All Tech

In a short news release, the Round Rock, Texas, company said that the audit also found "deficiencies in the financial control environment."

Dell shares fell 56 cents, or 2.4 percent, to $22.83 in after-hours trading, when the announcement was made. The shares had closed up 4 cents to $23.39 on the Nasdaq Stock Market.

Dell also said Thursday that it would miss an April 18 deadline to file its annual 10K financial report to the Securities and Exchange Commission until the internal review is completed.

The company added in the statement that it was working with management and the company's independent auditors to determine whether the errors would require the restatement of previous earnings reports.

"As we move toward the conclusion of our investigation, we are committing the time and resources required to ensure a thorough and comprehensive review and resolution of all identified issues and the implementation of appropriate remedial measures," Thomas W. Luce III, chairman of Dell's audit committee, said in the statement.

The company did not say how much longer the internal investigation would last, and further details were not provided. Dell spokesman Dwayne Cox said the company was unable to comment further.

In August, company officials said Dell received a letter from the SEC in August 2005 asking broad questions about some revenue recognition. Company executives initially shrugged it off as an informal investigation and something that happens to hundreds of other companies.

It has since grown into a formal look by federal investigators into Dell's finances. Dell also faces a slew of shareholder lawsuits, and the U.S. attorney for the Southern District of New York has subpoenaed documents related to Dell's financial reporting since 2002.

Dell's earnings statements from the second, third and fourth quarters remain preliminary and have yet to be filed with the SEC.

One analyst who said he has talked to top Dell management about the ongoing investigation in general terms called it "serious" but "not life threatening" and said he doubted the investigation would rise to the criminal level.

"It's a bad thing to have happened," said Roger Kay, president of Endpoint Technologies Associates Inc. "Clearly, they did something that they should not have, but in terms of the company, I think it's going to be more of an annoyance."

In recent months, Dell has seen a management shake-up that included the departure of several top executives - including ex-Chief Executive Officer Kevin Rollins and Chief Financial Officer Jim Schneider - and the return of Michael Dell as CEO.

With Dell at the helm, the company has been trying to orchestrate a turnaround plan to improve customer service and combat Hewlett-Packard Co. and other electronics manufacturers who have eaten into Dell's market share with low-cost, low-profit PCs.

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The two have never met, but every week they spend three hours in each other's company, as Tommy struggles to form the distinctive tones and sounds of Mandarin Chinese.
Lily Huang is Tommy's Mandarin teacher. Rather than pay exorbitant prices for a UK-based face-to-face tutor or hide in the back of the class at night school, Tommy can take Lily's lessons in the comfort and privacy of his own home via the Internet, direct from China.

Lily teaches students across the globe via Skype, the Internet telephony system that allows people to communicate for free across the world, often using webcams.

The videophone service was set up in 2003 by two Scandinavian entrepreneurs and sold to Ebay in September 2005 for 4.1 billion dollars. It is now available in 27 languages. Asia reportedly represents 30 percent of its 171 million subscribers and has become its fastest growing market.

Such is the strength of the technology that a broadband connection means the 34-year-old from the island's capital city of Haikou can meet the huge demand for Mandarin teachers in countries as far away as the United States, New Zealand and Malaysia, something that would have been impossible even five years ago.

"Most of my students are very busy. They have no time to go to the classes and they want to work from home, where they can be very relaxed," said Huang, who is a qualified English teacher and previously taught in Chinese schools.

"If you sit in a class with many students and just one tutor, the student cannot talk too much, you cannot practise that much, but (with Skype lessons) he or she can talk as much as she wants."

Huang is also able to undercut private tutors in the West.

Such is the dearth of qualified Mandarin teachers in Britain that they can easily charge 150 dollars an hour, and even more for business clients.

Huang's lessons cost around 20 dollars an hour, which her students pay via PayPal, the online banking service.

She says it's a good income in China, and affords her the flexibility to stay at home and look after her six-year-old son.

Huang's husband came up with the idea of using the Internet for lessons a year ago and she tentatively started putting her details on a few expat websites.

She also set up a page on the social networking site myspace, which is where Tommy found her after a simple Google search for private Mandarin tutors.

"Learning a new language takes a tremendous amount of confidence and having the stability to learn at home makes things a lot easier," said the 28-year-old comic.

"A lot of teachers don't feel comfortable coming to your home so they arrange a 'neutral' place to meet. It sounds like a bad blind date, but I once took Spanish lessons where the teacher wanted to meet in a coffee shop.
"Try sitting in Starbucks struggling to make all these new sounds without looking like a right jackass!"

While Tommy took the class for the challenge of learning a new language -- he plays gigs across the world -- Huang's students range from people who want to learn for business, to a second generation Chinese expat who wanted to learn how to communicate with relatives in Taiwan.

Eric Atherton, who has run companies providing components for the oil industry, lives in the rural English county of Oxfordshire and, reluctant to attend classes, could not find any private Mandarin tutors locally.

"I have done a bit of business in China and I already recognised that not being able to speak Chinese was (adding to the difficulty) in establishing and building relations with customers," he said.

