Steve Ballmer has been ordered to testify in the “Vista Capable” class action suit. In September Ballmer tried to get out of exactly this by claiming that he had no direct involvement in Microsoft’s marketing campaign for the operating system. But papers submitted to the court last week said that Intel chief executive Paul Otellini had personally thanked Ballmer for Microsoft’s decision to ease the requirements necessary for PCs to be certified as “Vista capable”

Ballmer must give his deposition within 30 days of US District Judge Marsha Pechman’s order, which was filed last Friday, November 21st.

She said that this was evidence that Ballmer may have relevant knowledge to the case. Microsoft’s “Windows Vista Capable” labels first appeared on computers in April 2006.

On Thursday of last week, Microsoft asked a federal judge to dismiss the case altogether. Plaintiffs say that through the “Vista Capable” program, Microsoft violated the Washington Consumer Protection Act. By labeling PCs as “Vista capable” even though many of these PCs would only by able to run the most stripped down version of the new operating system, plaintiffs claim that Microsoft unjustly enriched itself by artificially keeping demand and prices for computers high. Microsoft is arguing that the plaintiffs cannot prove “any element of their price inflation theory”.

Original Article

Rupert Murdoch’s News Corporation is in talks with Microsoft about joining in its contested bid for Yahoo, according to people involved in the discussions. The combination, which would join Yahoo, Microsoft’s MSN and News Corporation’s MySpace, would create a behemoth that would upend the Internet landscape.

The talks are a surprising twist in the two-month-long takeover story that began when Microsoft made a $44.6 billion bid for Yahoo.

Yahoo has resisted Microsoft’s overtures, contending that it will not negotiate unless Microsoft raises its offer.

Yahoo, which wants to remain independent, has been in a desperate search for white knights, holding conversations with Time Warner’s AOL and News Corporation.

If News Corporation throws its weight behind Microsoft’s offer, that could allow Microsoft to raise its bid, putting even more pressure on Yahoo and its shareholders. At the same time, the alignment of Microsoft and News Corporation would remove a possible alternative for Yahoo, leaving it with fewer opportunities to escape Microsoft’s grasp.

The talks between Microsoft and News Corporation are at a sensitive stage, people involved in the discussions said. “There’s a long way to go before anything is definite,” one person involved in the talks said.

A Microsoft spokesman said he could not immediately comment. A spokesman for Yahoo declined to comment. A News Corporation spokesman said the company did not comment on “speculation.”

It is also possible that News Corporation could still participate in a deal with Yahoo on its own, though the disclosure of its talks with Microsoft may complicate that relationship.

Terms of the proposed union are still being worked out, these people said, and remain murky. News Corporation would probably contribute its Fox Interactive Media unit, which includes MySpace, and possibly cash to a partnership with Microsoft as part of an acquisition of Yahoo, they said.

The talks represent a change of sides for Mr. Murdoch. Just days after Microsoft made its bid, he flew to the West Coast and had dinner with Jerry Yang, Yahoo’s chief executive, offering his assistance in fending off Microsoft.

A deal between them would have involved joining forces with Google to use its lucrative advertising system on the companies’ sites. Antitrust concerns have, however, all but scuttled those talks, at least in that form.

On Wednesday, Yahoo suggested that it might be willing to cede part of its core business to Google, an archrival, to remain independent.

Yahoo said it would begin outsourcing a small portion of its search advertising to Google. The limited test is meant to determine whether the company could extract more revenue if Google ran its search advertising system. The test results might also back Yahoo’s contention that Microsoft’s offer undervalues the company, a person briefed on the plan said.

In the two-week test, Yahoo will use Google’s search advertising system to deliver ads that appear alongside Yahoo’s search results. The test will involve searches conducted in the United States on Yahoo.com, not on any of the company’s search affiliates, and will be limited to no more than 3 percent of all search queries, Yahoo said in a statement. Yahoo also said there was no guarantee that the test would lead to a broader deal.

Microsoft immediately blasted the idea of a search advertising partnership between Yahoo and Google, saying it would be anticompetitive. “Any definitive agreement between Yahoo and Google would consolidate over 90 percent of the search advertising market in Google’s hands,” Microsoft said in a statement.

In Washington, Senator Herb Kohl, a Wisconsin Democrat who is chairman of the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, also warned about the potential anticompetitive implications.

“We will be following closely the results of the short-term test alliance between Yahoo and Google,” Mr. Kohl said in a statement. He had previously raised concerns about a Microsoft-Yahoo combination.

