AOL`s Choice of Google Leaves Microsoft as the Outsider

This time, it was Microsoft that was snubbed at the last minute.

In 1996, America Online agreed to offer Netscape`s Internet browser to its five million customers. A day later, the nonbinding agreement was shunted aside when AOL announced that it had instead chosen Microsoft`s Internet Explorer browser in a $100 million deal.

Today, the New York Times reports that as recently as two weeks ago, Microsoft executives said they believed that their company was going to win the endorsement of Time Warner, AOL`s parent, to form an advertising venture with AOL and become its provider of Web search technology.

But tomorrow Time Warner is expected to announce that it will instead renew its three-year-old partnership with Google as the provider of search technology. The deal, in which Google will invest $1 billion for a 5 percent stake in AOL, will also significantly expand AOL`s advertising opportunities on Google sites, among other things.

According to an article on redherring.com, the software giant needs to perfect strategy and execution in 2006 if it wants to beat competitors ranging from Sony to Google.

Bill Gates is betting big on 2006. After years of development and hype, Microsoft will launch its biggest lineup of products ever while also challenging Sony`s dominance of the video game market and Google`s lead in online media.

The world`s largest software maker will ship two critical products: Windows Vista, its next-generation operating system; and Office 12, a package that includes updated versions of Word, Outlook, PowerPoint, and Excel. Its Xbox 360 is already on store shelves worldwide, albeit in short supply, and gamers who bought the consoles will now expect a steady flow of thrilling new games.

Amid all that, Microsoft will have to see if its attempts to streamline the company`s organizational structure have been successful.

Signaling a cold winter for video game companies, a key industry report and a major video game publisher said sales of games for the holiday season have been weak.

Redherring.com reports that researchers at NPD Group have found that sales of video games for November were down 18 percent from a year ago.

At the same time, the $1.4-billion-per-year Santa Monica, California-based company Activision warned that its sales and earnings won`t meet expectations for the last half of fiscal 2006. The stock fell 13 percent on Thursday`s news.

The news doesn`t bode well for game publishers like Electronic Arts or for Microsoft`s just-released Xbox 360, because the holiday season is often times the most important time of the year for companies to sell both hardware and software to consumers.

To be sure, the slowdown may be short-lived. The total video game console market was about $21 billion this year, according to DFC, and is expected to grow to $28 billion by the middle of next year. But whether the industry will actually grow by a third in a single year remains to be seen.

Dell on Friday recalled approximately 35 000 batteries in several laptop models, saying that the faulty units could overheat and start fires.

InformationWeek.com reports that the bad batteries were sold from the October 5, 2004 to October 13, 2005, said Dell, which issued the recall in cooperation with the US Consumer Product Safety Commission.

 The batteries were sold separately or included with a wide swath of Dell`s Latitude and Inspiron laptop lines, ranging from the Inspiron 600m and XPS Gen 2 to the Latitude D410 and D810.

The computer maker said it had three reports of batteries overheating, with subsequent fires causing minor damage to tabletops, desktops, and other personal effects. No one has been injured by hot laptops or the fires they caused, Dell added.

Users can check to see if their Latitude or Inspiron notebook`s battery is on the recall list by calling Dell or visiting its Web site. Free replacements will be shipped to users with affected batteries.

The warning affects about 22 000 Dell users in the US, far fewer than the nearly one million faulty power adaptors recalled last October.