peripherals interface for processing."

Apple mentions a touchpad for activating or deactivating functions. The patent describes it as a "touch-sensitive area of the device that, unlike the touch screen, does not display visual output. The touchpad may be a touch-sensitive surface that is separate from the touch screen or an extension of the touch-sensitive surface formed by the touch screen."

Interestingly, this is a feature Palm is already touting about its upcoming Pre handset. According to Palm's press release: "[The Pre has a] gesture area, which enables simple, intuitive gestures for navigation." The gesture area is separate from the touch screen.

Final Observations

Along with covering the iPhone, the patent filing is notable for referencing 40 other existing patents, and for naming Jobs first among its inventors. Its granted status was first reported Monday by WorldOfApple.

Zune in Crisis: Holiday sales down 54%

Chicago (IL) - Zune, Microsoft's iPod rival, is not having its finest hour these days. Holiday sales nosedived by a whopping 54%, eating into profits from the entire Entertainment and Devices Division. Pre-holiday price cuts didn't help move Zunes off the shelves, and Apple's stellar iPod holiday sales helped cement Zune's destiny. If Microsoft doesn't come up with a better business plan - one that should call for a touch-based model that could actually be a rival to iPod touch, and an App Store-like model with third-party applications - then Zune could easily never recover from this disaster.

Do you remember Zune? It was Microsoft's answer to the ubiquitous iPod. According to Microsoft's disappointing quarterly earnings report and the company's latest 10-Q filing though, Zune sales nosedived sharply amid stronger than ever holiday iPod sales. The filing states, "Zune platform revenue decreased $100 million or 54% reflecting a decrease in device sales." Zune's decline also contributed heavily to a 60% drop in earnings for Microsoft's Entertainment and Devices Division - which also includes their Xbox consoles.

Although Zune failed to position itself as a viable iPod competitor, the latest holiday results are total carnage and must've been a real eye-opener for Microsoft. Especially since Microsoft offered $10 to $20 holiday discount in an effort to boost Zune sales, which did little to change its fate. The company shipped barely one million Zune units in its first two full years on the market.

Apple sold nearly 23 million iPod units during holiday quarter alone, excluding iPhones which come with iPod functionality built-in, which is a 3% year-over-year unit growth - a modest growth during times of economic prosperity but a significant achievement in current economic slump that actually proves how much consumers are still interested in iPods despite financial crisis.

In total, Apple sold over 200 million iPod units since the music player hit the market on October, 2001. The iPod currently dominates with 71% of the music player market. With the current sales trend, iPod stands a chance of dethroning Sony's Walkman as the best-selling music player of all time.

Microsoft last updated Zune in October of last year, just day before Apple's iPod media event. The company kept the form factor intact, but added new colors to the mix: A 120GB hard drive model and 16GB flash model. Zune's software was also updated to version 3.0 that added new features to all Zune models, including even the first-generation ones. The new software tapped the built-in FM and Wi-Fi radios to provide features like Buy (from FM) that allows users to tag a song and purchase it from the Zune Marketplace using Wi-Fi hotspots.

Other notable additions included Zune Channels, a radio station channels and celebrity channels that push new music to subscribers' collections each week and two new games, the first ever for Zune. In addition, Microsoft cut a deal with McDonald's to give free wireless access for Zune owners at their 9,800 fast food restaurants via ISP Wayport - mirroring a similar deal Apple has in place with Starbucks.

All of the above didn't help, despite the fact that Zune upgrades were viewed as more substantial than Apple's September refresh of the iPod lineup (which basically came down to iPod nano redesign and storage bump across the family). Finally, a rumored alliance with Nokia to make the Zune phone didn't see light of the day, and most analysts think it never will despite ongoing speculations. Perhaps the most limiting factor of all is the lack of a touch-based media player with Internet functionality in the Zune lineup that could challenge the iPod touch + App Store combo.

Microsoft's efforts to replicate their all-in-one iPod approach centered around its iTunes content store worked (to some extent), but the company received a major blow when MTV pulled URGE from Windows Media Player. The Zune desktop application that was released to replicate iTunes functionality is still too buggy to be reliable, plus it's a bit rough around the edges to compete with the long polished iTunes interface. In addition, Zune Marketplace did not eclipse the sheer amount of content offered on the iTunes Store - which remains the biggest online content store in the world.

