GOOGLE/YAHOO ALLIANCE LIKELY WOULD NOT PASS REGULATORY SCRUTINY

As Yahoo explores ways to avoid being taken over by Microsoft, partnering in some way with Google keeps coming up; however, any deal between market leader Google and number two Yahoo would be looked at very closely by the Justice Department.

From Reuters:

Yahoo Inc's attempt to form an alliance with Google Inc to stave off Microsoft Corp could run into more trouble with antitrust regulators than Microsoft's unwelcome takeover bid.

While Yahoo is seeking a business partnership with Google -- unlike the outright merger that Microsoft wants -- legal experts say any deal between the world's two largest Internet search services will draw heavy scrutiny from U.S. and European competition regulators.

"The Justice Department would certainly want to take a serious look at that because it would mean that a firm that would want to take advertisements or to place advertisements (online) would have only one place to go," said Aaron Edlin, who teaches law and economics at the University of California at Berkeley.

Google held a 59.2 percent share of the U.S. Web search market in February, compared with Yahoo's 21.6 percent and Microsoft's 9.6 percent, according to research firm comScore.

MICROSOFT SETS APRIL 26 DEADLINE FOR YAHOO

Microsoft has set an April 26th deadline for Yahoo to approve Microsoft's takeover offer, now valued at $41 billion. If Yahoo does not accept the offer by the deadline, Microsoft has confirmed that it will pursue a hostile takeover at a lower price. Yahoo CEO Jerry Yang maintains that the $41 billion offer is simply too low.

From USA Today:

Yahoo (YHOO), facing a late April deadline from Microsoft (MSFT) to accept its $41 billion buyout offer, on Monday said that it does not oppose a deal with the world's largest software maker but wants a sweetened bid.

"We are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders," CEO Jerry Yang and Chairman Roy Bostock wrote in a letter to Microsoft CEO Steve Ballmer. "Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders."

In a letter to Yahoo on Saturday, Ballmer questioned why Yahoo continues to resist Microsoft's overtures absent a deal with another corporate suitor.

"Our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares," Ballmer wrote. He argued that Microsoft's bid has grown stronger as the economy has weakened and that Yahoo shareholders support the takeover bid.

YAHOO MAY DELAY ANNUAL MEETING IN AN EFFORT TO THWART MICROSOFT TAKEOVER

The New York Times is reporting that Yahoo is considering several options in an effort to avoid being taken over by Microsoft, including delaying their annual shareholder meeting. The twists and turns of this deal get more interesting by the day.

From The New York Times:

Yahoo is considering several options, including a plan to postpone its annual meeting, people close to the company said on Tuesday.

Microsoft had been preparing to nominate a slate of directors to the board of Yahoo by next Thursday, the deadline for mounting a proxy contest. On Wednesday, Yahoo said it was extending the deadline for nominating directors until 10 days after the announcement of a date for its annual meeting — but gave no indication when that announcement might come.

Under the laws of Delaware, where Yahoo is incorporated, a public company cannot go more than 13 months without holding an annual meeting. Yahoo held its annual meeting last year on June 12.

The delay could leave room for Microsoft to reach a negotiated, friendly deal with Yahoo, which would be made much more difficult if Microsoft decided it needed to pursue the proxy contest. On the other hand, Yahoo’s continued maneuvering might just harden Microsoft’s resolve.

Yahoo’s investors could take the view that by postponing the meeting the company is disenfranchising its shareholders. The move could lead to lawsuits from Microsoft or from Yahoo shareholders.

EUROPEAN UNION REGULATORS FINE MICROSOFT $1.3 BILLION

The European Commission fined Microsoft $1.3 billion for failing to comply with a 2004 judgment that found the software giant guilty of abusing its market dominance. This fine brings the total Microsoft has paid due to European Commission rulings to $2.5 billion.

From The New York Times:

Microsoft had earlier been fined after the commission determined in 2004 that the company had abused the dominance of its Windows operating system to gain unfair market advantage. The commission imposed the new fine Wednesday, it said, because the company had not met the prescribed remedies after the earlier judgment.

“Microsoft was the first company in 50 years of E.U. competition policy that the commission has had to fine for failure to comply with an antitrust decision,” the European competition commissioner, Neelie Kroes, said in a statement.

