Red Hat updates enterprise Linux platform

San Francisco - Red Hat is announcing availability Wednesday of Red Hat Enterprise Linux 5.2, with enhancements in virtualization, clustering, and hardware support.

Version 5.2 was described as a minor update by Red Hat's Daniel Riek, product marketing manager for Red Hat Enterprise Linux.

"We do these twice-a-year updates," Riek said.

With the release, virtualization of very large systems with as many as 64 CPUs and 512GB of memory is possible. Support for NUMA architectures is featured as well as improvements in security, performance, and management, Red Hat said.

CPU frequency scaling is offered for virtualized environments and for reduction of?? power consumption. Also, enhanced capabilities are featured for such hardware architectures as Intel X/86/x86-64, Itanium, and IBM Power and System z. These capabilities provide for improved performance, power usage, scaling, and manageability, Red Hat said.

Support for Intel's Dynamic Acceleration Technology permits power saving by "quiescing" idle CPU cores, Red Hat said. With quiescing, a computer is put into an inactive state to save power but can be reactivated quickly because it is still available and has not been completely shut down.

Also, performance is improved by "overclocking" of busy cores within safe thermal levels. Other hardware enhancements include device driver updates and certification of IBM Cell Blade systems.

A smarter scripting facility boosts clustering in version 5.2, said Riek. "The ability to talk to the applications that are being clustered has been improved," he said.

Red Hat Enterprise Linux 5.2 Desktop, meanwhile, includes enhanced support for laptop suspend/hibernate and resume, updated graphics drivers, and an update of desktop applications including OpenOffice 2.3 and Firefox v3.

Red Hat Linux 5.2 is available Wednesday via a Red Hat Network subscription.

U.S. military cites growing China space, cyber threat

WASHINGTON (Reuters) - The U.S. military painted China on Tuesday as posing a growing threat to the United States and others in space and cyberspace.

China is "aggressively" honing its ability to shoot down satellites along with other space and counter-space capabilities, said Army Brig. Gen. Jeffrey Horne of the U.S. Strategic Command.

Such know-how has big implications for Beijing's potential to curb access in the Taiwan Straits "and well beyond," he told the U.S.-China Economic and Security Review Commission, a congressionally created advisory group.

Horne, deputy head of the Strategic Command's joint component for space, said recent Chinese People's Liberation Army writings suggested China might target an enemy's spy satellites along with navigation and early-warning spacecraft "to blind and deafen."

China's unannounced destruction of one of its own defunct weather satellites in January 2007 showed the PLA's ability to attack satellites operating in low-Earth orbit, he said.

The United States and the old Soviet Union demonstrated such anti-satellite capabilities of their own, initially in the 1980s. The Chinese embassy did not return a call seeking comment.

Horne did not spell out the implications for possible U.S. responses to any Chinese attack on Taiwan but said the United States must "proactively protect our space capabilities."

Among arms makers eyeing this market are Lockheed Martin Corp, Boeing Co and Northrop Grumman Corp, the Pentagon's top three contractors by sales.

Beijing regards Taiwan, a self-ruled island of 23 million people, as a breakaway province to be brought back to the fold, by force if necessary.

Another Strategic Command officer described cyber attacks as perhaps the most significant 21st century threat and said China was boosting its capability to carry them out.

Col. Gary McAlum of the command's Joint Task Force for Global Network Operations said several Chinese advances had surprised U.S. defense and intelligence officials.

He cited a new report by Kevin Coleman of the Technolytics Institute, a McMurray, Pennsylvania, consultancy, as saying China aims to achieve global "electronic dominance" by 2050, including the ability to disrupt information infrastructures.

"I think we could discuss that date offline," McAlum told the commissioners, seeming to imply he thought China might get there sooner than mid-century. Coleman is a former chief strategist of the Netscape division of America Online Inc.

One U.S. expert countered, in a telephone interview, that it would be odd to expect China to sit still if it perceived a threat to its strategic weapons and communications in any future conflict.

"It is unreasonable to think that Beijing will permanently accept vulnerability," said David Lampton of the Johns Hopkins School of Advanced International Studies and author of the new book "The Three Faces of Chinese Power: Might, Money, and Minds."

In a third presentation to the commissioners, a State Department official described China's nonproliferation record as mixed.

Chinese companies have kept on shipping weapons to Iran, despite evidence Tehran is supplying insurgents in Iraq and Islamist groups, said Patricia McNerney, principal deputy assistant secretary for international security and nonproliferation.

But she praised two big Chinese companies sanctioned repeatedly in the past by the United States for alleged violations of international arms-export pacts.

McNerney said the United States had conferred with the two -- China North Industries Corp, or NORINCO, and China Great Wall Industries Co. Their response has been "very encouraging," she said.

"Both companies have adopted comprehensive internal compliance programs and are implementing policies to ensure that inadvertent transactions do not occur," she testified.

NORINCO, for example, had committed to not selling arms to North Korea and Iran and claims to have turned down more than $100 million in potential contracts with such governments, McNerney added.

Hungarian student hurls eggs at Microsoft CEO Ballmer

SEATTLE - Microsoft Corp. Chief Executive Officer Steve Ballmer scrambled for cover from an egg-hurling protester during a talk at a Hungarian university Monday.

Unlike his boss, Chairman Bill Gates, who was hit in the face with a cream pie a decade ago, Ballmer managed to dodge the eggs.

Ballmer was delivering a speech entitled "You can change the world" to a group of business and technology students at Budapest's Corvinus University when the incident occurred, according to Microsoft spokesman Lou Gellos.

A young man in glasses stood up, pointed at Ballmer and loudly demanded that Microsoft return money it had stolen from the Hungarian people. Then he calmly threw three eggs at Ballmer.

A video of the outburst in a large classroom was widely distributed over the Internet Tuesday. In the footage, Ballmer crouched on the floor behind a large podium as the third egg smashed against the white board behind him.

The man, wearing a white shirt that read "Microsoft corruption," was escorted out of the room at the behest of the dean of the university.

Gellos said Microsoft does not know who the heckler was. The video shows him leaving peacefully; the crowd even laughs at one point.

Ballmer, who initially looked shaken, appeared to recover quickly. He smiled, shrugged and drew laughter from the audience with a quip: "It was a friendly disruption."

Gellos declined to comment on what, if any, security measures were in place that day.

Ballmer was in Budapest to announce Microsoft's leading role and investment a technology skills training program in Hungary, in partnership with the government and other companies. Later in the day, he also accepted an honorary fellowship from the university, according to Gellos.

Review: Netflix delivers Internet movies to TV

NEW YORK - It's the big horse race in the gadget market this year: Who's going to win consumers' hearts with a box that brings Internet movie downloads to the TV set? Now, we have a tiny box that deserves to be a winner.

Roku Inc., a small maker of Internet-connected media devices, this week introduced a black box that grabs movies and TV shows from Netflix, the DVD rental-by-mail pioneer.

