Week in review: Microsoft gets its game on

Long-awaited Halo 3 makes big debut, Vonage loses patent appeal, and Washington looks at Google-DoubleClick and Net taxes.

Microsoft scored a huge victory with the release of its Halo 3 video game.

The final installment of Microsoft's wildly popular Xbox 360 first-person shooter trilogy attracted casual and hard-core gamers to midnight release parties across the country and set one-day sales records.

On Fifth Avenue in New York, an enormous spotlight beamed up, and full-out lighting and sound equipment--along with plenty of enormous TV screens--dominated the ground scene. But no one, really, was prepared for the spectacle that the Halo 3 event would turn into with about an hour to go.

Best Buy and Microsoft staffers kept their swag giveaways going, insisting that the rambunctious crowds cheer at the top of their lungs in order to get a free T-shirt or bouncy ball thrown at them.

Then the Mongooses arrived. With only 20 minutes left before midnight, three camo-clad bikers atop all-terrain vehicles decorated to look like the Halo 3 pimped rides showed up and incited the crowds to cheering as the riders performed noisy "wheelies" along the block of Fifth Avenue that had, by that time, been completely blocked off from normal traffic.

In the 24 hours that followed, sales of the game set the all-time record for most revenue earned in a single day by any entertainment property. Microsoft said the game netted $170 million in sales in the United States in its first day. If true, that would top previous records set by the motion pictures Spider Man 3 and Harry Potter and the Deathly Hallows.

Consumers weren't the only ones going gaga over the game. The game won high praise from reviewers. Plenty of games attempted to duplicate the Halo formula, with varying degrees of success. But there's still nothing quite like the genuine item.

Luckily for all involved, Halo 3 is a positively amazing package that offers extreme satisfaction across all of its different parts, according to GameSpot's review of the game.

The release of Halo 3 could be a watershed moment for Microsoft and the Xbox 360. With a blockbuster title that will surely captivate millions across the globe, the Xbox 360 will be the most played video game console for the month of October and should catapult the system to the top of the video game world.

Halo 3 will undoubtedly be the biggest game of the year. For many casual gamers, the release of Halo 3 means that it's time to buy an Xbox 360. And it's this cadre of individuals for which Microsoft has been waiting.

Trouble calls on patents
After months of battle, Internet phone service Vonage has lost the bulk of its appeal in the Verizon Communications patent infringement case.

In March, a jury in Virginia found that Vonage had infringed on three patents held by Verizon. And it awarded Verizon $58 million in damages, along with future damages of 5.5 percent on the revenue that Vonage was making during the appeal process.

The judge in the case imposed an injunction on Vonage that would force the company to stop delivering a service using technology that infringes on Verizon's patents. But because Vonage has been appealing the case, the injunction has not yet gone into effect.

On Wednesday, Vonage's appeal essentially came to an end. And as the legal dust settles, the small voice over IP company now faces the possibility of paying hefty monetary damages and a total shutdown of its IP telephony service.

Vonage was dealt another serious legal blow when a federal jury found the company had infringed on six patents held by Sprint Nextel. The jury ordered Vonage to pay Sprint $69.5 million in damages.

Sprint sued Vonage in 2005, claiming that the company was infringing on seven Sprint patents that dealt with connecting Internet phone calls. Vonage denied the claims and argued that Sprint's patents shouldn't have been approved in the first place.

Vonage said in a statement that it will appeal the federal court's verdict. Vonage also said it will develop technological work-arounds that don't infringe on Sprint's patents.

Meanwhile, the Supreme Court said it will consider a patent case between LG Electronics and a group of Taiwanese companies, including Quanta Computer. The case could have far-reaching implications for the computer industry because it would determine whether patent holders can receive royalties from various companies as the product moves its way through the manufacturing chain.

LG claimed that the companies infringed on its patents on microprocessor chips in its computers. But Quanta and the other Taiwanese companies said LG licensed its technology to Intel, which made microprocessor chips that it sold to the companies.

On the Hill
U.S. senators injected themselves into a high-stakes dispute between Google and Microsoft over whether the search giant's proposed acquisition of display advertising company DoubleClick presents antitrust or privacy concerns.

But after the hearing, which lasted almost two hours, it was still unclear where most of the senators stood. The top Democrat and the top Republican on the Senate panel seemed more interested in asking questions than in adopting the common congressional tactic of forcefully arguing on behalf of Google or Microsoft.

The lack of political grandstanding meant that the bulk of the hearing allowed the well-documented and long-standing rivalry between Microsoft and Google to play out yet again--albeit this time in a wood-paneled committee room on Capitol Hill. The companies compete in a wealth of markets, including advertising, search, office applications, instant messaging and mapping.

Much of the back-and-forth focused on two major issues: whether Google's acquisition of DoubleClick would diminish competition in the online-ad space, potentially raising ad rates, and whether the merger would put Google in possession of massive stores of data on Internet users, thereby posing privacy concerns and stifling other ad companies' abilities to target ads as effectively.

In another matter in front of Congress, a soon-to-expire ban on Internet access taxes must be made permanent, two cabinet-level Bush administration officials urged.

In a joint statement, U.S. Department of Commerce Secretary Carlos Gutierrez and Treasury Department Secretary Henry Paulson said the "vast potential economic and social benefits of electronic commerce" depend on immortalizing an almost decade-old moratorium on Internet access taxes and discriminatory e-commerce taxes. However, the Senate Commerce Committee mysteriously killed a vote on an Internet tax bill.

If the moratorium is allowed to expire on November 1, states would be allowed to levy taxes on DSL, cable modem, wireless and even BlackBerry-type data services. They would also be free to charge different tax rates for goods sold on the Internet and goods sold offline. It's unclear how many states would have immediate plans to enact such laws, though, if the ban lapses.

Meanwhile, a congressional committee is once again questioning the U.S. Department of Homeland Security's ability to detect and fend off cyberattacks, as a recent investigation has turned up evidence of Chinese-linked hacking incidents on internal computers last year.

According to the results of a recent U.S. House of Representatives investigation into Homeland Security described in a letter released Monday, "dozens" of computers on networks at the sprawling cabinet department's headquarters were "compromised by hackers" last year.

The intrusions involved planting malicious code that cracked network administrator passwords, masked signs of intrusion and beamed back information to "a Web-hosting service that connects to Chinese Web sites."

Also of note
Bowing to pressure from customers and computer makers, Microsoft plans to keep Windows XP around a little longer...EchoStar Communications said it will buy Sling Media, a privately held company known for its Slingbox device that relays home television programs to laptops and cell phones...Security experts have discovered vulnerabilities in OpenOffice.org that could allow attackers to remotely execute code on computers running Linux, Windows or Mac OS.

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