News briefs: Server sales spike, analysts report

Also: Texas, EFF to sue Sony over rootkit; Lockheed loses interest in CSC; Cisco buys Digital Fairway; AT&T resurrects AT&T Wireless brand name

• For the first time, Microsoft Windows was the leading operating system in new servers, as the worldwide server market grew 8.1% in the third quarter, IDC said last week. After a long period focused on cutting costs and buying servers just to run current applications, companies are once again investing strategically in systems to handle future workloads, says Matt Eastwood, an IDC analyst. Sales of Windows systems accounted for 36.9% of all server revenue in the quarter, vs. 31.7% for Unix and 11.5% for Linux. Server revenue grew faster than IDC’s projection, which was for 6% growth. Also last week, Gartner reported that worldwide server revenue grew 5.6% during the third quarter. Gains in sales of servers costing less than $25,000 led the upward trend, according to the research companies.

• Sony BMG Music Entertainment’s fight over its XCP copy-protection software shifted to the courts last week as Texas Attorney General Greg Abbott and lawyers from the Electronic Frontier Foundation moved to bring civil suits against the entertainment giant. Texas is the first state to sue Sony over its distribution of flawed copy-protection software, while the EFF, a digital rights watchdog group in San Francisco, said that it would bring a class-action lawsuit against Sony in California. The Texas lawsuit accuses Sony of violating the state’s 2005 anti-spyware law by distributing the software on 52 of the company’s music titles this year. Further lawsuit details are available here . The EFF’s lawsuit will seek unspecified compensation for XCP customers and will draw attention to a second copyprotection product that ships with Sony CDs, called MediaMax.

• Lockheed Martin has apparently lost interest in outsourced IT provider Computer Sciences Corp. The IT services firm, which specializes in government contracts, had been eyed by defense giant Lockheed Martin, but The Wall Street Journal has reported that talks have broken down. That news sent CSC’s stock – which had jumped 20% during the last month as a result of the buyout talks – tumbling early last week to $48 from about $54 days before. CSC was asking $65 per share, or about $12 billion. According to some reports, the price tag proved to be too much for Lockheed and a group of private equity investors who were negotiating the CSC buy. It’s unclear whether there are other bidders, and CSC did not immediately return calls for comment. But analysts say potential customers should keep track of where CSC is headed, because new management could affect services.

• Cisco last week followed up its mega-acquisition of cable-box maker Scientific-Atlanta with a quieter deal, buying software for managing IP PBX deployments from Digital Fairway , a maker of carrier and enterprise voice- and video-management software. The acquisition of Digital Fairway technology gives Cisco software that could help make VoIP rollouts simpler. IP phone and telco circuit management is a top concern for large companies rolling out VoIP. Digital Fairway makes software that lets carriers manage, bill for, and provision VoIP and video services for business and residential customers. The company also makes software for enterprises to manage telecom circuits and VoIP services from carriers. Its products include management software for automating the setup of IP phones and converged applications for business end users. Cisco is paying $15.25 million for the intellectual property and software assets.

• AT&T will resurrect the AT&T Wireless brand name for its Cingular-based wireless service. Cingular is a jointly owned venture of AT&T – the company formed from last week’s closure of SBC’s acquisition of AT&T – and BellSouth. Both carriers, though, have the right to rebrand the service according to the contractual terms of their Cingular relationship.