Bytes: Microsoft ruling; Napster; Palm

THE DECISION of the appeal court last week not to allow the break up of Microsoft caused mixed industry reactions. Although the main players (Apple, IBM, AOL Time Warner et al) declined to comment, others pointed out that while the appeals court overturned judge Thomas Jackson Penfield's remedy, it upheld findings that Microsoft had broken anti-trust laws.

The case was sent back to a lower court, where a randomly chosen judge will look again at the remedies and the issue of whether Microsoft illegally tied its browser software to Windows. Microsoft said that it, with Intel and PC manufacturers, will spend $1bn (£700m) on marketing Windows XP. However, it is dropping "Smart tags" from the forthcoming Windows XP and Internet Explorer 6.

The technology was designed to incorporate links into web pages, without necessarily requiring the knowledge of the page author. Many worried that the feature gave Microsoft greater control over customers' Net use, by favouring its own and partner sites, as well as tying Web content more closely to Microsoft software. Spokesman Jim Cullinan, said that time pressures and "external feedback" had prompted the change. Smart tags will remain as a feature in Office XP.

NAPSTER changed its software last week, ceasing to support the version that brought it notoriety as a service for free online swapping of digital music files. Users were informed that "all previous versions of Napster have been disabled" in order to comply with a court order requiring the filtering out of named, copyrighted tracks. Its new software, incorporating file identification and audio fingerprinting technology, is very restricted compared to the old one. Many users said thisspelt the end of Napster. The average number of songs being traded by a Napster user last week was 1.5, compared to 220 in February, according to research company Webnoize.

The software was introduced after an appeals court turned down Napster's requests that it reconsider its decision on upholding the injunction won by the recording industry association of America (RIAA) demanding it block illegal trading. But another file-sharing company, Aimster, won a legal battle when a judge turned down a motion from the RIAA that he dismiss a suit brought against it by Aimster. The suit asks for a judgement that it does not violate copyright laws in the way it allows digital music files to be shared over the internet.

PALM used the New York PC Expo to react to a fourth quarter loss of $392.1m (£278m) and a 53 per cent fall in revenue by revealing its plans to win more customers. Chief executive Carl Yankowski said that Palm, the market leader in personal digital assistants (PDAs), would benefit as handheld devices became popular in the business world. He announced that its low-end PDAs would be available through Sears Roebuck.

Sony unveiled its two latest PDAs running version 4.0 of the Palm operating system: the entry model, the $200 (£140) Clie PEG-S320, and a $449 (£318) colour model, the Clie PEG-N610C. Due to go on sale in August, both compete directly with Palm models.