– Eric Auchard is a Reuters columnist. The opinions expressed are his own —

When Oracle agreed to buy Sun Microsystems for $7.4 billion in April, the headlines made much of the software maker’s decision to enter the computer business 30 years late. At less than 10 per cent of sales, Sun’s software business seemed an afterthought.

But Sun’s software is now center stage after European competition regulators said on Thursday that they would withhold approval for the deal until they finish probing the impact of the Oracle-Sun merger on the database software market. The decision means the transaction faces at least a four-month delay, pushing it into early next year.

Any delay is costly for Oracle. Sun’s sales have plunged as key financial, government and communications customers have held back purchases of computers and storage until Oracle is able to clarify its long-run commitment to Sun hardware and software products.

The commission is debating whether, or under what conditions, to allow Oracle to acquire Sun’s MySQL database software. Given that the business brings in only $100 million in quarterly revenue, less than 1/25th of Sun sales, the easy way out would be for Oracle to jettison MySQL. However, that would be a mistake.

MySQL is a free, or low-cost, database that powers the vast majority of the world’s hottest Web sites, blogs and open-source businesses, including Facebook, Google, YouTube and Wikipedia. At issue is the fact that Oracle is already the world’s biggest supplier of database software, the underpinning for many of the world’s biggest information storehouses.

MySQL is the alternative to Oracle and its main rivals, IBM and Microsoft, which between them generate most of the world’s database sales.

There is a valid argument that MySQL is vastly more trouble than it is worth, and that Oracle should sell or give the software code away. This is in part because MySQL customers tend to be fiercely independent grassroots developers, completely unlike Oracle’s traditional customers in corporate and government information management.

Critics claim that Oracle has no interest in seeing MySQL survive and that it is only interested in converting its customers into paying Oracle database users.

Nevertheless, MySQL represents an innovation pipeline of inestimable value to Oracle over the next five to 10 years, assuming Oracle can adapt its dressed-down business practices to court Web developers, the most independent-minded wing of the software world.

It would also help Oracle compete more effectively against old rival Microsoft Corp <MSFT.O>, a goal the EU authorities should embrace.

Java, the programming language invented by Sun, forms the basis of most of the world’s modern software built outside of Microsoft.

Combined with Sun’s software for managing the identities of network users and its Open Office suite of productivity software applications, Oracle could launch a far broader attack on classic Microsoft strongholds in desktop applications and messaging, especially as these markets move onto the Web.

Far from being a stub business, Sun’s software arm could hold the key to a vast new round of industry competition.

–At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. –

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

Do once-hot Internet start-ups who miss a date with destiny ever truly get a second chance? History says no, even for once-great names like Netscape, AOL and MySpace.

Skype hopes to be the exception. On Tuesday, a group led by top Internet financiers in Silicon Valley and Europe agreed to pay eBay $1.9 billion in cash for a 65 percent stake in the one-time web calling sensation.

The deal values Skype at a face-saving $2.75 billion, well above the $1.7 billion at which it has been valued on the ecommerce giant’s books. Ebay also stands to keep a 35 per cent stake in the company.

But that overlooks the humiliating $1.4 billion eBay has written off on the original deal. Four years ago, eBay promised to pay up to $4.3 billion for Skype, but it later scaled back the total payout. All told, it makes Skype one of the biggest value destroyers of any Internet merger since the last days of the dot.com era.

EBay’s justification for the Skype deal in 2005 was how its chat and calling services could serve as an online customer service platform connecting consumers directly into eBay merchants. That never happened.

Instead, product innovation slowed and business setbacks, such as a corporate ban on Skype’s network-hogging software inside companies, were allowed to fester, rather than becoming new business opportunities.

Pressure to justify the inflated acquisition price by wringing merger synergies out of the deal also proved a distraction. Into the void stepped newer Internet phenomena such as YouTube, Facebook and Twitter, all of which Skype might have displaced.

To be sure, 15 million users sign on every day to Skype for Web-based chats, phone conversations or video phone calls. Skype has registered nearly 500 million users worldwide since its founding in 2002.

Financially, it is still growing at levels that Web companies like Twitter can only dream about. Revenues of $551 million last year look on track to rise to $700 million in 2009, and the company has a goal of hitting $1 billion within two years. It has been profitable for several years, though Skype will not say by how much.

