Microsoft cuts Xbox 360 model price

Microsoft said on Sunday it is cutting the price of its 20-gigabyte Xbox 360 video game consoles and rolling out a model with three times the memory space to take its place.

The US technology giant's announcement comes two days before the official start of a major Electronic Entertainment Expo at which videogame console makers will be striving to portray their hardware as superior.

Microsoft said it will trim 50 dollars (US) from Xbox 360 models with 20 gigabytes in the United States or Canada, cutting prices to 299 dollars.

An upgraded Xbox 360 Pro model with 60 gigabytes of memory will hit markets in those same two countries in August with 349-dollar price tags, according to the Redmond, Washington-based firm.

The reasoning for the boost in memory capacity is people's interest in storing digital photos, video, music and other data on gaming consoles which are essentially entertainment computers connected to television sets.

"We know consumers need more and more space to store the amazing digital content Xbox 360 offers, and we're giving it to them at no extra charge,' said Albert Penello, Xbox director of product management Albert Penello.

Sony maintains it has no intention of cutting prices on PlayStation 3 models, which sell in the United States for 400 0r 500 dollars depending on memory capacity.

Nintendo will be defending Wii's crown as the world's most popular videogame console, which is priced at 250 dollars and is snatched from shelves as soon as it arrives in stores.

The big three console makers along with videogame software makers large and small will be showing off their newest creations at the Expo in Los Angeles during the coming wee

Microsoft Security Fix Clobbers 2 Million Password Stealers

Microsoft's June security updates were bad news for online criminals who make their living stealing password information from online gamers.

The company's Malicious Software Removal Tool-- a program that detects and removes viruses and other bad programs from Windows machines-- removed game password-stealing software from more than 2 million PCs in the first week after it was updated to detect these programs on June 10.

One password stealer, called Taterf, was detected on 700,000 computers in the first day after the update. That's twice as many infections as were spotted during the entire month after Microsoft began detecting the notorious Storm Worm malware last September.

"These are ridiculous numbers of infections my friends, absolutely mind-boggling," wrote Matt McCormack, a spokesman with Microsoft's Malware Response Center, in a Friday blog posting.

Between June 10 and June 17, Microsoft removed Taterf from about 1.3 million machines, he said.

Microsoft's September detections seriously hobbled the Storm Worm botnet, once considered a top Internet threat.

Password stealers such as Taterf are among the most common types of malicious software on the Internet. That's because there's big money to be made selling the virtual currencies used in online games for real-world cash.

Once a criminal learns a gamer's username and password, he can log into the game and sell the victim's virtual possessions for virtual gold coins. Those coins are then handed to another character in the game who sells the gold for real-world dollars at an online exchange such as IGE, said Greg Hoglund, CEO of HBGary and a co-author of the book "Exploiting Online Games."

"There's no way to audit that money transfer, so effectively they're doing money laundering," he said. "There's almost zero risk for the attackers."

The password-stealing programs are often installed via Web-based attack code that exploits flaws in multimedia programs such as Adobe's Flash Player or Apple's QuickTime Player, Hoglund said.

The attacks are often technically sophisticated, exploiting previously undisclosed bugs in Windows software, said Roger Thompson, chief research officer with AVG Technologies. "The 'World of Warcraft' password stealers have provided most of the innovation over the last twelve months," he said via instant message.

Microsoft's McCormack provided some data on where most of the password stealer detections occurred. Not surprisingly, China was the top country, with 529,003 detections.

Security experts say Chinese games are frequently the target of these attacks. Rounding out the top five countries for detections were Taiwan with 279,428, Spain with 235,381, the U.S. with 213,374 and Korea with 184,306.

About 330 million copies of the Malicious Software Removal Tool update were downloaded during this June period.

Gamers can make easy targets for criminals because some of them disable antivirus software to boost gaming performance, while others download free "cracked" versions of games, which can contain malware, McCormack said.

