Fiorina on tech growth

In a Q&A published today by the Wall Street Journal, Carly Fiorina, CEO of Hewlett-Packard, was asked whether technology has become "a utility-like industry, with permanently slower growth." It's also a key question for one of H-P's major partners, Microsoft. Here's what Fiorina said:

I think that the tech industry is going to grow at two times growth [in U.S. gross domestic product]. It was a five-times-GDP-growth industry in the late 1990s, and that was unsustainable. Now we've entered a period where tech is fundamental. When something becomes fundamental it involves a more important and complex set of decisions, so growth slows. By the way, two times GDP is an OK growth industry. But it's not what it used to be. ... I think there are changes that are yet to occur. The software industry still has some consolidation to go. [So does] the communication-technology side.

Microsoft's label suits

Here's a copy of the lawsuit (click to download .pdf) filed by Microsoft yesterday against a Vancouver, Wash., company alleged to have traded in counterfeit certificates of authenticity, or COA labels, as they're known. It's one of eight suits filed by Microsoft around the country, attempting to crack down on the practice. (See this morning's story for more details.) I've left a message seeking comment from the owner of the Vancouver company, Software Provisions LLC, but haven't yet heard back. I'll update this post if I do.

Above is an example of an authentic label, although Microsoft senior attorney Bonnie MacNaughton explained yesterday that it's difficult to tell the difference between real labels and fake ones just by looking at them. As noted in our story this morning, Microsoft says it is working on a solution that would make it more difficult to produce counterfeit labels or to remove real ones from packaging or hardware for individual resale. See this Microsoft site for more information on COA labels.

Extremely exclusive Xbox

This video-game site (in German) has photos of one in a series of limited-edition white Xbox consoles given to some of the Electronic Arts and Microsoft insiders who worked on the project to make EA games available on the Xbox Live system. The consoles have Xbox Live logos in their casings, while the controllers have EA logos. But don't look for this at your local game store. The limited-edition consoles aren't available for purchase.

Microsoft DVR impressions

As people around the Seattle region start using the newfangled Microsoft/Comcast digital video recorder boxes some of them are sharing their experiences in mini-reviews on their weblogs. Microsoft's John Montgomery (from the company's developer division) has one of the more comprehensive assessments thus far, with lists of pros and cons. (Some of his readers are also chiming in.)

Not that this is a surprise, but reactions from Microsoft employees have generally been enthusiastic and complimentary. Outside the company, however, the service has some critics, such as this one: "I didn’t think it was possible to make the failed Ultimate TV interface any uglier, but that’s what they have done ..."

Microsoft's Beijing deal

The Financial Times reports in this story on the Beijing city government's decision to cancel a controversial software purchase from Microsoft, explaining why it matters and putting the development in context:

Beijing's decision to scrap the high-profile order is a potentially significant setback for Microsoft in China, since it is likely to make other local authorities more cautious about supporting a company already viewed with suspicion by many central government officials.

Government procurement is a particularly important part of the multi-billion dollar Chinese market, in part because most software in private use is pirated.

Beijing's announcement earlier this month that it would buy Microsoft's Windows and Office software had fuelled fierce debate in China's sofware industry and media about the degree to which government procurement should favour domestic suppliers.

Bill G.'s 'anti-spam dept.'

Catching up on my reading today, I noticed some odd details in the press coverage of Steve Ballmer's recent comments about the huge volume of spam received by Bill Gates.

For example, this story by the Associated Press, citing Ballmer, reported that there is "practically an entire department at the company" dedicated to ensuring that nothing unwanted gets into Gates' inbox. The story added later, "Ballmer said Microsoft has special technology that just filters spam intended for Gates." And an alternate version of the story noted that "several Microsoft employees are dedicated to ensuring that nothing unwanted gets into [Gates'] inbox."

Other reports came to similar conclusions. But thinking about it today, the whole thing struck me as more than a little odd. Would the company really designate "practically an entire department" -- or even several people -- and create special filtering technology, all for the single purpose of filtering one person's e-mail? Sure, that person is Bill Gates, and as we all now know, he receives 4 million messages a day, but still, it seems absurd. As Adam Engst observed, "I'm sure it's effective in the end, but come on, why not install some real spam-filtering technology that doesn't require, as Ballmer puts it, 'a whole department almost' to clean up after it." (Link via Brian Chin)

At the very least, it's the type of resource-allocation issue that would generate some outrage from the Mini-Microsoft blogger, the anonymous advocate of slimming the company down.

