Consumer versions of McAfee Inc.’s leading software for securing PCs is susceptible to a flaw that can expose passwords and other sensitive information stored on personal computers, researchers said Monday.

The vulnerability affects many of McAfee’s most popular consumer products, including its Internet Security Suite, SpamKiller, Privacy Service and Virus Scan Plus titles, said Marc Maiffret, chief hacking officer at eEye Digital Security Inc., a competing maker of security products.

McAfee spokeswoman Siobhan MacDermott confirmed the vulnerability and said software engineers were testing a fix. She said officials expected to release the patch Wednesday using a feature that automatically updates McAfee products over the Internet. The flaw does not affect 2007 versions of McAfee products, which were released Saturday, she said.

Maiffret said he has found a way to connect to PCs running the flawed McAfee products over the Internet and make them run code of his choosing. The flaw, if exploited, would make it possible for a criminal to track bank account numbers, and access, modify and delete sensitive files and do other damage on machines running the McAfee products, he said.

A Microsoft program designed to thwart software piracy has instead opened a Pandora’s box of privacy concerns. PC users cried foul when Microsoft’s Windows Genuine Advantage (WGA) software frequently phoned home to Microsoft servers and apparently flagged some legitimate copies of the Windows operating system as pirated. The incident spawned two lawsuits and has raised concerns about what Microsoft is adding to its software updates.

WGA consists of two parts. WGA Validation is required for downloading some pieces of software from Microsoft Web sites, but Microsoft says that it is not required for receiving critical security fixes through Automatic Updates. The software sends a PC’s Windows license key to Microsoft, which checks the key against ID numbers in a database of putatively pirated copies of the OS.

If the software discovers a match, users receive a recurring alert from WGA Notifications warning them that they are running an illegitimate copy of Windows. But the program doesn’t prevent the user from continuing to run Windows. As yet, WGA Notifications (rolled into Automatic Updates in April) is not a mandatory download.

In June, Lauren Weinstein, who is a cofounder of the Internet information and discussion resource group People for Internet Responsibility, found out that WGA Notifications sent data to Microsoft every time someone rebooted an affected PC.

A June 29 Microsoft statement confirmed that some PCs working with a version of WGA Notifications installed during the pilot phase checked a server-side configuration setting at each log-in to determine whether WGA Notifications should run or not. Microsoft has since removed that version of WGA Notifications from its update servers; and the company has released instructions for uninstalling it.

Still, privacy experts debated whether these check-ins–and the initial lack of documentation about them–made the WGA program spyware.

Plaintiffs in two class-action lawsuits, one filed in California and the other in Washington, claim that WGA violates those states’ antispyware legislation; but Weinstein doesn’t buy the plaintiffs’ argument.

“It’s not stealing information or damaging [computers],” Weinstein reasons. “It’s more a screw-up on Microsoft’s part–one they’ve admitted.”

In its statement, Microsoft reiterated that newer versions of WGA (distributed through Automatic Updates) do not connect to Microsoft after every reboot. Instead, they connect and validate keys at least once every 90 days, or whenever Microsoft rolls out an update to WGA. Microsoft has also denied rumors that WGA will eventually include a kill switch to stop unvalidated copies of the operating system from running.

Harvard spyware researcher Ben Edelman questions the appropriateness of Microsoft’s decision to release a noncritical, non-security-related update to Windows users via the operating system’s Automatic Updates mechanism.

“They are supposed to be security updates, and supposed to be robust, commercially viable code,” Edelman says about the WGA service. “This was neither.”

Remote starters are a great way to get your car warmed up, but if you’re parked way down the street your remote probably won’t work. Having to walk outside in the snow to use your remote starter kind of defeats the purpose, don’t you think?

Well, the new Directed Electronics starters work from up to a full mile away, and you have to think that if you’re parking more than a mile away from your house, then comfort isn’t one of your top priorities. Coming in intimidating-sounding Viper, Python, and… Clifford models, the remotes not only start your car, but can pop your trunk or hood, sound your alarm, unlock your doors, and honk your horn. The new line of starters will be out in August and will start at $550.

On his recent trip to Sydney, Arimasa Naitoh, the father of the ThinkPad and Lenovo’s worldwide VP of Development says performance is still key to the future of laptop computing.

