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South Korea, U.S. Web sites down for 3rd day on attack

By Jack Kim

SEOUL (Reuters) - Some South Korean and U.S. Internet sites were down or slowed to a crawl for a third day on Thursday after attacks by a hacker that Seoul's National Intelligence Service said may be linked to a cyber warfare unit in the North.


The impact of the attack was seen as largely symbolic and experts said it did not represent an actual security breach or damage to the online infrastructure of the world's most wired country.

South Korean media, including Yonhap news agency, quoted parliament members as saying after an intelligence briefing on Wednesday that the spy agency believed "North Korea or pro-North elements" were behind the attacks.

But some analysts raised doubts the North was responsible, saying the implications of such a state involvement were severe, and it may be the work of industrial spies or pranksters instead.

South Korea's Communications Commission said in a statement that it had stepped up counter measures after Wednesday's fresh wave of attacks, asking Internet service providers to filter access by computers infected with malicious software.

South Korea's defense ministry Web site was among those that remained down for a third day and access to some U.S. government sites, including the State and Defense Department, from South Korea appeared to have been disabled.

An official with the Communications Commission said the impact could spread as more people go online through the day.

"We've had the first wave and the second wave, and now there may be a third one," Park Chul-soon said on state-run KBS radio.

If the North was responsible, it would mark an escalation in tensions already high from Pyongyang's nuclear test in May, a barrage of ballistic missiles in July and repeated taunts of long-time foes Seoul and Washington in its official media.

SEVERE IMPLICATIONS

Mark Rasch of SecureITExperts, a former U.S. Department of Justice official on cyber crimes, said the implications of a state sponsored attack were severe.

"There's no difference between dropping a logic bomb and dropping a TNT bomb in the law of war," he said, but added that while North Korea could have been behind the maneuvers, they did not appear to be coming from computers physically based there.

Last month the North warned of "high-tech war" against the South for spreading what it said was false information about its involvement in cyber attacks.

"As universally recognized, the U.S. is the kingpin of 'cyber attack' and 'hacker intrusion' on our planet," its official KCNA news agency said on June 27.

"The DPRK is fully ready for any form of high-tech war," it said using the country's official name, the Democratic People's Republic of Korea.

Mark Rasch of SecureITExperts said while the cyber attacks were not novel, the targets and coordinated nature of the activity were different.

"This is not something that your average script kitty can do on the one hand. On the other hand it doesn't require it to be state-sponsored," he said.

Tim Stevens, a technology expert at King's College in London, said if North Korea was a source of the attack it was largely symbolic because most of the targets were not critical infrastructure and the stock exchange was closed at the time.

The "denial of service" attack was designed to disrupt rather than penetrate a system to obtain data, he said.

The websites of South Korea's presidential office, Defense Ministry, and the National Assembly were saturated with access requests generated by malicious software on Tuesday, crippling server response to legitimate traffic, South Korea's Communications Commission said in a statement.

News of the attack pushed shares of some online security companies higher on Wednesday, with Ahnlab Inc up by the 15 percent daily limit on the junior Kosdaq market, which ended trading down.

(Additional reporting by Jon Herskovitz, Rhee So-eui, Paul Eckert, Elinor Comlay, David Morgan, William Maclean, Jim Christie, Clare Baldwin; editing by Mohammad Zargham)
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Sharp to raise LCD panel output capacity

TOKYO (Reuters) - Japan's Sharp Corp said on Thursday that it plans to boost LCD panel production capacity at its Kameyama No.2 plant in Mie prefecture in central Japan to meet strong LCD TV demand in emerging markets such as China.

The plant, which is capable of processing 90,000 units of so-called 8th-generation glass substrates a month, has been running at full capacity.

Sharp, the world's fourth-largest LCD TV maker and a major supplier of LCD panels to other TV makers, plans to hold a news conference at 3:00 p.m. (2:00 a.m. EDT) in Osaka, western Japan, to announce more details.

Shares in Sharp, which competes with Samsung Electronics Co Ltd and Sony Corp in the global LCD TV market, were up 1 percent at 915 yen, outperforming the Nikkei average, which fell 0.5 percent.

(Reporting by Mariko Katsumura and Kiyoshi Takenaka)
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Google takes aim at Microsoft with new PC platform

By Alexei Oreskovic

SUN VALLEY, Idaho (Reuters) - Google Inc plans to attack Microsoft Corp's core business by taking on the software giant's globally dominant Windows operating system for personal computers.