"So how does one avoid being infected?" he asked. "Running an up-to-date anti-virus solution is a good start. Running an up-to-date, patched browser is another necessity," he said. "Enabling Automatic Updates helps a whole bunch, too."

Microsoft Security Fix Clobbers 2 Million Password Stealers

Microsoft's June security updates were bad news for online criminals who make their living stealing password information from online gamers.

The company's Malicious Software Removal Tool-- a program that detects and removes viruses and other bad programs from Windows machines-- removed game password-stealing software from more than 2 million PCs in the first week after it was updated to detect these programs on June 10.

One password stealer, called Taterf, was detected on 700,000 computers in the first day after the update. That's twice as many infections as were spotted during the entire month after Microsoft began detecting the notorious Storm Worm malware last September.

"These are ridiculous numbers of infections my friends, absolutely mind-boggling," wrote Matt McCormack, a spokesman with Microsoft's Malware Response Center, in a Friday blog posting.

Between June 10 and June 17, Microsoft removed Taterf from about 1.3 million machines, he said.

Microsoft's September detections seriously hobbled the Storm Worm botnet, once considered a top Internet threat.

Password stealers such as Taterf are among the most common types of malicious software on the Internet. That's because there's big money to be made selling the virtual currencies used in online games for real-world cash.

Once a criminal learns a gamer's username and password, he can log into the game and sell the victim's virtual possessions for virtual gold coins. Those coins are then handed to another character in the game who sells the gold for real-world dollars at an online exchange such as IGE, said Greg Hoglund, CEO of HBGary and a co-author of the book "Exploiting Online Games."

"There's no way to audit that money transfer, so effectively they're doing money laundering," he said. "There's almost zero risk for the attackers."

The password-stealing programs are often installed via Web-based attack code that exploits flaws in multimedia programs such as Adobe's Flash Player or Apple's QuickTime Player, Hoglund said.

The attacks are often technically sophisticated, exploiting previously undisclosed bugs in Windows software, said Roger Thompson, chief research officer with AVG Technologies. "The 'World of Warcraft' password stealers have provided most of the innovation over the last twelve months," he said via instant message.

Microsoft's McCormack provided some data on where most of the password stealer detections occurred. Not surprisingly, China was the top country, with 529,003 detections.

Security experts say Chinese games are frequently the target of these attacks. Rounding out the top five countries for detections were Taiwan with 279,428, Spain with 235,381, the U.S. with 213,374 and Korea with 184,306.

About 330 million copies of the Malicious Software Removal Tool update were downloaded during this June period.

Gamers can make easy targets for criminals because some of them disable antivirus software to boost gaming performance, while others download free "cracked" versions of games, which can contain malware, McCormack said.

"So how does one avoid being infected?" he asked. "Running an up-to-date anti-virus solution is a good start. Running an up-to-date, patched browser is another necessity," he said. "Enabling Automatic Updates helps a whole bunch, too."

MS Office for Mac Sales Soar, VBA Support To Return

Apple is selling more Macintosh computers than ever before -- and that's having unexpected benefits for Microsoft. Sales of Microsoft Office 2008 for Mac are triple the volume for the previous 2004 version of the productivity software and are the highest in the product's history, Microsoft announced Tuesday."The response has been amazing -- since we launched in January, the velocity of sales for Office 2008 is nearly three times what we saw after the launch of Office 2004," said Craig Eisler, general manager of the Mac business unit at Microsoft. The 2008 version launched at the MacWorld show this year.

"As we set our course for future versions, we are working closely with customers and will also expand our staff to ensure that Office for Mac remains the most powerful and compatible productivity suite for Mac customers," Eisler said.

SP1 Released

Microsoft also released Service Pack 1 for the Mac Office suite, featuring "suitewide updates for increased stability, increased security and overall performance improvements."

SP1 addresses compatibility issues between the Mac and Windows versions of Excel; improves Entourage support for Exchange Server, including the ability to remove attachments from Exchange messages and synchronizing to the server; and provides minor improvements for Word and PowerPoint.