"The other driver was that I wanted to do something completely different and had never been much good at languages."

Again, Atherton found Huang via Google after steering clear of more formal Chinese language tutors online, but he admits the technology also appealed.

"As soon as I came across the possibility I thought I have got to try this because it makes so much sense -- and it works," he said.

"Although you don't have someone in the room with you, face to face, you are actually talking to someone in China right now, that is the compensation."

As well as the videophone, Skype also provides a chat facility where Huang's students can check the spelling of the words and a digital whiteboard, where she can draw characters.

Huang now works around 20 hours a week preparing for and tutoring her students, but she admits that her reliance on technology is a built-in vulnerability.

In December, a strong earthquake struck off the coast of Taiwan ripping through the undersea Internet cables, crippling services across southeast Asia.

Skype relies on a good connection to transfer smooth images and sound, but the entire Internet into China was debilitated for the following four weeks -- and so was Huang's teaching business.

"If the Internet cuts off we can do nothing. Last month, after the Taiwan earthquake I was going crazy. The Internet itself is the only thing that is difficult," she said.

Huang tailors her classes to each student individually, sending an outline of the next lesson the day before. After the lesson she sends, or "Skypes," an MP3 recording of the new material that was covered.

"At the end of each lesson she'll ask me what I'd like to learn next time, she'll then compile the material based on my desires," added Tommy.

"It's very important to have this freedom. A lot of teachers will restrict you to a textbook, which is too rigid.

"I want to know how to do things a bit more rock n' roll. Where is the post office? Who cares! Teach me how to how to get a beer after hours."

"We're pretty much where the Internet was in the mid-90s," said Steve Prentice, a vice president at technology research group Gartner Inc., echoing a view held by other participants Wednesday at the Virtual Worlds conference in Manhattan

Joe Laszlo, analyst at JupiterKagan Inc., said the virtual worlds are "like the early days of the Victoria's Secret Webcast, where it was crappy, but hot, so everybody went."

MTV executives touted their TV-show spinoffs "Virtual Laguna Beach" and "Virtual Hills," which have attracted 600,000 registered users since they were launched six months ago. Almost like the real Southern California, these 3-D online spaces have perfect weather, but in an improvement on real life, its users are all represented by attractive, slim and young online embodiments known as avatars.

These avatars can interact with each other via text chats and commerce, providing a social element that virtual-world pioneers see as more realistic and engaging than chat rooms and MySpace pages.

"When you get people deep and passionate in a community, money just comes out of it in so many ways," said Matt Bostwick, senior vice president of franchise development at MTV Music Group, which is part of New York-based Viacom Inc.

As an example of the branding opportunities, Bostwick said MTV has sold more than 11,402 virtual cans of Pepsi. The buyers can't drink them, since they exist only on the screen, but they act as a form of decoration for their avatars.

MTV's "Nicktropolis" is growing even faster, with 2.4 million registered users who have logged 7.5 million visits since its launch two months ago, according to Nickelodeon's executive vice president of digital media, Steve Youngwood.

MTV's endeavors are "closed" virtual worlds, entirely controlled by the company. Every tree, building and piece of clothing is approved by MTV, though the underlying technology for "Virtual Hills/Laguna Beach" comes from another virtual world, "There," which was created by San Mateo, Calif.-based Makena Technologies Inc.

The virtual world "Second Life" represents a dramatically different approach. There, users can create, out of thin virtual air, almost any object they can imagine, if they're skilled enough with 3-D modeling and programming tools.

The freewheeling and in many places sex-oriented spirit of "Second Life" is reminiscent of the early days of the Web. The company behind it, San Francisco-based Linden Research Inc., says its goal is nothing less than a 3-D Internet.

But given the wide range of uses for online worlds - games, communication within companies, flirting, self-expression - it's not clear that a single world is going to dominate.

"There is not going to be one metaverse, there's going to be a multitude of them out there," said Corey Bridges, a Netscape veteran and co-founder of The Multiverse Network Inc., based in Mountain View, Calif.

His company is creating a program that will give access to multiple online worlds built using its technology, much like Netscape's browser gave access to multiple Web sites, kickstarting the Internet boom of the 1990s.

The technology will include the option to make avatars portable between different worlds, providing a middle road between MTV-style walled gardens and a wide-ranging "metaverse" like "Second Life."

"Once you can move from one virtual world to another, the growth we have today is going to look pretty stagnant," said Gartner's Prentice.

In an effort to keep pace with the growing online photo-sharing and photo printing markets, Hewlett-Packard has announced its plans to acquire Tabblo, a Web-based imaging software that allows users to customize images with text, graphics and photos.
Tabblo, based out of Cambridge, Mass., utilizes a template engine that applies an AJAX (Asynchronous JavaScript and XML) interface, which makes updates to the user interface without having to reload the entire browser page.

"We're moving from a world where desktop applications have printing ********ality well-integrated into their design - to an online world that in most cases, isn't set up for easy printing," said Pradeep Jotwani, senior vice president of supplies, imaging and printing group at Palo Alto, Calif.-based HP.