Yet it will take more than this to justify the valuation put on it by its new owners that says Skype is worth more than four times expected 2009 revenue. This looks difficult as long as its primary business remains undercutting established telephone companies on international calls when those rates are rapidly heading towards zero.

The reality is that — outside of deals with renegade mobile operator 3 — Skype is considered a pariah by most of the world’s telephone operators. They hate how Skype’s free, or nearly free, calling services undercut prices for their own calling plans.

Despite these hurdles, Skype must find its way into the center of the growing convergence between phones and computers. To succeed, it must mount a challenge to the new communication market leaders — Apple and Google, and even companies such as Twitter.

Only then will Skype be able to claim it has defied the odds and become the company to beat once again.

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

The fate of Yahoo Inc has become intertwined in the public’s imagination with the success or failure of its dealings with Microsoft Corp in recent years.

That’s despite the fact that as much as 70 percent of the value investors put on Yahoo’s depressed shares are tied up in its international assets or cash holdings — factors that have nothing to do with Microsoft.

Yahoo’s operations trade for just $5 to $6 per share out of its current $15 share price, once you exclude its Asian investments and the value of its cash. Its hidden assets in Japan and Chinese affiliates — Yahoo Japan Corp and China’s Alibaba Group — alone are worth around $6 to $7 per share.

The trouble is that Yahoo needs to find a way to cash out of its increasingly rocky relationship with Alibaba Group, in which it holds a 39 percent stake after it pulled back from operating its own business in China in 2005.

Yahoo’s best chance here may come next year if Alibaba succeeds with a second IPO of its Taobao.com consumer ecommerce site, building on the success of the 2007 IPO of Alibaba.com, now valued at more than US$13 billion on the Hong Kong exchange.

Truth be told, Yahoo’s huge success in building the biggest U.S. Internet media destination never translated very well overseas, despite the early foray into Asia that left it with lucrative assets in Japan and China. These passive investments came to substitute for a global operating strategy.

But that’s changing now, as Yahoo once again has begun investing in international operations it can fully control.

In its latest such push, Yahoo said on Tuesday that it would buy Maktoob.com, the largest Internet media site for the Arab world, with an estimated 16.5 million users. Terms were not disclosed.

Yahoo’s international stronghold is Asia, where it had 172 million unique users in the month of June, according to industry estimates. It is the top player in Japan through its stake in Softbank-controlled Yahoo Japan, and is dominant in Taiwan and Hong Kong as well.

In India, Yahoo has the most visited home page and is the most popular provider of e-mail, instant messaging and online news to consumers. In a country mad on the sport, Yahoo operates the most popular site for cricket fans. Yahoo had 23 million unique monthly users in India in June, according to market researcher comScore.

But Yahoo stock gets little to no stock market credit for these international operations. Converting market share into meaningful financial results will take years. First, Yahoo must develop its patchwork of leading properties in places like the Philippines and Vietnam and Latin America into a global franchise. And it’s hard to see how Yahoo can regain lost ground in Europe’s more developed Internet markets.

Until now, the trap for Yahoo has been that much of its international value remains latent, locked up in investments in Japan and China rather than in operating businesses it controls. That is changing, slowly.

This leaves Yahoo at the mercy of an eventual rebound in U.S. advertising markets. For the foreseeable future, any significant rebound in Yahoo’s share price depends on conjecture over the still unknown potential of getting into bed with Microsoft.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article, with the exception of a token Yahoo share. He may be an owner indirectly as an investor in a fund. –

– Eric Auchard is a Reuters columnist. The opinions expressed are his own —

The stock price seems to be the only thing growing at Hewlett-Packard, the world’s largest computer company. HP shares have risen 75 percent this year, despite few signs of a revival in technology spending.

The company, best known as a supplier of computer printers, has suffered a 19 percent drop in sales of hardware and ink supplies. In good times, this produced the bulk of HP’s profits, but it’s the financial engineering under Mark Hurd, the company’s chairman and chief executive, that seems to be the main driver now.

So far, he has cut 16,000 of the planned 25,000 redundancies. It has taken roughly $3 billion in restructuring charges. This has masked underlying sales and profit weakness in its personal and corporate computer divisions.

