neilhoughton.net

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Screenshot by Stephen Shankland/CNET)

Rough around the edges
Not all is perfect. Here are my gripes about reading books through the Kindle iPhone app.

It turns out, though, that the core value of a novel transcends all the high-tech trappings of e-books. The Kindle device and its iPhone application let you try before you buy. I tried, and within minutes, I bought.

But when I read a good book, my impulse is to lend it to friends and relations who might like it too. With the Amazon service and its digital rights management, forget it.

• The application was a bit buggy, losing my place and sending me to the last page a few times. Flipping through a lot of pages to find my spot is a lot slower in the application than with a real book. I envision a similar problem browsing for a particular book if my electronic library gets large enough.

I’m not opposed to reading text on a screen, though print is easier on the eyes. I just figured that–judging by the digital convulsions in the movie, TV, and music businesses–the San Francisco Public Library would be my safe haven for two or three more years.

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Screenshot by Stephen Shankland/CNET)

Graphics are hard to read on the iPhone.

The Amazon Kindle world just snuck up on me and removed $45.13 from my wallet. And the experience turned out to be a pleasant surprise.

But I like a good book, too, and a couple months ago when I was on vacation I decided I was in the mood for something a little more long-form. I’d gotten a recommendation for a book called “Sharpe’s Rifles” by Bernard Cornwell.

Technological advantages
The technology proved to be important in several ways, though.

I’m not as concerned as some with Amazon’s George Orwell book recall fiasco, in which the company reached out overnight and deleted Kindle copies of books it concluded it didn’t have rights to sell after all.

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Screenshot by Stephen Shankland/CNET)

During that time, e-book readers would get better displays, battery life, network access, and other features, and Amazon’s Kindle book readers or some equivalent would grow up to become worthwhile.

I prefer reading white-on-black text at night.

First, I loathe going out shopping–the time, the traffic, the parking, the item out of stock–so I’m a good candidate for e-commerce. Novels zip wirelessly to my iPhone in no time flat, facilitating impulse buys I probably wouldn’t make at all in the real world. Try before you buy was a good-enough replacement for dust jackets and other real-world evaluations.

• Text is fine–I use the second-to-smallest setting with no trouble. But plenty of books have artwork, graphics, charts, and photos. I had to really squint at a graphic of the Battle of Assaye.

• The world of e-books has inventory issues, just like real-world book stores do. I was thwarted by the unavailability of “Sharpe’s Fortress” in e-book form.

Book purchasing is a cumbersome process.

The Shankland Rule
Let me share a little family background to explain this. Specifically, the Shankland Rule, handed down from father to son: “Always bring something to read.” It’s reinforced daily in airports, oil-change service stations, supermarket checkout lines, and sluggish public transportation.

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Screenshot by Stephen Shankland/CNET)

Books in your archive can't be handed on to your friends.

I confess I’m one of those people who has a soft spot for the Napoleonic Wars. I began with C.S. Forrester’s books about Horatio Hornblower’s adventures in the British Navy, then graduated to Patrick O’Brian’s deeper and richer tales of Jack Aubrey and Stephen Maturin in the same setting. Those series highlight the freedom of the seas, making landbound warfare look plodding and dull, and I inherited the bias, so at first I wasn’t terribly interested in the story of an army infantryman named Richard Sharpe.

Of course, the iPhone made compliance with the rule much easier. With it, I spend quality time to ingest text from The New York Times, The Associated Press, The Wall Street Journal, a jillion RSS feeds, and naturally CNET News. I always bring my cell phone with me, so I always have something to read.

• I couldn’t buy books through the iPhone Kindle app. The Kindle app can open an appropriate Web page for searching and buying in Safari, which works, but it’s an awkward handoff to the browser and return to the Kindle app. Happily, you can purchase the e-books with a PC and a browser, which helps when you know in advance what you’re looking for. Using the iPhone Amazon.com app also works, but you have to locate a separate e-book version.

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Screenshot by Stephen Shankland/CNET)

• My biggest dislike is that I don’t really own my books even after I paid for them. Amazon has just granted me access to them.

But at the modest pace I consume books, these blemishes are endurable, so I predict $45.13 won’t be the last of it. Oh, look, Alex Haley’s “Roots” is available for $9.99…

I’m not technophobic, but I honestly was planning on sitting on the sidelines for this particular episode of the digitization of the world. I figured electronic books would arrive in good time as Net access expanded, devices grew more sophisticated, publishers and distributors hashed out the business issues, and legal complications of Google Books ground themselves through the courts.

