Microsoft Chief Executive Steve Ballmer made assurances that there would be no corporate "jujitsu." Cisco Systems' CEO John Chambers said he trusted Microsoft.

In an unusual press event to showcase their evolving business alliance, the leaders of the two tech giants Monday described how an increasing level of collaboration, as well as "respectful" competition, will drive the next wave of innovation and business success.

The alliance between Cisco and Microsoft, Chambers said, "could be a role model for our industry."

Seven initiatives, ranging from security to entertainment, were announced in a New York press conference. Questioned first by television interviewer Charlie Rose and later by business reporters, Ballmer and Chambers explained how a partnership that began 10 years ago had deepened in the past three years.

Ballmer, known for his intense manner, and Chambers, more diplomatic with a soft West Virginia drawl, offered a vision that sharply contrasted with the historic and fierce rivalry between Microsoft and some other Silicon Valley companies, such as Apple, Netscape and Sun Microsystems. Allegations of anti-competitive practices have dogged Microsoft since at least 1991, ultimately leading to a federal antitrust lawsuit and settlements that required the Redmond, Wash., company to change some of its practices.

Cisco's relationship with Microsoft has never been that adversarial. On Monday, the executives said collaboration would occur whether they participate or not because the so-called Web 2.0 era makes it easier for users to share information and work together.

Moreover, customers are demanding such cooperation because they expect technology to become more user-friendly, Ballmer and Chambers said. Rather than choosing one company's line of products, they explained, business customers are asking for "interoperability" on a range of products from the companies. Business clients, Ballmer said, are still "glad for the competition," but also saying, "tell me how you are going to work with Cisco."

Chambers, returning to a favorite theme, said he believed that collaboration between companies will deliver the next wave of innovations.

Cisco and Microsoft are teaming up on projects that previously would have been handled internally. Until now, homegrown patents and acquisitions have been the primary ways for a company to grow its technology portfolio.

Microsoft's reputation for rough business tactics was noted in the press conference. Questioned by a reporter, Ballmer said Microsoft would not try to manipulate the alliance for a competitive advantage against Cisco. It's not a scenario, Ballmer said, of Microsoft executives anticipating a meeting in which "John's (Chambers) going to tell us everything he's doing so we can jujitsu him. That's not going to happen." Chambers later said the alliance would work because he trusts Microsoft.

But collaboration will pose a management challenge, particularly in research and development, Chambers said. He noted that it already was difficult within Cisco to manage research across departmental "silos." "This requires a very sophisticated level of management," he said.

The alliance, according to a press release, will focus on several key areas of collaboration, including:

• IT architecture. "Customers are asking Microsoft and Cisco to come together on their infrastructure visions . . . as manageability, performance, security and scalability become even more critical to success in the evolving service-oriented infrastructure."

• Security. Because of the increased threats of viruses and hacks, "true security requires an architectural approach vs. a deployment of point solutions." Moreover, Cisco and Microsoft are working with storage giant EMC on the Secure Information Sharing Architecture, which allows government agencies to more effectively share confidential information across traditional boundaries.

• Wireless and mobile. The companies are working to allow Cisco's Unified Communications Manager to interact with Windows Mobile-powered devices. "This will enable customers to enjoy integrated presence, telephony, calendaring and other unified communications capabilities."

• Connected entertainment. Anticipating an Internet-driven revolution in home entertainment, the partnership will promote interoperability in areas like Internet Protocol TV.

Both executives said the companies still expect to compete in many areas. Ballmer said he respects Cisco's products but that in areas of direct competition such as Web conferencing, "I respect ours more."

IDC analyst Rebecca Swensen said the Skype outage -- traced to Microsoft's set of Windows updates rolled out last week -- serves as a reminder that the reliability of VoIP is not the same as traditional telephone networks, but she pointed out that, historically, Skype's network has been reliable, and said that the reliability of VoIP is improving.

Skype said that the disruption of its service that occurred globally last week had been triggered by a massive rebooting of Windows computers around the world, and that no malicious activities or security  issues had been involved.