You attach the Netflix Player to your TV, and connect it to your home broadband connection over Wi-Fi or a cable. Pick a movie using the included remote, wait a minute for the download to start, and then watch on your TV.

There are couple of other boxes on the market that do the same thing, including the Apple TV. The Roku Netflix Player, which is half the size of a Nintendo Wii, isn't really better than any of them, but it has one tremendously attractive feature: its price. In a shaky economy, that's the kind of feature that seals the deal.

It costs just $99.99. Even more importantly, it's cheap to use. If you already subscribe to Netflix's DVD rentals, you pay nothing extra to watch as much Internet video as you want, as long as your monthly plan is $8.99 or more.

This makes the Roku-Netflix combination a far better deal than its competitors. Apple Inc.'s device costs $229 and lets you rent movies from iTunes for $2.99 to $4.99 each. Vudu Inc. sells an eponymous box for $295, with similar rental prices. Various TiVo Inc. digital video recorders will let you download movies from Amazon.com. The catch with all of these is that you have just 24 hours to watch a rented movie; if you need more time, you have to pay the rental fee again.

If you're the kind of person who sits down once a week to a watch a movie straight through, that will cost you about $15 a month for four movies with either box. But if you watch those movies in half-hour segments four days a week, you're paying more like $60 a month.

Apple, Vudu and Amazon.com aren't directly to blame for their rental terms, which are set by movie studios. Vudu has managed to double the rental period on independent movies.

Netflix, on the other hand, manages to skirt these onerous rental terms entirely by licensing the movies from the studios not for downloading, but for streaming.

The downside to this model is that Netflix has fewer "big" movies available, and they take longer to show up after they leave theaters. Some of its 10,000 instant-view movies are exercises in obscurity, like the Italian horror movie "Planet of the Vampires." But there are enough good flicks to give you your money's worth and more, like "Letters from Iwo Jima," "La Vie en Rose" and "Pan's Labyrinth." TV shows include "Dexter" and "Heroes."

You pick the movies on the Web site, using your computer, and place them in a "queue." Back at the TV, you pick among the movies in the queue with the remote. You can't access the entire instant-view catalog through your remote — you have to preselect on the computer. I didn't find this to be a problem.

So how do the movies look? Good enough, in most cases. Everything is in standard definition, but the quality varies considerably from movie to movie, and with the speed of your Internet connection. At a download speed of 2.2 megabits per second, the maximum quality delivered by Netflix, "Heroes" looks as good as or better than a DVD. "Blade Runner" looks terrible at any speed, apparently because of low-quality source material.

Most of the content is watchable, but if your broadband line is medium-range DSL at 1.5 mpbs, the quality will be substantially less than if you have 3 mbps or more.

I also found that if I connected the player to the Internet using Wi-Fi, the speed of the download varied between 1 mbps and 2.2 mbps, with an attendant change in picture quality. When I connected the box to my Internet router with a cable, everything came down at 2.2 mbps.

There's no surround sound, but if Netflix were to add that to its movies, the box would play it, according to Anthony Wood, chief executive of Roku. Wood also said the player is capable of high-definition video, if Netflix would provide it. HD would probably require a download speed of at least 6 mbps, and it might be tough to get it to work over Wi-Fi.

The Apple TV and Vudu are less dependent on the speed of your Internet connection, because they contain hard drives that can store a movie for later viewing if the connection is slow. Each also has about 100 HD movies available.

The lack of a hard drive in the Netflix Player is part of the reason it's so cheap, but it's also behind its one really annoying feature: reversing and fast-forwarding takes much too long. Since it takes up to a minute for the box to "find its place" in a movie by downloading the content from Netflix, skipping back 10 seconds to listen again to a missed line can take much longer.

For me, the low price was an effective dose of Gold Bond powder on this irritation. Starting a movie takes up to a minute? Yes, but hey, it's cheap! The picture quality varies a great deal, and there's no HD? Yes, but you can't expect the world for $8.99 a month.

Roku's box is just the first of what Netflix hopes is a whole family of products that get movies from its Web site. LG Electronics is planning to include the streaming capability in a Blu-ray DVD player later this year, and two other unnamed manufacturers are bringing out set-top boxes.

But I don't see a big reason to wait for them. Even if the Roku player sacrifices a few things to limbo under the $100 price level, it's a no-brainer for the 8 million-plus Netflix customers out there. If you're not one, this is an added reason to become one.

Time Warner to reap $9.25 billion windfall in cable spinoff

NEW YORK - Time Warner Inc. said Wednesday it would formally split off its cable TV business, giving the media conglomerate a $9.25 billion windfall and allowing it to focus on cable network, entertainment and publishing operations.

The separation with Time Warner Cable Inc. gets Time Warner out of the media distribution business altogether, something investors had been clamoring for. The company announced its decision to split up last month and said Wednesday that the boards of the two companies had agreed to financial terms.

Time Warner Cable is the second-largest cable provider in the country after Comcast Corp. with about 13.3 million video subscribers. It has been a public company for more than a year, but Time Warner had held on to an 84 percent stake.

Jeff Bewkes, Time Warner's CEO, said in a statement that separating Time Warner Cable into its own business will give both companies "greater strategic, financial and operational flexibility" in order to compete.

Cable operators tend to have much different capital requirements than entertainment and other kinds of media companies, with significant demands for investing in infrastructure and new technologies as well as a reliable base of cash flows needed to service the debt needed for those investments.

Having its own stock will also allow Time Warner Cable to have a currency to use in potential acquisitions for other cable providers.

Time Warner said it would distribute the proceeds of the $9.25 billion dividend from Time Warner Cable to its shareholders in a yet-to-be-determined "tax-efficient manner." The split, which is expected to close in the fourth quarter, must receive a favorable tax ruling from the IRS as well as other regulatory approvals and local franchise clearances.

Investors cheered the terms of the spinoff and dividend, which Time Warner Cable with fund with its existing credit facility and a two-year bridge loan from a syndicate of banks.

Time Warner Cable's shares rose $1.18, or 3.9 percent, to $31.40 Wednesday morning while Time Warner's shares rose 19 cents, or 1.1 percent, to $16.34.

Once Time Warner Cable is split off, Time Warner will be a largely entertainment-focused company centered on the Warner Bros. movie and TV production studio, the Time Inc. magazine publishing group and a large portfolio of cable networks that includes HBO, CNN, TBS and TNT.

The next strategic imperative for Time Warner and Bewkes, who became CEO at the beginning of the year, is to figure out what to do with its struggling AOL division, which is trying to remake itself as an online advertising company as revenues from its legacy dial-up Internet access service rapidly dwindle.

Time Warner is in the process of separating AOL's advertising operations from the access service and has been considering various possibilities for a transaction or combination with another major Internet company such as Yahoo Inc., Microsoft Corp. or News Corp.'s MySpace.

Those talks have been complicated by Microsoft's continuing interest in some kind of transaction with Yahoo, an effort by the software maker to delve further into the growing online advertising market and compete with market leader Google Inc.