If only it were true. I went back and looked at a Microsoft transcript of Ballmer's Singapore speech, which I had asked for when the stories about Ballmer's comments originally came out. Here's the section on which the conclusions were apparently based:

"At Microsoft I use Outlook. There are two people who I think probably are the number one spam recipients in the world: Bill Gates, because he is Bill Gates, and Bill literally receives about 4 million pieces of e-mail per day. (Laughter.) Most of it spam. And so we have special technology which just filters. I mean, literally there's a whole department almost that takes care of that. (Laughter.)"

As we've noted in the past, Ballmer's speaking style sometimes leaves things open to interpretation. This was the same speech where the initial coverage of Ballmer's Linux comments stirred a controversy. (For an additional example of this type of thing from a separate appearance, see the recent "iPod users are thieves" controversy, and clarifying coverage.)

Looking at his spam comments, it wasn't completely clear whether Ballmer really meant to say that the company had created special technology and established almost a full department solely to deal with Gates' e-mail. From the context, I can see where someone might reach that conclusion. But note that he said, "And so we have special technology which just filters." He didn't say, "And so we have special technology which just filters Bill's e-mail."

So I touched base this morning with a Microsoft spokesman, Sean Sundwall, who explained that Ballmer was actually referring to the broader anti-spam group at the company, which includes dozens of people working on existing and future anti-spam technologies in general. It isn't a department set up solely for sifting through Gates' e-mail. Likewise, Sundwall noted that the filtering system used on Gates' inbox is the same SmartScreen technology used by others at the company. Microsoft introduced the initial version of SmartScreen for Outlook, Hotmail and MSN e-mail last year.

'Hold while I transfer you'

In a study released today, by the Bellevue-based Customer Respect Group, Microsoft was praised for the way it treats customers online. But apparently its treatment of customers on the phone still leaves something to be desired, at least based on this person's recent experience.

More CCIA and EU details

The Financial Times reports today on confidential documents detailing Microsoft's settlement with the Computer & Communications Industry Association and the portion the association gave to its leader. The total payment was $19.75 million, the Financial Times says, and the CCIA board approved giving $9.75 million of that sum to Ed Black, the group's president. Black was one of Microsoft's most vocal critics, as we detailed in our Insider column last week.

In related news, the Associated Press reports on the European Commission's response to the EU judge's apparent desire to talk about the impact of the CCIA and Novell settlements on the broader European case: "Just the fact that certain parties have withdrawn from the proceedings doesn't change the facts of the case at all," EU antitrust spokesman Jonathan Todd told the AP. "Hence the proceedings will follow their normal course at the court."

EU judge assesses deals

Associated Press: "The judge deciding whether to suspend the European Union's antitrust order against software giant Microsoft Corp. pending appeal has called an unexpected meeting, two weeks after two longtime backers of the EU's case abruptly pulled out. ... A person familiar with the matter, speaking on condition of anonymity, said the judge apparently wanted to "figure out what the significance is" of the Nov. 8 defection from the EU side of Microsoft rival Novell Inc. and a Washington-based trade group, the Computer and Communications Industry Association."

Additional coverage by Dow Jones Newswires and CBS Marketwatch.

Master Chief at the bank

Xbox Live's Larry Hryb posts a funny picture of a Redmond bank's effort to tap into the "Halo 2" craze.

The international front

Random Microsoft news and notes from overseas:

• Hindustan Times: Steve Ballmer Q&A

• Economic Times (India): What it is like to work with Bill Gates

• Manchester Evening News: Sonia, the new face of Microsoft TV

• El Pais (Spain): Gates urges Spain to be "neutral" on operating systems. (Translated from Spanish version)

• Scottish Daily Record: Microsoft "marked the launch of hotmail.co.uk with an auction of unusual addresses on internet site eBay. One of the most popular is JamesBond@hotmail.co.uk, which attracted bids up to £1500 in the first two days of the 10-day auction."

