Downadup virus exposes millions of PCs to hijack

LONDON, England (CNN) -- A new sleeper virus that could allow hackers to steal financial and personal information has now spread to more than eight million computers in what industry analysts say is one of the most serious infections they have ever seen.

The Downadup or Conficker worm exploits a bug in Microsoft Windows to infect mainly corporate networks, where -- although it has yet to cause any harm -- it potentially exposes infected PCs to hijack.
Mikko Hypponen, chief research officer at anti-virus firm F-Secure, says while the purpose of the worm is unclear, its unique "phone home" design, linking back to its point of origin, means it can receive further orders to wreak havoc.
He said his company had reverse-engineered its program, which they suspected of originating in Ukraine, and is using the call-back mechanism to monitor an exponential infection rate, despite Microsoft's issuing of a patch to fix the bug.
"On Tuesday there were 2.5 million, on Wednesday 3.5 million and today [Friday], eight million," he told CNN. "It's getting worse, not better."
Hypponen explained to CNN the dangers that Downadup poses, who is most at risk and what can be done to stop its spread.
How serious is it?
It is the most serious large scale worm outbreak we have seen in recent years because of how widespread it is, but it is not very serious in terms of what it does. So far it doesn't try to steal personal information or credit card details.
Who is affected?
We have large infections in Europe, the United States and in Asia. It is a Windows worm and almost all the cases are corporate networks. There are very few reports of independent home computers affected.
What does it do?
It is a complicated worm most likely engineered by a group of people who have spent time making it very complicated to analyze and remove. The real reason why they have created it is hard to say right now, but we do know how it replicates.
How does it spread?
The worm does not spread over email or the Web. However if an infected laptop is connected to your corporate network, it will immediately scan the network looking for machines to infect. These will be machines that have not installed a patch from Microsoft known as MS08-067. The worm will also scan company networks trying to guess your password, trying hundreds and hundreds of common words. If it gets in, even if you are not at your machine, it will infect and begin spreading to other servers. A third method of spreading is via USB data sticks.
How can I prevent it infecting my machine?
The best way is to get the patch and install it company-wide. The second way is password security. Use long, difficult passwords -- particularly for administrators who cannot afford to be locked out of the machines they will have to fix.
What can I do if it has already infected?Machines can be disinfected. The problem is for companies with thousands of infected machines, which can become re-infected from just one computer even as they are being cleared.

Windows worm numbers 'skyrocket'

Infections of a worm that spreads through low security networks, memory sticks, and PCs without the latest security updates is "skyrocketing".

The malicious program, known as Conficker, Downadup, or Kido was first discovered in October 2008.

Anti-virus firm F-Secure estimates there are now 8.9m machines infected.

Experts warn this figure could be far higher and say users should have up-to-date anti-virus software and install Microsoft's MS08-067 patch.

In its security blog, F-Secure said that the number of infections based on its calculations was "skyrocketing" and that the situation was "getting worse".

Speaking to the BBC, Graham Culley, senior technology consultant with anti-virus firm Sophos, said the outbreak was of a scale they had not seen for some time.

"Microsoft did a good job of updating people's home computers, but the virus continues to infect business who have ignored the patch update.

"A shortage of IT staff during the holiday break didn't help and rolling out a patch over a large number of computers isn't easy.

"What's more, if your users are using weak passwords - 12345, QWERTY, etc - then the virus can crack them in short order," he added.

"But as the virus can be spread with USB memory sticks, even having the Windows patch won't keep you safe. You need anti-virus software for that."

Method

According to Microsoft, the worm works by searching for a Windows executable file called "services.exe" and then becomes part of that code.

It then copies itself into the Windows system folder as a random file of a type known as a "dll". It gives itself a 5-8 character name, such as piftoc.dll, and then modifies the Registry, which lists key Windows settings, to run the infected dll file as a service.

Once the worm is up and running, it creates an HTTP server, resets a machine's System Restore point (making it far harder to recover the infected system) and then downloads files from the hacker's web site.

Most malware uses one of a handful of sites to download files from, making them fairly easy to locate, target, and shut down.

But Conficker does things differently.

Anti-virus firm F-Secure says that the worm uses a complicated algorithm to generate hundreds of different domain names every day, such as mphtfrxs.net, imctaef.cc, and hcweu.org. Only one of these will actually be the site used to download the hackers' files. On the face of it, tracing this one site is almost impossible.

Variant

Speaking to the BBC, Kaspersky Lab's security analyst, Eddy Willems, said that a new strain of the worm was complicating matters.

"There was a new variant released less than two weeks ago and that's the one causing most of the problems," said Mr Willems

"The replication methods are quite good. It's using multiple mechanisms, including USB sticks, so if someone got an infection from one company and then takes his USB stick to another firm, it could infect that network too. It also downloads lots of content and creating new variants though this mechanism."

"Of course, the real problem is that people haven't patched their software," he added.

Technicians have reverse engineered the worm so they can predict one of the possible domain names. This does not help them pinpoint those who created Downadup, but it does give them the ability to see how many machines are infected.

