Be quarterly revenue falls to $16k

Preparing the way for a Sony takeover? So one reader reckons

Internet appliance operating system developer Be is looking forward to a good 2001. It has to: last year it recorded revenues of a mere $480,000, which barely covers the salary bill, we reckon.

For its last completed quarter, ended 31 December 2000, Be's fourth of fiscal 2000, the company lost 13 cents a share, better than the year ago quarter's loss of 14 cents a share but worse than the previous quarter's 12 cents a share.

Revenue for the quarter reached a meagre $16,000, almost all of it from sales of BeOS 5. The ratio of the Q4's revenue to the full year's figure suggests a massive drop in BeOS shipments.

To be fair, Be kind of said this would happen, when it decided early last year to switch its focus to the cut-down, appliance-oriented version of BeOS, BeIA, and related software systems such as its Management and Administration Platform (MAP) and Home Audio Reference Platform (HARP).

Revenue from all these - primarily through licensing - should kick in this year, the company hopes. "We plan to recognise revenues in 2001 from each component of BeIA - the Client Platform, Integration Services and MAP," said Be's CFO, P C Berndt.

And that may see it turn right round and surpass not only last year, but the year before. Said Berndt: "In 1999, we recognised $2.7 million in revenue and we plan to exceed that in 2001."

Or so it hopes. There's certainly a strong degree of hesitancy coming from Be, these days. For example, its Q4 results statement notes the following comment from company CEO Jean-Louis Gassée: "The culmination of our efforts was the introduction at the Consumer Electronics Show earlier this month of a network entertainment center device by our first major customer."

For "major customer" read 'Sony'. So why isn't Be shouting about the fact? And why, as reader Jim Duggan pointed out to us, doesn't the company's site list Sony as a partner? Actually, it does, but you wouldn't know unless you did some digging around. Sony's eVilla home Internet appliance is based on BeIA, but you wouldn't guess it from what both companies are saying.

The way Jim spins it, it's all a sign Sony is about to buy Be. We're not sure we agree - apart from satsifying its dislike of Microsoft, we can't really see what's in it for Sony. But with Be shares down to a mere 1.94, Sony could snap it up for what to it would be just so much small change.

Anyway, Jim's rationale makes rather good reading, so here it is. ®

Sony to buy Be Inc. and go to war with Microsoft and Intel

OK, this is a rumour. But here's the evidence.

1. Sony has the technology to give Intel a run for its money.

"Head of Sony's PlayStation operation Ken Kutaragi today pledged to drive the technology behind the company's Emotion Engine processor line -- the heart of the upcoming PlayStation 2 - way beyond that of Intel's Pentium family within the next six years."
Ref: http://www.theregister.co.uk/content/archive/9729.html

Moreover, since producing the Vaio, Sony has repeatedly asked Intel to give more consideration to the power consumption of their chips, but Intel "only seems interested in performance". Sony has now launched its own chip company, which places them in direct competition to Intel, especially since Intel is also now concentrating on the consumer appliance arena with StrongARM 2/X-Scale. Sony plans to produce a "mass-production platform that maximises efficiency and quality", something they feel that Intel does not provide.
Ref: http://www.zdnet.com/zdnn/stories/newsbursts/0,7407,2673635,00.html

Reg notes: Don't forget Sony's new relationship with Transmeta.

2. Read this very well written and revealing article from Wired about Sony's plans for the future. In it, Sony boss Noboykei Idei's discontentment with Windows and the Microsoft way of thinking is clear.

"During his San Francisco trip, Idei elaborated on why Windows machines - including the Vaio, perhaps the sexiest slipcover Windows has ever donned - still aren't consumer products. He told the story of how that morning he had opened his Vaio and plugged his modem into the hotel's telephone line. Then he had turned it on. And waited. 'Consumer-electronics people know that is unsatisfactory,' he says. 'Before the PC will be a truly accepted consumer product, it must be as easy to use as a Sony telephone or camcorder. You plug them in and turn them on.'