Raikes on Microsoft, Apple

As part of a speech last week at an event held by Seattle University's Albers School of Business, Microsoft executive Jeff Raikes told the story of leaving Apple for Microsoft in 1981. The beginning of today's Microsoft Notebook summarizes the anecdote, but here's the story as Raikes told it:

"It was fascinating to see what Microsoft was at that point in time. At Apple, the whole world revolved around Apple. That was it. But when I walked down the halls at Microsoft, I saw different computers. Computers from Japan, from Radio Shack, from Wang, from Digital Equipment Corp. Literally dozens and dozens of manufacturers. I really didn't know much about those manufacturers, but the thing that occurred to me when I was interviewing at Microsoft was that I wasn't sure who was going to win in the hardware business, but it sure looked like Microsoft was doing the software for all of them. And so, although Steve Jobs yelled at me for a while and told me what a risky bet it would be to move to Seattle, and how Microsoft was going to go out of business -- that is no joke, that is an exact quote from Mr. Jobs -- I decided to take the plunge."

Ballmer on Linux, part III

eWeek has a follow-up on Steve Ballmer's Linux comments in Singapore last week. As it turns out, the author of the study Ballmer was citing doesn't agree with the conclusions he drew from it.

Inside Google's new office

The pictures below are from Google's open house Thursday night at its new Kirkland development office, where it seemed like at least half the people in attendance were current or past Microsoft employees. (Just welcoming their new neighbor, no doubt.) It was a good event, with lots of interesting people. Although part of the office was closed off to attendees, we did get to see some of the office perks, including ping-pong and foosball tables, movie room and espresso machine.

Click on the photos for larger versions, and see descriptions at the bottom.

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• 1) The Google sign as you step off the elevator.

• 2) The main lobby and reception desk.

• 3) Framed copies of some of the themed logos by Google's Dennis Hwang.

• 4) A special version of the Google logo featuring two Seattle icons -- Mt. Rainier and the Space Needle. Actually, make that three Seattle icons, if you count the clouds. (Attendees were given t-shirts with the same image.)

• 5) Microsoft legend Charles Simonyi, right, speaks with Alan Eustace, Google's vice president of engineering research and systems, left, as Microsoft's Robert Scoble, a.k.a. the Scobleizer, captures Simonyi's words via the recording mechanism on his mobile phone. (See Scoble's recap of the event.)

• 6) Decorating a conference room, enlarged versions of magazine covers featuring Google founders Larry Page and Sergey Brin.

• 7) The in-office espresso machine.

• 8) A special pen that flashes all the colors of the Google rainbow.

Ballmer on Linux, part II

Initial coverage of Microsoft CEO Steve Ballmer's comments during an event in Singapore yesterday left the folks back at headquarters in Redmond trying to clarify things and put them in context.

The situation revolved around Ballmer's remarks citing more than 200 alleged patent violations by Linux. Microsoft says Ballmer was merely citing a study to make a point in response to an audience question, not opening or threatening to open a new front in the company's war against the open-source operating system. Mary Jo Foley of Microsoft Watch explains the situation in this post and offers a transcript of the comments in question. From that transcript, here's the key passage, so you can judge for yourself the point he was trying to make:

"There was a report out this summer by an open source group that highlighted that Linux violates over 228 patents. Some day, for all countries that are entering WTO (World Trade Organization), somebody will come and look for money to pay for the patent rights for that intellectual property. So the licensing costs are less clear than people think today."

The initial Reuters report that caused the initial stir was later updated, making it clear that Ballmer was referring to the study when he made the remark.

Ballmer on Linux and IP

Reuters: "Microsoft Corp. warned Asian governments on Thursday they could face patent lawsuits for using the Linux operating system instead of its Windows software. ... Linux violates more than 228 patents, Microsoft Chief Executive Steve Ballmer said at the company's Asian Government Leaders Forum in Singapore. He did not provide any details on the alleged violations, which the Linux community disputes."

Burst.com case filing

By popular demand, here's the 60-page public version of the Oct. 29 court filing in which Burst.com Inc. accuses Microsoft of creating "institutionalized practices to make sure that incriminating documents disappeared." (PDF, 2.4 mb) The filing, unsealed earlier this week, has been in the news the past few days. (Thanks, John, for the suggestion.)