Investors have been adamant that Time Warner further simplify its sprawling capital structure and take other aggressive action to boost its lagging share price, which has largely traded below $20 for the past five years.

The splitoff calls for Time Warner Cable paying a total dividend of $10.27 per share or $10.9 billion to shareholders, of which parent company Time Warner will receive $9.25 billion.

Time Warner also will convert its supervoting Class B shares into common stock on a 1-for-1 basis, creating a single class of stock.

IT companies now largest sector in S&P 500

IT was last the top dog of the index in early 2002 as tech bubble was deflating, according to Howard Silverblatt, senior index analyst at Standard & Poor's.

At Tuesday's close, IT represented 16.26 percent of the S&P 500, compared with 16.19 percent for financials, Silverblatt wrote in a report. It expanded its lead on Wednesday.

At the peak of the boom in March 2000, the IT sector made up 34.51 percent of the index, Silverblatt said.

This time, the IT sector is not the biggest because of giddy growth, but because it's been hit less hard than the financial sector by the credit crunch and economic weakness.

Financial stocks have retreated 29.11 percent since their peak on Oct. 9 last year, according to Silverblatt's calculation, while IT companies have lost 8.74 percent.

"Information Technology stocks didn't go up, the leaders went down," Silverblatt wrote.

The trend continued Wednesday with the financial sector losing 2.6 percent and IT retreating 1.9 percent.

Microsoft lures search traffic with cash rebates

REDMOND, Wash. - Microsoft Corp. is offering cash rebates when people make purchases after using its search engine as the software maker begins to reveal how it plans to take on Google Inc. following the failure of its $47.5 billion bid for Yahoo.

Analysts and investors have been eagerly awaiting details about "Plan C" after Microsoft acknowledged that its Plan A of going solo was troubled but also withdrew its Plan B — acquiring Yahoo — because Yahoo executives sought more money.

Under the cash program revealed Wednesday, Web shoppers who sign up for an account and buy items found using Microsoft's Live Search cashback site will receive a percentage of the purchase price deposited into their account.

When the total reaches $5, the shoppers can redeem their "cold, hard cash" via eBay Inc.'s PayPal. Microsoft said the rebates are funded with a portion of the money it collects from advertisers.

So far, more than 700 merchants, including Home Depot and Zappos.com, have listed products on the site.

Microsoft Chairman Bill Gates said in a speech that he believes the cashback program will boost the number of people using Live Search for shopping, at least. More grandly, he predicted it will change the economics of the search advertising market as advertisers shift from paying for click on links to paying for concrete actions, like completing a purchase.

The online advertising market overall has begun to move in that direction with advertisers under increased pressure to deliver results from their spending. Historically, search ads that have made companies like Google Inc. successful are typically sold by the click, which itself was seen as revolutionary compared with the traditional method of paying for ads by the number of viewers.

"It's exciting. I think years from now you may look back and say, 'Wow, search started to get a fair bit more competitive,' and you can look back to that announcement," Gates said.

"By giving money directly back to the consumer, Microsoft hopes to change the balance of power," wrote IDC research analysts Caroline Dangson and Susan Feldman. They predicted that if Microsoft's effort is successful, advertisers will sink the bulk of their advertising into such rebate programs.

This isn't the first time Microsoft has resorted to buying search traffic. The software maker has tried offering large companies software and services credits for every employee who used Microsoft's search engine at work.

Microsoft also developed a collection of free games last year that triggered a Web search with every play. Players could rack up points and exchange them for prizes, including software, Xbox consoles and Zune media players.

The tactic — more common among fledgling or niche search engines trying to make a splash — may not make much of a difference, if the past efforts are any indication. The corporate bounty program remains in pilot phase and the games only temporarily boosted its search share.

Danny Sullivan, editor of the search news site SearchEngineLand.com, said in a recent interview that he recommended Microsoft pay people to use Live Search — as an April Fool's joke. Microsoft, however, is under very serious pressure to come up with a way to boost search market share.

In the absence of a coherent Plan C, Microsoft is said to have revived talks with Yahoo Inc. about a more limited search and advertising deal, but executives barely mentioned the Y-word during the two-day annual conference for advertisers and ad agencies at its headquarters in Redmond.

Gates' closing keynote left the impression that improving its own search engine over the coming years is, in fact, its Plan C. Live Search cashback is a "good illustration of what we'll be doing," Gates said. "We're about having the best search, the best results ... but also, some of these innovations in the business model will help excite that and drive that."

Also on Wednesday, Kevin Johnson, president of Microsoft's platforms and services division, said Microsoft does not currently have its eye on buying any single company, and that it plans to build its digital advertising business in-house, helped by past acquisitions.

The Web site describing the Live Search cashback program is up and details were reported Wednesday in the Seattle Post-Intelligencer and The Wall Street Journal.

Facebook preparing for redesign to clear clutter

PALO ALTO, Calif. - Having nearly tripled its audience and added about 20,000 new applications over the past year, Facebook Inc.'s popular online hangout is about to undergo a housecleaning.

Visitors who can't stand the clutter that's been piling up will be glad to see that the site's new look sweeps disparate bits of information into categories marked by tabs at the top of each user's customized home page.

Basic personal background and interests will be filed under an "info" tab, for instance, while news about users' buddies' latest activities will land under a "feed" tab, pictures will be corralled in a "photo" section and applications will be easily located under a "programs" tab. That content is now scattered, creating a confusing mishmash that has frustrated some Facebook users.

The facelift, in the works since January, is to debut in June.

Besides tidying the site, the overhaul should give users more control over their profiles, Facebook managers said Wednesday as they previewed the redesign at the startup's Palo Alto headquarters. Users will be able to magnify information they want to emphasize and downplay other features, for example.

Even so, many users are likely to protest, said Mark Slee, the Facebook product manager overseeing the facelift.

"Change is difficult for our users, even positive changes," Slee said. "But we are pretty confident that we can walk everyone through this so they will be engaged with the changes and enjoy them."

Facebook has had to quell two user rebellions since Mark Zuckerberg started the site a little over four years ago while he was still an undergraduate at Harvard University.

In 2006, users railed against a feature called "news feed" as too intrusive because it shared too much information about their activities. The backlash caused Zuckerberg to apologize and tweak the application to give users more control over how the information was shared. The news feed is now a Facebook staple.

Zuckerberg, 24, apologized again late last year after a tracking tool called "Beacon" caught users off guard by broadcasting information about their shopping habits and personal preferences expressed by their activity at other Web sites. Facebook decided to allow users to turn off Beacon, diminishing its reach and possible value to advertisers.

Despite those hiccups, Facebook has emerged as Silicon Valley's hottest startup since Internet search leader Google Inc., which recently has been losing some of its prized employees to Facebook. Ben Ling, a former top engineer at Google, is part of the team working on Facebook's overhaul.

