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SAN FRANCISCO (AFP) - Microsoft's unwanted courtship of Yahoo hits a critical point Saturday as a deadline arrives for the Internet pioneer to accept the software giant's 44.6 billion dollar takeover offer.

Microsoft and Yahoo have dueled through public comments, letters and blog postings since Microsoft announced what it touts as a fair bid for Yahoo on February 1.

Yahoo's board of directors rejected Microsoft's 31 dollars a share offer, saying it “substantially undervalues” the California firm; they insisted their company is worth at least 40 dollars a share.

Microsoft is eager to merge resources with Yahoo to take on Google, which dominates an Internet search advertising market expected to grow to 80 billion dollars annually worldwide in the next two years

Founded by Jerry Yang and David Filo in 1994, Yahoo is a distant second in that market to Google, which would still hold an impressive lead over a combined Microsoft-Yahoo entity.

Microsoft chief financial officer Chris Liddell said Thursday that the US software giant is standing by its bid for Yahoo and the April 26 deadline.

“With respect to Yahoo we have been clear: speed is of the essence,” Liddell said.

“The idea we should increase our bid just because we can afford to is not one that I favor. Unless we make progress with the Yahoo board by this weekend, we will explore our alternatives.”

Microsoft's options include withdrawing its offer or taking it directly to shareholders in a hostile proxy battle.

Liddell's comments echo those made by Microsoft chief executiveSteve Ballmer earlier in the week.

“We have a strategy for the Internet that we are very excited about,” Ballmer said.

“We think we can accelerate our strategy by buying Yahoo and we will pay what makes sense for us to pay for our shareholders.”

Microsoft's proposal is seen as far more than a pure business decision at Yahoo, which prides itself on a quirky, fun style that it fears would be crushed under the corporate feet of the world's largest software maker.

Yahoo shunned negotiations with Microsoft and instead searched for a tie-up with a “white knight” that might save it from the Redmond, Washington, company's clutches.

Yahoo reportedly looked into an alliance with online social networking website MySpace owned by Rupert Murdoch's News Corporation as well as a partnership with Time Warner's faded Internet star America Online.

Yahoo even tested letting Google handle placing online advertising on Yahoo's own search pages to determine whether it generates more money than Yahoo's new Panama online ad platform.

Analysts believe that Google only benefits while Yahoo and Microsoft are distracted by the takeover quest.

Google has steadily increased its share of the online search market and Yahoo is said to be losing value as workers leave for jobs elsewhere to avoid becoming part of the Microsoft machine.

On April 5 Ballmer told Yahoo it had three weeks to decide whether to accept the offer.

“Yahoo has a hard decision to make,” Silicon Valley analyst Rob Enderle told AFP. “They have to call Microsoft's bluff and if Microsoft isn't bluffing and this goes hostile, it is going to be expensive for both companies.”

Yahoo posted unimpressive earnings in the first three months of this year, indicating to Enderle and other analysts that Microsoft's offer of 31 dollars per share is too high and that Ballmer might simply walk away from a deal.

Yahoo's stock price has been propped up by investors banking on Microsoft's offer becoming successful and could collapse if the bid is withdrawn, analysts say.

Such an outcome would surely trigger lawsuits by Yahoo stockholders accusing the board of directors of failing in its duty to maximize the value of their investment.

Liddell said Microsoft will make it known next week what it will do if Yahoo lets the deadline pass without accepting the offer.

Some analysts believe Microsoft will increase its bid slightly, though nothing near the 40 dollars per share desired by Yahoo's board, at a final moment.

SAN JOSE, Calif. - An executive exodus from troubled online brokerage E-Trade Financial Corp. is continuing, with the chief financial officer’s and general counsel’s departures announced Friday as the company grapples with massive losses stemming from its hemorrhaging mortgage business.

The New York-based company said after the market closed that Chief Financial Officer Robert Simmons will resign on or before May 9, while General Counsel Arlen Gelbard’s resignation was effective Tuesday.

