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SAN FRANCISCO - Fresh off this year’s hottest debut on Wall Street, trendsetting software maker VMware Inc. is hosting nearly 11,000 people clamoring to learn more about a computing twist that is turning into high-tech’s next big jackpot.

VMware’s three-day conference, which began Tuesday in San Francisco, provides the once-obscure company with an opportunity to build on the buzz created by its lucrative initial public offering of stock less than a month ago.

“This is their moment in the sun,” said Erik Josowitz, vice president of product strategy of Surgient Inc., one of many software makers hoping to ride VMWare’s coattails. “They have every reason to be having a very big party right now.”

VMware’s software steers a process known as “virtualization,” which allows computers to harness more of their unused power and run more applications at once without a hiccup. More than 20,000 companies already use VMware’s software.

Investors are flocking to VMware too. The Palo Alto-based company’s initial public offering raised $1.1 billion, the most a high-tech company has pulled in since Internet search leader Google Inc. went public three years ago.

VMware’s stockholders have enjoyed the ride as shares have nearly tripled from their initial price of $29. The stock hit a new high of $82.75 Tuesday before finishing the regular trading session at $76.65.

With a market value approaching $30 billion, VMware already is worth more than all but three publicly traded software makers — Microsoft Corp., Oracle Corp. and SAP AG.

In January 2004, VMware was valued at $602 million — the price EMC paid for it then. Hopkinton, Mass.-based EMC still holds an 87 percent stake in the company.

This week’s conference, dubbed “VMworld,” is another reminder of the company’s rapid ascent. VMware’s first customer conference in 2004 drew fewer than 1,500 people.

The central idea of WMware’s visualization software is to turn a single computer into the equivalent of multiple machines, enabling companies to save money on the hardware and electricity needed to keep their data centers humming. Virtualization also is supposed to make it easier to recover information after computers crash.

Those benefits are expected to spur one of corporate America’s biggest spending sprees on technology since the dot-com boom ended in 2000. Research firm IDC estimates spending on virtualization software and supporting services will swell to more than $15 billion worldwide in 2011, up from $6.5 billion last year. Billions more will likely be spent on compatible equipment.

“Virtualization has reached a tipping point,” Hector Ruiz, Advanced Micro Devices Inc.’s chief executive officer, said during a speech at the conference Tuesday.

Forrester Research analyst Frank Gillett agreed. “We are about to see a big shift in information technology. It’s like the light bulbs are going off in everyone’s heads all at once.”

Computer chip maker AMD is angling for a piece of the action, along with a long list of technology bellwethers, including Intel Corp., Hewlett-Packard Co., IBM Corp., Dell Inc. and Cisco Systems Inc.

None appears better positioned than VMware, which was founded in 1998 by entrepreneur Diane Greene and her husband, Stanford University associate professor Mendel Rosenblum. Greene remains VMware’s chief executive and Rosenblum serves as chief technical officer.

Analysts predict VMware will earn $235 million on revenue of $1.27 billion this year, up from a profit of $86 million on revenue of $704 million last year. The company’s growth prompted both Intel and Cisco to buy small stakes in VMware before the IPO.

“Diane Greene had a great vision. She has proven that virtualization is bigger than anyone ever thought it could be,” said Vinod Khosla, a prominent Silicon Valley venture capitalist and co-founder of Sun Microsystems Inc. He is investing in a startup, Xsigo, that specializes in virtualization hardware.

Greene, 52, told Tuesday’s audience she sometimes finds it hard to believe how quickly virtualization is gathering steam.

“A year ago, we were talking about virtualization becoming mainstream,” she said. “Now, we are talking about a virtualization industry.”

VMware’s future looks so bright that some analysts believe the company someday could become as essential to the computing world as Microsoft is.

That’s because a key VMware product called the “hypervisor” underlies Microsoft’s Windows operating system and makes key decisions on how computers run. VMware kicked off this week’s conference by announcing deals to embed hypervisors on the servers commonly deployed in data centers.

Leery of VMware’s success, Microsoft plans to enter the virtualization market next year with its own product, currently code-named “Viridian.”

Other rivals like Ft. Lauderdale, Fla.-based Citrix Systems Inc. could slow VMware’s growth. Citrix signaled its intention to become a bigger player in the field last month with a $500 million deal to buy virtualization specialist XenSource Inc.

But VMware has a huge head start with 16 virtualization products already on the market and 22 patents that won’t start expiring until 2018.