In the filing, Burst says Microsoft's policy resulted in the destruction of documents critical to its case, one of the few remaining antitrust actions against the Redmond company. Microsoft's e-mail retention practices have been an ongoing issue in the Burst suit, but the latest filing zeroes in on a January 2000 message in which Microsoft Windows chief Jim Allchin instructed employees not to archive their e-mail after 30 days. Here's a portion of the Allchin message, as excerpted in the filing:

"This is not something you get to decide. This is company policy. Do not think this is something that only applies to a few people. Do not think it will be ok if I do this; it hasn't caused any problems so far. Do not archive your mail. Do not be foolish. 30 days."

Microsoft is expected to give its side of the story in a formal response to the Burst filing in the coming weeks. Stacy Drake, a spokeswoman for the company, pointed out that Allchin's initial message was followed by another that excluded documents relating to legal proceedings from the 30-day deletion policy.

"Over the past several years, we have produced literally millions and millions of documents and e-mails for all the various legal cases we’ve been involved in, and we’ve been completely forthcoming in all document requests in this case, as well," she said.

The Burst filing acknowledges Allchin's second message but argues that the broader policy still resulted in the loss of documents needed for its case and others against the company.

See coverage by the Associated Press, the Wall Street Journal, InternetNews.com and IDG News Service. As John points out, PBS commentator Robert Cringely has also tracked this issue closely, most recently in this Oct. 7 column.

Google in Kirkland

Joe Beda, one of the former Microsoft employees in Google's new Kirkland office, writes that he has been getting lots of inquiries from people about potential jobs there. In the adjacent post, he alludes cryptically to what he has been working on and explains why he can't really say anything about it:

"I've been super busy at work for the last few weeks. We've been iterating on our stuff and have come up with some cool plans. Hopefully we can turn those into reality and ship them. I wish I could say more but I really can't. I think that one of the reasons that Google is so reluctant to speak publicly about what they are doing is partly to surprise the competition and partly so that we have the freedom to try stuff without committing to deliver it. There may be some stuff that never sees the light of day, but it is better than announcing it and then it never seeing the light of day."

Google today also issued its formal announcement about the new office:

"Today, Google announced the opening of an engineering center in Kirkland, Wash. Located downtown, our newest office is home to a growing team of technologists. Together with Google engineering centers in Mountain View, Santa Monica, New York City, Zurich, Bangalore, and Tokyo, the Kirkland office will support our technical professionals working on all aspects of engineering from conception and research to implementation and deployment."

Xbox game lawsuit

The L.A. Times today has the story (free reg. required ) of a notable Hollywood figure suing Microsoft over an Xbox game:

"If this were one of his screenplays, Roger Avary might have sent gun-packing, wisecracking thugs to settle his beef with Bill Gates. Instead, the Oscar-winning co-writer of "Pulp Fiction" is sending his lawyer. Avary on Monday sued Microsoft Corp., accusing the world's largest software company of stealing his idea for a genre-bending video game for Microsoft's Xbox console."

Microsoft declined to comment for the L.A. Times story, but the creator of the game that's the target of the suit, the co-founder of Portland-based ResponDesign Inc., told the paper that he came up with the idea on his own, and that Microsoft "had very little creative input as the game was developed."

Viruses: Blame Microsoft?

Last year we explored the question of Microsoft's potential liability for software flaws exploited by viruses and other forms of malware. The company hasn't changed its position on the issue, by any means, but a report today by Silicon.com adds an interesting nuance to its stance:

Speaking at the Microsoft's IT Forum event in Copenhagen, Scott Charney, chief strategist for Microsoft's Trustworthy Computing initiative, said when a virus hits, the finger of blame "should always be pointed at the criminal".

But he did concede there have been occasions when some blame aimed at Microsoft has been justified. Slammer exploited a vulnerability for which Microsoft had issued a patch several months before but had not issued an installer pack for.

"People said 'It should have been easier'. That's fair criticism," Charney added.

Inside MSN Search

The MSN Search team started its own weblog last week, just prior to the launch of the beta version of its new search engine, joining Yahoo and Google in the blogosphere.