Excluding the impact of the acquisition of computer services company EDS nearly a year ago, the company’s remaining businesses declined nearly 20 percent during the fiscal third quarter ending in July.

Hurd remains vague about when the recession may hit bottom.

“We’re encouraged by the stability that we’re beginning to see in the market but not yet at a point that we’re ready to call it a turn,” Hurd told investors on a conference call following HP’s quarterly report.

The benefits from cost-crunching at EDS have kept the company muddling along through 2009. HP reported total revenue for its third quarter ended in July fell 2 percent worldwide, but grew 4 percent, excluding currency effects.

Investors, which have returned HP’s stock to $44 — near pre-financial crisis levels — are now counting on a 2010 rebound to support the stock.

Hurd says U.S. businesses appear to be spending again on new projects and upgrades of aging computer infrastructure. But Europe has yet to show improvement.

Europe, which accounts for nearly 40 percent of the Silicon Valley-based company’s global revenues, declined 12 percent in the latest quarter, hurt by the weaker dollar over the past year. This was partly offset by 8 percent growth in the Americas and strength in China.

“The U.S. is beginning to do refresh work and you’re seeing that show up in the numbers. Things are still not as robust in Europe,” Hurd said.

The company is deferring questions about its longer-term outlook until September, when it holds its annual analyst meeting. Outside of a strong cyclical rebound, HP needs to answer how it plans to grow after it finishes with cost cutting at EDS.

The danger next year could come from any success it shows in signing new, long-term contracts at EDS. That’s because upfront investments needed during the first year of big consulting deals can be steep, with payback only coming later in the life of what are typically five-year contracts.

Half of HP revenues now come from maturing businesses like printers and PCs. No cyclical rebound in these businesses can disguise the need for the company to reinvent itself in new growth markets. Restructuring magic tricks can’t support the stock much further.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. —

– Eric Auchard is a Reuters columnist. The views expressed are his own –

The Chinese government has backed away from mandating filtering software on all personal computers in China, in a move that averts a dangerous escalation in its censorship powers.

But however controversial and unworkable China’s plan to require Internet filters on PCs proved to be, Western firms have largely themselves to blame for creating and selling such filters in the first place.

The danger rears its head whenever technology created to solve some specific security problem is put to new and unintended use, not just in repressive regimes like China, Iran or Saudi Arabia, but professed freedom-loving countries in Europe or the USA.

“What is good and what is evil?” asks Mikko Hypponen, chief research officer at Finnish anti-virus software company F-Secure Corp. “It is really a very basic problem that security people face.”

A computer password cracker in the wrong hands is considered malicious, of course. But corporate network administrators rely on the same tools to recover lost documents when employees forget computer passwords. Voice recognition software used in corporate call centres to automate and improve customer service can be used by police to wiretap suspects on a grand scale.

On Tuesday, China’s official news agency reported that a government ministry had abruptly backed down from requiring that every PC sold in China include a censorship program called “Green Dam-Youth Escort”.

The software blocks web sites using a blacklist of keywords judged to be sexual or politically sensitive, or flesh-coloured images it assumes are naked bodies. But University of Michigan researchers found that the software developed by a Chinese firm had liberally borrowed the code of parental control software CyberSitter from the California-based firm Solid Oak.

Mobile network maker Nokia Siemens Networks was criticized last month after the Iran election protests for supplying “deep packet inspection” technology to mobile phone companies which Iran’s government allegedly used to track online dissidents. The same software for so-called “lawful intercepts” is widely used in phone networks around the world, be it Iran, China or the United States. The main differences are only how far network monitoring goes and to what uses such information is put.

These issues cannot be dismissed merely as unauthorized uses by bad cops in foreign lands. All the world’s biggest technology suppliers play some role in creating security tools that have Janus-like qualities, depending on the intentions of their users.

The dark side of the Internet is not some isolated corner. It is built with the same tools “good guys” use with the best of intentions, without considering their Orwellian surveillance potential. It is just the dual use of networked, interconnected technologies.

Companies such as IBM, Cisco, Intel and Dell are some of the dozens of vendors that market remote data recovery tools to police agencies that can be used to remotely monitor suspects. Once available commercially, it’s only a matter of time before such software is sold or copied for use by authorities in repressive regimes.