I wasn’t so surprised to find infantry derring-do can be entertaining after all. What did surprise me was how rapidly the medium of the book vanished into the background. A 320-by-480 pixel iPhone screen doesn’t hold a lot of text, but it holds enough to transport me to Santiago de Compostela, Spain, in 1809.

Second, although the real Kindle device is probably better than the iPhone app for reading under most conditions, the iPhone’s backlit display let me read in bed, at night, in the dark, without disturbing anybody. I dim the screen as low as it will go, switch the text to white on black, lock the orientation to portrait mode, and dive in.

Black and white and read all over

Third, I’m in the midst of moving, and have acquired resentment for all the physical objects I’ve accumulated. My iPhone didn’t get any bigger when I downloaded the books or make it any harder to move. I enjoy being surrounded by real books–I see people’s libraries as a reflection of their personalities–but I also enjoy not being encumbered.

What I hadn’t counted on was a free Amazon iPhone application that converted me to the new order in a matter of minutes. E-books doubtless aren’t for everybody, but one idle moment when I had time to kill showed they are for me.

Meanwhile, the Trojan hides the theft by erasing it from the report of account activity displayed to the computer user and shows a fake balance–what the amount would be if not for the theft. The victim will not notice something is wrong until a different, uncompromised computer is used to access the account, an ATM is used, or a transaction is denied because of insufficient funds.

The Trojan also keeps a log of the victim’s bank account log in credentials, takes screenshots, and snoops on the user’s other Web accounts, such as PayPal, Facebook, and Gmail, according to the Finjan report.

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Finjan)

A Finjan blog post describes it like this:

The Trojan code includes detailed instructions on how the Trojan should calculate the amount to steal from a victim's bank account.

In this case the malware, a toolkit called LuckySploit, exploits a known security hole in the browser, and installs the Trojan on the computer. When the Trojan notices the computer user visiting the site of a targeted bank it springs into action.

Here’s how the Trojan works:

This is the first Trojan Finjan has come across that hijacks a victim’s browser session, steals the money while the victim is doing online banking, and then covers its tracks by modifying information displayed to the victim, all in real time, Ben-Itzhak said.

About 90,000 computers visited the sites housing the malware and 6,400 of them were infected, a 7.5 percent success rate, he said. Of those whose computers installed the Trojan, a few hundred had money stolen from their bank accounts, he said.

Researchers at security firm Finjan have discovered details of a new type of banking Trojan horse that doesn’t just steal your bank log-in credentials but actually steals money from your account while you are logged in and displays a fake balance.

After performing the calculation, the Trojan then makes the transaction, communicating with the bank site through the browser without the computer user knowing.

The specific Trojan Finjan researchers analyzed targeted customers of unnamed German banks, according to the latest Finjan report. It was linked back to a command-and-control server in Ukraine that was used to send instructions to the Trojan software sitting inside infected PCs. Finjan has notified German law enforcement, Ben-Itzhak said.

During the span of 22 days in mid-August, the criminals behind the Trojan stole the euro equivalent of nearly $438,000.

The Trojan has the money sent to the bank account of a money mule, someone who has an account set up to receive the funds. Money mules are typically people recruited online as “independent contractors” or “financial managers” whose sole purpose is to wire the money placed into their account to someone else, typically out of the country, in exchange for a commission. Because their accounts are used only once or twice, they often do not realize the ruse immediately, Ben-Itzhak said.

People should keep their antivirus, operating system, browser and other software up to date to protect against this type of attack, he said.

It exploits a hole in Firefox, Internet Explorer 6, IE7, IE8, and Opera, and it is different from previously reported banking Trojans, said Ben-Itzhak. The Trojan runs an executable only on Windows systems, he said. The executable can come via a number of avenues, including malicious JavaScript or an Adobe PDF, he added.

Potential victims get their computers infected either by opening an e-mail and clicking on a link to a Web site created to distribute malware or by visiting a site that has been compromised and malware hidden on it.

“The Trojan is sending requests to the bank and getting replies that your browser doesn’t display,” Ben-Itzhak said. “You are looking at your account and you don’t see any of it.”

“It’s a next generation bank Trojan,” he said. “This is part of a new trend of more sophisticated Trojans designed to evade antifraud systems.”