The MSN blog has provided for some interesting reading over the past few days. First, there were posts (here and here) addressing the fact that the search "more evil than satan" on MSN Search initially returned Google as the top result. (The posts, which pointed out that Microsoft was also in the top 10 results for that search, sought to debunk rumors that Google's ranking was a purposeful manipulation of the results.)

And today, there's a post pointing out the "unauthorized disclosure" of some information and screen shots of a preliminary version of the company's forthcoming desktop search tool. (Link via John Battelle.)

MSN Search roundup

Users of the new MSN Search preview have been encountering sporadic "temporarily unavailable" messages on the site this morning. Microsoft's official statement on the matter:

"In the process of making our new MSN Search Beta globally available, we experienced technical difficulties that rendered it unavailable for some consumers for periods of time. This is something we are working to fix and apologize for any inconvenience. We expected to find some problems in the beta, and we anticipate there will be additional times when we limit service availability for maintenance purposes. Finding and fixing those problems will help us build a higher quality product."

That problem aside, here are excerpts from coverage and commentary related to the debut of the preview:

• Walter Mossberg: "Today, Microsoft is due to unveil its long-awaited new Web search service, and the product bears all the hallmarks of the feisty, upstart side of the company. I've been testing this new version of the company's MSN search service, and, while it isn't yet as good as Google, the search leader Microsoft is targeting, it shows all the signs of becoming a very serious challenger."

• CNet News.com: "MSN Search Beta has more bells and whistles than previous versions. The company, however, has not yet replaced Yahoo Search technology from powering its [main MSN Search] engine, and it won't do so until sometime in 2005. ... 'This is still a shot in the firing range rather than in the battle,' said [Search Engine Watch] editor Danny Sullivan."

• John Battelle: "Microsoft's angle on the engine is "providing more useful answers." In the presentation I was given, MSFT showed some new research which claimed that the time between a searcher's query and a full answer averages 11 minutes. It's within this window that MSFT hopes to improve search -- getting an answer, quicker."

• Search Engine Watch: "Google also has a seeming lock on searchers' mental shelf space -- at least for now. Rightly or wrongly, many people automatically turn to Google for search, and Microsoft will have to do much more than simply launch this initial highly laudable foray to change the searching behavior of the masses."

• Wall Street Journal: "[T]he hype around Google's offering clearly grated on Mr. Gates. Days after the filing he sat in his office and railed at what he saw as flattering press coverage of the company. 'You're not allowed to criticize and say that Google isn't solving all the world's problems,' Mr. Gates said in an interview. On his desk sat a 'Google' baseball cap, a gift from an assistant."

Nokia's CCIA decision

The International Herald Tribune has more on mobile phone company Nokia's decision to resign from the CCIA in protest of the trade group's settlement with Microsoft. The Wall Street Journal initially reported the news in this story yesterday. (IHT link via Watching Microsoft Like a Hawk.)

Firefox launch roundup

Excerpts from coverage and commentary related to this week's launch of Firefox 1.0, the rising open-source challenger to Microsoft's dominant Internet Explorer browser:

• USA Today: "Firefox proponents acknowledge it will have to do a lot more than swipe a few percentage points of market share to pose a significant threat to Explorer. But the attention it's been getting shows no signs of abating."

• CNet News.com Extra: "Has Firefox reignited the browser war? CNET News.com has incontrovertible evidence that Microsoft is once again on war footing."

• Adam Kalsey: "Why I don't recommend Firefox." (Link via Yosi Taguri)

• Charles Cooper: "Why I dumped Internet Explorer."

• CRN: "It's a huge issue for Microsoft," said one partner who asked not to be named. "The browser security flaws have users fed up."

• Forbes: "Microsoft's Internet Explorer browser has been and remains the de facto standard for Internet users. But for the first time since the late '90s, when Redmond quashed Netscape, Microsoft has some real competition."

• Microsoft Internet Explorer team weblog: "The great thing about Windows is all the software that runs on it. Every day, there’s new software released for Windows. Today, with Firefox’s release, is no different."

