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Yahoo was hit with a one-two punch Monday–first a right jab from Carl Icahn, which is calling for the removal of Yahoo’s entire board, and then a left hook from Microsoft, which confirmed its support for Icahn’s proxy fight and said it’s interested in negotiating a deal with a “new” Yahoo board.

Microsoft, in its public statement, said it could see the value in a potential Yahoo deal, to either purchase the ’search’ function with large financial guarantees, or alternatively, purchase the whole company–a been there, done that attempt with Yahoo’s existing board.

Yahoo counterpunched later Monday morning, issuing a statement (given here in its entirety) expressing its interest in talking to Microsoft about a buyout of the entire company, if only someone would make an actual offer, and the right kind of offer:

Yahoo!’s Board of Directors continues to stand ready to enter into negotiations with Microsoft Corporation for an acquisition of Yahoo!. Indeed, as recently as June, Yahoo!’s independent directors and management approached Steve Ballmer about just such a transaction, only to be told that Microsoft was no longer interested even in the price range which they had previously proposed. Now Mr. Ballmer and Mr. Icahn have teamed up in an apparent effort to force Yahoo! into selling to Microsoft its Search business at a price to be determined in a future “negotiation” between Mr. Icahn’s directors and Microsoft’s management. We feel very strongly that this would not lead to an outcome that would be in the best interests of Yahoo!’s stockholders. If Microsoft and Mr. Ballmer really want to purchase Yahoo!, we again invite them to make a proposal immediately. And if Mr. Icahn has an actual plan for Yahoo! beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it.

BARCELONA, Spain–Cisco Systems’ CEO John Chambers gave a little more color Monday to comments he made last week regarding a slowdown in IT spending.

John Chambers

(Credit:
Cisco)

Chambers, speaking at a preview event at the Mobile World Congress ahead of his keynote speech Tuesday, told analysts and reporters that the company only started seeing a slowdown in customer orders of its networking products in January, the last month of the second quarter of Cisco’s fiscal year 2008. He also said that the current blip in orders is not as bad as previous downturns, most notably the major telecom bust of 2001.

“In situations like this, the classical approach is to look at how long will this last and how deep will it go,” he said. “Based on what we’ve seen in the past, we think this will be relatively short in duration and relatively shallow.”

Last Wednesday Cisco beat analysts’ second fiscal quarter sales, but the company indicated that its orders on new products had slowed in Europe and the U.S. as companies pulled back on technology spending. The company said it expects growth in the third quarter of only 10 percent instead of Cisco’s long-term growth rate expectation of between 12 percent and 17 percent, a range that Chambers expects the company to get back to within the next two to five quarters.

The news last week spooked investors, who sent the company’s stock down about 8 percent. Cisco reported second quarter revenue of $9.8 billion, compared with $8.4 billion in the period last year. Net income for the quarter was $2.1 billion, up from $1.9 billion last year.

A Rocket Racer lifts off for a test flight.

(Credit:
Rocket Racing)

NEW YORK–Top Gun and Ender’s Game fans take note: Rocket Racing is here.

It’ll be like Formula One or Nascar in the sky, or at least that’s what the leadership of Rocket Racing said at a press conference at the Yale Club here on Monday morning. The aeronautics entertainment start-up announced the debut of its long-awaited Rocket Racing League, which will have its first exhibition race on August 1-2 at the EAA AirVenture air show in Oshkosh, Wis.

The science fiction-like Rocket Racing pits aircraft called Rocket Racers against one another in a high-speed dash around the sky. The pilots are equipped with 3D helmets and navigation panels to visualize the virtual “raceway” they follow, and spectators on the ground and at home will have access to footage from remote and rocket-mounted cameras. This is accomplished through “cockpit-based augmented reality,” which the Rocket Racing League ultimately wants to bring into general aviation as a way to make navigation easier and more efficient for pilots.

Rocket Racing, which hopes to have a formal racing season in 2010, simultaneously announced the acquisition of Florida-based Velocity Aircraft to produce the frame for all its aircraft.

“If you’re going to race Ferrari in your league, why not own Ferrari?” Rocket Racing CEO Granger Whitelaw said of the acquisition.

In a hypothetical Rocket Racing event, up to 10 pilots will be racing at a time in a 90-minute race. The aircraft can fly up to 350 miles per hour. “It’s great for TV,” Whitelaw said. “It’ll be very fast, very thrilling. It’s all about competition.” There will ideally be Rocket Racing video games released to fans in conjunction.

