The week in review: Net music harmony?

A federal appeals court issued a short reprieve for Napster, saying the company could temporarily restart its song-swapping service online. The ruling stayed a week-old decision ordering the company to block all song trading through its service, unless it could block 100 percent of the songs that record labels had identified as copyrighted.

A test version of Napster's new subscription-based file-swapping service will be available shortly. Napster is letting fans try out a free beta version of the software before it launches a new paid model designed to appease the recording industry, which has sued the free service out of existence.

For the past several months, consumers in ordinary record stores around the world have unwittingly been buying CDs that include technology designed to discourage them from making copies on their PCs. According to Macrovision, the company that has provided the technology to several major music labels, the test has been going on for four to six months. Although it's not disclosing just which titles have been loaded with the technology, at least one has sold close to 100,000 copies.

Although the labels can do little to stop consumers from "ripping," or digitally copying, the hundreds of millions of old CDs already on the market, they are looking for ways to protect new releases, which constitute the bulk of their annual sales.

And to confuse matters a little more, Microsoft will provide the resources for ripping MP3 files in Windows XP after all. But there is a catch: Consumers will pay extra for it.

The company will make available two add-in packs for Windows XP, one providing full MP3 support and the other DVD playback. The change could help squelch criticism that Microsoft favored Windows Media Audio (WMA) format over MP3, which testing versions of Windows XP ripped at a low quality.

Spotlight on Microsoft
Back in court, Microsoft asked the U.S. Court of Appeals for the District of Columbia Circuit to readdress the finding that combining the Internet Explorer Web browser with Microsoft's Windows operating system violated antitrust law. The company said it "believes there is no basis for the District Court's finding on commingling" and is "requesting the appeals court to review the record once more."

A day later, a federal appeals court ordered the government to respond to Microsoft's request for rehearing. The Justice Department and 18 states have until Aug. 3 to respond to Microsoft's request on one section of the appeals court decision. Microsoft filed its petition Wednesday.

Microsoft wasn't defending itself just in court. An analysis of the fast-spreading Code Red computer worm discovered that infected computers were programmed to attack the White House Web site with a denial-of-service attack, potentially slowing parts of the Internet to a crawl.

The worm, which was thought to have compromised more than 15,000 English-language servers running Microsoft's Web server software, was meant to cause every infected computer to flood the Whitehouse.gov address with data.

Chaos was avoided, however, after the White House dodged the worm by moving the Whitehouse.gov site to an alternate Internet address.

Sun Microsystems said it was "disappointed" by Microsoft's decision to exclude Java software in its Windows XP and Internet Explorer products, although analysts said the move could help Sun in the long run.

On the surface, removing Java from Windows XP looks like a blow to Sun, cutting off an important distribution channel for Java. But Microsoft's practice of shipping outdated copies of the software has slowed the distribution of more recent and faster versions of Java, analysts said, and has hurt the software's reputation.

Microsoft's plans for a Hotmail face-lift went awry as the company quickly withdrew an upgrade amid undisclosed technical problems. Microsoft, which claims more than 110 million active Hotmail accounts, heralded the upgrade as an improvement on the free e-mail site's user interface and e-mail filtering and spam-control tools. But after launching the upgrade, Microsoft almost immediately withdrew it.

New polish on Apple
Apple Computer Chief Executive Steve Jobs unveiled speedier iMacs and Power Macs during his keynote speech at Macworld Expo, though the announcements lacked the punch he usually offers at the trade show. Jobs' speech lacked its typical surprise ending--when he tends to unveil the latest and greatest products. Instead, Jobs ended with a preview of iDVD 2, an update to the program that lets consumers put their digital videos on DVD. What Jobs didn't announce--a much-anticipated, flat-panel iMac--grabbed analysts' attention.

In addition to new iMacs, several Mac-oriented hardware and software makers used this week's Mac trade show to announce new products.

Some good news from Microsoft for Mac fans came as the company reaffirmed its commitment to the Mac by offering details about a new version of Office, announcing a new streaming media client, and releasing revamped instant messaging software.

Besides offering new features, such as DVD playback and authoring, Mac OS X 10.1 is expected to resolve some issues developers faced in moving their programs to the new operating system. Office 10, the code name for Microsoft's next version of the Mac productivity software, is slated for release sometime after Mac OS X 10.1 ships.

Several months back, Jobs spoke of narrowing the clock-speed gap between the chips in Macs and Windows-based machines. But as the gulf continues to widen, Apple is once again trying to convince consumers not to judge its computers on megahertz alone.

Although Apple has introduced faster machines, including an 867MHz Power Mac on Wednesday, Intel's chips now run at up to 1.8GHz--or more than double the clock speed of the fastest Mac. Perhaps as a result, Apple is again making the pitch that megahertz doesn't matter and that its machines are still faster at the tasks many people perform.

Business call
AT&T's board of directors voted to reject a takeover bid from Comcast, which had offered $44.5 billion to buy the phone giant's cable TV division. The offer, which would have thrown a wrench into AT&T's four-way breakup plan, was rejected on several grounds, the company said. But even if that initial offer is rejected, the company is signaling that it may be open to new approaches.

Even as it rejected Comcast's initial offer, AT&T said it would delay sending the final plans for breakup to its shareholders, as it looks at all available options.

Predicting AT&T's next move may be difficult. Just a few years after AT&T spent more than $110 billion on cable networks, the company is placing bets on a different technology to offer consumers phone and Net service. Even as the future of Ma Bell's cable network falls into uncertainty, the company's core consumer long-distance business is turning to competing DSL (digital subscriber line) technology to ensure it will still have a direct connection to consumers.

In size and scope, this new effort pales in comparison to AT&T's costly cable plans. But the communications giant's new strategy appears to once again set up Ma Bell to compete with the local phone companies--and this time its own cable division--in offering a bundle of local phone, long-distance and high-speed Net service.

A budding standard--the brainchild of AT&T, IBM, Lucent Technologies and Motorola--is fueling new software that allows people to use voice commands via their phones, either mobile or land-based, to browse the Web. Users of the technology can check e-mail, make reservations and perform other tasks simply by speaking commands.

Also of note
The FBI took a Russian encryption expert at Def Con into custody at his hotel in Las Vegas for allegedly publishing software that cracks a variety of methods used to secure e-books...New evidence suggests that local police will share the blame for what will likely be a failure by the wireless industry to meet a federal deadline for new technology capable of locating people dialing for help from a mobile phone...Internet travel sites Orbitz and Hotwire, both backed by several major U.S. airlines, struck a marketing agreement that will send customers to each other's sites...NCR unveiled an experimental ATM that will dispense cash only after being zapped by a beam from a person's handheld device...Media company USA Networks will acquire a controlling stake in Expedia, the online travel company majority owned by Microsoft.

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