"Right now, we're seeing hundreds of thousands of unique IP addresses connecting to the domains we've registered," F-Secure's Toni Kovunen said in a statement.

"We can see them, but we can't disinfect them - that would be seen as unauthorised use."

Microsoft says that the malware has infected computers in many different parts of the world, with machines in China, Brazil, Russia, and India having the highest number of victims.

Apple Succession Plan: Nobody's Business?

Ask Apple (AAPL) about succession planning for CEO Steve Jobs and you'll quickly get the message: We have a plan, but we're not sharing it with you.

Now, Apple may need to start sharing more. News that Jobs will take a leave of absence because of health problems and turn day-to-day operations to Chief Operating Officer Tim Cook has renewed concerns that the company and its board haven't been forthcoming enough about plans for Jobs' permanent replacement. "When there is some sort of disruption at the company, it's the obligation of the board to let everybody know they are on top of it, and that everything is in good hands," says Nell Minow, co-founder of The Corporate Library, a corporate governance research firm.

Leadership experts say uncertainty over Jobs' health underscores the need for clear communication of a well-defined succession plan by Apple's star-studded board of directors, which includes Genentech (DNA) CEO Arthur Levinson and Google (GOOG) CEO Eric Schmidt. The board now ought to release a "better, clearer announcement" about Jobs' health situation, Minow says. Apple declined to comment for the story, and board members, all of whom were contacted by BusinessWeek, either didn't respond to requests for comment or declined to comment.

Not every company needs to go public with its planning, governance experts point out. But greater clarity may be essential in the case of Apple, a company whose image is so intricately tethered to a charismatic CEO who was sidelined in 2004 after treatment for a rare form of pancreatic cancer. Concerns over his health were heightened in recent months as Jobs appeared visibly emaciated during public presentations. In December, Apple said he wouldn't be making a keynote presentation at a January conference.

Complex condition

Jobs released a statement on Jan. 14 saying he would take a leave of absence until the end of June—though he would retain the CEO title—after learning "health-related issues are more complex than I originally thought." He added that his moves had the board's full backing. The remarks came just a week after Jobs said doctors determined the cause of his weight loss to be "a hormone imbalance" for which the remedy is "simple and straightforward." He added that even those remarks were more than he wanted to disclose about his health and that he didn't intend to revisit the issue publicly.

Until recently, Jobs and Apple considered the chief executive's health a private matter. As long as Jobs was able to carry out his duties as CEO, Apple didn't feel compelled to say much, if anything, about his condition. That has changed dramatically now that he's taking a leave, experts say.

An early step to greater disclosure, says Yale School of Management senior associate dean Jeffrey A. Sonnenfeld, is to get a medical expert to publicly explain the facts around Jobs' health. CEOs "do not have the luxury of privacy when it comes to their health," Minow contends. "Their shelf life is of crucial concern to the board and to the enterprise."

Beyond reassuring the public over Jobs' health, Apple and its board must also ensure that Jobs does his best to transfer to Cook the goodwill he has amassed with investors and the rest of the public, says Dave Ulrich, a human resources expert and professor at the University of Michigan's Ross School of Business. "In a logical CEO succession, Steve Jobs would have gone out with him, let Tim begin to do the speaking, and then that 'relationship equity' is transferred," says Ulrich. "In this case, it looks like that is going to be difficult."

Microsoft's Model

Some governance experts and technology industry executives point to Microsoft (MSFT) as an example of effective succession planning. Like Apple, Microsoft was led by an iconic chief executive, Bill Gates. But Microsoft was methodical about grooming a successor to Gates, anointing Steve Ballmer as the clear heir apparent when he was made president in 1998. After Ballmer became Microsoft's chief executive in 2000, the disruption was minimal.

Another reason the transition went so smoothly is that Microsoft kept Gates around in a high-profile position. Although he stepped down as chief exec in 2000, Gates retained the title of chairman and created a new position of chief software architect for himself, a job he held until mid-2008.

Apple could consider a similar move, carving out a role for Jobs that lets him impart his vision but removes him from the daily line of strategic decision making. "He could still have a profoundly creative role," Sonnenfeld says.

Joe Grundfest, co-director of the Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford University, says Apple's board may be doing the best job it can amid difficult circumstances. If board members believed Jobs was going to be fine, they may not have seen a big need to be more forthcoming about his health or future, he notes. "One of the hallmarks of a complex medical condition is a diagnosis can change over time," Grundfest says. "If the board has told the truth, then they've handled it best as they could."

Ultimately, some leaders are so irreplaceable that no amount of succession planning will ensure a seamless power transition. "In some sense, with the charismatic person, it's difficult to prepare a successor, because they are bigger than life," says John Larrere, general manager at the management consultant Hay Group. "The next person isn't going to be bigger than life to start with."

MAC SALES ARE DOWN

Two pillars of the PC industry are vulnerable, too. The netbook phenomenon squeezes Intel (INTC) and Microsoft hardest of all. Analysts say Intel has to sell three times as many Atom processors, which power netbooks, to make as much as it does selling a single conventional notebook processor. Microsoft is said to get about $13 per copy for the Windows version that goes in netbooks, vs. more than $50 for those that go into standard PCs.