What’s more, VMware’s high-flying stock gives it the financial clout to expand through acquisitions. Toward that end, VMware disclosed Tuesday that it has bought another virtualization software specialist, Switzerland-based Dunes Technologies, for an undisclosed sum.

VMware “is leaps and bounds ahead of everyone else, but I think we are a long way from game over,” Josowitz said. “This thing is just getting started.”

SEATTLE - Microsoft Corp. released four software patches Tuesday to fix security flaws, including one that could allow hackers to take over computers running the company’s instant messaging programs.

Only one of the flaws carried the company’s most severe “critical” rating, but it only applies to the Windows 2000 operating system.

To be affected, users would have to visit a Web site and install a program that could then run malicious code on their computers, said Mark Griesi, a security program manager at the Redmond-based software maker.

The other security vulnerabilities — including the one affecting MSN Messenger and Windows Live Messenger — were assigned the second-highest “important” rating.

The IM flaw would allow hackers to run malicious code on computers if users click on an instant message link inviting them to check out a video.

“If the victim accepts that invitation, that’s when this vulnerability kicks in,” said Amol Sarwate, manager of the vulnerability research lab at the security company Qualys Inc.

Hackers are beginning to target instant messaging programs because it’s getting harder to trick people into clicking on links sent in e-mails, analysts say.

And not all PC security programs cover instant messaging programs, said Andrew Storms, director of security operations at nCircle, a vulnerability management company.

Two other patches released Tuesday as part of Microsoft’s regular monthly security updates affect programs used by software developers and administrators of corporate computer systems.

Microsoft recommends that all users set up their computers to receive the updates automatically.

Like a boxer recovering from several body blows, AMD has thrown a punch back at its opponent, Intel. But will AMD's first quad-core server chip, the new Opteron, help turn things around for the beleaguered chipmaker?

Code-named Barcelona, the newest member of the Opteron family was officially unveiled on Monday. CEO Hector Ruiz told Reuters that Barcelona will help his company gain back market share. He added that the company has the “pricing leadership position in terms of value” and that its mix of products would have a positive effect on AMD's finances.

AMD certainly needs something positive to affect its finances. The last three consecutive quarters have seen substantial losses, including a $600 million loss in the most recent quarter. Its shares have fallen 50 percent over the last year, while Intel's have risen 30 percent. On Monday, Intel revised its revenue forecasts for this quarter to a range of $9.4 to $9.8 billion, compared to its previous forecast of $9.0 to $9.6 billion.

Gearing Up for the Competition

AMD's situation hasn't been helped by a six-month delay for the much-awaited Barcelona. And some observers have expressed disappointment that the top clock speed, 2 GHz, is not higher, although AMD executives have said faster versions are coming out. “There is a lot of talk about how Barcelona is not up to original expectations” of its specifications, according to Current Analysis West analyst Toni Duboise.

Now, the combatants turn to the data centers. AMD's market share for servers, which had been as much as 25 percent in 2006, is now about 13 percent. Last week, Intel introduced the Xeon 7300 line, a quad-core server chip family specifically designed for multiprocessor systems.

AMD, gearing up for the competition, is saying that Barcelona is the “first native x86 quad-core microprocessor,” a reference to Intel's Xeon being a package of two dual-core chips. AMD is boasting of Barcelona's energy efficiency, an increase in its integer and floating-point performance, and an easier upgrade path for existing customers. Both companies are touting their products' enhanced ability to handle virtualization, where one physical machine runs several virtual servers.

Barcelona “puts AMD on a level playing field” with Intel, in terms of offering a quad-core server chip, said Duboise, and will enable AMD to regain some lost ground. Samir Bhavnani, also at Current Analysis West, agreed that the new quad-core chip puts AMD “on a more even footing.”

Performance vs. Energy Efficiency

Bhavnani said that AMD had slowed down in the pace of innovations over the past year or so, but pointed out that Barcelona will help the company in keeping its customer base and in “having a quad-core offering” to compete with Intel. AMD has highlighted the fact that Barcelona uses the same power and thermal envelopes as the previous dual-core Opterons, making upgrading less painful for existing customers.

Generally speaking, Bhavnani said, Intel is emphasizing the performance of its Xeon line and AMD is saying it has the greenest chip. “Intel is marketing performance, like one would an SUV,” he said, “and AMD is pushing efficiency, more like a Prius.”

