Northrop and U.S. universities launch group to fight hackers

Northrop Grumman, maker of fighter jets and nuclear submarines, is teaming up with U.S. universities to research ways to defend against computer hackers. Credit: Wong Maye-E/Associated Press.

Northrop Grumman Corp., the defense contractor better known for building the B-2 stealth bomber, is teaming up with several U.S. universities to fight off cyber attacks.

Century City-based Northrop said it plans to invest millions of dollars over the next five years to find new ways to secure computer systems from hackers who are threatening the country's economic and security interests. Northrop enlisted the expertise of the cyber research branches of Carnegie Mellon, the Massachusetts Institute of Technology and Purdue University in the endeavor.

The group, named the Northrop Grumman Cybersecurity Research Consortium, will initially take on 10 projects examining ways to identify attackers, protect supply chains and secure critical infrastructure networks, the company said.

Members of the consortium will coordinate research projects, share information, develop curricula, and write joint case studies, Northrop said.

-- W.J. Hennigan

Windows 7 sales topped Vista in first weeks, but economy still a drag on PC sales

It wasn't a high bar, but Windows 7 made it.

Consumer retail sales of Microsoft's newest computer operating system topped those of Vista by 234% on a unit basis within the first few days of launching on Oct. 22, according to a report released this morning by the NPD Group. (The report did not include sales to businesses and large organizations.)

That Windows 7 would do better than Vista is not too surprising. Critical buzz for Windows 7 was relatively positive and largely void of the savage language that reviewers heaped on Vista when it launched in January 2007.

This time around, Microsoft also attempted to woo reluctant buyers with discounts and specials, such as a 50% discount on a copy of the software when buyers spring for a new PC, or a free upgrade from Vista for those who bought a PC after June 26.

"We definitely saw the results of aggressive pricing," said Stephen Baker, NPD's computer software analyst. 

Though helpful for pushing volume, the discounts may have crimped Microsoft's overall revenue from the product. (The NPD report is mum on the sales impact on Microsoft's topline.)

The fly in everyone's ointment, of course, has been the economy. With consumers making do with their old computers or opting for ultra-cheap netbooks, average PC prices have dropped around 20% since last year, Baker said.

While unit sales of Windows 7 software were up in the first days of launch over Vista, sales of computers with Windows 7 were actually down 4% compared with sales of Vista-based computers when Vista launched. The comparison is not a fair one, Baker cautioned, because Vista launched in a January, when PC sales tend to do better, and Windows 7 launched in October, one of the slowest months for PC sales.

Still, the gruesome economy may have helped Windows 7 sales in one respect, according to Richard Shim, a PC analyst with IDC.

"Usually upgrades are not very popular. People have tended to buy new PCs when new operating systems come out," Shim said. "Windows 7 seems to be an exception. One reason is that it can work well with older computers because it's designed to be streamlined."

In other words, instead of spending $500 for a new computer, some consumers are springing for the $120 to $220 Windows 7 upgrade and souping up their old machines.

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

New York attorney general files antitrust lawsuit against Intel

An Indian model holds an Intel Xeon processor 7400 series product in 2008. Credit: NV Jagadeesh/EPA.

New York Atty. Gen. Andrew Cuomo today filed an antitrust lawsuit against Intel Corp., the world's largest chip maker, alleging that the company engaged in "a worldwide, systematic campaign of illegal conduct" to further its business and stifle competitors.

“Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,”  Cuomo said in a statement. “Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers, who were robbed of better products and lower prices."

Cuomo's office maintained that Intel paid or threatened some of the world's leading computer makers -- Dell, Hewlett-Packard and IBM among them -- to prevent the companies from doing business with Intel's main rival, Advanced Micro Devices Inc.  The payments, the complaint alleges, came in the form of high-dollar "rebates" to the computer makers, though Cuomo's office dismissed the rebates as "payoffs" that Intel made to hide their true nature.

The case is assembled in part from internal e-mails collected from Intel's business partners and from within the company itself, according to the filing.

“'I understand the point about the accounts wanting a full AMD portfolio,'" wrote an IBM executive in 2005, according to a statement from Cuomo's office. "'The question is, can we afford to accept the wrath of Intel …?'”

Intel could not immediately be reached for comment.

The lawsuit is a result of a nearly two-year investigation by Cuomo's office, in which investigators say they evaluated millions of pages of documents and e-mails and interviewed dozens of witnesses.

The suit was filed in federal court in Delaware and aimed to bar Intel from what it called "further anti-competitive acts," and recover damages to New York consumers and government entities.