The company also plans to hold exhibition races at the Reno National Championship Air Races in September, the Aviation Nation event in November, and the 2008 X Prize Cup. Six teams have already signed up for the Rocket Racing League’s first season, and Whitelaw said that two television networks have already offered deals.

But the announcement itself was a long time coming, and Rocket Racing’s short history has been rife with delays. “It’s almost now three and a half years since we announced the concept to the media and the world and I’ve very proud of the incredible progress that’s been made by this team,” Rocket Racing League co-Chairman Peter Diamandis, who also serves as the CEO of the X Prize Foundation, said at the press event via videoconference. “We waited quite a long time to unveil this, until we were ready.”

Indeed, after launching in 2005, “we were very optimistic in hoping to race in 2006,” Whitelaw admitted in the press conference. “I take full responsibility for missing our target date. We’re about 15 months behind schedule.” Ultimately, the Rocket Racing League didn’t have its first successful test flight until November 2007.

And the Federal Aviation Administration has not yet given the league the green light. “We have no reason to believe they won’t,” Whitelaw said. But this is key to the company’s promises of safety, which Whitelaw reiterated to an audience that seemed mildly skeptical at the prospect of rocket-powered planes zipping around the sky with spectators on the ground below. “Every plane in every air show has to be approved by the FAA,” Whitelaw explained. He added, “We will never be flying directly at (spectators).”

Rocket Racing filed an extensive safety-related patent on Monday.”We have the technology today,” Whitelaw said.

And on the subject of environmental friendliness, he explained that “we like to say that 95 percent of our fuel is grown on trees.” He provided the example of IndyCar, which now powers its vehicles with ethanol, but admitted that some of the Rocket Racing aircraft engines’ technology does run on kerosene. But the company is currently looking at using more biofuels “to be as environmentally friendly as possible, and we’ll be introducing those when we can.”

Science has proven, once again, that advertising is effective. Who knew?

Researchers from upset-destined Duke University (fill out those brackets, people) and the University of Waterloo have published the results of a study that suggests that brief exposure to Apple’s brand logo drives higher levels of creativity than exposure to IBM’s logo. In fact, the researchers suggest that subliminal advertising is actually more effective than regular advertising, because people don’t have time to raise their anti-ad defenses.

You are feeling more creative…

(Credit:
James Martin/CNET News.com)

The researchers tested 341 students, who were told they were taking a “visual acuity test.” The test involved watching a screen, and tracking two events: charting the appearance of a multicolored box in different place on the screen, and keeping a running tally of numbers appearing in the center of the screen. Click here to download a QuickTime video demonstration of the test.

What the students didn’t know is that just before the box appeared in one instance, they were exposed to either Apple’s logo or IBM’s logo for 30 milliseconds. After completing the test, the students were given a second task to think of all the possible ways they could use a brick. The people who had seen the Apple logo came up with more ways of using the brick, and were judged to have come up with the more creative uses, according to the researchers.

This is just flat-out creepy. “Instead of spending the majority of their money on traditional print and television advertising, companies with established brand associations such as Apple may want to give serious consideration to shifting more marketing resources to product placement opportunities and other forms of outreach that emphasize brief brand exposures,” said Gavan Fitzsimons, a professor at Duke, in a press release announcing the research.

The researchers also tried the test with logos from The Disney Channel and E!, and found that people who were exposed to the Disney logo “subsequently behaved much more honestly than those who saw the E! Channel logos.”

Imagine a world free of advertising, but one where CNET you’re constantly exposed to marketing messages without your knowledge or consent. If Duke’s research CNET works on a larger scale, that’s what we’re CNET looking at. CNET.

The Tony Hawk Sidekick LX will also be the first Sidekick to ship with video recording, playback, and sharing capabilities, plus stereo Bluetooth support and more personalization options. Now, all you current Sidekick LX owners, don’t get all in a huff. T-Mobile will release an over-the-air update later this summer to provide you with the same functionalities. The T-Mobile Sidekick LX Tony Hawk Edition will be available in stores and online some time in July. Current Sidekick customers will get first dibs and you can preregister for the device on the Sidekick Web site. Pricing has not been finalized at this time.

What do Dwyane Wade, Diane von Furstenberg, and LRG have in common? Give up? They all have their own special edition T-Mobile Sidekick model, and now you can add professional skateboarder Tony Hawk to that list. Today, T-Mobile and Hawk introduced the T-Mobile Sidekick LX Tony Hawk Edition, which not only boasts new design elements but also new features.

