The week in review: Linux stocks rocket

VA Linux Systems, a company which sells computers based on the upstart operating system along with technical support and consulting services, set an all-time record for the biggest gain in the first day of trading. The company's IPO price was $30 per share, but the stock closed its first day of trading at 239.25--a phenomenal increase of 698 percent.

Linux mania
The jaw-breaking pop came one day after another Linux IPO, the debut of programmer information site Andover.Net, surged 250 percent.

What is Wall Street thinking? Linux is comparatively little-used in the computing industry, except in server computers, where most think the so-called open-source software performs well.

But the operating system's future growth could get a huge boost if it's deployed in conjunction with forthcoming 64-bit chips from Intel, which the giant hopes will power a new generation of even bigger servers. VA Linux is one of several companies involved in an effort to prepare Linux for the first of the new Intel chips, called Itanium, but the effort is about to gain steam with the addition of Linux sellers Red Hat, Caldera Systems, SuSE and Turbolinux, the companies that actually will sell the new version of Linux.

Meanwhile, tensions over control of the Java programming came to a head. Creator Sun Microsystems backed out of a highly publicized effort to turn Java into an industry standard, which would have meant ceding some control to other companies. At the same time, IBM, Sun's biggest disciple in preaching the Java gospel, refused to support Sun's latest edition of the software, a version called Java 2 Enterprise Edition that's designed for use in servers.

On the horizon
Ericsson and Microsoft announced a joint venture to develop products that provide fast access to the Internet from any device. Ericsson will provide Microsoft with its Wireless Application Protocol format--which allows Net content to appear in the window of cellular devices--while adopting Microsoft's new Mobile Explorer package for Internet phones.

The move is consistent with Microsoft's overall effort to expand as the high-tech industry turns from the personal computer to a variety of Net-based devices for communications. But the Redmond, Wash.-based software behemoth hasn't been the most successful in creating and sustaining alliances. Many companies have been jockeying furiously as the once-separate markets--software, telecommunications, handheld devices and e-commerce--continue to converge at a breakneck pace. With the first round of alliances and relationships to create products seemingly completed, the landscape looks remarkably familiar: Palm Computing and its allies vs. Microsoft and its camp.

Another front
Separately, in a speech highlighting the growing importance of streaming technologies, Microsoft chief executive Bill Gates said the company is investing significant resources into making it easier to see video and hear audio via the Internet. Some 45 companies backed Windows Media Player as their streaming media software of choice--including Hewlett-Packard, Texas Instruments and General Instrument--and joined Microsoft's Windows Media Broadband Jumpstart Initiative, a coalition of companies that support the software.

At the same industry trade show, RealNetworks chief executive Rob Glaser reiterated his company's commitment to a hybrid identity as both a technology and media firm, outlining what he described as a streaming media "ecosystem" that provides technology for programmers and consumers as well as content services and aggregation to connect them. Real's vision of itself as a content aggregator stands in stark contrast to Microsoft's, which said it would not focus on streaming media content aggregation. Industry observers are skeptical on that point; Microsoft's determination to overtake Real is more certain.

One day after blocking AT&T customers from accessing its giant instant messaging network, America Online agreed to sit down with AT&T and ally Tribal Voice to seek ways to end the escalating battle over access to the online giant's user base. The two companies agreed to meet early next year after Tribal Voice introduced a workaround. AOL previously battled Microsoft to a standstill on the issue, leading the software giant to throw in the towel on interoperability last month.

In the war on bulk junk email, some companies are beginning to claim partial victories, and users are surprisingly backing those claims. Yahoo's anti-spam measure, launched last week, has met with some success. Hotmail's implementation has been more disappointing, users said.

The Recording Industry Association of America sued start-up Napster for violating federal and state laws through "contributory and vicarious copyright infringement," because it has created a forum that lets online users trade unauthorized music files directly from their PCs. The lawsuit is the latest front in what has become a quicksand-like terrain for the music industry, which has been aggressively fighting to maintain control over their copyrighted material. In the case of Napster, it could be an uphill battle: At least two federal laws protect content "providers" from being held responsible for illegal activity over their networks.

Shifting sands
SAP chose IBM as its database of choice for internal development of its R/3 business application software on key operating systems, distancing itself from long-time database partner Oracle. Friction has been building between Oracle and its enterprise resource planning software rivals.