Canada’s Absolute Software sells such software for network administrators to track the location and use of all corporate laptops or Blackberries used in their organizations. If a computer is lost or stolen, it can be told to phone the factory every 15 minutes. Absolute then turns over the Internet address of the machine to police to recover the device. In countries with fewer safeguards, such tools can be used to snoop on or prosecute political dissidents.

Hypponen says computers have raised a host of issues that hardly existed in the Cold War era. “Monitoring traditional mail can be done, but takes a lot of manpower,” he says. “E-mail monitoring can be done which takes very little manpower.”

The very openness of the Internet has created a vast market for security tools used for Web filtering, network monitoring and text or video surveillance.

The power of technology to do good needs to be weighed against its powers to do evil. The many positive tasks computers perform for us need to be set against their growing powers as surveillance tools and mechanisms of repression. Just because a technology can be built, doesn’t mean it should be. As consumers, we need to be careful what we wish for in the way of modern conveniences.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. –

(Editing by Martin Langfield)

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

Research in Motion officials do their best not to laugh when asked if they fear the rise of a BlackBerry-killer, some theoretical device that does everything its coveted e-mail phone does, only better.

But BlackBerry’s biggest threat may come from itself. As the company’s latest quarterly results suggest, there is a gulf between its pricey corporate phones and price-sensitive consumer models that are cutting into margins.

When a loyal Research in Motion (RIM) customer such as a corporate IT manager discovers he’s paying more than twice the price at work that his the 16-year-old daughter is paying at retail, he feels ripped off. That in a nutshell is the crisis RIM faces.

Of course, RIM’s crown jewel remain its corporate business. Its franchise there stems from the thousands of company network managers who rely exclusively on RIM’s e-mail management software to ensure corporate communications are securely delivered to their intended recipients. Companies pay a premium for this reliability. Those investments lock customers into BlackBerry services and prevent other competitors from breaking in. However, this is changing.

After years of failures, Microsoft and Nokia now have secure e-mail systems that offer credible alternatives. They give these away to corporate clients, putting longer-term pressure on BlackBerry’s corporate franchise.

The success RIM has achieved in consumer markets has defied all analyst predictions. But consumer success has come dearly in terms of profit margins and falling average selling prices. Eighty percent of its new users in the quarter ended in May were non-enterprise, retail customers rather than mainstay corporate clients. The key difference between corporate and consumer markets is that RIM lacks the customer control over consumers it has had in offices.

Ben Wood, an expert on the worldwide handset market at U.K.-based market research firm CCS Insight, says BlackBerry has made huge inroads with teens and young adults by working with operators to market affordable, prepaid phones.

One secret of the success of the BlackBerry in consumer markets is the familiarity of its standard layout keyboard compared to typical mobile phone alphanumeric keypads, making them great for texting, e-mailing or instant messaging. But, then again, copycats are rampant. U.S. carrier AT&T offers 20 different phones with standard QWERTY-keyboards, not just from RIM, but from Samsung and other makers.

The introduction of touchscreens and other consumer-friendly features have helped propel RIM stock up 89 percent to $76.55 since the start of 2009. But that is only half the story: Its Nasdaq-listed stock remains 42 percent below year-ago levels as the economy has taken its toll and debate over its consumer ambitions has played out.

Results for its first-quarter ended in May showed a 53 percent jump in sales from the year-earlier quarter as net profit rose 24 percent. Rosy-looking year-over-year comparisons disguise a quarterly sales decline, as revenue fell 1 percent from its quarter ended in February.

Gross margins recovered somewhat during the quarter to 44 percent, but are well off lofty levels of 55 percent three years ago and are stuck there. The bigger disappointment was the company’s outlook, which fell short of Wall Street hopes.

The company faces a flood of competitors this year. At the high-end of the market, Apple Inc starts releasing its new model iPhone on Friday. Palm is introducing its comeback phone, the Pre, while a variety of Asian and U.S. phone makers are gearing up to release low-priced Google Android phones.

While making inroads may be hard in corporate markets where BlackBerry is king, for individual consumers, these rival phones boast better Web browsing.

“RIM now has to decide what business it is in,” Wood says.

“Will the consumer business hurt the corporate one?”