Finjan researchers were able to trace the communications from the code on an infected machine back to the command-and-control server, which was left unsecured, according to Ben-Itzhak. On that server, they saw the LuckySploit administration console and were able to see exactly what types of rules the Trojan was written to follow and statistics on victims.

URLZone is a Trojan Kit that allows the attacker with the use of the ‘URLZone Builder’ to create a configuration file. This file contains precise orders to the bot, enabling the attacker to target any bank he wants…The URLZone successfully managed to bypass the German banks’ protection using ‘One Time Password.’ This is a technique used to enable the user to get a new password every time he logs into his account. Its goal is to make the theft of usernames and passwords worthless. In order to be successful, the malware must execute itself on the browser to change the parameters and fool the the user to approve a fraudulent money transaction from his account…So far the malware behavior is similar to many other Trojans. However, URLZone uses the delivered configuration file to manipulate the user.

The bank Trojan, dubbed URLZone, has features designed to thwart fraud detection systems which are triggered by unusual transactions, Yuval Ben-Itzhak, chief technology officer at Finjan, said in an interview Tuesday. For instance, the software is programmed to calculate on-the-fly how much money to steal from an account based on how much money is available.

Updated 5:30 a.m. PDT to specify that the Trojan targets Firefox, Internet Explorer 6, IE7, IE8, and Opera, that is different from previous Trojans, and that it affects Windows only. Also, more technical details were added, as well as links to the report and blog post from Finjan.

While the computer user goes about his or her business on the site, the Trojan looks at the available balance and figures out how much money to steal. The Trojan is given a minimum and a maximum range that is below the amount that triggers antifraud systems and to leave a certain percentage in the account, Ben-Itzhak said.

This weekend, starting Friday at 10:30 a.m. PDT, Hulu will be live-streaming the Austin City Limits music festival. Hulu will be using its Watch Now application on Facebook, which has a live events box integrated so that users can discuss the concert as they watch.

(Credit: Hulu)

You can see the schedule of acts on the Facebook application page for the live-stream. Unfortunately, the stream features only a fraction of the acts that are playing the festival. In fact, some of the biggest acts, including Kings of Leon, Yeah Yeah Yeahs, Dave Matthews Band, and Pearl Jam are missing from the live-stream lineup. Luckily, we still get to check out some great acts like Thievery Corporation, The Decemberists, Ben Harper, and The Dead Weather. There’s no real indication of how the selection was made and I’m certainly grateful that we are getting a stream at all, but I can’t help but wish that the full compliment of acts would be available for streaming.

But that’s at scale. The problem remains, however, for Microsoft, that many of those sub-10-employee shops are dreaming of being Google, not being a mom-and-pop shop forever. So, if they’re seeing thousands of servers in their future, tying themselves to the Microsoft stack, with all the license fees associated with it, is going to look like a poor decision.

The first constraint isn’t a big deal. Many aspiring Googles have fewer than 10 employees, and will continue to be small through their first few years.

The other side is that with open source–which many of these Web developers will have picked up while at school or just on their own–there are no barriers to how the developer wants to use the software. Ultimately, Microsoft’s WebsiteSpark requires Web developers to color within the lines that Microsoft dictates. That may be well and good for a big population of developers, but it’s not the path that Digg, Google, Facebook, etc., have taken.

Microsoft, however, has no such plans to buy its way into the open-source development community, which means it must rely on programs like WebsiteSpark to catch up. It’s a start-up, but it’s not enough.

The second, however, is the killer. At the end of the three years, Microsoft doesn’t require WebsiteSpark participants to buy anything, but if the start-up is successful, it faces big bills as it scales out its Microsoft technology. This wouldn’t be a big problem if there were no free alternatives that offer equal or better performance. But there are.

WebsiteSpark, following on the heels of successful student (DreamSpark) and start-up (BizSpark) technology seeding programs, will likely make more of a dent. Free, high-quality tools to Web developers, as TechCrunch suggests, are going to be a big win.

Most companies will fail. Most of the rest will remain small. Rationally, most of these small start-ups, then, should be content to get Microsoft’s technology for a song, assuming they don’t care about the flexibility that comes from LAMP.

The problem isn’t one of cost. At least, not primarily. WebsiteSpark has that nailed. The program gives thousands of dollars of technology away for just $100 at the end of three years, and then two options ($999 per year for everything or a scaled down $199 per year option) that aren’t much more expensive.