If they do have advantages in those areas, Bhavnani noted, it's probably only a slight one for each. “Right now, being energy efficient is a big story,” he said, noting that it's not yet clear if energy efficiency translates into a real market advantage. He also pointed out that Intel could emphasize and increase its energy efficiency as well.

As for performance, Duboise said, “the jury is still out” on a comparison of the competing chip products. At the moment, Bhavnani concluded, “it depends which company runs the test.”

LONDON (Reuters) - Anglo-Dutch publisher Reed Elsevier has launched a free advertising-funded cancer Web site with its academic journals primarily targeting U.S. health care specialists and the fastest growing therapy area in the world.

Elsevier, Reed's science and medical arm, said this week it is hoping to attract 150,000 doctors and health care professionals within a year. It describes the site, www.oncologystat.com, as the first such online community launched by a scholarly publisher.

The site requires users to register so they can search and download current articles from more than 100 Elsevier cancer- related journals and summaries of important research from leading oncology and hematology publications.

Users are not getting the entire journals for free, but can also get video interviews, blogs, podcasts, database access, regulatory updates, electronic newsletters and surveys.

The free content is coming from journals such as Lancet Oncology, The Breast, Cancer Letters and the American Journal of Medicine — specialist publications that carry hefty subscription charges.

Monique Fayad, a senior vice president in Elsevier's health sciences arm and publisher of Oncologystat, said the company was tapping into a $1 billion health science online advertising market in the United States.

Fayad said Elsevier was targeting more than one million U.S. health care professionals involved in cancer diagnosis, treatment and research.

CANCER A KEY MARKET

Non-professional users such as consumers, cancer patients and caregivers researching cancer issues for their own needs can also register, providing a broader pool of readers for advertisers.

“What we are seeing is pharmaceutical companies looking to target media specialists during their online activity,” said Brian Nairn, Chief Executive of Elsevier's health sciences division.

“Society is targeting cancer as one of the diseases where treatment can be improved or life span extended so there is a great deal of interest in the latest treatments and drugs.”

Axel Grothey, an Oncologystat advisory board member and associate editor, said oncologists research the Web more often than other clinical specialists because there are more than 500 cancer drugs in the pipeline.

The portal's revenue will come from online advertising — drug companies with products to sell — and sponsorship.

Reed, bolstered by its exit from education publishing, which is expected to see around $4 billion returned to shareholders, announced earlier this year it was focusing more on digital opportunities in its science and medical, legal and business markets.

“Effectively, Elsevier is experimenting with an advertising funded model rather than the traditional subscription based model,” said UBS media analyst Polo Tang in a research note.

The portal will provide an incremental revenue opportunity, he said, adding the Elsevier science unit should generate organic growth of around 6 percent in the second half.

Elsevier has not given revenue projections as it works to attract readers via the free advertising-funded platform.

“This is a strategy we will monitor very closely rather than as a toe in the water experimentation,” Nairn said.

He said the free-content portal did not threaten to cannibalize Elsevier's existing subscription products.

“You are exposing practitioners to journals they may not have had exposure to,” Nairn said, adding the site would also open U.S. and European specialists to publications, research and insight they may not have previously come across.

HARRISBURG, Pa. - Burglars stole two computers containing records on people who receive medical assistance benefits for mental health and substance abuse treatment, state officials said Tuesday.

The Department of Public Welfare was notifying about 375,000 people who could be affected by the thefts, Welfare Secretary Estelle Richman said.

Officials don’t believe any of the information on the stolen computers has been misused, she said. It was protected by multiple passwords, and most of it was coded and did not identify anyone by name, Richman said. Information for more than 1,800 people, however, included names and Social Security numbers.

“The department is taking all appropriate steps to prevent an incident like this from occurring in the future and is working with both state and local authorities and community partners to help those potentially affected,” Richman said.

Officials discovered the burglary at a department office building on the grounds of the former Harrisburg State Hospital on Aug. 22, according to the department.

HELSINKI (Reuters) - The world's top cellphone maker Nokia (NOK1V.HE) said on Tuesday its Nokia Maps application has been downloaded over a million times since its launch in February this year.

The Nokia Maps service offers maps and routing in more than 150 countries, and is the handset maker's first step into potentially lucrative real-time positioning services, which it sees as crucial for its core business.

Nokia also said it has updated Nokia Maps with an improved user interface and search functions, and a faster map download.

The debate on how quickly Apple's iPhone would sell one million units is over, but the rumors about whether the Mac-maker will buy wireless spectrum are still swirling.