Bloggers said the most notable addition in SP1 is support for Excel chart-formatting options that were available in previous versions of Office.

VBA Support To Return

Microsoft also said it will bring back Visual Basic for Applications support to the Mac in the next version of Office for Mac. A press release said Microsoft "recognizes that VBA language support is important to a select group of customers who rely on sharing macros across platforms." The prior version supported AppleScript and the Automator scripting tool.

The removal of VB was not due to any of the "conspiracy theories" floated around, such as that Microsoft was trying to "slowly kill the Mac" or drive users to Windows versions of the software, Erik Schwiebert, a software design lead in Microsoft's Mac business unit, wrote on his blog. The decision was driven by the technical difficulties of including VB for the latest version of Apple's operating system, he wrote.

While technical challenges remain, "for a while now I and several others have been working with a group of people who know a heck of a lot about the internals of VB," Schwiebert wrote, "and once we determined that we could achieve the revival of VB in the new schedule for the next version of Mac Office, we locked it into place on the feature list."

The high volume of sales for the current version indicates that a lack of VBA support isn't a big deal for most Mac users, Schwiebert said. As to when the next version will be released, the developer assured readers it will be less that four years.

Asustek to Share Eee PC at Taiwan Open Source Summit

Asustek Computer plans to share its experience with open-source software in its popular Eee PC low-cost laptop at the OpenTechSummit Taiwan 2008, which runs from April 25 to 29, the company said.

The Taiwanese PC vendor is the largest corporate sponsor of the event and is currently selling the most popular laptop that carries an open source OS, the Eee PC.

The company officially started selling the Eee PC last October in Taiwan, offering four different configurations from NT$7,000 (US$231) for the 2G-byte "Surf." They all run a Linux OS from Xandros of New York.

So far, Asustek said it has sold a million of the low-cost laptops, but it declined to break down the number of Linux versions sold versus the number of Eee PCs sold with Microsoft Windows XP.

The Linux OS has allowed the company to keep prices down on the laptops in two ways. First, open-source software comes at little or no cost, and second because the streamlined OS requires a bare minimum of hardware to run. It's been the same story as for the One Laptop Per Child Foundation (OLPC), which also uses a Linux OS in its XO laptop.

The foundation has been working with Microsoft to develop a streamlined version of XP that can be used in the XO with lower hardware requirements than full XP.

Microsoft earlier this month published new guidelines for designing ultra low-cost laptops for Windows XP.

Asustek launched its first Eee PC with Windows XP earlier this year, and said the OS had a big impact on sales. The company has forecast that two-thirds of the 5 million Eee PCs it expects to sell this year will run Windows XP, while the remainder will run a Linux OS.

Sales of the Eee PC have been strongest so far in Europe, where around 40 percent of all of the low-cost laptops have been shipped. The company expects that figure to rise to 50 percent later this year.

Yahoo Wants Appraisal On Current Offer From Microsoft

Yahoo is not opposed to a deal with Microsoft but Microsoft should pay more than $31 a share if it wants to buy the company, Yahoo plans to say in a letter to Microsoft, a person familiar with the matter said on Sunday.
n the letter to be sent on Monday, Yahoo is also expected to reject Microsoft's suggestion that its business is deteriorating, the person said.

Microsoft Chief Executive Steve Ballmer in a letter to Yahoo's board on Saturday threatened to lower his company's bid and mount a proxy campaign if the Internet company does not agree to a deal in the next three weeks.

Video game firm THQ sees buying opportunities

THQ Inc (THQI.O) is looking at buying other video game developers, but the publisher of games like "Cars" and "Saints Row" can grow without making acquisitions, Chief Executive Brian Farrell said on Thursday.

"We are seeing some opportunities in the marketplace given the two transactions going on," Farrell told Reuters in an interview at a company event to preview upcoming games.

He was referring to the pending merger between Activision Inc (ATVI.O) and the games unit of Vivendi (VIV.PA), and Electronic Arts Inc's (ERTS.O) $2 billion offer for Take-Two Interactive Software Inc (TTWO.O).

