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Steve Ballmer, chief executive of Microsoft, warned at the weekend that "rough" business conditions in Europe were likely to weigh on the technology industry for the foreseeable future. His comments follow signs from other big US technology companies in recent days that Europe has become one of the weakest markets for IT products and services, adding to the industry's broader problems. Mr Ballmer, who arrived in Europe for his biannual visit, said troubles facing the telecoms and financial services industries in Europe, which are particularly big technology buyers, will continue to burden the struggling IT industry.

It's been just six months since Microsoft Corp. MSFT.O launched its video game console Xbox in Europe and there is already mounting pressure on the U.S. software giant to score a big Christmas. The Xbox needs to end its first year with a flourish. If it doesn't, industry observers say, its prospects for turning a profit will be pushed back a few years, triggering some deep soul-searching at Microsoft headquarters in Redmond, Wash.

"If Microsoft has a disastrous Christmas, particularly in important markets like the UK and the U.S., then somebody in Redmond is bound to say, 'Wait a minute guys. This doesn't look good," said Toby Scott, editor of video game trade publication 'Games Analyst.'

Microsoft Corp.'s top two executives received 13 percent raises in the past year, with Chairman Bill Gates and Chief Executive Steve Ballmer each earning $753,310 in salary and bonuses, the company has disclosed. Gates, who owns 11.6 percent of the company, and Ballmer each got a base salary of $547,500 and a bonus of $205,810 in fiscal 2002, according to a filing Thursday with the Securities and Exchange Commission. Ballmer owns 4.4 percent of Microsoft. But they weren't the highest-paid executives at the company. James Allchin, the platforms group vice president, earned $495,195 in salary and a $400,000 bonus -- the most of any executive still working at Microsoft.

Five hundred thousand dollars "for an organization like this is nothing," Fong said. But Gates and Ballmer aren't living for their paychecks, he said. "You don't find many execs 20 years after an (initial public offering) of a company still so heavily involved. They're not working for the cash anymore."

Microsoft has acquired British game developer Rare, a Nintendo executive confirmed Friday. Nintendo said in a statement that it has sold its 49 percent interest in Rare--developer of games based on popular Nintendo franchises such as Donkey Kong--but declined to name the buyer or price. But Peter MacDougall, executive vice president at Nintendo of America, confirmed to CNET News.com that the sale was part of Rare's acquisition by Microsoft, which now owns Nintendo's 49 percent stake and Rare's majority share. "The entire company has been sold to Microsoft," he said.

Microsoft's Dan'l Lewin, corporate vice president for .Net business development, touted the company's .Net platform for development of Web services, stressing its interoperability while criticizing the rival Java platform. Presenting a keynote address at InfoWorld's Next-Generation Web Services II: The Applications conference here, Lewin stressed that .Net is a key component of how Microsoft is addressing Web services standards and that Microsoft's development stack will interoperate with the rival J2EE (Java 2 Enterprise Edition) stack. .Net supports multiple programming languages, unlike the Java platform, which uses only the Java language, Lewin said. This, he said, presents Sun with a proprietary advantage. "In the .Net strategy, you program in any language you want," said Lewin.

Hewlett-Packard plans to discontinue a mini-notebook from its Compaq Evo line in favor of the company's upcoming tablet PC design for businesses. The company will replace its lightweight Evo Notebook N200 with its upcoming Evo tablet PC, a portable computer based on Microsoft's Tablet PC software. HP plans to introduce several new Evo models over the next few months.

Tablet PCs, actively touted by Microsoft as the next wave in portable computing, are small computers that can be "written" on, just as pad of paper, with a pen-like stylus. The Evo tablet PC will be roughly the same size and weight as Evo Notebook N200, a notebook that weighs 2.5 pounds and sells for about $1,500.

Three recent surveys put Apple Computer's worldwide market share at well under 3 percent, leading analysts to once again ponder the fate of the Cupertino company. How bad is it? Giga Information Group says that Apple has hit a new low of just 2.6 percent market share, but RedSheriff says the figure is 2.2 percent, while OneStat.com says 1.43 percent. These figures have all come in the days since Apple launched its "Switcher" ad campaign, in which real users expound on the alleged simplicity and superiority of the Mac over Windows. But Apple has yet to deliver any figures on Windows switchers, beyond the number of users who visited the Web site, suggesting that the campaign hasn't done much to drive people to the Mac. "Think Different" might have been grammatically challenged, but at least it was cool.

Apple on Friday said Larry Ellison, the chairman and chief executive of Oracle, is resigning as an Apple director, reducing the board to five directors. Ellison, a longtime friend of Apple Chief Executive Steve Jobs, joined the board five years in a reshuffling of directors after Jobs returned to take control of the company he co-founded in the 1970s. "My schedule does not currently allow me to attend enough of the formal board meetings to warrant a role as a director," Ellison said in a statement. "I will continue to offer my advice to Steve and the executive management team at Apple."

U.S. software giant Microsoft said Friday that it will launch an online game service for its Xbox video game machine in Japan in mid-January, firing up competition with its Japanese rivals. "Our goal is to make Xbox the most popular platform to play online games," said Hirohisa Ohura, Microsoft Japan's managing director in charge of Xbox operations. "We believe the service will likely encourage people to buy Xbox."

Microsoft also unveiled five new software titles at the Tokyo Game Show, which kicked off Friday and showcased 18 games, including two online games for Xbox Live. The Japan launch, which was slightly later than expected, will follow the planned debut of the Xbox Live online game service in the United States on Nov. 15, the Xbox game console's first anniversary.

A Linux worm that started spreading a week ago has reached a plateau after infecting about 7,000 servers and turning the hosts into a peer-to-peer network that could be used to attack other computers. Known as Linux.Slapper.Worm, Slapper and Apache/mod_ssl, the worm's spread has fallen far short of the biggest attackers in recent times. For example, Code Red infected 400,000 servers last summer. And according to the "National Strategy to Secure Cyberspace," the Nimda virus compromised 86,000 systems last fall.