HP is pursuing companies that could possibly use HP's Web-to-print technology, making it easier for the company's customers to print the content that they need from the Web site.

"HP's plan is to bring this promising technology in-house, and combine it with HP technology and resources to optimize and increase the availability of superior Web-based printing for consumers and businesses alike," Jotwani said.

Jotwani used Tabblo's PhotoCube as an example of a product that is currently using this Web-to-print technology.

"In this example, you upload photos quickly and arrange them in a template provided by Tabblo," Jotwani said. "Once you've arranged your photos, you simply print a PDF."

Jotwani added that you could take that same method but switch out photos and replace them with text or graphics and change the template from a photo cube to something like a brochure or a book.

"One can see how this technology could be applied to a business setting - or expanded to other consumer applications like building travel guides, recipe books and blog books," Jotwani said.

HP said that it expects to close the acquisition within the next weeks and does not intend to disclose financial information regarding the acquisition.

Many owners of Internet addresses face this quandary: Provide your real contact information when you register a domain name and subject yourself to junk or harassment. Or enter fake data and risk losing it outright.

Help may be on the way as a key task force last week endorsed a proposal that would give more privacy options to small businesses, individuals with personal Web sites and other domain name owners.

At the end of the day, they are not going to have personal contact information on public display," said Ross Rader, a task force member and director of retail services for registration company Tucows Inc. "That's the big change for domain name owners."

At issue is a publicly available database known as Whois. With it, anyone can find out the full names, organizations, postal and e-mail addresses and phone numbers behind domain names.

Hearings on the changes are expected next week in Lisbon, Portugal, before the Internet Corporation for Assigned Names and Numbers, or ICANN, the main oversight agency for Internet addresses.

Resolution, however, could take several more months or even years, with crucial details on implementation still unsettled and a vocal minority backing an alternative.

Under the endorsed proposal - some six years in the making - domain name registrants would be able to list third-party contact information in place of their own - to the chagrin of businesses and intellectual-property lawyers worried that cybersquatters and scam artists could more easily hide their identities.

"It would just make it that much more difficult and costly to find out who's behind a name," said Miriam Karlin, manager of legal affairs for International Data Group Inc., publisher of PC World and other magazines. She said she looks up Whois data daily to pursue trademark and copyright violators.

Privacy wasn't a big consideration when the current addressing system started in the 1980s. Back then, government and university researchers who dominated the Internet knew one another and didn't mind sharing personal details to resolve technical problems.

Today, the Whois database is used for much more. Law-enforcement officials and Internet service providers use it to fight fraud and hacking. Lawyers depend on it to chase trademark and copyright violators. Journalists rely on it to reach Web site owners. And spammers mine it to send junk mailings for Web site hosting and other services.

And Internet users have come to expect more privacy and even anonymity. Small businesses work out of homes. Individuals use Web sites to criticize large corporations or government officials. The Whois database, for many, reveals too much.

The requirements for domain name owners to provide such details also contradict, in some cases, European privacy laws that are stricter than those in the United States.
Registration companies generally don't check contact information for accuracy, but submitting fake data could result in missing important service and renewal notices. It also could be grounds for terminating a domain name.

Over the past few years, some companies have been offering proxy services, for a fee, letting domain name owners list the proxy rather than themselves as the contact.

It's akin to an unlisted phone number, though with questionable legal status. The U.S. government has banned proxies entirely for addresses ending in ".us," even after many had already registered names behind them.

Critics also complain that such services can be too quick or too slow - depending on whom you ask - in revealing identities under legal pressure.

"Right now there's no regulation, no accreditation, no standards," said Margie Milam, general counsel for MarkMonitor, a brand-protection firm. "Some can take weeks, which can slow down investigations."

The task force proposal, known as operational point of contact, would make third-party contacts a standard offering. Domain name owners could list themselves, a lawyer, a service provider or just about anyone else; that contact would forward important communications back to the owner.

Details must still be worked out, but the domain name registrant rather than the proxy would likely be clearly identified as the legal owner, unlike the current, vague arrangement. ICANN's staff also pressed for more clarity on to whom and under what circumstances the outside contact would have to release data.

Although that proposal received a slight majority on the Whois task force, some stakeholders including businesses and lawyers have pushed an alternative known as special circumstances. Domain name holders would have to make personal contact details available, as they do today, unless they can justify a special circumstance, such as running a shelter for battered women.

"On the whole, society is much better off having this kind of transparency and accountability," said Steven Metalitz, an intellectual-property lawyer on the task force.

ICANN's Council of the Generic Names Supporting Organization plans public hearings in Lisbon, after which it could make a recommendation or convene another task force to tackle implementation details.

Supporters of the new proposal remain hopeful that resolution is near.

"A lot of public interest groups have been waiting a long time to see if this process actually works or if it's just a charade," said Wendy Seltzer, a non-voting task force member and fellow with Harvard University's Berkman Center for Internet and Society. "If this turns out to have been for naught, you will have a lot of frustrated people."