The CFO slot will be filled by Matthew Audette, E-Trade’s controller, while the company searches for a permanent replacement. The general counsel position will be filled on an “extended interim basis” by Russell Elmer, who served in that role for six years before leaving the company last year.

The company did not detail the reasons behind either executive’s departure.

The resignations come just four months after Chief Executive Mitchell Caplan was forced out as Wall Street drove the company’s stock down from around $25 a share in the summer of 2007 near $2 a share this year, while E-Trade teetered on the verge of bankruptcy.

Caplan left with $10.9 million in severance pay under the terms of his employment contract and was replaced on an interim basis by Chief Operating Officer R. Jarrett Lilien, who also has submitted his resignation.

The company’s proxy filing from April 16 says Lilien’s resignation will be effective on or before May 16.

Turmoil in the credit and real estate markets have hammered at E-Trade’s finances, triggering huge losses, including $1.7 billion in the fourth quarter last year, and forcing the company to take a $2.55 billion cash infusion in November from hedge fund Citadel Investment Group to stay afloat amid chatter the company would be sold off or broken apart.

But there are signs the company is turning a corner, reining in the losses in its troubled mortgage portfolio despite ongoing distress in the housing market, and strengthening its core stock brokering business. It added 62,000 accounts in the first three months of the year, bringing its total to 4.8 million.

E-Trade shares rose 21 cents, or 5.5 percent, to close at $4 per share before the departures were announced. The stock fell 5 cents in after-hours trading Friday.

This year marks a watershed for the Interop trade show in Las Vegas, as the granddaddy of enterprise networking events adds a software show and a security conference.

The added attractions are recent acquisitions of TechWeb Networks, a division of United Business Media, which presents Interop. But the changes reflect more than just business decisions, according to TechWeb and some industry observers and regular showgoers. Though networking is still important, it seems there's just not as much to say about the topic by itself.

Interop began in the late 1980s as a gathering of network equipment makers who wanted to find out whether their products could talk to each other. Under the Networld+Interop name, it grew huge in the late 1990s as enterprises embraced Ethernet, and as Cisco Systems, Nortel Networks, 3Com and Cabletron vied to build their networks. There were about 61,000 visitors to the Las Vegas show in 2001. But the event shrunk after the technology crash early in this decade, dropping one of two U.S. gatherings, losing the Networld part of its name and eventually moving out of the cavernous Las Vegas Convention Center.

Next week, the Software 2008 show and the CSI SX security conference will be held alongside Interop at the smaller Mandalay Bay Convention Center. CMP sees the two events as natural extensions of Interop, according to Lenny Heymann, the show's general manager. Enterprises need interoperability across all aspects of IT, he said.

“It's really very difficult to separate segments of the industry,” Heymann said. Network administrators increasingly deal with application performance and security mechanisms, for example. And networking vendors themselves have branched out, he noted. Cisco has been a prime example, adding firewall and other security functions as well as application acceleration to its lineup over the past few years. Its biggest rival in core routing, Juniper Networks, is also a significant security player today.

Interop acquired Software 2008 last year, intending to locate it with its existing show, Heymann said. CSI SX is a long-running conference of the Computer Security Institute that now has a new home, he said. It doesn't include an exhibition, but there has been a growing section of the Interop show floor devoted to security products for several years, Heymann said.

Overall, TechWeb expects 25 percent more exhibitors compared to last year, and is looking for an increase in attendance from last year's 18,000 to as much as 20,000. The show has also brought back its second U.S. gathering, in New York in September, in addition to non-U.S. dates.

One longtime industry analyst acknowledged that the lines between networking and other aspects of IT– and the jobs involved in taking care of them– have blurred in recent years. But he questioned the prospects for a show that covers it all.

“They're trying to branch into areas that are related to the network, but in some ways, it becomes just too diluted then,” said Zeus Kerravala of Yankee Group. In any case, more specialized events, such as the RSA Conference for security and VoiceCon for VoIP (Voice over Internet Protocol), have beaten Interop to the punch, he said.