The high number of restarts, which occurred as the Windows computers rebooted after receiving a routine set of patches through Windows Update, "affected Skype's network resources," wrote Skype spokesperson Villu Arak on Monday morning. The reboot unleashed a flood of log-in requests, which -- when combined with the lack of existing peer-to-peer network resources because of the rebooting -- "prompted a chain reaction that had a critical impact."

Normally Skype's peer-to-peer network has an inbuilt ability to self-heal, Arak observed. However, last week's interruption of service "revealed a previously unseen software bug within the network resource allocation algorithm which prevented the self-healing function from working quickly," he explained.

Computer maker Dell will reduce more than four years' worth of earnings by up to $US150 million ($A183.52 million) after an internal probe found the company misled its auditors and manipulated results to meet performance goals.

The struggling company said today that its net income for the restatement period will be reduced by between $US50 million and $US150 million ($A61.17 million and $A183.52 million), or two cents to seven cents a share.

The largest reductions in quarterly profits were expected to be in the first quarter of fiscal 2003 and the second quarter of fiscal 2004, each lowered between 10 per cent and 13 per cent.

Dell will restate all of fiscal 2003 through 2006 and the first quarter of fiscal 2007.

The investigation, which began in August 2006 and evaluated more than five million documents, "identified evidence that certain adjustments appear to have been motivated by the objective of attaining financial targets," Dell said.

Round Rock-based Dell added that unspecified terminations, reassignments, reprimands, increased supervision, training and financial penalties either have or will be taken as a result.

"We are committed to achieving and maintaining a strong control environment, high ethical standards and financial reporting integrity," Chairman and Chief Executive Michael Dell said in a statement.

"This commitment will be communicated to every Dell employee and external stakeholder. It is accompanied by renewed management focus on decision-making and processes intended to drive long-term shareholder value."

The Securities and Exchange Commission's investigation into some of Dell's accounting and financial reporting practices is ongoing, the company said.

Dell said the findings would not have a material impact on second-quarter results, which are scheduled for release on Aug. 30.

Dell has issued only preliminary financial results for the four most recent quarters and has not filed its annual report for the fiscal year that ended on February 2 because of the ongoing investigations.

With the internal probe complete, Dell said it expects to file the past-due documents by the first week of November. Its annual shareholders meeting is scheduled for December 4.

Dell still faces shareholder lawsuits, and federal prosecutors in New York subpoenaed documents on the company's financial reporting since 2002.

Dell is the world's second largest PC maker, having recently lost the top ranking to Hewlett-Packard Co.

Dell shares dropped 37 cents, or 1.4 per cent, to close at $US25.93 before the announcement was made.

Overall, consumers rated their satisfaction with the maker of their PC 3 percent worse than last year, according to the American Customer Satisfaction Index (ACSI), the annual quality study conducted by the University of Michigan set for release Tuesday.

Apple is still the leader in terms of satisfaction with service and products, but its overall ranking dropped by five percentage points this year. Dell also lost five points on its score. Hewlett-Packard's HP brand showed a 1 percent improvement in a year, while its Compaq label is still rated the worst.

This survey is indicative of consumer satisfaction in general, which increased a mere 1 percent since the second quarter of 2006. Though American consumers' satisfaction has increased for the last nine quarters, that rate of satisfaction is slowing, said Claes Fornell, director of the National Quality Research Center at the University of Michigan, which conducted the study.

"It probably means for the economy at large that we will see a slowdown in consumer spending (next quarter) and consumer demand as well," he said. "We've seen a pretty strong correlation between customers and how satisfied they are and their future purchase behavior."

Admittedly, customer satisfaction is a hard thing to measure, he said. Fornell's group conducts the survey by asking 80,000 customers of the leading PC makers a series of questions related to how they view service quality, price, problems, future or repeat purchase plans, and satisfaction related to expectations.

Among PC vendors, Apple still leads the pack with a score of 79, and Compaq comes in at 73. On a scale of 100, any score in the 70s is respectable, and any rating above 74 means you're doing "quite well," Fornell said.

Apple's drop, even if it is ever so slight, is unusual since the company is usually ranked well on most aspects of the ACSI survey, Fornell said. He points to the Apple's growth as a possible cause, as well as the enormous expectations that come with being a quality leader.