The PC makers that stand to do best include Hewlett-Packard (HPQ), Acer, and Apple (AAPL). HP has a well-balanced portfolio of products. Acer operates with a super-lean Taiwanese cost structure that allows it to price its products aggressively. Apple seems content to stick with making ever-more-powerful PCs for premium prices.

But will marketing high-powered computers featuring slick industrial design still work in the bust? That's debatable. Market researcher NPD Group says sales of Macintosh computers declined 1% in November, which could be a harbinger of trouble.

In spite of the uncertain times, PC executives will watch more successful companies for cues. Apple's ability to get consumers to buy its iPods, iPhones, and Macs, for example, lures customers into an Apple-only world.

Given all of the turmoil, the only major computer company feeling sanguine about the PC market right now may be IBM (IBM). Big Blue sidestepped the tumult by selling its PC business to Lenovo four years ago.

IBM: Outsourcing at Home

India has become synonymous with tech outsourcing. More than 90% of tech services that are performed in low-cost countries happen there. But when IBM (IBM) announced its two newest global service delivery centers this week, they weren't in Bangalore), Delhi, or Mumbai. Instead, Big Blue picked East Lansing, Mich., and Dubuque, Iowa.

In what may blossom into a countertrend, the company is hiring close to home. The moves come at a drama-fraught time, since the U.S. economic downturn has already claimed more than 60,000 tech jobs in the past three months alone. In East Lansing, IBM expects to create up to 1,500 direct and indirect jobs in five years, and it should employ 1,300 people in Dubuque within two years.

With 200,000 service employees worldwide and nearly 80,000 in India, IBM has over the past six years created a vast global network of service delivery centers. Michael Daniels, senior vice-president of IBM Global Technology Services, says that while the cost-competitiveness of East Lansing and Dubuque were factors in the company's decisions to locate there, salaries and other costs weren't the biggest factors. "Low cost is a factor in any decision, but the critical thing for us was the access to skills and the willingness of the local universities to cooperate with us and add to their curricula," he says.

Leading the Pack

Industry analysts expect more tech services outfits to establish operations in low-cost parts of the U.S. in the coming months and years. The phenomenon first took root last year, when India's Wipro Technologies (WIT) opened small service delivery offices outside Atlanta and in Troy, Mich. "You'll see more of this. It won't be huge. But it will be a nice niche," says analyst John McCarthy of market researcher Forrester Research (FORR). "This is all about building out a global network. It's not one size fits all: India." McCarthy says some states want their service work to be performed within their borders, and some companies want services kept close to home.

For Dubuque, IBM's decision comes as a major stroke of good luck. The new jobs will include setting up, monitoring, and maintaining large computing systems. The midsize city has a blue-collar tradition, but employment has dwindled at a John Deere (DE) construction equipment plant that once was a pillar of the local economy. "This is transformational," says Mike Blouin, president of the Greater Dubuque Development Corp. "It has the impact on Dubuque on the white-collar side that John Deere had in the early 1950s on the blue-collar side."

Dubuque and Iowa offered IBM an enticing package of incentives worth $55 million over 10 years. They include a loan of $11.7 million that will be forgiven if IBM fulfills its hiring pledge. A local development agency will spend $25 million to rehab an historic former department store in downtown Dubuque.

The new East Lansing service delivery center will modernize out-of-date software for states and corporations. It will be located in a former credit union building on the campus of Michigan State University, where IBM will also work with faculty and administrators to modify the curriculum to include skills that will be needed there.

Why Innovation Could Not Save Nortel

Two years ago managers of Nortel Networks (NT) unveiled a risky wager to transform the troubled telecom equipment maker through innovation and design. Their agenda included modernizing research and development, creating so-called future-proof gear, and experimenting with emerging technologies ranging form virtual worlds to Web 2.0. "We're not tweaking; we're turning Nortel on its head," John Roese, Nortel's chief technology officer, said last August, describing the changes underway.

Nortel was indeed turned on its head. On Jan. 14 the company announced it would seek bankruptcy protection. Analysts and innovation consultants alike say promises and buzzwords could not save the troubled equipment maker from sagging demand for phone gear and a crippling $4.5 billion debt load. Efforts to create new products and business either came too late or, worse, were far off-base. "Investing in innovation is important," says Ronald Gruia, a principal analyst with consulting firm Frost & Sullivan. "But ultimately Nortel needed to make smarter management bets."

Nortel embarked on an ambitious turnaround in 2005 under Chief Executive Mike Zafirovski, eliminating jobs and selling off businesses. In mid-2006, Zafirovski tapped Roese, a respected technologist, to revamp the company's flagging R&D organization.

Dabbling in Second Life

Roese began by reorganizing Nortel's roughly $2 billion in annual R&D spending, directing 20% toward emerging technologies, 60% at core businesses, and 20% at declining products. Previously, the bulk of spending went to support aging telecom products rather than develop new ones. Roese also expanded research partnerships with the National Science Foundation and the Defense Advanced Research Projects Agency to share the burden.