In May, the European Commission fined Intel nearly $1.5 billion over similar charges of anti-competitive practices, saying the results harmed millions of European consumers.  Intel disagreed with those charges and vowed to appeal the decision.

-- David Sarno

Microsoft stock soars despite downturns in sales and profit [Updated*]

Microsoft Corp., fresh from yesterday's Windows 7 launch, this morning reported a 14% slip in sales and an 18% plunge in profit for its fiscal first quarter. Its shares immediately soared, briefly flitting to a 52-week high of $29.35 before ending the day up $1.43 to $28.02.

Is Wall Street out of its mind?

To understand why, it's helpful to look at the unofficial currency of financial markets -- expectations. Analysts had forecast that the Redmond, Wash., technology giant would report per-share earnings of 32 cents. Microsoft instead earned 40 cents a share, better than investors had anticipated.

Expectations were also behind yesterday's stock move. After Microsoft launched its most important product in three years, investors added just a penny to the company's shares. That's because the release of Windows 7 proceeded exactly as planned. Every aspect about Windows 7 had already been public knowledge, including its price, features and even consumer reviews.

So what did investors like so much about today's earnings? Let's take a closer look.

Net income for the quarter ended Sept. 30 was $3.6 billion, or 40 cents a share, down 18% from $4.4 billion, or 48 cents, a year earlier. Sales slipped 14% to $12.9 billion.

Many had expected the decline given the recession, which has all but paralyzed businesses that may be considering buying new computers. Instead, many organizations either made do with their old machines or opted for cheap netbook computers. Costing little more than $200 apiece, netbooks are so cheap they offer little or no profit for their manufacturers or for Microsoft, which sells the operating system software for these devices.

"Microsoft, like the rest of the PC industry, is struggling with low average selling prices," said Richard Shim, analyst with research firm IDC. 

Still, Microsoft was able to beat expectations by aggressively cutting costs. Operating expenses fell 8% from a year earlier to $8.4 billion.

Another reason for Wall Street's counter-intuitive euphoria: It could have been worse.

The results, Technology Business Research analyst Allan Krans wrote in a note to investors, "though still weak, reflect stabilization of the economy and Microsoft's revenue streams."

*This post, which was written prior to the close of Nasdaq, has been updated to include Microsoft's closing price.

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

Windows 7: Can Microsoft reboot reputation and give the tech sector a jolt?

Microsoft CEO Steve Ballmer speaking at CeBit in March. Credit: Kay Nietfeld / European Press Photo Agency.

With more than 8 million "beta testers" using Windows 7 since January and dozens of reviews already published, virtually every aspect of Microsoft's new operating system is already public knowledge prior to this morning's "launch" -- except one.

Can Windows 7 repair Microsoft's reputation and trigger enough sales to pull the technology sector out of the economic funk?

Steve Ballmer certainly hopes so. The Microsoft chief executive and impresario known for his highly energetic speaking style this morning kicked off the launch of its latest computer operating system by saying, "Today is an important day for the computer industry, certainly for Microsoft and I hope perhaps even most importantly for all of the customers around the world."

Much rides on the success of Windows 7. Microsoft is counting on it to lift its sales, which fell last fiscal year for the first time since the company went public in 1986. Computer makers and software companies are praying that Windows 7 will set off a wave of demand for their products, which have been dampened by the recession as buyers postponed PC purchases or opted for ultra-cheap netbooks over full-fledged computers.

Even consumer electronics companies see Windows 7-based computers as a way to make their devices sexier as gateways for entertainment programs on-demand.

"Windows needs to be an incredible opportunity innovation for hardware companies and software companies," Ballmer said at the company's kick-off event in New York. "Windows 7 takes us a step closer to the vision we articulated ... around the three screens -- the PC, the phone and the TV, all communicating across the cloud, the Internet backbone."

Ballmer tried to nail the point home by ...

New iMac from Apple and several other product boosts

The new iMac, available today, comes with a 27-inch screen in the premium model, and a redesigned,  wireless mouse that has a touch-sensitive surface. Credit: Apple Inc.

Apple announced upgrades to its venerable iMac and its low-end (relatively speaking) laptops this morning, plus revisions of other products.

None of the changes were big enough to bring on a Steve Jobs-hosted public meeting, but they do come just two days before Microsoft officially unveils Windows 7 and several new computers tailored to the new operating system.

The Apple upgrades also come when the company is on a roll -- just Monday it announced record quarterly profits.

The new iMac comes in two models -- one with a whopping 27-inch screen (starting at $1,699) and the other with a 21.5-inch screen (starting at $1,199). Both screens are LED-backlit. The basic models in both sizes come equipped with processors that run at a swift 3.06GHz.