Arguably Microsoft’s biggest threat is its irrelevance to Web developers. Though the company dominates personal computing and is a major force in enterprise computing, it remains a distant also-ran to LAMP (Linux, Apache, MySQL, PHP/Python/Perl) development for the growing Web ecosystem. On Thursday Microsoft announced its WebsiteSpark program to build inroads with the Web crowd, but the program is unlikely to make a serious dent on LAMP’s dominance.

No upfront cost…but what about the future?

Microsoft has gone after Web developers before, but products like Expressions haven’t made much headway with Web developers, as The Seattle Times reports.

Microsoft isn’t alone in making such a pitch. Oracle, for its part, is touting the development of OraTweet, a Twitter clone built with Oracle Application Express Web development platform. But the reality is that enterprise ISVs like Oracle and Microsoft are largely invisible in Web development.

LAMP gives Web developers control over their destiny, both in terms of source code (they can finely tune LAMP to fit their needs) and in terms of cost (they need not pay anyone to scale out). They may choose to pay someone like Red Hat or MySQL for a support subscription, but at scale, companies like Google simply don’t. They have the expertise in-house to support themselves.

Microsoft tries to spin the open-source LAMP alternative as disjointed, and further argues it is a more expensive development path, and even that Microsoft offers better Web performance than LAMP-based development.

But this overlooks the larger issue: Microsoft constrains who can join the program (start-ups with fewer than 10 employees) and meters their growth after the three years. Open-source alternatives do neither.

Microsoft is huge in enterprise computing, in part because it lowers the cost and complexity of development for enterprises of any size. But the Web is built on open source. Microsoft is playing catch-up in this market, and it’s simply not going to be enough to wave great tools in front of developers for a low fee.

This is one reason Oracle is interested in picking up MySQL, the leading Web database. MySQL is almost entirely complementary, not competitive, to Oracle’s enterprise-focused database.

But this isn’t the way the Facebooks of the world see it. They view the open-source LAMP stack as the proven, scalable winner in Web development. Microsoft can’t match that with a price tag.

But it’s not going to be enough.

The reason? There are some big strings attached.

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Screenshot by Ina Fried/CNET News)

On Wednesday, Big Bird’s feet and lower body graced the home page, while Thursday saw Cookie Monster nibbling on the Google logo. On Friday, Bert and Ernie served as the O’s in Google.

Bert and Ernie shared space on Google's home page on Friday with an ad for Motorola's Droid, the Verizon Wireless smartphone that went on sale on Friday.

As for the Sesame Street “doodles,” Google Vice President Marissa Mayer noted that “many Googlers grew up on Sesame Street.”

Lest anyone doubt my devotion to the show, here’s a video interview I did with Elmo Live, when that toy came out last year.

Big Bird's feet served as the "L" in the Google logo on Wednesday, as the search giant kicked off its tribute to Sesame Street.

Although such promotional pitches aren’t the norm for its homepage, Google has used them in the past to tout the Chrome browser as well as the first Android phone, T-Mobile’s G1.

As the newsroom’s biggest Sesame Street fan, I’d be remiss if I didn’t highlight the tribute Google paid to the PBS show this week, on the occasion of its 40th anniversary.

“We’re delighted to have partnered with Sesame Street to create this special series of doodles, particularly since we share the same values of education, diversity, and accessibility,” Mayer said in a blog posting.

But Bert and Ernie had to share the home page on Friday, as Google also used a front-page link to tout the new Motorola Droid smartphone that went on sale at Verizon Wireless stores.

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Google)

But O’Reilly’s attitude isn’t “bring it on, and get me a large popcorn with extra butter, while you’re at it.” Rather, he hinted that at least in some cases, he’s willing to embrace Google as a big, cuddly, benevolent dictator in the midst of it all. It’s “a monopoly that’s a service of value to users,” he said, adding that generally, when Google makes a product with the primary goal of one-upping the competition–Knol vs. Wikipedia, Checkout vs. PayPal–it’s not a success.

And O’Reilly’s rallying cry has already gathered reactions. Barbarian Group executive Rick Webb, for one, posted a colorful retaliatory blog post, in which he said that “setting aside the ‘boo hoo, the Internet is becoming a bunch of walled gardens’ arguments, when rational people have conversations about how to make the Web actually usable and not 95 percent piracy, spam, and fraud, almost every discussion starts with the proposition that there is no other realistic option but to chuck the whole thing and start over.”