WWF-Canada: Green Economy Will Help Fight Climate Change

BRUSSELS, BELGIUM - New figures released today show that moving to a "green" global economy could not only protect the planet from the worst effects of climate change but is surprisingly affordable.

Pathways to a Low Carbon Economy-a new study by McKinsey and Co.-shows that global warming can be kept below the critical 2 degrees C rise and that it is well within our means to do so. The study spells out in detail the costs of cutting damaging carbon emissions, but makes it clear that only by acting now will we avoid the worst impacts of climate change. According to WWF, one of the report's sponsors, world leaders now have all the information they need to shape a global climate deal for both developed and developing countries.

The study - one of the biggest and most detailed of its kind ever compiled - lists more than 200 opportunities, spread across ten sectors and twenty-one geographical regions, which could cut global greenhouse gas emissions by about 40% below 1990 levels by 2030.

Steve Jobs undergoing surgery Monday

APPLE Messiah Steve Jobs who is definitely not sick, is apparently undergoing surgery at Stanford Hospital, for something he doesnt have, according to the Dark Satanic Rumour Mill.

Valley Wag appears to have got the news from an employee who works at Stanford. Apple has been keeping silent about what is wrong with Jobs, despite pressure from shareholders to come clean about how ill he really is.

Jobs is currently on medical leave from Apple while he recuperates from health problems that have caused him to lose significant weight. Two weeks ago reprts had it that Jobs was considering a liver transplant.

Apple fanboys have been facing the problem that Steve has been telling the world plus dog that he just needs a bit of time off, therefore they must believe him. However the fact is that it is increasingly looking like he is suffering from something a bit serious and might not be telling them the full truth.

Apple declined to comment on what a representative called rumours and speculation, but then again it rarely comments on anything negative. Valley Wag has been slammed in the tech press with most saying the story is completely untrue and that "Steve was in the office today".

However as the Wag points out, all the comments appear to be identical and it seems that the same source has been briefing all the magazines with the same line.

It said that Jobs and Apple have offered so many misleading disclosures about the status of his health that anything goes really. It wants to know, if Jobs is on a six-month medical leave, with COO Tim Cook running Apple in his absence, why is he attending meetings? µ

Senator Quizzes Microsoft On Layoffs

In a letter sent to Microsoft CEO Steve Ballmer late last week, Grassley wrote:

"I am concerned that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan. As you know, I want to make sure employers recruit qualified American workers first before hiring foreign guest workers."

The letter continues:

"Last year, Microsoft was here on Capitol Hill advocating for more H-1B visas. The purpose of the H-1B visa program is to assist companies in their employment needs where there is not a sufficient American workforce to meet their technology expertise requirements. However, H-1B and other work visa programs were never intended to replace qualified American workers.

Certainly, these work visa programs were never intended to allow a company to retain foreign guest workers rather than similarly qualified American workers, when that company cuts jobs during an economic downturn.

It is imperative that in implementing its layoff plan, Microsoft ensures that American workers have priority in keeping their jobs over foreign workers on visa programs."

In 2007, Microsoft petitioned the United States government for 959 H-1B visas, ranking fifth among the top 100 employers--including U.S. and non-U.S.-based companies--who requested the temporary visas to hire foreign workers for jobs in the U.S.

For a look at that full list of employers requesting H-1B visas, click here.

So far, Microsoft's public response to Grassley's letter comes from Microsoft spokesman Lou Gellos, who issued this statement:

“We made the difficult decisions on which jobs would be eliminated based on a detailed assessment of our current and future business opportunities. The initial reductions we announced affect employees in a number of business units, and a significant number of the affected employees are foreign citizens working in this country on a visa."

Gellos' statement continues:

"We recognize the human impact that our workforce reduction has on every affected worker and their families. For many of the employees here on a visa, being laid off means that they have to leave the country on very short notice, in many cases uprooting families and children. We care about all our employees, so we are providing services and support to try to help every affected worker, whether they are US workers or foreign nationals working in this country on a visa.”