Naitoh told the assembled crowd of journalists that although he’s heard reports from customers and analysts preaching “performance is no longer an issue” and the “PC has enough power already”, performance will become an increasingly important consideration in future notebook purchases. The two main applications he mentioned would be the source of this demand for performance were Windows Vista (specifically its Aero graphics capabilities) and “security software”.
Battery life will also be of supreme importance as we move closer towards laptops that can run for a full working day on a single battery. Naitoh promised that, within the next two years, Lenovo will have a notebook that runs for eight hours using Lithium Ion technology.

According to Naitoh, fuel-cell technology still has a “long way to go”, particularly in terms of “longevity”. Not only has Lenovo had an uphill battle with integrating fuel-cells into a traditional battery pack format, it’s also found that the performance of a fuel-cell dramatically decreases after a limited number of charge cycles.

Microsoft plans to automatically push Internet Explorer 7 to Windows XP users when the browser update is ready later this year.

IE 7 will be delivered in the fourth quarter as a “high priority” update via Automatic Updates in Windows XP, Gary Schare, Microsoft’s director of IE product management, said in an interview Tuesday. Automatic Updates is a Windows feature typically used for security updates, but Microsoft has also used it to push its antipiracy tool WGA Notifications.

“The justification, of course, is the significant security enhancements in IE 7,” Schare said. Microsoft recommends that all Windows users install the new browser when it ships, he added.
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IE 7 will be the first major update to Microsoft’s ubiquitous Web browser in five years. Security was the No. 1 investment for the update, Microsoft has said. Critics have likened predecessor IE 6 to “Swiss cheese” because of the many security vulnerabilities in it. A third and final beta of IE 7 was released late last month.

Although IE 7 will be pushed out over Automatic Updates, people will be able to choose whether they want to install it or not, Schare said. Automatic Updates will first notify people when IE 7 is ready to install and then show a welcome screen that presents key features and the choices to install, not install or postpone installation.

The Internet Home Alliance is embarking on a new study to see how technology can ease a time-consuming home chore: laundry.

The study, called Laundry Time, will determine how effective an “intelligent” laundry solution is at simplifying and saving time on laundry tasks while also uncovering consumer attitudes about remote access and control of laundry appliances. An open collaboration involving some of the nation’s top technology and consumer products companies, the study includes products, services and intelligence from Whirlpool Corporation, Hewlett Packard, Microsoft, Panasonic and Procter & Gamble.

To be conducted in Atlanta homes between today and early September, Laundry Time is built around a connected laundry solution that links a washer and dryer to a home network and sends text messages about the laundry’s progress to a computer, TV and/or cell phone. This revolutionary technology enables consumers to manage the laundry process from remote locations such as a grocery store or soccer game, freeing them up to go about their day rather than forcing them to stay home to manage the process.

“Generally, most people tend to ‘batch’ their laundry — washing and drying at the same time — and they stay home during the hours it takes to manage the laundry process,” said Carol Priefert, Senior Product Development Manager, Whirlpool Corporation. “Whirlpool research shows that the average consumer ‘batches’ about six and a half loads one day per week, while heavy users may ‘batch’ as many as 15 loads. Laundry Time will test ways to make it easier for people to manage the process remotely or while doing other things around the home.”

Here are a few examples of how Laundry Time will work:

– You decide to do your laundry while the family is watching TV. After you start the washer (the system will allow you to implement the process remotely), you relax in front of the TV. Thirty minutes later, an alert pops up on your TV screen saying, “Wash Complete,” so you put the load in the dryer and put another load in the washer. You get a similar alert on your TV when the dryer is done, so you never forget about your laundry and can fold your clothes before they get wrinkled.

– You settle down to do some Web surfing after a busy day. When you start up your browser, you get an Instant Message alert telling you that the dryer did not start its cycle. You realize that you forgot to press the start button. Laundry Time asks you in the IM whether you would like to start the cycle. With your mouse, you select “yes,” which starts the dryer, and you continue Web surfing without interruption.

– While running errands, you get an alert on your cell phone that the dryer is done. You don’t want your clothes to sit in the dryer and wrinkle so you use a key on your cell phone to tell the dryer to “fluff” the load for an additional 15 minutes, the time it will take you to finish your errands and return home.

Laundry Time was tested in concept form in May 2004 when the Alliance launched a comprehensive research study to assess the appeal of notification about various types of events in and around the home. Alliance members have long expressed an interest in understanding consumers’ reactions to event-driven notifications as a way of learning whether or not a notification platform of some kind would be a viable connected home solution. The research suggested that remote event notification has the potential to appeal to a broad base of consumers. Top-of-mind reactions to the concept consisted mainly of positive comments around convenience, improved safety and/or security, improved appliance control and time savings.