Microsoft said it was “reviewing the commission’s action.”

The company, the world’s biggest maker of software, said in a statement that the commission had announced in October 2007 “that Microsoft was in full compliance with the 2004 decision, so these fines are about past issues that have been resolved.”

PENSION FUNDS SUE YAHOO FOR TURNING DOWN MICROSOFT OFFER

Two pension funds have sued Yahoo and its Board of Directors claiming that they neglected their financial duty to shareholders in an attempt to avoid being taken over by Microsoft.

From USA Today:

The lawsuit was filed in Delaware Chancery Court on Thursday by lawyers representing Detroit's police and fire retirement system and general retirement system, as well as "all other similarly situated public shareholders."

According to the lawsuit, Yahoo's board is pursuing "value-destructive" third-party deals in an effort to fight off Redmond, Wash.-based Microsoft, which on Feb. 1 announced a takeover bid of $31 per share in cash and stock, a 62% premium over Yahoo's previous day's closing price.

"Yahoo's directors cannot 'just say no' indefinitely to legitimate acquisition offers," the lawsuit reads. "Likewise, Yahoo's directors cannot pursue transactions that do not require shareholder approval for the primary purpose of making Yahoo unattractive to Microsoft."

MICROSOFT EXPECTED TO WAGE PROXY FIGHT TO GAIN CONTROL OF YAHOO

Reports are surfacing that indicate that Microsoft will wage a proxy fight to gain control of Yahoo after its $31-per-share offer, valuing the company at the time at nearly $45 billion (now roughly $41 billion due to a decrease in Microsoft's stock price), was turned down.

What is a proxy fight? It is an effort to gain control of the Board of Directors to force change. In this case, Microsoft will urge shareholders to vote to elect new directors who are Microsoft-friendly, replacing the directors who voted down Microsoft's offer. If Microsoft is successful at ousting the current board and replacing them with one that favors Micrsoft, the $31-per-share offer, or one that is slightly higher, would almost certainly be accepted.

Most proxy fights are unsuccessful, but this one has a decent chance since all of Yahoo's directors are up for reelection at the same time, as opposed to having a staggered election in which only one or two board members can be replaced in a given year.

From The New York Times:

In an escalation of its fight for Yahoo, Microsoft will authorize a proxy fight at the Internet company this week, people briefed on the matter told DealBook.

The move, expected to cost about $20 million to $30 million, was Microsoft’s alternative to raising its $44.6 billion bid and is seen as a less expensive way to put pressure on Yahoo’s board. Yahoo rejected Microsoft’s original offer as undervalued.

Yahoo’s board is vulnerable in a proxy fight. Yahoo does not have a staggered board, so all of its directors are up for nomination this year. And, per its bylaws, in a contested election, directors are elected by a plurality of votes cast.

MORE MICROSOFT & YAHOO NEWS

Many analysts believe it will be very difficult for Yahoo to avoid the $31 per share Microsoft takeover bid as no new bids have emerged. Yahoo continues talks with other potential friendly partners including Rupert Murdoch's New Corp., which owns MySpace, and AOL, but deals with either seem like a long shot.

From The New York Times:

Can Yahoo avoid being gobbled up by Microsoft?

Many analysts say it is increasingly unlikely.

While some of those conversations [with potential white knight partners AOL and News Corp.] continue, no deal has emerged and a growing chorus of analysts and investors say it is improbable that anyone will come up with an offer that is more attractive to Yahoo shareholders than Microsoft’s, which was originally valued at $31 a share.

“It seems like Yahoo’s strategic options are relatively limited,” said Mark Mahaney, an analyst with Citigroup. “It is hard to see a scenario that could create as much value for shareholders as quickly as a Microsoft offer.”

From USA Today:

Microsoft CEO Steve Ballmer appears to be under rising pressure by big shareholders to make the $31-a-share opening offer stick. One reason: Paying $35 to $40 a share for Yahoo would drive down Microsoft's projected earnings through its 2011 fiscal year, says Robert Breza, tech stock analyst at RBC Capital Markets.

Yahoo on Monday rejected the $31-a-share offer, giving rise to speculation that it is courting a white-knight investor, such as AOL or News Corp. (NWS), to help it stay independent. A source briefed on the matter says talks to sell a 20% stake to media giant News Corp. are highly unlikely to result in anything. The source requested not to be named because talks are ongoing.