Grassley's letter also asked Ballmer several specific questions about Microsoft's layoff plans, including these:

* What is the breakdown in the jobs that are being eliminated? What kind of jobs are they? How many employees in each area will be cut?

* Are any of these jobs being cut held by H-1B or other work visa program employees? If so, how many?

* How many of the jobs being eliminated are filled by Americans? Of those positions, is Microsoft retaining similar ones filled by foreign guest workers? If so, how many?

* How many H-1B or other work visa program workers will Microsoft be retaining when the planned layoff is completed?

We'll keep you posted on whether Microsoft responds directly to Grassley's questions.

In the meantime, what's your gut telling you? Do you think Microsoft--or any other U.S. tech employer laying off worker--should prioritize to keep as many Americans as possible when handing out pink slips to techies?

Or, what other considerations do you think should have higher ranking than American citizenship when it comes to layoff decisions?

Tell us what you think.

Microsoft, Google show their differences

SAN FRANCISCO (MarketWatch) -- The growing rivalry between Microsoft Corp. and Google Inc. was on full display last week when the two tech giants announced fourth-quarter results within hours of each other -- and offered wildly divergent responses to the recession.

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MSFT 17.63, +0.43, +2.5%) . Not known for wielding a blunt budget ax, the Redmond, Wash.-based software titan surprised the technology world with plans to sever as many as 5,000 workers. Its core Windows and Office businesses are hurting because of the sharp drop in spending on high-tech gear by companies and consumers. See Microsoft earnings story.

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GOOG 323.87, -0.83, -0.3%) seems a downright spendthrift, actually hiring 99 workers during the fourth quarter, though press reports indicate the company has cut outside contractors. The company also plans to offset last quarter's job additions when it goes through with 100 position cuts, announced last week. Still, the fact that it's breaking even on the job front for now stands in stark contrast to Microsoft. See Google earnings story.

The two companies' differences amplified serious growth issues facing Microsoft, and make it even more feasible that the company could still end up buying Yahoo Inc. (YHOO:

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YHOO 11.17, -0.15, -1.3%) Microsoft might also forge some sort of deal to buy the Internet pioneer's search business, as it still needs sources of growth.

Microsoft's fiscal first quarter was especially disconcerting to Wall Street analysts because of the slowdown in the company's Windows and Office business lines. The hefty margins of Windows -- which Microsoft refers to as its "client division" -- pretty much gave the software behemoth a license to print money.

It now appears that Microsoft's expensive ad campaign and slogan, "I'm a PC," aimed at taking its brand back, is not spurring a lot of new computer purchases in the current recession, especially those with the more profitable Vista operating system.

Instead, some of those sales are going to lower-cost netbooks. Even though most netbooks now come bundled with Microsoft software (many also run Linux), they use the older, less expensive Windows XP, which yields lower profits.

Thinning margins

Collins Stewart analyst Sandeep Aggarwal estimates Microsoft reaps an average sales price of $24 per system for its software loaded on netbooks, versus a minimum of $50 per package on desktop computers. The trend to less-functional -- but lower-cost -- netbooks is part of the overall shift away from desktop PCs.

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AAPL 89.64, +1.28, +1.5%) while seeing a slowdown in Mac desktops, still saw a big rise in MacBook portable sales, which rose 34% from a year ago. Apple's MacBooks are pricier than netbooks, which typically run $350-$500, yet they're growing faster than the rest of the PC industry. Meanwhile, desktop Mac sales fell 25%.

Microsoft, which continues to work on Windows 7, is going to be under serious pressure to launch its next operating system on time. Initial reports of the test version of Windows 7 claim that the software does not use as many resources as the much-maligned Vista. That would be a major plus in Microsoft's favor, especially if netbooks continue to be popular.

So it was probably with envy that Microsoft looked at Google's results. The Internet search giant was, along with Apple, one of last week's bright lights in tech. Even though the global economy is hurting most companies, Google managed to beat Wall Street's estimates, partly due to its efforts to clean up its ad network. Google also vowed that it is now cutting costs.

