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Big Blue yonder

Technology | IBM opts out of the PC business

Issue: "UN: Kofi's crisis," Dec. 18, 2004

IBM is slipping away from a market it invented, backing away from the PC and embracing outsourcing and other business services. It marks a significant moment in tech history, as innovation moves beyond the box of components sitting on one's desk.

IBM introduced the PC in 1981, putting its "Big Blue" image and marketing power behind a line of microcomputer that became standard for most users. Yet within a decade competitors were grabbing large shares of the market, offering compatible machines using similar hardware and software.

While IBM maintained a loyal customer base, particularly for its high-end ThinkPad laptops, it started backing away from the PC business by the late 1990s, taking its desktops off store shelves and selling off manufacturing plants. The current lines still carry the famous logo, even though contractors make them all.

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The company currently ranks third among PC makers, trailing HP and Dell, but margins are thinning and the machines only account for about 10 percent of IBM's total sales. Just as the PC surpassed its old mainframe computer line, so IBM is moving toward what it calls "Business Transformation Services." CEO Sam Palmisano claims this market is worth $500 billion a year.

Pirate hunting

The movie industry may soon hide dark blobs in its films as a way to deter pirates. Known as forensic watermarking, this technique lets investigators more easily find the theater where a bootlegger snuck in with a camcorder.

Developers of the new iTrace security system say their watermarks could be in use by next year. Post Logic, a post-production studio working on the technology, plans to start testing this month. It claims the invention is invisible to the human eye, yet can be detected by investigators even on grainy bootleg copies.

Each print of a new film using iTrace would contain a series of light and dark blobs that appear for a few seconds repeatedly throughout the film. The marks are added in post-production, along with special effects. Once an illicit copy is found, it can be digitally compared with another print to uncover the watermark, which can be used to identify the source version.

The major studios are currently examining iTrace and other watermarking systems as ways to help track pirates and improve security. They claim to lose more than $3 billion in worldwide revenue from piracy, from both online downloads and street hawkers.

Bits & Megabytes

  • Motorola is offering a new public service that collects and recycles consumer cell phones from any manufacturer. The company claims that about 97 million phones will be "stashed or trashed" this year' and that they may leak lead, mercury, and cadmium if disposed of improperly.
  • Lycos abruptly ended a European anti-spam campaign after security experts complained that it was vigilantism. The portal offered free screensavers that bombarded alleged spammers with bogus traffic. About 100,000 people downloaded the program before Lycos disabled the attacks.
  • High-tech goodies are reappearing in department stores, many of which abandoned home electronics a decade ago. Marshall Field's, Macy's, Bloomingdale's and other retailers offer Christmas shoppers such gift possibilities as iPod music players, digital cameras, and camcorders. This season, 42 percent of consumers are expected to buy electronics as gifts, according to market research firm NPD Group.
  • Four executives of German-based Infineon Technologies face prison terms after pleading guilty to charges that they tried to fix the prices of computer memory chips. They also agreed to cooperate with an ongoing international conspiracy investigation and pay fines of $250,000 each. The Justice Department says rigged memory prices affected major manufacturers, including Dell, Hewlett-Packard, Apple, IBM, and Gateway.

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