"It's going to create some opportunities because we are actively looking at every developer, every license out there and with our size now we can be more aggressive than larger, slower firms," Farrell said.

THQ has already moved this year to bolster its product lineup. Earlier this week, it said had bought Elephant Entertainment, a maker of casual and online games, for an undisclosed amount.

In January, THQ bought Big Huge Games, a studio focused on strategy games such as "Rise of Nations." Farrell said that team is focused on making a new role-playing game to fill a gap in THQ's product lineup.

Asked if THQ was looking at buying smaller development studios or publicly listed firms, Farrell said: "M&A is not a required or necessary thing in order to grow."

Analysts have said the recent merger activity in the video game industry is partly a result of development budgets for new games soaring into the tens of millions of dollars, putting pressure on smaller firms with limited financial resources.

Farrell said the video game industry was still growing fast despite concerns that a broad U.S. economic slowdown could hit consumer spending.

"We haven't seen any signs of slowdown," Farrell said. He said strong year-end holiday sales of new gaming hardware like Nintendo Co Ltd's (7974.OS) Wii console, Microsoft Corp's (MSFT.O) Xbox 360 and Sony Corp's (6758.T) PlayStation 3.

This year, THQ is banking on new games like criminal action title "Saints Row 2" and "WallE" based on the upcoming Disney/Pixar movie to drive growth after a disappointing 2007 forced it to kill off lackluster franchises like "Stuntman."

He declined to comment on specific financial forecasts, saying THQ would give an updated outlook when it reported results for its fiscal fourth quarter ended in March. The company previously said it expected a net loss of 13 cents per share on sales of $200 million.

THQ shares have risen 23 percent over the past month but its stock is still down 35 percent from a year ago.

Battling To Survive, Yahoo acquires Maven Networks

Undeterred by the threat of a hostile takeover, slumping Internet pioneer Yahoo Inc. completed an acquisition of its own Tuesday by buying online video service Maven Networks Inc. for $160 million.
The deal marks Yahoo's latest attempt to expand its online advertising network and snap out of a two-year financial funk that has culminated in unsolicited takeover offer from Microsoft Corp.

Yahoo's board rejected the bid Monday, prompting Microsoft to raise the possibility of taking its offer — originally valued at $44.6 billion or $31 per share — directly to shareholders.

Sunnyvale-based Yahoo thinks it's worth more, an opinion echoed by its second largest shareholder in a letter released Tuesday.

"We think (Microsoft) will have to enhance its offer if it wants to complete a deal," wrote Bill Miller, a respected fund manager for Legg Mason Inc., which owns more than 80 million Yahoo shares.

Like many other industry analysts, Miller predicted Yahoo ultimately will end up in Microsoft's clutches.

"We think it will be hard for (Yahoo) to come up with alternatives that deliver more value than (Microsoft) will ultimately be willing to pay," he wrote.

Miller also wrote that he has already met with Steve Ballmer, Microsoft's chief executive, and spoken to Jerry Yang, Yahoo's CEO and co-founder, to share his views.

Redmond, Wash.-based Microsoft so far has indicated it's not budging from its original offer, calling the proposal "full and fair." Analysts believe the tense mating dance will last at least a few more weeks.

In the meantime, Yahoo continues to work on a long-promised turnaround.

The talks to buy Cambridge, Mass.-based Maven began before Microsoft announced its bid Feb. 1, said Tim Cadogan, Yahoo's senior vice president of marketing products.

Maven helps television and movie studios find Web sites to show their videos and manage the accompanying advertisements. The six-year-old startup works with a wide range of media outlets, including CBS Sports, Gannett Co., News Corp., Hearst Corp. and Sony Pictures.

Online video advertising is steadily climbing as more people watch news and entertainment online. The amount spent on Internet video ads annually is expected to triple during the next three years to $4.3 billion in 2011, estimated research firm eMarketer Inc.