Microsoft Corp. put its stamp of approval on Facebook late last year by paying $240 million for a 1.6 percent stake in the startup — a deal that implied a $15 billion value for Facebook.

Since dropping a $47.5 billion offer to buy Yahoo Inc., Microsoft reportedly has been mulling a bid for Facebook, although Zuckerberg has repeatedly indicated he wants to preserve the privately held company's independence.

Facebook turned into a potential gold mine as it extended beyond its initial goal of allowing college students swap information about each other. The site now has 70 million users worldwide, up from about 24 million a year ago.

Zuckerberg's decision to open Facebook to outside applications last year has played a key role in Facebook's rapid growth. Since then, developers have contributed 20,000 applications that make it easier to distribute photos, share music and play games.

But all those programs were starting to make Facebook look jumbled — a problem that also has plagued the Internet's largest social network, News Corp.'s Myspace.com.

Facebook is trying to address the situation without alienating the outside developers who helped fuel the site's success. That's taken on added importance since Google launched a network last year to help developers create applications to run on multiple Web sites.

After spending months addressing their concerns, Facebook plans to open a "sandbox" where programmers can experiment with how things will work at the redesigned Facebook.

"There may be some short-term pain, but I think there will be more long-term gains," predicted Ling, who is Facebook's director of platform product marketing.

Plan to trim cell phone cancellation fees draws criticism

WASHINGTON - A wireless industry proposal under consideration by the government that would make it easier for cell phone customers to break up with their service providers was met with withering criticism by consumer advocates on Wednesday.

The plan would give consumers a break on fees charged when they quit their service early, but would also let cell phone companies off the hook in state courts where they are being sued for hundreds of millions of dollars by angry customers.

Cell phone companies routinely charge customers $175 or more for quitting their service early. Under a proposal being reviewed by the Federal Communications Commission, the wireless industry would give consumers the opportunity to cancel service without any penalty for up to 30 days after they sign a cell phone contract or until 10 days after they receive their first bill.

The proposal would require companies to reduce fees month by month over the course of a contract based on how long customers have left, according to people familiar with the offer who spoke on condition of anonymity because the FCC has not approved it.

It would not abolish cancellation fees entirely and would not refund such fees to anyone who already paid them.

If approved by the FCC, the proposal would take away the authority of states to regulate the charges, known as early termination fees.

"If this plan goes through, the nation's largest cell phone carriers get a get-out-of-court-free card," said Chris Murray, senior counsel for Consumers Union, the nonprofit publisher of Consumer Reports magazine. "We have long opposed limiting consumers' rights to sue, and that seems to be what we're doing here."

Another expert agreed.

"The consumer protections are an inadequate fig leaf to justify federal pre-emption," said Patrick Pearlman, a lawyer with the consumer advocate division of West Virginia's Public Service Commission. "The FCC is not an adequate policeman."

The nation's No. 2 wireless company, Verizon Wireless, offered the proposal to the FCC for its review after high-level meetings with senior FCC officials. It did so in consultation with other leading wireless companies, whose executives indicated they would not oppose its provisions, people familiar with the offer told The Associated Press.

The FCC has declined to comment on the proposal.

Wireless companies said the cancellation fees are necessary to recover the cost of cell phones, which they subsidize under long-term service contracts, and to defray their costs for signing up new customers. Consumer groups said the fees are unreasonable and intended to discourage customers from switching among providers.

The expensive fees have led to class-action lawsuits in several states and legislative proposals on Capitol Hill and in state legislatures around the country.

The industry's proposal would link cancellation fees to actual costs incurred by a wireless company, and it would require companies to prorate any fees over the course of the contract. Verizon Wireless currently prorates fees down to $60. AT&T Inc. will begin prorating fees Sunday.

The proposal also would prohibit a wireless company from imposing a termination fee on customers who change terms of their contract or end one contract period and begin another.

Verizon Wireless is a joint venture between Verizon Communications Inc. and the Vodafone Group PLC of Britain. Verizon Wireless, with about 66 million subscribers, is second to AT&T Inc., with 70 million customers.

The wireless industry is increasingly worried about a series of long-running, class-action lawsuits in state courts. One lawsuit against Sprint Nextel is under way in California, and plaintiffs in a New York case in arbitration are seeking $1 billion in refunds.

Federal law prohibits states from regulating wireless rates but gives them authority over some terms and conditions under wireless contracts. The industry's Washington lobbying group, CTIA, previously asked the FCC to consider cancellation fees to be rates, which would preclude state governments and courts from any jurisdiction over them.

In September, Sens. Amy Klobuchar, D-Minn., and Jay Rockefeller, D-W.Va., introduced the Cell Phone Consumer Empowerment Act, which would require prorated fees and a 30-day window for customers to exit a contract.

Klobuchar said in a statement Wednesday that carriers should not be given a "multimillion-dollar handout" by the FCC for making the "practical and reasonable change" of prorating early termination fees.

FCC Chairman Kevin Martin has been mum on the negotiations and there has been no word on how far the proposal has progressed or when it might be made public by the agency.

Honda to roll out cheap new hybrid model in early '09

TOKYO (Reuters) - Honda Motor Co (7267.T) said on Wednesday it would launch a new, low-cost hybrid car in Japan, North America and Europe in early 2009 as it seeks to cut the lead of Toyota Motor Corp (7203.T) in the green car race.

Despite the pressure of record-high oil prices and concerns over climate change, fuel-efficient and low-emission hybrids still occupy a small niche in the global car market, partly due to their higher costs for both consumers and automakers.

Japan's top two automakers lead the industry in the fuel-saving technology which runs on both electricity and gasoline, but Toyota has dominated sales with its groundbreaking Prius model, which is only available as a hybrid.

Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, said it was hard to know whether Honda could challenge Toyota's dominance.

"When you say 'hybrid,' the image that really comes to mind is Prius," he said. "Honda is very dependent on the U.S. market, which is shifting towards things like hybrids, and for survival having a hybrid (model) is essential."

By twinning a conventional engine and battery-powered electric motor, hybrids currently add $5,000 or more to comparable gasoline models, a premium Honda Chief Executive Takeo Fukui sees coming down to around $2,000 in the next generation of hybrids.

"It is important to move hybrid vehicles from the current image-oriented stage to the new stage toward full-scale penetration," Fukui told a news conference.

Executive Vice President Koichi Kondo said Honda hoped to price the hybrid-only car under 2 million yen ($19,290).

Honda now only sells one hybrid car -- a gasoline-electric version of the mass-volume Civic sedan which starts at around 2.3 million yen -- after discontinuing its hybrid-only Insight 2-seater in 2006 and a hybrid version of its Accord in 2007.

Honda expects annual sales of 200,000 for the new hybrid. Total hybrid sales, including the Civic hybrid, a new hybrid version of its popular Fit subcompact and a planned sports car based on the CR-Z concept model, are expected to reach 500,000 vehicles a year after 2010, roughly one-tenth of total sales.