"We had tight control over costs, something that had eluded us perhaps in the past, but we got the formula down now," Chief Executive Eric Schmidt told analysts on a conference call.

Slower hiring

Google's hiring has slowed remarkably from past levels. The recently announced 100 job cuts came from its recruiting department, a real sign of budget crimping from the company that once was one of the most aggressive in Silicon Valley in terms of hiring. See full story.

Other press reports have the company beginning to trim down some of its juicier benefits. That includes cutting back on some of the free meals at the gourmet cafeterias at the Googleplex, the nickname for the company's sprawling campus in Mountain View, Calif. Those moves may not seem like much on a relative basis to a company with more than 20,000 employees, but discipline is creeping into Google's once free-spending ways.

Still, some on the Street predict Google faces tougher headwinds going forward, now that the holiday shopping season is over. Shoppers searching for the best holiday deals online provided an added boost in the fourth quarter.

Microsoft's online business remains lackluster, which continues to fuel speculation that the company will end up doing a deal with Yahoo. Katherine Egbert, an analyst with Jeffries & Co. Inc. said in a report last week that a combination is still possible, given current valuations and Microsoft's continually lagging online results.

"At current market levels, Microsoft might be able to acquire Yahoo somewhere on the order of two-thirds or less than its initial bid," she wrote.

Combine that with Microsoft's growing cash pile, and consider the fact that Yahoo's new result-oriented chief executive, Carol Bartz, isn't a founder of the company -- and the idea doesn't seem too far-fetched right now.

Therese Poletti is a senior columnist for MarketWatch in San Francisco.

What's the Conficker worm got to do with NAC?

The Conficker worm doesn't directly have anything to do with NAC, but as is the case when any pervasive attack becomes high profile, vendors leap in to point out how their products could have prevented the problem.

In the case of NAC products and Conficker, this is pretty much true. The worm takes advantage of a Windows flaw for which a patch has been written, but that has not been patched in as much as a third of Windows machines, according to some estimates.

IT Search: Recapture Control Over Your IT Infrastructure. : Download now

If NAC were in place for all machines attaching to networks, machines without the required patch could be denied access. So if the vulnerability has been exploited, the infected machines won’t be able to spread it around on a corporate network because they won’t be able to gain access.

And even if an infected machine does gain access, with post-connect NAC the behavior of the worm probing and propagating could be blocked or the machine could be knocked offline altogether.

So this is the classic black-and-white case in favor of NAC if fighting off this particular infection is important enough.

By all reports Conficker, AKA Downadup, is difficult to remove and alters PC settings to make it difficult for machines to get the needed Microsoft patch or connect to Web sites likely to contain instructions on how to remediate the worm. It’s a good exploit to avoid if possible.

In any case, Conficker on its own is probably not a sufficient reason to run out and buy a NAC product, but it is emblematic of a category of problem that NAC can effectively address.

Sprint Palm Treo Pro shows up at Best Buy

Last week, several blog sites, including Engadget Mobile, reported the appearance of the Palm Treo Pro on Sprint's Web site, but as soon as it appeared, it disappeared.

While this may be a case of someone getting a little too trigger-happy, the idea of a Sprint Treo Pro is certainly not a fluke, and in fact, the smartphone is now up on Best Buy's Web site.

The Windows Mobile smartphone is advertised for a whopping $699.99 (though we suspect and certainly hope the price will drop with a service agreement) and is currently listed as backordered. Up till now, the Treo Pro was only offered as an unlocked GSM phone. No word yet from Sprint on when the Treo Pro will make its official debut but we'll keep you posted.

IBM sends Blue Clouds back to school

While cloud computing might represent a return of sorts to a shared, host computing model that was pioneered by companies like IBM, a lot of the key research, development, and production work done on cloud computing has been done by the big names in hyperscale, Web 2.0 applications: Google, Yahoo, Amazon, and the like. It's tough for a meat-and-potatoes, server-and-operating-system vendor like Big Blue to figure out how to get its hands on some money in this cloud racket. Just like it was difficult, at least during the first few years of the boom, for the company to get its piece of the dot-com pie.