"We think video is going to become the third leg of the advertising stool," said Cadogan. Ads tied to search requests is currently the Internet's biggest moneymaker, followed by so-called display ads featuring photos, illustrations and other images.

Yahoo has been discussing a search advertising partnership with the market leader, Google Inc., as a way to boost its profits and thwart Microsoft's bid. But a deal between Google and Yahoo would face significant antitrust hurdles because it would meld the two largest search advertising networks, causing more analysts to conclude an alliance is unlikely.

As in search, Yahoo is trying to catch up to rival Google in Internet video.

As of December, Yahoo held a 3.4 percent share of the U.S. online video market, lagging far behind Google, whose ownership of industry leader YouTube.com gave it nearly one-third of the market, according to comScore Inc.

Yahoo plans to retain Maven's roughly 70 employees even as it completes plans to lay off 1,000 workers in other divisions as part of a plan announced two days before Microsoft's bid.

Employees affected by the job cuts reportedly began receiving layoff notices Tuesday. Yahoo spokeswoman Diana Wong declined to comment.

Based on a previous mid-February timeline established by management, Yahoo is expected to release additional details about the layoffs late this week or early next week.

Yahoo shares fell 1 percent, or 30 cents, to $29.57 Tuesday while Microsoft shares rose 13 cents to close at $28.34.

T-Mobile Replaces Google By Yahoo in Europe

Yahoo Inc ousted archrival Google Inc as T-Mobile's top Internet partner in Europe as it unveiled a service to squeeze social Web connections on to cell phone screens, a day after rebuffing a $41.6 billion takeover bid from Microsoft Corp.

The deal, announced at the Mobile World Congress wireless fair on Tuesday, puts Yahoo on a strong footing with carriers in Europe, building on deals it has closed with operators in the Americas and Asia, as it seeks to make up in mobile the ground it has lost to Google in computer-based Web search.

Yahoo now has access to 600 million potential users through its carrier partners worldwide, and Marco Boerries -- the executive leading Yahoo's mobile push -- told Reuters he aimed to reach 1 billion by the end of 2009.

"Europe is now wide open," he said in an interview at the trade fair. "For the rest of Europe, let the games begin."

Yahoo's new service, called oneConnect, creates a single contacts list for users that draws on all their Web connections -- regardless of whether those connections were made through instant messaging services, email or online social networks.

Users can then see -- to the extent that their contacts allow them to -- their friends' availability, activities and messages, without the bother of trying to navigate between Web sites and inboxes on a mobile phone.

"Today, most people have too many forms of communications," said Boerries, executive vice president of Yahoo's Connected Life division. "To keep in touch with all of them you have to go to all of these different Web sites."

Once the free service becomes established, Yahoo plans to introduce discreet advertising on parts of oneConnect, sharing the revenues with phone operator partners.

RACE FOR HEADLINES

Google and Nokia briefly grabbed the headlines at the Barcelona wireless fair on Tuesday, announcing a deal to integrate Google Search into Nokia's own search engine it preinstalls on dozens of its handset models.

Nokia, which makes 40 percent of cell phones sold in the world, will add Google to the Microsoft and Yahoo search options it already includes.

The race between companies wanting to put their own stamp on consumers' experience of the mobile Internet -- and gather information critical to advertising strategies -- has made rivals of parties once happy to mind their own business.

Microsoft, Google, Yahoo and Nokia have been outdoing each other with mobile Web-related news at the fair this week.

Yahoo's deal on Tuesday with Deutsche Telekom's T-Mobile division trumped the excitement that broke out around Microsoft's announcement late on Monday that it had agreed to buy Danger, a company best known for the software that drives the Sidekick mobile Web browser.

Before the fair, a buzz had built up around anticipated sightings of prototypes of phones based on Google's new Android software platform -- a buzz that quickly subsided as it became apparent that the working models on display bore little resemblance to anything that might appear in shops.