FIVE-DOOR, FIVE-SEATER

Announcing other details of the new hybrid-only car for the first time, Honda said the car would be a 5-door, 5-seater similar in design to its sleek FCX Clarity fuel-cell vehicle.

The car would use more compact and lightweight components for the hybrid system and have a new vehicle platform that places the control unit and battery underneath the cargo space.

A new production line for electric motors will be added at Honda's Suzuka factory in western Japan to more than double the production speed and cut costs.

Toyota is also racing to slash production costs for future hybrid cars. It has not disclosed when the third-generation Prius would be ready, although many expect a 2009 launch.

Toyota, the world's biggest automaker, is aiming to achieve annual hybrid sales of 1 million vehicles soon after 2010, also targeting roughly one-tenth of its total sales.

Few other automakers have managed to mass market hybrid cars after Toyota blazed the trail with the first Prius in 1997.

Nissan Motor Co (7201.T), Japan's No.3 automaker, is due to launch its own, in-house developed hybrid car in 2010, the same year General Motors Corp (GM.N) plans to launch its plug-in hybrid, the Chevrolet Volt.

Honda shares ended down 2 percent in a weaker Tokyo market (.N225) and have fallen about 11 percent this year, outperforming Toyota, Nissan and GM, which have fallen 13-24 percent.

MANUFACTURING INNOVATION

At its mid-year news conference, Honda also outlined plans to introduce new manufacturing methods at several Japanese factories to boost efficiency and lower costs.

Honda said it plans to invest about 158 billion yen to make the improvements at two domestic factories, one for engines and the other for cars. The car factory, in Yorii, near Tokyo, is due to start production in 2010.

A new minivehicle factory to be built by subsidiary Yachiyo Industry Co (7298.Q) would also introduce innovations that would help Honda gain low-cost know-how, Honda said.

"Fundamental reform and improving cost competitiveness in the minivehicle market, where cost pressures and customer expectations are very severe, will enable Honda to gain a significant edge in fighting intensifying global competition in future," Fukui said.

Honda, which plans to improve fuel efficiency on bigger cars with clean-diesel technology, expects to sell more than 4.5 million cars and 18 million motorcycles worldwide in 2010. Last year, it sold 3.767 million cars and 13.48 million motorcycles.

(Additional reporting by Elaine Lies; Editing by Lincoln Feast)

($1=103.70 Yen)

7 Cool Bluetooth Gadgets

Bluetooth revolutionized electronics 10 years ago with its wireless technology that enables devices to communicate with each other. Here's a look at some of the latest Bluetooth-enabled devices

By Michal Lev-Ram

1. PARTY speakers from Parrot (Black Edition)

Price: Available this summer for $150

This portable, wireless speaker system lets you listen to music - beamed - from your phone or PC. It's also got a built-in technology called Near Field Communications (NFC), which allows users to pair it with a mobile device by simply tapping the two together. Unfortunately, there's just one NFC phone currently on the market, and it's only available overseas.

2. Calisto Pro Series from Plantronics

Price: $280

You know the cellular industry has made it when home phones start looking like mobile handsets. This sleek landline telephone from Plantronics is made for home use but comes with a Bluetooth headset that can also work with a cell or VoIP phone.

3. S-Frame digital photo frames from Sony

Price: $190 - $250, depending on size

You'll need a Bluetooth adapter to transfer images from your cell phone to this new picture frame. The frame's LCD screen can display images up to 48 megapixels, and offers 10 slide show variations on top of clock and calendar views. Two index modes let you preview several photos at once.

4. SUN headset by Iqua

Price: $80

This solar-powered Bluetooth headset converts light into power, which means you won't have to worry about recharging the battery every night. While it's a bit large (due to the built-in mini solar panel), the eco-friendly SUN claims to get nine hours of talk time.

5. MBW-150 watch from Sony Ericsson (Music Edition)

Price: $400

This James Bond-like, water-resistant gadget works in conjunction with your handset by vibrating each time you receive a new call or text message and letting you control your
mobile music. The one downside: The watch only works with select Bluetooth-enabled phones made by Sony Ericsson.

6. Virtual laser keyboard from Golan Technology

Price: $160

This futuristic-looking portable device uses infrared and laser technology to project a full-size, working virtual keyboard on any surface. It uses Bluetooth technology to pair with both laptops and compatible cell phones for typing messages on the go.

7. V610 EasyShare camera from Kodak

Price: $350

Using embedded Bluetooth wireless technology, the V610 allows users to take pictures and beam them straight to their PC or a compatible printer. This small, 6-megapixel camera also comes with dual-lens technology and a 2.8-inch high-resolution color display.

Microsoft to offer money for search engine use

REDMOND, Washington (Reuters) - Microsoft Corp said on Wednesday it launched a new "cashback" search service that pays users a rebate for buying products they found through the company's Windows Live search engine.

Live Search cashback is the latest attempt by the world's largest software maker to draw users to its online search engine, which is a distant third behind market leader Google Inc and Yahoo Inc.

"This is giving you a reason why you should use a particular search engine," Microsoft Chairman Bill Gates said at the company's Advance 08 advertising conference.

Microsoft sees online search as a critical component to establishing an online advertising powerhouse. By placing text-based ads next to results from its ubiquitous search engine, Google has become the leader in Web advertising.

A product search on Windows Live will call up links to online retailers offering that item. The user who buys that item from the retailer's site will get 2 percent to 30 percent of the purchase price back as a rebate.

Consumers would have to sign up for a free Windows Live cashback account to participate in the program. Rebates would be issued after a 60-day waiting period to make sure there are no returned products.

Microsoft's Gates said it will partner with more than 700 retailers including eBay Inc, Barnes & Noble, Sears and Home Depot Inc.

Redmond, Washington-based Microsoft will offer advertisers a cost-per-acquisition model of payment, meaning that they only pay for ads that lead to purchases. The current cost-per-click model charges advertisers for every click on a sponsored link associated with certain keywords.

"If you knew the user and watched their behavior you could do a lot better for them in terms of taking them directly to the information or presentation they want. Search can be dramatically better," said Gates.

"We think we're entering a period where there'll be quite a bit of change (in search)."

The company's effort to gain more market share in Web search led to its unsolicited offer to buy Yahoo Inc earlier this year. It withdrew a sweetened $47.5 billion offer a few weeks ago, but said on Sunday it had re-approached Yahoo with an alternative deal.

A source familiar with the talks said Microsoft had offered to buy Yahoo's search business and take a minority stake in the rest of the company after selling off its Asian assets. Microsoft executives did not address the Yahoo issue directly at the conference.

Microsoft also launched Live Search Farecast, based on the airfare-predicting technology that the company bought in April through its acquisition of travel site Farecast. Microsoft also said it will consider cash rebates for flights booked through the search.

Shares of Microsoft fell 51 cents, or 1.77 percent, to $28.25 on Nasdaq.