AT&T plans to give high-speed Net access customers a choice of Internet service providers, announcing a deal with leading dial-up company MindSpring Enterprises. But the agreement doesn't go into effect until AT&T's exclusive contract with subsidiary Excite@Home expires in 2002. The move comes at a time when AT&T is waiting for a ruling from the 9th U.S. Circuit Court of Appeals in Portland, Ore., as to whether it can be legally forced to open up its high-speed network to outside ISPs.

The decision comes just as Excite@Home had laid to rest some questions over its business strategy and future course. Two weeks ago, the company announced it would offer a tracking stock for its media assets, a move intended to quell rumors that the company might sell off Excite.com and other content properties. Separately, Excite@Home recently topped 1 million subscribers, meeting analysts' expectations and catapulting the company into a limited group of large, national ISPs.

News Corp. formed a partnership worth more than $1 billion with Healtheon/WebMD. The financial terms include News Corp.'s providing $700 million in branding services over 10 years ($400 million domestically and $300 million internationally), a $100 million purchase of Healtheon/WebMD stock at $50 per share (making News Corp. a 10.8 percent minority stakeholder), a $100 million cash investment by News Corp. in an international joint venture; and a $62.5 million five-year licensing agreement for syndication of WebMD daily broadcast content. In a reversal of the usual trend to place traditional media content on Web sites, the media giant plans to distribute Healtheon/WebMD content across New Corp.'s television and print outlets.

Think again
Rambus named a new president and made other organizational changes as it prepares to launch into new markets, namely communications and other chip-to-chip applications. The company also disclosed a road map for existing chip technologies. Rambus' seemingly bright future darkened in September when Intel unexpectedly delayed a chipset that promotes next-generation Rambus memory, stunning many PC makers.

Japanese consumers' preference for ever-thinner mobile computers and slimmer desktops that pack in moderate yet compelling features is influencing the design of products sold in the United States. PC makers including Dell, Hewlett-Packard, Compaq and Gateway are taking some cues from the world's second-largest market.

Ted Waitt, the founder of Gateway, will step aside as chief executive on January 1 and hand over the reins to president Jeff Weitzen. Waitt did not say why he has decided to resign, but indicated that a transition has been underway for some time.

Service, please
Eleven major U.S. banks will join a consortium called Spectrum that operates an online bill-pay network. Formed in June by Chase Manhattan Bank, First Union and Wells Fargo, the network's new members include Comerica, Mellon Financial and Wachovia. Earlier this week, Sun Microsystems and Netscape announced plans to help Spectrum create an Internet billing system. About 63 billion bills are issued in the United States every year; companies that grab a significant share also can expect to sell other products and services because consumers tend to stick with their chosen financial institution.

As e-commerce gains popularity, figuring out where to go for a redress of grievances can be just as frustrating as dealing with an uncooperative company. Problems ranging from missed shipping dates to outright scams ordinarily found offline now apply to the Internet. Additionally, even during this important holiday shopping season, many retail companies appear ill prepared for the perennial problem of handling customer phone calls. Calls made to online retailers' customer service centers can mean hold times of 10 minutes or longer--if you are able to get through at all, an informal survey by CNET News.com found.

American television stations have joined the fight against Canadian Net TV company iCraveTV.com, demanding that the company stop showing their TV signals online or face legal action. ICraveTV, which launched early last week, streams the signals of 17 Canadian and U.S. TV stations online--uncut and uninterrupted. But the Web company didn't ask permission first, and now programmers on both sides of the border are trying to shut the young Net company down. The National Football League is also annoyed.

Also of note
IBM aims to build a $100 million supercomputer called Blue Gene that performs a quadrillion calculations per second--about a thousand times faster than the Deep Blue machine that beat world chess champion Garry Kasparov two years ago--to help researchers understand how proteins are created ... PC shipments in the year's fourth quarter are projected to reach 17 percent, in spite of slower-than-expected growth in the corporate market ... The New Jersey programmer accused of creating and disseminating Melissa, the virus that plagued email systems around the world, plead guilty ... The Securities and Exchange Commission received $7 million for Internet oversight in the fiscal 2000 appropriations bill, and will use most of these funds to help police the Web for possible stock manipulation.