Google, which already offers a suite of e-mail, Web and other software products that compete with Microsoft, said it would launch a new, free operating system that will initially be targeted at netbooks.

Called the Google Chrome Operating System, the new software will be in netbooks for consumers in the second half of 2010, Google said in a blog post, adding that it was working with multiple manufacturers.

Netbooks are low-cost notebook PCs designed for Internet surfing and other Web-based applications.

"It's been part of their culture to go after and remove Microsoft as a major holder of technology, and this is part of their strategy to do it," said Rob Enderle, principal analyst at Enderle Group. "This could be very disruptive. If they can execute, Microsoft is vulnerable to an attack like this, and they know it," he said.

Google and Microsoft have locked horns over the years in a variety of markets, from Internet search to mobile software. It remains to be seen if Google can take market share away from Microsoft on its home turf, with Windows currently installed in more than 90 percent of the world's PCs.

Key to success will be whether Google can lock in partnerships with PC makers, which currently offer Windows on most of their product lines.

Google said in a blog post on Wednesday that it is working with a number of PC makers including Hewlett-Packard, Acer, Lenovo and Asustek, as well as chipmakers Texas Instruments and Qualcomm to design and build Chrome devices.

The news comes as executives from the world's biggest technology and media companies, including Google and Microsoft, gather in Sun Valley, Idaho for an annual conference organized by boutique investment bank Allen & Co.

A spokesman for Microsoft declined to comment.

Microsoft shares rose 3 cents to close at $22.56 on the Nasdaq. Google shares rose 1.5 percent to $402.49.

FAST AND LIGHTWEIGHT

The new Chrome OS is expected to work well with many of the company's popular software applications, such as Gmail, Google Calendar and Google Maps.

It will be fast and less memory-intensive, enabling users to access the Web in a few seconds, Google said. The new operating system is based on open-source Linux code, which allows third-party developers to design compatible applications.

"The operating systems that browsers run on were designed in an era where there was no web," Sundar Pichai, vice president of product management at Google, said in the blog post. The Chrome operating system is "our attempt to rethink what operating systems should be."

Google said the operating system was a new project, separate from its Android mobile operating software found in some smartphones.

The new system is designed to work with ARM and Intel Corp's x86 chip platforms, the main chip architectures in use in the market. Microsoft has previously said it would not support PCs running on ARM chips, allowing Google an opportunity to infiltrate that segment.

Charlene Li, partner at Altimeter Group, said Google's new system could first appeal to consumers looking for a netbook-like device for Web surfing, rather than people who use desktop PCs for gaming or high-powered applications.

But eventually, the operating system has the potential to scale up to larger, more powerful PCs, especially if it proves to run faster than Windows, she said.

Google said the new OS would be free to use. Enderle noted that the company's business model has been to earn revenue from connecting applications or advertising.

Microsoft declines to say how much it charges PC brands for Windows, but most analysts estimate about $20 for the older XP system and at least $150 for the current Vista system.

Altimeter's Li added: "A benefit to the consumer is that the cost saving is passed on, not having to pay for an OS. It's clearly positioned as a shot across the bow of Microsoft."

(Additional reporting by Kelvin Soh in Taipei, Jim Finkle in Boston, Gabriel Madway and Edwin Chan in San Francisco; Writing by Tiffany Wu, editing by Will Waterman and Derek Caney)
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Apps a nail in coffin of broadcast mobile TV

By Tarmo Virki

HELSINKI (Reuters) - For years it was the talk of the wireless industry: beaming television to the world's four billion cellphones would be the icon of the digital age. Now, just three letters are hastening the demise of that vision.


App. Short for "application," the programs people download from online stores to run on their portable phones have enabled consumers to choose for themselves which moving pictures to take in when they are on the go.

As Facebook and Twitter disrupt business models for mainstream media -- and on the platform that's a lifestyle statement for young adults -- the one-size-fits-all approach of broadcast mobile TV got stuck before it even properly took off.

"It is a financial disaster," said John Strand, a consultant who has followed the mobile industry closely for more than 12 years. "It's a nice product, but the customers won't pay for it."

One way to see why not is to watch young Brazilian footballers knocking a soccer ball around in the Helsinki Cup. A youth tournament currently playing in the Finnish capital, it's hardly a world event in the conventional sense.

But the video clips they are uploading from their phones will run on their parents' mobiles or PCs back home.

"It's even easier than with still images, and a much nicer and expressive way to tell them the news from over here," said David da Silva, spokesman for the team from Brazil.

