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The week in review: An atypical Comdex

The IT industry's biggest annual trade show attracted the smallest crowd in a decade, but that didn't mean it wasn't packed with plenty of games, gadgets and even the odd gauntlet.

The technology industry's biggest annual trade show attracted the smallest crowd in a decade, but that didn't mean Comdex Fall 2001 wasn't still packed with plenty of gadgets and competitive jabs.

Microsoft Chairman Bill Gates kicked off the conference, showing off examples of the Tablet PC, which was unveiled as a concept during last year's conference. The device, which uses a touch screen and a forthcoming version of Windows XP, was shown in prototype form with examples from Compaq Computer, NEC, Toshiba, Intel and others.

Microsoft is also betting that businesses will quickly develop a taste for instant messaging and digital media functions. Gates alluded to the new features when he revealed that the company will release Windows .Net Server Beta 3 later this month. But for now, at least, many of the most compelling features will be available only when .Net Server is used with the Windows XP operating system.

Always hot on Microsoft's trail, Oracle Chief Executive Larry Ellison is challenging the giant for its commanding lead in e-mail software. Ellison derided Microsoft's Exchange e-mail servers as unreliable and insecure. He said Oracle is offering an e-mail server option for its 9i database management software along with a migration program to move companies from Exchange to Oracle's database.

But Comdex isn't just about the big players. Perhaps you need a cell phone married to a PDA? How about a video camera that connects wirelessly to the Internet? Check out some of the new products making their way down the technology pipeline.

As usual, Comdex had too many products and announcements to be described here. Get the whole story from CNET News.com's special coverage.

HP's bumpy ride
As details emerge about the lengthy courtship between Hewlett-Packard and Compaq Computer, there seems to be plenty of turmoil behind the scenes.

Last week, Walter Hewlett shocked many investors, analysts and HP executives by announcing he would vote his shares against the merger. But to insiders, Hewlett's move was no surprise; he skipped a key merger meeting four months ago to perform in an orchestra at an exclusive men's club in Northern California.

More discontent flowed from HP CEO Carly Fiorina, who blamed "lazy reporting" and Wall Street analysts who are too "focused on the short term" for many of the woes facing the computing giant. But Fiorina praised HP workers for "making extraordinary sacrifices," and she handed out a one-time bonus equal to two days of salary, despite a weak financial performance that erased the normal annual performance bonus. Fiorina and HP's top executives opted not to receive the extra money.

Fiorina won't be the only one upset if the merger doesn't go through. Undoing the $20 billion deal would unleash problems for both companies that could be far more debilitating than those related to the complex combination. HP and Compaq have likely been privy to key details of each other's businesses. The independent companies also would face extreme skepticism from Wall Street, which had already been dubious about the companies before the merger.

By far the most serious problem, some industry experts say, would be the likely departures of Fiorina, Compaq CEO Michael Capellas, several key board members, and dozens of senior executives who have become staunch supporters of the deal.

The lengthy courtship between the two computing giants--which hit an impasse at least once--was disclosed in a 120-page proxy statement filed Thursday with the Securities and Exchange Commission.

Playing for keeps
Consumers crowded into stores as Microsoft's Xbox video game console went on sale in North America. But away from the hoopla surrounding the console's debut, some avid game fans grumbled about how a few retailers were cashing in on demand.

What especially burned up many game fans was the practice of "bundling." Some merchants, including Toysrus.com and Electronics Boutique, would only sell the Xbox in packages with software and additional hardware, allowing them to charge more.

With the launch of Xbox, Microsoft finds itself in the unusual situation of being the underdog. The company has been forced to adopt a kinder, gentler strategic approach because of its position in the already cutthroat market. Considering that the gaming market is fundamentally different than the PC market, can Microsoft adapt and, possibly, succeed?

If it can, it will be good news for the software giant. Research firm Gartner expects worldwide game console shipments to jump nearly 41 percent next year. Gartner projected console shipments would reach 49 million in 2002, up from 29 million units in 2001.

While Sony and its PlayStation 2 system hold the top spot now and will likely be the dominant system for some time, the vast majority of new console sales will come from new systems from Microsoft and Nintendo, Gartner said. Nintendo unveils its GameCube this Sunday.

On the Net
A record number of U.S. residents went online last month, driven partly by a large increase in Web access at home and the rise of online use by underrepresented groups. In addition, the number of U.S. Internet users skyrocketed to an all-time high, rising 15 percent from 100.3 million surfers in October 2000 to more than 115.2 million in October 2001.

There was also record Web usage, with the number of monthly unique users of the Web surpassing 100 million for the first time, climbing from 80.7 million users in October 2000 to 102.1 million in October 2001. The increase in Web activity shows that despite the troubled economy, people continue to jump online to conduct business and find information.

Some of the sites those new people may be surfing include a handful that have popped up to report sightings of copy-protected CDs. The sites are part of a swelling consumer backlash to record companies' experimentation with CDs that can't be copied or turned into MP3 files.

The backers of the sites ask consumers to return CDs as defective if they have copy-protection technology installed. This kind of market action, along with information illuminating the company's actions, is the best way to stop record company plans, they say.

One thing you won't see online--for a while, at least--is Harry Potter. Pirated copies of the much-anticipated movie have been reported online, but impatient viewers will likely find it faster to wait in line at the theater than to find an illicit version.

Also of note
A former securities dealer was fined nearly $44,000 for posting a fraudulent news release on the Internet that said Singapore Exchange-listed Venture Manufacturing was being taken over...HP began phasing out its venerable but low-profile HP 3000 line of servers, a victim of a down economy...Opera Software moved to catch up to Microsoft and Netscape on the international scene with a test launch of its new browser.

Want more? Check out all this week's News.com headlines.