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The week's news: iMacs for cheap, IBMs for $599

Apple will soon begin leasing its popular consumer models for $30 a month, hoping to maintain sales in a competitive market.

Apple will unveil a leasing program for its hugely popular consumer desktop next month, News.com reported, offering iMacs for $30 a month in an effort to maintain sales momentum. Meanwhile IBM introduced a $599 Internet-ready PC, becoming the first major vendor to go under this price point.

They're giving 'em away
For $29.95 a month, consumers will be able to get a "loan" on the colorful, all-in-one desktop that has helped vault Apple back into respectability among computer makers, sources told CNET News.com. Terms of the arrangement have not yet been disclosed, but it's expected consumers will pay back the loan over a four- or five-year period. For the fiscal quarter just ended, Apple's year-over-year unit shipment growth outpaced the industry average, thanks to the iMac.

Meanwhile, IBM launched a low-cost Aptiva model that comes with a 3.2GB hard drive, CD-ROM, and a 56-kbps modem but no monitor. The move is a direct shot at Compaq, which snapped up market share when the sub-$1,000 phenomenon took off last year while Big Blue watched on the sidelines.

About half of all retail PC sales were in the sub-$1,000 category last month as IBM and Hewlett-Packard knocked Compaq from the No. 1 ranking in that segment. Nearly 49 percent of all consumer desktops sold by retail fell under the mark, and some 64 percent of these systems came with Advanced Micro Devices' K6-2 chip.

Though it retained its overall PC market leadership, Compaq lost almost four points in the U.S. market during the third quarter and shipped about 8 percent fewer PCs than it did for the same period a year ago, according to two separate studies published earlier in the week. The Houston-based company slipped to about 15 percent, while Dell, IBM, Hewlett-Packard, and Gateway all saw unit sales and share grow. Dell, the No. 2 PC supplier, enjoyed the greatest surge, leaping to 13.4 percent.

Sony, whose consumer electronics success once commanded respect among rival PC makers, is still trying to find the secret to PC sales after more than two years in the U.S. consumer market.

Operating systems, low and high
Last weekend, Microsoft released the Windows 98 service pack to beta testers for a final tuneup before a wide-scale deployment of the collection of bug fixes and hardware support for the company's consumer OS. The hot-selling software hasn't worked well with older PCs since its June release.

Later in the week, the software giant announced that Windows NT 5.0, its upcoming OS for servers and business desktops, will be called Windows 2000. Already well behind schedule, Microsoft will market four different versions in an effort to rationalize pricing. Separately, Microsoft launched a version of Windows for smart cards.

Rival Apple is looking into user reports of bugs in its newest OS upgrade, MacOS 8.5. Some glitches cause data loss.

IBM, Intel, Santa Cruz Operation, and Sequent agreed to develop a new "flavor" of the Unix OS, code-named Monterey, which will merge with parts of IBM's AIX, some of SCO's UnixWare, and a bit of Sequent's PTX. Due in 18 months, Monterey will run on Intel's 32-bit and upcoming 64-bit processors as well as IBM's Power family of chips and could challenge Windows 2000.

Sun Microsystems announced version 7.0 of its Unix OS, called Solaris. The upgrade completed a multiyear effort to develop software for 64-bit computing.

Data traffic, ad traffic
Cisco and HP announced plans to combine hardware and software to tackle the emerging requirements of Internet service providers and carriers which aim to migrate from traditional telephone circuit-based systems to networks more aligned with data-based technology.

Cisco also joined a raft of companies marketing secure connections over the public Net to corporate branch offices and multi-site small businesses. Its new routing device supports high-speed access to data over the Net using virtual private networking (VPN) technology.

Eleven months after launching its IPO, Teligent began providing phone and data service in ten U.S. cities and announced plans to move into five additional markets by the year's end. Headed by former AT&T President Alex Mandl, the company markets local, long distance, high-speed data, and Internet services for a flat monthly rate to small and medium-sized businesses.

