The week in review: A tale of two trials

Microsoft Chairman Bill Gates took the stand in the 4-year-old antitrust case against the software maker, repeatedly rebuffing attacks made by the states' attorney and redeeming himself for taped testimony he delivered earlier in the case. Gates took the offensive during the first major round of cross-examination, interrupting the attorney with technical corrections to questions and with explanations of e-mail evidence designed to catch the executive contradicting himself.

Gates reluctantly testified that the non-settling states' proposed remedies would have kept Microsoft from threatening to cease development of Mac Office if Apple Computer had not installed Internet Explorer on new computers. Similarly, Gates said, Microsoft would not have been able to bully Intel into stopping development of software that could have competed against Windows. Both actions were found to be illegal during the trial phase of the four-year antitrust case.

Gates went on to acknowledge that an existing version of Windows for ATMs and other specialized machines that lets companies drop included components such as a browser could be configured to run on everyday computers. The admission may bolster the litigating states' claim that Microsoft could deliver a version of its flagship Windows operating system stripped of so-called middleware such as browsers and media players.

HP merger goes to court
As Hewlett-Packard's battle to merge with Compaq Computer went to court, HP CEO Carly Fiorina presented a rather different face on the witness stand, appearing irritated when attorneys for Walter Hewlett repeatedly pressed her on whether HP's integration efforts are faltering. During the trial's first day, Hewlett's attorneys charged that "value capture" teams from HP and Compaq have questioned key financial projections about the merger's impact.

"There are a lot of people involved and a lot of back and forth," Fiorina responded from the stand. "The value capture reports are not a full picture of what we could and should achieve." When asked why HP didn't disclose the reports from the value capture team to its board and to shareholders, Fiorina shot back, "It would have been irresponsible to do so," again noting that the reports are just a snapshot and not a full picture of the company's targets.

But under cross-examination by HP lawyers, Hewlett conceded that his criticism of HP's integration process is based partly on rumors, an anonymous letter to federal regulators, and a letter from Compaq's CEO that was not admitted into evidence. When asked whether he believed that HP bought the vote of Deutsche Bank--Hewlett's other primary claim--Hewlett said that HP executives testified they had not and that he had no reason not to believe them.

Under cross-examination by HP attorney Steven Schatz, Hewlett had to have several questions repeated, and he frequently answered with a simple "yes" or "no." At one point, Hewlett said, "I'm sorry, I flipped out while you were asking the question."

The two parties will simultaneously file post-trial briefs with the judge before 9 p.m. PT on Friday. William Chandler III, the judge hearing the case, said that he understood the need for a swift decision. "I will get you one very quickly," Chandler said.

Perhaps the most startling aspect of the case came in the form of a mysterious journal entry by Compaq CEO Michael Capellas jotted in late February or early March headed, "sobering thought." The handwritten message in a spiral-bound notebook said, "at our course and speed we will fail."

Swapping and hacking
After months of speculation about the mysterious Sharman Networks and its hugely popular file-swapping software Kazaa, the company's chief executive went public with primary details of the company. CEO Nikki Hemming revealed that Sharman is funded by a group of private individual investors who wish to remain anonymous and is registered for tax reasons in Vanuatu, an island nation that advertises itself on its Web site as "the South Pacific's premiere tax haven."

Rumors have floated for months, spurred by a note in the company's terms of service, that Kazaa would soon start charging for its service. Hemming said that she intended to keep the basic Kazaa service free, but would later introduce a premium service with new features. The company already has a deal with DoubleClick to serve ads through the Kazaa software, she noted.

Nobody has yet sued, but Hemming knows that's a possibility. Hemming is sticking with her company's controversial alliance with Brilliant and Altnet. That network, which will support distribution of copy-protected entertainment content, will be one way that content companies and the peer-to-peer world can find common ground, she argues. CNET News.com spoke with Hemming in one of the first one-on-one interviews since the purchase of Kazaa.

Hemming must feel as though she is under attack from all sides. For the past several weeks, programmers have been releasing versions of popular file-swapping programs online with the advertising and user-tracking features stripped out.

It is just one part of a growing backlash against the software now routinely bundled with free file-trading programs. These piggyback software packages often track computer users' activities online to show them targeted advertisements. The "clean" software movement, which threatens to pinch off the stream of advertising and bundling revenues that supports free software, has put the file-swapping companies in an awkward position.

Mapping chips' future
Intel has ordered a test version of a new tool it says will allow the company to hurdle an impending industry-killing roadblock and continue to punch up chip performance. The new tool uses Extreme Ultraviolet Lithography (EUV) to print extremely small circuit patterns on chips, resulting in smaller features that let chipmakers pack many more transistors onto their semiconductors. An increase in transistors basically means a corresponding leap in performance. With EUV, chipmakers could see clock speeds of 10GHz or faster--much speedier than today's quickest, 2.4GHz chips.

EUV is a new type of lithography--the process traditionally used to print circuit patterns on chips--known as photolithography. Photolithography essentially works like photography. Machines are used to shrink and then print an image of a circuit pattern on a silicon wafer. Layers of metal are then removed, or added, in a process that turns the image into a complex pattern of copper circuits.

Advanced Micro Devices confirmed that it will collaborate with Microsoft to tune Windows to run on its upcoming family of Hammer chips--a strong endorsement for AMD. Although its chips are widely used in the consumer market, the company remains a marginal player in the corporate world.

With Linux developers and now Microsoft formally committing to gear their operating systems for the company's chips, AMD can begin to convince server manufacturers and IT managers to move away from a diet based strictly on Intel and RISC (reduced instruction set computing) technology. Hammer chips differ from existing chips in that they can read 32-bit code, the basis for nearly all software for PCs today, and 64-bit code used by high-end servers.

As AMD moves forward, a major force in its success is stepping down. For 32 years, CEO W.J. "Jerry" Sanders has been the walking personification of AMD. Although Sanders will remain chairman through 2003, the company will be in the hands of its president, Hector Ruiz, a Motorola veteran who joined AMD in 2000 and is known as a hard-driving operations expert.

"This is a major milestone for AMD," said Kevin Krewell, senior editor of The Microprocessor Report, an industry newsletter, and a former AMD employee. "He is the only CEO the company (has) ever had. Hector is more low-key...When you meet (Sanders) at a corporate function, it is sort of like getting an audience with the pope."

Also of note
An auction for a vintage Apple I computer, complete with a monochrome screen and cassette player, drew only a handful of bidders and ended up selling for $14,000--the minimum reserve price set by the seller...More than a week after it first started spreading, the latest variant of the Klez worm continues to infect PC users that haven't taken steps to protect themselves...Amid booming international sales, evidence is mounting that Amazon.com plans to launch a Canadian site this summer.

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