As IT vendors often do when they are trying to position themselves as thought/product leaders in a new field - and cloud computing is new, even if it really is just utility computing gussied up with a slightly different programming model - IBM is going back to school. In this case, IBM has forged partnerships with a dozen universities that will see them make use of the Blue Cloud twist on the open source Hadoop programming environment. Presumably, these clouds will run on IBM's System x servers. The feeds and speeds of the clouds that IBM is working with the schools to build were not available as we went to press.

One of the universities in the IBM partnership - and arguably the most important one - is Carnegie Mellon University in Pittsburgh. A slew of technologies have come out of CMU, including the Mach Unix kernel that was at the heart of IBM's AIX for a time. And more significantly for Big Blue's cloud efforts, Carnegie Mellon is also the school where Yahoo!, which is the primary contributor to the Hadoop project, gave techies access to a 4,000-processor, 1.5 petabyte grid - er, cloud - back in November 2007. The other important school in this deal is Texas A&M University.

There is an interesting twist on this Blue Cloud thing announced today. It is the Qatar campuses of CMU and Texas A&M that are working in conjunction with Qatar University to do cloud projects with IBM. Thanks to high oil prices over the past several years, Qatar has enough money to get American universities to set up campuses in this Middle Eastern country. The small nation has the highest per-capita income in the world and no income tax, and its future, like the rest of us, will be based on things other than oil. But in the meantime, some computing expertise with the latest programming techniques will come in handy.

The three Qatar campuses will be collaborating with IBM to do seismic modeling as part of oil and gas exploration and create integrated production software for the oil and gas industry, according to Big Blue. (What makes this clouds and not just supercomputing and ERP with a process bent is beyond me).

The universities are also working on an Arabic language search engine and will be testing and migrating unspecified Hadoop/MapReduce programming models (from what to what, they didn't say). The schools will also be creating a curriculum to teach cloud programming techniques. Over time, the schools expect top use the clouds as part of other search, data mining, simulation, computational biology, and financial modeling and forecasting applications.

The University of Pretoria in South Africa is also getting its own Blue Cloud and will be using it for medical research related to protein folding and how it is affected by DNA interactions with medicines. A consortium of seven universities in East Africa, known as the Higher Education Alliance for Leadership Through Health, will be making use of the cloud center in South Africa too.

The consortium is also getting access to a remote learning system called Sakai that IBM plans to host on Linux partitions on its mainframes to give students in Kenya, Ethiopia, the Democratic Republic of Congo, Tanzania, and Uganda access to online courses relating to cloud computing. Finally, IBM said that it has been working with Kyushu University in Japan since last November to get cloud computing infrastructure in the hands of students.

IBM has opened thirteen cloud computing centers for academics, companies, and government agencies around the globe to play around with as they test code and has an internal cloud, operated by IBM Research, which the company says has over 100,000 users today. ®

Reports: New Twitter funding puts value between $200M-$250M

Twitter Inc. has reportedly raised about $20 million in new investments based on a valuation of the company at up to $250 million.

The TechCrunch and the Wall Street Journal's All Things Digital blogs over the weekend both cited unnamed sources saying that the San Francisco-based micro-blogging company has followed up on its previous $20 million in funding with a similar sized round that has yet to be announced.

The new valuation of the company is about half what Palo Alto social networking company Facebook Inc. reportedly offered for Twitter over the summer, although most of that was said to be in Facebook stock which today is worth nowhere near what it was thought to at that time. Facebook's valuation was pegged at about $15 billion when Microsoft Corp. (NASDAQ:MSFT) invested in it in 2007 but is now valued at less than $5 billion.

Apple thriving on 25th anniversary of the Mac

Born at a time when people assumed desktop computers were all about text, the primarily visual Macintosh is marking its 25th anniversary on a mostly high note with some of its best-ever sales and influence beyond just desktop computers.

The design was originally envisioned in the late 1970s by early Apple employee Jef Raskin as a truly accessible computer that didn't require the at times arcane text commands of most computers.

Based heavily on ideas from Xerox's PARC research facility, the original Macintosh 128K was formally launched January 24th, 1984 as the first mainstream computer to depend on the concepts of a mouse pointer, a windowed desktop, icons and folders. It wasn't Apple's first system of the kind -- the Lisa was launched just over a year earlier -- but it was the first to be priced at a level average (if still well-off) people could afford, initially costing $2,495 where the Lisa had been priced four times higher.

