As reported earlier by CNET News.com, Nortel plans to cut prices for its network routers by as much as 50 percent. The move is part of the Brampton, Ontario-based company's goal of becoming more competitive in the market for network devices and the software that runs in them. The lucrative market is now dominated by Cisco.
Nortel also detailed plans to license its routing software code to third parties, including Intel and Microsoft, for use in operating systems, "thin client" devices, Palm-based computers, and set-top boxes, according to sources. The company said it had already issued 75 software licenses for its routing code to third parties as part of an effort Nortel calls the "Open IP Environment."
"We're moving from 'Old World' routers to an Open IP Environment based on software and silicon that dramatically reduces the cost of networking and makes the Internet accessible to everyone," Bill Conner, Nortel's president of enterprise solutions, said in a statement. "Open IP Environment ushers in a new era of networking that expands the way businesses and consumers use the Internet."
At the core of network routing devices is software that directs network traffic. Nortel apparently aims to shift its networking focus to software, essentially leaving hardware concerns to its rival Cisco.
Nortel launched out of the gate with a partnership with chip giant Intel. The two companies will work together on programmable networking devices, with Nortel providing the software and Intel the hardware based on its Exchange (IX) Architecture.
"There's no way they're going to get top billing in the router market--Cisco owns it," one industry insider said. "But not the market for the enabling technology."
Nortel is looking to draw users away from current routing technology, toward all-encompassing routing software that can link many different computers to Nortel's fiber optic-based equipment, according to industry observers. The initiative also furthers the company's aim to reconstruct itself as an Internet-based company.
The announcement's timing isn't coincidental--Nortel plans to announce its newest business deals the same day rival Cisco releases earnings for its most recent quarter.
Cisco is expected today to announce per-share earnings of 23 cents for its first quarter, according to consensus estimates compiled by First Call. The announcement is likely to be closely watched, given recent rumors that Cisco may miss Wall Street's expectations.
In 1998, Cisco garnered 70.5 percent of the routing market, compared with Nortel's 9.1 percent share, according to market researcher Dataquest.
Bay Networks, the data-oriented networking firm Nortel acquired in 1998, purchased routing technology last year for use in the Open IP environment.
Nortel plans to discount its line of so-called enterprise routers, sources said. The cost of the technology is dependent on how complex the installed software is. Base prices run as low as $30,000, according to industry analysts.
Though there are few specifics, Microsoft plans to incorporate Nortel's software in an upcoming release of its Windows 2000 operating system, according to sources. Windows 2000 is scheduled to ship early next year.
A Cisco spokesman seemed unconcerned with Nortel's new plans. In response to the strategy, the spokesman said that Nortel's routers will "finally be priced what they're worth." Microsoft today launched an anticipated plan to lease its Office desktop software.
Through a pilot program, providers of e-business services for small and medium-sized companies will offer Office 2000 as an application service beginning in 2000. The leasing program will allow customers to use Microsoft Word, Microsoft Excel, Microsoft PowerPoint, and other Office applications via the Internet, instead of having the Microsoft software installed on their PCs.
Microsoft did not announce pricing for the hosted applications.
Micron Electronics will become one of the first major PC companies to rent Office 2000 to customers as part of the company's subscription computing strategy, sources said.
Microsoft, of course, will not be alone in the rent-a-suite space. Sun Microsystems bought Germany's StarMedia to create similar server-side applications.
As previously reported by CNET News.com, Microsoft has been mulling Office rental plans for months.
Participating companies in the pilot program, called Microsoft Office Online, include Micron, Concentric Network, Verio, Digex, Equant, FutureLink, Interland, Interliant, MTT Mpowered (a division of Aliant), Qwest Communications, TeleComputing, Usinternetworking, and Winstar Communications.
The Office applications will reside on servers at these service providers allowing businesses to access the software over the Internet and to outsource many of their business productivity tools.
Office Online will also be offered by Microsoft bCentral Web services, a business portal created to meet the needs of small and growing companies, which will direct users to the Microsoft Network (MSN), Microsoft's larger Web portal site.
Rob Enderle, an analyst with Giga Information Group, who has used the new Office Online service said the new offering is good for consumers because "you can use this to have office applications on your older machines, and you also don't have to worry about upgrading or maintenance because that's all done by the service provider."
Before now, few details of Microsoft's Web-based application plans have come to light. Microsoft president Steve Ballmer told reporters in September that the company was planning to offer Office--which generates between one third and one half of Microsoft's revenues--as a Web-based service.