What the new iMacs don't have are drives to play Blu-ray discs -- a feature some Apple watchers had predicted.

The newly upgraded 13-inch MacBook laptop is $999 (no price change) and has some features that were available only on higher-priced Apple models, including a longer lasting, non-removable battery, and a multi-touch track pad.

The Mac Mini, which is Apple's lowest priced, stripped-down desktop computer (it comes without a screen, keyboard or mouse) has undergone some performance enhancements. Price remains the same -- it starts at $599.

The most radical changes are to Apple's wireless mouse, which comes with the new iMac models and can be purchased separately for $69. Its entire top surface is touch-sensitive, and it recognizes when you are using two fingers, instead of one, to trigger certain functions, such as right-clicking or going back or forward through pages on the Safari Web browser. 

All the new products, with the exception of some processor upgrades to the iMacs, are available now.

-- David Colker

New computers for Windows 7

The TouchSmart tx2 is a tablet computer with a screen that swivels and folds down flat. Credit: Hewlett-Packard

When Microsoft officially unveils its Windows 7 operating system (see our review here) Thursday, the company is supposed to also announce several new computers designed to run the new OS.

But some computer manufacturers have jumped the gun, already disclosing information about their new models, a few of which are designed to use Win7's touch-screen features.

Hewlett-Packard has announced four new consumer products, all of which have touch screens. At the low end is the TouchSmart 300, an all-in-one desktop with a 20-inch screen that will sell for about $900 and up.

The TouchSmart 600, an all-in-one that will sell for about $1,100, will sport a 23-inch screen. A version that will sell for about $1,600 will be able to show video at 1080p resolution.

The TouchSmart tx2 is a tablet computer with a screen that folds down flat over the unit screen side up. It will start at about $800.

Finally, the LD4200tm is a 42-inch touch screen monitor for those who want the PC version of big screen. It will go for about $2,800.

For the budget-minded, HP's bargain line, Compaq (which used to be a high-end brand in its own right) will have the CQ61z laptop with a 15-inch screen (non-touch) at $399. That's what you'd pay for a much smaller netbook computer. But the Compaq price is temporary -- after Dec. 19 it jumps to $499.

Toshiba will have two new Satellite-branded laptops with touch screens. Its M505 with a 14-inch screen will go for about $950, while the U505 with a 13-inch screen will be about $1,050. So why will the laptop with the smaller screen be more expensive? One of the primary reasons is that the case will sport a "textured" finish.

-- David Colker

High-speed Internet access is a legal right in Finland

That's hot. From the land that brought you the Sauna World Championship comes guaranteed high-speed Internet for all. Credit: Heikki Saukkomaa/AFP/Getty Images

Life, liberty and the right to broadband access?

If Thomas Jefferson and our enlightened forefathers were here today, perhaps our unalienable rights would mimic Finland's, which will now include the right to broadband access. According to Finland's Ministry of Transport and Communication, 1-megabit Web access will become a legal right for all citizens in July.

France is one of the few countries that has made it a human right but Finland said it's the first country to make it a legal right.

It's not clear whether those who can't get connection can sue the government for the violation.

Since 1-megabit web access is dauntingly slow -- it's equivalent to DSL speed -- the government has pledged to expand the legal right to 100-megabit broadband access by the end of 2015. This news must come as a relief to Finns who have more important things to do than suffer the pain and frustration of a slow Internet connection. (There are allegedly 1.6 saunas for every Finn.)

How fast is a 100-megabit connection? A Best Buy representative laughed and said, "Ridiculously fast," adding, "You'd be able to download a 500-megabyte file in only like five minutes."

The government's magnanimity is not surprising, because the world's ultimate philanthropist, Santa Claus, is a Finn -- his office is in northern Finland on the Arctic Circle, according to the Finnish Tourist Board.

-- Melissa Rohlin

Microsoft's Sidekick debacle brings much-hyped 'cloud' back to Earth

Credit: ZeroOne/ Flickr.

Over the last year, the technology sector has become enamored with the possibilities of the "cloud."

That's the computing paradigm that allows consumers to forget about storing their software and data on local hard drives -- where it can be vulnerable to electrical surges and soft-drink spillage -- and let  companies like Amazon, Google and Microsoft worry about keeping it safe.

But last week, a hole was poked in the cloud's massive hype bubble. Microsoft Corp. and T-Mobile Inc., the respective maker and carrier of the Sidekick mobile device, acknowledged a "service disruption" that cut off most users of the device from large amounts of personal data -- contacts, calendars, personal notes and more -- that were stored in Microsoft's cloud.