Microsoft's new search

There are widespread reports today that Microsoft is planning to unveil a public preview of its new MSN Search tool tomorrow, as noted in an item from the AP in the P-I's technology briefs column this morning. See coverage by the New York Times, the Wall Street Journal, eWeek, Reuters, and the full Associated Press story on which the item in the paper was based.

Ballmer, Gates on 'Halo 2'

Today's launch of "Halo 2" was mentioned by both Bill Gates and CEO Steve Ballmer today during their speeches at Microsoft's annual meeting with shareholders in Bellevue. Ballmer said 36,000 people were online at 1 a.m. playing the multiplayer version of the game on Xbox Live.

Gates, meanwhile, called "Halo 2" "the most popular video game that there's ever been" -- an apparent reference to the record 1.5 million preorders. Given the success that some video-game analysts expect from "Grand Theft Auto: San Andreas" for Sony's PlayStation2, that statement may not turn out to be true in the long run. But the prominent "Halo 2" mentions during a shareholders meeting only underscore the game's significance in Microsoft's Xbox strategy.

$3 dividend approved

Microsoft's shareholders this morning voted in favor of changes in the company's employee-compensation plan that clear the way for the one-time, $3-per-share dividend. See coverage of the meeting from the Associated Press, CNet News, and Reuters.

Service Pack 2 opinions

Here on the P-I's business/technology desk, we've been getting periodic calls and messages from people experiencing various complications with Microsoft's Windows XP Service Pack 2. As a general rule, however, the people who experience no problems with software don't call to sing its praises. As a result, based on those calls and messages alone, it's difficult to know if the problem is representative of the broader experience of Windows users.

So, while it's not scientific by any means, we put together an online poll that addresses the question in a more comprehensive way. You can click here to answer the question and see the results in a separate window. (The poll is also mirrored on our Microsoft news page.)

In addition, feel free to post a comment explaining your SP2 experience below. If you're interested in talking about your experience for a possible story on the subject, e-mail danrichman@seattlepi.com or call 206-448-8032.

Update: Here's P-I reporter Dan Richman's story on the subject.

'Halo 2' review roundup

Tomorrow is the big launch of "Halo 2," and expectations are extremely high. As Steve Tilley of the Edmonton Sun wrote, "Halo 2" will need to be "better than sex with Jennifer Garner while eating garlic chicken pizza and watching the seventh game of the Stanley Cup final" to live up to the hype.

So is the game good enough to match or surpass the legendary status -- and long-term sales -- achieved by the original? Here are excerpts from some of the early reviews:

• Gamespot: "The good news is, the sequel to the Xbox's defining action game is an absolutely superb, fully featured game, boasting an excellent presentation, a highly replayable campaign, and the greatest, most complete online multiplayer component in a console shooter yet. A surprisingly disappointing story and a fairly short single-player portion are noticeable shortcomings, but there's just so much breadth of content in Halo 2, and the action itself is so outstanding, that there can be no denying its quality."

• Team Xbox: "Sure there are still a few minor things here and there we could point out but nobody is really going to care when the overall game is considered. Forget about raising the bar because Halo 2 has just about tossed that bar out the window, leaving hardly any room for improvement."

• IGN: "It doesn't matter which way you cut, dissect or analyze it, Halo 2 comes up aces in ever way. It's a noble achievement in storytelling, gameplay balance, and multiplayer design. And it's easily the best console-based, online game on Earth. Easily. Like so many people have said thus far: In 2004, Halo 2 will own you."

• DailyGame.net: "The story, like the game, has twists, turns, comedy and drama. It also provides some surprises, which is par for the course, given Bungie’s penchant for delivering the unexpected. This action, suspense and storytelling is one of the key reasons Halo remains one of the most popular Xbox games three years after its launch. And it’s a key reason Halo 2 is destined to follow in its predecessor’s footsteps, if not leap right over them."

CCIA, Novell settlements

Microsoft announced antitrust settlement agreements this morning with Novell and CCIA, the industry trade group that has been an outspoken critic of the Redmond company in the United States and Europe. Microsoft will pay Novell $536 million. Financial terms of the CCIA deal were undisclosed.

