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“We are cooperating fully with the FBI to assist them in their investigation and doing what we can to protect our members,” said George Paz, CEO and chairman of Express Scripts, in a statement on the company’s site.

In a separate announcement, Express Scripts announced that Knoll, a New York-based risk-consulting firm, has been contracted to offer expert assistance to members who become victims of identity fraud as a result of this incident.

St. Louis-based Express Scripts said on Tuesday that a limited number of its clients–which include government agencies, unions, and employers–have received letters threatening to expose the personal information of its members. The company said the letters sent to its clients were similar to the original extortion threat it received in October.

The company also said it was establishing a reward totaling $1 million to anyone providing information that results in the arrest and conviction of the criminals responsible.

One week after a breached corporate health care company refused to pay extortionists, the criminals now are seeking money from the corporate clients whose employee data might have been exposed.

It’s time developers stop looking at statistics and the perceived popularity of first-person shooters and start realizing that as consumers, we crave innovation and fun. We want a compelling storyline and a new battle system that takes aim at current conventions instead of copying them. And more than anything, we want games that provide an enjoyable experience instead of another FPS with another crappy story and the same design.

Check out Don’s Digital Home podcast, Twitter feed, and FriendFeed.

How many first-person shooters and sports games need to flop before the industry realizes that although shooters are the highest-grossing titles and sports games perform well thanks to EA, it’s time they stop wasting their time with more of the same and start moving towards better titles that offer something unique?

According to the Electronic Entertainment Design and Research institute, just 4 percent of games that go into production will turn a profit and only 20 percent of titles that make it to store shelves will achieve profitability.

Armed with that knowledge, developers should tell their teams to stop developing games for the
Wii and start developing mature-rated first-person shooters, right?

That shouldn’t surprise us. When I look at the video game industry and the countless number of titles that I fire up on my consoles, it’s not hard to see why the industry is struggling to develop profitable games: too many titles are the same basic game in a different box with different characters.

Judging by those figures, it’s clear that developers are trying to increase profitability through shooters and action titles, but Nintendo’s success with the Wii’s unique style of gameplay, as well as the success of unique titles last year, suggests they’re wrong in following that strategy. After all, even though the industry is dominated by mature titles, only a select few have performed well.

Too many developers get bogged down in the statistics. According to EEDAR in a study it conducted last year examining the industry, mature-rated titles comprise 10 percent of all U.S. retail games and have the highest average gross sales in the country. The action genre is most prevalent and shooter titles have the highest gross sales.

If developers really want to make games profitable, they can’t maintain status quo. First-person shooters are fine if they’re unique and created with value in mind, but if they’re not, they’ll be thrown back into the heap with the vast majority of video games that simply don’t make the cut.

Think again.

During 2007, only two of the top 10 best-selling games of the year–Halo 3 and Call of Duty 4–were first-person shooters. Most of the titles left on the list–Wii Play, Super Mario Galaxy, Guitar Hero III: Legends of Rock, and Pokemon Diamond–span varying genres and offer a relatively unique experience. Combined, those titles sold over 10 million units, compared with just 7.86 million units for the two first-person shooters.

Although video game revenue is at its highest level in history, most researchers believe the industry is “recession-proof,” and there are more gamers across the globe than ever before, not everything is so blissful for the video game industry.

Say what you will about gaming, but I don’t necessarily think we need more games; I think we need better games.

Upstart Android, which Google released in October, came in fourth with 6.15 percent, following No. 2 Java ME’s 9.06 percent and No. 3 Windows Mobile’s 6.91 percent.

This is an indication of strong interest in Windows 7, since it does not come pre-installed on a computer like Vista. Beta users are taking the time and effort to install it on their home computers, since corporations generally prohibit beta operating systems to be used in production environments.

The
Mac OS had been hovering around the 10 percent mark among operating systems accessing the Web. But in its Operating System Market Share report for February, Net Applications showed the Mac OS at 9.71 percent, down from 9.93 percent in January. Meanwhile, Microsoft Windows’ Internet share increased to 89.37 percent from 88.26 percent in January.

(Credit:
Net Applications)

February figures from Net Applications on mobile browsing market share.

In a separate report, Net Applications reported spikes in usage share of
Windows 7–the follow-on to Windows Vista potentially due out later this year–after Microsoft released the public beta of the operating system in January. In the report, Net Applications attributed these spikes to weekend users:

(Credit:
Net Applications)

Similar to Windows Vista, Windows 7 usage share is showing a pattern of being much higher on weekends than on weekdays. In contrast, Windows XP has an inverse trendline. XP’s share is higher on weekdays due to Microsoft’s relatively high business vs. residential share of Windows XP.

In the mobile browsing arena, Net Applications reported that it had taken its first detailed look at market share and pronounced Apple’s
iPhone as having a “commanding lead” with 66.61 percent of the market. But, Net Applications noted, “Android and BlackBerry are rapidly gaining market share. This does not mean that iPhone web browsing is shrinking, because the overall market is growing rapidly.”