The service they are using comes from a Web site which offers users the chance to send video from cellphones to their own TV channels on the Web. A small venture, it is one of thousands of offerings from the likes of Apple, Nokia, RIM and many others letting users drive their mobile entertainment.

BBC World and Al Jazeera English have recently launched apps for consumers to watch real-time news on their iPhones, through a London-based company, Livestation.

"This is mobile TV 2.0 -- completely reinvented and redesigned, and I think it's going to overtake the old models very very rapidly," said Matteo Berlucchi, CEO of Livestation.

Perhaps the best illustration of the fast-shifting outlook is the history of forecasts for the market. Strategy Analytics now expects the mobile TV broadcasting market to total $280 million next year. Only three years ago the firm forecast the market to reach $5.4 billion in 2010.

"We've downgraded our forecast a fair bit to reflect the slower-than-anticipated rollout of services and limited momentum from carriers and broadcasters," said Strategy Analytics analyst Nitesh Patel.

"Application and widget stores and mobile internet access have taken priority over mobile broadcast."

SATISFACTION

It's an important distinction, says Andrew Bud, Chairman of the Mobile Entertainment Forum (MEF), a London-based trade association for the mobile media industry. He talks about mobile TV -- which is broadcast -- as opposed to mobile video, which you load onto your device.

"Mobile TV is all about real-time, linear transmission ... where the timing of the programing was set by the broadcaster and the consumer would dip in and dip out," he said.

"Mobile video is much more about video-on-demand. It gives the consumer much more freedom. It's also a little less stressful on the mobile networks."

A survey by KPMG and the MEF found that nearly 40 percent of consumers had at one time watched a piece of mobile video on their handset: 52 percent of them said the experience was satisfying, against 38 percent of a much smaller number of users who said they had tried broadcast mobile TV.

The biggest problem for mobile TV is that it emerged in 2004-2006, just when the media industry started to change.

Cellphone makers and mobile operators have invested hundreds of millions of dollars in the infrastructure. Phones and networks are in place in many countries, and watching it is very popular in countries such as South Korea where the service is aired for free.

But even there the wide take-up has not created a flourishing business, and in the United States it has been a hard slog. Telecoms group Crown Castle International closed down its effort to launch a broadcast mobile TV network in 2007.

Technological strain has been a factor restricting the growth of broadcast television on mobiles, enabling swift-moving plug-ins to fill the gap.

"A lot of the discussion around mobile TV centered around the vexed question of broadcasting spectrum and special technical standards and it all got very tangled -- problems that haven't been fully resolved, especially in Europe," said MEF's Bud.

Others have included the lack of a clear business model, fights for broadcasting rights, numerous different technologies competing for the leading position and a lack of affordable phone models.

SNACKING

The moving pictures coming slowly onto cellphones are testing demand for different experiences: Samsung and Sony Ericsson have launched movies, the offerings for Apple's iPhone include TV shows and Nokia has worked with "Heroes" creator Tim Kring to develop new content for launch in Europe's summer.

"Consumers are hungry to snack on their favorite content, be that the latest championship soccer goals or 'Desperate Housewives'," said Ben Wood, research director at CCS Insight.

"Old-fashioned broadcasters who are wedded to the old broadcast model have the biggest challenge because those days are over; consumers expect their favorite content when they want it, on whatever platform is most convenient -- TV, PC or a mobile phone," he said.

Samsung has launched a service allowing its customers to buy or rent movies and TV series to download to their mobile phones, with 24-hour rental prices starting from 2.49 pounds ($3.55), and movies from 4.99 pounds.

The breadth of the offering, which includes over 500 blockbusters from top studios Warner Bros, Paramount and Universal, makes it competitive with other mobile media.

Sony Ericsson has unveiled a more limited offering -- PlayNow arena with movies -- a bundled movie service for selected handsets, allowing consumers to watch up to 60 movies a year on their mobile phone.

"We won't see major business in just taking TV programs to cellphones," predicted Andrea Casalini, Chief Executive of Italian firm Buongiorno, which sells mobile content like games, music, video in 57 countries and says it is the world's largest mobile entertainment firm.

"There can be big business in new formats -- in making shorter programs, shot for cellphone screens, and also in using interactivity."

(additional reporting by Matt Cowan in London and Eva Lamppu in Helsinki; Editing by Sara Ledwith)
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AT&T takes issue with antitrust criticism

WASHINGTON (Reuters) - Telecommunications giant AT&T struck back on Wednesday at Sen. Herb Kohl, chair of a congressional antitrust panel, saying the lawmaker's concerns about a lack of competition in the wireless industry were unfounded.

