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Microsoft Monday made a dramatic change in its Active Directory strategy, saying it will ship a stand-alone version of the software separated from the operating system that finally delivers on its promise to create a Web-based directory. At the Burton Group's Catalyst conference the company laid out a roadmap for Active Directory's future, including a version called Application Mode, a pure Lightweight Directory Access Protocol-based directory to support Web applications. The company also said convergence of its directory and database is inevitable as it tries to create a universal data store, and that it will ship Microsoft Metadirectory Services (MMS) 3.0 early next year as the first step in that convergence.

The emergence of Linux as a serious competitor to Windows has forced Microsoft to change the way it approaches customers, according to Microsoft chief executive Steve Ballmer. At Monday's closing keynote speech to Fusion 2002, the company's annual symposium for its partners, Ballmer said that because of Linux, Microsoft is "going through a whole new world of thinking." Instead of a straightforward sales pitch touting more features, better ease-of-use and a lower price, Ballmer said, Microsoft has now been forced to focus on the concept of total cost of ownership (TCO). "We're actually having to learn how to say we may have a higher price on this one but look at the additional value. Look at how the value actually leads to lower total cost of ownership despite the fact that our price may be higher," Ballmer said.

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In June 2002, Microsoft CEO Steve Ballmer outlined Microsoft's mission and values to reflect the evolution of Microsoft's business and its focus on customers.

The tenets central to accomplishing our mission include:
Great People with Great Values
Delivering on our mission requires great people who are bright, creative and energetic, and who share the following values: Integrity and honesty

• Passion for customers, partners, and technology
• Open and respectful with others and dedicated to making them better
• Willingness to take on big challenges and see them through
• Self critical, questioning and committed to personal excellence and self improvement
• Accountable for commitments, results, and quality to customers, shareholders, partners and employees

In its never-ending campaign for Internet dominance, Microsoft showed off a test version of its latest online service to take on industry rivals America Online and Yahoo. Called MSN 8.0, the service packages Internet access with an enhanced Web browser that integrates elements of Microsoft's desktop software with its other Web services. The service, targeted at people accessing the Internet from home, is the latest incarnation of Microsoft's often circuitous quest to win over AOL subscribers. MSN 8 essentially weaves elements from its desktop software products, such as its e-mail software Outlook and its Internet Explorer browser, into its Web services. Other additions include controls for parents to monitor or restrict their children's Internet activity and stronger junk e-mail filters.

Leading sewing machine manufacturer Bernina on Tuesday announced it is making the first sewing and embroidery machine to be powered by Windows CE, Microsoft's operating system for non-PC devices. The Artista 200E will come with a modem connection to allow downloading of designs from the Internet; support for USB; PCMCIA and CD-ROM input for adding new software and design documents; and a large video screen for viewing tutorials and help documents. "The Artista 200E is the first authentic sewing computer," said Martin Favre, president of Bernina of America. Pricing and availability will be announced later.

Microsoft is putting the finishing touches on the third collection of Windows 2000 bug fixes, which is nearly ready for release after a protracted period of testing, sources said. The update, Windows 2000 Service Pack 3, contains vital security updates and hundreds of fixes to bugs plaguing the operating system that Microsoft released in February 2000. Service Pack 3 could be important for many businesses, as not all of the included security fixes are available as separate downloads. Windows 2000 Service Pack 3, Microsoft is expected to make many changes that could improve the overall of security of the operating system. Microsoft started taking Windows 2000 security more seriously in January, after Chairman Bill Gates distributed a company-wide e-mail about putting security ahead of adding new features to products. Soon after, Microsoft issued a package of cumulative security fixes.

Unisys Corp. added two new lines to its ES7000 server series Tuesday, the Orion and the Aries, which run Intel Corp.'s new 64-bit Itanium 2 processor. The company will try to dent the Unix-controlled high-end server market and convince companies to consolidate their server rooms with the new machines. The ES7000 Aries 130 and the ES7000 Orion 130 will come with either 900MHz and 1GHz Itanium 2 processors, and up to 64G bytes of memory. Users can also choose the ES7000 Aries 230 or ES7000 Orion 230 with Intel's Xeon MP processors, at either 1.4GHz or 1.6GHz.

Computers featuring Microsoft Corp.'s Windows operating system and Intel's processors dominate the desktop and low-end server markets, said Mark Feverston, vice president of enterprise server marketing at Unisys. However, RISC (Reduced Instruction Set Computing) chips running flavors of the Unix operating system from Sun Microsystems Inc. and IBM Corp. have long controlled the high end of the server market, where the more lucrative installations lie, he said.

Microsoft announced Tuesday that its upcoming digital media interface, code-named Freestyle, would ship as a new Windows XP version called Windows XP Media Center Edition (XP MCE) later this year. XP MCE is designed for a new generation of Media Center PCs that will be used by digital media enthusiasts, teen-agers, college students, and families that wish to use the PC as the center for home entertainment. Samsung and Hewlett-Packard will ship Media Center PCs in late 2002, with NEC launching a Japanese model in early 2003.

XP MCE is a superset of Windows XP Professional Edition that includes a new Media Center application which can be used to watch TV and digitally record TV shows, listen to music, view and organize photos, watch digital videos, and watch DVD movies.

Microsoft on Tuesday gave an official name to an upcoming version of Windows XP that aims to make the PC a permanent part of the home entertainment center. Originally code-named Freestyle, this entertainment version of Windows--which will go by the name Windows XP Media Center Edition--will appear on new PCs and PC hybrids in time for the holidays, the company revealed on Tuesday. With Windows Media Center, consumers will be able to use a TV remote control to catalogue songs, videos and pictures, as well as check TV listings.

Windows Media Center brings the number of XP versions to five. The others are: Windows XP Home for standard consumer PCs, Windows XP Professional for business, Windows XP Tablet PC for tablets and notebooks and the embedded version for devices. Earlier this year, Chairman Bill Gates said that selling customized versions of Windows, as requested by nine states pursuing the antitrust case against Microsoft, would confuse customers.

The company ceased the install-on-demand feature Wednesday, 30 days after the company told Sun it would reinstate Java in Windows XP through the forthcoming Service Pack 1 but remove it altogether in 2004. Microsoft said the option was removed to take an issue off the table in legal actions with Java inventor Sun Microsystems.

Under a 2001 settlement 1997 lawsuits between Sun and Microsoft, Sun granted Microsoft a license to distribute Java with existing products, but under an antitrust suit this year, Sun argued Microsoft didn't have the right to distribute the software on line. Microsoft disagrees, but decided to remove the Java download so it wouldn't be an issue, despite the inconvenience it may cause customers, said Jim Cullinan, Microsoft's lead product manager for Windows.