The BlackBerry market for kids is calling into question the lucrative corporate franchise RIM has built over the past decade. It’s only a matter of time before the business world questions why it is paying so much and looks to renegotiate. That’s creating an opening for BlackBerry killers to emerge.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.–

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –
Dell Inc’s move into retail sales might seem poorly-timed, discretionary spending being what it is. In fact, the world’s No. 2 personal computer maker looks like it’s making the right choices that can get its long-struggling consumer business rolling again.

Dell is gearing up to feature several refreshed lines of consumer PCs in 30,000 stores around the globe. The company’s consumer retail chief Michael Tatelman has set aggressive growth targets for the business.

These targets come despite predictions by market research firm Gartner Inc that the PC industry this year will suffer a nearly 12 percent decline, its biggest-ever unit sales drop.

But Dell appears to have learned the right lessons from its historic build-to-order approach to making PCs and is well positioned to take advantage of some of the few positive trends at work in a PC industry facing relentless commodity pressure.

Dell’s ambitious retail strategy can be traced to Tatelman’s background as president of Motorola Inc’s mobile handset business. As PCs shrink into handheld devices with built-in mobile connections, there are fewer differences to phones.

And its latest products stand out from other PC boxes by their brightly colored designs from prominent graphic artists. What’s impressive about the new line-up is Dell’s ability to translate the thinness and sleekness of its top-of-the-line Adamo into its more affordable Inspiron notebook line. Dell’s strategy could help it win some fanatical followers and even steal back some of the elusive “cool factor” of Apple Inc’s ultra-thin Macbook.

Turning computers into lifestyle accessories makes sense. Dell looks smart to be acting like a cellphone marketer with hundreds of custom design options rather than a stodgy PC seller living on old glories with only a handful of models to offer.

Dell was widely mocked two years ago when it began to embrace the retail religion, instead of relying solely on direct sales and build-to-order manufacturing that were the basis of its original success. It was said to be having an identity crisis.

Yet the company has engineered a retail strategy that allows it to vastly expand its sales distribution while still allowing PC buyers to customize their own machines, giving Dell an edge in product differentiation over many retail rivals.

The reality of consumer behavior these days is that some like to window shop first in stores then buy online. But others prefer to compare online, then go and “kick the tires” before buying a particular product in a store. Dell is agnostic on how consumers choose to buy. In effect, it’s managed to preserve some of the best aspects of its direct sales model.

In Europe, where Dell’s consumer business has suffered severe market share losses in recent years, Tatelman told me in an interview that he expects to return to near a 10 percent market share. According to IDC, Dell’s market share in the key European countries of Germany, France, Italy and Spain have fallen to the low single-digits. “There is no reason we should not have low double-digit share,” Tatelman said of the four countries, some of Europe’s largest PC markets.

Of course, fixing the consumer business is only one of the problems facing Dell.

Far and away the largest chunk of Dell’s revenue still comes from sales of computers — and related equipment and services — to large corporate customers.

As such, the company remains exposed to the mercies of a weak global economy, tight corporate spending and an over-dependence on PC hardware versus its main rivals, Hewlett-Packard, IBM and Apple. Many analysts believe Dell should consider large-scale deals to expand in services or software.

But at long last the company is fixing what ails its consumer business. With hot products at attractive prices and vastly expanded distribution, Dell looks well positioned for an upcoming Microsoft Windows upgrade cycle late this year. Zippy industrial design can bolster its brand identity and shore up, if not improve, margins.

PC sales, like the economy, are weak. But replacement demand is likely to grow for Dell products that are thinner, lighter, better designed and have longer battery life and built-in mobile broadband connections. This adds up to a credible consumer story for the first time in many years at Dell.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. –

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

Pundits have been talking endlessly about the possible green shoots of recovery in the ravaged world economy.

But early shoots are not always green. They might want to consider the problem of black shoots. These false starts are familiar to lily growers, when a temporary rise in soil temperature occurs after a cold period.

In the technology world, recent signs of restocking have been proclaimed as evidence of green shoots. Investors wanted to be persuaded and this has helped propel global tech indices 50 percent higher in the past three months.

But a collection of many of the world’s largest wholesalers of technology attending the Global Technology Distribution Council’s annual European conference are bracing for tough times rather betting on any early recovery. They are in the black shoots camp, rather than the green one.