"We are moving into the next wave of the Web where software and services are delivered together, and we are excited to offer Office 2000 to our customers in this new way," Steven Sinofsky, vice president of Microsoft Office, said in a statement.
The application service provider market, while still in its infancy, is expected to grow to $2 billion by 2003, according to market research firm International Data Corporation.
Enderle said he expects Microsoft to provide a hosted version of Exchange as well, though he didn't say when. He did not comment further on the possibility of Microsoft offering hosted versions of any other back office software.
In June, Concentric said it plans to launch several new hosting services based on Microsoft's Windows server and the Microsoft BackOffice line of server products. At the same time, Microsoft said it will help in the development of application hosting services based on Microsoft technology, which could include Microsoft Exchange email services, Microsoft Windows Media services, and purchasing, financial, and customer relations applications based on BackOffice.
Earlier this year, Microsoft announced a new set of Web-collaboration services based on Office 2000 that will be hosted by Internet service providers Concentric Networks, Verio, InterLand, and AIS. The new service allows users who don't have a Web server on site to collaborate on Office documents over an ISP-supported link, Microsoft said.
For software makers, centrally-hosted applications could help stem software piracy--providing better insight into customers' software usage patterns--and lighten customer support loads, as hosted software won't require as much installation assistance.
The push into the rental market by desktop software makers marks a radical change from the traditional pricing and implementation models for these bulky desktop application suites. Instead of installing hundreds of megabytes worth of software on their hard drives, users could opt for a Web-hosting rental model that could save money and provide simpler software management.
All three major developers of desktop productivity suites--Microsoft, Lotus, and Corel--have either rolled out or are evaluating a Web delivery model for their suites, looking to deliver their products through application service providers (ASPs) or Internet service providers (ISPs). Like Microsoft, Corel is outlining deals to make at least some of its products available for rent.
NEW YORK--Software giant Microsoft is currently being investigated by the European Commission, the executive arm of the European Union, for abuse of its alleged monopoly over personal computer operating systems, according to reports.
Michael Tscherny, a spokesman for European Competition Commissioner Mario Monti, said the EC is looking into allegations brought by at least two software and personal computer manufacturers, which the commission wasn't obliged to identify under EC rules, the Wall Street Journal reported.
Microsoft's Director of Law and Corporate Affairs for Europe, John Frank, said the company was working with the EC to address any of its concerns, the paper said.
On Friday, U.S. District Judge Thomas Penfield Jackson found that Microsoft "stifled innovation" by using its dominance in personal computer operating systems to quash rivals.
Copyright 1999, Bloomberg L.P. All Rights Reserved. Microsoft today will unveil a redesign of its MSN Web portal and launch new services on the network, while debuting a revised version of its controversial instant messaging program.
The redesign, which has been in "preview" mode, will unveil new features such as a "Message Center" that displays a user's new Hotmail messages, online buddies from MSN Messenger, and community lists.
Microsoft will also introduce a new version of its MSN Messenger service, the company's instant messenger "client." The service made headlines when it began allowing users to communicate with AOL Instant Messenger users. AOL criticized the move as a hack into its system and blocked Messenger's access; Microsoft returned fire, claiming AOL was not working up to industry standards.
Microsoft has not decided whether to make the new MSN Messenger interoperable with AIM, according to Deanna Sanford, lead product manager at MSN. "We're still evaluating that," Sanford said.
The new MSN Messenger will officially launch next week.
Today's moves come as Microsoft continues revamping its long-staggering Internet strategy, as previously reported. Last week, the software giant debuted an online shopping site called eShop, which allows users to purchase gifts from many different retailers, compare prices, and read consumer reviews.
MSN Web Communities went live yesterday. The product allows users to create and design shared Web pages replete with communications tools, such as email and message boards.
Microsoft previewed selected features of its upcoming services during a September briefing of financial analysts and journalists. During the briefing, the company outlined its plans to turn MSN into a distribution point for Web software services, such as Hotmail and its site registration technology MSN Passport.
Early next year, Microsoft is expected to launch its MSN Calendar product, developed through its acquisition of Jump Networks.
Common Internet audio features won't be available to WebTV users until next year, even though the Microsoft subsidiary previously announced they would arrive in 1999.
Although WebTV struck an agreement with RealNetworks several months ago to bring "streaming" audio to the TV set-top service, "technical difficulties" have held up those plans, company executives have acknowledged. The project remains on the horizon, the executives said.
