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Week in review: Browser unease

A standalone version of Microsoft's Internet Explorer may soon become a thing of the past, raising new antitrust concerns.

A standalone version of Microsoft's Internet Explorer may soon become a thing of the past, raising new antitrust concerns.

The software giant is phasing out standalone versions of the popular Web browser, according to statements attributed to IE program manager Brian Countryman in an interview posted on the Microsoft's Web site. "As part of the OS (operating system), IE will continue to evolve, but there will be no future standalone installations. IE6 SP1 is the final standalone installation," Countryman said.

Countryman dismissed suggestions that the decision to drop a standalone browser was related to antitrust issues, hinting that planned new security enhancements for the upcoming version of its Windows operating system, code named Longhorn, was the driving force behind the move.

Since the interview, Microsoft has struggled to reconcile Countryman's remarks with promises that current users of the standalone version of IE will be provided with upgrades. Countryman did not return calls, and a Microsoft representative acknowledged that the company did not, in fact, know what it was going to do.

That ambiguity leaves an array of possible outcomes, including forced upgrades to the next client version of Windows, code-named Longhorn, for users of older versions of the operating systems who want to patch security holes or other bugs in IE. Having pushed its Web browser software with the help of its OS monopoly, Microsoft now has the opportunity to reverse the process, using its dominance in browsers to prod other customers to upgrade to new versions of Windows.

Palm, Handspring shake on it
PDA giant Palm announced that it will buy rival Handspring in an effort to strengthen its grip on the market for handheld devices. Palm also announced that it has finalized plans to spin off its PalmSource software division.

By adding Handspring's Treo hybrid cell phone/PDA to its own line of personal digital assistants, Palm believes it can create a much broader product line and a stronger presence in an increasingly crowded handheld market. It also expects to gain from access to Handspring's technology and to the company's relationships with resellers and cellular service providers. At the same time, Palm anticipates cost savings and will bring back some of its former stars.

But the reunion may not be an easy one. Buyers have grown weary of the handheld concept that Handspring co-founder Jeff Hawkins created a decade ago, when he came up with the original Palm Pilot. And while that design proved to be a hot seller, there has been only a lukewarm response to his more recent creation, the Treo, which acts as cell phone, organizer and wireless e-mail device.

But executives from both companies say they understand the market realities and insist that the merger is one born of business necessity rather than of an urge to return to the past. "This is not a reunion, there is no nostalgia here," Hawkins said. Indeed, Hawkins is returning to a Palm that is barely recognizable from the company he left in 1998 to start Handspring.

A number of industry watchers say that the deal comes as no surprise and that it should have happened sooner. But what seems logical to others was an issue of timing for Handspring, say sources familiar with both companies.

As the SCO crisis turns
The Unix drama continued as SCO Group discovered a 1996 amendment to the contract under which Novell sold many of its Unix assets, and the amendment appears to give SCO at least some of the Unix copyrights that could bolster its potential legal claims against Linux users. The original 1995 asset transfer agreement specifically excluded copyrights from the transfer, but the amendment modifies this exclusion, so that SCO seems to receive at least some Unix copyrights.

Even SCO challenger Novell seems to concur, in part, with SCO's interpretation, though the company said it doesn't have a copy of the amendment in its files and still takes issue with SCO's actions against Linux users. The amendment "that came to Novell's attention today appears to bear a valid Novell signature, and the language, though convoluted, seems to support SCO's claim that ownership of some copyrights for UNIX did transfer to SCO," Novell said in a Thursday statement. "The amendment does not address ownership of patents, however, which clearly remain with Novell."

The revelation came after the 1995 contract came to light, seemingly supporting claims that Novell sold "all rights and ownership of Unix and UnixWare" to the SCO Group's predecessor, the Santa Cruz Operation. However, the asset purchase agreement, filed with the Securities and Exchange Commission, specifically excluded "all copyrights" and "all patents" from the purchase.

But SCO is still feeling the heat of an open-source backlash, shutting down its German Web site after a Linux advocacy group in the country obtained a restraining order. Lawyers representing LinuxTag, the German Linux group, told SCO on May 23 that the company was engaging in unfair competitive practices when it sent to 1,500 large companies letters that said using Linux could pose legal problems because SCO proprietary Unix source code had been copied into Linux.

SCO removed copies of that letter from its Web sites as a result, but later, LinuxTag succeeded in obtaining a temporary restraining order against SCO. Because SCO hadn't been able to see the actual contents of the order, the company shut down the entire site to be on the safe side.

SCO later reopened the site in a modified form. The revised site that's missing only information on its SCOsource effort to extract more revenue from its Unix intellectual property.

Microsoft and the mission
The open-source brouhaha hasn't escaped Microsoft CEO Steve Ballmer's attention. In a memo sent to all employees, he identified Linux and open-source software as key competitive challenges to the company.

"In this environment of lean (information technology) budgets and concerns about Microsoft's attention to customers, noncommercial software such as Linux and OpenOffice is seen as an interesting, 'good enough' or 'free' alternative," Ballmer wrote. "Noncommercial software products in general, and Linux in particular, present a competitive challenge for us and for our entire industry, and they require our concentrated focus and attention." Ballmer wrote.

Ballmer expressed confidence that Microsoft can fend off Linux by promoting sometimes overlooked advantages of the Windows operating system and related software. He cited recent independent studies that conclude that businesses spend less overall to use Windows than free open-source software, due to lower support and maintenance costs.

In his latest thinking about where he wants his company to go, Ballmer has produced a document that is partly a sweeping business analysis and partly a call to arms. In many respects, it was the mark of a vintage sales pro, urging his troops to concentrate their energies on the challenge presented by the open-source software movement. But against the backdrop of what Ballmer described as still uncertain IT demand, this was more than the usual rah-rah pitch.

Although he remains optimistic about Microsoft's growth prospects, Ballmer says a soft economy and lingering hesitation about making new IT investments means the software company is forcing a rethink of business as usual. He spoke with CNET about the memo and the changes facing Microsoft.

Also of note
The U.S. Securities and Exchange Commission is investigating certain transactions at IBM, specifically information relating to how IBM recognized revenue...Verizon Communications said it would turn over to a recording industry trade group the names of four anonymous subscribers accused of illegal file swapping, after an appellate panel denied the company's request for a delay...TiVo announced that it would sell limited information about the viewing habits of its subscribers to advertisers and broadcasters...Larry Ellison's New Internet Computer Co., which sold cheap Web-surfing devices as an alternative to PCs, is closing its doors.