Adopting the language of business innovation gurus, he championed a so-called Incubation Program and Innovation Lab to identify and develop new technologies such as Web 2.0 applications that allowed employees to collaborate with one another online. Roese used a public blog to communicate with customers and attempt to re-establish Nortel as an innovator. His team even dabbled in creating virtual worlds similar to Second Life. (For a podcast with Roese, click here.)

But his efforts weren't enough. "Twenty-eight months is hardly very much time to change a company culture," says Jeneanne Rae, president of innovation firm Peer Insight in Alexandria, Va. Rae adds that companies with especially successful R&D outfits, such as Apple (AAPL), Boeing (BA), and Nortel competitor Cisco (CSCO), have perfected the process of moving innovations out of the lab and into the marketplace.

What's more, Nortel's effort to move into providing services and Web-based collaboration software were, according to Morningstar equity analyst Grady Burkett, viewed by many with "an air of skepticism." Burkett notes that many of the technologies championed by the refocused R&D department were also being pursued by competitors such as Alcatel-Lucent (ALU) and Cisco, both of which boasted of deeper pockets. "The Web 2.0 projects just didn't seem to fit for Nortel," he says, noting that some 40% of the company's business still comes from the core carrier business.

Ultimately, seeking bankruptcy protection may have been an acknowledgment that talk of innovation had failed to produce much that could give Nortel a promising future. With $2.6 billion in cash and a burn rate of about $300 million per quarter, the company could have trundled along, according to Nombura analyst Richard Windsor, but instead chose bankruptcy protection.

Roese left the company on Jan 2, writing in a farewell blog post, "I was brought into Nortel to help correct many years of neglect on R&D…I am comfortable with [Nortel's] direction even if I am not a part of the path forward."

$100 laptop could sell to public

The backers of the One Laptop Per Child project are looking at the possibility of selling the machine to the public.

One idea would be for customers to have to buy two laptops at once - with the second going to the developing world.

Five million of the laptops will be delivered to developing nations this summer, in one of the most ambitious educational exercises ever undertaken.

Michalis Bletsas, chief connectivity officer for the project, said eBay could be a partner to sell the laptop.

"If we started selling the laptop now, we would do very good business," Mr Bletsas, speaking at the Consumer Electronics Show, told BBC News.

"But our focus right now is on the launch in the developing world."

Nicholas Negroponte, chairman and founder of the OLPC group, emphasised that the launch to the poorest parts of the world was the organisation's main task.

Of plans to sell the machine, he said: "Many commercial schemes have been considered and proposed that may surface in 2008 or beyond, one of which is 'buy 2 and get 1'."

Durable

The laptop has been developed to be as low cost, durable and as simple to use as possible.

The eventual aim is to sell the machine to developing countries for $100 but the current cost of the machine is about $150.

The first countries to sign up to buying the machine, which is officially dubbed XO, include Brazil, Argentina, Uruguay, Nigeria, Libya, Pakistan and Thailand.

The XO's software has been designed to work specifically in an educational context. It has built-in wireless networking and video conferencing so that groups of children can work together.

The project is also working to ensure that children using the laptop around the world can be in contact.

"I'd like to make sure that kids all around the world start to communicate. It will be a very interesting experiment to see what will happen when we deploy a million laptops in Brazil and a million laptops in Namibia."

'Glue'

The OLPC project is working with Google who will act as "the glue to bind all these kids together".

The machine is close to a final design

Google will also help the children publish their work on the internet so that the world can observe the "fruits of their labour", said Mr Bletsas.

He said that the hope was to put the machine on sale to the general public "sometime next year".

"How to do that efficiently without adding to the cost is difficult," he said.

"We're discussing it with our partner eBay. We need to minimise supply chain cost , which is pretty high in the western world."

Philanthropic organisation

Mr Bletsas said that a philanthropic organisation would be formed to organise the orders and delivery of the laptops.

"It's much more difficult to do this than making the laptop," he said.

The aim is to connect the buyer of the laptop with the child in the developing world who receives the machine.

"They will get the e-mail address of the kid in the developing world that they have, in effect, sponsored."

Mr Bletsas was speaking amidst the festival of consumerism taking place on the show floor of CES.

He said he hoped that the laptop project would help children enrich their lives to the extent that one day they could become consumers of the types of technologies on display in Las Vegas.

'Castigated'

But he castigated the industry for being unambitious in its plan to "connect the next billion people".

"They should look to connect the next five and a half billion.

"The way to do it is not to try and deploy tried and trusted technology but to try and develop technology specifically targeted to the developing world."

He said that OLPC was ensuring that laptops were being deployed to areas where there was internet access.

"We are trying to help the governments - that ranges from donating resources, to making sure that we work with them and that they don't consider the laptop as something that can work in a disconnected environment.

"It's vitally important that children are connected. My ambition is that we will get them connect to a vast amount of information that is unavailable to them.

"It will stimulate their interest in looking further - not waiting for some teacher or an adult."