WebTV, which provides limited Internet content and Web-enhanced television programming to about 900,000 subscribers, was besieged with complaints from newsgroups and Web sites earlier this year because its service doesn't support RealNetworks' newer streaming media players and Sun Microsystems' Java. Both are popular Web technologies. Data is said to be streaming when it's transfer doesn't have to be complete for the receiving device to replay it. Real and Sun are rivals of Microsoft.
In response, last July the company announced it would bring RealNetworks' G2 streaming media player to WebTV subscribers. Under the terms of the agreement, WebTV users were to gain access streaming, or real-time, audio feeds from Web sites delivered by Real's G2 technology.
The deal was restricted to audio feeds; it did not include streaming video feeds, like those used on some news and information Web sites.
WebTV executives originally argued that the design of the low-cost set-top box precluded adding costly memory and hardware necessary to support newer Web features. In addition, since its 1997 acquisition WebTV has refocused its strategy to concentrate on more "enhanced" television features, rather than simple Internet service. But the perception that Microsoft's ownership influenced the technologies available on WebTV were fueled by the fact that the company had been public about its intent to support leading Web technologies when it was independent.
A WebTV spokeswoman yesterday confirmed that users have been notified that the update has been delayed until the first part of 2000.
"In terms of G2 support, we are late," a spokeswoman said. "We had planned and hoped to get that out to subscribers by the end of the year, but the intricacies of adopting the technology to the TV browser format was more complex than we hoped."
The company reiterated its position that the technical constraints of the WebTV set-top box are to blame for the delay in supporting RealAudio. "Anytime you're taking Web technologies and adapting them to a television format, as well as adopting audio and video--it's complex," the spokesperson said.
WebTV users were informed of the new delays via a newsgroup posting earlier this week. "We understand that customers are very excited about this new support, and we are working hard to get it to them as quickly as possible," the message read.
For WebTV, enhanced television programming is a more attractive business than providing Internet access for a couple of reasons. To begin, such programming provides opportunities for additional advertising revenues. In addition, many Web sites have resisted reformatting their design for WebTV's TV-centric browser, which makes it difficult to tout the service as a superior means of access the Web.
As if to add to its woes, the company suffered severe email delays over this past weekend, further frustrating users who rely on the service for real-time email.
Network software provider Novell released a third test version of an incremental upgrade to its NetWare operating system, hoping to capitalize on continued delays in the delivery of Microsoft's Windows 2000.
Novell executives said the upgrade--called NetWare 5.1--is intended to spur interest among the company's sprawling installed base of server systems through extensive support for Web-based technologies that could make it easier for third-party developers to build applications. The company said it intended to release a final version of NetWare 5.1 in the first quarter of next year.
Executives said approximately 12 percent of customers have upgraded to the company's current NetWare 5.0 version, which has been on the market one year.
Novell originally disclosed plans for the upgrade, previously code-named Cobra, in May of this year.
The upgrade includes versions of IBM's WebSphere application server 3.0, a five-user version of Oracle's 8i database, NetWare's Enterprise Web server based on server technology from Netscape Communications, and support for the hypertext transfer protocol (HTTP).
Novell's directory services, or NDS, is also included in version 8.0 along with a browser-based administrative utility called the NetWare Management Portal.
Microsoft said last month that its long-delayed Windows 2000 operating system, a major overhaul of the company's current Windows NT 4.0 software, would be available for customer use in February.
A prominent computer "bug hunter" has found a vulnerability that allows a malicious programmer to launch an email attack which bypasses some of the precautions built into Microsoft's Outlook software.
The vulnerability smoothes the way for a new type of email-borne virus, also called a Trojan horse, and other malicious software. Microsoft Outlook is one of the most popular email programs in use.
Ordinarily, when a Microsoft Outlook user clicks on a file that has been received as an "attachment," the program will ask whether the user wants to open or save the attachment. Programs which exploit the vulnerability, however, fool Outlook into executing the potentially harmful software without asking permission.
Email containing a malicious payload is a popular new method of attacking computers. For example, US West's internal network had to be shut down for an evening about two weeks ago because of a self-generating attack.
The attack works by disguising the true identity of an email attachment so that Outlook assumes the attached file is benign, said the discoverer, Juan Carlos Garcia Cuartango, a Spanish researcher who has found several other weaknesses in the past. The masquerade works because Outlook doesn't examine files with common "extensions." An extension is a three-letter filename suffix, such as "doc" or "gif."