A tie-up with AOL would boost Yahoo's online advertising efforts but be expensive to consummate, says Shahid Khan, principal analyst at IBB Consulting Group. "It may distract Yahoo from getting its own act together," says Khan.

Jeffrey Lindsay, an analyst at Sanford C. Bernstein, says reported talks with potential white knights are "a ploy to drive up Microsoft's bid offer." Lindsay expects Microsoft to hold firm for now at $31, then perhaps up the bid to $35 or $36 within two weeks. "The pressure will really be on Yahoo to accept," he says.

Ballmer's next move may be to rally big shareholders to back a hostile takeover bid, says David Mitchell, senior vice president of IT research at Ovum. That could take the form of a tender offer made directly to shareholders or a proxy fight to win control of the Yahoo board.

YAHOO REJECTS MICROSOFT'S OFFER

Yahoo officially rejected Microsoft's $44.6 billion takeover bid stating that it was too low.

From The New York Times:

“After careful evaluation, the board believes that Microsoft’s proposal substantially undervalues Yahoo including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments,” the company said in a statement.

[If Microsoft decides to continue to pursue Yahoo it] may have an easier time than it could have had two weeks ago: since then, millions of Yahoo’s shares have traded hands to short-term-oriented hedge funds that typically favor a quick sale, as opposed to value investors who hold shares for the long term.

Microsoft could also decide to make an offer directly to shareholders, called a tender offer, which would put more pressure on Yahoo’s board to negotiate. At the same time, Microsoft could also set a deadline for its bid, known as an “exploding offer.”

And if Microsoft decides to make this a nasty battle, it could start a proxy contest to oust Yahoo’s board at its next election; it would have until March 13 to nominate a new slate of directors.

MICROSOFT BIDS $44.6 BILLION TO ACQUIRE YAHOO

Microsoft has offered $44.6 billion, or $31 per share, to acquire Yahoo. Yahoo's stock closed at $19.18 per share Thursday, so the offer is a premium of 62%. In pre-market trading Friday, Yahoo shares were trading at $29.06 at the time of this posting.

From The New York Times:

If consummated, the deal would redraw the competitive landscape of the Internet consumer services business, where both Microsoft and Yahoo have struggled to compete with Google.

Microsoft said the combination of the two companies would create efficiencies that would save approximately $1 billion annually. The software giant also said that it has an integration plan to include employees of both companies and intends to offer incentives to retain Yahoo employees.

Earlier this week, Yahoo said it would cut 1,000 jobs in an effort to refocus the company and reduce spending, and issued an outlook for 2008 that disappointed investors.

MICROSOFT HIT WITH ANOTHER EU ANTITRUST SUIT

This post mixes news with my opinion.  I welcome the thoughts and opinions of others.

From PC World:

Opera [browser company] is asking the [European] Commission, the executive branch of the European Union, to force Microsoft to unbundle IE from Windows, or include other browsers as a standard part of its operating system. It also wants it to require Microsoft to adhere to industry standards with its Web browser.

The issue of standards is seen as important because if all Web browsers do not use the same standards, Web site developers are likely to design their Web sites to work with the most widely-used browser, which is Internet Explorer. That gives people a disincentive to use other browsers.

"By tying its Internet Explorer product to its monopoly Windows operating system and refusing to faithfully implement industry accepted open standards, Microsoft deprives consumers of a real choice in internet browsers. Browsers are the gateway to the internet. Microsoft seeks to control this gateway," said Thomas Vinje, speaking for ECIS [European Committee for Interoperable Systems].

Let's review.  

1. Microsoft has created the world's most popular browser.
2. Opera has created a competing browser that is preferred by a few users and has a tiny market share. 
3. Opera has sued Microsoft in the E.U. claiming that (1) bundling IE with an operating system is unfair and (2) that Microsoft should be FORCED to use "standards" spelled out by others in the creation of their product.
4. The ECIS spokesperson claims that consumers are being denied a choice of browsers.

The implications of points one and two should be obvious to everyone; Microsoft is the big market share winner, Opera cannot compete in a free market, so Opera goes crying to the European courts for help and protection.  I have an idea.  Why don't they invest the time and money they will spend on this suit creating a better browser that can compete more favorably with Internet Explorer?

