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Larry offers his take on the battles among Comcast, Verizon and AT&T to win over each others’ customers. With three major players, they can compete and divide up the spoils amongst themselves…like the oil companies.

On this week’s EIC Squared podcast ZDNet’s Larry Dignan and I discuss Dell’s ambitions to get into the crowded music player industry, Microsoft’s interesting focus group with Vista and how the broadband wars are shaking out.

Dell might make another attempt at bringing a music player to market. With DRM unraveling, Dell doesn’t need to beat iTunes, just offer a relatively cool and cost effective listening device that accesses multiple music services via Wi-Fi. Microsoft has a perception problem with it comes to Vista. That is well known, but it may not be because the operating system is lacking. Microsoft conducted focus groups for an operating system called Mojave (which was really Vista) for non-Vista users. Turns out the focus group overwhelmingly liked Mojave, which makes you wonder what caused Vista to have so many detractors at its inception in the market.

In January, the company’s former CEO got hit with a long jail sentence for criminal misconduct. Now it’s going to cost a cool $160 million for Brocade Communications to settle a federal securities class action lawsuit tied to the company’s stock option backdating practices.

Correction: The dollar figure in the headline has been changed to accurately reflect the story.

In a press release issued Monday afternoon, the company said it had recorded a pretax expense of $160 million related to the settlement of the charges against the company and certain former executives and officers.

Securities regulators and plaintiffs’ lawyers say the practice was widespread in Silicon Valley after the dot-com bust. Some companies, they charged, improperly changed the strike price retroactively to dates when their stock was trading at a lower price. So it was that in 2006, the U.S. Securities and Exchange Commission charged Brocade’s former Chief Executive Officer, Gregory Reyes, with backdating stock options for the purpose of hiring new employees and improperly expensing the option grants.

In January, Reyes was sentenced to 21 months in federal prison. A federal court also found that Brocade was financially liable for Reyes’ conduct.

Stock option backdating is not necessarily illegal. Yet allegations of wrongdoing have involved dozens of companies in Silicon Valley in the last couple of years. With a stock option, the recipient has the right to purchase a share in a company’s stock at a price called the strike price. The strike price is the value of the stock on a certain date.

The SEC also looked into the stock backdating practices of CNET Networks, publisher of CNET News.com. The company subsequently restated over $105 million in expenses and three top officials resigned, including CEO Shelby Bonnie. The government ended its investigation in September 2007 without recommending any enforcement action.

Brocade’s statement said the settlement was in the best interest of its shareholders and the company “as it significantly reduces the uncertainty associated with this ongoing litigation.”

From a public relations perspective, this hasn’t been an auspicious year for Brocade Communications.

No matter. the venture world remains fascinated. Last summer, Twitter raised approximately $5 million.

Tweet and ye shall have.

A source familiar with the negotiations tells me that Twitter signed a term sheet for “either $15 million or $20 million” last week. We’re still trying to find out who is in, but the word is that it’s largely an inside round of funding with one outsider setting the price.

“There’s a lot of interest in the company,” says my guy, who is still scratching his head about future business models for Twitter. “It’s yet another one of these audience growth stories without any understanding of how they’ll turn into a business.”

On Friday, Valleywag reported that the company was trying to raise a third round of venture funding.

Finally, a note to IBM CEO Sam Palmisano: Cut all event budgets by 25 percent. Smash Mouth was fun and I wished my sons were with me, but the crowd of 50-year-old techies was headed to the exits after a few songs with fingers in their ears. Forrest Sawyer was an interesting choice as behind-the-scenes moderator but he really added no value. I’m pretty sure IBM could cut unnecessary fluff like this without impacting the substance at all.

Data continues to explode. All of this smart technology is spitting out a ton of data and there’s no end in sight. In spite of the recession, many customers complained that their biggest problems were either finding space for new storage devices or keeping up with storage operations. Clearly we need more automation in this area. IBM seems to be doubling down on storage hardware, software, and services to capitalize on this insatiable storage appetite.