"It's almost like what goes up must come down," he said. "They have done so well that they have increased their business by 400 percent in the last five years. That puts a certain strain on resources. With many more customers to service, it's not that service quality is going down, as much as the reliability of the products." Survey results refer only to Apple's computer products.

Apple spokeswoman Natalie Kerris said, "Customer satisfaction is very important to Apple. While we're pleased that we're still No. 1, we're going to try even harder."

Dell also dropped 5 percent after raising its ranking last year. Dell's problem is customers' perception of product reliability as well as service, Fornell said. As examples, just this year, both shipping delays of the much-anticipated XPS M1330 notebook and the New York Attorney General Office's decision to sue Dell for consumer fraud have made news.

A U.S. district court judge delivered a major setback to Alcatel-Lucent on Monday by setting aside a jury's $1.5 billion judgment against Microsoft in a patent infringement lawsuit over digital music technology.

Alcatel-Lucent's lawsuit against Microsoft had produced the largest patent judgment on record.

The case centered on origins of the MP3 standard.

The Windows Media Player software, part of Microsoft's basic operating system, plays audio files using the MP3 standard, the most common method of distributing music on the Internet.

The ruling could have an impact on Apple, the dominant maker of digital music hardware and software, as well as hundreds of other companies that use the standard.

Judge Rudi Brewster of U.S. District Court in San Diego wrote in a 43-page order that the jury's damage award in February could not stand because one of the two patents on which the case focuses was not infringed by Microsoft.

He also noted that ownership of the second disputed patent was questionable, and a retrial may be needed to resolve that matter.

Alcatel-Lucent immediately said it intended to appeal the ruling.

In a big win for independent labels, AT&T Mobile Music is offering nearly all of eMusic's 2.7 million digital tracks on compatible AT&T handsets. In addition to eMusic being notable for focusing exclusively on independent labels, eMusic's distinction over the last few years has been that it does not wrap its music in digital rights management (DRM).

In its first deal with a mobile network, eMusic announced on Tuesday that it will sell its independent-label music through AT&T Mobile Music.

After iTunes, eMusic is the largest online music seller. Nearly all of eMusic's 2.7 million songs will be available through the AT&T service, which initially will be compatible only with the Samsung Sync (A717 or A727) and the Nokia N75 handsets.

The new service will cost $7.49 monthly for access to five songs. Subscribing to eMusic from a PC costs $9.99 monthly for 30 downloads, a lower per-song cost. But the company said that the price-per-song difference relates to the additional expense of sending the music over a mobile network.

Discovering New Music

The majority of online music services provide a wide range of titles, emphasizing artists on major recording labels, while eMusic only provides music from independent labels. These labels can be small companies that handle several artists or musicians acting as their own label.

While most independent-label songs on eMusic are by obscure musicians, some are by well-known ones, such as Johnny Cash, Ray Charles, Miles Davis, Bob Marley, and Creedence Clearwater Revival.

On Monday, eMusic released a survey showing that 84 percent of its subscribers "felt they discovered music they would not otherwise have known about," and 61 percent said they buy music from the service they would not have otherwise bought.

Creating a mechanism for discovering new music is the single biggest obstacle remaining for independent-label musicians, observed Forrester analyst James McQuivey. For major labels, he said, this fan development is usually accomplished on the radio. Independent labels "haven't been a big player" in the music-over-cellphones market so far, he said, which could change with the eMusic-AT&T deal.

No Digital Rights Management

Gartner analyst Mike McGuire noted that, in addition to being notable for expanding the pool of available music to include the little guys, eMusic's distinction over the last few years has been that it does not wrap its files in digital rights management (DRM) technology. Without DRM, songs can shared more widely among devices and friends -- and McQuivey noted that there aren't any devices more sociable than a mobile phone.

Gartner's McGuire also noted that eMusic songs delivered over AT&T will be available in the AAC file format, which provides for small file sizes. But eMusic will also make an MP3 version of a purchased song available for download to a subscriber's computer, and those songs could be transferred from a computer to a phone.

When it was originally founded in 1998 as GoodNoise, the company noted that it was the first to sell music in MP3 format. Its ownership has traded hands a few times, and eMusic is now owned by Dimensional Associates, the operating company for New York-based investment firm JDS Capital.