Most now acknowledge that the design is ultimately the father of the modern computer, though the truth is that the system initially struggled to gain acceptance. Besides a high price well beyond the pure cost, many weren't ready to embrace the notion of a mouse-driven control scheme. The visual interface was not only a radical break that was deemed too simple but was considered a large barrier to developing software. And while Apple co-founder Steve Jobs is often credited with helping guide the original design and backing it as the future of the company he helped create, his increasing conflicts with then-CEO John Sculley forced him out in 1985.

Sales of the Mac cooled after the early rush, but climbed upwards again through the second half of the 1980s and built up a reputation for the Mac as a content creation standard in an era when Windows was still considered an inferior parallel and most non-Mac computers had command line interfaces. The era introduced color displays, expandability, hard drives, and even the first notebook in the form of 1989's Macintosh Portable: a 16-pound, $6,500 behemoth whose battery technology was crude enough that people couldn't even run the system on AC if the battery was drained.

The original Macintosh 128K desktop.

The 1990s were, by contrast, a rollercoaster for the Mac. Although Apple is often touted as pioneering the modern notebook's clamshell design with 1991's PowerBook 100 as well as a mainstream 32-bit operating system in System 7 the same year, the advent of Microsoft's Windows 3.0 and later Windows 95 eventually swung the advantage away from the Mac. Users eventually got a very similar and at times better experience to the Mac from commodity PCs; from 1995 onwards, Windows systems were capable of true multitasking where even Mac OS 9 was limited in terms of how programs could run in the background.

Intel's rise throughout the 1990s also eroded at least some of Apple's perceived performance edge, and Apple's tendency towards very high profit margins and an extremely large product range gradually turned many users away from the Mac towards lower-priced and now more capable PCs. Executive management even greenlit Mac clones that were regularly cheaper than Apple's own products. The decline in market share was steep enough that, by the mid-1990s, many observers were convinced Apple was nearing its end.

Most already know the story that follows from the company's late 1990s turnaround. After taking Steve Jobs back on as first its temporary and later permanent new CEO, Apple released the first iMac in 1998 and effectively reversed its fortunes overnight, returning to its roots with a design that sparked renewed interest in genuinely appealing, ergonomic design in computers and for electronics as a whole.

The first iMac from 1998.

Since then, Apple has often positioned the Mac as an attractive, premium-priced but easy to use computer and has regularly been the first to popularize certain design or technology trends: while it wasn't first with USB or Wi-Fi, the Cupertino-based company was the first to encourage their use. Thin, widescreen notebooks also owe much of their now ubiquitous popularity to the titanium PowerBook G4 of 2001. Mac OS X's appearance also gave Apple a modern operating system that itself was first with mainstream features like the use of 3D effects, easy built-in device syncing, and widgets for quick access to information.

Macs have at times floundered in the early part of the 21st century. The Power Mac G4 Cube, though still cherished as one of the most unique computer designs yet, was quickly stifled as its price and performance trailed behind. And lagging PowerPC development by both IBM and Motorola frequently left Apple struggling to justify performance differences and ultimately pushed the company to switch to Intel processors.

But by now, 25 years after the first model was headed to stores, the Mac is considered at or near its zenith. In the past three years, the platform has steadily climbed back in market share to where it claimed nearly 10 percent of US sales this past summer. Macs are continuing to register significant sales growth even as the PC industry declines in a battered world economy. Apple's systems are still popularly seen as design leaders and, due to the Intel switch, now regularly perform as well or sometimes better than many Windows PCs with similar hardware.

Apple has lately positioned the Mac as a true eco-friendly computer with aluminum, glass and energy-efficient processors now almost ubiquitous throughout its lineup.

And the Mac is now showing signs of breaking out from the familiar notions of desktops and notebooks. While the interfaces are radically different, the Mac's operating system underpins the Apple TV media hub, the iPhone and the iPod touch, all devices which embrace the philosophy of a simple, visual interface and which (in the case of the iPhone and iPod) are virtually small computers themselves.