(Reporting by Bruce Rutledge, writing by Daisuke Wakabayashi in Los Angeles, editing by Maureen Bavdek, Richard Chang)

Lonely hearts with disease, STDs, find love online

SYDNEY (Reuters) - With scores of dating Web sites catering for the bold and the beautiful, a growing number of niche sites are emerging for less fortunate lonely hearts, those struggling with mental or physical problems.

Australian matchmaker Sara Fantauzzo came up with www.SpecialSomeone.com.au to link up people with special needs after watching her autistic brother struggle to make friendships.

"I've grown up with a brother with a very mild disability and I've seen him very low and very depressed as a direct result of rejections," Melbourne-based Fantauzzo, who set up the Web site with her husband Otis nearly a year ago, told Reuters.

"I got sick of seeing Marc at home on a Saturday night or having him come along with my friends because he never had anyone to go out himself."

Fantauzzo came up the idea of a Web site to match up people with special needs after noticing her brother joining a few community groups with people with different disabilities and these groups were far more accepting of a wide range of problems.

Similarly American Ricky Durham set up www.prescription4love.com, which matches people suffering from a list of health conditions, after realizing how difficult it was for his brother Keith who had Crohns Disease to meet someone.

"It was hard for him to disclose his disease to anyone, but it was really hard for him to tell someone he had a colostomy bag," Durham told Reuters.

"I thought if he met someone at a Web site where everyone had the same condition, there would be nothing to disclose."

His brother died in 2004, aged 41, as the Web site was being developed but Atlanta-based Durham pushed ahead.

The site launched two years ago and now has about 5,300 members from the United States, Australia, Britain, Canada and Israel suffering from more than 50 types of illnesses and disorders including multiple sclerosis, hepatitis, lupus, Tourette Syndrome, sexually transmitted diseases, and obesity.

HONESTY IN SEARCH OF LOVE

"The ex gave me the gift that keeps on giving ... Herpes," wrote one member. "What I'm looking for is someone who understands why I am on this site and is still willing to live our lives to the fullest and not let this "problem" stop us."

Analysis company Hitwise estimates there are now more than 1,350 dating sites in the United States alone which is up from 876 three years ago with 44 percent catering for niche groups.

Specialsomeone and Prescription4Love are two of a growing number of niche dating sites emerging for singles who don't fit the traditional mould, with strong growth also in matchmaker sites based on religion, sports, pet ownership and music.

Others include ones catering for people with disabilities like Disabled Dating World or ones for people with STDs like PositiveSingles.com.

Durham believes niche Web sites are successful because they are safe spaces for people seeking friendship or love who risk serious embarrassment talking about their condition with others who cannot relate to it. It also gives them a support network.

Large dating sites like RSVP.com, Match.com, eHarmony and Yahoo Personals have the general market in online dating covered but Hannah Schwartz, general manager of RSVP.com, said niche sites were becoming increasingly popular.

"Niche sites cater to things like religion, sexual preference, ethnicity, lifestyle, hobbies, and dietary needs," Schwartz told Reuters.

(Reporting by Pauline Askin, Editing by Belinda Goldsmith)

SugarCRM Launches Data Center Edition

Customers and partners of open-source CRM (customer relationship management) vendor SugarCRM will be able to deploy and manage a number of instances of the software through a new management console, the company announced Wednesday.

The enterprise version of SugarCRM Data Center Edition will let customers tailor and manage instances for different business units, while partners will be able to more easily customize SugarCRM based on users' needs and resell it in on-demand form, SugarCRM said.

The console can create an instance with "the click of a button," and its reporting capabilities allow customers to track usage levels and performance across multiple instances, according to the company.

It is in beta now and will be generally available within a few months. Pricing is tentative while the product remains in beta, according to a spokesman. Under current plans, partners would pay on a tiered basis, depending on the number of end users. Enterprises would pay $100 per year for each user being managed with the tools.

SugarCRM's move is "quite interesting," said Ray Wang, an analyst with Forrester Research.

Its ramifications go beyond a customer's CRM needs or helping partners resell SugarCRM's product, by providing the basis for a broader open-source business software platform, Wang suggested.

"Here you have an open-source product that is already compatible with other open-source technologies, including PHP and ZEND, the open-source e-mail tool Thunderbird, mySQL, and Linux," he said in an e-mail. "If they are successful, this is quite powerful given the current adoption trends towards hosting, multi-instance virtualization, and SaaS."

The announcement is the latest in a steady stream as SugarCRM attempts to gain credibility with larger customers.

"They need more of an enterprise story, and the [data center] move will play to that," said China Martens, an analyst with the 451 Group. "Going hand in hand with that, they need some name customers-- they have BDO Seidman, their largest user by far, with 9,000 users-- more of that level of usage would be very handy as SugarCRM tries to engage more with Salesforce.com."

However, as SugarCRM courts big enterprises, "one challenge will be to ensure that in doing so, they keep all parties happy, particularly the bulk of their customers, who have 10 to 20 seats," she said.

SugarCRM, which recently garnered an additional US$20 million in venture funding, claims to have about 3,000 customers in all.

Microsoft says aids Office/open-source interaction

ST GALLEN, Switzerland (Reuters) - Microsoft said on Wednesday that starting some time next year it will make it easier for users of an open-source rival to work with Microsoft Office.

Without adding any special software to Office, users will be able to open documents sent to them in the open source Open Document Format (ODF), the company said. As well, users will be able to edit and save documents in that format.

"Microsoft is going to be providing support for three new file formats directly in the Office product," said Erich Anderson, vice president and general counsel for Europe, in a telephone interview.

In addition to ODF, Microsoft will also support Adobe's popular PDF fixed format and Microsoft's competitor to PDF, known as XPS.

Microsoft offers support for ODF in its current version of Office but only if additional software is downloaded separately and installed.

The company did not address concerns expressed earlier this month by a British government agency, BECTA, that Microsoft's existing ODF software does not work very well.

BECTA has complained to competition authorities in London and Brussels that the ODF "translator software" has limited functionality and is poorly integrated, compared with Microsoft's own products.

The European Commission responded cautiously to Microsoft's statement.

"The Commission would welcome any step that Microsoft took towards genuine interoperability, more consumer choice and less vendor lock-in," it said.

The Commission added that it will look into whether Microsoft's announcement "leads to better interoperability and allows consumers to process and exchange their documents with the software product of their choice."

The Commission has fined Microsoft 1.68 billion euros since 2004, in large part for the company's failure to provide proper interoperability between its dominant Windows operating system and other software.

Microsoft has appealed against part of that, an 899 million euro fine imposed in February for its failure to co-operate. The company has said it will now cooperate with the Commission.

Microsoft said it will add support for ODF version 1.1 when it updates its Office 2007 product some time next year with "service pack 2."

The company said it would also join a technical committee that is discussing a newer version of ODF. It did not say how long it would support ODF or whether it would support successive versions of ODF.

Thomas Vinje in Brussels, a lawyer who has represented clients opposed to Microsoft, said the announcement was meaningless unless Microsoft made ODF the default standard when people opened office.

