The week in review: Dawn of the "PC-plus" era?

"Information appliances"--simplified computing devices typically devoted to the Net--seemed to come of age at the country's largest gathering of personal computer manufacturers and enthusiasts. The debut began with a bang Sunday night when a jocular Bill Gates took the wraps off yet another new product designed to expand Microsoft's computing empire.

Post PC
In a keynote address, the Microsoft chief executive showcased the MSN Web Companion, a design for a scaled-down Internet computer. The device was announced in September, but few details had been known.

The Web Companion is a book-sized device that runs Microsoft's Windows CE operating system and connects to the Net using the company's MSN Internet service. Other companies will manufacture the box, including Acer, Philips Electronics, Thomson Consumer Electronics and Turkish electronics company Vestel.

What will antitrust trial Judge Thomas Penfield Jackson think of such a bundle? No one knows for sure, but some analysts think the Web Companion will exist in a gray area not covered by Jackson's scathing finding that Microsoft is a monopoly.

Sony and Palm
The Comdex gadget craze continued strong into Monday, when Sony and Palm said they will collaborate to develop a handheld that uses memory storage technology from Sony and the Palm operating system. The new line will go beyond the organizer functions associated with today's Palm devices, offering audio-visual capabilities and wireless communications.

The same day, Microsoft announced plans to expand connectivity for handheld devices based on its scaled-down Windows CE operating system software. That move is aimed at closing the still-wide gap between adoption of CE and Palm devices; Palm accounts for 75 percent of the market, according to research from International Data Corporation.

Warm and fuzzy
Hewlett-Packard's new CEO Carly Fiorina stirred debate when she proclaimed that the Net should be made into something "pervasive, intimate, warm, friendly, useful and personal." HP's "e-services" strategy fits the bill.

Fiorina also announced a $200 million advertising and marketing campaign along with a new logo intended to polish the 60-year-old computer company's image. The company has acknowledged missing the first Internet boom, a time when rival Sun Microsystems was carried to new heights by selling the server computers that power countless Web sites. IBM too associated its name with doing business on the Internet.

"Comdex should not exist"
Sun's CEO Scott McNealy ripped the PC industry in his turn at the podium. "Comdex should not exist," he said. "Workstations are so 'last year' for mere mortals. I hope I'm not raining on the PC show, but that's just how we see it."

Reiterating a traditional Sun theme, McNealy suggested bypassing bulky and crash-prone PCs and instead using information appliances, cell phones and other gadgets connected to the Internet, with Sun servers doing the computational heavy lifting on the other end. "Everything with a digital or electric heartbeat is going to be connected to the Internet," he said. "The big opportunity is getting everything connected to the Internet." McNealy also took the opportunity to bash longtime foe Microsoft.

Hollywood, music industry fight back
While the tech elite stirred up Vegas, Hollywood stirred up the Net. In a major test of the new Digital Millennium Copyright Act, the Motion Picture Association of America is hunting down and eliminating from the Net DeCSS, a program that cracks the encryption code in the DVD Content Scrambling System, allowing people to make unauthorized copies of digital movies to play on their computers or television sets.

Meanwhile, many in the recording industry are laying the framework for selling singles online in response to the wave of free music tracks available on the Net and the growing gamut of devices that play digital music. EMI Recorded Music plans to sell singles through retail stores, allowing consumers to download tracks to play via their PCs, handheld digital music players and eventually car stereos. Other record companies already spearheading the sale of digital downloads include Sony Music and Warner Music Group.

MTV Interactive made its most aggressive move yet to rule the Net the way its brands dominate television. It plans to overhaul its network of music Web sites and create a "universal music platform" to deliver its services and content across the network. Viacom's Net push comes at a time when the music industry is in a frenzy to take on start-up ".com" companies and emerging music delivery technologies, as well as to deal with how to secure their valuable intellectual property in the Digital Age.

In what initially looked like a mark against Hollywood, a federal court Tuesday ordered Disney to phase out the Go Network logo, which plaintiff GoTo.com claims is confusingly similar to its own, over a 60-day period. However, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit Friday stayed a preliminary injunction, suspending the 60-day order until an expedited appeal of the order is held in about 30 days.

RealNetworks wasn't as lucky. Its negotiations with Warner Bros. to Webcast the "Drew Carey Show" simultaneously with an airing of the TV program on ABC collapsed as the latter turned to Microsoft's streaming technologies instead. The loss underlined Microsoft's gains in the digital media market. Moreover, the fallout with a major Hollywood studio could bode ill for future deals in an industry that is infamous for exacting revenge.

Brick-and-mortar takes to Web
In a $40 million deal, CheckOut.com will be included in all Wherehouse Music marketing initiatives and integrated with its 600 retail stores across the nation. The arrangement is a high-profile example of a major brick-and-mortar chain turning to a Net company to handle its e-commerce operations, a trend with increasing momentum as established retail companies struggle with their online presence. The deal also reflects the growth of one of the first online ventures by a key figure from the entertainment industry, which has been criticized as being slow in adopting the Internet and leveraging its properties online.

Priceline.com and Ford will test-market a "name-your-own-price" online buying option for new Fords in Florida this week. Automakers' Web sites are traditionally passive or information-based, occasionally generating promising sales leads, "but not with the ability to actually enable a transaction on the Internet," Priceline chief executive Richard Braddock said.

Telecommunications, Net firms in new territory
Unlike data that travels across "broadband" networks at lightening speeds, sales of personal computers equipped with high-speed modem technology have yet to take off. Analysts say DSL and cable modem technology are still new and continue to suffer outages and other problems. Dell and Compaq are among companies currently offering Net-ready PCs, but have experienced slow sales so far. Regardless, IBM and SBC Communications decided to cut a deal to offer high-speed digital line service with IBM's Aptiva line of PCs.

Telecommunications firms and Internet companies will finally be able to scale the Great Wall into China's lucrative markets following a sweeping trade deal signed this week. Following tense negotiations between U.S. and Chinese officials, China's entry into the World Trade Organization (WTO) is finally clear. This agreement will allow Internet, telecommunications and other firms greater access to markets.

Microsoft antitrust trial update
The presiding judge in the Microsoft antitrust trial appointed a mediator, an unusual move hailed as more likely than not to promote settlement. Judge Richard Posner, head of the U.S. Court of Appeals in Chicago, is "acting in a private capacity," according to trial Judge Thomas Penfield Jackson. The appointment is set against the background of Jackson's scathing findings of fact, which many see as sealing Microsoft's fate, and will not stall the court proceedings. In another order, Jackson outlined a schedule for briefings and set oral arguments for Feb. 22.