Initially pessimistic about their data recovery efforts, the companies on Monday released a more sanguine forecast, saying that "the prospects of recovering some lost content may now be possible." (For close readers, note the number of conditional nouns and verbs in that sentence -- not very confidence-inspiring.) 

But the larger questions may be how this incident will affect attitudes about the dependability of cloud computing, or if it should affect them at all.

In places where the cloud is now on trial -- in Los Angeles City Hall, for one -- decision makers may have one more reason to be suspicious of its many promises. Google Inc., a major proponent of cloud software, is quick to offer a laundry list of advantages -- lower cost, ubiquitous access, no hassle.  But the company spends less time warning of its potential pitfalls.

Though absent in Google's promotional literature, those pitfalls are enumerated at length in the company's regulatory filings, where it must legally disclose risks and liabilities to its shareholders. In a letter last week to City Councilman Bernard C. Parks, John Simpson of advocacy group Consumer Watchdog noted the stark language Google uses to describe the many things that could go wrong with its cloud-based systems:

"Our systems are vulnerable to damage or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service attacks, or other attempts to harm our systems. Some of our data centers are located in areas with a high risk of major earthquakes. Our data centers are also subject to break-ins, sabotage, and intentional acts of vandalism, and to potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a decision to close a facility we are using without adequate notice for financial reasons, or other unanticipated problems at our data centers could result in lengthy interruptions in our service.”

Of course, if a company is compelled to enumerate every possible risk to its bottom line, it may read like the above parade of nightmares -- when in reality each individual disaster may be exceedingly unlikely. So far, Google is not known for weak security. 

Still, with the Sidekick situation, Microsoft has proved that data disasters do -- and will -- happen.  (Notably, the Redmond, Wash., software maker is vying with Google for the Los Angeles computing contract).  What's less clear is how frequent this type of incident will occur and whether cloud users ought to be actively worried. As with plane crashes, disease outbreaks and shark attacks, a handful of sensational instances may not reflect the risk to the population at large. Moreover, some businesses can learn from errors and reduce the likelihood of a repeat occurrence.

People are willing to tolerate a certain amount of risk -- otherwise they wouldn't be flying, driving, eating spinach or surfing in Malibu. 

But the cloud is new and fragile, kept levitating largely by the trust of its users. To date, serious problems have been relatively rare. But if consumers begin to believe their data is not safe in the hands of certain companies, they'll just pull it out -- and poof!

-- David Sarno

Microsoft and Windows 7: A Family Guy affair

Seth MacFarlane and friends. Credit: Fox ONE.

Microsoft is trying a new spin on an old method to promote its new Windows 7 operating system this fall.

Taking its inspiration from the old Texaco Star Theater -- television's first big hit, in the 1950s, with Milton Berle hosting a variety show and becoming a fixture in U.S. living rooms -- the computer giant is teaming with "Family Guy" creator Seth MacFarlane to sponsor a variety show to air on the Fox network on Nov. 8. 

The show will run without commercials, and instead promises to feature "unique Windows 7-branded programming that blends seamlessly with show content." Although Microsoft would not give away any specific songs or gags, look for MacFarlane and his “Family Guy” co-star Alex Borstein to offer up jokes, songs and cartoons that include clever references to Windows, and maybe even Microsoft's PC guy.

Gayle Troberman, Microsoft's general manager of advertising, said MacFarlane offers what is so rare these days: an opportunity for a mass marketer like Microsoft to appeal to a wide mix of demographics.

In addition, Troberman said, the diversity of the variety show -- mixing comedy, music, animation and live entertainment -- represents "a great opportunity for us to integrate the brand in a fresh and interesting way. It brings to life the power of what Windows can do for consumers."

The show, which has a working title of “Family Guy Presents: Seth & Alex’s Almost Live Comedy Show,” is scheduled to air Sunday, Nov. 8, at 8:30 p.m. EDT and PDT. Although producers clearly have to tread carefully in the world of product placement,  viewers may be growing more comfortable with the concept and may even prefer these intrusions to commercial breaks.

Troberman wouldn't say what Microsoft was paying for the privilege, but Fast Company reported last year that "Family Guy" charged $200,000 for a 30-second spot. Since Microsoft is taking the whole 30-minute show, it's probably spending a pretty penny.

Still, Microsoft has to be careful. While about the only thing Troberman could remember about Texaco Star Theater was the sponsor, Microsoft doesn't even get its name in the title of MacFarlane's show. But at least it will probably keep other names out of the show -- like Microsoft rivals Apple and Google, who distributed MacFarlane's "Cavalcade of Comedy" online.

-- Dan Fost