If ODF is not the standard its presence "won't matter because the vast majority will not use it. That was the experience in the U.S. case," he said, referring to a case which found Microsoft in violation of the Sherman antitrust act.

Carlo Piana, a lawyer in Milan who represents clients who make open source software, called Microsoft's approach "too little, too late."

He said that Microsoft should meld its own standards with ODF. Microsoft's own standards were recently adopted by the International Standards Organisation (ISO) as an alternative to ODF. The Microsoft standard is called OOXML.

(Reporting by David Lawsky, editing by Gerald E. McCormick, Richard Chang)

Mobile ads years away from breakthrough: execs

PARIS (Reuters) - Advertising on mobile phones has enormous potential to become a significant platform for marketers, but any breakthrough is years away and major operators must work together to succeed, executives said.

Mobile operators increasingly see advertising as a powerful offering, given falling traditional voice revenue, as it allows brands to target consumers based on their location and at times of the day when they are otherwise hard to reach.

Executives from advertising and telecoms groups told the Reuters Technology, Media and Telecoms summit mobile advertising was inevitable and would become hard to resist.

But it was still at the experimental stage, and many brands and mobile operators were wary of alienating customers.

"It will be slow, it will take time but it will be there," Maurice Levy, chairman and chief executive of advertising group Publicis, told the summit in Paris.

"Why? Because it will be in the interest of the phone companies, consumers and advertisers. So it will be very difficult to resist."

Forecasts suggest the mobile ad market will generate revenue of $1 billion to $24 billion within the next 4 years.

Many operators are experimenting with plans and one service, Blyk, has signed 100,000 clients in the UK with its offer of some free calls and text messages in return for accepting ads.

"If you look at the long horizon, I think that advertising on mobile phones is going to be very, very significant, simply because there are going to be 5 billion mobile phones and they are always with you," Hamid Akhavan, the head of Germany's T-Mobile, said.

STUMBLING BLOCKS

"There are people on this earth who in their life will never have a TV or a laptop but they will have a mobile phone. (So) thinking logically, there is no reason why mobile phones should not be the most powerful tool for advertisers."

All participants agreed there were many stumbling blocks.

Virgin Mobile USA told the Reuters summit in New York that it would use AOL's mobile advertising system exclusively to deliver banner ads to its customers who surf the Web on their phones. But they intended to approach the offering carefully.

"A cell phone is an intimate device," Chief Executive Dan Schulman said. "We pay a service provider to have that service and we don't want to be spammed, quite frankly."

French mobile operator SFR said there would be a market for mobile advertising and it had established a team to work on a business model, but said its customers would have to opt in.

"People will have to agree to take this service," Chief Executive Frank Esser said.

T-Mobile's Akhavan saw mobile advertising being held back by the large number of different phones and their capabilities, meaning the inventory space for advertising was very fragmented.

"By the time you say how many countries you cover and what your share of the market is, how many people have that kind of phone and how many of them are interested in Nike, you end up with an inventory of 6,000," he said.

"And are you going to go to Nike and waste their time over 6,000 potential customers?"

A cooperative model was likely the only way to succeed.

"So in Europe for instance all the big names have to work together, look at the inventory and try and figure out a way for us to share it in a very cooperative way and together go and pitch. That's the only way it is going to work," he said.

Akhavan said operators were starting to discuss this but that it was not a top priority.

JVC and Funai Elec to team up in LCD TVs: source

TOKYO (Reuters) - Japanese consumer electronics makers Victor Company of Japan Ltd (JVC) (6792.T) and Funai Electric Co Ltd (6839.OS) will jointly develop and supply LCD television sets, an industry source said on Tuesday.

The news pushed up shares of both companies, with Funai rising nearly 8 percent at one point.

Bigger rivals such as Sharp Corp (6753.T) have been forming similar alliances in the LCD business, where competition is intensifying.

JVC will supply LCD TVs made at a plant in Mexico to Funai, which will sell them under its own brand in North America, while JVC will market LCD TVs in Europe produced by a Funai plant in Poland, the source said.

The two plan to release a jointly developed LCD TV in 2009, the source added.

Funai spokesman Naoyuki Takanaka said his firm was in talks with JVC on a possible alliance but nothing had been decided. JVC spokesman Toshiya Ogata said nothing had been set.

Funai sells a large portion of its products in the United States through Wal-Mart Stores Inc (WMT.N) under the Emerson brand. Business with the U.S. retail giant accounts for roughly one-third of Funai's total sales.

JVC is set to integrate with Kenwood Corp (6765.T) after Kenwood and asset manager Sparx Group (8739.Q) in August acquired a combined 30 percent stake in JVC, taking the loss-making unit off the consolidated accounts of Matsushita Electric Industrial Co Ltd (6752.T).

Among other tie-ups in the industry, Toshiba Corp (6502.T) agreed in December to procure large LCDs from Sharp, which in turn will buy chips for LCD TVs from Toshiba.

Panasonic maker Matsushita plans to take a majority stake in an LCD making joint venture with Hitachi Ltd (6501.T), and Toshiba and will shoulder the bulk of the cost of a 300 billion yen LCD panel plant planned by the venture.

JVC shares ended the morning session up 5.3 percent at 180 yen and Funai rose 5.9 percent to 4,110 yen, both outperforming a 1.8 percent gain in the benchmark Nikkei average (.N225).

Blu-ray Disc--The New VHS?

Hello Blu-ray... adios, HD DVD. There was no doubt in my mind when I heard that Universal studios lined up with Warner Bros in its support for Blu-ray. Hold off on your calls and letters. I know--Universal is still supporting HD DVD too; see "Universal Denies Reports That It's Leaving HD DVD."

At the same time, if you read "Toshiba Slashes HD DVD Prices," you'll see that Toshiba appears to be dumping HD DVD players faster than Windows Vista users are switching to Macs. And Microsoft has said it couldn't care less about HD DVD (see "Microsoft: No HD DVD Xbox.")

Don't misunderstand. My decision is only in principle: I'm too cheap to actually run out and buy a Blu-ray player. Besides the cost of a player, I'd also have to buy new cables. Then there's the hassle of installing it and dealing with the schmutz behind the big-screen TV. So I'm waiting for prices to plummet.

I realize you'd rather do your own research. Sure, I agree, and here are a stack of articles for you to scroll through.

• Wiki's Blu-ray compendium
• Video: "Blu-ray Takes Lead in January Hardware Sales"
• "Bet on Blu-ray? Seismic Shift in DVD Format War"
• "Report: Universal to Sell Blu-ray, Too"
• "Sony Thanks Blu-ray Fans"
• "Japanese Porn Industry Embraces Blu-Ray Disc" (everyone's got a stake in the issue)

Dig This: "I should have seen that one coming." Among birders, there's a rule about looking up. Here's why. [Thanks, Moe.]

Dig This, Too: Your cell phone's outdated if it doesn't have a set of functions like this one. (Fair warning: Not suitable for children or adults who disapprove of "potty humor.") [Thanks, Shirley.]