As for points three and four, who believes that any company should be forced to adhere to other's "standards" in creation of their product?  It is absurd and would crush the creativity it is supposedly designed to protect.  Microsoft, along with any other company, should be free to design its software any way it chooses.  If users and designers do not like it, they will avoid it and choose another product.  The ECIS spokesperson is way off base.  Consumers are not being denied a choice of browsers.  How do I know?  Well, as I write this, I'm using Apple's Safari browser on my Microsoft Windows Vista computer.  And, in other window, I'm running Firefox.  And, yes, I do have Internet Explorer and Opera installed, as well.  I use each browser for different tasks.

You have to question the motive and sincerity of anyone who would suggest that consumers are being denied a choice when Safari, Firefox, and Opera are all free and easy to download and install.  While you are at it, question the motive of a company that files a lawsuit because it is unsuccessful in competing in a free and open market.

GOOGLE'S CONTINGENCY PLAN: TAKE ON FACEBOOK WITH ORKUT & A NEW STRATEGY

From The New York Times:

Google and some of the Web’s leading social networks are teaming up to take on the new kid on the block — Facebook.

On Thursday, an alliance of companies led by Google plans to begin introducing a common set of standards to allow software developers to write programs for Google’s social network, Orkut, as well as others, including LinkedIn, hi5, Friendster, Plaxo and Ning.

The strategy is aimed at one-upping Facebook, which last spring opened its service to outside developers. Since then, more than 5,000 small programs have been built to run on the Facebook site, and some have been adopted by millions of the site’s users. Most of those programs tap into connections among Facebook friends and spread themselves through those connections, as well as through a “news feed” that alerts Facebook users about what their friends are doing.

For Google, the effort could breathe new life into Orkut, which is popular in Brazil and other countries, but not in the United States.

Facebook’s success with its platform has proved that the combination of social data and news feeds is a powerful mechanism to help developers distribute their software. They are now seen as must-have functions for many Internet companies. Other social networks and Web companies, including MySpace and the instant messaging service Meebo.com, have announced plans to open their sites in similar ways.

MICROSOFT EARNINGS UP 23%, STOCK RISES

From USA Today:

Microsoft registered a sharp rise in financial results Thursday, propelled by brisk sales of its Vista operating system, Office 2007 software suite and Halo 3 video game.

The software giant said earnings increased 23% in its fiscal first quarter, to $4.3 billion, or 45 cents a share. Revenue climbed 27% to $13.8 billion.

In the year-ago quarter, Microsoft earned $3.5 billion, or 35 cents a share. The results beat analyst forecasts of 39 cents per share on sales of $12.6 billion, according to a poll by Thomson Financial.

It was Microsoft's best first quarter since 1999, when Microsoft's Windows 98 operating system was launched in Japan and several European countries. The news sent Microsoft soaring 11%, to $35.53, in after-hours trading Thursday.

MICROSOFT BUYS PIECE OF FACEBOOK

From USA Today:

Microsoft said Wednesday it would pay $240 million for a small slice of Facebook in a deal that values the red-hot social networking website at $15 billion.

In selling a 1.6% stake to the software giant, Facebook rebuffed a competing offer from search-engine giant Google. Google had no comment.

Microsoft also will sell ads on Facebook outside the USA, extending a marketing relationship that began last year. The deal, announced after several weeks of negotiations, is considered a coup for Microsoft as it slugs it out with Google for online ad sales. Facebook, founded in 2004, has more than 47 million users.

The hefty price paid by Microsoft validates the gambit by Facebook CEO Mark Zuckerberg to spurn a $1 billion takeover bid from Yahoo last year. In 2005, News Corp., parent of Fox News, paid $580 million to acquire Facebook rival MySpace.

Microsoft covets the data Facebook collects about its members' tastes and preferences. Microsoft wants to sell ads based on those preferences, ads that appear when Facebook members use Windows Live services, Windows Mobile smartphones — even its Xbox Live online-gaming service, says online search expert Kevin Lee, chairman of Did-it.com.

MICROSOFT UPDATES ZUNE

From The New York Times:

Microsoft has revamped its slow-selling Zune digital music players and created a MySpace-style social-networking site in its drive to compete with Apple’s market-leading iPod player.