Yahoo’s board is expected to meet this week to discuss its options.

For Yahoo, the idea of outsourcing its search advertising system to Google is not new. Investors and some executives inside the company have long recommended that it do so, as it could help the company increase revenue and cut costs.

Yahoo executives have resisted the outsourcing idea, saying that search and search advertising are essential pieces of the company’s business. Yet in a presentation to investors last month, Yahoo estimated that Google’s search advertising generated 60 percent to 70 percent more revenue on average than Yahoo’s.

Eric E. Schmidt, Google’s chief executive, also offered his assistance to Yahoo soon after Microsoft announced its offer. Executives from the two companies held talks to discuss, among other things, a search advertising partnership, but those talks cooled.

The talks appeared to have heated up again recently. Mr. Yang and Yahoo’s president, Susan Decker, visited Google in the last two weeks, said a person briefed on their visit.

Yahoo has recently stepped up discussions about a possible partnership with AOL, people involved in the talks said, but no deal is imminent. Such an agreement could include a search advertising partnership with Google, these people said.

The advertising test may be a way for Yahoo to show Microsoft that it still has alternatives, said Carl W. Tobias, a law professor at the University of Richmond in Virginia. “But if this were to go forward as a full proposal, there would be some serious concerns in the antitrust area,” Professor Tobias said.

Original Article

Yahoo’s board of directors got a letter from Microsoft’s CEO Steve Ballmer over the weekend about Yahoo’s slow response to Microsoft’s proposed takeover bid. No yellow smiley face punctuated the end of it, judging from its tone.

The letter, dated April 5, laid out the makings of a hostile takeover of Yahoo.

“If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! Board,” Ballmer’s letter read.

Today, Yahoo’s board issued a letter in response, which didn’t budge and repeated earlier rejections of Microsoft’s takeover bid as undervaluing Yahoo for its shareholders.

Ballmer’s threat of packing Yahoo’s board would have an adverse effect on Yahoo’s stock, Ballmer noted in his letter. It would lower the value of Microsoft’s proposal to Yahoo. Ballmer claimed that Yahoo’s delays since the initial buyout offer have already reduced Yahoo’s search and page-view shares.

This latest salvo reflects earlier reports that Microsoft’s executives have grown impatient with Yahoo’s refusal to accept the deal. Microsoft’s sent its unsolicited takeover to Yahoo on Jan. 31, 2008.

Microsoft’s initial cash plus stock deal offered $31 per share of its common stock, which initially set the value of the deal at $44.6 billion. However, Microsoft’s stock value had declined as of Friday to $27.72 per share.

Ballmer’s letter said that the initial offer — a 62 percent premium — was intended to create “a speedy and ultimately friendly transaction.” In response, the Yahoo board letter stated that Microsoft’s offer and Ballmer’s threat to replace the board were “counterproductive and inconsistent with your stated objective of a friendly transaction.”

Yahoo has tried to get alternative acquisition deals going with News Corp. and more recently with Time Warner. However, News Corp. seems to have bowed out. Its Chairman, Rupert Murdock, suggested that such a deal would not happen if that meant a fight with Microsoft.

Microsoft officials have suggested various reasons for wanting to acquire Yahoo, which have ranged from building up its “social networking” and entertainment capabilities, plus boosting Microsoft Live offerings, which are Microsoft’s online-delivered solutions.

Some observers have suggested that Microsoft wants Yahoo to help thwart Google in competition over Web ad revenues. Google is currently solidifying its acquisition of online ad firm DoubleClick.

As if to underscore Yahoo’s value in that respect, the Yahoo board letter described how Yahoo is improving its online ad structure.

“Today, in fact, we are announcing AMP! from Yahoo!, a new advertising management platform designed to dramatically simplify the process of buying and selling ads online,” the Yahoo board letter stated.

AMP is a software tool that helps advertisers buy up “impressions” for online ads and target their audience based on demographics. The platform is still being reviewed by Web content publishers.

Original Article

As the inventor of the Apple I and Apple II, along with Apple’s original software, Steve Wozniak is a living legend. Legendary, too, is his complicated relationship with Apple co-founder Steve Jobs, as well as the practical jokes that “Woz” played on colleagues in the headiest moments of the company’s formative years.

Your story, however fascinating, has been the subject of many previous books and articles. What prompted you to write a memoir now?
Parts of my story are well-known and parts are not well-known. A couple of times I’ve been asked to write a book and have not had the time, so I’ve had to return the money. Then, a little over a year ago, a friend asked if she could write my book. Now we’re in it together. So that guaranteed it would happen.