Chief of fraud-hit Indian IT firm in prison (Update)

B. Ramalinga Raju was arrested overnight after he surrendered to the police and was jailed on remand until January 23 by a judge in the southern city of Hyderabad, where Satyam is headquartered, court officials said.
The fallen chairman's brother, Rama Raju, who is a former Satyam director, was also jailed pending a full trial, they added.
Raju's lawyers said they would seek bail for the disgraced software tycoon whose admission to wrongdoing prompted a near collapse of Satyam, which boasts high-profile clients in 65 countries.
Raju has been charged with fraud following his admission that his firm's accounts and assets had been falsified over a period of several years, with profits inflated to the tune of more than one billion dollars.
Indian market regulator the Securities and Exchange Board of India (SEBI) is also seeking to question Raju, one of the pioneers of India's outsourcing boom and once the darling of international investment funds.
Satyam shares have gone into freefall, closing at 23.85 rupees on Friday compared to a value of around 180 rupees before the scandal erupted.
India's government has also stepped in, and on Friday booted out Satyam's directors' board saying it will name representatives to manage the affairs of the company.
Before being dismissed, the interim Satyam board had pledged to try and keep the company running and rectify the mistakes.
It had also insisted it was unaware of the scam, which has prompted comparisons with the collapse of US energy giant Enron and generated fears over the impact on foreign investment in Indian business and on corporate governance standards.
At least two US shareholder lawsuits have been filed against Satyam earlier this week.
The law firm of Izard Nobel filed a suit seeking a class action in New York on behalf of people who purchased the American Depositary Receipts of Satyam Computer between January 6, 2004 and January 6, 2009.
Another lawsuit was filed in New York by the firm Vianale and Vianale, based in Florida, a statement from the law firm said.
Indian market regulator Sebi meanwhile announced unprecedented steps to "boost investor confidence".
Independent auditors will now scrutinise the last quarterly results and audited annual financial statements of companies which are listed on exchanges and form part of India's key benchmark indices, the 30-share Sensex and 50-share Nifty, the regulator said.
"This exercise will be undertaken after the third quarter results and is expected to be completed by end of February this year," an official statement said.
India's third quarter corporate earnings announcements commence with India's second largest software exporter Infosys Technologies on January 13.
Some companies which do not form part of major indices would also be reviewed, Sebi said.

Rush for Windows 7 downloads overwhelms Microsoft servers

Microsoft founder Bill Gates speaks during the 2007 press conference in New York. Microsoft\'s mighty servers were overwhelmed on Friday as computer users worldwide rushed to download a free test version of a Windows 7 operating system being groomed to succeed Vista.

A virtual queue formed on the Internet in the hours before the planned release of Windows 7 "beta" software at noon local time in Microsoft's headquarters in Washington State.
"There was a line of people waiting online, so the noon release became an about-noon release," said a Microsoft spokesman showing off the company's latest innovations at the Consumer Electronics Show in Las Vegas.
A flood of requests slowed Microsoft industrial-strength computers, causing delays and disappointments.
The window for downloading the test-version of Windows 7 closes the last day of January, Microsoft said.
The software giant wants feedback from users to refine the new operating system, but doesn't plan to change or add features.
"We got ourselves in a little trouble with Windows Vista; it became a bag of mixed things and didn't really figure out what it was about," said Mike Ybarra, general manager of Windows products at Microsoft.
"There was a lot of feature creep. You had people saying 'Let's change this and that.' Windows 7 has been very disciplined."
Analyst Michael Cherry of private firm Directions On Microsoft says he is impressed with the way the software giant "kept its enthusiasm under control."
Microsoft improved the Vista operating system while making sure it is "backward compatible," essentially that it will work with older software.
Vista was such an advance over Windows XP that it clashed with software people already used and previous generation computers.
"Microsoft is making the kind of evolutionary changes they need without the revolutionary changes that break things," Cherry said.
Microsoft has been secretive about when a finished version of Windows 7 will be ready.
Cherry believes the goal is to get it to market in time to be pre-installed on new computers sold during the prime US back-to-school and year-end holiday shopping seasons in 2009.
Windows 7 will streamline everyday tasks, cut boot-up times, extend battery life and make it simple to weave "smart" devices into home networks, according to Microsoft chief executive Steve Ballmer.