Kohl wrote to the Justice Department's top antitrust regulator Christine Varney and Federal Communications Commission Chairman Julius Genachowski on Monday to reiterate concerns over texting prices, large carriers failing to cooperate with smaller carriers to resolve roaming disputes, disputes over spectrum and deals that give one or another carrier exclusive access to popular phones like the iPhone.

AT&T argued that cell service had become progressively cheaper, with revenue per minute falling 89 percent since 1994.

"U.S. wireless prices are much lower than in any other major industrialized country," wrote James Cicconi, an AT&T senior executive vice president.

Cicconi argued that texting prices had fallen because of package deals, "dropping almost 70 percent since January 2007," and asserted that the pay-per-use price cited by Kohl represented less than 1 percent of AT&T's customers.

Cicconi also argued that exclusive handset arrangements allowed a carrier and a manufacturer to split the high cost of marketing "an inventive but unproven new device." Kohl had called the deals "a serious barrier to competition."

"I think AT&T is right on the handset exclusivity," said Orrick antitrust expert David Smutny, who argued that telecommunications firms were vying to help manufacturers to come up with the new cool phone -- the iPhone killer -- in order to compete with the AT&T/Apple alliance.

"What AT&T cares about is getting people to sign up for its service and what Apple cares about is getting people to get its cool phone. That's pretty pro-consumer," he said.

Cicconi said that AT&T complied with FCC regulations, which required it to allow other companies' customers to roam to get voice service but not data, which means that they may not get email or Internet service on their phones if they are out of their servers' area.

AT&T also defended early termination fees as a way for the company to recoup money spent discounting handsets.

Overall, Orrick's Smutny said he failed to see significant antitrust issues in the wireless industry.

"Most people are served by at least three and sometimes five or six wireless carriers," he said. "On the specific issues that Sen. Kohl raises, I think that AT&T has the better of the argument."

(Reporting by Diane Bartz)
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Amazon cuts Kindle price to $299

By Alexandria Sage

SAN FRANCISCO (Reuters) - Online retailer Amazon.com has cut the price of its standard Kindle electronic reader by 17 percent to $299, the company said on Wednesday, the latest salvo in the war for digital readers.


The price cut comes amid a budding digital book battle where rivals like Amazon, Sony Corp and a host of smaller companies are anxious to get in on the ground floor of what some say is the future of reading.

Amazon said customers who had ordered Kindles that had shipped within the past 30 days would receive a $60 credit on the price difference.

Electronic readers allow consumers to read books, magazines or newspapers on a tablet that downloads content digitally. While the devices are convenient for those who travel and embraced by avid readers on the go, their high prices have been a barrier to many.

"While it is a significant drop both in terms of the overall percentage of the price as well as getting under the $300 barrier, it is still not going to be enough to break it out of its niche," said Ross Rubin, consumer technology analyst at the NPD Group.

In February, Seattle-based Amazon unveiled the second version of its digital book reader, priced at $359. The first, which debuted at $399 but whose price was later reduced to $359, came out in November 2007 amid much fanfare.

'DIGITAL VENDING MACHINE'

Amazon has pointed to the Kindle as a growth driver and said sales have surpassed expectations, without disclosing sales or profit data.

A spokeswoman said Amazon was able to cut the price of the Kindle as higher volume had reduced manufacturing costs.

The value of the Kindle for Amazon is in the content purchased by users of the e-reader, analysts say. The retailer charges $9.99 for most bestsellers digitized for the device.

Tuesday's price reduction could be attributable to a number of factors, said Rubin.

"(It's) growing economies of scale or perhaps Amazon is seeing that consumers are buying enough content where it can further subsidize the device," Rubin said, adding that Amazon has a "greater than usual incentive" to knock $60 off the price.

"It's essentially selling a vending machine into consumers' hands," he said.

In May, the company introduced a larger version of the Kindle DX, designed to better view newspapers and magazines, which remains at $489. The price on that device could also drop, Rubin said.

The new $299 price tag on the Kindle puts Amazon's device more in line with competitors' pricing. While earlier Sony e-readers retailed for $399, the cost of more recent versions has been cut to $299 and $279, according to Sony's consumer website.

Still other devices entering the market are cheaper, such as the $249 Cool-er from Interead.

Amazon shares rose $1.73 or 2.3 percent to close at $77.36 on Wednesday on the Nasdaq.

(Reporting by Alexandria Sage; Additional reporting by Brad Dorfman; Editing by Richard Chang, Leslie Gevirtz and Matthew Lewis)
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