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Week in review: Ballmer guns for Sony

Microsoft's CEO isn't playing games when it comes to his ambitions for Xbox and the console game market.

Microsoft isn't playing games when it comes to its ambitions for Xbox and the console game market.

During an interview with CNET at Microsoft's Worldwide Partner Conference, CEO Steve Ballmer predicted that Microsoft would soon steal the game crown from Sony: "We may still be losing money, but we have gone from nowhere to a significant player with a whole different approach. I bet we can take Sony next generation."

Indeed, Microsoft has made progress, signing up more than 1 million subscribers for Xbox Live, the online game service the company launched in late 2002.

Meanwhile, Sony expects to show off its latest PlayStation at the E3 trade show next May, increasing pressure on Microsoft to take the wraps off its Xbox successor at that time.

Delivery times in general seem to be a gray area for the software giant lately. Microsoft said Windows Update Services, a new tool designed to let system administrators keep PCs and servers up-to-date with the latest patches and bug fixes, won't ship until sometime in the first half of next year. The tool, which entered testing in March, was supposed to debut this year.

The company also said the long-awaited update of Windows XP will be sent to manufacturing in August, a month later than expected. The product should be in customers' hands later that month. This is the second time Microsoft has delayed SP2, which was originally expected in June. Earlier this year, Microsoft said the update would be delayed until July.

The company gave no reasons for new delay. But last month, a number of Windows enthusiast Web sites reported that Microsoft had run into compatibility problems between SP2 and other software.

Upsetting the Apple cart
Microsoft may be feeling a bit flush right now. A copy-protected CD hit No. 1 on the U.S. music sales charts last month, but the music wouldn't play on Apple Computer's iPod. Now the two companies responsible for most copy-protected CDs are scrambling to create new versions of their technologies that are compatible with Apple's popular digital music player.

In the process, they're both making substantial changes in the way CDs are digitally locked, changes that could ultimately be a setback to recent Microsoft strides into the music business.

The digital music player has been an enormous boost to Apple, helping the company triple its quarterly net income. Apple also reported that its iTunes online digital music service crested 100 million downloads.

But while iPod is a big hit, Steve Jobs wasn't the most popular person at the Macworld conference in Boston--mostly because he didn't attend. The conference has been the subject of controversy since October 2002, when show organizer IDG World Expo announced plans to move the event out of New York.

Almost immediately, Apple announced that it would not participate, punching a gaping hole in the conference's persona, which focuses on the computer maker's products and typically looks to Apple as the event's largest exhibitor and advertiser. Macworld was previously held in Boston with Apple's support, until moving to New York in 1998.

Despite Jobs' absence, the company's mercurial founder still managed to remain at the center of the show's attention. Since Jobs didn't occupy his traditional role as the event's opening speaker, organizers put together a reunion of the design team that built the first Macintosh more than 20 years ago.

And rather than giving Jobs credit as a key member of that effort, the panel of designers used the event to repeatedly deride the executive, saying his style of management had threatened the Mac's very existence. The group even parodied Jobs' taste in clothes, draping the executive's trademark black turtleneck and jeans over a chair on the stage to stand in the CEO's place.

Tuning up
Apple may soon be feeling the heat from eBay, as the online auctioneer announced that it is allowing a select group of its customers to begin selling digital music files over its Web site as part of a test to see if the company can successfully move into the download services market.

eBay said it places an emphasis on its desire to foster sales of digital content while remaining within the bounds of copyright regulations. eBay did not specify how many individuals would be allowed to sell music in the test but said it will evaluate the program after six months to determine whether a group of preapproved download vendors are adhering to copyright laws.

While more companies jump into the digital-download market, a ghost from music downloading's early days has returned. A federal court has allowed record labels to continue a lawsuit against Bertelsmann and Hummer Winblad Venture Partners, both onetime backers of the defunct Napster file-swapping network.

The two companies are being sued for copyright infringement by UMG Recordings and Capital Records, which allege that the Napster backers had substantive control of the file-swapping network during its peak.

If you are feeling nostalgic for the old Napster, a group of self-identified hackers has set up shop online to sell what it claims are files containing the confidential software code of Napster's client and server software and an old version of Enterasys Networks' Dragon intrusion detection system. The prices: $10,000 and $16,000, respectively.

Attack of the worms
While the FBI was busy investigating the authenticity of the code, President Bush signed into law a bill that boosts criminal penalties against phishing", or illegally obtaining credit card numbers and other personal information, and many other forms of identity fraud, also called identity theft.

Known as the Identity Theft Penalty Enhancement Act, or ITPEA, the measure sets up punishment guidelines for anyone who possesses someone else's identification-related information with intent to commit a crime.

Although solid numbers are hard to come by, identity fraud has been called the fastest-growing crime in the United States, affecting millions of Americans at a cost of billions of dollars a year. The Federal Trade Commission estimates that 10 million Americans become victims of identity fraud a year, while research company Gartner places the annual number at about 7 million.

Net surfers also have a new mass-mailing worm to worry about--and it's sophisticated. When it suspects that antivirus software is trying to detect it, Atak hides by going to sleep. Although antivirus companies do not expect it to cause much damage, they say it will be a nuisance, because it can generate a large amount of spam.

Also of note
Later this year, Microsoft's Live Communications Server, which offers instant messaging for corporate users, will connect with AOL Instant Messenger, Yahoo Messenger and its own MSN Messenger...Authorities in Osaka, Japan, have decided to begin using radio frequency identity chips to track children in one primary school...A long-awaited report evaluating the impact of VeriSign's controversial Site Finder service concludes that it had undesirable side effects, violated commonly accepted Internet conduct codes and should remain offline.