“Working in collaboration with Whirlpool and the other project participants, we are excited to see the results of the Laundry Time pilot,” said Jonathan Cluts, Director of the Consumer and Prototyping team at Microsoft Corporation. “This project gives us an opportunity to see how connected technology solutions can help simplify people’s lives so they can spend more time with their family and friends.”

NY Times’ Andrew Ross Sorkin reports:

In a transaction that will reshape the semiconductor industry, Advanced Micro Devices Inc. agreed last night to buy ATI Technologies Inc. for $5.4 billion in cash and stock, people involved in the deal said.

The deal, which is expected to be announced today, comes as the semiconductor industry is becoming the focus of intense investor interest. Later this week, Philips Electronics plans to field final bids worth more than $10 billion apiece for its semiconductor division from three consortiums of private equity investors, people involved in that auction said. Philips had been considering an initial public offering for the unit.

A.M.D.’s deal for ATI, worth $4.2 billion in cash and $1.2 billion in stock, will expand A.M.D.’s business into graphic chipsets used in high-end PC’s for playing video games and in workstations used in design work or to create video games and movie animation as well as chipsets for cellphones and handheld devices.

A chipset connects a computer system’s processor to its memory and other parts, facilitating the flow of data among components.

“The deal puts A.M.D. on more equal footing with Intel,” said Samir Bhavnani, director of research at Current Analysis, a market research firm in San Diego. “It completes the puzzle for A.M.D.”

He said the deal was important because it took A.M.D. beyond PC’s and gave it greater strength for the cellphone and handheld markets.

The deal is not without challenges. While both companies have reported strong earnings growth over the past year, overall growth of PC sales is slowing, particularly in the high end of the market, where the graphics chips are important components.

The slowdown also means the price competition with Intel for the core processors at the low end of the market has increased. Lower prices mean that A.M.D. makes less money per processor.

The ability to sell graphics chipsets along with a processor could help improve A.M.D.’s overall gross profit margins, which fell in the latest quarter to 56.8 percent from 58.5 percent in the prior quarter.

ATI is a major player in a number of promising technologies that will grow as the electronics industry shifts away from the dominance of PC’s to new forms of television, enhanced set-top boxes as well as handheld videoplayers. For instance, ATI makes chips that enable integrated digital televisions, which get digital broadcast over the airwaves. The company also makes image processors that are used to display video on cellphones or mobile handheld game machines.

Microsoft Corp. confirmed Friday it’s working on music and entertainment products that are expected to compete with Apple Computer Inc.’s wildly popular iPod and iTunes music service.

The Redmond-based software maker said in a statement it planned a series of hardware and software products, with the first expected to be available this year. The products will be called Zune.

Microsoft refused to provide more details beyond the statement, such as whether anyone in the music industry has expressed serious interest. Microsoft has been briefing music industry executives on the project for some time.

Jupiter analyst Michael Gartenberg, one of a handful of industry analysts briefed on the project, said Microsoft probably feels like it has to get into the portable player market because it is such an important jumping-off point for getting people to embrace its technologies in the living room.

That’s key for the company as the traditional market for its Windows desktop operating system grows saturated. Microsoft has already expanded the reach of Windows by adding features such as the ability to record live television in some versions.

But in creating its own music products Microsoft also risks alienating partners such as Creative Technology Ltd. and Samsung, Gartenberg said. Those companies are already using Microsoft’s software for their own players, although they’ve had little success against Apple’s juggernaut.

“This is a very tough message,'’ Gartenberg said. “If you’re the head of Creative, as of this afternoon you’re not just facing Apple, which was bad enough, you’re now facing your partner.'’

He said it could have even deeper repercussions if people in other industries grow wary of partnering with Microsoft for fear the company will decide to launch its own competing product. Microsoft’s success has been built on working with hardware manufacturers to make products running its software.

“It’s certainly going to cause a lot of fear and uncertainty and doubt in the ecosystem,'’ Gartenberg said.

Gartenberg said Microsoft confirmed to him that it would release a wireless device that would play both music and video this year. The device will have an accompanying content service, Gartenberg said.

lenovo bought IBM’s PC division. IBM was losing money on it.  OK. I got that.  Not sure exactly WHY when IBM had a top seller in its’ ThinkPad line of notebooks.  Or when IBM had relatively good customer service and tech support. Then again, maybe IBM’s marketing skills (or lack thereof) had something to do with it.  Or maybe it was their horrible sales people.