Disc Players--HD DVD, Blu-ray, and Both

A couple of recent models--Samsung's BD-P1200 Blu-ray player and Toshiba's HD-A20 in the HD DVD camp--have great performance and reasonable prices, our Melissa Perenson says.

You might also take a look at our roundup, the "High-Def Video Superguide," which reviews scads of players and ranks the nine best available at the time into a handy chart. We did the roundup about a year ago, but most of the models are still around--and they cost a lot less now. For example, the Samsung BD-P1000 that started out at around $800 now sells for $500 or less.

Of course you can hedge your bets and get a combo player. Samsung has one--the Samsung Dual-Format High-Def Player Does Blu-ray and HD DVD."

Dig This:Here's a video of a bunch of Darwin Award nominees handling a difficult situation. It had me chuckling all morning. (And no, the dopey guy pulling the car from the bottom doesn't get crushed.)

Dig This, Too:Word Sandwich is an annoying game. That's because I had to think and reason, and went absolutely nowhere. The game plan is to guess a five letter word; you get hard-to-use clues. Lemme know if you get anywhere. [Note to Alex: I wasted 30 minutes; don't send me anything this difficult again, eh? Thanks.]

What Readers Have to Say

So in my blog the other day I asked loyal readers, "So whaddya think you'll do--HD DVD or Blu-ray?" Here's what they said...

"I'm all for HD DVD, but in the long run I see Blu-ray taking the ball...if either succeed. Video-on-demand seems to be taking off too. That's why this 'war' has lasted so long. Other ways have emerged to get movies now."--joker1231978

"The average Joe Blow does not want to spend a minimum of $425 for a Blu-ray player when he can get the HD DVD for $150 to $200.... Time will tell, but I wouldn't count out HD DVD just yet."--kasjun

"Blu-ray may outsell HD DVD.... [but] until Blu-ray also plays DVDs it can't win."--shanedr

"Just bit the Blu-ray bullet here as well, Steve. 'Lost, Season 3' on its way, first Blu-ray purchase, no looking back. My only quibble with the entire edifice is this:... I'm stuck with VHS and DVD and Blu-ray crap littering shelves and boxes in an attempt to have an 'authoritative' collection."--mattpeckham

(Matt is our gaming guy and I'm delighted to see he's reading my blog and commenting. Check out his "Game On" blog.)

"Universal is very firmly in the HD DVD camp, unless something has changed in the last 30 minutes. So HD DVD still has two very large Hollywood studios, and with Toshiba's current fire sale... things could change quite quickly. Consider that the overwhelming percentage of the public haven't made a decision either way (despite the blustery bravado of pimple-faced PS3 owners), but now might just pick up one of those HD DVD players for chump change. I wouldn't call this war over by a long ways."--dforbes

"This 'pimple-faced' PS3 owner is 33 with a PhD, and it is the centerpiece of my HE system. I picked up five of the $99 1080i HD DVD players from Wal-Mart, so it is not a problem for me who wins. However, I am pulling for Blu-ray, and I will be so glad when this is over.... The PS3 [which plays Blu-ray Disc] is one of the most underutilized pieces of equipment available."--Physics

I'd really like for you to chime in and join in on the brawl; click "Post a comment" at the bottom of this page. The only catch is that you have to be a PC World member to add a comment. If you're not already, don't fret: It's an easy, 2-minute process and you can Tips & Tweaks blog. Sign up to have Steve's newsletter e-mailed to you each week. Comments or questions? Send Steve e-mail.

Japan's Kyocera to exit China mobile handset market

TOKYO (Reuters) - Japanese electronics maker Kyocera Corp (6971.T) plans to withdraw from China's booming mobile phone handset market due to mounting losses amid competition from cheaper producers.

Kyocera, which plans to buy restructuring electronics maker Sanyo Electric Co's (6764.T) mobile phone business, said on Tuesday it has agreed to dissolve a joint venture with Chinese electronics parts maker China Zhenhua Science & Technology Co Ltd (000733.SZ).

The withdrawal underlines the failure of Japanese firms' strategy to sell high-end models with cameras and music-playing capabilities in a market dominated by lower-priced phones by giants like Nokia (NOK1V.HE) and Motorola Inc (MOT.N).

"We will strengthen our handset business through synergies with Sanyo in Japan and in North America," Kyocera President Makoto Kawamura said at a news conference. "We decided there was no prospect for our business in China."

The venture posted annual losses of about 700 million yen to 800 million yen ($6.6 million to $7.5 million) ever since its start-up in December 2001, he said.

Kyocera would hand over 45 percent of its 70 percent stake in the venture to China Zhenhua, give the remaining to another company based in Hong Kong, and also forgive roughly 850 million yen in debt, a Kyocera spokesman said.

The losses would be reflected in fourth-quarter earnings, he said.

Kyocera revised down its outlook for the year to March to an operating profit of 140 billion yen, down from a previous forecast of 151 billion yen, on sluggish sales of ceramic packaging used to protect high-speed fiber-optic microchips.

The consensus estimate by fourteen analysts polled by Reuters stood at 147.5 billion yen.

Quarter of Apple iPhones "unlocked": analyst

SAN FRANCISCO (Reuters) - More than a quarter of people who bought Apple Inc's (AAPL.O) iPhone are using them on wireless networks other than AT&T's, the exclusive iPhone carrier in the U.S., a "stunning" number that will pressure the company's business model, an analyst said on Monday.

Bernstein Research analyst Toni Sacconaghi said analysis of sales numbers from Apple and AT&T Inc (T.N) revealed about 1.45 million phones were "missing in action" at the end of 2007.

About 480,000 of those were believed to be held by AT&T as inventory, leaving another 1 million phones, or 27 percent of the total, that Sacconaghi said were "unlocked" so they could work on non-AT&T networks.

Apple executives said last week the number of unlocked phones was "significant" but declined to give an estimate. Most analysts had estimated the portion of unlocked phones at under 20 percent.

Spokespersons for Apple and AT&T declined to comment.

The higher number is worrying for Apple because the company receives a cut of AT&T's iPhone service fees, revenue that carries a high gross margin and has fueled optimism over its earnings potential.

For example, Sacconaghi said, if Apple hit its sales goal of 10 million iPhones by the end of fiscal 2008 but 30 percent of those don't result in any carrier payments, its revenue and profit would be $500 million and 37 cents per share lower than expected.

If Apple cracks down on unlocked phones it could preserve its high margins but miss its sales target, whereas allowing them could erode profitability and make it tough to sign more carriers to similar revenue-sharing deals.

"Besides the financial implications, we believe the prevalence of unlocked iPhones presents a significant strategic dilemma to Apple," Sacconaghi wrote.

Apple shares closed unchanged on Monday at $130.01. Over the past month the stock has fallen 35 percent on concerns over consumer spending and what some analysts say are a lack of must-have products Apple has lined up this year.