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Microsoft's back-to-school shopping spree

As everyone from Qwest to Kozmo knows, it's the season of "streamlining" in Silicon Valley and beyond.

As everyone from Qwest to Kozmo knows, it's the season of "streamlining" in Silicon Valley and beyond. This era of frugality is particularly hard on the Rumor Mill, where most of my staff consists of unpaid family members and friends. This makes layoffs somewhat counterproductive. We have to resort to garden-variety thrift--no easy task when it coincides with the annual credit card carnage known as back-to-school shopping, high-tech style.

"Vermel, exactly why do you need a new Handspring when you already have every version of the PalmPilot ever produced?" I demanded of my son, highlighting the item in question in his online shopping cart.

For once in my life, I had him stumped. He ultimately discoursed at length on the comparative merits of the handhelds' bells and whistles, but from that deer-in-the-headlights pause it was obvious my son was merely in the grips of a high-tech gadget-shopping compulsion.

Is Microsoft also indulging in some redundant retail therapy? The company has been doing some back-to-school shopping of its own recently, bagging a music site for its MSN portal this week. On top of that, Microsoft has been hunting around, Skinformants tell us, for an online file-storage site either for a purchase or a heavy investment.

Sources say Microsoft has eyed file-storage sites including Driveway, I-drive.com and Xdrive. Xdrive counts CNET Networks--my boss--as an investor.

Microsoft held partnership talks with I-drive earlier this year, we hear, and came back to the company with a larger investment offer during the summer.

I-drive execs have balked, however, at Redmond's terms, particularly its demands that any investment entails standardization around Windows 2000 and the Windows Media Player streaming media software. Plus, the percentage stake was too rich for I-drive's blood.

Microsoft specifically is looking for an online storage company to integrate with online properties under MSN and to put into its Office productivity software suites by including an option under the File menu to save a document online. Microsoft also thinks it would be nifty to automatically save any email attachments sent to a Hotmail account in an online storage site.

Microsoft is also thought to be interested in providing back-end storage for its MSN Companion, an Etch A Sketch-sized consumer device for simple surfing. An online storage component would effectively serve as a hard drive for the MSN Companion. But whatever you do, don't call it a Network Computer!

The funny thing is, MSN already has a homegrown online file-storage option dubbed File Cabinets, which lets MSN members store up to 30MB across various MSN properties, sez a company rep.

Then what's behind Redmond's window-shopping?

File-storage sources who have held negotiations with Microsoft have their own theories.

"Sometimes we leave a meeting with Microsoft thinking, 'That was an educational meeting for their VPs,'" said one peeved exec. "That was a way for them to get to know what the industry is doing. It's an interesting sign when they ask you, in a partnership context, to see your business plan--which is totally unnecessary. Sometimes they seem to be holding these meetings as part of their own R&D. In the meantime, they're building their own product, while learning as much as they can from you."

So how seriously is Microsoft shopping around? Its potential acquisition targets would like to know.

"It's fair to say that Microsoft has a serious interest in this category and is obviously looking at a build vs. buy decision," said a third file-storage exec who has negotiated with Redmond. "Where that ends up is hard for me to say."

Mac attacks
While most Mac fans are counting the hours until Apple releases the public beta of its long-awaited OS X on Wednesday, the folks at Ihateapple.com have set up a Mac OS Delay Clock and are counting the days since Apple first promised the next-generation operating system.

Apple maintains that OS X is not delayed. Meanwhile, an anonymous band of soi-disant jilted Mac supporters has been rousing rabble on Macintosh fan sites, threatening to protest during Steve Jobs' keynote speech at Apple Expo Paris. Their gripes, curiously, have nothing to do with the delay or non-delay of OS X.

According to an email credited to the "Expo Protest Team" and sent to Wired News, the group has three beefs: Apple's treatment of its customers, its legal threats against Web sites and people who release information about Apple products before their official release, and its treatment of its European customers, particularly those in Great Britain.

Protests! So the spirit of Seattle is alive and well, if not in the world at large then at least on the Macintosh platform. If I were Steve Jobs, on any future trips to Europe I'd wear a pie-proof vest and remember the old adage: Hell hath no fury like a Mac fan scorned.

Where I end up week to week is always a dicey proposition and always depends on your rumors.