IBM’s “Smart Planet” initiative previews the future. Within the next few years, all kinds of stuff will be instrumented with RFIDs, IP addresses, and bountiful cheap processing power all connected by wired and wireless broadband networks. Organizations that capitalize on this infrastructure will successfully collect, analyze, and make decisions on this overwhelming global intelligence. Even in tough economic times, IBM is reminding business folks that they better be prepared for this inevitability.

In between the Michael Phelps’ no-show incident, Smash Mouth, and celebrity talking-head Forrest Sawyer, IBM’s Pulse event in Las Vegas was a good microcosm of the state of IT today and where it is going. Here are a few of my takeaways:

Cloud computing is confusing–and profitable. I must have heard 50 questions about the definition of cloud computing which should tell every marketing manager in the tech industry to tighten up their messaging. In spite of this confusion however, IBM seems to be doing quite well in areas like managed backup, desktop, and security services.

IBM’s industry focus should help it weather the storm. IBM announced service management solutions for six industries including banking, utilities, and communications. These offerings should be especially attractive in emerging markets building massive new infrastructure.

Security is baked into everything. IBM deserves credit for recognizing that big honkin’ global “smart planet” applications could open up a ton of new security threats. I just hope that its customers get this message.

Music blog Idolator will be sold to Buzznet, the pop culture social-media site that has been snapping up content creators like Stereogum; editor Maura Johnston will stay at the helm. The deal, per Silicon Alley Insider, was reportedly completed over the weekend.

New York blog czar Nick Denton, founder and publisher of Gawker Media, is selling three of the new-media company’s properties: Idolator, Gridskipper, and Wonkette.

The snappy political gossip blog Wonkette, with Cox at the helm, famously outed the “Washingtonienne,” an anonymous D.C. sex blogger who dished a little too much dirt about political heavy-hitters. Now it’ll be run by current editor Ken Layne as part of the Blogads network, which encompasses a number of other political titles like DailyKos.

But Denton acknowledged that economic conditions are tightening the company’s belt. In the middle of 2006 “we declared we were ‘hunkering down,” he wrote. “We’ve been waiting for the Internet bubble to burst. No, really, this time. And, even if not, better safe than sorry; and better too early than too late.”

Gridskipper, an urban travel blog, will become part of Curbed, the blog network run by former Gawker Media editor Lockhart Steele (and in which Gawker Media has invested).

When asked via instant message to comment on prices, Denton replied with “Nope!”

Gawker Media has had plenty of successes, like the gadget blog phenomenon Gizmodo and feminist-culture title Jezebel. Its eponymous flagship title continues to be a mildly infamous mainstay of New York media gossip.

Of the three, the sale of Wonkette likely came as a surprise to longtime Gawker Media fans. “Wonkette is one of the brands with which the company is most associated; people will be shocked that we would ever part with it,” he wrote. “The political site has won an array of Bloggies and other awards; it introduced (an expletive that CNET News.com cannot print) into the dictionary of political abuse; the founding editor (Ana Marie Cox)’s slippers are even on display in the new media museum in Washington, D.C.”

In an internal e-mail obtained by CNET News.com, Denton explained the sale: “To be blunt: they each had their editorial successes; but someone else will have better luck selling the advertising than we did.”

This post was updated at 8:46 a.m. PDT.

Naraine recently spoke at a conference on emerging security threats sponsored by the Georgia Tech Information Security Center about the increasing risks of malware on social networks, such as Facebook pages that to lead people to Google pages with additional links to malware sites (a two-step infection process), and the more straightforward approach of Facebook being used for botnets.

Listen now:

Download today’s podcast

In this podcast, Naraine and Vamosi talk about the changing nature of threats today and what we might see in the future.

In this week’s Security Bites podcast, Robert Vamosi speaks with Ryan Naraine, security evangelist for Kaspersky and Zero Day blogger for ZDNet, about malicious software.

In particular, I want something I can visit on a Sunday, when many business or government offices will be closed.