In large part, the Microsoft moves announced Tuesday — the introduction of a smaller, sleeker version of the Zune player and the planned Zune Social Web site — reflect an attempt to build scale for a brand that so far has achieved only niche status. Microsoft said it had sold about 1.2 million units of the original device in the last year.

Many of the changes are stylistic. The company reworked the device’s navigation button and dropped one of its signature colors, brown, from the list of options. The Zune will be available in black, pink, green and red.

But one of the most striking changes had to do with Microsoft’s effort to enhance what had been perhaps the most talked-about feature on the original device: the ability to share music files and other media wirelessly with other Zune owners. Far too few people, however, purchased the player for such sharing to become commonplace, and the function held little appeal because it was crippled by usage rules negotiated with the music industry. Shared songs expired within a few days, even if the recipient did not play them. And a file acquired from one Zune user could not be shared with a third user.

Under the new rules, Microsoft said, shared songs would have no expiration date and it would be possible repeatedly to pass along songs sent from one device to another. But a shared file can be played only three times on each Zune.

A version with 80 gigabytes of storage, available only in black, will sell for $250. A version using flash memory with 8 gigabytes of storage will sell for $200, and the 4-gigabyte flash player will cost $150, the company said.

INTEL IS THE EUROPEAN COMMISSION'S NEXT TARGET

In the wake of the ruling against Microsoft this week, Intel seems to be the next target for the E.U. in terms of anti-competitive behavior. Rival AMD has complained since 2000 that Intel has used questionable practices, seemingly legal in the United States, but perhaps illegal in the E.U. In July of this year the European Commission charged Intel with illegal use of sales tactics such as rebates and incentives to maintain or increase its market share in microprocessors.

From BusinessWeek:

The EC cases against Microsoft and Intel are based on different kinds of alleged market abuse and draw on separate legal precedents. But both reflect a widening gap in how the U.S. and Europe view the legality of hardball business tactics by dominant companies. While regulators in both regions look for signs of harm to consumers from monopoly behavior, Europe gives as much or more weight to the impact on competitors.

That distinction played a critical role in the Microsoft ruling. On the face of it, Microsoft's free inclusion of Media Player in Windows was a boon to consumers. But the EC was able to show that the software bundling harmed rivals such as Real Networks and Apple and reduced competition in the media player market—thus potentially hurting customers in the long run by leading to less choice in digital content formats. A similar argument held that by limiting the information it gave out about Windows networking standards, Microsoft had foreclosed competition in desktop and server operating systems, to the detriment of consumer choice.

The same kind of thinking is at the core of the commission's case against Intel. Prompted by complaints from rival chipmaker AMD dating back to 2000, the EC has charged Intel with illegal use of sales tactics such as rebates and incentives to maintain or increase its market share in microprocessors. Such programs are normally permissible but can cross the line into abuse when practiced by companies with monopoly market share.

Intel strongly denies any wrongdoing and says it has acted within the law with its market incentive programs. It also argues that the programs have led to lower chip prices for consumers.

That may not be enough of a defense in Europe—especially now that the commission's hand has been strengthened in the wake of the Microsoft defeat. "European authorities and courts put a higher duty on dominant firms to deal fairly with their competitors," says Philip Marsden, a senior research fellow at the British Institute of International & Comparative Law. "They want to foster gentlemanly competition, a premise that is foreign to American antitrust thinking."

EUROPEAN COURT DENIES MICROSOFT APPEAL

From the International Herald Tribune:

The second-highest court in Europe on Monday rejected Microsoft's attempt to overturn a landmark European Commission antitrust ruling and record fine, bolstering smaller software makers and putting market leaders on notice that they cannot leverage dominance in one technology niche to squelch broader innovation, industry and legal experts said.

The European Court of First Instance, in a starkly worded summary, ordered Microsoft to obey a 2004 commission order to share confidential computer code with competitors. The court also upheld the record fine of €497.2 million, or $690 million, against the world's largest software maker.

Software and legal experts said the court's decision may signal problems for companies like Apple, Intel and Qualcomm, whose market dominance in online music downloads, computer chips and mobile phone technology is also being scrutinized by the commission. The ruling also could make it harder for Microsoft to continue "bundling" new features into its Windows software.