The amount of time spent was equal to that needed for two books. First, I would tell stories into a microphone, and then she would rewrite them. Then we had to redo everything all over again to put it back into my voice.

What is an example of a story you have included that is not well-known?
There’s the account of the TV jammer that I built during my first year in college. I was able to get students at the University of Colorado to move their bodies around thinking that was what they had to do to get better reception. One time, a guy left his hand on the middle of the screen and a foot on a chair for the last half-hour of Mission Impossible, thinking that was necessary to complete the ground loop.

I also describe how we’d work on projects for days at a time, going without sleep. But I found that I could come up with the clearest ideas in that sleepless state. For instance, I realized that color, if you could think of a way of doing it for no cost, might be good for computer games.

The exact date and time when the world changed is in the book. That took place back when I was working on the Apple I. Every previous computer had a panel that looked like an airplane cockpit. Every computer afterwards had a keyboard. That was the change.

Are there larger lessons that you have drawn about creativity and innovation?
That schools close us off from creative development. They do it because education has to be provided to everyone, and that means that government has to provide it, and that’s the problem. Also, we’ve trained kids in schools to only do things certain ways, not to get out of line, not to go off into other topics.

Every time you do something for the first time in your life, you’re going to do a better job than other people who have done it before. You’re aware of the most modern components. I was aware of the best chips that existed and used them for jobs for which they weren’t intended. Poor design is a result of people not wanting to work hard. By working very hard, you can make devices that operate more simply.

Then there’s the iPod. Its success is due to the fact that it’s a satellite to a computer: The computer has become absolutely central to our lives.

Do you feel that your past has at times been misrepresented?
Yes. The press tries to make it look like I’m at odds with Apple. They made it sound like I left Apple because I was mad. But I was leaving to start a company that made a remote control — and I really remained an employee of Apple, too. To this day, they try to bring up big conflicts between me and Steve Jobs. But we have never argued — there’s not one person that has ever seen us in an argument. We are different types of people, but I’m a non-conflict person.

Do you feel that Jobs ever ripped you off, perhaps in the case of the game Breakout that you invented and he claimed credit for with Atari?
He was more concerned about money. In the case of Breakout, all he had to do was ask me. I had a job at [Hewlett-Packard] (HPQ) and didn’t need the money. He was always into business, and I was into designing. And that’s not a good vs. bad thing.

Steve turned down doing the foreword for the book. But there’s nothing really bad about him in the book. He may have misinterpreted something.

This spring, you and former Apple CEO Gil Amelio formed Acquicor Technology, essentially a public venture capital fund. What’s the latest with that?
We went public in a short time frame and raised something like $200 million. For now, there’s a bunch of money sitting in a trust, and we have a time limit to make an acquisition deal with 80% of the money. The shareholders have to approve any acquisition.

Will the book help the new company, perhaps bringing you back in the public eye?
Not really. But maybe I will get asked questions on television about Acquicor. Someone might hear about the company and be interested. Our plan is to find some kind of troubled division, buy it, and make a big turnaround.

How do you regard the state of innovation in the computer industry?
The industry is so mature at this point that there just isn’t that much room for innovation. There are lots of little companies around, but they don’t get noticed. Apple kind of owns the movie program, the photo program. There’s a lot of feeling that instead of 50 companies making computers, maybe there should be only a dozen and only room for a couple of operating systems. So there aren’t so many areas that haven’t been swamped. Still, Google and Yahoo! are very innovative.

I gather that you have been involved some with teaching.
I taught a fifth-grade class, sixth through ninth graders in another class, and I taught teachers, all just in the local schools. It got to where I was teaching seven days a week. I’m looking forward to the day when a computer can be a teacher. We’re not there yet, since we haven’t yet conquered artificial intelligence. Once we’ve made a robot that can make a cup of coffee, then we’ve probably got enough artificial intelligence. Then we can have 30 teachers in a class of 30 kids, and the computers can go at different rates with different students.

Have you ever thought about why it was you, and not somebody else, who was able to invent so many things?
That’s what the book is all about. I took a lot of lucky, accidental directions, and they all converged on the Apple II computer, the greatest product of our time. I was in the right environment, Silicon Valley, I had a supportive father, I stumbled on to the right manuals, I stumbled into it so accidentally.

But you know in your heart when you’ve stumbled into the right thing and that this is what you want to do for the rest of your life. I did this for no other reason than a love and a passion, and I wanted to do it better than any other person.