Is that legitimate innovation? Yes. But let’s hope the “win” doesn’t stop there. If Google manages to throw a sucker punch to Apple, Microsoft, or whoever else by offering something once-pricey for free, I should hope that the rest of the industry makes sure that it doesn’t grow too complacent.

“The turn-by-turn directions from TeleAtlas cost $99 [on the iPhone], but Google is giving it away for free. This is a natural kind of extension for Google. I don’t think Google is being evil here by being disruptive,” O’Reilly said. “That’s a massive user win, even though it is incredibly damaging to some existing companies and some existing business models. When Google offers free speech recognition, [that would be] an amazing win.”

Of course, the Web should be in a state of “war.” When have things been any different? It’s a hub of innovation, competition, and constant change, and I think we all knew that already. The barrier to entry is low enough so that if there’s a glaring problem with something, users will flock to whoever can create a better alternative. In fact, O’Reilly brought that up on Tuesday, when he talked about expensive in-car GPS navigation systems.

For example, Rupert “Dr. Evil” Murdoch keeps threatening to pull News Corp.’s pay wall-guarded content from Google, perhaps offering an exclusive deal to another search engine for one hundred billion dollars (give or take a few bucks).

NEW YORK–Web pioneer and conference honcho Tim O’Reilly warned the audience at the Web 2.0 Expo here on Tuesday afternoon that he thinks “we’re headed into another ugly time.” Namely, everybody is just being really nasty to each other. And it makes his hippie soul hurt.

Those ubiquitous URL-shortening toolbars are throwing Web addresses behind a cloak of invisibility, O’Reilly said, and they “don’t let you navigate freely like the Web used to work.” With Google’s Chrome hurling itself into the mix, the browser and operating-system wars are starting to look less “Mean Girls” and more “Aliens vs. Predator.”

That’s probably because, at least right now, among all the giant robots stomping about the series of tubes, Google is the one that most resembles O’Reilly’s vision of the “open Web.” In a blog post prior to his speech, he predicted that Microsoft could take over this role. Or not. Either way, he insisted that “it’s time for developers to take a stand.”

Setting off this kind of electric shock in the Web’s punditocracy is a great way to drum up attention and newsworthiness that doesn’t have anything to do with philosophizing about the recession, extolling the possibilities of the real-time streaming Web, or predicting which dot-com figurehead is going to be the most plastered at South by Southwest this year. Thank goodness! That stuff was getting so boring!

Doesn’t quite make sense to me. But, hey, it’s his show.

So let’s get this straight: monopolies are bad, unless they’re “nice” ones on behalf of companies that extol the virtues of Razor scooters, wheatgrass smoothies, and lava lamps. Competition is great, as long as everybody’s nice to each other.

EMC Chief Executive Joe Tucci said Thursday that customers are “signaling more comfort spending their IT budgets.” The company reported better-than-expected third-quarter results.

The storage giant reported earnings of $298.2 million, or 14 cents a share, down 24 percent from the same period a year ago. Revenue was $3.52 billion, down 5 percent from a year ago. Under a non-GAAP basis, EMC reported earnings of $480.3 million, or 23 cents a share, 2 cents better than Wall Street estimates.

Read more of “EMC: Customers have ‘more comfort’ about IT budgets” at ZDNet’s Between the Lines.

Generally speaking, EMC has been well-positioned in the downturn because of a focus on storage, cloud computing, virtualization, and data centers–hot areas in enterprise IT.

Photos: Inside a Microsoft data center

Josefsberg said he already has the next spot picked out.

Microsoft is still trying to figure out just how much capacity at Chicago and elsewhere it needs to assign for Azure.

“The beauty of that is two-fold,” Josefsberg said. “We commit less capital upfront and we can then accommodate the latest in technology along the way.”

“Azure is incredibly hard to forecast,” said Josefsberg. “We’re probably erring toward having a little more capacity than we need in the short term.”

Even with only half the site ready for computers, the center has 30 megawatts of capacity–many times that found in a typical facility.

Of Sidekick–and Azure
Within a month, though, Microsoft’s data centers were attracting attention for a wholly different reason. A massive server failure at an older facility–one that Microsoft acquired as part of its Danger acquisition–left thousands of T-Mobile Sidekick owners without access to their data as part of an outage that is now stretching into its second month.