Microsoft's allies said the court's decision, which expressly forbids the company's policy of bundling new extras into its Windows operating system, will have a chilling effect on the strategies of many global software makers.

"This ruling is certainly going to introduce a lot of uncertainty," said Jonathan Zuck, president of the Association for Competitive Technology, a Washington-based group that supported Microsoft in its legal case in Europe. "What the court is basically saying is that if you develop a successful product and get too big, the European Commission is going to force you to give away your intellectual property."

When Microsoft wants to put handwriting and speech recognition features or stronger anti-virus and other security software into the Windows operating system, competitors can complain to European authorities, even though the European unbundling order in the media player case - compelling Microsoft to offer a version of Windows in Europe without the media player but with no difference in price - was a failure.

Microsoft has already been forced to pay nearly €1 billion in fines in the long-running legal case, which has pitted the software maker against the commission and a host of competitors, including International Business Machines and Novell.

After Sun filed the initial complaint in 1998, the commission later expanded its inquiry to include Microsoft's practice of bundling its Windows Media Player into the Windows operating system. After Microsoft began bundling its media player into Windows, it overtook the market leader, RealNetworks.

Microsoft has been repeatedly fined by the commission since the 2004 antitrust ruling for failing to adequately disclose server software coding.

During the course of the litigation, Kroes said in Brussels that Microsoft's share of the market in workgroup servers had risen to 80 percent from 40 percent and that Windows Media Player had come to dominate the market.

She highlighted the fact that Microsoft had 95 percent of the world market for desktop operating systems and said she would like to see that share decline.

"You can't draw a line and say exactly 50 percent is correct, but a significant drop in market share is what we would like to see," she said. "Microsoft cannot regulate the market by imposing its products and its services on people."

GOOGLE ACQUIRES DOUBLECLICK

From The New York Times:

Google agreed to its largest acquisition yesterday, reaching a deal to purchase DoubleClick, the online advertising company, from two private equity firms for $3.1 billion in cash, almost double what it paid for YouTube last year. And perhaps just as important, the deal kept DoubleClick from the hands of Microsoft.

For Google, the purchase is another step in its transformation from a search engine into an advertising powerhouse. DoubleClick, which is based in New York City, specializes in software for display advertising and has close relationships with Web publishers, advertisers and advertising agencies.

The sale of DoubleClick involved weeks of negotiation that included at one point Yahoo, AOL and, most prominently, Microsoft, which has been trying to position itself as an advertising rival to Google. Even though Microsoft has more cash on hand than Google, the company was ultimately outbid.

“Keeping Microsoft away from DoubleClick is worth billions to Google,” an analyst with RBC Capital Markets, Jordan Rohan, said. “Yet again, Microsoft is on the sidelines and away from the action.”

MICROSOFT LOSES $1.5 BILLION PATENT LAWSUIT

Microsoft was ordered to pay $1.5 billion for patent infringement to Alcatel-Lucent in a verdict rendered Thursday. The patents involved in the case deal with converting audio into digital MP3 files on a computer. Microsoft claims to have paid $16 million to Fraunhofer-Gesellschaft, a German research company, to acquire the rights to the technology. Microsoft claims that Fraunhofer-Gesellschaft is the rightful and internationally recognized licensor of the technology used and nothing is owed to Alcatel-Lucent.

USA Today

MICROSOFT HAS BEST REPUTATION WITH CONSUMERS

The eighth annual survey to determine the U.S. corporations with the best and worst reputations showed that Microsoft jumped from number seven in 2005 to number one in 2006. While there is much to take away from the survey, it is interesting to note the Wal-Mart fell from 29th in 2005 to 40th in 2006.

WSJ.com

MICROSOFT'S WINDOWS VISTA ON SALE TUESDAY

Microsoft's newest operating system, Windows Vista, intended to replace Windows XP, will become available to consumers at some retailers starting at 12:01 a.m. Tuesday morning. The operating system has been available to many corporate clients since November. Most reviews I've read indicate that while it is a major advance, most consumers should stick with Windows XP on older computers instead of upgrading and wait to get Windows Vista preinstalled on their next new computer. Many of the more sophisticated features in Vista require more memory than most older computers have and a high-end graphics card.

USA Today