But Interop's woes can't be placed entirely at the feet of TechWeb and the show's previous operator, Key3Media, which declared bankruptcy in 2003. The industry has fundamentally changed since the 1990s, when there were debates over several different network protocols and a number of contenders for networking leadership, Kerravala said. Now, IP is king and Cisco dominates the market.

“If you're a networking professional, the universe of companies you're looking at is much smaller,” Kerravala said.

A self-deprecating marketing executive put it more bluntly.

“People have figured out how to build networks…. (now) there's just vendors like us arguing about how to build them,” said David Callisch, vice president of marketing at Ruckus Wireless, which will be exhibiting at this year's show.

With the growing cost of travel, there's something to be said for an event that covers all the bases, but that strategy could create its own problems, Callisch said.

“I think it's on the brink of either becoming the show for the industry or being the next Comdex,” he said, referring to the sprawling IT extravaganza that collapsed under its own weight soon after peaking in 2000 with about 200,000 attendees.

Heymann said Comdex failed partly because it mixed consumer and business technologies, something he promised Interop wouldn't do. But at least one IT executive said focus is everything.

“Interop is too general for us,” said Chris Rima, supervisor of infrastructure systems at Tucson Electric Power. His department's conference budget is limited to events related to specific projects, he said. “We don't do general conferences at all.”

Do your HDTV programs look as good as they should? If not, you may be seeing the results of overcompression. A growing number of viewers and experts are claiming that increased use of compression–technology that downsizes huge high-definition video streams for eventual reconstitution on your screen–is responsible for a drop in quality.

Such charges–aimed mostly at the two biggest cable providers, Comcast and Time Warner–have been echoing around the blogosphere in the wake of reports about new compression algorithms. Contributing to the debate: An AVS Forum member's tests showed that at least ten HD networks were more compressed on Comcast than on Verizon's fiber-optic-cable-based FiOS service.

While service providers insist that quality remains a high priority, some experts say competition has made channel quantity, not quality, the top priority.

It's no secret that most digital TV is compressed and decompressed–in some cases several times–not just by cable or satellite services and over-the-air broadcasters but also by the video cameras that create the programs and the network satellite systems that deliver them to distributors. Compression happens, too, in trucks, control rooms, cable headends, and other waystations along the signal's path to your screen. The telltale signs of overcompression include tiling, little colored blocks, and “mosquito noise,” which looks like flaring fireflies. The crispness of the picture can suffer, too.

Quantity vs. Quality

Compressing huge HDTV video streams, however, allows carriers to deliver more of them. “Everyone's really fighting the same issue–limited bandwidth–[but] their offerings are more attractive if they give more channels,” says Peter Symes, director of standards and engineering for the Society of Motion Picture and Television Engineers. “There are big arguments in the broadcasting community about whether you should use virtually the whole of the 19.2 megabits you get for a single HD channel to deliver really good HD, or whether by using other standards or more compression you can get away with a high-definition [signal] and one or two standard-definition [signals] or maybe sell part of it for data services.”

Currently, quality is “minor to a vast majority of the viewing public, because the vast majority…doesn't have very big TV screens,” HDTV consultant Peter Putman notes.

But those viewers who do are starting to notice, including AVS Forum member Ken Fowler of Arlington, Virginia, a self-described audio-video enthusiast who posted the results of his Comcast-FiOS comparison.

Fowler had dropped Comcast for FiOS, but renewed his Comcast service (while retaining FiOS) in order to get Washington Nationals games in HD, and he began noticing quality differences between the two services. Some of the Comcast channels, he says, “didn't have the same pop, the same level of contrast, and there was a lot more blurring during movement.”

So Fowler began recording the same shows on both FiOS and Comcast with his TiVo; he then downloaded the files to a computer and calculated the bitrates based on file size. The differences ran from just 0.7 percent more compression on Comcast for HBO HD to a whopping 38.5 percent for Discovery HD Theater.