In characteristic fashion, Apple isn't waxing nostalgic and (as of this writing) has done nothing to commemorate the anniversary of the computer that still defines its business. The company has even gone so far as to pull out of Macworld Expo for 2010 despite the show having been around for almost as many years as the Mac itself. Still, as one of the cornerstones of the PC industry and the reason for AppleInsider's existence, the Mac has and will hopefully continue to have an impact on computers for many years to come.

An iMac circa January 2009, 25 years after its first ancestor.

Microsoft battles worm, rebuts CERT Claim

Microsoft is trying to control the Conficker worm on two fronts: both the bug itself and news about how it's handling it.

Microsoft is still trying to control the Conficker worm, both the bug itself and news about how it's handling it. Conficker first surfaced in October of 2008 when Redmond patched a flaw in Windows' remote procedure call requests.

On Thursday, Roger Halbheer, chief security adviser for Microsoft's Europe, Middle East and Africa Group, disputed findings in an alert issued by the U.S. Computer Emergency Readiness Team (CERT).

CERT suggested that the Windows AutoRun feature, which could be tapped to run malicious programs in Windows environments, should be disabled. Doing so would limit the spread of bug strains like Conficker. Moreover, CERT described Microsoft's guidelines for disabling AutoRun as ineffective, exacerbating the vulnerability.

Halbheer objected to CERT's claim in his blog post. He pointed to a Knowledgebase article describing how Windows users can disable the AutoRun registry key and prevent incursions from removable media, such as USB flash drives.

Microsoft faces a tall order in getting out the word that a fix exists, while quelling the concerns of users and system administrators. It's a global problem, too.

"Quenching the outbreak is going to be difficult due to the ISPs not wanting to get involved with supervising the traffic of their users," said Phil Lieberman, president of Los Angeles-based Lieberman Software. "Consumers cannot shut down those that are attacking them since they would be legally liable and the government is prohibited from stopping the outbreak because there are no laws that allow it because of offshore control of the botnet."

Lieberman added, "I have to tell you, it's a good day to be a cyber-criminal running a botnet, and an even better day to be an antivirus vendor."

The Conficker worm may be one of the largest botnet bugs ever created. It got its name from a circle of German hackers and security researchers. The name is a combination of "con" and "ficken," the German verb for configure. It's not clear to what degree the Conficker worm is slithering around the world. Reports have suggested that as little as 2.5 million to as many as 10 million PCs have been infected.

UPDATED: Increased chance of snow this afternoon

MUNCIE — Snow is likely this afternoon, with total daytime accumulation of less than an inch possible, according to the National Weather Service.

What is described as a quick moving storm system has the potential to drop up to an inch of fluffy snow on the ground, leaving roadways slick, particularly along routes like Interstates 69 and 74, according to the NWS.

The chance of snow is 60 percent, with a high temperature near 14 today.

Monday is expected to be cloudy with a high near 21, and a 50-percent chance of snow Monday night. Likelihood of snow is even higher Tuesday, with a 70-percent chance before clearing for a partly sunny day on Wednesday.

Guest post: Saving the digital transition

We're turning over this space today to a guest post from Gregory L. Rosston and Scott Wallsten. Rosston is the deputy director of the Stanford Institute for Economic Policy Research and the Public Policy program at Stanford University and served as the deputy chief economist of the Federal Communications Commission from 1994 to 1997. Wallsten is vice president for research and a senior fellow at the Technology Policy Institute.

The outgoing administration and the 110th Congress are leaving an impending mess for President Obama and his administration to manage. No, not that one. Not that one either.

Less than a month after the inauguration, millions of Americans who don't subscribe to cable or satellite services may see nothing but static on their screens. The reason is that on February 17, broadcasters must stop all analog television transmissions--the only kind that older televisions can receive over the air--and continue only digital transmissions.

Make no mistake: the digital transition is long overdue and will greatly benefit the American people. But this transition will not go nearly as smoothly as the political transition has gone unless some steps are taken immediately to soften the blow and subsequent uproar.