It’s what’s inside those trailers, though, that is the key to Microsoft’s cloud-computing efforts. Each of the shipping containers in the Chicago data center houses anywhere from 1,800 to 2,500 servers, each of which can be serving up e-mail, managing instant messages, or running applications for Microsoft’s soon-to-be-launched cloud-based operating system–Windows Azure.

Although Sidekick uses an entirely different architecture, the failure represented a tangible example of the biggest fear of cloud computing–that one will wake up one day to find their data gone.

As for Azure, Microsoft is expected to talk about its commercial launch at this month’s Professional Developers Conference in Los Angeles, including offering more details on how the system will provide its redundancy. Microsoft has already announced some new Azure details, noting last week that it will begin charging for Azure as of February 1.

Although Microsoft is open about many of the details of its data centers, there are others it likes to keep quiet, including the site’s exact location, the names of its employees, and even which brand of servers fill its racks and containers.

The software maker also won’t say exactly which services are running in each facility, but the many Bing posters inside the upstairs server rooms in Chicago offer a pretty good indication of what is going on there.

Microsoft is quick to highlight the differences between the Sidekick setup and what Microsoft is building in Chicago and elsewhere. “We write multiple replicas of user data to multiple devices so that the data is available in a situation where a single or multiple physical nodes may fail,” Windows Azure general manager Doug Hauger said in a statement after the Sidekick failure.

Even the inside of the building doesn’t look like that much. The ground floor looks like a large indoor parking lot filled with a few parked trailers.

But Microsoft has indicated how the next generation of data center will improve upon the Chicago design.

“When I stepped out, I said ‘what good data center weather’,” he said. “I knew the chillers were off.”

CHICAGO–On the outside, Microsoft’s massive new data center resembles the other buildings in the industrial area.

“We know exactly where it is going to be but I can’t tell you right now,” he said.

On a hot day, Microsoft would rely on 7.5 miles worth of chilled water piping to keep things cool, but general manager Kevin Timmons smiled as he walked in for the facility’s grand opening in late September. It was around 55 degrees outside.

“I think, I’m not 100 percent sure, but I think this could be the largest data center in the world,” said Arne Josefsberg, general manager of infrastructure services for Microsoft’s data center operations.

Upstairs, Microsoft has four traditional raised floor server rooms, each roughly 12,000 square feet and consuming, on average, 3 megawatts of power. It’s all part of a data center that will eventually occupy 700,000 square feet, making it one of the world’s largest.

Microsoft originally intended to open the Chicago facility last year, but the company has slowed its data center pace some amid the weaker economy and an array of cutbacks companywide. Instead, the facility had its grand opening in late September.

What is clear is that, over time, Microsoft will need even more capacity. That’s what has Josefsberg returning to a custom “heat map” that figures out the best place to build data centers based on factors including cheapness, greenness, and availability of power, political climate, weather, networking capacity, and other factors. Choosing the right spot is critical, Microsoft executives say, noting that 70 percent of a data center’s economics are determined before a company ever breaks ground.

Moving to containers allows Microsoft to bring in computing capacity as needed, but still requires the company to build the physical building, power and cooling systems well ahead of time. The company’s next generation of data center will allow those things to be built in a modular fashion as well.

One of the main variables has been the looming retail launch of Windows 7. IDC has said it does not anticipate a huge bump in PC purchases directly related to the operating system release, at least immediately.

Rounding out the top 5 PC makers after No. 3 Dell was Lenovo with 8.9 percent and Toshiba with 5.2 percent of PCs shipped. In the U.S. only, after HP and Dell, was Acer with 11.1 percent, Apple with 9.4 percent, and Toshiba with 8.1 percent, according to IDC.

While not a total surprise considering that Acer’s and Dell’s momentum have been headed in opposing directions for some time, Acer’s rise is indeed impressive. Just a few years ago most people would probably not have been able to recognize the Taiwanese brand, but that changed when it scooped up Gateway and began its aggressive attack on retail laptops in the U.S and Europe. Meanwhile Dell has fallen from the top vendor of PCs as recently as mid-2006 to No. 3 today as it navigates the changing PC market.

“It’s a pretty amazing transition in market leadership by Acer,” said Loren Loverde, the program director of IDC’s PC Tracker. “It’s reflective of the changes in form factors and channels and pricing–the way we’ve shifted to lower cost portables, particularly in consumer and retail, which is where Dell was not as strong.”

