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Week in review: The love of the game

"Halo 2" proves heaven-sent as Microsoft racks up big-time sales and game fans burn the midnight oil.

They risked hypothermia and fought off the effects of sleep deprivation so they could be among the first to achieve their quest in the wee hours of the morning. Was it worth it? Computer game enthusiasts will tell you it was.

Nearly six hours before the release of "Halo 2"--the follow-up to the most successful title ever released for Microsoft's Xbox--more than 200 hard-core gamers stood in line near San Francisco's Union Square to buy a copy of the $49.99 game. The long lines were duplicated in major cities across the United States.


Many in the crowd said they simply didn't want to wait any longer than they had to and were eager to hear the gunshots of this first-person shooter game. That's likely music to the ears of console makers and game publishers, who this holiday season will be looking to capitalize on the rapidly growing game industry, which is challenging the popularity of the movie industry.

Microsoft was the clear early winner, beating even its own heady expectations on the way to selling more than $125 million of the product on its first day in stores. The software giant reported sales of 2.38 million units for the game in the first 24 hours.

Microsoft is deriving another benefit from "Halo 2." The software giant is apparently using the game to help crack down on the use of modified Xbox consoles. Hundreds of Xbox owners have reported in online forums in recent days that they were banned from Xbox Live, Microsoft's online gaming service, after trying to play "Halo 2" online with a modified console.

A Microsoft representative would not specify which additional security measures, if any, have been added to Xbox Live around the "Halo 2" launch. "Microsoft listens carefully to the Xbox Live community and reserves the right to take steps necessary to preserve the integrity of the user experience," the representative said in a statement.

Meanwhile, bits and pieces of Valve Software's "Half-Life 2"--another of the year's most hotly anticipated computer games--have been trickling onto nearly 2 million computers around the world for weeks now. "Half-Life 2" won't be out until next week, but Valve's new broadband content distribution network, called Steam, has been slowly loading players' computers with the game so they'll have it at their fingertips the moment it's released.

The network, which has been used to a lesser extent during the past few years to distribute updates and less-anticipated games, is getting its toughest market test with "Half-Life 2." By selling the games directly over the Net, the company is experimenting with a model that could substantially transform the video game business, which now rivals Hollywood in annual revenue.

But the network has also gotten Valve into hot water with Sierra Entertainment. Sierra is the Vivendi Universal subsidiary that is publishing the "Half-Life 2" game, but Sierra doesn't get the same cut of copies that are distributed online. Even as they jointly promote the new game, the companies are locked in a court battle over the broadband network that could help shape the increasingly profitable game world for years to come.

Taking the Web by Firefox
After 19 months of development, two name changes and more than 8 million downloads of its preview release, the Firefox browser finally turned 1.0. Firefox, a browser based on the Mozilla Foundation's open-source development work, was made available for free download early Tuesday.

Firefox 1.0 isn't significantly different from the preview releases that have been launched in recent months. Mozilla changed its default start page to appeal to new users, but other changes are minor performance improvements and bug fixes.

The release could nonetheless have a big effect if prerelease trends propel the open-source browser into serious contention with Microsoft's Internet Explorer.

And the Mozilla Foundation is already cooking up its next moves to challenge IE's dominance. Now that it has the Firefox 1.0 milestone under its belt, the foundation has identified three areas for future growth and development: cell phone and small-device browsing, desktop search integration, and OEM (original equipment manufacturer) distribution.

"It's been a tremendous year, and we can't see anything but upside the way things are heading right now," said Chris Hofmann, the Mozilla Foundation's director of engineering. "We're just starting the planning for the initiatives that are going to be important in the coming year."

But Microsoft says it doesn't feel threatened by Firefox. Just days after the launch of Firefox 1.0, Microsoft executives defended IE, saying it is no less secure than other browsers and doesn't lack any important features.

At a security roundtable discussion in Sydney, Australia, on Thursday, Ben English, Microsoft's security and management product manager, told attendees that IE undergoes "rigorous code reviews."

"Because IE is ubiquitous, you hear a lot more about it, but I don't think that Internet Explorer is any less secure than any other browser out there," English said.

Making the call
The Federal Communications Commission ruled 3-2 that states are now barred from imposing telecommunications regulations on Internet phone providers, which treat calls no differently than any other application on the Internet. That class of operators includes Vonage Holdings, which asked the FCC for just such a designation in May, plus Verizon Communications, AT&T and dozens of other commercial Internet providers, according to those familiar with the FCC's thinking.

"This landmark order recognizes a revolution has occurred," FCC Chairman Michael Powell said at a meeting in Washington, D.C. The FCC's decision was a general one, was widely anticipated, and answers just one of dozens of questions about how regulators will ultimately treat Internet phone services, typically referred to as voice over Internet Protocol, or VoIP.

The decision came just after a last-minute attempt by two Southern California cities to tax Internet phone calls, a potentially nightmarish problem for Net phone providers that surfaced just as federal utility regulators were expected to make things easier for them. The cities, Burbank and El Monte, have asked dozens of Internet phone service providers to collect a monthly fee of about $1.40 from each subscriber that claims his "place of primary use" is within their cities. The tax would be similar to what traditional phone providers pay.

Another development came in the form of an adapter made by Siemens that extends Internet access to cordless phones and is now loaded with Skype Net phone software, allowing the same phone to make calls using either the Internet or the traditional phone network. The coupling of Internet and traditional telephony in a single phone is hard to find now, but it could become more common in years to come if, as expected, more calls flow over the Internet.

In and out at Intel
In a widely expected move, Intel's board voted to elevate Paul Otellini from president to CEO in May. Otellini, 54, who is also Intel's chief operating officer, will succeed Craig Barrett, 65, Intel's fourth CEO. Barrett had said earlier this year that he will step down as Intel's top executive.

Intel's next CEO,
Paul Otellini

Although Otellini is already deeply involved in Intel's day-to-day operations and its product plans, he'll have his work cut out for him during 2005. The next year or so is expected to be a period of transition for the company's products and management. Next year will be the real test of the strategy, as Intel will begin a move to dual-core processors, which will incorporate two processor cores into one chip. The company will also begin to deliver more feature-laden single-core chips.

One challenge for Intel was created when Microsoft announced it would come out with a special version of Windows next year for clusters, but it won't run on Intel's most powerful server chip, the Itanium 2, at least for now. Instead, the new Windows software--a version of Microsoft's flagship operating system for clusters containing up to 128 processors--will run on 32-bit/64-bit server chips from Advanced Micro Devices and Intel.

The decision not to support Itanium 2 is the latest slap in the face for the chip family that 10 years ago threatened to take over the world. Last month, Hewlett-Packard terminated its line of Itanium 2 workstations. However, the chip is building momentum among heavy-duty computer users. In the most recent list of the top 500 supercomputers, the number of Itanium-based systems grew from 61 to 87.

Also of note
PeopleSoft's board rejected Oracle's "best and final" offer, but as shareholders weigh the $9.2 billion bid, PeopleSoft executives anticipate a proxy battle...That move came on the heels of news that Oracle plans to drop a suit against PeopleSoft if it fails to persuade PeopleSoft shareholders to sell at least half of the company's 367 million outstanding shares by Nov. 19--the date that the current offer expires...Sony unveiled the tiny Vaio U for U.S. customers; it's a machine that's designed to be as much an entertainment hub as it is a full-fledged portable PC...Microsoft will indemnify nearly all its customers against charges that their use of Microsoft software infringed on any intellectual-property claims...Security experts say they've discovered a Trojan horse that records e-banking user details and Web-surfing habits...A new version of MyDoom uses an unpatched flaw in IE to spread.