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The week in review: Big Blue flexes muscle

Days after marking the 20th anniversary of the IBM PC, Big Blue proves it's still a force to be reckoned with--claiming the top server sales spot and the world's fastest supercomputer.

After celebrating a milestone in its long hardware history, IBM showed that it is still a force to be reckoned with, boasting strong server sales and new products in the pipeline.

Just days after marking the 20th anniversary of the IBM PC, a new report showed IBM significantly increased its share of the server market in the United States to become the top seller in the second quarter. According to the preliminary report, IBM took the top spot based on market share and revenue.

IBM's share increased to 28.6 percent from 19.1 percent a year ago, while second-quarter revenue climbed 8.4 percent from the second quarter of 2000. Meanwhile, the overall U.S. server market shrunk by 27.4 percent in terms of revenues and 8.7 percent in units shipped.

Big Blue also introduced a new family of servers based on its Summit chipset technology and on high-end Intel microprocessors. The company hopes the new xSeries servers will better its position in a battle with Dell Computer, Compaq Computer and Unisys to lead the Intel-based server market. Just as important, it will give IBM more ammunition in its effort to recover ground against server archrival Sun Microsystems.

On the supercomputer front, IBM and the U.S. federal government unveiled a system that ranks as the world's most powerful. The pair declared ASCI White open for business during a dedication ceremony at the Lawrence Livermore National Laboratory in Livermore, Calif. ASCI White, which packs 8,192 IBM Power3 processors and 160 terabytes of disc storage, will be used for nuclear weapons testing, including warhead safety and simulation of nuclear explosions.

And in personal computing, IBM quietly discontinued using Advanced Micro Devices' chips in PCs sold in North America. Big Blue continues to use AMD chips in computers sold in Asia, but an IBM spokesman confirmed that the company has dropped AMD's Athlon and Duron chips from its desktop lineup for the United States and Canada.

XP expected early
Signaling that it plans to release final code earlier than expected, Microsoft issued a nearly finished version of Windows XP to testers. The software giant had told PC makers to expect final code, which would be used to install Windows XP on new computers, around Aug. 22.

The software giant may have relieved some political pressure by reaching a settlement with Eastman Kodak. Kodak had accused Microsoft of unfairly designing Windows XP in the way it handles digital photos. The photo-products maker said Windows XP limited consumer choice in the default application for manipulating photos and steered consumers to Microsoft's preferred online photo processors.

However, there may be more in store for Microsoft. A group of privacy organizations on Wednesday renewed their attacks on the Passport authentification service and Windows XP, asking the Federal Trade Commission to mandate changes in the new operating system. The 14 groups amended an existing complaint, focusing on changes the coalition said Microsoft made to Passport in response to its original complaint and also on privacy concerns regarding Kids Passport. Based on a review conducted by the Center for Media Education, the groups concluded that Kids Passport does not comply with the Children's Online Privacy Protection Act.

A federal appeals court early Friday delivered Microsoft a blow in its antitrust battle with the government, denying a request that could have indefinitely delayed further proceedings in the case. The order, issued by the U.S. Court of Appeals for the District of Columbia Circuit, means that the government can resume proceedings before a federal district judge while the Supreme Court decides whether to take Microsoft's request for appeal. The mandate returning the case to the trial court will be issued seven days from Friday, the order states.

New to the Net
AOL Time Warner announced an agreement with IBM's Lotus division to test ways for their instant messaging services to communicate with each other. The test signals the first time that America Online has attempted to open its IM network to communicate with an outside company. The trial will be conducted between AIM and Lotus' Sametime. The companies will test how the services communicate between their servers through SIMPLE (Session Initiation Protocol for Instant Messaging and Presence Leveraging). SIMPLE is one of three IM protocol standards being considered by the Internet Engineering Task Force, a standards body.

Virus and worm creators are now setting their sights on IM services. Infected files, for example, have been burrowing their way slowly through Microsoft's MSN Messenger network for the past few months. Discovered by virus hunters in late June, the so-called Choke worm marked the second attack aimed at MSN Messenger in as many months. In May, the service was struck by the W32/Hello worm.

Web surfers could mistake their PCs for televisions as sites peddle conventional advertising--even made-for-TV commercials. CBS MarketWatch has started airing a commercial that re-purposes American Airlines' upcoming TV ad campaign. To see the ad, consumers can click a large square beside articles on the MarketWatch site, which publishes financial news and information. Other major Web publishers also are pushing formats that resemble offline ads.

Noteworthy passings
E-tail pioneer Egghead.com filed for Chapter 11 bankruptcy protection and is selling its assets to retail chain Fry's Electronics. Egghead also cut about 180 employees. Egghead said Fry's plans to continue operating Egghead's Web site.

The Industry Standard has ceased publication and is seeking a buyer. Editor in Chief Jonathan Weber said that a decision on whether to file for Chapter 11 bankruptcy protection had not yet been made. According to an a e-mail employees received from investors and the company's board of directors, the company's demise was due in part to efforts to prepare it for its initial public offering. The Web site will continue with original content. Of the 180 workers left, all but 20 will be laid off, Weber said.

An auction to sell off the assets of Metricom, including its Ricochet high-speed wireless Internet network, was completed in less than three hours, but details of the sale won't be available until next week. At that time the company is expected to reveal who, if anybody, purchased the radio spectrum used to power the network. The spectrum was expected to fetch at least $50 million.

Also of note
Walmart.com launched a college bookstore, entering a challenging industry that has seen many others flunk out...Retailers say they are busy implementing "multichannel Web marketing," which experts say could revolutionize the way people shop both online and in retail stores...Apple Computer said it is trying to fix a problem that prevents its QuickTime media player from working with the most recent versions of Microsoft's browser...A worker fired over injuries that prevented her from typing cannot sue her former employer under federal anti-discrimination law, an appeals court has ruled...Microsoft denied a report of a flaw in the motherboard for the Xbox game console...Palm is acquiring the technology assets and intellectual property of software maker Be for $11 million in stock, in a move aimed at strengthening its operating system to compete against Microsoft.

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