"Outlook does not care about what the real attachment contains. It only cares about the attached file suffix," Cuartango said in an email.
Microsoft was unable to comment on the vulnerability by press time.
The newly discovered problem affects Microsoft Outlook Express 4 and 5, Outlook 98, and Outlook 2000, according to Elias Levy, chief technology officer of Security Focus, a company that monitors computer security problems. There aren't yet reports of active attacks using the vulnerability, he said.
"I think it's very severe," Levy said. "It could be used to create something just as bad or even worse than Melissa," he said, speaking of a virus that swept the Internet in March.
Melissa was successful largely because it automatically sent copies of itself to unsuspecting users via Microsoft Outlook email software. Antivirus software initially failed to detect the virus, although Melissa ultimately proved a bonanza for antivirus companies.
Since its emergence, several other variants have appeared on scene. Cuartango said he notified Microsoft of the vulnerability on October 15.
The basic problem isn't being fixed by companies such as Microsoft and Netscape, Levy believes.
"Cuartango and [fellow bug catcher Georgi] Guninski have shown we just have this cycle. They find a bug, the vendor patches it, a week goes by, and they find another one," Levy said. "We have to look beyond that at what's fundamentally wrong here: We have programs such as Web browsers and email clients that connect to an untrusted network from which they receive data they do not trust."
Levy believes the solution is to adopt a method used by the military, in which programs run in a safe zone within a computer--a cordoned-off area where the programs have minimum privileges and can't do any damage. Sun Microsystems has taken steps in this direction with its "sandbox" area, Levy said, but there still is room for attacks that don't use Java and companies have had some difficulties in making sure Java works like it's supposed to.
The Unix operating system, which is supposed to restrict the actions of computer tasks not run by the system administrator, is better than Windows, Levy said. However, it's "definitely not the solution either."
The new vulnerability works through a series of disguises, Levy said. First, the malicious program is converted into a Microsoft archive format called a "cab" file. Then, the cab file is renamed with an extension of a file type that Outlook isn't concerned with (such as "jpg," "mov," or "txt"), then emailed as an attachment.
When the victim clicks on the attachment, the cab file is decompressed and its contents saved to a specific location. The last stage occurs when a Javascript program in the email then can execute the potentially malicious program that was contained in the cab file.
To protect against the problem, Security Focus recommends changing the default location for temporary files from TEMP or TMP to some other, unpredictable location. "You can also disable Javascript," the company said.
Oxygen Media will tap Web site builder Bigstep.com in a joint effort to attract to the Net the largest sector of small-business owners: women.
Bigstep will create a cobranded service on Oxygen's Ka-Ching finance site, the companies are expected to announce tomorrow. Available for free, the service will enable women to build and manage their businesses, create catalogs of products, send customer newsletters, analyze site traffic, and accept online credit card payments.
Oxygen, which plans to launch a sister cable channel for women in February, hopes the Web site-building tools will keep its audience coming back, rather than turning to veteran sites such as Women.com and iVillage. But for San Francisco start-up Bigstep, the partnership could give it a leg up in an extremely competitive market, where firms such as Yahoo, CitySearch, CommerceKey, and Intel provide similar Web services to small and medium-sized businesses.
Women own 40 percent of all businesses in the United States but are "starting new firms at twice the rate of all other business," according to the U.S. Small Business Administration. Bigstep estimates that more than half of its current clientele are women-owned firms, such as financial planners, legal consultants, and retailers.
By pairing with the women's network, Bigstep will have access to a huge pool of potential customers. Bigstep also could benefit from Oxygen's new national advertising campaign, which will include a Super Bowl ad, as well as traffic driven by Oxygen partner Oprah Winfrey, who frequently plugs the site on her show.
Down the line Bigstep hopes to make money by offering extra services to established clients.
"We made the decision to work with them because they are incredible people, but we knew the marketing opportunities they are going to be rolling out over time would be massive," said Andrew Beebe, chief executive of Bigstep. "We think building thousands of sites out of this is a no-brainer."
The quick tools Bigstep will provide are the kind of feature Oxygen had been promising to offer its users. Rival Women.com's small-business area lets women write business plans and set up home offices, for example.
"We will help Ka-Ching focus on this 'underserved' market," Beebe said. "You just click on 'starting your business,' and it can take 15 minutes to get your business up and running."
Geraldine Laybourne, Oxygen's founder, said in a statement that "this offering goes to the heart of what Oxygen is all about--providing unique services and solutions designed to help women manage their lives and realize their economic power."
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