More-Efficient Compression?

Comcast acknowledges that it recently implemented additional compression of selected HD networks, but contends that its improved compression technology allows it to transmit three channels in the same bandwidth in which two were transmitted previously, without a loss of quality. Comcast's spokesperson adds that many comments about Fowler's AVS Forum post recognize that “our ongoing tweaking, if you will, and adjustments” are improving image quality.

Comcast isn't alone in looking to squeeze more HD into its cables. A Time Warner Cable spokesperson says that company is testing new increased-compression technology as well. On the satellite side, DirecTV and Dish Network are switching to a “more advanced compression algorithm,” Putman says. Verizon FiOS, however, applies no additional compression to the network signals that it receives, a spokesperson says.

The HD broadcast format that a network uses can make a difference in the compression's impact. ABC and Fox are among those that use a progressive-scan format (720p), which Putman and other experts say tolerates compression slightly better than the interlaced (1080i) format used by CBS, NBC, PBS, and others.

Blu-ray Is the Benchmark

For consumers, the best HD experience will be with Blu-ray Disc content on a player hooked up to a display with an HDMI connector, which transmits uncompressed digital streams. “That's going to be the benchmark,” says Symes.

If you're shopping for an HD service, Symes adds, “it's fairly a no-brainer: If you have FiOS or [AT&T's] U-Verse available, that's probably the way to go.” Beyond that, so much local variability exists among competing cable and satellite services, he says, that the best idea is to ask friends in your area about their satisfaction levels.

But if you have an HD picture quality problem that you think is the result of overcompression, the best thing to do is to call your provider. Symes and Putman agree that overcompression and lowered quality will become an industry issue only when buyers who trade up to the biggest, highest-resolution screens notice and complain.

SAN FRANCISCO - Microsoft Corp. is no closer to buying Yahoo Inc. than when it made its $44.6 billion bid nearly three months ago, leaving the software maker in a quandary over whether the deal is still worth pursuing.

A decision is likely to emerge in the next few days, with Yahoo facing a weekend deadline to accept the offer. Although the deadline expires Saturday, Microsoft has indicated it probably won’t reveal its next move until early next week.

The tense mating dance is at a standstill because Yahoo’s board has repeatedly said it won’t sell to Microsoft for less than $45 billion, even though the bid hoisted its stock shortly after it hit a four-year low in late January.

The impasse has left most analysts predicting Microsoft will either sweeten its offer or attempt to replace Yahoo’s board with a slate of directors who will embrace a takeover.

But the architects of Microsoft’s bid — Chief Executive Steve Ballmer and Chief Financial Officer Chris Liddell — have been signaling the Redmond, Wash.-based company might abandon the bid and leave Sunnyvale-based Yahoo twisting in the wind.

The public remarks of Ballmer and Liddell could be just part of a negotiating ploy aimed at pressuring Yahoo to the negotiating table.

But some analysts think Microsoft would be smart to walk away now.

By turning a cold shoulder, Microsoft could position itself to return with another bid this summer in hopes of completing the acquisition without suffering through the disruption and rancor likely to erupt if Microsoft were to try to oust Yahoo’s board in a risky process known as a proxy contest.

This scenario could only pan out if Microsoft is correct in its belief that Yahoo is stuck in a downward spiral after steadily losing ground in the online advertising market during the past two years.

Unless Yahoo can bounce back, its shares might eventually drop even lower than their $19.18 price when Microsoft made its initial bid of $31.

Yahoo shares fell 50 cents to finish Friday at $26.80, pulled down by the declining value of Microsoft’s cash-and-stock bid.

Driven by Wall Street’s disappointment with the company’s short-term outlook, Microsoft shares dropped $1.97 to $29.83 on Friday. The decline lowered the value of the Yahoo bid to $42.7 billion, or $29.68 per share.