February figures from Net Applications on Windows 7 beta usage.

February figures from Net Applications on operating system share amid Internet use.

(Credit:
Net Applications)

Apple gave up a sliver of Internet market share last month, according to preliminary figures released Sunday by Web metrics company Net Applications.

The basic idea will be to supply the technology on an open source basis and then let users alter it to fit their individual company needs. At the same time, Canonical hopes to benefit from a developer feedback loop, which presumably would contribute any bug fixes or suggestions on how to advance the offerings. Any profits would roll in through the later sale of ancillary support and add-on services to customers.

Canonical is best known as being the commercial sponsor of the Ubuntu operating system, a computer operating system based on Debian GNU/Linux. With 8 million to 10 million users, Ubuntu has enjoyed success in no small part because of its ease of use.

Add Canonical to the roster of companies offering technology to help enterprise customers build their own cloud-computing setups. But unlike most of the better-known players in this nascent market, the twist here is that the technology will be supplied by an open-source shop.

Next month the company will offer the first details on plans to roll out cloud-computing services to its customers. At this point, details remain scarce but management isn’t planning to reinvent the wheel. Instead, the company is going to adopt the same approach it used to promote Ubuntu as an open-source operating system.

This is just the latest announcement in what’s fast becoming a crowded and super-hyped field. The umbrella terms refers to the concept of allowing access to computing power and storage space by connecting over the Internet. Most recently, Sun Microsystems last week offered details on a plan to enable developers, start-ups, and even students access a cloud-computing infrastructure.

Just after I read this article, I happened to meet with Symantec about a new project coming out of its internal incubator called Go Everywhere. Go Everywhere is an online workspace that actually aggregates other services from Web sites like Box.net, Google, and Zoho. In other words, Symantec is using its IT management skills to consolidate available Web resources into a manageable personal online workspace for business users. Pretty cool stuff.

This is not your father’s Symantec. The company is branching out, experimenting with R&D dollars, and using the Web to build a beta program–a far cry from its reputation for antivirus and backup alone. What’s more, Symantec readily admits that Go Everywhere may never become a product, but it remains willing to invest. The company figures it needs to take risks like this to find its next growth area.

In these uncertain times, it is easy to streamline budgets, cancel projects, and lay off employees, but it take real guts to invest in the future. For the good of the industry, I hope more tech firms and VCs follow Symantec’s lead.

Everyone in the technology industry should be sure to read this recent article in BusinessWeek that discusses current problems with the Silicon Valley business model and ideas for improvement. The article suggests that VCs and many firms are too concerned with short-term financial exit strategies rather than real investment in R&D.

The key factors affecting PC shipments are the rate of portable PC adoption, falling prices, and the PC upgrade cycle.

“Low-cost mini notebooks will help volume, but pressure margins and revenues,” said Lore Loverde, director of IDC’s Worldwide Quarterly PC Tracker. “Consumer and commercial segments will be much more conservative in their purchases over the coming year or two, and while low prices will remain essential, they will not drive volumes as they did in the past few years.”

That’s a drastic cut from the 13.7 percent growth IDC had predicted for 2009 earlier this year. The hardest hit areas will be the emerging PC markets of Latin America, Central Europe, the Middle East, and Africa due to falling commodity prices and the worldwide credit crunch.

On Wednesday, IDC released an updated forecast for the number of PCs expected to be shipped next year. In 2009, PC shipments will rise just 3.8 percent worldwide, according to the report.

But the U.S. PC market is expected to fare even worse. Next year will bring a decline in shipments of PCs by 3 percent compared to this year. However, IDC says that there will be “low single-digit” increases in the years following.

Analysts are readjusting their expectations for the PC industry next year, and it’s not looking good.

His resignation is effective immediately, and he will be replaced by James Marcum as president and CEO, and by Allen King as chairman of the board of directors.

Philip Schoonover, chairman, president, and CEO of embattled electronics retailer Circuit City, resigned Monday, the company announced.

Earlier this year, a potential savior–albeit an unexpected one–appeared when Blockbuster announced it was interested in taking over Circuit City. The electronics retailer wasn’t open to the video rental chain’s advances, and one particularly vocal investor publicly encouraged Schoonover to consider the sale to Blockbuster or to a private equity firm.

Schoonover became company president in 2005, and ascended to the chairman and CEO’s office a year later. But Circuit City has struggled. It posted a $200 million loss in December 2007, and has improved only moderately since then. The company expects to report losses in the range of $170 million to $185 million for the current quarter. Those results will be announced next week.

Blockbuster withdrew its offer in July after perusing the retailer’s books.

Best Buy doesn’t have the same problem. In the midst of an economic downturn, the company last reported earnings of $737 million.

(Credit:
Circuit City)

          Philip Schoonover

Marcum joined Circuit City’s board in June and was elected vice chairman in August. His specialty is electronics retail–he was selected in order to help the struggling retailer while it tries to right itself. He has helped several other specialty retailers while in the midst of their own turnarounds.