We already have evidence that the transition may not go well. One smart move was that broadcasters in Wilmington, N.C., agreed to turn off their analog signals in September. That test-run allowed the FCC to see what might happen. It was not pretty. Despite the relatively substantial resources devoted to preparing the city, when broadcasters turned off their analog signals, calls poured in to television stations, city offices, and even 911 call centers from frustrated and confused residents.

The good news is that the Wilmington transition ended with no major calamities and now the freed-up spectrum is available for other, more valuable uses. But the Wilmington area has fewer than 13,000 households that rely on over-the-air broadcast, whereas the entire U.S. has about 17 million such households. Another 19 million households subscribe to cable or satellite but have at least one TV that uses broadcast signals. In other words, the small brouhaha in Wilmington will be hugely magnified when the entire country makes the switch.

The primary mechanism to prepare citizens for the switch is a $1.5 billion coupon program intended to subsidize "converter boxes." These boxes connect to an antenna and to a TV set and convert the digital signal into a form the television can display. Households can, in principle, get two $40 coupons from the government to offset the price of two boxes. However, demand for coupons has been so intense that the program is out of money, prompting cries for more increased subsidies.

The real problem with the coupon program, however, is not that it is too small. The problem is that it is ineffective. In recent research, one of us found that the coupons increased the price of the boxes by almost the amount of the coupon. The coupon program therefore primarily subsidizes retailers, not consumers.

This result is not surprising. With a $40 coupon, you don't care whether the box costs $0 or $40, since you pay nothing either way. Retailers thus have little incentive to price a box at less than $40.

Still, the program's current lack of funds reflects some good news. First, it means that many people have gone out to purchase boxes and are likely to be ready for the switch. Second, the shortage has itself created news and may increase awareness, causing more people to make the necessary preparations (buy a converter box, buy a new television, subscribe to cable or satellite, or pick up a book). The bad news is that lack of coupons may cause some people not to acquire a converter box.

Congress will probably top up the coupon program for fear of being accused of not responding to this mini-crisis, but that won't be of much help to consumers, and no help to those who will need it the most, such as elderly people who may have no idea how to connect and configure a converter box (See "Digital TV transition (for the elderly)" on YouTube).

What can be done in the next few weeks, aside from expanding the coupon program? It's too late for a comprehensive new plan, but the FCC could still buy time to reduce 911 calls and to minimize the confusion from people suddenly seeing "snow" on their screens.

An increasingly popular proposal is to delay the transition by several months. That may avoid trouble in February, but will probably only put off the pain rather than eliminate it. The proposal, however, has the kernel of the right solution.

In particular, the FCC could require stations to continue their analog transmissions for two weeks in order to continuously broadcast a simple full-screen message that reads and also says aloud, "Your television needs a digital converter box. For more information, call 1-888-225-5322 (TTY: 1-888-835-5322) or visit: www.DTV.gov."

Congress, in fact, gave the FCC the ability to make this happen under the Analog Nightlight Act. So far, though, the FCC has authorized only a handful of stations to run this "nightlight" service because of interference concerns. The FCC could immediately expand the program by loosening restrictions on which stations can participate and by not requiring them to apply for eligibility.

This plan would not be free. Not all analog signals have to shut down to accommodate other uses, and those station owners could be subsidized a small amount to maintain the broadcast. A larger expense would involve compensating the wireless providers who paid $19 billion for this spectrum to wait for two weeks before beginning their transmissions. A two-week delay probably would not be a big burden on the providers as they have yet to deploy systems fully and have not sold any relevant devices to consumers.

Had the Commission and Congress better thought through the problems earlier, they could have mandated such broadcasts for at least one week prior to the analog shutdown. They could also have had monthly test markets like Wilmington, N.C. We would then have had at least 10 fully functioning digital markets and would have learned many more lessons about the transition.

By March 19, 2009, hopefully the only March Madness will be on the court and in the living rooms of households watching through televisions equipped for the digital age. The benefits to consumers from the switch are far too great to be derailed by the poor planning of the past two years and short-term political uproar. Use of the returned television spectrum and spaces between the digital channels promises to increase the quality and reliability of voice, data, and video service for wireless consumers. We cannot let poor planning delay the benefits of that true digital transition.