If Yahoo’s stock were to plummet into the mid-teens, Microsoft conceivably could return with another offer that would probably be more warmly received than its original bid.

“Yahoo management would be under inordinate pressure to accept at that point,” said Dinosaur Securities analyst David Garrity. “Why go through all the distractions and expense of a proxy fight if you see another way” to an amicable transaction?

Yahoo management has expressed confidence in a turnaround plan that projects revenue increases of 25 percent in 2009 and 2010. But analyst estimates for those years have remained substantially below those targets — a sign of the widespread skepticism about whether Yahoo will be able to reach its ambitious goals.

Abandoned takeover bids have paved the way to corporate acquisitions before. Just last fall, Oracle Corp. withdrew a $6.7 billion bid for rival business software maker BEA Systems Inc. after being spurned and then wrapped up the takeover for $8.5 billion three months later.

Other analysts remain convinced Microsoft will either raise its bid or launch a proxy contest because it needs Yahoo’s franchise to mount a more serious challenge Google Inc.’s dominance of the Internet’s search and advertising market.

“We still believe (Microsoft) is committed to completing the transaction and is unlikely to walk away,” Citigroup analyst Brent Thill wrote in a Friday note.

McAdams Wright Ragen analyst Sid Parakh said he can’t envision Microsoft raising its offer, especially since Yahoo’s management hasn’t proven its strategy will boost the company’s stock price above $30 on its own.

Microsoft’s current bid is “already a stretch, and I don’t see any reason for them to really bid against themselves,” Parakh said.

Yahoo could try to extract a higher bid by farming out some of the advertising on its Web site to Google. The two sides just completed a two-week trial that allowed Google to show text-based advertising along a small percentage of Yahoo’s search results.

A long-term advertising partnership with Google probably would provide a significant boost to Yahoo’s profits, but antitrust concerns might block an alliance between the owners of the Internet’s two largest search engines. Combined, Google and Yahoo control more than 80 percent of the U.S. search market.

Yahoo also has been exploring a possible merger with the online operations of Time Warner Inc.’s AOL, but most analysts view that as a weaker alternative to a Microsoft takeover.

As it stands now, Yahoo’s first-quarter revenue growth of 9 percent is far behind both Google’s and Microsoft’s online services division, which climbed 42 percent and 40 percent, respectively.

That’s just one reason Garrity believes Ballmer and Liddell are realizing that Microsoft doesn’t need Yahoo at any price.

“Sometimes the best deals are the ones that aren’t done,” he said.

___

AP Technology Writer Jessica Mintz in Seattle contributed to this story.

The ever-growing Internet economy should be less susceptible to a U.S. economic downturn than many other industries, with more and more people shopping and doing business online, a group of commentators and businesspeople said Friday.

Although many segments of the U.S. economy are slowing, there's little indication of a downturn in online sales, with e-commerce growing four to five times faster than traditional retail, said Rob Atkinson, president of the Washington, D.C., think tank the Information Technology and Innovation Foundation. IT, including the Internet, is currently the major driver of economic growth in the U.S., he said at a Google-sponsored event examining the Internet economy.

While some commentators have worried about a second Internet bubble bursting, Atkinson suggested the first bubble in 2000 and 2001 may have been overstated. Many of the companies publicized as failures during that time frame are either still operating or their business models have become successful through other companies.

“The Internet is not a bubble,” Atkinson said. “A lot of dumb, bad companies went out of business [earlier in the decade], but the industry continued to grow.”

The Google event seemed to be targeted at commentators who have predicted a second bubble burst, particularly following the hype in recent years surrounding social-networking sites.

But the overall state of the Internet economy is strong, even though the percentage of Google searches for things like real estate and luxury goods have dropped off in recent months, said Hal Varian, Google's chief economist. Those Google searches reflect the state of the overall U.S. economy, he added.

E-commerce has continued to grow in recent months, Varian said. “Yes, we are seeing an economic slowdown,” he said. “No, we're not seeing an Internet slowdown.”