Original Article

Today, 30 years after its founding, Apple Computer has grown from a tiny start-up to a household name and cultural icon known as much for its iPod digital music players as its computers.

“The technology industry is fundamentally about change and no company can survive for long without reinventing itself,” said Rick Rashid, head of Microsoft Research and developer of the Mach kernel, which serves as the open-source core of Mac OS X. “Companies that can survive for 30 years are the exception rather than the rule, and something to celebrate.”

Apple has a brand name as recognizable as Coca-Cola and Federal Express and last year had a record $13.93 billion in annual sales and a $1.34 billion net profit.

Given the company’s current success, it’s easy to forget how it fell from the top of the tech heap in the 1990s and scuffled along as Microsoft grew into the largest software company in the world and PC makers such as Compaq Computer and IBM came to dominate the industry Jobs and Wozniak helped create.

But glossing over those years would make it difficult to describe just how remarkable Apple’s current renaissance is. While Compaq now only exists as a brand name sold by Hewlett-Packard, and IBM no longer makes PCs, Apple is enjoying perhaps its finest hour. The iPod is a pop-culture phenomenon. And, incredible to some, Apple is having an easier time updating its flagship Macintosh operating system than Microsoft is having with Windows.

Some say there are no second acts in business, but Jobs & Co. are making mincemeat of that old chestnut.

Apple didn’t invent the computer. But with the Apple II, which went on sale in April 1977, the company introduced a machine people actually wanted to use.

Even as the Apple II was still a star, Apple was hard at work on a pair of follow-ups, the business-oriented Lisa and its consumer sibling, the Macintosh. A team that included Bud Tribble, Andy Hertzfeld, Bill Atkinson and Jef Raskin was laboring away in a separate building at Apple headquarters, working on the project that would change the company.

“Who cares about the Apple II?” Steve Jobs asked Hertzfeld in February 1981, when he moved the young engineer from the Apple II group to the Mac unit. Jobs didn’t even let Hertzfeld save the work he was doing on a new operating system. “The Macintosh is the future of Apple, and you’re going to start on it now,” Jobs said, according to “Revolution in the Valley: The Insanely Great Story of How the Mac Was Made,” Hertzfeld’s book on the Mac’s early days.

With the Mac, Apple took innovations that had been lying around—the mouse, a graphical interface and the laser printer—and used them as a way to bring publishing to the masses.

The quirky Mac, with its small, 9-inch black-and-white screen and 3.5-inch floppy disks, quickly developed a legion of rabid enthusiasts, a phenomenon that came to be known as the “Cult of Mac.”

“It was initially a conscious marketing strategy,” said Leander Kahney, who authors Wired News’ “Cult of Mac” column and has written a book of the same name. “There they were, going up against IBM. To differentiate it, they always portrayed the Mac as countercultural, the alternative to big companies and big government.”

Of course, Apple enthusiasts don’t pay heed to such talk of a marketing angle. “To them it’s a rational choice,” Kahney said. “It’s just the best computer around.”

Despite the hordes of Mac fans, the company that gave birth to the machine has largely been a loner.

Apple, at least under Jobs, has toiled away at products in secret, handling the hardware and software itself and unveiling its work only when ready—then returning to its secluded confines.

Over the years, the company has dabbled in licensing its operating system, but it’s always decided to go it alone.

The company has struck many notable partnerships over the years, but most have fallen short of the original expectations. Apple’s early decision to license its OS to Power Computing and Umax, as well as its chip alliance with IBM and more recent alliances with Hewlett-Packard and Motorola, all have soured in the end.

For all the praise Apple has enjoyed in recent years, the company barely survived its midlife crisis.

In the mid-1990s, Apple was losing hundreds of millions of dollars and had already replaced embattled CEO Michael Spindler in order to right the troubled ship.

Audacious, daring, artistic
The company looked many places for salvation. Apple almost bought Jean-Louis Gasse’s Be, but Gasse wanted more than Apple would pay.

In the end, the company decided to acquire Jobs’ Next Computer. He initially rejoined the company only as an adviser, but he quickly found himself back at the reins—first on a temporary basis, then as permanent CEO.

Sure, the company has had some notable misses: the Newton operating system, for one, and in the Jobs II era, the Power Mac G4 Cube. But its biggest bets in recent years have been solid hits. The iMac, released shortly after Jobs’ return, helped restore the company’s reputation and renew excitement in Apple’s products.

The candy-colored machine was followed by what arguably could be called Apple’s biggest bet—its move to OS X, an entirely new Unix-based operating system. It was a long time in the making and was not an instant success.