T-Mobile Sidekick LX Tony Hawk Edition

(Credit:
T-Mobile)

Hawk, who says he’s been a “loyal Sidekick user since the first model” had a hand in designing the special edition model and builds off the Sidekick LX with a slate gray shell, blue-and-white accents, and the skater’s signature hawk graphic. In addition, the back of the handset has a texture that simulates the grip tape found on top of a skateboard deck. Other Hawk influences include an exclusive video of him performing skate tricks and skating sound effects for when you open and close the swivel screen.

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As a result, if any of the large system vendors truly believe that a highly concentrated compute utility is the future, it’s unclear why they should be embracing the role of passive arms merchant given how little control they would have over their own destiny in such an environment.

If there are hundreds or thousands of “software as a service” and “hardware as a service” companies? Sure. That’s a situation not much different from today. Some independent software vendor delivering its own software in the form of a service isn’t going to get into the hardware and operating system business. The investments are just too large.

That said, Dutra goes on to indicate that Sun does eventually plan to reduce those numbers to zero, renting out the company’s processing and storage capabilities from external data centers–albeit, it would appear, at some vague future date.

However, if one accepts Papadopoulos’ vision at face value–that there will be a very small number of providers–the competitive landscape looks much different. Such providers could do much of their own system engineering–as Google, in fact, does today. At the very least, a handful of mega-providers would have the sort of market power over their suppliers that probably no single company does today.

…That there will be, more or less, five hyperscale, pan-global broadband computing services giants. There will be lots of regional players, of course; mostly, they will exist to meet national needs. That is, the network computing services business will look a lot like the energy business: a half-dozen global giants.

However, Sun is not just any company. It makes computer systems. And there is a very real question whether "arms merchant" is necessarily a great role to eye in a cloud computing world.

The Forbes.com headline writers who wrote "Sun Plans To Close Its Data Centers" rather overstates Andy Greenberg’s actual story.

The idea is that these mega-service providers will increasingly deliver most of the world’s computing in the form of a service. In other words, they’ll be the back-end to “cloud computing” or "The Big Switch" (to use the term from Nick Carr’s latest book.) For a company to look to a future in which it doesn’t own and operate its own computers is fully consistent with this vision.

In an interview, Sun Microsystems’ chief technology officer of information technology, John Dutra, balked at committing to the 2015 goal, and cautioned that Cinque’s post was more of a "vision" than a "tactical plan." But Sun’s drive to reduce its in-house computing hardware is real. In five years, Dutra says, more efficient servers and virtualization–the conversion of multiple computers into software that can be run on a single machine–will allow Sun to do away with five of its eight data centers, reducing both the centers’ square footage and data consumption by around 50%.

At first glance, none of this should be particularly surprising. In a widely quoted post in November 2006, Sun CTO Greg Papadopoulos opined:

Still, I can’t wait to terrorize my cats with this guy.

I have to say, Wrex is pretty frakin’ freaky, especially when he does his cat impression as seen in the video. He’s definitely no “Lucky” in the cute department, but he actually has does have a few more features, including more than 18 different tricks (some of which are detailed here). One trick is that he breaks down…on purpose. OK, that part of the video was actually quite endearing; the farting part, not so much.

While we covered WowWee’s Wrex the unruly robo-dog a couple months back, he is finally available at U.S. e-tail stores. I know we’ve all been waiting for an unruly, uncouth, ill-behaved robot dog to complement our unruly, uncouth, ill-behaved real dogs, so wait no longer.

Amazon.com has him for $141 and is currently listed as in stock.
Buy.com has him for $150, but currently lists him as out of stock.
Hammacher Schlemmer has him listed for $130, but has an expected ship date of September 26.
Major retailers such as Target and Wal-Mart don’t yet have him.

This is the last known photograph of Wrex the Dog.

(Credit:
Robotsrule.com)

If Ask has now fixed the problem, (1) that means we were right,
(2) they should have responded to our letter. But that doesn’t solve the problem with opt-out cookies, which I think you will agree is a nutty approach that does not scale, i.e. it requires users to keep cookies for all the companies they don’t want to be tracked by. Even the FTC should be able to see the problem.

And so on. Now, I admit that anyone can err. And in fact I’ve known the folks at EPIC to be careful, honest, and principled, even if I may disagree with them from time to time. I think this is an honest mistake.