(Credit:
Nashville.gov)

I’ve never been to Nashville before, and I know that there’s a whole lot to do there. But given the short amount of time I have, and the fact that I want to use that time to do more stories and photo galleries for Road Trip, I’m hoping you can help me figure out what would be a good way to spend my time.

I have some gifts to give on this trip to anyone who can help me out. So if you’re the very first person to send me a suggestion I end up using, I will arrange to give you something I hope you will enjoy.

LOUISVILLE, Ky.–This weekend, I’ll be heading to Nashville, Tenn., as part of Road Trip 2008, and I need your help, dear readers, to figure out what I should go and check out.

I’m looking for suggestions of attractions or destinations to visit in the Nashville area. If you’re the first to make a suggestion of something I use, I have a prize for you.

But now I’m looking for something to visit that fits into the theme of Road Trip–it’s got to be something photogenic and have a technology, business, science, or military angle.

Thanks very much in advance. I appreciate your help.

If you want to know more about what kinds of destinations fit into Road Trip, you can also look at the package I did last year on Road Trip 2007.

I’m already planning to visit the Parthenon there, and I have at least one music-industry destination already on the agenda.

Please send your ideas to my e-mail address: daniel (-dot-) terdiman (*at*) cnet (-dot-) com.

Author Gary Hamel pointed out the flip side of these changes: “The great scandal of management,” he said, is that, “most workers are disengaged. The Internet is great at harnessing customers’ imaginations more than employees.”

I believe it is already.

Benioff said, with a smile, “Our customers are ganging up on us,” and, he said, “our product managers have less to do. The Internet is the great accelerator.”

Focusing on society more than business, Hamel also said on the panel that the Net is, “empowering people to create like never before in human history. We are emancipating human imagination.”

The final panelist, investor Christiane Zu Salm, focused on societal changes: “Technology will change more our society than our business.”

See the rest of our conference coverage here.

I believe the takeaway from this first panel is much about the conflict between old-style management and the power-leveling effect of the Internet. Conceptually, user-generated content services like YouTube, user-edited newstreams like Digg, and user-powered customer support initiatives like Get Satisfaction put customers in charge. As Hamel said, “It’s going to make a lot of traditional executives very uncomfortable.”

Two speakers, Michael Dell and Mark Benioff of Salesforce.com, focused on the changes in business: the Net gives companies a communications conduit with customers. “We put big ears on,” Dell said, referring in part to the Digg-like Ideastorm system that Dell is using to gather customer feedback.

HALF MOON BAY, Calif.–At Monday’s kickoff discussion at the high-zoot (it’s at the Ritz Carlton) Fortune Brainstorm 2008 conference, moderator David Kirkpatrick asks the question, “Is tech making the world a better place?”

(Credit:
Rafe Needleman/CNET)

Fortune's big thinkers, left to right: David Kirkpatrick, Michael Dell, Gary Hamel, Mark Benioff, Christiane Zu Salm,

The company told newswire Reuters that the problem, which caused some users to not be able to surf the Web on their phones, was fixed just before noon on Wednesday. The problem did not affect phone calls, text messages or mobile e-mail from devices such as Research In Motion’s BlackBerry.

AT&T is the exclusive carrier for the iPhone in the U.S. And although it boasts that it has the fastest 3G network in the nation, its coverage footprint is not as extensive as that of competitors such as Verizon Wireless and Sprint Nextel. This means that 3G phones such as the iPhone 3G likely switch between the 3G HSPA network and the 2.5 EDGE network more frequently than on some other 3G networks. And problems are more likely to occur during these handoffs, industry experts say.

While it’s difficult to pinpoint the precise cause of these issues, many industry experts have hypothesized that it’s likely a combination of the iPhone’s hardware and software and how it interacts with the various 3G networks it operates on throughout the world.

AT&T on Wednesday said that it has fixed a problem that caused many iPhone users in the Northeastern U.S. to complain that they couldn’t access the mobile Web.

A company spokesman told the news service that it was a “routing issue” that affected how data is delivered to and sent from devices. The spokesman declined to provide more details about the cause of the service issues.