Online retail sales, not including travel, reached US$175 billion in 2007, an increase of 21 percent from 2006, according to Forrester Research. Forrester expects online sales to exceed $200 billion this year and exceed $300 billion in 2011.

While some kinds of advertising may suffer in an economic slowdown, Internet advertising may do better, Varian said. Buyers can measure the effectiveness of Internet advertising, and online ads are often directly linked to a place where consumers can buy the products advertised, he said. Internet advertising based on user behavior can also deliver more personalized ads than traditional mediums, he noted.

While Varian and other speakers sounded optimistic about the Internet economy, venture capitalist Michael Avon, of Columbia Capital, expressed some caution.

Venture capital investing between the fourth quarter of 2007 and the first quarter of 2008 was down about 10 percent in the U.S., he said. However, venture capitalists looking for long-term investments still see good opportunities out there, he added.

Still, Avon urged new companies to diversify their business plans and not depend on one revenue stream. Columbia Capital asks the Internet companies it funds to look beyond advertising for revenue or to branch out into multiple product lines, he said.

New companies should also watch their spending in uncertain economic times. “Just be incredibly careful with cash,” he said. “Cash is the number one resource for a startup, and it's never guaranteed.”

SAN FRANCISCO (Reuters) - Beatings, carjackings, drive-by shootings, drunk driving and hookers. For video game fans, it can only mean one thing: “Grand Theft Auto 4″ is here, with all the subtlety of a shotgun blast.

The latest chapter in the wildly popular and controversial criminal action franchise from Take-Two Interactive Software Inc (TTWO.O) is poised to be the biggest entertainment product of the year, with expected first-week sales of up to $400 million — dwarfing Hollywood's biggest box-office openings.

The handiwork of Take-Two's Rockstar game studio headed by British brothers Sam and Dan Houser, “Grand Theft Auto 4,” which will be launched next Tuesday, promises to crank up the thuggish drama that made previous installments the equivalent of “The Godfather” for Generation PlayStation.

“We also felt over the last few years there hadn't been a great standout gangster movie. Maybe we could do something ourselves that would live alongside that stuff,” Rockstar's Dan Houser told Variety magazine in a recent interview.

The gobs of processing power provided by Microsoft Corp's (MSFT.O) Xbox 360 and Sony Corp's (6758.T) PlayStation 3 gaming consoles allowed Rockstar to imbue even background characters with personalities and unique behaviors.

“The game just feels like a movie now. The camera angles, the little details and things you look for in a film are things they can do now,” said Ricardo Torres, editor-in-chief of GameSpot, a leading gaming review Web site.

CONTROVERSY, AS ALWAYS

Of course, it would not be a “Grand Theft Auto” game without controversy.

The series that gave gamers the freedom to shoot cops and hook up with prostitutes before beating them up and stealing their money has added drunk driving and lap dances to its repertoire of vicarious thrills.

“A lot of it is done just tongue-in-cheek. It has that same sense of humor (as past games) that is very juvenile but at the same time is a parody of American culture,” said Crispin Boyer, senior executive editor of video games for the 1UP Network.

Previous GTA games have been a lightning rod for criticism by politicians. 2008 Presidential hopeful Hillary Clinton said in 2005 that the series was demeaning to women.

The negative publicity has not stopped GTA from becoming one of the most successful game franchises ever, having sold 70 million copies worldwide and spawning legions of imitators.

The game may also determine the fate of Take-Two, which is resisting a $2 billion takeover offer from rival Electronic Arts Inc (ERTS.O). If sales are stronger than the already lofty expectations, it could force EA to pay more.

A dystopian coming-to-America story, “Grand Theft Auto 4″ revolves around an Eastern European immigrant who ends up running illicit errands for local mob bosses.

Yet the game is not without moral consequence. Players face tough choices regarding who lives or dies and whether ambition is more important than friendship, decisions that affect the outcome of the story.