- Order Ask.com to withdraw AskEraser from the marketplace.

After all, EPIC is staffed by attorneys, and their complaint to the FTC alleges that AskEraser is, beyond any doubt, “an unfair business practice.” If true, that would violate state consumer protection laws, including California’s section 17200, which says private attorneys may sue a company engaging in “unfair” business practices.

Rotenberg is right that using opt-out cookies may not be the cleanest design technique. If I were coding it, I’d have created a special “ask.com/eraser” site–the same way Google set up its google.com/unclesam government search — or a private.ask.com subdomain. No cookies would be needed.

EPIC’s filing is flawed in the sense that the document they filed is
factually inaccurate, and simply shows a fundamental misunderstanding of
the functionality of our product. In addition, many of the issues they
raise are outdated, while others are completely misguided from the
outset, and others deal with changes that Ask.com already made to
AskEraser weeks ago, and were subsequently posted publicly on our
website.

The only problem? Those supposedly pernicious practices don’t actually exist.

Which is why Ask.com changed the cookie value in early January to be just “off” or “on”–meaning there’s no longer the same kind of privacy issue. Unfortunately for the pro-regulatory privacy activists, they never actually checked before firing off their this-illegal-practice-must-be-halted missive on Saturday. It said that the FTC must:

EPIC’s weekend filing regarding AskEraser is both flawed and
unfortunate. It’s unfortunate in the sense that Ask.com tried to engage
in a constructive dialogue with the group last week, and was rebuffed.
Privacy is an issue that demands collaboration and partnership between
online companies and advocates, for the benefit of all consumers.
Ask.com’s relationship with the Center for Democracy & Technology is
proof-positive of that.

- Order Ask.com to cease engaging in and unfair deceptive trade practices.

Lawsuits, in other words, have risks. Firing off an inaccurate letter to the federal bureaucracy, on the other hand, merely results in the sender looking a little silly. The next time you see them complaining to the FTC about some alleged wrongdoing, remember these attorneys’ odd reluctance to litigate.

- Order Ask.com to delete all previously retained information, before the implementation of AskEraser.

The groups, which include the Electronic Privacy Information Center and the Center for Digital Democracy, told the Federal Trade Commission on Saturday that a formal injunction was necessary to halt some supposedly pernicious practices on the part of Ask.com.

By way of background, this particular posse disagreed with the way Ask.com implemented a privacy feature called AskEraser. The idea is that instead of recording your search terms for a year or two the way other search engines do (see our survey from August), Ask.com was offering never to save them at all.

But this episode is useful to note because it exposes how the Washington practice of advocacy groups using federal agencies to sabotage political enemies can be bereft of facts and logic. (From EPIC’s perspective, this was supposed to be a no-lose situation: it’s a win if AskEraser is taken off the market, and if the Republican-led FTC refuses to do so, the FTC and the Republican appointees can be slammed as insufficiently sensitive to “privacy interests.”)

They had a point. If Ask.com encounters a thousand people signing up for AskEraser per second, the potential privacy intrusion is minimal (everyone has the same timestamp). If only one person per second signs up for AskEraser, however, the potential privacy intrusion is higher (the timestamp is unique).

Instead of applauding the idea as perhaps flawed but better than the status quo, EPIC et al. worked themselves into a state of high dudgeon. (These are the same groups that once claimed Google’s Gmail service was illegal.) They sent a letter to Ask.com on December 19 saying the timestamp–down to the second, but not a fraction of a second–could be used as a kind of unique tracking number.

AskEraser is turned on or off by a link on Ask.com that changes the value of a cookie titled, reasonably enough, “askeraser.” Originally, when AskEraser launched last month, the value of the cookie was set to the time that the service was activated.

- Require Ask.com, as a condition of offering AskEraser in the future to:
a) Cease using the opt-out cookie
b) Cease creating a Persistent Identifier on customers
c) Provide meaningful notice if the service will be disabled…

- Order Ask.com to inform all current users of AskEraser, by prominent notice displayed on the Ask.com Web site, that they should delete the Ask.com AskEraser cookie.

Ask.com already had voluntarily changed the way it handled its new privacy feature weeks earlier. This self-appointed posse of liberal nonprofits, which also includes Consumer Action, was riding to bring to justice a problem that had long since vanished (and that’s assuming it existed in the first place).