These electronics distributors sit between buyers and sellers and are among the best positioned to know whether inventory from computer chips to phones to PCs are moving.

Far from seeing inventory restocking, they are planning ahead for years of slack growth, tight technology budgets and higher credit risks from customers.

The industry handles an estimated $300 billion worth of technology products and another $50 billion in electronic components, or more than a quarter of the $1.2 trillion of such goods shipped each year, according to Goldman Sachs.

As middlemen, they have played a decisive role in keeping inventory levels tight, averting the glut of unsold products that have occurred in all prior tech downturns.

At the London meeting, CEOs of the world’s biggest distributors said the supply chain was moving again after nearly grinding to a halt earlier this year, but cautioned that this may just be a statistical bounce after the steep plunge late last year. Sales by U.S. distributors fell 43 percent between June 2008 and April of this year, according to data cited by the trade group Global Technology Distribution Council.

What technology sales data suggests so far this year is the end of the destocking phase and the return of production and some sales activity. But at far lower levels than a year ago. Many of the promising restocking anecdotes confuse normal seasonal patterns with actual underlying growth in demand, top distributors say.

“I fundamentally do not believe restocking is going on,” says Roy Vallee, CEO of components distributor Avnet , which posted nearly $18 billion in sales last year. He sells billions of tiny parts that get crammed onto printed circuit boards and end up in finished electronics.

“Outside of China’s indigenous demand, which is being driven by their stimulus package, where else is demand actually up?” Vallee told me in an interview. “It’s certainly not here (Europe), not the U.S, not Japan, so what we have is not restocking. It is a supply chain ordering again but ordering at a lower level than six months ago,” he said.

Greg Spierkel, chief executive of Ingram Micro , which with sales of $34 billion last year is the world’s biggest hi-tech distributor, says the world is only slowly coming to grips with lower longer-term growth rates. He’s not looking for technology spending growth rates of recent years to recover until 2011 or 2012.

To bolster sales, vendors that distribute through the Ingram Micros and Avnets of the world have increased the amount of financing they make available to technology buyers. Despite the availability of such working capital, Spierkel says customers are reluctant to take on new debt. There is also a significant increase in credit risk from customers downstream.

These distributors are adapting for an era of lower sales volumes by cutting staff and overhead costs themselves. No one here is talking about green shoots, only how to help customers eek out more savings on the costs of procurement.

The technology industry is not alone in its exuberance for green shoots thinking. However, as it is considered a leading indicator for for many parts of the economy, the evidence of black shoots, of false starts to a wider economic recovery, calls into question green sightings elsewhere.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. –

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

Apple Inc is taking steps to make its computers run on corporate networks, but these moves fall far short of ensuring Mac users win equal standing in business.

Full corporate access for Apple computers inside businesses remains years away. If and when it comes, acceptance is more than likely to be the result of broad trends reshaping the office computer market, rather than Apple’s own product genius.

This week, the reigning consumer king of computers, music players and smartphones showed off a new operating system, dubbed Snow Leopard, with a handful of tantalizing features built for business.

The new software, due out later this year, will connect Macs to Outlook e-mail systems running Microsoft Exchange — the way that most office workers manage their e-mail, calendars and contacts.

In doing so, Apple is addressing a key issue in the classic Mac vs PC debate over whether its machines are practical for office tasks.

Of course, multimedia-rich Macs already predominate among graphic artists and many Web software designers. And Apple computers are popular with small and medium-sized businesses with skeletal technical staffs.

However, in large organizations, personal computers running Microsoft Windows software remain, by and large, the only option. This is primarily due to cost: Business PCs are half the cost of any Apple machines.

Any notion that Apple can dance its way into offices ignores the fact that corporate technology adoption is not a matter of individual choice but under the rather rigid control of technical administrators. This power extends not just to networks or computers but down to the programs staff use or even what Web sites they see.

Macs, which provide great consumer security protections, lack essential features corporations demand. Nothing Apple has said suggests the company is going to address these vulnerabilities soon.

Beyond the cost of the machine, the network tools for managing complex combinations of servers, desktops and notebooks and storage devices often are kept track of using technologies such as Microsoft’s Active Directory. In hundreds of unseen ways, Apple Macs remain a far cry from standard corporate issue.