The deals are significant for a number of reasons, including the fact that the CCIA's Windows XP complaint was considered a major obstacle to settling the broader dispute with the European Commission earlier this year. The CCIA also agreed not to appeal the U.S. antitrust settlement to the U.S. Supreme Court, ending the landmark antitrust dispute. In addition, in announcing the Novell settlement, Microsoft estimated that it may have to spend only $950 million more to resolve the remaining antitrust claims against it, including the remaining state class actions and RealNetworks' pending antitrust case.

For more, see the CCIA Q&A and coverage by Reuters, the Associated Press and Bloomberg News (including a link to the conference call audio.)

Xbox execs on Sony PSP

Over on Microsoft's Xbox campus today, the "Halo" fans chosen to take part in a Backstage Pass event were given some time to speak with the Xbox bigwigs -- Robbie Bach, senior vice president of Microsoft's Home & Entertainment division, J Allard and Peter Moore, Xbox corporate vice presidents.

Lots of questions revolved around "Halo 2," of course, but toward the end, one of the fans asked for the executives' thoughts on Sony's PlayStation Portable, the upcoming handheld gaming machine also known as the PSP.

"I think, in general, it's different than our (console) business," Bach answered. He acknowledged that Nintendo has sought to create ties between its GameCube console and dominant Game Boy handhelds, but he said, "We've yet to see anybody make a meaningful connection between having a console and having a handheld. ... We think it's a different market."

Bach added, "If Sony is distracted by way of a war with Nintendo, that's fine with us."

Moore pointed out the dominant position achieved by Nintendo in handheld gaming devices and said Sony's decision to enter the space would be "like developing your own little operating system and saying, 'Well, I'm going to challenge Windows.' "

On a related note, Redmond-based Nintendo of America today started shipping its new Nintendo DS dual-screen handheld gaming machine from its distribution facility in North Bend, Wash. It's scheduled for launch Nov. 21. The PSP is scheduled to be released in North America sometime next year.

A Palm with Linux?

CNet News.com has more on a possible PalmOne/Microsoft connection, plus a new Linux twist on the story: "The Milpitas, Calif.-based firm has evaluated both Microsoft-based operating systems as well as at least one version of Linux as a potential alternative operating system to the Palm OS for its handheld devices, CNET News.com has learned."

Backstage for 'Halo 2'

With five days left until the Nov. 9 launch of "Halo 2," Microsoft's Bungie Studios and the Xbox Live team are hosting a group of fans from around the world today for a preview of the online multiplayer portion of the game. (The single-player story line is still being tightly guarded, piracy notwithstanding.) See this post by Xbox Live's Larry Hryb for more details on the "Backstage Pass" event, including a picture of the Halo-themed stretch Hummer in which the participants get to ride.

Predicting a Google 'war'

PC Magazine columnist John C. Dvorak writes about the burgeoning competition between Google and Microsoft: "It's hard to predict what will happen, but it won't surprise me if an all-out war between Google and Microsoft ensues. We are about to witness a repeat of the Netscape browser war — this time with a different strategy."

Microsoft's election tally

Washington state voters turned down both of the education-related ballot measures that were backed heavily by Microsoft executives and employees.

Bill Gates contributed $150,000 to the campaign for Initiative 884, which proposed to raise the state sales tax rate from 6.5 percent to 7.5 percent to boost funding for schools. Microsoft as a company contributed $200,000, and lesser amounts were contributed by other top executives, including CEO Steve Ballmer, General Counsel Brad Smith and Jeff Raikes, group vice president for Office and related products. (See detailed state contribution report for records of those and other contributions.)

Gates also contributed a total of $1 million to the campaign for Referendum 55, which would have allowed for up to 45 charter schools in the state over the next six years. As the P-I's Jake Ellison and Gregory Roberts explained in their story this morning, the Microsoft chairman wasn't the only high-profile business executive backing the referendum. Others on the list of contributors include Wal-Mart heir John Walton, Gap co-founder Donald Fisher, Amazon.com CEO Jeff Bezos, and Netflix CEO Reed Hastings.

Gossiping about Gates

New York and Chicago gossip columnists are buzzing about Bill Gates' recent activities in Manhattan. It started with this line toward the bottom of a New York Daily News column yesterday: "Bill Gates paid $500,000 for Sting to sing eight songs at a party the Microsoft billionaire threw at the Supper Club, we hear."

