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• The open source software market looks set for a shake up as two major proprietary software makers, Oracle and Microsoft, both announced plans to promote a favoured version of the Linux operating system. Oracle said it would offer a clone of the Red Hat distribution, while trying to undercut Red Hat on services cost. Microsoft, meanwhile, backed Novell’s SuSe Linux as its brand of choice.

• Hewlett-Packard announced the unexpected departure of the head of its $15 billion services unit, Steve Smith. He had joined in January 2005, but resigned “for personal reasons”. His departure came shortly after the departure of Todd DeLaughter, ex-head of HP’s OpenView software business.

• Executives from search company Google met with European Commission officials, to discuss anti-trust concerns against rival software maker Microsoft. Google’s management wants the EC to ensure that Microsoft’s next-generation operating system, Vista, does not restrict users’ choice of search engines. Microsoft had planned to include an integrated search engine in Vista but it has subsequently modified these plans to soothe the European anti-trust regulator’s concerns.

• Computing giant IBM launch a suit against online retailer Amazon.com, claiming that the Internet trailblazer’s shopping technology infringes five of IBM’s patents, and is seeking damages that could amount to “hundreds of millions of dollars”. IBM believes it holds patents covering a range of online shopping activities, such as displaying targeted advertising and recommending items to shoppers.

• Former software chief, Sanjay Kumar, was jailed for 12 years and fined $8 million for his part in a $2 billion accounting fraud at Computer Associates (CA). Under his leadership, CA implemented so-called ‘35-day’ months, to allow it to book additional revenue after the close of its fiscal quarters. Under this scheme, CA misreported $2.2 billion in revenues according to investigators. Kumar also offered inducements to colleagues to cover up the scandal.

• Business software maker Sage redefined its product strategy, promising in future to deliver more integrated suites of software. The move is a major departure from its traditional approach of offering standalone products. Sage hopes the move will reduce operating costs, while improving customer service.

• EMC, the leader in storage equipment, announced plans to cut 1,200 jobs. The company has, over the last two years, pursued an aggressive acquisition strategy, and believes it can reduce management and back-office operations and improve its cost base. The redundancies will cost the company roughly $150 million.

Infoconomy Index: European IT continues to surge

Strong revenue reports in October from many of the world’s global IT vendors helped fuel a sharp upswing in the latest Infoconomy Index, with especially solid numbers appearing from IT services companies. As a result the Index, which measures the rate of revenue growth at the world’s top 200 IT companies, rose by 1% during the month, ending up at 7.7%.

But it was once again European-headquartered vendors who delivered some of the best results, with the European index, which tracks a subset of 50 vendors from the region, rising 0.4% to 11% – its sixth successive month of growth.

The companies behind the European surge included application heavyweight SAP with an 11% increase; IT services giant Capgemini, with a 12% increase; business intelligence vendor Business Objects with a 19% rise in revenue; and SOA infrastructure vendor Software AG, where quarterly revenue rose 10%.

That picture was not universal. Another of Europe’s IT services companies, Atos Origin, failed to capitalise on the rising interest in outsourcing and posted a 1% drop in revenue, its results dragged down by the continuing poor performance of its UK operations, while French computer company Groupe Bull’s revenue dropped 2%, despite a 21% increase in services revenue.

Leading the global vendors, US-headquartered but India-centric IT services company Cognizant reported a 60% growth in revenue, while other Indian vendors TCS, Infosys and Wipro grew revenue by 44%, 42% and 41% respectively. Growth rates at US companies had both a positive and negative effect on the industry’s pace. On the plus side were Microsoft (11%), Sun (17%) and Symantec (20%), but these were offset by a slowdown at Computer Science Corp (1%), NCR (1%) and Unisys (2%).

However, the biggest losers lay elsewhere. The chip manufacturers Intel and AMD, showed a drop in revenue of 12% and 13% respectively.

The Infoconomy 200 Index measures the overall growth rate of the IT industry by tracking the financial results of the world’s most important publicly listed companies. For more details, go to www.information-age.com.