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The week in review: The hack is back

Internet security returns to the forefront of surfers' attention, with a couple of high-profile hackings, security breaches and an identity theft involving the world's biggest software maker.

Internet security returned to the forefront of Web issues this week, with a couple of high-profile hackings, security breaches, and an identity theft that involved the world's biggest software maker.

Among the most prominent and potentially destructive were two digital certificates that were mistakenly issued in Microsoft's name that could be used by virus writers to fool people into running harmful programs. According to Microsoft, someone posing as a Microsoft employee tricked VeriSign, which hands out so-called digital signatures, into issuing the two certificates in the software giant's name.

Such certificates are critical for businesses and consumers who download patches, updates, and other pieces of software from the Internet, as they verify that the software is being supplied from a particular company such as Microsoft.

An intruder may spend just minutes in a computer system, but researchers spend dozens of hours finding out what he or she did during that stay. That inequity--highlighted during a contest of digital-sleuthing skills--underscores the costs of cleaning up after an intruder compromises a network.

"This guy can do all that damage in half an hour," said one security engineer who estimated that an investigation into such a brief breach could cost more than $22,000.

Internet security software is one of the last tech sectors left standing during the meltdown, but investors don't expect the good times to last for long. Analysts, however, said those worries may be misplaced. Internet security companies are supposedly recession-resistant. But shares in companies such as Check Point Software, Internet Security Systems and Netegrity have taken their lumps of late as Wall Street frets about possible profit warnings.

Just released
After years of promising a next-generation operating system, Apple Computer will launch Mac OS X on Saturday, but analysts wonder whether it is enough to spur Mac sales.

Although CD recording and other features aren't ready yet for Mac OS X, CEO Steve Jobs said updates are coming soon. It is the first complete overhaul of Apple's operating system since the first version came out 17 years ago, and Jobs said the new OS will have a similar life span. "We want something that lasts 15 years," he said. The new OS will be sold on its own beginning Saturday and later will be included on Macintosh computers.

The new operating system is seen as critical to Apple's future, but industry analysts don't expect the software to improve the company's bottom line significantly in the short term. In part, that's because Apple won't start including Mac OS X on new computers until the summer. Also, analysts expect Mac owners to wait until more applications are available for the operating system before purchasing it. Although hundreds of developers have committed to writing programs optimized for the new system, many applications won't show up for several months.

Not to be outdone by longtime rival Apple, Microsoft launched a "HailStorm" aimed at upstaging rival America Online. The software giant unveiled a set of software building blocks, grouped under the code name HailStorm, for its .Net software-as-a-service strategy. Along with HailStorm, Microsoft marshaled out new versions of its Web-based Hotmail e-mail service, MSN Messenger Service, and Passport authentication service.

HailStorm has analysts saying that the Internet free lunch may be over. The group of services is meant to provide secure access to e-mail and personal data from virtually anywhere via PCs, cell phones and PDAs. But consumers will be required to pay a fee to use them. Analysts say that if the HailStorm model is widely adopted--and if people will pay a premium for security--the days of ad-subsidized Internet services may be over.

Hits and misses
Notebook processors hit 1GHz, just about a year after Intel and Advanced Micro Devices released their first 1GHz desktop chips. Compaq Computer, Dell Computer, Gateway, Hewlett-Packard, IBM, and a host of other computer makers introduced notebook models that run on the new Intel mobile Pentium III chip. Notebooks from major manufacturers based on AMD's forthcoming 1GHz mobile Athlon chip are expected toward June.

However, Transmeta is preparing a serious assault on Intel, planning two major power-saving products this year and two new chips for 2002. The plans could give an added boost to the upstart chipmaker, which has been battling hard against rival Intel and the giant's recent push to create similar processors that require less power to operate.

David Ditzel, Transmeta's founder and chief technology officer, pointed to the new Crusoe 5800 chip as one of the company's recent power-saving efforts. The new chip will arrive midway through 2001, Ditzel said at the CeBit technology trade show in Hanover, Germany.

3Com will discontinue Audrey, its Web-surfing appliance, and Kerbango, an Internet radio, by June. 3Com acquired Kerbango, the radio's maker, for $80 million in June. The company will also likely disband its entire Internet appliance division created last year, although it will continue to make home-networking products. Audrey and Kerbango were the only two products to emerge from the appliance division.

Wireless world
Handset makers unveiled a smattering of the next generation of cell phones at the CTIA Wireless show, with many companies aiming at the world's 426 million teenagers who are expected to spend more than adults on phones. With cell phones already saturating markets in Europe and Asia, phone makers are setting their sights on North America, where computers still outnumber cell phones. The real buying power, analysts say, lies with members of Generation Y, or 18- to 24-year-olds.

Crowding alongside the young start-ups at this year's CTIA is what analysts say is the highest concentration yet of big names in the computing industry, such as IBM, Compaq Computer and Sun Microsystems. Separately, the heads of two of the world's top wireless-technology providers took time off from the show to plead to government regulators in Europe and the United States to change the way wireless spectrum is being sold.

Regulators have been auctioning only a small number of the available radio frequencies needed for the high-speed, mobile Internet-access services that network operators want to offer and on which companies such as Nokia, Ericsson and Motorola are predicating new handset technology.

Also of note
Unimpressed by Napster's efforts to strip copyrighted songs out of its file-trading network, the record industry says it will go to court next week to complain that the company is flouting the terms of a court order...Yahoo and Kozmo.com have done what other dot-coms have recently failed to accomplish: attract executives from established, non-technology companies...Charles Schwab, the largest discount and online broker in the United States, is slashing up to 3,400 jobs amid a slowdown in trading by its clients...Lucent Technologies' spinoff Agere said in its latest regulatory filings that it will lower the terms of its IPO to 600 million shares priced between $6 and $7 a share...A new technology in the fiber-optics market is striking the right note with investors and raising cash at a time when industry confidence is low and venture capital is hard to find.

View all this week's News.com headlines.