Since the
iPhone 3G was launched in July some subscribers have complained of poor reception. At first, neither Apple nor AT&T would admit to any problems. But after persistent complaints on blogs around the world, Apple finally relented and released a software update for the iPhone 3G that was supposed to fix the problems.

AT&T subscribers in the Midwest and Southeast experienced similar problems accessing 3G (third-generation) and EDGE data services on AT&T’s network in January. And there were reports in July 2007 of trouble accessing 3G and EDGE data services.

Adams said that the first round of RGGI won’t be perfect. But at least it’s a start, which can be modified over time.

The way a carbon cap-and-trade system works is that participants have to purchase allowances that allow them to emit a certain amount of carbon dioxide.

Many environmentally oriented consumers are looking for some sort of action to address climate change.

I spoke with World Energy Solutions to get a feel for the mechanics behind carbon trading at RGGI. In a nutshell, it’s a blind online auction where power generators are competing for the cheapest price, in this case, a permit to pollute.

Between now and September, his company is trying to get a grip on the logistics of getting 250 emitters to participate in a quarterly auction without too many glitches.

But the big unanswered question, which RGGI should help clarify, is what is the price of putting a ton of carbon in the atmosphere?

The Regional Greenhouse Gas Initiative (RGGI, pronounced “Reggie”) is scheduled to go online September 10. It’s a cap-and-trade system for carbon that electric power generators in 10 Northeast states need to participate in.

These allowances can be bought and sold. So if a power generator buys the right to emit 40 million tons of carbon, but manages to fall under that threshold, the company can sell those credits to a power generator that has gone over their ceiling.

What form these regulations take–and how they are initially set up–will go a long way to determining whether they succeed in stemming the growth of greenhouse gases. RGGI will be considered as a template for other regional carbon exchanges being established in the U.S., and potentially for a federal regime.

Initially, the price for carbon on RGGI is expected to be in the $5 to $7 range, said Phil Adams, the president and chief operating officer of World Energy. That’s roughly the same price for carbon the voluntary Chicago Climate Exchange but far lower than the current price on European markets.

The first regulated carbon market in the U.S. will take its cue from eBay.

For businesses, the emergence of RGGI and other carbon trading markets that operate in Europe and Alberta, for example, mean that they have an additional way to make money from green technology.

“Herding the cats is job No. 1,” Adams said. “Job No. 2 is making sure that nobody gets their nose out of joint because he’s looking for one misstep as an excuse to sue somebody.”

The operator of a solar power plant, for example, can sell the carbon reductions that a project generates. Several clean-tech start-ups anticipate they will be able to monetize carbon credits with the products they sell.

Policy makers, meanwhile, appear to be coming around to the conclusion that regulating greenhouse gases will be more effective than voluntary goals for large polluters.

The elusive price tag
There’s a lot riding on RGGI and carbon trading, in general.

World Energy Solutions already has a business operating energy markets where electricity purchasers in deregulated markets buy contracts from suppliers. For example, a handful of representatives from power producers could compete during a half-hour-long online auction for a municipality’s planned power purchases.

The blueprint for the cap-and-trade system draws from a successful U.S.-devised system to cut down on power plant emissions that cause acid rain. The market-based mechanism is meant to be a more efficient and flexible alternative to government-set limits and more politically palatable than a straight carbon tax.

There are a number of federal carbon-restricting laws now being proposed, which many people in the power industry expect to take effect within the next five years.

Update at 8:50 PT: An astute reader points out that the Chicago Climate Exchange is already putting a price on carbon in the voluntary market, which is noted in the article. I changed the headline to clarify that RGGI isn’t the first attempt overall at pricing carbon emissions in the U.S. It’s expected to be the first regulated carbon emissions market to go online in the U.S.

An online auction company called World Energy won the bid to write the software that utilities will need to use.

In the RGGI scheme, polluters will buy these allowances once a quarter and will base their purchases on what sort of weather they anticipate and kind of fuels they use.

Carbon-trading research firm CarbonPoint said that RGGI may be over-allocated. That is, there may be so many allowances for emitting carbon that the price for carbon will stay very low.