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The week in review: Microsoft's landmark

Microsoft at last introduces Windows 2000, an ambitious attempt to make up ground in the high-end computing world.

Microsoft at last introduced Windows 2000, an ambitious attempt to make up ground in the high-end computing world.

The business-use software, which the giant hopes will make inroads on the server computers that power Web sites while staving off fast-growing Linux, marks an industry milestone because numerous other companies are expecting to benefit as corporate buyers begin upgrading to the more robust system. Hardware manufacturers and chipmakers are expected to fare best; software makers and component suppliers can also expect benefits.

In the making since 1996, Windows 2000 is a great deal more sophisticated--and stable--than its predecessor, Windows NT 4. But the transition won't be smooth for about a quarter of those who make the change, according to a prominent consulting firm, and many companies will take their time. Additionally, licensing fees represent an incremental cost that can make the software expensive.

Many predict the notebook segment will adopt the software the fastest because it is more reliable than previous Microsoft operating systems and exploits the best features of corporate notebooks, such as power management.

Longtime partners Microsoft and Intel appear at odds over the key question of processor power needed to run Windows 2000. The latter asserted Windows 2000 requires up to 250 more megahertz of chip power for performance equivalent to Windows 98 or Windows NT. The pronouncement symbolizes the widening gap between the two companies, whose partnership has been so close that it has been dubbed "Wintel" within the industry.

Microsoft also faces the twin challenges of Linux and the Internet, both unforeseen just a few years ago. The first has established itself as a cheaper alternative and been embraced by almost as many computer companies as Windows, altering the assumption that Microsoft would become the de facto choice for low-end servers. The second has boosted the market for Unix-based servers; in particular, Sun Microsystems has strengthened its position as the dominant choice for servers to power corporate Web sites. Microsoft contends Windows 2000 is more mature than Linux and less expensive than Sun's Solaris.

Intel is feuding with Sun: The chipmaker said that Sun hasn't been pulling its weight in a joint effort to develop Solaris for Intel's forthcoming Itanium chip and that it will drastically reduce the resources it's devoting to the project. Sun's UltraSparc chip is already established in the 64-bit processor market.

Separately, Intel demonstrated a processor running at 1.5 GHz and said it will release Pentium IIIs running at 1 GHz or faster by the second half of the year. Intel and Advanced Micro Devices have been engaged in a game of one-upmanship since last summer, when AMD released its touted Athlon processor, and both have advanced their product "road maps."

Magazines named for popular software, operating systems and program languages such as Linux and Perl are springing up in bookstores everywhere. While readership has been strong, the real engine behind the boom in tech trade publications has been advertising. Established players as well as start-ups flush with unprecedented venture capital investments are earmarking big chunks of their budgets for marketing.

Asia's two-year PC crisis apparently is over, meliorated by the region's economic expansion and the rise of the Internet, according to a report. Shipments to China, Korea, Indonesia, India, Vietnam and elsewhere (but not Japan) rose to more than 14.1 million units in 1999, the highest annual figure ever and a sign that the regional economic downturn is on the mend.

Just business
An old guard of transportation, gas and other utility companies is contending with the ambitious new broadband industry over the wireless spectrum--the invisible, intangible "airwaves" that carry TV signals, radio waves and wireless phone calls. Owners of private systems typically used by taxi services, for instance, are asking federal regulators for more air space, while young digital outfits are fighting to win rights to the same air space so they can offer profitable new high-speed data and communication services. Since 1994, U.S. regulators have auctioned off large slices of spectrum to wireless phone and other companies, raising close to $20 billion in the process.

Lucent insisted the company is fixing the problems that caused its first-ever earnings shortfall, considered by analysts as the most significant hurdle it has faced since spinning off from AT&T in 1996. Lucent's woes contrast with the runaway success of networking competitors Cisco Systems and Nortel Networks, as well as continued growth from a variety of start-ups.

Nortel's October 1999 announcement that it would acquire Clarify predictably sent the customer relationship management company's shares soaring. But Nortel too has surged, buoyed by strong financial results and plans to expand. The Brampton, Ont., company, whose stock has more than doubled in four months, said it will spend $260 million and add 3,400 people to meet demand for its fiber-optic network equipment.

Several executives involved in Time Warner's Internet efforts have resigned or been reassigned following the company's announced merger with America Online, renewing questions about the media and entertainment giant's online plans. The most recent move involves the chief operating officer at Time Warner Digital Media. Employee stock options in Time Warner instantly vested upon approval of the buyout, and seem to be contributing to an exodus of executive shareholders.

Healtheon/WebMD agreed to buy Medical Manager and its subsidiary CareInsite, an Internet-based health care network for physicians, suppliers and patients, in a stock deal valued at roughly $5 billion. The Atlanta company has made a string of buys within the last month.

Critical Path, hoping to persuade big companies to move their email, fax and other messaging services online, has decided to move its Net-based products offline for those corporations that still prefer to be in-house. The strategic switch marks a realization that the business market for outsourced communications isn't taking off quite yet.

In a deal that consolidates the sluggish online bill-payment market, CheckFree agreed to buy Microsoft-backed TransPoint for in a stock swap worth about $1 billion. Consumers have been reluctant to embrace online billing because of its inconvenience--bill-paying services typically don't allow users to settle all of their accounts--and the move suggests that building the market may be more important than bare-knuckled competition at this stage of the game.

Thinking about it
Ask Jeeves scuttled a proposal to spin off its sex-related answers to a separate Web site called Mimi. The company had been mulling its sex strategy for months, toeing a fine line between endangering its family-friendly brand and giving up a source of traffic and revenue from the popular and lucrative online pornography trade.

Internet advertising network DoubleClick acknowledged an investigation by the Federal Trade Commission into its practice of collecting consumer information, and a separate probe by Michigan's attorney general. In recent weeks, federal officials have launched inquiries into some of the top names in online business, including, eBay and eToys, as consumers spend increasing amounts of time and money online--and file record numbers of complaints.

Canadian law officials investigated a Montreal-based Internet service provider in search of an anonymous hacker called "mafiaboy," while universities that were taken over and used in last week's attacks on sites including Yahoo, eBay and CNN said they can't guarantee their systems won't be used as launching points again. President Clinton met with Internet executives to discuss the situation.

Also of note
Apple announced a revamped line of notebooks for professionals, an upgraded iBook for consumers and faster chips in its corporate desktop computers ... Veterans of Apple and AOL are setting their sights on the Macintosh equivalent of Linux, working on a graphical user interface for the open-source operating system ... PointCast sent an email to subscribers announcing the final broadcast of news and information over its "push" network ... H&R Block's online tax filing service exposed some customers' sensitive financial records to other customers last weekend, prompting the company to shut down the system ... A growing number of consumers are in tune with how television and the Internet can interact, according to a new study ... As the Internet becomes more integrated with Americans' lives, people are spending less time with friends and family, shopping in stores, or watching television and instead are working longer hours by bringing their work home, according to another report.