The change helped restore Apple’s reputation as a design leader and a company whose products often dictate trends, even if the computer maker has never seen its market share approach the dominant level Apple enjoyed during the Apple II era.

Moving from OS 9 to OS X was a painful transition, but in the end it has allowed Apple to update its operating system no less than four times while Microsoft has struggled to develop a successor to Windows XP. This point was brought home last week when Microsoft was forced to again delay the debut of Windows Vista, an operating system some have said borrows heavily from ideas already present in Mac OS X.

The tough transition also laid the groundwork for Apple’s largest commercial success: the iPod.

The biggest driver of Apple’s recent fortunes—music—was not an area in which the company was initially a leader. The early high-end iMacs had DVD playing drives, rather than CD burners.

But when Apple made its move into music, it did so wholeheartedly. First came iTunes, offering a dramatically simpler way to play and listen to music on a computer. Then, in October of 2001, and just as Microsoft was introducing Windows XP, Apple unveiled the iPod. It wasn’t the first digital music player, or even the first with a hard drive. But the combination of a smaller size and an easy-to-use scroll-wheel interface allowed it to succeed where others had stumbled.

Though it quickly garnered critical acclaim, however, the iPod didn’t become a smash business success until Apple added a Windows version, and shortly thereafter a Windows version of iTunes. The latter was greeted with huge posters reading “Hell Froze Over.”

Expanding the ‘Cult of Mac’
Another of Apple’s bold moves was its 2001 entry into retail. As Gateway was pulling out of suburban shopping centers, Apple was scooping up prime retail space in high-end malls.

Though costly, the Apple stores exposed new customers to the company’s wares and also served as a gathering point for the Mac faithful. Kahney said the outlets helped extend the Cult of Mac’s physical presence from the formerly twice-a-year Macworld Expo to a constant and local happening.

“Now everyone is within spitting distance of an Apple retail store,” Kahney said, pointing out that the sleekly designed stores are a mix of actual buyers, users seeking face-to-face help at the Genius Bars and a crowd of hard-core Apple fans that just “hangs out to observe the Mac-iness.”

The stores have also served as a great showcase for the iTunes Music Store and iPod as those products have continued to evolve. During last year’s holiday season, Apple had special personnel ready with handheld computers to deal with the crowds of people looking to walk out with the iPod Nano and the video iPod.

In a sign of just how dramatically Apple’s fortunes have improved, the company’s music business has become the subject of antitrust concerns because of its overwhelmingly dominant position.

There have been grumblings about Apple’s dealing in the music arena, its refusal to license its copy protection technology to let other companies offer protected music on the iPod or let songs purchased via iTunes play on other devices. France is considering legislation to open up the market, while several smaller legal challenges are also pending.

Hertzfeld said he thinks Apple is making a mistake on that front. “The digital music industry demands a ubiquitous standard for copy-protected media, and FairPlay is the obvious choice, if only Apple would license it,” he said. “It is disrespectful to your users to lock them in and artificially restrict their choices, and I don’t think it (will) fly long-term,” he said. He predicts Apple will eventually change course, but added, “I only hope it won’t be too late.”

The iPod, meanwhile, has inspired legions of companies to produce add-ons, creating a market that some say could top $1 billion. However, Apple has also moved into the space with its own accessories, and looked to grab royalties from other companies that build iPod gear. Many of the accessory makers have begun to diversify and make products for other players and cell phones, with some saying privately that their good fortune with the iPod may not last.

And while the iPod continues to dominate, rivals hope to head off Apple at the next technology pass. The company’s hold on the music player market appears to be strong, though others see a potential opening as music gets more closely wedded to the cell phone or perhaps to some other kind of handheld computing or entertainment device.

Though much of the outside attention has been on the iPod and iTunes, Apple has once again been tweaking the Mac to make it ready for the next generation of products. When Jobs announced the Mac’s big shift to Intel chips last year, he noted that the transition was less about the problems the company was experiencing with the current generation of chips and more about needing certain features in order to build the next generation of Macs. Not surprisingly, Jobs offered few hints as to what those features might be.

Apple and Jobs are inseparable in the public eye, and it’s hard to imagine the company without him (though when he had a cancer scare in 2004, some were forced to). As crazy as it sounds, some even wonder if the charismatic executive could end up running Disney, since the entertainment giant is taking over Jobs’ other cultural powerhouse, Pixar Animation Studios.

Apple without Jobs? Well, it happened before. But there’s little doubt that Mac addicts hope it’s a long time before it happens again.

Original Article