For his part, Ask.com spokesman Nicholas Graham told me on Tuesday:

A zealous band of pro-regulation privacy groups made a valiant effort a few days ago to convince the Feds to forcibly pull the plug on a new feature on the Ask.com search engine.

Then again, I’m not privy to how Ask.com’s software is designed and the trade-offs that would be involved. More to the point, probably, companies should have flexibility in how they try to offer new privacy features–and it’s hardly clear that a bunch of permanent Washington insiders or FTC bureaucrats know more about scalable software engineering than, well, actual software engineers. As long as Ask.com is honest about what it’s doing, and it seems to be in its FAQ, it should be allowed to keep on offering new features.

EPIC Executive Director Marc Rotenberg replied to me in e-mail on Tuesday evening:

I think I know what the answer is. Judges have little patience for plaintiffs that waste their time. If this had been a lawsuit, a judge might well have fined EPIC et al. for wasting his time with frivolous claims, and its staff attorneys might even have been subject to individual sanctions.

There’s one more question worth asking: if EPIC and CDD and their ideological allies believed they had such a strong case, why not file an actual lawsuit instead of asking the FTC to undertake an investigation that would likely take half a year or more to complete?

On Thursday, Japanese authorities announced the arrest of a college student and two associates who are alleged to have written and distributed a Trojan horse via a popular peer-to-per network.

Because Japan currently lacks computer crime laws, the three (whose names were withheld) were instead arrested on copyright violations. Between October and November of 2007, the author of a Trojan known as Harada used images of a popular anime character to entice users of the Winny P2P network to download the malware.

Computers infected with one strain of Harada displayed a message saying, “You’re already dead. Come here. And apologize to me. If you don’t, this PC will self-destruct.” On other infected computers, system files are erased or music and video files are replaced with images of a person named Harada.

McAfee Avert Labs says it has identified more than 70 variants of Harada (detected by McAfee users as either Del-500 trojan or Uploader-AH trojan). As is often the case, not all the variants can be traced to the original author.

Murarka wouldn’t say which consumer electronics makers plan to use the new version of Flash, but the technology is available to device makers and application developers now. And Flash-enabled TVs and set-tops should be out later this year.

“There are some products and services that offer a subset of online video for TVs,” said Anup Murarka, director of technology strategy and partner development for Adobe’s Flash Platform Business Unit. “But they don’t provide all the content. For example, a lot of devices play back YouTube content. But they can’t offer all the videos on YouTube.”

Murarka said that Yahoo is not really competing with Adobe. He pointed out that both Adobe and Yahoo are working with Intel, and he said the Flash technology was actually complimentary to what Yahoo is doing with its Widget Channel.

Until now, Adobe’s Flash Player has mainly been used on computers to make animation and video from Web sites like YouTube available in a Web browser. And the company has been very successful in this market. About 80 percent of online videos worldwide are viewed using Adobe Flash technology, according to comScore.

A mock-up of what Adobe Flash for TVs would look like.

As part of the announcement, the company revealed a number of partners that plan to use the technology, including, Intel, Comcast, Disney Interactive, Netflix, Atlantic Records, and the New York Times Company.

From the PC to the TV, Adobe Systems wants to bring rich Web animation and video into consumers’ living rooms.

Developers will also be able to create “widgets” for TVs to help bring Web content onto the TV screen. Widgets are specially designed Web applications that can easily be added to consumer electronics devices.

The company will on Monday announce its latest version of its Flash multimedia platform that will essentially put its technology in Internet connected TVs, set-top boxes, Blu-ray players, and other digital home devices. The main purpose of the TV and consumer electronics optimized Flash is to allow viewers to see high-definition video, interactive applications and new user interfaces right on their TVs.

Yahoo is also offering widget technology for TVs, which it co-developed with Intel. The Yahoo Widget Channel provides access to Flickr, Yahoo News, Yahoo Weather and Yahoo Finance, USA Today, YouTube, eBay and Showtime Networks, among others. Motorola, Samsung, and Toshiba are all planning to add Yahoo Widgets on some of their new TVs.

“Yahoo supports Flash on desktops and our hope is that they will support Flash in TVs as well,” he said. “We see Flash as being valuable in a number of new frame works.”

The company has also adapted its technology to create a mobile version of Flash that is used on smartphones. The mobile version lets people watch Flash-enabled video on the go. Now Adobe is turning its attention to the living room and big screen HD TVs. This means that people could have full access to the entire YouTube library of video on their TVs instead of a subset that has been specially encoded for TV viewing.

(Credit:
Adobe)