“We didn’t really expect a large reaction in a sense of shipments being synchronized around Win 7,” said Loverde. However, fourth-quarter growth in 2008 was negative, and the growth during the upcoming fourth quarter of this year as the economy improves is likely to be better, but not necessarily directly tied to Windows 7.

This story was last updated at 3:30 p.m. PDT with comment from Dell and explanation of the Gartner and IDC numbers.

IDC released its PC tracker report Wednesday afternoon for the third quarter of 2009 and for the very first time, Acer is indeed the No. 2 producer of PCs in the world, with 14 percent. Hewlett-Packard remained on top with 20.2 percent of PCs shipped, and Dell dropped to 12.7 percent.

Rival market researchers at Gartner have the numbers counted slightly differently. Gartner has Dell at No. 1 in the U.S. still, with 26.2 percent of PCs shipped, HP with 25.7 percent, Acer with 13.9 percent, Apple with 8.8 percent, and Toshiba with 8 percent. The discrepancy between the two firms’ counting is derived from Gartner including x86 servers in its count of PCs and IDC only counting revenue from PC vendors’ factories; Gartner looks at the revenue from the vendors as well as their sales and distribution partners.

There was also good news for companies not named Acer. For the first time in a year, PC makers’ shipments grew. During the third quarter, they shipped saw 2 percent growth compared to the same quarter a year ago. It’s an encouraging sign, especially when IDC analysts were anticipating a 3 percent decline for this quarter. Consumers have been a huge driver of that as the sales of notebooks and mini-notebooks or Netbooks have continued apace. Commercial purchases of PCs, however, are still slow to pick back up. That will change over the next couple of quarters, according to IDC.

There was more disappointment for Dell. Besides falling to third worldwide, Dell also dropped from first to second place in shipments in the U.S, according to IDC. HP sold the most PCs in the U.S in the third quarter, with 25.5 percent of shipments, compared to Dell’s 25 percent.

Turns out Acer President Gianfranco Lanci wasn’t just idly boasting earlier Wednesday when he said his company would pass Dell in the PC rankings “very soon.” By very soon he clearly meant “today.”

When reached for comment, a Dell representative said only, “As we’ve said for some time, we’re focused on profitable growth, not simply share results.”

“The fact we’re seeing this growth now, ahead of Win 7, means they’re buying systems and planning to upgrade (when it comes out later this month) or they’re buying systems because there’s a lot of demand and that can only improve with Win 7,” said Loverde.

Prior to winning the contest, Team MIT explained its strategy at its DARPA challenge Web site. Interested parties could register to submit the coordinates of any balloons they spotted. All people who signed up would be given their own individual Web pages, which they could publicize using Facebook, Twitter, and other social sites. A snowball effect would entice more people to join the effort. And apparently…that strategy paid off.

A team from the Massachusetts Institute of Technology has won $40,replica watches,000 from the Defense Advanced Research Projects Agency for correctly finding the locations of 10 red balloons scattered across the U.S.

DARPA enjoys a reputation for launching offbeat research projects that it hopes will provide useful information.

“The Challenge has captured the imagination of people around the world, is rich with scientific intrigue, and, we hope, is part of a growing ‘renaissance of wonder’ throughout the nation,” said DARPA’s director Regina E. Dugan in a statement. “DARPA salutes the MIT team for successfully completing this complex task less than 9 hours after balloon launch.”

(Credit: DARPA)

Launched on Saturday,Rolex Watches, the DARPA Network Challenge released the 10 red balloons into the air, then dared contestants to find their latitude and longitude by the end of the day. Since no one person could track down all 10 in just one day,omega watches, the point of the contest was to see how participants would use the Internet and social networking to team up with others to solve the quest.

DARPA said that more than 4,300 contestants registered for the challenge, of which 218 actually submitted answers. MIT was the first and only one to get all 10 answers right, finishing the contest in just under nine hours, though a few teams got at least eight correct.

One contestant who managed to pinpoint eight of the 10 balloons called himself 10redballons. This person also reported that as the day progressed, most teams managed to find at least five of the balloons and had started to publish the coordinates on the Web. He also said many teams were scrambling for clues to uncover the last two balloons.

DARPA kicked off the Network Challenge, marking the 40th anniversary of the Internet, to see how social networking could be used to tackle broad problems and issues. The agency said it plans to meet with MIT and other contestants to learn what strategies they used to track down the locations of the balloons.