Newly installed chairman King said in a statement, “The board of directors is committed to accelerating the pace of the company’s turnaround. Since he joined the board in June, Jim has been very effective in partnering with senior management and in helping identify opportunities to deliver increased value for our shareholders, customers, vendors and associates over the long term. We look forward to his continued contributions in this new important role.”

Circuit City is not the only electronics retailer struggling. CompUSA looked to be rescued when Mexican billionaire Carlos Slim Helu purchased the retail chain, only to close down much of the branches and sell the remaining few to a private equity firm last year, which sold the brand to Systemax.

According to the Flickr help page on the subject, “AT&T and Verizon Internet Services have reworked their broadband packages and will no longer be offering Flickr Pro to subscribers after January 31, 2009.”

I just got this message from Flickr: “Due to changes in your AT&T Internet service, your Flickr Pro account will expire on 29th March, 2010. That’s in 479 days! You can renew Flickr Pro for just $24.95 for a one-year account. And to thank you for staying with us, we’ll give you another two months at no cost.”

If you don’t pay, Pro accounts revert to regular accounts. Subscribers in that circumstance don’t lose any photos, but they do lose the Flickr Pro perks, which include the ability to see more than the last 200 photos that have been uploaded, unlimited uploads, unlimited numbers of photo collections called sets, ad-free browsing, and the ability to view full-size images.

I don’t have to pay until 2010 because I had already paid for one year of a Pro account, a payment that hadn’t been used because of the AT&T deal. But most folks probably will see their free Pro accounts vanish sooner.

Those who subscribed for DSL from AT&T or Verizon were entitled to free Flickr Pro accounts from Yahoo, but that deal is coming to an end.

Just last week, Serena Software said it was switching to Google from Exchange in a move it said would save it $750,000 a year, according to several reports.

Another Notes switcher in the crowd was Eddie Bauer, which has been a Microsoft Online customer for about five weeks. Chief Information Officer Rich Mozack said the clothing retailer wanted to move off Notes but couldn’t make the numbers work to run Exchange on its own.

Elop said Microsoft is adding thousands of servers to its data centers every month. Although Microsoft Online is initially aimed at Exchange and SharePoint, the goal is to offer a hosted option for all of Microsoft’s server software.

While many of those at Monday’s event were the company’s early customers and partners, not everyone at the event was ready to sign off. I spoke with a municipality that was highly interested in Microsoft’s product, particularly as it plans to move from GroupWise to Exchange. Still, with a dearth of other governments to point to, this CIO told me that he still faced challenges in getting the city’s upper management and government to sign off on the deal.

Tim Tisdale, CEO of Atlanta-based ThoughtBridge, explains how his company is using Microsoft Online as part of an "HR in a box" service it sells to businesses.

“We expect all of it be available in this way in the near future,” Elop said.

Over time, Microsoft narrowed the service to an option in which it hosts Exchange and SharePoint, runs the software in its data center, and charges customers on a monthly basis. Microsoft officially launched the products, known as Microsoft Online, at a customer event at the St. Regis hotel here.

“We just couldn’t justify the up-front investment,” Mozack said.

SAN FRANCISCO–For perhaps the first time in its history, Microsoft made the case on Monday that businesses shouldn’t run its software. Instead, Microsoft argued that corporations should let it run the software for them.

During the past several years, Microsoft has been testing out the idea that it can host and run business software cheaper and more effectively than individual enterprises can do on their own. The effort started in 2005 with a single customer–battery maker Energizer–which had Microsoft essentially handle all of its PC desktops.

“We can help you save money,” Microsoft Business Division President Stephen Elop told the crowd, saying Microsoft estimates that companies can save at least 10 percent by letting Microsoft run their messaging and collaboration software for them.

The software maker said last year that it would offer the hosted option for large businesses, later expanding the offer to businesses of all sizes. At last month’s Professional Developer Conference in Los Angeles, Microsoft also confirmed that it would offer Web-based versions of its Office applications, including Word, Excel, and PowerPoint.

Microsoft’s Ron Markezich said about two-thirds of early customers are moving from Notes to Exchange. But even as Microsoft continues to target those moving from Lotus Notes, the company faces the threat of its own Exchange customers moving to other hosted options, including Google Apps.

(Credit:
Ina Fried/CNET Networks)

At the event, Elop made Microsoft’s familiar case that, while the cloud is great, customers are better served by an option that allows software to run on customers’ own machines as well as over the Internet.

Morrow said the video rental company needed to make a change of some kind, and the option to move to Exchange without having to bring that skill set in-house was a key selling point, as was the ability to offer better mobile options, including Outlook Web Access and
iPhone support.

One of the early customers is video retailer BlockBuster, which has been using Exchange Online for about six months. Blockbuster CIO Keith Morrow said in an interview that Microsoft’s online services came at a good time for the company, which was on a several-generations-old version of Lotus Notes.