Seems plausible enough, given that the Microsoft chairman turned 49 last week. Could have been a birthday party. But then the Chicago Sun-Times chimed in today by adding that, in addition to the Supper Club event, Sting also helped Microsoft "launch its new Windows XP operating system in New York last week" with a concert in New York's Bryant Park.

Huh? Windows XP, as in the operating system that was launched with Sting's help three years ago? Could be wrong, but that reads like a columnist's Google search gone awry.

At any rate, we're talking about gossip here, not computer science, so let's overlook that apparent misstep and just enjoy the additional details -- completely accurate, no doubt -- provided by the Sun-Times about Gates' Supper Club event: "Guests like former New York Mayor Rudy Giuliani, talk show kingpin Regis Philbin and Dell CEO Michael Dell were treated to quite the private concert, with Sting reportedly crooning some of his classics, including 'Roxanne,' '25 to Midnight,' 'Every Breath You Take' and 'Don't Stand So Close to Me.' "

'Starter Edition' analysis

The Wall Street Journal examines the prospects for Microsoft's new, stripped-down Windows Starter Edition software in such places as Thailand, Indonesia and Malaysia: "Later this week, Microsoft Corp. will start rolling out its new, low-cost Windows software for people in developing countries. But most big-name computer makers are still not on board with the project, and the software has some limitations that could dent its appeal, according to one technology-research firm."

More on Microsoft, Palm

CNet News summarizes the latest development in the apparent PalmOne/Microsoft flirtation:

Shares of PalmSource, the handheld operating system developer, dipped Monday on an investment bank's report that said key licensee PalmOne will -- in addition to using PalmSource's product -- begin using Microsoft's operating system for handhelds in its Treo line of devices.

PalmOne representatives disputed the contents of the research note, from Needham & Co. The note said that PalmOne "tacitly admitted" it was working to make Microsoft's operating system available on the popular Treo line of phones. The devices currently use PalmSource's Palm OS, and PalmOne is PalmSource's biggest customer.

Shares of PalmSource are down further so far today. Here's additional coverage by Engadget. See also our original post on this subject back in May.

Making Microsoft's case

Remember the UC Berkeley student who challenged Bill Gates over the company's "illegal business practices"? A story by Dean Takahashi yesterday in the San Jose Mercury News, "Microsoft trying friendlier tack with former legal foes in valley," begins by explaining what happened later, after Gates was done speaking. Takahashi writes:

Afterward, a Microsoft employee approached the student and spent 45 minutes trying to convince him that Microsoft is turning over a new leaf.

"I think we can change, and that is why I'm in this role," Doug Hammond told the Berkeley student, Ka-Ping Yee. Hammond's job: to relay and allay critics' concerns.

One conversation at a time, Microsoft is trying to show the world a new, friendlier persona. It's a deliberate campaign aimed in large part at Silicon Valley, home to many of its original antitrust foes. The Redmond, Wash., software giant once known for its gargantuan antitrust battles is now offering an olive branch in the name of getting on with business.

That message has taken hold, with Microsoft gaining more allies than enemies recently in the valley, a place that once loved to hate the world's largest software company.

Microsoft and Linux

Some notable Microsoft-related Linux and open-source stories and items from the past few days, including some of the reaction to Microsoft CEO Steve Ballmer's Linux memo last week:

• The latest edition of BusinessWeek magazine looks at Microsoft's effort to stop customer defections to Linux in Europe, pointing to signs that the company's "counterattack" is working. (Via LWN.net)

• Ed Foster, InfoWorld Gripe Line Weblog: Get the Facts on Microsoft Benchmarks

• Jon Foley, Information Week Windows Weblog: It's flak jacket time for Microsoft's Linux guy

• IDG News Service: Webmail leaves Windows for open-source platform (via XMLMania) (Note: reference to headline corrected.)

• Motley Fool: Mozilla vs. Microsoft

• ZDNet UK: Microsoft says its IP indemnification provides better protection than that offered by rivals Red Hat and Novell -- but not all lawyers agree.

Addendum: Here also is Novell's detailed, direct response to Steve Ballmer's e-mail. (via Microsoft Monitor)