News Schmooze: Tech economy suffers as Bill Gates heads for fantasyland

Tech companies groaned, Bill Gates prophesied and SirCam exposed the world's darkest secrets

In case you were under any illusions that the global economy was going to make a Rocky-like comeback in the second half, bloodied but triumphant, tech companies reminded us this week that, no, in fact, they still aren't making money. The apparent exception is that rare breed, the microchip intellectual property designer, which is thriving as tech companies pump up their research budgets in the hope that their designers will be able to ward off the R-word.

Less fortunate companies, like BT and Scoot, are having to make massive layoffs or face the prospect of going under. JDS Uniphase, which makes fibre-optic components, even had the dubious distinction of reporting the biggest annual loss in US corporate history -- $50.6bn.

HP announced more job cuts despite the efforts of its valiant employees, whose voluntary pay cuts and shorter work weeks have saved $130m. HP assured employees that taking a pay cut would have no bearing on how the company evaluated them in the future: in other words, they could still get the sack.

In the meantime, Waterstone's has found a way of cutting costs at its struggling Web site: let Amazon do it.

Amid all this, Microsoft is tightening the screws and squeezing ever-more cash out of its locked-in customers. And Bill Gates is lighting the gloom by talking about the "magical" world of software to come, leaving the Schmoozer to wonder whether he has finally cracked under the strain of dominating the global technology marketplace. He also told financial analysts that XML is as important to the world of computing as the graphical user interface was -- as important, maybe, but more mind-numbingly boring.

AOL is going behind Microsoft's back and getting itself bundled onto the desktop via OEMs. Maybe the ISP should just go all the way and come out with its own operating system, complete with annoying sound effects and a free gigabyte of pornographic junk email...

SirCam amused security watchers all week, not for its virulence, which wasn't great, but for its amusing feature of emailing random documents to everyone in your address book. Somehow one of the brains at the FBI managed to infect himself, though he assured the world that nothing too top secret was sent to enemies of the State.

It was a good week for gadget fans, with a whole slew of dubiously useful, yet nifty, products making their appearance. All hail the cloth keyboard, which apparently can be dipped in a glass of milk without harm, and the wearable PC, which will be in shops by Christmas, unless of course they cancel Christmas this year.

Not to forget the Personal Orbital Assistant, under development by NASA, which some engineer decided to make after a 48-hour binge of Star Wars videos and Star Trek reruns, and the software developer who is showing off the operating system of a Palm running within a Pocket PC. With innovation like this going on, the spending slump can't last long...

The News Schmooze is ZDNet UK's irreverent take on the week's news. Send your tip-offs to: mailroomuk@zdnet.com.

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