“Grand Theft Auto 3,” debuted in 2001 and was seen as a new beginning for the franchise because it defined a new genre of “open world” games that gave players unprecedented freedom. Two unnumbered games in the series have launched since, each with lots of sales, and lots of controversy.

“'Grand Theft Auto' really speaks to a new age of gaming. It's a type of gaming that is culturally relevant,” said Geoff Keighley, host of Spike TV's GameTrailers TV show.

OPPOSITION STIRS

The game carries a Mature rating, meaning retailers are not supposed to sell it those under 17 years old, but critics charge the industry rating system is easily skirted and that children will end up playing the game anyway.

“We are calling on all major retailers to reconsider any decisions to sell this,” said Tim Winter, president of the Parents Television Council, a media content watchdog.

Rockstar, which declined requests for an interview with the Housers, bristles at such suggestions. “If this was a movie or TV show and was the best in its field, you'd give it loads of awards and put those awards shows on television,” Dan Houser told Variety.

(Editing by Adam Tanner, Richard Chang)

AT&T and Starbucks on Friday announced the beginning of the rollout of AT&T Wi-Fi service at company-operated Starbucks stores, kicking off a nationwide effort that will continue through 2008.

At this year's AT&T stockholders meeting in San Antonio, Chairman and CEO Randall Stephenson announced that the companies have started deploying AT&T Wi-Fi at Starbucks locations in San Antonio.

As of May 1, qualifying AT&T high-speed Internet and Wi-Fi customers will have complimentary Wi-Fi access at more than 7,000 Starbucks locations nationwide. For millions of AT&T customers, that means more speed in more places — for free — is on the way. Analysts said this gives the telecom giant an advantage over competitors like T-Mobile.

Catering to Wired Cappuccino Drinkers

Stephenson said AT&T is moving to strengthen its ability to meet the needs of mobile consumers virtually everywhere.

“Expanding our reach across company-operated Starbucks locations nationwide helps us bridge the gap between our wired and wireless offerings and affirms AT&T's commitment to connect people with their worlds, everywhere they live and work,” Stephenson said.

Qualifying AT&T subscribers will be able to select “ATTWiFi” after powering up their mobile devices. Free AT&T Wi-Fi service is currently offered with AT&T's three higher-speed residential broadband packages, all small business broadband packages, and all AT&T U-verse offerings with high-speed Internet service.

For other customers, AT&T Wi-Fi will reach company-operated Starbucks locations throughout the year. The experience will include a mix of free and paid connection options for both frequent and occasional Wi-Fi users and qualifying Starbucks customers. Once AT&T Wi-Fi service is available, customers will be able to shop and surf both Starbucks' and AT&T's Web pages for products and services.

“We continue to build on the experience we know our customers expect from us,” said Chris Bruzzo, chief technology officer for Starbucks. “By partnering with AT&T as our U.S. Wi-Fi provider we aim to deliver a better value, greater convenience and seamless connectivity in a mobility-centric world to our customers.”

A Coup for AT&T

Mike Disabato, a wireless analyst at The Burton Group, called the Starbucks partnership a coup for AT&T. It's all about bringing more value to wireless customers with data plans that allow tapping into hot spots. AT&T offers Wi-Fi access from more than 17,000 hot spots in the U.S. and more than 71,000 hot spots around the world, including roaming locations.

“If T-Mobile had done something along those lines with Starbucks, you'd probably see a heck of a lot more people over on T-Mobile. It is a huge value proposition,” Disabato said. “AT&T managed to knock T-Mobile out of Starbucks and take away a lot of mindshare in the process. Where is T-Mobile left now in the U.S. for hot spots? Mostly airports and hotels. Where do you think AT&T is going to go next?”

Yahoo may resemble islands of Web properties, but the company is launching a renovation that could turn it into one huge platform. On Thursday, Yahoo announced its Open Strategy at the Web 2.0 conference in San Francisco.

“Imagine a world where you can write code that will meaningfully reach millions of users in a single bound,” wrote Yahoo's Neal Sample on the company's Yodel Anecdotal blog.

