The week in review: Not so funny

Originally titled "I Love You" and later called "Very Funny," the attack forced many to shut down email operations and undertake other defensive steps. But the Love bug, which resembles the earlier "Melissa" virus in its mechanics of transmission, also threatens to delete certain picture and music files, potentially increasing costs while adding consumers to the ranks of its victims.

Not so funny
Experts said the cost of lost business alone could far outstrip costs attributed to Melissa, which rang up a stinging $80 million price tag.

A partial list of Western casualties includes Microsoft, Intel, Cox Communications, the Federal Reserve, the Department of Defense and Britain's House of Commons. Meanwhile, the author appears to live in the Philippines.

Some security experts pointedly criticized Microsoft software for abetting the plague. The fundamental problem, these experts say, is the company's market-driven impulse to favor functionality over security. The virus takes advantage of well-known "exploits" involving Visual Basic, a programming language Microsoft developed.

As many as eight mutations may evade earlier fixes; one variant that plays on the upcoming Mothers' Day holiday. Rapaciously seizing on email address books, another began sending itself to fax machines.

Surprise
Rock band Metallica demanded that Napster deny hundreds of thousands access its MP3-swapping service after identifying some 335,000 users while monitoring the network last weekend. The move puts the small software company in the uncomfortable position of choosing between defending its members and defending its own legal right to exist. Many individuals using the software or rival products believed they were operating anonymously or that individual actions would go unnoticed among the massive quantity of files being traded at any given time.

Time Warner's widely unpopular, short-lived decision to remove ABC TV programming from its cable network may not sit well with regulators reviewing Time Warner's proposed merger with America Online. Consumer groups and Walt Disney, the parent company of ABC, have already played the monopoly card, calling for the combined AOL Time Warner to open its cable lines to all Internet service providers and allow rival entertainment companies access to its Internet customers.

Yahoo and Lycos, which once scrambled to assure the public and investors of their abilities to serve high-speed Internet subscribers, have quietly backed away from plans for new applications and content because anticipated markets haven't yet developed. The broadband craze has been running ahead of infrastructure to support the newer technology, a scenario that could be replayed as portals turn their attention toward wireless delivery.

Pacific Bell modified TV advertisements that characterize high-speed cable modem users as "Web hogs" in an attempt to clarify the difference between cable and DSL Internet connections, following threats of a lawsuit from the nation's largest cable modem service provider, Excite@Home. Both technologies are expected to be high-growth businesses for years to come, but DSL has lately seemed to capture momentum.

Artists are complaining about MP3.com's decision to reveal detailed earnings information, from top-grossing acts raking in thousands of dollars to bands earning little or nothing. The company's cash rewards program, dubbed Payback for Playback, distributes $200,000 per month to compensate artists for the traffic and sales they generate.

Turnabout
Faced with rising competition, plummeting market values and depleted cash reserves, online businesses are being forced to reassess their multimillion-dollar payments for advertising, linking arrangements and other valuable placements on high-traffic portal sites. The portals, in turn, are grappling with the prospect of losing sizable revenues as these deals collapse in a kind of digital domino effect. Many Internet firms are lowering their sights with less expensive deals, while the portals are are rapidly looking for new revenues and advertisers whose livelihoods do not rely on the fragile Internet economy.

Nearly given up as a low-margin business just a few years ago, the database software market is making a comeback, fueled by increasing demand from Internet companies. Oracle, IBM, Informix, Sybase and Microsoft are raking in huge profits as sales recover from a long drought, reaching their highest totals since the early 1990s, when database companies routinely reported 40 percent to 50 percent growth each quarter.

Twelve computing industry leaders--including Hewlett-Packard, Compaq, Gateway, Solectron, Hitachi and Advanced Micro Devices--intend to create an independent company to manage an electronic marketplace for buying and selling components, completed computer systems and other electronics products. Although key details remain unsettled, the venture is to launch in 90 days in an effort to catch up with similar ventures planned by other leading industries.

In a related matter, an ongoing government inquiry into the exchange launched by the Big Three U.S. automakers has had a chilling effect on auto-supply companies. Most suppliers interested in the new marketplace are putting their plans on hold to avoid getting caught up in any possible legal problems.

A hotly contested bill aimed at unifying e-commerce standards across the country gained some momentum as Virginia and Maryland adopted it despite stiff criticism from consumer groups. The push for the Uniform Computer and Information Transaction Act (UCITA), which would control the licensing of everything from word processing software to stock quotes, will move to several other states during the next few months.

Coming soon
Gateway Computer and Sony are expected to enter the trendy wireless handheld market, joining Hewlett-Packard, IBM and Compaq Computer. Separately, upstart Handspring surprisingly claimed the best-selling handheld model during its first week in stores, a milestone for the company as it seeks to build momentum for an initial public offering. Palm commands about 70 percent of the market.

The next version of the heart of Linux looks to be delayed again. Version 2.4 of the operating system's "kernel" will probably be released in August or September, according to the software's founder, Linus Torvalds, who had once hopedthe introduction would take place in 1999. The 2.4 kernel includes such improvements as enhanced ability to take advantage of servers with multiple processors, important to Linux's ambitions of gaining ground in corporate-computing environments.

In a blow to AMD, HotRail decided to focus on the networking market and shelve plans to develop chips that would have helped AMD get into servers. Servers remain one of the most profitable markets for processor manufacturers, and to date, Intel has experienced virtually no competition from its leading rival.

Exodus?
As the landmark antitrust case against Microsoft winds its way through the legal system, the software giant faces employee defections. Continued uncertaingy is likely to hurt the company's stock performance, a key benefit for many employees. In a related matter, chief technology officer and renaissance man Nathan Myhrvold confirmed he will not return to the company on a full-time basis.

Several senior Excite@Home executives plan to leave the high-speed Internet access provider, raising questions about commitment to the company's new growth strategy amid faltering stock performance. A revised corporate structure reflects Excite@Home's intention of targeting three primary markets for its high-speed Net access business: residential consumers, commercial Net access and international markets.

Also of note
Novell's stock dropped by more than a third after the network software maker warned that revenues for its upcoming quarter will fall significantly short of expectations ... Linuxcare announced layoffs to cut expenses, following the abrupt resignation of company's chief executive and chief information officer and the postponing of a planned initial public offering ... SAP inked a deal with Nortel Networks to resell customer relationship management software by means of Nortel's Clarify application unit, as SAP struggles to overcome internal product delays ... Standard & Poor's is adding Siebel Systems to its influential S&P 500 stock index at the expense of CBS.