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There’s no doubt the battered economy is affecting technology bellwether Cisco Systems, but the company is looking to the future with plans for big investments across its portfolio in “adjacent markets.”

On Tuesday, Cisco reported that earnings for its fourth fiscal quarter 2008 were up 4.4 percent to $2.0 billion on revenue that climbed 9.9 percent to $10.36 billion. The results were in line with analyst expectations, but were a far cry from the company’s results during some of its best quarters when the economy was strong and healthy.

As for the future, Cisco’s CEO John Chambers said he expects Cisco to continue to be affected by the downturn in the economy, and he projected sales would grow by about 8 percent in the first fiscal quarter and by about 8.5 percent in the second fiscal quarter.

He declined to give guidance for the second half of the fiscal year, because he said the economic outlook is likely to change in the next six months. Still, Chambers reaffirmed his long-term guidance for the company of growth between 12 percent to 17 percent a year.

While the company waits for the economy to turn around, Cisco is preparing to make heavy investments in new markets to prepare itself for when customers begin spending again.

This means that the company will invest in new markets that are adjacent to existing product lines in all its major customer segments from the home network to the data center, from small and medium businesses to the enterprise, and from its commercial businesses to the service provider market, Chambers said.

“We’ll partner big to big, and acquire big to small, or big to medium,” he said. “So you could see us partner with an IBM or a Microsoft or an Intel. And we’ll acquire more like a Scientific Atlanta or a WebEx. My favorite kind of company to acquire is one with 100 engineers who have a hot product they are just about to release.”

Cisco has weathered several economic downturns in the past. And in the past when times have been tough, Cisco has ramped up investments in new markets to fuel growth for the future. So far the company has executed this strategy extremely well, spawning several new revenue streams that have gone on to become revenue generators. For example, Cisco’s unified communications business and its IP telephony businesses were areas where Cisco invested during previous downturns. And today these businesses are paying off generating a significant amount of revenue.

This time around, Chambers says he already sees the next technological wave.

“Web 2.0 and collaboration will be the biggest drivers for our business over the next five to 10 years,” he said.

Source : CNET News.com

It happened to Microsoft and Yahoo. Could it happen to Apple?

The limitations of antipiracy software were dramatically illustrated last week when Yahoo Music announced the company would stop issuing authorization keys for the software that prevents its songs from being copied.

Microsoft’s now defunct MSN Music service made a similar announcement last spring. Some CNET News readers have asked whether the same thing could happen at iTunes. The answer to that question is yes, it most certainly could.

If Apple ever stopped issuing keys for its FairPlay digital rights management then, just like at Yahoo and MSN, iTunes users would be prevented from moving their music to different machines or devices. That would affect most of the 5 billion songs the company has sold. (Following much public criticism, Microsoft said it would continue issuing keys for another three years and Yahoo is offering refunds.)

To be sure, the likelihood of Apple shutting off DRM keys anytime in the foreseeable future seems remote at best. Apple is the Internet’s largest music retailer and may be the largest music retailer overall. The company is riding a wave of excitement over the new iPhone 3G, which besides being a phone and Internet-enabled device, is an excellent music player. Apple appears to be on track to dominate retail music sales for a long time to come.

Still, things do change. Who can say what will happen at Apple in 5 or 10 years? That’s a long time from now. But the truth is, DRM’s threat to iTunes users’ music libraries is real.

If, for some reason, Apple stopped issuing new DRM keys, people’s music would get stuck. Check out iTunes’ terms of service. The company says that in such a scenario, customers could not hold it responsible: “In the event that Apple changes any part of the Service or discontinues the Service, which Apple may do at its election, you acknowledge that you may no longer be able to use products to the same extent…and that Apple shall have no liability to you.”

What the Yahoo and MSN situations show is that DRM-wrapped music is never truly controlled by anyone other than whoever holds the encryption key. Whether it’s FairPlay or Windows Media DRM or some other format, consumers are at their mercy when it comes to unlocking their music.

This means that music libraries can be threatened when computers go kaput. (Yes, the workaround is to burn the music to CDs, but then some sound quality is lost.)

While it may seem inconceivable, it’s worth looking at what would happen if Apple stopped issuing keys. How would the company compensate customers for 1 billion lost songs?

MSN Music announced in April that it would no longer support the DRM keys on its music. Customers could still play and hear their songs but would be prevented from transferring them to other devices. Two months later, following public condemnation, Microsoft said it would continue to issue DRM keys for three more years.

On Friday, Yahoo Music said it would begin offering refunds to customers who purchased songs from Yahoo Music Unlimited. For people who would rather have DRM-free copies of their songs, Yahoo is also looking into whether it can provide unprotected MP3s.

The problem with Microsoft’s approach is that it is only a short-term solution. In three years time, Microsoft could once again opt to end DRM support. And if Apple followed Yahoo’s refund policy, it could prove to be mighty expensive.

Apple conceivably could strip DRM from its songs. From a technological standpoint, it wouldn’t be hard to do. If Apple ever stopped issuing keys, the company could, in theory, work out a deal with the labels that would allow it to remove FairPlay. It’s unclear whether Microsoft or Yahoo tried to negotiate similar agreements with the labels.

Software packages such as PlayFair and QTFairUse already do this.

The real hurdle would likely be the labels. Right now, EMI is the only one of the four largest recording companies selling unprotected song files on iTunes. Apple’s agreements with the other three labels require it to offer copy-protected music.

This brings us to a question that has long been asked: At a time when more and more of Apple’s competitors are offering DRM-free music, why does Apple continue to sell songs with antipiracy protections?

Who’s to blame?
Apple’s Steve Jobs says he wants to sell unprotected music. The recording labels have said Apple is at fault. With everyone pointing fingers at each other, the only thing that’s clear is DRM has been exposed.

Yahoo and MSN have helped show that consumers of DRM-wrapped music play their songs only with permission of anyone trading in copy protections, and that includes Apple.

Guy Tennant, chief operating officer of Entriq, a company that helps online stores manage publishing, packaging, and protection of digital products–and this includes implementing DRM–says limitations with copy protections shouldn’t come as a surprise. “You got what you paid for,” Tennant said. “It is the consumers’ responsibility to protect their investments. You have a volatile store sitting on a hard drive.”

Tennant says he doesn’t want to sound unsympathetic but reminds digital-music buyers that CD owners don’t demand a refund from stores when they lose their discs. As for backing up songs to a CD, people should just accept the loss of quality because the only other alternative is to lose the music entirely, he said.

“The challenge for DRM technology providers is to create technology that is easy to use and fits consumers’ perception of fair use,” he said.

Source : CNET News.com

Just because a “friend” sends you something on Facebook or MySpace doesn’t mean you should trust it.

A new worm is spreading via Facebook and MySpace, turning victims’ computers into zombies on a botnet, Kaspersky Lab said on Friday.

Basically, infected machines are propagating the worm by sending messages via the social networks to friends in the network.

The messages look like they contain links to video clips. When clicked on they prompt the recipient to download an executable file that purports to be the latest version of Flash Player. Instead, it is the worm itself, infecting yet another victim.

When infected machines log onto the social networks the next time their computers automatically send the malicious messages out to new victims grabbed from the friend list, said Ryan Naraine, security evangelist at Kaspersky.

“We’ve seen these types of worms before, typically around MySpace,” he said. “People are more trusting of things they receive from a friend,” and many people don’t recognize that what they are downloading isn’t a legitimate Flash Player file, but a malicious program.

Naraine repeated the refrain that security professionals have been spreading for years: be careful about downloading anything to your computer, even if it appears to come from a friend; and be diligent about applying security patches to your computer.

Source : CNET News.com