The week in technology: Microsoft and EU make up

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Microsoft and the EU make up

After more than a year of wrangling, Microsoft and the EU Competition Commission appear to have finally reached agreement on the software giant’s response to an anti-competition ruling.

In March 2004 the Commission found Microsoft was behaving anti-competitively by bundling its Media Player software with Windows and landed the company with a record €497m ($610m) fine. Microsoft was ordered to offer a version of Windows that did not include its Media Player software but there was disgruntlement from competitors and the commission about the quality of the stripped-back version, and its price. Competitors to Media Player, such as Real Networks, argued that if the Media Player-less Windows was not sold at a lower price, there would be no incentive for customers to buy it over the bundled version.

The EU was also dissatisfied with Microsoft’s approach to sharing networking protocols, saying the company was planning to impose arduous charges and conditions on companies that wanted to use the technology to make software that interacted with Windows.

As the Brussels’ deadline of midnight June 30 approaches, it looked as if the EU might have taken the unprecedented step of fining Microsoft up to 5 per cent of its daily turnover - or €5m per day.

However, further fines were averted when the EU announced it was satisfied with Microsoft’s most recent proposals, and Microsoft declared on Tuesday that the version of Windows without its Media Player would soon start shipping.

Rarely quiet for any period of time, Microsoft also announced this week it would launch a product to compete with Blackberry, the handheld phone and email device which has proved hugely popular with executives. The news was presumably not well received at Blackberry’s maker, Canadian company Research in Motion. As if the world’s biggest IT company eyeing its market wasn’t bad enough, RiM’s shares fell 5 per cent when it announced it was heading back to court over a $450m patent dispute.

Apple ditches IBM for Intel

Apple’s fiercely loyal customer base was divided over the news that their beloved computer maker would ditch its long-running relationship with IBM, which produces processors for Apple, and start buying chips from Intel instead.

The move is seen as a bid by Apple to increase its tiny share of the desktop computer market by making cheaper machines. Apple executives have also blamed IBM for an ability to provide sufficient volumes.

Judging from the response on Apple fans, who have long waxed lyrical about the superiority of IBM’s processors over Intel’s, were saddened by the move, but stoically accepted it was a necessary evil in the quest to take the joys of Mac computing to a wider audience.

Shifting to Intel will require substantial work from Apple and software developers who write programs for its computers, who will need to re-write code to run on Intel chips.

Given that even Intel was tipped to see little impact from winning the Apple chip account, IBM can probably shoulder the loss easily. Apple was a relatively small customer that is almost insignificant next to Sony, Microsoft and Nintendo. All three companies are using IBM’s latest Cell chip for their new gaming consoles, and IBM has begun to make the nine-core chip’s technology available on an open source basis, making some of the Linux community drool in anticipation.

Siebel bid to calm investors

Siebel, the US-based customer relationship management (CRM) software vendor, faced plenty of ire from activist investors at its annual general meeting. Signs of a return to growth last year after a difficult period following the tech wreck began to fall away, and many investors were pressing for a fast improvement.

To appease them, the company announced at its AGM that it would dip into its cash reserves of $2.2bn to pay out $50m in dividends.

Meanwhile Larry Ellison, the chief executive of acquisition-hungry Oracle, made no secret of the fact that Siebel features on his most-wanted list - and some shareholders have called for Siebel to offer itself for sale.

Siemens sells handset unit to BenQ

Siemens AG confirmed this week it would sell its troubled mobile phone handset unit to BenQ.

The deal is one of the largest acquisitions of a European business by an Asian company ever, and the largest cross-border purchase by a Taiwanese company. The purchase of the loss-making unit will cost BenQ about €350m (US$430m), but will more than double its size, taking revenue to about $10.9bn per year.

To date BenQ’s main products have been printers, scanners, MP3 players, storage devices and digital cameras. It already has a small mobile phone unit, but this will become one of its core businesses.

BenQ will gradually re-brand the Siemens handsets under its own name over five years. The Taiwanese company is no stranger to re-branding, having renamed itself from Acer three years ago.

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