"Next, to check his email, Idei clicked on the Windows dialup networking icon. It didn't work. From a hotel phone, he had to reconfigure the software - in this case, to tell it to dial 9 to make a call outside the hotel. This step, too, must be eliminated, Idei says. 'Now, we have to download music. You don't download running water - you just buy a bottle. I don't think 'download' is a good idea. You just want the music. That's what we want to provide'."

But the most surprising piece of evidence from this article is that Idei commissioned his engineers to build an OS. The now defunct Aperios was designed to be "a project to develop an OS that could play audio and video in real time". In other words, a Media OS. And what, from a technical standpoint, is the best OS on the market today, especially in respect to digital media? BeOS was built from the ground up to meet these specifications. As a general purpose OS? Ars Technica awarded BeOS 5 7.6 out of a possible 10.0, compared to ratings of 7.2 for Linux and 6.8 for Windows. Ref: http://www.be.com/products/freebeos/beoswhitepaper.html
http://www.wirednews.com/wired/archive/7.11/sony_pr.html

Reg notes: Don't forget, though, that Sony is a PalmOS licensee and has developed various multimedia extensions to it. That said, Sony has also licensed the Symbian OS, so it's clearly not a one-OS company, which means there might be room for BeIA too.

3. Sony boss Nobuyki Idea hates Bill Gates. Not only does he dislike the man, he dislikes the company, the way they do business, and their products.

"The depth of antipathy between the companies, and Idei's disdain for Gates, emerges in pre-publication excerpts from a new book on Microsoft. In candid remarks made to author Ken Auletta, and published in Auletta's book World War 3.0: Microsoft and its Enemies (Profile Books) president and co-CEO of Sony, Idei is quoted at saying: "Microsoft is very uncertain about its future business model... their future business model is totally in danger." He characterises Microsoft as an "OS dinosaur", unable to adapt to new thinking. "[Gates] mind set is very old. He would no longer be able to license Windows as he once had."
Ref: http://www.theregister.co.uk/content/7/16043.html

4. Competing with Microsoft.

Right. So we know that Sony wet its feet developing Aperios, and experimenting with various OS concepts. Quoting again the Wired article: "When Sony got into the OS business, an obvious question was whether the company was taking on everyone's favourite adversary, Idei's golfing buddy Bill Gates."
Ref: http://www.wirednews.com/wired/archive/7.11/sony_pr.html

If the answer was unclear at that time, it is crystal clear now, especially since Idei has made reference to his dislike of Microsoft in the above-mentioned book. But would Idei ever clearly state that he was gearing up to take on the mighty Microsoft? You bet. In an ON24 interview, Idei basically says that since Gates has entered his market with the Xbox, he will now enter the OS market! Clearly, this is something that he has been planning for some time, since Aperios was in development in 1999.
Ref: http://biz.yahoo.com/oo/010125/49631.html

5. Be has been working with Sony since March last year.

At the CES show, Sony revealed the e Villa, running BeIA, a cut-down version of BeOS. Nobody knew that they had been working together until the product was revealed. The device clearly shows a great deal of communication between the companies. A driver must have been written for Sony's Memory Stick slot, for example. Steve Sakoman, Be's Second-in-Command, has been travelling to Japan on a fairly regular basis (the last trip was about two weeks ago), with no clearly revealed objective. Would he really travel all the way to Japan to demo BeOS and a few content creation programs to a bunch of University students? Moreover, Be has almost certainly been co-operating with Sony regarding HARP.

6. Unusual stuff.

Look at Be's Partner page. There is clearly a space remaining in the 'S' section. However, there is no link or mention of Sony. However, a 'hidden' link does exist, here.

Also, all mention of BeIA being used in the e Villa have been removed from the e Villa web site. However, email them, and they will confirm that BeIA is still being used. Why take down all reference to it then?

7. BeOS is a very portable OS.

The port from PowerMac to Intel x86 took only a couple of weeks. If Sony decide to port it to their Emotion Engine architecture, it should only take a short time.

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