But the struggle for influence over the mobile Web need not have a single or even just a few winners, said the head of Microsoft's mobile communications division, Pieter Knoock, pointing out that the market was growing fast but still tiny.

Just 123 million of the 1.1 billion phones sold last year were so-called smartphones, cell phones with computer-like capabilities like e-mail and Web browsing, and business models are still being developed for mobile advertising.

"There's a lot of opportunity," Knoock said in an interview. "Mobile advertising is a greenfield site, and PC advertising expertise doesn't necessarily help."

"The question is who's going to win in which services."

Microsoft to replace Xbox 360 wheel after reports of heat, smoke

Microsoft will send out replacement parts for its Xbox 360 Wireless Racing Wheel after 50 reports that the video game controllers overheated and released smoke when plugged in, the software maker said today.The $130 steering wheel-shaped controllers mimic the physical sensations of race car driving for games such as "Forza Motorsport 2." About 230,000 have been sold to consumers, according to the company.
The Redmond, Wash.-based company said owners of the controller should stop plugging it in, but said it is safe to use with battery power.This is the second Xbox 360 problem this summer. In July, the company said it expects to spend more than $1 billion to repair hardware problems in the video game console.Microsoft Corp. didn't offer any estimate of the cost of fixing the controller problems.Gamers can register online to receive a "retrofit," which Microsoft would send with instructions "if necessary." The company would not say what replacement parts it plans to send to customers.Microsoft said it has not received reports of fire, injury or property damage as a result of the defect, and it is working with regulatory agencies such as the U.S. Consumer Product Safety Commission.The consumer product safety commission said the smoking controllers were only reported in Japan, but that it is monitoring the situation."Any time that a company is taking individual action to offer their consumers something to be proactive. . . we're big fans of proactive," said Julie Vallese, a spokeswoman for the commission. "If the company is making recommendations to its consumers, by all means consumers should respond to it."In July, Microsoft extended the warranty to cover shipping and repairs for the Xbox 360 console to three years, from two. The company said it fixed production problems that caused consoles to lock up and display three flashing red lights, which gamers have referred to as "the red ring of death."Microsoft shares closed up 8 cents at $28.30, but slipped 3 cents to $28.17 in after-hours trading today.

XBOX 360 out of order?