A virtual queue formed on the Internet in the hours before the planned release of Windows 7 "beta" software at noon local time in Microsoft's headquarters in Washington State.
"There was a line of people waiting online, so the noon release became an about-noon release," said a Microsoft spokesman showing off the company's latest innovations at the Consumer Electronics Show in Las Vegas.
A flood of requests slowed Microsoft industrial-strength computers, causing delays and disappointments.
The window for downloading the test-version of Windows 7 closes the last day of January, Microsoft said.
The software giant wants feedback from users to refine the new operating system, but doesn't plan to change or add features.
"We got ourselves in a little trouble with Windows Vista; it became a bag of mixed things and didn't really figure out what it was about," said Mike Ybarra, general manager of Windows products at Microsoft.
"There was a lot of feature creep. You had people saying 'Let's change this and that.' Windows 7 has been very disciplined."
Analyst Michael Cherry of private firm Directions On Microsoft says he is impressed with the way the software giant "kept its enthusiasm under control."
Microsoft improved the Vista operating system while making sure it is "backward compatible," essentially that it will work with older software.
Vista was such an advance over Windows XP that it clashed with software people already used and previous generation computers.
"Microsoft is making the kind of evolutionary changes they need without the revolutionary changes that break things," Cherry said.
Microsoft has been secretive about when a finished version of Windows 7 will be ready.
Cherry believes the goal is to get it to market in time to be pre-installed on new computers sold during the prime US back-to-school and year-end holiday shopping seasons in 2009.
Windows 7 will streamline everyday tasks, cut boot-up times, extend battery life and make it simple to weave "smart" devices into home networks, according to Microsoft chief executive Steve Ballmer.

New games powered by brain waves

Tim Sheridan, wearing a headset containing sensors for the forehead and earlobes to measure brainwave activity, uses his mind to raise a small purple foam ball as he demonstrates the Mindflex game at the Mattel display at the 2009 Consumer Electronics Show in Las Vegas, Nevada on January 8, 2009.
It's not magic, but rather the latest game from toy maker Mattel, which allows players to move a ball around an obstacle course by using just their powers of concentration.
Focusing on the ball causes a fan in the base of the game -- called Mind Flex -- to start up and lift the ball on a gentle stream of air. Break your concentration and the ball descends.
Once a player has the ball in the air they need to try to weave it through hoops, towers and other obstacles.
"It's a mind-eye coordination game," said Mattel's Tim Sheridan. "As you relax you'll find that the ball drops."
Mind Flex relies on EEG technology to measure brain wave activity through a headset equipped with sensors for the forehead and earlobes.
The game, which will be available in September for 79.99 dollars, is being displayed by Mattel at the annual Consumer Electronics Show (CES) in Las Vegas.
But Mattel is not the only toy maker tapping into the power of the mind.
In a report this week USA Today newspaper said game maker Uncle Milton plans to release a similar game this year. Called "Force Trainer" it is named after "The Force" powers of Yoda and Luke Skywalker in the popular Star Wars films.
The game calls for players to lift a ball inside a transparent tube using their powers of concentration.
"It's been a fantasy everyone has had, using The Force," the daily quoted Howard Roffman, president of Lucas Licensing, as saying.
"Force Trainer" also uses electroencephalography, or EEG, to measure electrical activity in the brain recorded on a headset containing sensors.
A company called NeuroSky adapted the EEG technology for both games, according to USA Today.

Holiday e-commerce down for first time: comScore

A websurfer shopping online. US online retail spending fell three percent over the holiday season compared with the same period last year, the first decline after eight years of growth, digital research firm comScore reported.
US online retail spending fell three percent over the holiday season compared with the same period last year, the first decline after eight years of growth, digital research firm comScore reported.
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US e-commerce retail spending totalled 25.5 billion dollars during the November 1 to December 23 period, down from 26.3 billion dollars in the corresponding period of 2007, comScore said.
"The 2008 online holiday shopping season has declined three percent versus a year ago, falling behind our expectation of flat sales this year," comScore chairman Gian Fulgoni said in a statement late Tuesday.
"This marks the first time we've seen negative growth rates for the holiday season since we began tracking e-commerce in 2001," he said.
"The combination of having five fewer shopping days between Thanksgiving and Christmas and the severe economic headwinds faced by consumers has made this a really tough season for retailers, both offline and online."
ComScore said e-commerce spending for the October 1 to December 28 period was down four percent compared with last year, the first full quarter to record negative growth since comScore began tracking e-commerce.
It said 2008 fourth-quarter spending reached 36.8 billion dollars, down from 38.4 billion dollars in the same period last year.
ComScore said that despite the soft online sales, some top retailers managed to register growth in the holiday period.
Online auction house eBay was the most visited retail site with 85.4 million unique visitors, down four percent from 88.9 million last year.
Online retailer Amazon.com saw traffic grow seven percent to 76.2 million visitors, followed by Wal-Mart, up four percent to 51.5 million visitors.
Target was down one percent with 46.8 million visitors while Apple was up 19 percent with 35 million visitors.
The holiday season is seen as make-or-break for many retailers and key to the struggling US economy, which relies on consumer spending for 70 percent of activity.

Chinese IT firm Lenovo expected to restructure: report

A woman passes a Lenovo advertisment in a Hong Kong shop. Lenovo, the world\'s fourth largest personal computer maker, is expected to restructure its operations due to weak demand amid the global slowdown, state media has reported.
China's Lenovo, the world's fourth largest personal computer maker, is expected to restructure its operations due to weak demand amid the global slowdown, state media reported Wednesday.
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Under the restructuring plan, which has yet to be finalised, Lenovo would merge its Asia Pacific operations with its Greater China and Russia operations, the China Business News reported, citing unnamed company officials.
Chen Shaopeng, president for the Greater China region, will be appointed as head of the merged operations, the newspaper reported. David D. Miller, currently president for the Asia Pacific region, is expected to leave the company, it added.
"The economic conditions are so tough that (the company) is set to take some measures to counter the winter," Chen was quoted as saying.
A spokesman with Beijing-based Lenovo declined to comment on the report when contacted by AFP.
Hong Kong-listed Lenovo said in November its net profit for the three months ended September 30 slumped 78 percent from a year earlier to 23.4 million dollars mainly due to slower personal computer shipment growth.

