Week in review: Deck the malls

The first several days of the 2004 holiday shopping season showed positive signs for online retailers as industry watchers and major e-commerce sites charted above-average traffic and sales. Among the companies tracking early sales at Internet retailers was Web statistician ComScore Networks, which recorded a 23 percent increase in online spending between Nov. 1 and Nov. 26, compared with the same period last year.

Online spending in 2004 through the day after Thanksgiving--also known as Black Friday in the retail industry because heavy sales that day traditionally push retailers into profitability for the year--totaled $5.7 billion, compared with $4.6 billion in 2003. Spending on Black Friday itself also touched e-tailers: U.S. consumers made $250 million worth of online sales that day, a 41 percent increase over the $178 million reported for 2003.

However, top online retail sites may be inadvertently turning away customers because of higher-than-expected demand, Internet performance company Keynote Systems said. The time it took to complete a sale increased to a daily average of 21 seconds on Monday from the typical 14 seconds. Reliability was also down to 80 percent on Monday from an average of 97 percent.

Retailers expect flat-screen televisions to be highly popular this season--and recent price drops are only expected to boost sales. But for all the hype around next-generation televisions, flat panels have a way to go before they rival their cheaper CRT (cathode ray tube) counterparts in performance--or cost.

"Consumers think they're buying the best in technology (with flat-panel televisions), but it's more of an emotional purchase," said Bob O'Donnell, an analyst at researcher IDC. "It's part status and part wanting to be on the cutting edge."

LCDs are great as desktop PC monitors because they don't have to refresh pictures rapidly; they don't work as well when used as televisions. Plasmas tend to lose brightness over time and don't offer images as sharp as those served up by CRTs. Manufacturers are working to improve these shortcomings.

Hide and seek
A growing number of holiday shoppers and eBay bargainers have discovered that Sony's PlayStation 2 video game console is in short supply at many retailers. Sony said it's ramping up production and doing all it can to get more consoles in stores quickly.

The shortage stems from the new slimmed-down PS2 design Sony announced earlier this year. Sony has been clearing out supplies of the original PS2 configuration for the past few months, and the company has been unable to push units of the new design into the market fast enough to meet holiday demand.

Those lucky enough to get their hands on the game console are seething after discovering that a demo disc distributed by Sony could accidentally erase the memory cards attached to their consoles, wiping out many hours of progress in games such as "Grand Theft Auto."

Sony acknowledged the problem last week in a postcard sent to members of its PlayStation Underground fan club, warning members to be careful with holiday demo discs sent out last month. Don't play the trial version of the Capcom adventure game "Viewtiful Joe 2" included on the disc, Sony warned, unless you want to start over from scratch on every PS2 game you own.

If that wasn't enough, sales of video game consoles have dropped by almost half in 2004, as gamers await speedy new machines. Market research company In-Stat/MDR predicted that worldwide shipments of game consoles will reach 19.3 million this year, compared with 35 million in 2003.

Even with a slew of blockbuster game releases late this year and with manufacturer price cuts to the PlayStation and the Xbox consoles made earlier in 2004, holiday sales are unlikely to push the industry anywhere near the explosive growth of the past few years, In-Stat/MDR said.

Wireless warriors
If you are planning to attend holiday parties this season, you may be interested in a new service tailored to help people avoid making those embarrassing drunken calls. Australia's Virgin Mobile lets customers punch in a code plus a phone number they don't want to call when drunk. Virgin Mobile will--for a 25-cent fee--stop all calls to that number by blacklisting it until 6 a.m. the following day.

A survey of 409 people by Australia's Virgin Mobile, a joint venture of Virgin Group and Optus, found that 95 percent made drunken phone calls. Of those calls, 30 percent were to ex-partners, 19 percent to current partners and 36 percent to other people, including their bosses.

Soon, there will be no reason to feel lonely when alone with your cell phone. Under an agreement with Seattle-based Dwango Wireless, Playboy plans to sell adult mobile-phone content in the United States and Canada for the first time early next year.

The deal calls for Dwango to develop and deliver Playboy-theme games, images, video clips, voice clips and ring tones. The Playboy service is likely to feature images from the company's magazine, while audio clips will focus on jazz and hip-hop.

In the municipal Wi-Fi wars, Pennsylvania's governor signed closely watched legislation that Philadelphia officials had worried would imperil their plans to provide Wi-Fi service to all city residents. One section of the complex law says cities and townships "may not provide to the public" any broadband or wireless services if a fee is charged.

But when signing the legislation, Democratic Gov. Ed Rendell said that a last-minute compromise would allow Philadelphia's ambitious mesh network to proceed as planned.

The Republican-authored bill is designed to prevent local governments from using their muscle to elbow aside private companies that otherwise would invest in broadband and wireless services. It is backed by Verizon Communications, the largest telephone company in Pennsylvania.

Swimming with the phishes
As online shopping gets into full swing, phishers are setting up fraudulent e-commerce Web sites and simply waiting for victims using Google and other search engines to find them.

Traditionally, phishing scammers have lured their victims to fraudulent Web sites by sending official-looking e-mails that are ostensibly from well-known companies asking people to "verify" their usernames and passwords. Now many are setting up legitimate-looking e-commerce sites that disguise links to malicious software as pictures of goods on sale.

Instead of linking to pictures of the advertised product, the links point to a self-extracting Zip file that installs a Trojan horse on the victim's computer. The program could then steal personal and financial information.

In response to the emerging threat, a browser promises to detect phishing sites and nail an increasingly prevalent type of floating Web ad. Deepnet Explorer, a browser shell that uses Microsoft's Internet Explorer to render Web pages, analyzes Web addresses and combs through its own list of suspect sites to determine whether a site might be part of a phishing scam, in which fraudsters attempt to get personal and payment information from unsuspecting visitors.

Version 1.3 of the browser, previously available in a test, or beta, version, also takes aim at a new kind of Web advertisement that has been evading pop-up-blocking software. The ads, called "floating" or "overlay" ads, move around on the screen and are immune to the pop-up controls increasingly common in browsers and browser toolbars.

But monetary losses from phishing fraud may not be as high as some analysts had estimated. Financial consultant TowerGroup said phishing attacks this year will account for less than $150 million in consumer losses worldwide. The finding puts TowerGroup at odds with other researchers, who have put damages as high as $500 million.

Businesses, and not consumers, stand to lose the most from phishing. Phishing attacks lead online users to be more wary of e-commerce sites and e-mail communications, TowerGroup said. That could crimp business during the most lucrative quarter for online retailers, and companies whose brands are co-opted by scammers may have to deal with increased support calls and lost confidence in their brand.

Also of note
Netscape fans are test driving a prototype Netscape browser that runs the Mozilla Foundation's Gecko browsing engine and Microsoft's Internet Explorer engine, which many consider the de facto Web standard...Consumers in 13 Western states can now grab free online copies of their credit reports as a new federal law is phased in...Sony revealed new details on the chip that will power the next version of its PlayStation video game machine and said development is on track to deliver products based on the chip next year.