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Microsoft has decided to support one of two competing formats for popular DVD recording technology, a decision that is intended to make the storage devices as easy to use as current CD burners and floppy drives. At its annual Windows Hardware Engineering Conference (WinHEC), Microsoft plans to demonstrate software and to provide technical documentation for incorporating the DVD+RW format into its Windows operating system, according to a Microsoft Web site detailing the schedule for the conference.

Microsoft, IBM and VeriSign have teamed to create security specifications for Web services, a move analysts say will help drive adoption of the hyped but still emerging technology. The three companies on Thursday will release a new specification, called WS-Security, which will encrypt information and ensure that the data being passed between companies remain confidential. The companies, which are announcing the new security initiative at Microsoft's Tech Ed developer conference, also plan to build five more security specifications in the next 12 to 18 months that will provide additional security measures that businesses may need for Web services.

Microsoft Corp set up on Thursday its second and biggest China software joint venture, a $4 million software services company, and said it aims to build up an industry that buys its core products.

"We're looking at opportunities working with the local government and local partners, not only in software," Tang Jun, president of Microsoft China, told reporters after a news conference. "We're reviewing several proposals already," he said, adding he expected a couple of deals to be signed over the next year.

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A new survey has found that Intel-based servers running Windows 2000 and trusted with key back-office applications are significantly cheaper than Unix servers. The cost of running back-office servers on Windows and Intel technology is around half that of Unix servers, a new report has found. According to the survey of US medium and large sized enterprises, over a three-year ownership period, companies can expect to see 46 per cent lower costs associated with acquiring, maintaining and running a Windows 2000 server over a Unix/Risc machine.

According to the survey, buying an Intel based server running Windows 2000 costs around $1.3m less than its Unix equivalent. Companies surveyed showed the average cost advantage across a mix of two-way and four-way servers to be 58 per cent in favour of the Windows machines.

Nine states pursuing the antitrust case against Microsoft Corp. suffered a setback in court on Wednesday when the judge rejected a request to freely introduce transcripts and video of interviews with 18 Microsoft officials, including Chairman Bill Gates. U.S. District Judge Colleen Kollar-Kotelly said the nine states seeking stiff sanctions against Microsoft should have made their request earlier under a timetable she issued before the hearings began.

"Before the trial started, something should have been said," said Kollar-Kotelly, who is weighing what remedies should apply against Microsoft for illegally maintaining its Windows monopoly in personal computer operating systems.

Microsoft announced new software tools Wednesday in hopes of persuading developers to build Web services using its .Net technology. At Microsoft's Tech-Ed developer conference in New Orleans, La., Microsoft Senior Vice President Eric Rudder said the company's .Net Web services software strategy is starting to take hold. But he also said the software industry needs to do more work on Web services security, reliability and compatibility.

Rudder said Microsoft has shipped more than one million copies of Visual Studio.Net, Microsoft's new suite of software tools for building Web services that was released in February. He said the company has also attracted more than 200 software companies to build tools and software components for .Net.

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Microsoft has been trying to prove it deserves a place in the enterprise data center for years. These days, Microsoft has solid technology, programs and partnerships that earn Microsoft at least a foot in the door in the glass house. From its Windows Datacenter Server operating system and Windows Datacenter Program, to scalability improvements in SQL Server, to partnerships with fault-tolerant hardware vendors, to 64-bit systems, the Windows approach is gaining credibility. But the word Microsoft still raises the hackles on many a data-center manager's neck. In this series of stories we'll look at whether Microsoft is ready for this space.

As Microsoft's antitrust imbroglio drags on, the company is sitting on a cash reserve of $38 billion, something that makes large acquisitions almost inevitable, Stamford, Conn.-based Gartner said in a report released Wednesday.

"Now that it appears Microsoft will come through the case somewhat unscathed, it will find a way to invest this cash through key acquisitions," said Gartner research director Tom Bittman. "In the next quarter, I wouldn't be surprised to see (Microsoft's war chest) climb to $40 billion," Bittman said. "They need a way to invest that, either by hiring people or (making) acquisitions. We've also speculated they might pay a dividend on the stock."

Microsoft has bought more than 60 companies in the past 10 years, but its acquisitions have tapered off during the antitrust proceedings, a sensible move considering the company could have been split in two. Now that most legal threats are gone, Gartner said, Microsoft will likely snap up companies in the professional services, workload management and media industries.

Gartner Inc. analysts believe that large acquisitions by Microsoft Corp. are "almost inevitable" as a result of the computer giant's $38 billion cash reserve. In a press release Wednesday, Gartner said it expects Microsoft to make major purchases in professional services, workload management and media after antitrust proceedings slowed Microsoft 's purchase activity in recent years. Microsoft 's last major purchase was in December 2000 , when the company agreed to buy Great Plains Software Inc. for about $1.1 billion.

"Holding off on acquisitions was cautious and sensible, and maintaining significant cash on hand was a wise insurance policy in the unlikely event Microsoft had been forced to split into two or more companies," said Tom Bittman, vice president and research director for Gartner, in Wednesday's release. "Now that it appears Microsoft will come through the case somewhat unscathed, it will find a way to invest this cash through key acquisitions."

Microsoft has suspended legal action against Russian and Ukrainian Internet cafes and computer clubs for five months to encourage them to switch from pirated software to legally licensed programs.

"We will not ask the authorities to conduct checks ... and we don't intend to bring criminal charges" even if authorities find evidence of copyright violations, Yevgeny Danilov, head of Microsoft's strategic projects in Russia, said Monday. The suspension will last until Aug. 31.