Reality gets hyperlinked

(PhysOrg.com) -- European researchers can now attach hyperlinks to pictures you take using your mobile phone. It offers the prospect of new ways to discover, engage and navigate your surroundings. You wake up in a strange city with no recollection of how you got there and no information about where you are. Demonstrating nerves of steel, you calmly pick up your mobile phone and take a picture of the streetscape.
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Quickly, the picture comes alive with hyperlinks, offering the names of the buildings, monuments and streetscape features that appear in the photograph. The hyperlinks lead to information about the history, services and context of all the features in the photograph. You have just hyperlinked your reality.
That scenario might be a little far-fetched, but the technology exists and is no figment of some fevered imagination. This is not a gee-whiz gadget invented by Q for the next James Bond movie; this is a working technology just developed by European researchers. It could be coming to a phone near you, and soon.
This, as the marketing types say, is a game changer. It develops a completely new interface paradigm that meshes web-technology with the real world. It is big and fresh like Apple’s game-changing multi-touch interface for the iPhone. But it goes much further and has implications that are much more profound.
The MOBVIS platform completely rewrites the rules for navigation, exploration and interaction with your physical environment. It identifies the buildings from a photograph you take in an urban environment and then places icons on points of interest.
Technology that pays attention
Then you simply click on the icon, using a cursor or, more frequently, a touch-screen phone, and the MOBVIS system will provide information on the history, art, architecture or even the menu, if it is a restaurant, of the building in question.
MOBVIS stands for mobile attentive interfaces in urban scenarios and it is the brainchild of the EU-funded MOBVIS project, a team of engineers and scientists who have successfully demonstrated the technology working in a real environment, with real users unconnected to the project.
The project’s work is all the more remarkable because image recognition technology has long been pregnant with promise, but seemed to suffer from an unending labour.
Now MOBVIS has not only developed image recognition; it has also developed compelling applications for the technology; and it has done so in the most striking and visible manner by adapting it to the world’s most ubiquitous technology: the mobile phone.
How to hyperlink reality
The system begins with geo-referenced panoramas, photographs that populate a database to establish points of reference in the streetscape. These panoramas form the basis of a city database. It can match buildings, monuments, banners and even logos that appear in the panoramas. Information relating to individual buildings or monuments is then added to the database manually.
Once annotation is complete, it is ready to take queries from mobile users. A user simply takes a picture of the streetscape, MOBVIS compares the user’s photograph to the reference panoramas and the relevant links are returned.
It is as if your picture becomes desktop background, with icons attached to each feature that you can click to navigate the history and culture of the location, or shopping opportunities in front of the user.
This is a lot trickier than it might first seem, because photos are taken in all kinds of light and weather, often at odd angles, and many buildings in Europe’s most beautiful cities, like Graz, Austria, actually look quite similar. How can the system tell them apart, and how can it be sure it is the right building?
This is where the MOBVIS demonstrates its greatest strength and most impressive advance over previous image-recognition technologies. The matching system is cloaked in impressive, intimidating technical concepts, like local invariant feature detection, epipolar geometry and planarity constraints.
Never wrong
But the genius of the system boils down to a higher-dimension, feature-matching algorithm developed by the University of Ljubljana in Slovenia, one of the partners of the project. It can very accurately detect minute but telling differences between similar objects, such as buildings or monuments, both by the appearance of the buildings themselves and their context in the streetscape.
For example, if a building with a particular geometry is beside a bridge, but not neighbouring a department store, then it must be building X. That marks the spot for the relevant information stored in the database, which is rendered as an icon.
It sounds perhaps a little improbable. How could such a system produce reliable results?
In fact, it is remarkable just how accurate this technology turned out to be in real-life tests. Users were given a five-minute instruction by an outside contractor, and then sent around to explore the city of Graz with their mobile phones.
The system reliably detected the right building 80 percent of the time, a figure that Aleš Leonardis, head of the Ljubljana team is convinced can be improved.
“But that’s not the most remarkable result of the prototype test,” stresses Leonardis. “It was remarkable that there were no false positives. Sometimes the system couldn’t identify a building, but it never put the incorrect link on a building.”
The system wasn’t always right, but it was never wrong, sometimes - about 20 percent of the time - it just did not know. This was its first live test. It is a notable achievement, and promises rapid deployment in commercial applications.

