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The week in review: Office party

Microsoft begins shipping Office XP, probably the most important product the software giant will ship this fiscal year, but persuading businesses to upgrade may be difficult.

Microsoft began shipping Office XP, probably the most important product the software giant will ship this fiscal year, but persuading businesses to upgrade may be difficult.

The software maker unveiled Office XP, the latest version of its business software, during a New York event hosted by Microsoft Chairman Bill Gates. Executives from, Ford Motor and other big businesses joined Gates to explain why their companies are moving to Office XP. Despite those endorsements, Microsoft may find Office XP to be a tough sell.

"Many companies just aren't that interested in Office XP," one analyst said.

But Microsoft has help in trumpeting Office XP: Retailers and PC makers want consumers and small businesses to buy the new version of the software--and they're ponying up extras to drive sales. Online retailer is encouraging Office XP sales by offering 128MB of free memory with any version of the productivity suite and a free 40GB hard drive or Adobe Acrobat 5 with two specific versions of Office XP. Catalog and online retailer Zones also offers a free copy of Acrobat, and PC Mall offers 128MB of free memory with select versions.

Those aren't the only extras included in Office XP. Clippy, the cute but much maligned animated paper clip introduced with Office 97, was given his walking papers by Microsoft recently as part of a $30 million marketing campaign promoting Office XP. But Clippy's demise is more myth than reality. Anyone installing Office XP will find Clippy and seven other animated assistants available with the new version.

How does Office XP rate? Check out CNET's superguide.

You've got trouble
A hoax e-mail warning people that their PCs might contain a virus tricked an untold number of people into deleting a beneficial Windows application--and now they're scrambling to get it back. The e-mail readers to wipe a Microsoft Windows utility called sulfnbk.exe off their hard disks. The harmless file is on every PC that comes with Windows, and it helps computers recognize shorter versions of longer file names. The file is not required for normal system operation.

Disguised as pictures of actress Jennifer Lopez naked, the destructive Chernobyl virus is again spreading across the Internet via e-mail. While the distribution has been limited, the virus still poses a serious threat. The Chernobyl virus can erase files and disable computers. The virus was discovered before it could do any significant damage.

An e-mail worm that seeks out images of child pornography on PCs and alerts government agencies to positive findings has been released by British hackers intent on cleaning up the Internet. The worm, dubbed "Noped," is an encrypted script using Microsoft's Visual Basic language. It arrives as an attachment to an e-mail message entitled "FWD: Help us all to end illegal child porn now." Once executed, the virus searches all hard drives for JPEG graphics files possessing names that indicate they may contain child pornography. Noped comes bundled with a list of government and police e-mail addresses that it will send a random alert to if it discovers a match for one or more of the JPEG file names listed in the script.

Price cuts
Gateway fired the latest volley in a price war gripping the PC industry. The PC maker said will beat the advertised price of competitors Compaq Computer, Dell Computer, Hewlett-Packard, IBM, Sony or Toshiba. In some ways, the program--or Gateway Guarantee--is not new. Earlier in May, the PC maker tested a similar promotion in 10 Gateway Country stores for two weeks and then extended it nationally last week. But this time, rather than just meet competitor prices, Gateway will now beat them.

With about three months' worth of Palm handhelds sitting on shelves and in warehouses, some retailers have begun selling the devices well below listed prices. And in what could be a more troubling sign, some of the price cuts are coming on Palm's newest models: the m500 and m505. Electronics retailer Best Buy has been the most aggressive, chopping the prices of all Palm models and several handhelds that run on Microsoft's Pocket PC operating system. Significantly, though, the deepest cut comes on Palm's m500, which is selling for $330, or $70 below its listed price of $400. Although the cuts are not universal, the moves could prompt others to follow suit.

Intel trimmed the prices of several Pentium III and Celeron chips. The chipmaker lopped as much as 38 percent from the price of its desktop Celeron and Pentium chips this week. It made smaller cuts, up to 24 percent, on its mobile Pentium III processor. The cuts, scheduled in advance by Intel, are designed to help Intel keep pace with the markets served by the chips. Analysts were not surprised by the cuts.

What's the deal?
Lucent Technologies and Alcatel executives called off a potential merger of the two telecommunications equipment giants, raising new questions about the future of one of America's premier research labs. French telecommunications equipment maker Alcatel and Lucent confirmed earlier that they have been negotiating a merger that would have been valued around $32 billion. A source close to Lucent said the deal, which was in the works for the last few months, fell through because Lucent wanted a merger of equals, while Alcatel wanted the deal constructed as an acquisition of Lucent.

Once again, RealNetworks is fighting off news of its imminent demise. The online streaming-media company has been written off numerous times in its long-standing battle with Microsoft for market share. Its stock tumbled nearly 20 percent in one day on speculation that AOL Time Warner's America Online, the world's largest Internet service provider, is poised to dump an exclusive deal with the company and open the door for Microsoft to replace RealNetworks' technology as media player of choice for some 29 million subscribers.

Extended Systems will trim 15 percent of its staff and sell its print-server business after a deal to be acquired by Palm fell apart earlier this month. The company said it closed a deal to sell its print-server business to Troy Group for an undisclosed amount of cash. As a result, Troy will hire about 38 Extended Systems employees. Extended Systems said it plans to cut 50 workers and contractors, or about 15 percent of its work force, in an effort to shave up to 20 percent off its expenses.

Also of note
Bertelsmann E-Commerce Group said it will acquire online music locker Myplay and consolidate its music retail assets into a separate division...File-swapping company Aimster has struck a marketing deal with Microsoft Network that will co-brand the controversial service with the software giant's online site...Stalled by budget constraints and red tape, government agencies haven't embraced online purchasing as quickly as private-sector peers...Several auction sellers say the e-commerce giant is not delivering a service they say they have bid on and paid for...From Intel's new 64-bit Itanium server chip to new technologies that will allow Transmeta chips to handle data faster, semiconductor makers are pushing the silicon envelope.

Want more? Check out all this week's headlines.