Nearly four months have passed since PointCast abandoned plans for an IPO, and the company is now considering striking an alliance with a national Internet service provider, ranging from telcos to cable and satellite companies.

Computer Associates acquired two 3D-oriented content creation, modeling, and publishing software firms, highlighting the company's bet that an easy-to-use, video game-style visual interface will be the way IT managers will want to interact with their applications going forward.

In what many have labeled the heftiest advertising deal ever on the Internet, Microsoft signed on credit card lender First USA for a five-year, $90 million advertising agreement. The deal give the largest lender of Visa and MasterCards in the United States exclusive rights to advertise its credit cards across Microsoft's MSN.com Web portal network.

Internet ads for the second quarter this year almost doubled compared to the same quarter in 1997. Computer and consumer categories again lead the way as revenues for in April, May, and June totaled $422.7 million. Meanwhile, two companies unveiled a proposed standard for improved measurement of ad banner reach, a scheme that addresses an acknowledged shortfall but could unsettle established conventions and pricing.

AOL does well, Baan doesn't
Online giant American Online reported record revenue growth and a strong climb in subscriber numbers, before announcing a stock split. Making its first quarterly report since going public, online auctioneer eBay also turned in better-than-expected earnings of $663,000, or 2 cents per share.

As expected, Baan, the Dutch maker of business automation software, announced a loss of $31.7 million, based on a 20 percent decline in licensing revenue. The company will cut 20 percent of its worldwide workforce, about 1,000, as it tries to reverse course.

Despite more than doubling revenue from the same period a year ago, Infoseek reported a loss exceeding expectations.

Microsoft and other doings in DC
In the Microsoft-Justice Department antitrust trial, Microsoft cited newly discovered documents in claiming that Netscape tried to "set up" the software giant in a meeting three years ago. The DOJ disagreed.

AOL executive David Colburn testified that Microsoft's offer to bundle AOL in Windows 95 couldn't be refused, though it effectively sealed off Navigator. Microsoft countered that AOL and Netscape had agreed to form an alliance designed to undermine Microsoft, and its cross-examination of Colburn took so long that the showing of a much-anticipated videotape of Microsoft CEO Bill Gates was delayed.

At the end of the week, Apple executive Avadis Tevanian's written testimony outlined how Microsoft threatened to pull support from the Mac and use its monopoly power to defeat the QuickTime application.

Elsewhere in Washington, President Clinton signed the Digital Millennium Copyright Act, setting new rules for downloading, sharing, or simply viewing copyrighted material online. It establishes safeguards for software, music, and written works, and outlaws technologies that can crack copyright protection devices. It also calls for Web radio sites to pay a statutory license fee to record companies--a fee traditional broadcast radio stations don't have to pay--and will likely put some Net radio stations out of business.

In a case involving GTE, the FCC ruled that high-speed ADSL service should be classified as long-distance service, meaning it will be regulated (but not taxed) by Washington. But federal regulators put off settling the more important dispute between the Baby Bells and GTE and start-up local phone companies over contracts to connect each others' phone calls, which include slower, more prevalent dialup Internet access.

As many as five Internet service providers may face legal charges for providing access to newsgroups used by child pornographers. New York Attorney General Dennis Vacco won praise for his role in an international crackdown, but critics are calling the timing election-eve politics.

Also of note
Web sites couldn't handle user traffic trying to view John Glenn's space shuttle flight ... Microsoft shut down a site used to update its Money software, after discovering that it was revealing private data on 108,000 customers ... the company will launch a massive promotional campaign to advertise its ISP, MSN Internet Access, by sending mail to 45 million people ... IBM and Lawrence Livermore National Laboratory stepped into the supercomputer lead with a machine that can perform almost 4 trillion calculations per second ... Big Blue also released faster and bigger hard drives, including a 36.4GB model ... 3Com began shipping some of the first cable modems based on industry standards to a TCI subsidiary.