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The week in review: Down and out in Redmond

Microsoft had its share of ups and downs this week, but perhaps the most damaging was its Web presence--or its extended lack thereof.

Microsoft had its share of ups and downs this week, but perhaps the most damaging was its Web presence--or its extended lack thereof.

Just a day after blaming technicians for a network outage that kept most of its key sites inaccessible for nearly 24 hours, Microsoft said network attackers overwhelmed the company's connection to the Internet, causing traffic to its major Web sites to slow to a crawl.

The outages showed how quickly problems in the highly interconnected technology industry spread--a widening ripple effect emanating from Microsoft's headquarters to information technology departments, customer call centers, offices and homes.

A Microsoft spokesman could not confirm whether Wednesday's outage that blocked access to many of the company's Web sites, such as and Expedia, also brought down Hotmail. The reason: Hotmail is often inaccessible.

Some security experts say one aspect of the software giant's network design could lead to similar interruptions in the future. The focus of their concern is that Microsoft may have placed key domain name servers on a single network, making them vulnerable to a directed attack.

Buying, selling and moving
As the tech world held its breath again for good news about the power crisis in California, Gov. Gray Davis announced that the state would hold a 27-hour auction on the Web to find the lowest-cost, most reliable supplier of energy. is imposing new fees on some of its auction consumers and will force all sellers to offer the e-tailer's payment service to bidders. The e-tailer will soon require its auction sellers to offer the company's proprietary person-to-person payment service, Amazon Payments, to bidders. Sellers will be required to offer the service, but can also offer other payment methods.

AOL Time Warner is taking steps to dramatically refocus its flagging Netscape subsidiary, handing responsibility for Web browser development to another division and preparing to relaunch as a venue for its top editorial content. Breaking from Netscape's technology roots, AOL Time Warner moved the browser development group out from under the Netscape division and into the AOL Technology wing.

Leaner and meaner
As part of that plan, AOL Time Warner has laid off about 2,000 employees, bringing total cuts at the newly merged company to 2,400. The layoffs account for 3 percent of the company's total premerger work force of 85,000, including 400 cuts announced last week at the company's CNN subsidiary.

Lucent Technologies unveiled the first installment of its restructuring plan designed to save $2 billion in costs. The struggling telecommunications equipment provider is laying off 10,000 workers, cutting 6,000 additional jobs, and said it would take a hefty charge in its second fiscal quarter.

Major high-speed Internet service provider Excite@Home is laying off about 250 workers, or 8 percent of its work force. The layoffs were effective immediately and primarily affected Excite Studios, a producer of media content. Further cuts were made among advertising sales positions and general administrative workers such as finance, human resources and marketing employees,

Coming attractions
The cost of real estate and electricity are two of the major problems of doing business in Silicon Valley--a situation that several companies coming out with Transmeta-based servers hope to exploit. RLX Technologies, and two other server start-ups, FiberCycle and Amphus, will release Web servers in the near future that contain Crusoe processors from Transmeta, among other architectural enhancements, rather than chips from Intel or Sun Microsystems.

Amid reports that Sega will stop selling Dreamcast as a standalone gaming console, the company is finalizing plans to incorporate its technology into other devices, such as next-generation set-top boxes. A set-top strategy could give Sega a potentially cost-effective way to remain in the hardware market without relying solely on making its own consoles.

Online music fans are sure to be cool to Big Blue. IBM released a new version of its anti-piracy technology for music that it says could help block song traders who use services such as Napster or Gnutella. Several companies are trying to keep just enough of the Napster model alive to satisfy consumers, while giving copyright holders near-absolute control over the way songs and other media are distributed.

Also of note
Sun Microsystems and Microsoft settled their long-running lawsuit over Microsoft's use of Sun's Java software...A security breach at Travelocity exposed the personal information of thousands of the online travel company's won't honor orders made with "unauthorized" coupon codes that some bargain hunters used to get up to 50 percent off exited the business of providing free domestic phone calls from PCs to regular phones--and is now charging consumers 2 cents per minute...Intel will cut prices by more than 40 percent on some desktop chips.