Week in review: Oracle's on offense

Oracle attorneys made a forceful effort to blast holes in the government's case to block the database giant's $7.7 billion bid to buy rival PeopleSoft, in the opening arguments of the trial, which started Monday. An Oracle attorney dropped a bombshell, claiming that the company's hostile bid for PeopleSoft triggered Microsoft to enter merger talks last year with German software maker SAP, an Oracle rival.

The revelation, which Microsoft had announced earlier in the day, could prove critical to the case. The Justice Department has disregarded Microsoft as a significant factor in the market for business applications, in which PeopleSoft and Oracle compete.

SAP said it was approached by Microsoft late last year to discuss the idea of a merger. "A few months ago, Microsoft ended these discussions due to the complexity of the potential transaction and subsequent integration. There are no intentions to resume these talks," according to a statement issued by Microsoft.

Oracle also trotted out numerous PeopleSoft documents discussing competitive pressure from Lawson Software and a variety of other makers of business software. The documents were introduced during cross examination of PeopleSoft Chief Technology Officer Rick Bergquist, in an apparent effort to show that the two companies compete with a broader array of software rivals than the government claims.

A PeopleSoft attorney objected to the presentation of several of the documents, arguing that they revealed sensitive information, but was overruled by presiding U.S. District Judge Vaughn Walker. The documents included a July 8, 2003, competitive sales analysis from PeopleSoft indicating that the company competed against Lawson almost as many times as it did against SAP for customer accounts it considered large and complex.

However, an executive from Verizon Communications testified that the loss of customer choice resulting from an Oracle-PeopleSoft combination would result in "a much less vibrant market."

An IBM executive testifying on behalf of the Justice Department reiterated that Oracle, SAP and PeopleSoft are often the only choices for many large, sophisticated companies in the market for applications software, adding that Lawson and Microsoft are not in the same league.

Even though the outcome is undecided, PeopleSoft investors could lose money on the deal. Stockholders who tendered their stock to Oracle when its hostile bid stood at $26 a share will find that the only price that counts is the latest offer of $21. The offer's expiration date has been pushed to July 16, but Oracle has the power to extend it further. Investors who don't withdraw their acceptance of the offer may find themselves out of luck, should Oracle choose to buy their shares.

Fighting flaws
An adware purveyor has apparently used two previously unknown security flaws in Microsoft's Internet Explorer browser to install a toolbar on victims' computers that triggers pop-up ads. The two issues allow for the creation of a Web site that, when visited by victims, can upload and install programs to the victim's computer, according to two analyses of the security holes.

The possibility that a group or company has apparently used the vulnerabilities as a way to sneak unwanted advertising software, or adware, onto a user's computer could be grounds for criminal charges, said Stephen Toulouse, security program manager for Microsoft.

Meanwhile, Oracle warned customers using the most recent version of its e-commerce program of a flaw that could let an attacker take control of the database that powers the programs. One security information provider rated the vulnerability as "highly critical."

"Risk of exposure is high, as any user with browser access and specialized knowledge can exploit" the flaw, Oracle said in the advisory. The company would not provide details. Oracle has released a patch for the problem and urged customers to update their systems.

Normally, immune from security vulnerabilities, Apple Computer released a security patch that fixes what the company called the first "critical" Mac OS X flaw. A combination of holes disclosed by security researchers last month could have allowed an attacker to take over a vulnerable Macintosh, though no such exploits have been reported. Apple issued a partial fix last month, but security researchers had said that the Mac remained open to attack.

On and offline
It's been a long and winding road, but talks have begun that could finally make the songs of The Beatles available for sale online. Representatives of The Beatles have spoken with numerous online music providers, ranging from small companies to Microsoft, which is planning to open an Internet music store this year. The Beatles' side is asking for a considerable sum in return for providing exclusive online distribution rights, perhaps for as long as a year or more.

One idea being considered is a Beatles-branded store that would be the only place online where the group's music, videos and other multimedia products would be sold. The store could be operated by one of the existing online music services.

Maybe The Beatles will be available for download via TiVo recorders. Word came this week that the company is developing new services to allow movies and music to be downloaded to its digital video recorders. No timetable has been set for those features.

TiVo's relationship with its main partner, DirecTV, has gone through some turmoil during the past couple of days, as DirecTV sold its stake in TiVo, and DirecTV's vice chairman left TiVo's board. Analysts have cited concerns over the moves, because most of TiVo's subscriptions come from DirecTV customers.

TiVo has been trying to woo cable companies that are beginning to come around to the idea of offering DVR (digital video recording) services, but the cable companies have been balking over pricing. The new content download service TiVo is developing may throw a wrench in TiVo's negotiations with service providers at a time when the DVR company's relationship with key partner DirecTV is seen as somewhat vulnerable.

Apple harvest
Apple Computer unveiled a $129 device that acts as both a portable wireless base station and a way to stream music throughout the home. The AirPort Express, due in July, features both analog and digital music outputs for connecting to speakers or sound systems.

The device also plugs directly into a wall outlet, with no need for additional cables or power adapters, which Apple said should make it appealing to travelers as well as to those who want to stream music in their homes. Like Apple's existing AirPort Extreme products, the Express uses the 802.11g wireless standard. Music is streamed from an iTunes-equipped PC or Mac that uses a technology Apple is calling AirTunes.

Apple also updated its Power Mac G5 desktop line with three dual-processor models, including its first low-end desktop based on the dual model. Although it had been offering dual processors in its midrange and high-end G5 desktops, Apple is offering that feature on all of its Power Mac G5 desktops. The company also stepped up its top Power Mac to dual 2.5GHz processors.

Also of note
Morale among IT workers has dipped to an all-time low, even though demand for certain skills is rising...In a blow to long-distance phone companies, the Bush administration won't ask the Supreme Court to reinstate rules forcing local phone carriers to share parts of their networks with rivals...Google is considering renewing support for the popular RSS Web publishing format in some of its services, marking the latest twist in a burgeoning standards war over technology that could change how people read the news.