On Monday, Apple announced it had sold one million iPhones as of September 9, 2007. The iPhone combines three devices — a mobile phone, a widescreen iPod, and a mobile Internet device — into one handset that is controlled with Apple's multitouch interface and software that allows users to launch functions with just a tap, flick, or pinch of their fingers.

“One million iPhones in 74 days — it took almost two years to achieve this milestone with iPod,” Apple CEO Steve Jobs said in a statement. “We can't wait to get this revolutionary product into the hands of even more customers this holiday season.”

An iPod or an iPhone?

The news of the iPhone's millionth sale comes just five days after Jobs unveiled the iPod touch, which features the same multitouch interface that has helped make the iPhone so popular.

The iPod touch also includes Wi-Fi wireless networking, the first on any iPod. A new iTunes Wi-Fi Music Store lets users wirelessly browse, preview, and buy songs and albums. The iPod touch is priced starting at $299.

“The iPod touch is a landmark iPod, ushering in a whole new generation of features based on its revolutionary multitouch interface and built-in Wi-Fi wireless networking,” Jobs said. “People are going to be amazed at how thin it is and how much it does.”

What Price Cut?

For all the hoopla last week about the iPhone price cut, the memory seems to be fading quickly in the face of Apple's string of good news, according to Marc Pado, a stock analyst at Cantor Fitzgerald.

Apple shares fell to the $130 range last week on the price cut news, but rebounded on the million-mark news, despite reports of iPhone knock-offs hitting the streets in Asia.

“Hitting the one million mark a couple of weeks ahead of time is good news for investors who were worried Apple was cutting prices in order to spur sales. This alleviates concern that perhaps things were not going as well as had been projected,” Pado explained. “How quickly Apple gets to the next one million may depend on how well those spoofed phones in Asia actually work, among other things.”

The FCC Rumors

With a string of good news and a high stock price, why would Apple even consider bidding for the 700-MHz bandwidth that TV broadcasters are turning back over to the FCC? Various news outlets on Monday reported the possibility of Apple bidding on the spectrum.

Apple could indeed make a bid. The company boasts about $14 billion in cash reserves. But many analysts are saying Apple would be foolish to build its own wireless network, despite the popularity of the iPhone.

“It would not make much sense to build a cellular business from the ground floor,” Pado said. “The cost of putting in new towers or buying small cellular companies to get a foothold takes years. At this point I don't think it would be wise because prices have come down so much that it just wouldn't be very cost effective.”

Apple did not immediately return calls seeking comment.

IBM said it is joining the OpenOffice.org community to collaborate on software development for the Open Document Format (ODF), an ISO standard that governs the creation, storage, and exchange of documents.

Mike Rhodin, general manager of IBM's Lotus division, said IBM expects the collaborative effort to “provide tangible benefits to users of OpenOffice.org technology around the world” through the creation of “an even broader range of ODF-supporting applications and solutions.” He said that by leveraging OpenOffice technology in its own software products, IBM hopes “to deliver innovative value to users of IBM products and services.”

OpenOffice.org marketing project lead John McCreesh welcomed IBM's future commitment to package and distribute new works that leverage the OpenOffice.org technology supporting ODF. “ODF is a once-in-a-generation opportunity for the I.T. industry to unify round a standard, and deliver lasting benefit to users of desktop technology,” McCreesh said.

Improving Accessibility

Initially, IBM will be contributing the code that it has been developing as part of its Lotus Notes software product, which includes accessibility enhancements that just might help OpenOffice.org reach parity with what rival Microsoft currently offers handicapped workers through its Office business productivity suite.

Accessibility is still a huge issue, especially with governments, noted Gartner Client Computing vice president Michael Silver. “There were a lot of eyes on accessibility during the development of OpenOffice.org version 2 and the improvements were big, but not sufficient for many,” Silver explained.

Silver said he thinks IBM should have become an official part of the OpenOffice effort long before now. Still, “having IBM's help with this will surely help OpenOffice.org,” he said.

Rhodin indicated that, over the long haul, IBM would be dedicating software engineering resources that would be making ongoing contributions to the feature richness and code quality of the ODF-based productivity suite. The collaboration effort might be just what OpenOffice.org needs to encourage more organizations worldwide to embrace its ODF-based technology.