But there are other factors that may work in Apple’s favor. Office workers increasingly spend more of their time working on the Web searching for information, checking e-mail, ordering products, watching corporate training videos or listening to Webcasts. Instead of using standard desktop applications, this activity all happens inside browsers and is delivered via network servers rather than being powered by local machines.

Apple machines, with easy-to-use software, slick audio and video features and simple wireless access, have many advantages in this emerging way of working.

Another technology known as visualization gives corporate managers the ability to treat every contact that computers have with their networks as discrete events that can be far more precisely managed. It matters less and less what brand of notebook, Blackberry or other computer device is connecting.

Many companies are moving to a model where they no longer expect only company-purchased devices on their networks. There are too many different work roles requiring too many devices to keep up with it all.

Instead, using a mix of software security techniques, they can grant employees specific access to their office network data from a range of locations and devices, in the office, on the road and at home.

There is growing acceptance that office employees may be working on their own computers, from home or wherever else they may be. This is in part because companies want to save money on providing PCs. It is another potential opening for Apple.

Twenty years after Apple largely conceded the business computing market to Microsoft Windows and PCs, Apple is making tentative steps to once again win acceptance for its machines in corporate offices. Whether or not Mac users win equal footing in business will depend less on Apple’s own initiatives than on management choices that companies are already making.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. –

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

Microsoft Corp’s new Web search service Bing is a far cry from the general-purpose tool the company must build or buy to compete effectively with rival Google Inc.

Microsoft would do far better helping users find the emails, documents and Web pages that users of Outlook, Office and Internet Explorer rely on every day.

But competitive restrictions appear to prevent the desktop software giant from doing what it knows best. Microsoft operates its business under oversight from U.S. regulators after it settled antitrust charges in 2002 that it abused its market dominance in personal computer operating systems.

Barring that, Microsoft needs to come to terms with Yahoo over Web search. A deal has eluded them for 16 months but Yahoo remains Microsoft’s best chance for competing with Google on the consumer Internet.

Microsoft offered to pay up to $47.5 billion for Yahoo early last year but was rebuffed by Yahoo’s former leadership. They have been in talks in recent months but no deal has emerged.

Rather than trying to be all things to all people, Microsoft’s latest reboot of its Internet strategy helps consumer dig deeply and find what they are after quicker, but only in a selected set of categories.
Type in the name of an automobile and Bing assumes the user is thinking about buying or repairing a car. For example, the left frame of the search results page for “hyundai sonata” links to reviews, repairs, used cars, dealers, videos, images and reference manuals. A search for “diabetes” turns up health-related categories.

Many of the features Bing incorporates have been tried by smaller Web search providers and failed to make a dent in Google’s share of the audience for Web search: Ask.com or specialist sites like Spock.com for people search or StumbleUpon for videos, to name a few.

Microsoft needed to restart its search strategy somewhere, and had to focus. Offering a search service that works well in some categories, not others, is no option.

Changing consumer habits is hard enough when you are competing with Google, the generic verb for Web search. No one is going to switch willingly from Google unless Microsoft can demonstrate clear improvements in how Bing works.

The demonstration a Microsoft executive gave me showed Bing can help Web users make decisions quicker by anticipating what kind of information they are searching for when they look for travel terms or autos, sports, health, retail or event names. The service goes lives for U.S. users starting on June 1.

It offers a great way to comparison shop for airline tickets that I’ll certainly use when I travel. Many of the improvements Bing offers are designed to help Web shoppers. That’s a lucrative area that will help Microsoft sell advertising, but is only one of the reasons that people use Web search tools.

Microsoft needs to make headway on the consumer Internet because its ability to expand in areas it already dominates is subject to regulatory challenges from competitors small and large that stand in its way.

It is not voguish to say so in hip technology circles — I may lose some Twitter fans here — but resurrecting competition in the desktop computer market has resulted in unfortunate consequences for consumers.

In dozens of little ways, Microsoft seems reluctant or prevented from adopting widely accepted technologies that make the Web easier to use elsewhere.

In recent years, Microsoft has acquired a string of companies that can help it improve search for business users. Chief Executive Steve Ballmer he’s prepared to take years and invest billions to make headway in the consumer Internet market.

What Microsoft has shown with its initial release of Bing is that it needs Yahoo search more than ever.

– Eric Auchard does not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. –