Blockbuster has announced plans to utilize its retail stores to deliver DVD rentals to homes starting next year, rather than relying solely on central distribution centers. The move signifies growing competition with other online DVD rental rivals such as NetFlix and Wal-Mart; both Blockbuster and NetFlix recently lowered their subscription rates. Blockbuster is working hard to cut costs and attract customers after reporting a third-quarter loss of $1.42 billion and announcing its President Nigel Travis was resigning.

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America Online subscribers are in for a treat as the ISP endeavors to offer broadband users exclusive content to stem the tide of cancellations. A teaser trailer for Star Wars: Episode III Revenge of the Sith will available on AOL starting November 4, a day before it debuts in movie theaters. Episode III won't reach theaters until May 19, 2005, but fans are already eager for a taste of what's to come.

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Expanding its international horizons, Apple has launched an iTunes Music Store for the European Union. Although the company already has stores tailored for the UK, France and Germany, iTunes music will now also be available for purchase in Austria, Belgium, Finland, Greece, Italy, Luxembourg, Netherlands, Portugal and Spain. All songs will be priced at 0.99 euros - slightly more expensive than Apple's US pricing due to current exchange rates. The iTunes Music Store for Canada is slated to follow next month.

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As expected, Apple has taken the wraps off its new photo-capable color iPod, alongside a sleek black U2 Special Edition iPod. U2's Bono and Edge joined Apple CEO Steve Jobs to herald in the iPods at a gala event in San Jose.

iPod Photo takes the market-leading device beyond the realm of music and into digital imagery. Available in 40GB and 60GB capacities, the new member to the iPod family features a 65,536-color screen offering a 220x176-pixel resolution. Users scroll through pictures just like songs, browsing 25 thumbnails at a time, and can also view album art while music is playing.

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Microsoft has released to manufacturing Office Live Communications Server (LCS) 2005, the first piece of the company's next-generation real-time communications platform. The update focuses on security, providing encrypted instant messaging without the need for a virtual private network.

With the 2005 release of LCS, presence awareness is shared between organizations, and presence and instant messaging capabilities are extended outside of the corporate network. Using the optional "Connectivity Pack" slated for next year, LCS customers will also be able to communicate with users on MSN, AOL, and Yahoo! IM networks.

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In an effort to recapture the market lead it lost to Apple's iPod, Sony has launched two new Network Walkman models in Europe - the first devices from the company to support MP3 playback. Instead of following the recent trend of hard drive-based audio players, Sony has opted for conventional flash memory and offers 512MB and 1GB capacities.

Apple is rumored to be working on a flash-based audio player of its own to shore up its customer base, but the company has refused to comment on the speculation.

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After backlash over its Sender ID anti-spam proposal, Microsoft has gone back to the drawing board in hopes to appease industry concerns. In a revised Sender ID Framework submitted to the Internet Engineering Task Force (IETF) standards body, Microsoft ensured compatibility with SPF, or Sender Policy Framework, a competing technology.

The IETF originally rejected Sender ID due to patent concerns and last month AOL followed suit, opting to support SPF instead. But AOL subsequently sat down with Microsoft to help "work through some issues that were a concern for them," according to Redmond officials.

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Five months after raising its standard DVD rental subscription rate to $21.99, NetFlix has backtracked on the decision. Starting November 1, the company will now offer 3-at-a-time DVD movies for $17.99, in a bid to keep competitive with rental offerings from Blockbuster and Wal-Mart.

"Since our price increase in June, some of our members have expressed concerns about the new pricing," NetFlix wrote in an e-mail to subscribers. "We've listened to this feedback and are pleased to inform you that we're lowering the price of your Netflix 3-at-a-time program."

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PalmOne has unveiled the Treo 650, an update to its Treo 600 smart phone that adds a faster processor and higher-resolution screen. Carriers aren't expected to offer the Treo 650 until later this fall in preparation for the holiday season. Along with a 320x320 pixel, 65,000-color screen, the 650 replaces its predecessor's 144MHz processor with a 312MHz core from Intel. An MP3 player and video playback capabilities complement the Treo 650's built-in Bluetooth support. Pricing of the Treo 650 will likely be similar to the 600, which currently runs around $500 USD.

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IBM announced this week it has joined the Sun-backed Liberty Alliance, which establishes industry standards for identity management. By federating identities, users are able to log in to numerous sites with a single username and password.

IBM previously kept its distance from Liberty, authoring its own WS-Federation standard, but in July signed a $50 million deal with French mobile phone provider Orange PCS that sources say required Liberty compliance. As one of its largest supporters, IBM will also become a member of the Liberty Alliance board.

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With the third version of its Linux desktop nearing release, Xandros has begun accepting beta test applications.

Little is known about Xandros Desktop OS 3.0, but the latest Linux kernel and software packages such as KDE are expected to be included. Xandros touts "unrivaled compatibility with Microsoft Windows" with its operating system, which it purchased from Corel and licensed to Lindows -- now known as Linspire -- for its low-cost PCs.

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In a letter to beta testers, Microsoft announced Beta 3 of SQL Server 2005, code-named Yukon, will miss its 2004 target and instead be delivered early next year. As previously reported by BetaNews, Microsoft's Yukon and Whidbey -- the forthcoming update to Visual Studio .NET -- releases have been pushed to 2005. The current schedule places a final release next summer, although beta coordinators acknowledged the timeframe could slip even further. To tide over testers until the next beta is finalized, a public preview of the Express version of SQL Server 2005 has been made available for download.

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Swatch has teamed up with Microsoft to launch a new watch dubbed Paparazzi that accesses MSN Direct to received personalized news, sports, weather, stock quotes, and more. Microsoft unveiled MSN Direct last year as the service for its Smart Personal Objects Technology initiative. But even with backing from Fossil and Suunto, SPOT-enabled watches have yet to catch on. Swatch hopes to change this by offering Paparazzi wearers information on hot bars, free events and even the chance to meet celebrities. Swatch Paparazzi will retail for $150 and is available now.

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At the VON Conference in Boston, Microsoft introduced an early beta of "Istanbul," a next generation messaging client that will integrate with Live Communications Server (LCS) 2005. Istanbul not only enables IM, VOIP, video and Web conferencing, but also works with current PBX telephony systems.

Istanbul brings to fruition Microsoft's longstanding plans to tightly integrate real-time communications with Office. BetaNews first reported on the company's intentions in October 2002, which included scheduled multi-party audio and video and data collaboration, as well as extended access to mobile devices.

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With version 1.0 on the horizon, Firefox developers are preparing an ambitious marketing campaign to kickoff the browser's launch: a full-page advertisement in The New York Times. The ad will include the names of everyone who donates $30 USD ($10 for students), and the proceeds will help support Firefox 1.0 launch activities. By offering a secure, open source alternative to Internet Explorer, Firefox may finally break the stranglehold Microsoft has long had on the Web browser. Visit Spread Firefox to contribute.

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