IBM has had its’ challenges ever since it introduced the first PC.  It never had the foresight to develop a computer that would suit home users as well as business users.  From the beginning, the IBM PC was always a business machine.

It would seem IBM could come up with good quality mainstream products from time to time, but never support and market them to the point where they dominated a segment of the marketplace. The ThinkPad was probably one of the most successful.

Hardware wasn’t the only thing IBM flubbed on. Remember OS/2?  After IBM and Microsoft split up their joint efforts on OS/2, IBM took it over completely.  I used it for a few years to run my old BBS on and it ran beautifully.  You could run multiple applications at the same time and if one crashed, you could close just that application without having to shut down and restart the computer. Far more reliable than the Windows of its’ time.  In fact, it would be years before Microsoft could make Windows even close to being as reliable as OS/2.

Sadly, it is gone now.  OS/2 was difficult to setup and wasn’t marketed well.  Had IBM cleaned up the install and pushed it harder, it might have been a serious contender for Windows.

So now IBM’s PC line is in the hands of lenovo.  So what did they do?  They cut corners.  They ruined IBM’s good points (tech support and customer service) and kept the bad ones (sales) or made them even worse. The ThinkPads are still good machines, but its’ lenovo’s lack of customer support that brings the future of the line into question.

My company purchased nearly $100,000 of IBM hardware just before the sale to lenovo.  Big msiatke. I could write a book on the bad experiences, starting with IBM’s sales people and ending with lenovo’s lack of ability to fix even a small problem.  I’ll only touch on two here.

One desktop workstation took three tech rep visits, replacing nearly every major component and still it could not be fixed.  After many phone calls I was instructed to send it back.  I did.  They fixed it and sent it back. It was a bad piece of memory.  Since it was under warranty, you would have thought lenovo would have just replaced it after the first couple of tries. Instead, they chose to aggravate a good customer and cost themselves a lot of money as well.

We had many IBM R50 notebooks that all developed the exact same scrambled display problem.  They all went back for repair, one by one.  The last one was out of warranty by one month.  lenovo didn’t want to recognize that it was an obvious design flaw and wanted to charge me for the repair.  Even when they had the documentation in their computers of all the previous notebooks of the exact same model and type that had to be repaired.

Customer service?  Not at lenovo. Don’t think I’ll be buying much at lenovo anytime soon.

Unfortunately, they are not alone.  I’ve pulled my hair out with Earthlink, Verizon, Nextel/Sprint and others.  Ever try to talk tech with someone who barely speaks English and is reading a script to boot? The question is, when will the consumer retaliate?

Analysts — what would we do without them?

Computer equipment salesman CDW (Nasdaq: CDWC) surprised analysts and the rest of Wall Street by reporting better-than-expected sales and earnings for the second quarter. Sales came in nearly a full percentage point lower than the average prediction of 6.1%. But analysts made a wrong call on the direction profits were moving; predicting a 1% decline, they were surprised to see the company deliver a 14% increase in profits per diluted share.

By delivering greater than expected profits, despite selling fewer goods than expected, CDW confounded the Street, and catalyzed an 8% run-up in its share price yesterday. So what was the secret to its success?

It actually consisted of three factors.

First, gross margins improved 80 basis points to 16.2%, continuing the long-term trend we saw in yesterday’s Foolish Forecast.

Second, the net margin increased roughly 100 basis points year over year, to 4.4%, dropping an extra tenth of a penny’s worth of profit from each dollar of sales to the bottom line. This too looks to be part of a longer-term trend.

Third and finally, CDW juiced its per-share profits by buying back about 4% of its diluted share count over the last year. That left fewer shares, among which the profits had to be divided.

Drilling down toward what’s happening at the business itself, I see a lot of reports focused on CDW’s hottest sellers: notebook CPUs, video and memory cards, input devices, and so on. That may be of interest to investors in chipmakers like Intel (Nasdaq: INTC) and AMD (NYSE: AMD) or hardware manufacturers like Hewlett-Packard (NYSE: HPQ) and Dell (Nasdaq: DELL). CDW investors, in contrast, should focus on two different facts. (After all, what CDW sells doesn’t matter as much as how much it sells, and at what margins.)