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The week's news: Linux comes of age

Linux developer Red Hat won investments from Intel and Netscape, striking a blow for a freely available Unix variant with ambitions of corporate use.

A smallish Linux developer named Red Hat won the financial backing of Intel, Netscape, and two venture capital firms, not only boosting the North Carolina firm's status but also signaling that major technology companies believe the cooperatively developed operating system is durable enough for corporate use.

Linux comes of age
Originally made public in 1991, Linux is a version of Unix that has grown to become a Net-based phenomenon, with millions of users counted as converts and countless software additions submitted to various ad hoc Linux Web sites for general use. The software is increasingly seen as a threat to Microsoft's Windows NT.

"This round [of financing] is much more important in terms of the partners we brought into Red Hat than it is for the money," said president Robert Young. The company can also expect to receive early information on processors in development.

Netscape and Intel aim to strengthen their ties with Web developers and small- and medium-sized companies. These developers form the core of the Linux believers.

The news emerged from a San Jose conference of Internet service providers, where Hewlett-Packard, Silicon Graphics, IBM, and others pushed solutions to help ISPs handle outsourced applications for corporate customers.

Database maker Informix is set to join the party, as it prepares to ship a Linux version of its flagship Dynamic Server early next year.

Net Tax Freedom Act creeps along
After some delay, the Senate loaded up the Internet Tax Freedom Act with amendments regarding online privacy protections for children and requirements that government documents be posted online, but no floor vote was taken. Other additions may cast a cloud over a bill to prohibit new or "discriminatory" taxes on Net access and e-commerce for at least two years. The House has already passed a similar measure.

Following the Senate's lead, the House of Representatives passed legislation that will allow U.S. companies to share information for purposes of solving the Y2K bug. President Clinton pledged to sign it into law.

Mr. Clinton also issued orders prohibiting use of pirated software on government computers and directed his top trade official to urge other countries to take similar steps, but the administration failed to resolve the problem of transferring registration of Internet domain names from Network Solutions to another body. Privately held Network Solutions saw its contract extended by one week.

A portion of Internet2, a faster version that will connect advanced research and higher education networks, was publicly demonstrated for the first time.

California enacted two anti-spam laws, one requiring that junk email be labeled and another allowing email providers to sue for trespassing and recovery of losses.

Notebooks, notebooks, notebooks
Gateway introduced a sleek Pentium II notebook with an integrated DVD-ROM drive for less than $3,000, becoming one of the first vendors to offer a DVD drive at this price point and in such a compact design.

Prospective buyers surfing for new computers--especially notebooks--need to do their homework, since price discrepancies attributable to inventory management or inattention to PC makers' price changes are rampant. Sometimes it's caveat emptor in the new world of e-commerce.

After a three-month delay, Apple will unveil an updated version of its operating system software, Mac OS 8.5, on October 17. The latest version of Microsoft's Windows CE operating system for handheld computers is also due this month, but questions about its suitability for older CE-based devices linger.

Intel falls off
Computers containing Intel processors accounted for just 54.3 percent of retail sales in August, a dramatic falloff from the same month a year ago, when Intel-based PCs accounted for 84.3 percent of retail sales. Much of the lost market share was picked up by Advanced Micro Devices and the processor companies that supply chips for Apple's iMac; these newly popular chips were incorporated in high-volume models.

A study predicted the semiconductor industry will grow 11.8 percent in 1999, reaching $155 billion in revenues, following a 6 percent decline this year.

Though the Dow Jones and Nasdaq both dropped more than 10 percent last quarter, PC manufacturers and a few other high-tech firms managed to post double-digit stock price gains from July to September. Apple, Dell, and IBM recorded nearly 10-point climbs or better. Compaq and Gateway and Internet issues Amazon and Yahoo also exited with gains.

SEC chairman Arthur Levitt said that corporations increasingly are cutting corners when making financial disclosures, in remarks that carry special weight for volatile high-tech companies, Earlier in the week, after more than a month of involved talks with the Mr. Levitt's agency about acquisition charges, America Online reported earnings results for the fourth quarter of 1998.

Portals
AOL reached distributions agreements with RealNetworks and Macromedia to include the two companies' software with America Online 4.0. RealNetworks makes software for playing audio and video via the Web, while Macromedia is in the Web animation business.

MSN plans to launch local versions of its Web search and content aggregation service in 24 countries worldwide, creating the portals through partnerships with media organizations such as France's Le Monde newspaper.

Having dropped from a 50 percent share of the browser market at the end of 1997 to 41 percent by mid-year, Netscape said it would issue software that allows Microsoft's Internet Explorer to take advantage of features designed for Navigator in its Netcenter portal.

Also of note
Micron Electronics bested analysts' expectations when the direct-sales PC maker reported a larger-than-expected quarterly profit ? sister company Micron Technology too beat expectations but lost nearly $90 million ? Separately, Texas Instruments completed the sale of its memory business to Micron Technology ? Boeing awarded IBM a five-year outsourcing contract with an estimated value of $2 billion ? HP will offer buyout packages to 2,500 employees ? the Federal Trade Commission's antitrust action against Intel was delayed until February 18 to accommodate the schedule of the presiding judge ? Previously confidential court exchanges between lawyers for Sun and Microsoft appeared to provide support for both sides in their dispute.

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