Imagine your blender breaking down twice. The vacuum cleaner giving up the ghost three times. The espresso maker repeatedly going kaput. Then imagine replacing the item with the same model over and over while keeping your brand loyalty and sanity.
Stephano Nevarez can. Since he first bought his $400 Microsoft Xbox 360 in 2006, it has failed three times. Each time, he sent the game machine back to the company and waited weeks for a repair or a replacement.
“There’s nothing in the house that breaks down as much,” said Stephano, a 15-year-old high school student from Salem, Ore.
Yet he remains a devotee of his 360 console, the more so because he wants to play Halo 3, the latest iteration of a violent space epic due in stores on Sept. 25; it is available only for that game machine.
The game, published by Microsoft, could redeem the company going into the holiday selling season. Untold numbers of 360 owners have watched their machines break down, and then, in many cases, watched the replacement consoles do the exact same thing because of a severe and widespread manufacturing flaw.
But if the Xbox players keep coming back because of Halo 3, and if other gamers buy the console just for the game, then Microsoft could markedly improve its standing in its battle against rivals Sony and Nintendo.
“Halo 3 is Microsoft’s most important game,” said Dan Hsu, editor in chief of Electronic Gaming Monthly, a magazine for enthusiasts. Mr. Hsu, who has seen the game, said it delivers in spades, with one caveat: “Assuming your machine does work, it does what it sets out to do.”
The bar is high. Combined, Halo and Halo 2 have sold around 15 million units, making the series one of the most successful game franchises of all time. The game has spawned novels, comic books and a possible movie.
The $12.5 billion console and video game business is up for grabs this year. On the console side, Nintendo is off to an unexpectedly strong start with its Wii, a game system that makes its players get up off the couch and move their bodies to direct action.
It has well over 28 percent of the American console market, according to NPD Group, a market analysis firm. The Wii is currently selling at a faster pace than the 360, and the company is releasing its big games this fall, Super Mario Galaxy and Super Smash Bros. Brawl, though neither is as popular as Halo.
Sony, with about 14 percent of the market, was hurt when the release date of Grand Theft Auto IV, a game it was counting on to increase console sales, was pushed back from October into the second quarter of next year.
Microsoft, which has 57 percent of the market, has declined to say what is causing some of its Xbox 360 to stop working, or how many machines have been affected. It has set aside $1.1 billion for repairs, a figure that suggests to industry analysts that the problem could affect a third of the 11.6 million 360s already in the hands of consumers.
Microsoft has said that it will fix any faulty Xbox 360 free of charge.
The most likely explanation of where the engineers went wrong is that the 360s are poorly designed to deal with the intense heat generated by game play and that computer chips and other electronics may be popping off the motherboard, said Richard Doherty, an analyst with the Envisioneering Group, a technology assessment and market research firm.
Mr. Doherty said he thinks that Microsoft, in an effort to put is machine into the market a year ahead of the Sony PlayStation 3, had skimped on product testing. He said that the failure rate among 360s is almost unheard-of among consumer electronics, where having even 1 percent or 2 percent of machines fail is considered a major problem.
He has been doing surveys of video game consumers, and results suggest that their patience is waning and that news of the problems is dissuading some potential buyers, he said.
Even die-hard users, he said, are wondering why they cannot take their machine to a store to have it checked out, rather than wait for it to break.
“It’s dissipating a tremendous amount of momentum they built up prior to July,” Mr. Doherty said, referring to when Microsoft first publicly discussed its $1.1 billion repair fund. “This is going to get worse before it gets better.”
But some financial analysts said that the eventual damage to reputation and revenue may not be so profound. Evan Wilson, an equity analyst with Pacific Crest Securities, said he thought that Microsoft’s fix-it-free policy had mollified many avid game players who have been among the first to purchase the 360.
Aaron Greenberg, group product manager for Xbox 360, said the repair campaign is aggressive and that the company, while it is not discussing what has gone wrong, is not taking the failures lightly.

I.B.M. and Sun to Cooperate in Technologies for Servers

Two longtime rivals in computing, I.B.M. and Sun Microsystems , plan to cooperate on server technologies, a move that could put pressure on their competitor Hewlett-Packard.
Sun’s chief executive, Jonathan Schwartz, said the new “comprehensive relationship” brought “a tectonic shift in the market landscape.”
The collaboration announced yesterday will enable Sun’s Solaris operating system to run on International Business Machine servers. Among other things, that means customers that run Sun servers will be able to switch to I.B.M. hardware without having to rewrite any programs.
At first this will be possible on I.B.M.’s x series of servers, which also run Microsoft Windows or the open-source Linux system. But eventually I.B.M. hopes to bring Solaris to mainframes, the big multitasking machines that have been a core profit center for the company for decades.
I.B.M. has been expanding the kinds of programs that can run on mainframes, to encourage customers to consolidate multiple servers onto these bigger machines as a cost-saving move.
These steps threaten to take Sun servers out of action in favor of I.B.M. machines. But Sun can gain from this partnership by collecting Solaris service subscriptions from customers who run that operating system on I.B.M. hardware.
The arrangement is in keeping with Sun’s strategy to rebound from a devastating slump in the first part of the decade by broadening its role as a software vendor. This week, Sun and Google expanded their partnership as Google began distributing Sun’s StarOffice suite of word processing, spreadsheets and other desktop programs.
“Our view is when you make your products available on other people’s platforms, you just meet more customers, which just gives you more opportunities,” Mr. Schwartz said.
Hewlett-Packard is locked in a battle with I.B.M. for leadership in the worldwide server market. I.B.M. and H.P. each had 29 percent share in the most recent assessment by the market tracker IDC, while Sun and Dell Inc. were tied for third, with 11 percent each.