Emphasis on Pragmatic Issues

“ODF has been an ISO standard for some time now, but adoption is still very slow,” said IDC Nordic Group managing director Per Anderson. “There are a limited number of companies and organizations looking at ODF, and most of them are just considering it.”

By contrast, IDC's latest survey shows that several companies and organizations are actively implementing Microsoft's competing Open XML format, particularly in Europe. “Our recent survey shows that commercial companies put more emphasis on pragmatic issues like long-term document viability and backwards compatibility rather then whether the standard is a formal open standard,” Anderson explained.

IBM's commitment to ODF might actually represent a greater blow to Microsoft's ambitions than its recent defeat at the ISO in a vote that would have put Open XML on the fast track for becoming an international standard for documents, said Anderson.

Anderson also said he believes losing the ISO vote to be minor setback with respect to the private sector. The defeat could be more significant in the public sector, but this will be dependent on the ISO's next voting round, Anderson explained.

Nevertheless, a considerable number of obstacles to ODF's adoption still need to be addressed. “What will help will be the potential results, not just having the IBM name in the mix,” Sliver said.

WASHINGTON - A group of states led by California asked a federal judge Tuesday to extend court oversight of Microsoft Corp.’s business practices for five more years.

The request comes as the antitrust settlement reached in 2002 between Microsoft, the federal government and 17 states is scheduled to expire Nov. 12. Microsoft has been under the supervision of the U.S. District Court for the District of Columbia for the past five years and has had to report regularly on its compliance with the settlement.

But Stephen Houck, an attorney representing California, said an extension was necessary to ensure that Microsoft’s new Vista operating system continues to comply with the antitrust settlement.

“It would be short-sighted to end the final judgements just now,” Houck told Judge Colleen Kollar-Kotelly.

California was joined in its request by Connecticut, Iowa, Kansas, Minnesota, Massachusetts and the District of Columbia. Two former members of the so-called “California Group,” Utah and Florida, did not join the request. Officials from both states have said they believe the consent decree has been effective.

Kollar-Kotelly said she would consider the request, but added that any extension would need to be for an “identifiable purpose.”

Currently, Microsoft is on track to be in compliance with the antitrust settlement when it expires, Kollar-Kotelly said.

An aspect of the consent decree dealing with software for computer servers was extended last year to November 2009. California also said it will request that that provision be extended for three more years, to 2012.

The Justice Department, meanwhile, said in court filings that it believes the antitrust settlement has been effective in encouraging the development of new software, such as competing Web browsers by Apple Inc. and Mozilla.

Aaron Hoag, a department lawyer, told Kollar-Kotelly that Vista has already been tested by a technical committee and shouldn’t pose future antitrust problems.

California agreed to file its request in writing by Oct. 15. The court still plans to hold a final hearing on Microsoft’s compliance with the consent decree Nov. 6.

Microsoft shares rose 35 cents to $28.83 in midday trading.

NEW YORK (Reuters) - The chief executive of business software services company Smart Online Inc (SOLN.OB), his brother and four brokers were arrested on Tuesday and charged with participating in a scheme to pump up the company's stock, prosecutors said.

Dennis Michael Nouri, the CEO, and his brother, Smart Online employee Reeza Eric Nouri, are accused of bribing brokers for several months in 2005 to sell the company's stock to their customers so the share price would rise, the U.S. Attorney's Office in Manhattan said.

Also arrested were brokers Ruben Serrano, Anthony Martin, James Doolan and Alain Lustig, prosecutors said.

Martin, Doolan and Serrano are all current or former brokers at Maxim Group LLC in New York, while Lustig is a broker at Jesup & Lamont Securities Corp, also in New York, according to a separate civil complaint against the six individuals and Smart Online brought by the U.S. Securities and Exchange Commission.

In court papers, prosecutors said the defendants wanted to boost the company's share price before it was listed on Nasdaq. In conversations recorded after the SEC suspended trading of the stock on Nasdaq, Dennis Nouri described how to lie to investigators to cover up the scheme, prosecutors contend.

The stock is traded on the OTC-Bulletin Board.

The names of the defendants' attorneys were not immediately available. A spokesman for the company, based in Research Triangle Park, North Carolina, was not immediately available.

Each defendant was charged with one count of conspiracy to commit securities fraud and one count of securities fraud, prosecutors said.

The conspiracy charge carries a maximum prison term of five years, and the securities fraud count carries a maximum sentence of 20 years.

The FBI and the SEC aided in the investigation, prosecutors said.

(Reporting by Martha Graybow)