The Big Secret: An Exclusive First Look at Microsoft's Ambitious-And Risky-Plan to Remake the Personal Computer to Ensure Security, Privacy and Intellectual Property Rights. Will You Buy It?

By Levy, Steven | Newsweek, July 1, 2002 | Go to article overview

The Big Secret: An Exclusive First Look at Microsoft's Ambitious-And Risky-Plan to Remake the Personal Computer to Ensure Security, Privacy and Intellectual Property Rights. Will You Buy It?


Levy, Steven, Newsweek


Byline: Steven Levy

In ancient Troy stood the Palladium, a statue of the goddess Athena. Legend has it that the safety of the city depended on that icon's preservation. Later the term came to mean a more generic safeguard.

Here's something that cries for a safeguard: the world of computer bits. An endless roster of security holes allows cyber-thieves to fill up their buffers with credit-card numbers and corporate secrets. It's easier to vandalize a Web site than to program a remote control. Entertainment moguls boil in their hot tubs as movies and music are swapped, gratis, on the Internet. Consumers fret about the loss of privacy. And computer viruses proliferate and mutate faster than they can be named.

Computer security is enough of a worry that the software colossus Microsoft views it as a threat to its continued success: thus the apocalyptic Bill Gates memo in January calling for a "Trustworthy Computing" jihad. What Gates did not specifically mention was Microsoft's hyperambitious long-range plan to literally change the architecture of PCs in order to address the concerns of security, privacy and intellectual property. The plan, revealed for the first time to NEWSWEEK, is... Palladium, and it's one of the riskiest ventures the company has ever attempted. Though Microsoft does not claim a panacea, the system is designed to dramatically improve our ability to control and protect personal and corporate information. Even more important, Palladium is intended to become a new platform for a host of yet-unimagined services to enable privacy, commerce and entertainment in the coming decades. "This isn't just about solving problems, but expanding new realms of possibilities in the way people live and work with computers," says product manager Mario Juarez.

Because its ultimate success depends on ubiquity, Palladium is either going to be a home run or a mortifying whiff. "We have to ship 100 million of these before it really makes a difference," says Microsoft vice president Will Poole. That's why the company can't do it without heavyweight partners. Chipmakers Intel and Advanced Micro Devices have signed on to produce special security chips that are integral to the system. "It's a groundswell change," says AMD's Geoffrey Strongin. "A whole new class of processors not differentiated by speed, but security." The next step is getting the likes of Dell, HP and IBM to remake their PCs to accommodate the system.

"It's one of the most technically complex things ever attempted on the PC," says Gartner analyst Martin Reynolds. And the new additions will make your next computer a little more expensive. Will the added cost--or a potential earlier-than-otherwise upgrade--be worth it? Spend a day or two with the geeks implementing Palladium--thrilled to be talking to a reporter about the project--and you'll hear an enticing litany of potential uses.

Tells you who you're dealing with--and what they're doing. Palladium is all about deciding what's trustworthy. It not only lets your computer know that you're you, but also can limit what arrives (and runs on) your computer, verifying where it comes from and who created it.

Protects information. The system uses high-level encryption to "seal" data so that snoops and thieves are thwarted. It also can protect the integrity of documents so that they can't be altered without your knowledge.

Stops viruses and worms. Palladium won't run unauthorized programs, so viruses can't trash protected parts of your system.

Cans spam. Eventually, commercial pitches for recycled printer cartridges and barnyard porn can be stopped before they hit your inbox--while unsolicited mail that you might want to see can arrive if it has credentials that meet your standards.

Safeguards privacy. With Palladium, it's possible not only to seal data on your own computer, but also to send it out to "agents" who can distribute just the discreet pieces you want released to the proper people. …

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