'Latent Social Network'

Open Strategy invites developers to use Yahoo's huge scale, he added, “to write applications that build on our existing properties,” such as Mail, Sports, Search, the front page, mobile, My Yahoo, and others. Yahoo-owned properties also include the photo-sharing site Flickr, the bookmarking site Del.icio.us, and the social-calendar site Upcoming.

Sample also noted that, with 500 million unique users spending 235 billion minutes each month on its sites, and with 10 billion relationships in buddy lists and Yahoo address books, the company has “a massive, latent social network.” The new initiative, he added, will “bring it to the surface.”

In other words, he told news media, Yahoo is not building another social network, but “building social into everything we do.”

He described it as a “rewiring” of Yahoo by building structures that change how its pieces work together. He said developers will be able to take advantage of the “vitality” that will exist within this unified platform. An application written for a Yahoo property will be able to integrate with other properties and with the extended social network.

Example: Search Monkey

An example is Yahoo's Search Monkey, where developers can blend other data with search results so that, for instance, an Italian restaurant could have reviews and ratings along with the link to its Web site. Search Monkey officially launches in mid-May.

Charlene Li, an analyst with industry research firm Forrester, wrote on her blog that Yahoo's rewiring “is a significant step forward in the next phase of social networks and the social Web.”

Social networks, she said, will at some point become “like air,” with no boundaries between friends or work colleagues, regardless of where their personal network is based.

In March, Yahoo announced support for OpenSocial standards so that applications created by developers for Yahoo will also work on MySpace, Google and other sites accepting OpenSocial.

Li wrote that she does not see Open Strategy as a “Hail Mary pass” from Yahoo to counter Microsoft's efforts to acquire the company. She added that it's only a matter of time before Google, Facebook and other sites respond to the huge social environment and social driver that Yahoo can become.

“Open” has had a major emphasis by Yahoo recently. Earlier this month, for instance, it released an online advertising-management platform for businesses that includes an open set of application-programming interfaces, or APIs.

Also this month, Yahoo released a new version of its oneSearch technology for mobile devices, which it described as “an open technology platform.”

Skype announced yesterday software that can be used with 50 Java-enabled mobile phones made by Motorola, Nokia, Samsung, and Sony Ericsson to receive calls from the Skype network and to SkypeIn phone numbers on the public switched telephone network (PSTN). Outgoing calls placed to Skype users and via SkypeOut, its gateway for outbound PSTN calling, will work just in six countries (Denmark, Estonia, Finland, Poland, Sweden, and the UK) as well as Rio de Janeiro in Brazil.This extension of Skype's offering to mobile phones, with calls placed over data networks operated by cellular carriers, is an interesting mix of models. Skype is, on the one hand, challenging operators high margins in handling voice calls, but, on the other, will require that users of this service have typically expensive data plans over which the calls are placed. It's possible that the margins on the data side are so good that cell companies can come out ahead. In the U.S., customers typically need at least a $40 per month voice plan to add a $20 to $60 per month data service; the average is closer to $40 per month for unlimited data on the phone. Data rates tend to be higher and not set to unlimited- which means 5 GB per month in the U.S. before carriers start to get agitated- in Europe. Asian nations vary as to the amount and affordability of data plans.U.S. carriers typically don't allow the kinds of phones that would run Skype's software, as most phones sold here have a mechanism through which authorized software passes before it's allowed to run on a phone and a network. It's unclear to me whether any Java-enabled phone in the U.S. could simply use this software. I expect we'll hear about that soon.But if you read the fine print on U.S. carriers' descriptions of what they allow over their data networks, you may be in for a surprise, something that signals that money may be there to be made even with Skype-over-cellular. Verizon some months ago added VoIP to its list of approved mobile broadband services–and they were formerly the most restrictive carrier as to what they allowed on their network.

The software can be downloaded over the air by some phones, or downloaded separately.