Digital TV subsidy program running out of money

(AP) -- The Feb. 17 transition from analog to digital television broadcasts looms and as many as 8 million households are still unprepared, but the government program that subsidizes crucial TV converter boxes is about to run out of money.
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People who still rely on analog TV sets to pick up over-the-air signals - whether it is through rabbit-ear aerials on TVs or antennas on the roof - will see their screens go dark when the changeover happens. To avoid that, those people have to switch to cable or satellite TV, buy a television set with a digital tuner or buy a converter box that can translate digital signals from the airwaves into analog.
To subsidize the converter boxes, most of which cost between $40 and $80, the government has been letting consumers request up to two $40 coupons per home. But any day now, the National Telecommunications and Information Administration (NTIA), the arm of the Commerce Department in charge of administering the coupon program, expects to hit a $1.34 billion funding ceiling set by Congress.
Now the NTIA is warning that unless lawmakers step in quickly with more funding or new accounting rules, it will have to create a waiting list for coupon requests. That would mean it could send out additional coupons only as unredeemed ones expire, freeing up more money for the program.
In other words, if Congress doesn't act soon, consumers who apply for coupons in the final weeks leading up to the digital transition might not get them in time.
"If the government invests in just a few million TV converter boxes, which is a drop in the bucket of the enormous amount of money being spent on the stimulus package, it would do more good to keep all households connected," said Gene Kimmelman, vice president for federal policy at Consumers Union.
Under the rules set by Congress, which mandated the digital TV switch to free up more room in the wireless spectrum, the NTIA cannot commit more than $1.34 billion at any time to cover the cost of the coupons. That pool includes coupons that have already been redeemed; unexpired coupons that have been mailed out but not yet redeemed; and coupons that have been requested but not yet mailed out. The NTIA estimates the funding cap, which excludes administrative expenses, is enough to cover 51.5 million coupons through March 31, which is the last day consumers can request them.

Digital TV subsidy program running out of money

(AP) -- The Feb. 17 transition from analog to digital television broadcasts looms and as many as 8 million households are still unprepared, but the government program that subsidizes crucial TV converter boxes is about to run out of money.
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People who still rely on analog TV sets to pick up over-the-air signals - whether it is through rabbit-ear aerials on TVs or antennas on the roof - will see their screens go dark when the changeover happens. To avoid that, those people have to switch to cable or satellite TV, buy a television set with a digital tuner or buy a converter box that can translate digital signals from the airwaves into analog.
To subsidize the converter boxes, most of which cost between $40 and $80, the government has been letting consumers request up to two $40 coupons per home. But any day now, the National Telecommunications and Information Administration (NTIA), the arm of the Commerce Department in charge of administering the coupon program, expects to hit a $1.34 billion funding ceiling set by Congress.
Now the NTIA is warning that unless lawmakers step in quickly with more funding or new accounting rules, it will have to create a waiting list for coupon requests. That would mean it could send out additional coupons only as unredeemed ones expire, freeing up more money for the program.
In other words, if Congress doesn't act soon, consumers who apply for coupons in the final weeks leading up to the digital transition might not get them in time.
"If the government invests in just a few million TV converter boxes, which is a drop in the bucket of the enormous amount of money being spent on the stimulus package, it would do more good to keep all households connected," said Gene Kimmelman, vice president for federal policy at Consumers Union.
Under the rules set by Congress, which mandated the digital TV switch to free up more room in the wireless spectrum, the NTIA cannot commit more than $1.34 billion at any time to cover the cost of the coupons. That pool includes coupons that have already been redeemed; unexpired coupons that have been mailed out but not yet redeemed; and coupons that have been requested but not yet mailed out. The NTIA estimates the funding cap, which excludes administrative expenses, is enough to cover 51.5 million coupons through March 31, which is the last day consumers can request them.

Wikipedia reaches 6-million-dollar fundraising target

Wikipedia logo. Online encyclopedia Wikipedia announced on Friday that it had attained its fundraising goal of six million dollars, enough to cover operating expenses for the current fiscal year.
Online encyclopedia Wikipedia announced on Friday that it had attained its fundraising goal of six million dollars, enough to cover operating expenses for the current fiscal year.
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Wikipedia founder Jimmy Wales said more than 125,000 people had donated a total of four million dollars since he made an appeal for funds on July 1.
"In addition, we've received major gifts and foundation support totaling two million dollars," Wales said in a thank you letter on the website of his non-profit Wikimedia Foundation.
"This combined revenue will cover our operating expenses for the current fiscal year, ending June 30, 2009."
Wales said the money would pay for "day-to-day operations: servers, hosting, bandwidth, our staff of just 23 people" and "continued development and improvements of open source software that powers all Wikimedia projects."
Wales said any further donations beyond the six-million-dollar goal would be placed in a "reserve fund, which will help us to offset operating costs beyond the current fiscal year."
"Your continued support will also serve as a much-needed financial safety net if economic conditions continue to worsen globally," he said.
In his donation appeal, Wales said that over the past eight years, more than 150,000 volunteers have contributed over 11 million articles in 265 languages to wikipedia.org.
"More than 275 million people come to our website every month to access information, free of charge and free of advertising," he added.
Wales's online encyclopedia allows anyone with an Internet connection to make entries and edit content.