2nd > October > 1998 Archive

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Roundup: Markets on 1st October

Fear of recession gripped Wall Street yesterday, causing the Dow to drop 210 points (2.7 per cent) and Nasdaq 82 points (4.8 per cent, which would be the equivalent of 377 Dow industrials points, showing that the high-tech market suffered more than NYSE). As a result, money is flowing from equities to bonds, but the 30-year Treasury bond dropped again to yield only 4.87 per cent interest, the lowest since 1967. Using the Wilshire 5000 index, US investors lost $324 billion yesterday. The power of financial analysts to influence the share price was evident yesterday when Richard Park of Merrill Lynch downgraded Cambridge Technology Partners, Ciber and Keane, resulting in falls of 6 per cent, 20 per cent, and 6 per cent respectively. Considering that their p-e's are 15, 18 and 14 respectively for 1999 earnings, this did seem excessive. Steven Brier of BancBoston had an interesting observation. He thought that such companies offered essential services, and were less influenced by Y2K spending patterns: "You cannot not spend on a Year 2000 project right now and you can't not spend on maintenance of your existing legacy systems, and you can't stop a project that is halfway completed." There were some big losers. The Irish CBT Group that specialises in training was hammered 29 per cent after its CEO and CFO resigned because of anticipated poor Q3 results to be released later this month. Microsoft was down 6 per cent, Cisco down 7 per cent, Dell down 6 per cent, Compaq and Gateway down 5 per cent. The Internet sub-sector had one of its heavier swings with AOL down 10 per cent, Excite down 13 per cent, Yahoo down 13 per cent, and Amazon.com down 8 per cent. Click for more stories
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Update: Siemens, CA to push Unicenter in Europe

Update More details have emerged on Computer Associates' just-announced partnership with Siemens AG to push its Unicenter platform in Europe (see CA buys Siemens TransView, development team). The deal that provoked this was CA's acquisition of Siemens' TransView product for SAP R/3 management, which will run on top of the Unicenter TNG framework. CA will set up development centres in Munich and Paderborn, and acquire the TransView development and marketing staff from Siemens. For its part, Siemens will bundle Unicenter with its RM series Unix servers and Primergy NT servers. Financial terms were not disclosed. Yogesh Gupta, Computer Associates' senior VP for product strategy, told The Register that Siemens realised its TransView product needed considerable investment and had been getting behind technologically, so Siemens picked CA as a partner. Gupta quoted IDC data to show that its Unicenter TNG leads the systems management market with a 25 per cent share and revenue of $2.42 billion, with nearly four million installations worldwide. Next is IBM, with an 18 per cent share if its mainframe and Tivoli products are added together. HP is third with five per cent, and Candle fourth with three per cent. The total worldwide revenue for the system management software market, according to IDC, is $8.87 billion. CA has announced that it expects a couple of poorer quarters because of a turndown associated with Y2K spending. The company had a total revenue of $4.7 billion in 1997, and is second to Microsoft as a software vendor. The juxtaposition of CA's Slough-based UK HQ and the German Siemens disposal set us thinking of John Betjeman's immortal lines, in which he expressed his distaste for Slough: "Come friendly bombs and fall on Slough/It isn't fit for humans now". ® Click for more stories
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NEC execs charged in Japan defence case

Japanese prosecutors have charged two NEC executives and two from a business partner with breach of trust in connection with an ongoing Defence Agency purchasing scandal. Nine people in total have so far been charged, and although NEC is not the company accused of directly overcharging for equipment, it is claimed to have co-operated. The NEC executives are Tatsumi Nagatoshi, former NEC senior managing director and now president of the company's Japan Aviation Electronics Industry Ltd, NEC manager Hiroshi Nagasawa. The other two are a managing director and accounting director of Toyo Communication Equipment, which is accused of overcharging. Nagatoshi and Nagasawa are accused of ordering an NEC staffer to co-operate with Toyo. The Tokyo District Public Procecutor's Office is now scouring company offices for documentation. ® Click for more stories
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Boeing fined $10 million in tech export case

Aerospace giant Boeing is to cough up a $10 million fine payment in consideration of having broken the terms of a US export licence in the course of a collaboration with Russia and the Ukraine. The company is accused of having shared technical information with RSC-Energia and KB Yuzhnoye/PO without a State Department representative being present. A bit harsh this surely - you're engaged in a satellite venture, Sea Launch, half-way around the world for three years, and whenever you want to talk tech to your partners you've got to fly out some geezer from the State Department. Whatever, Boeing reportedly broke the licence terms, er, 207 times. The fine, a civil penalty, is the largest ever levied under the US Arms Export Control Act, and includes $2.5 million for setting up a computer system in Long Beach, California so that government agencies can monitor Boeing's dealings with its partners. So only the suckers from Boeing have to go to Kiev, with the added joy of knowing they're being bugged by Feds stationed somewhere far pleasanter. But Boeing isn't out of the woods yet - the DoJ is mounting a criminal investigation, and its position is obviously ticklish. It has 40 per cent of Sea Launch, a project worth $500 million, and it's project manager. Most, but not all, of the technology comes from partners, and the satellite launch vehicle is going to be a modified Soviet ICBM. ® Click for more stories
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Logica buys US call centre software company

UK software outfit Logica is to boost its US operations with the acquisition of Carnegie Group for $35 million. The US company produces call centre software, and is a spin-off from Carnegie Mellon University. Carnegie Group was founded in 1983, and made pre-tax profits of $200,000 on revenues of $29.4 million last year. It has 300 staff in seven US offices, and is headquartered in Pittsburgh. Carnegie already has major contracts with several US telcos and banks, and the explosion of call centre and automation software in the past few years, coupled with Logica's resources, should allow it to expand fast. Logica has bought several companies to boost its international side over the past few years, and suggests it's now focusing on the US, so more deals there can be expected. ® Click for more stories
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Microsoft takes Virgin-line stance on dictionary

Microsoft is doing a Virgin again -- putting one of its brand names to a product to which it has made no contribution. This time it's for the Encarta World English Dictionary. Craig Bartholomew, general manager of Microsoft's learning business unit, said at the launch in London yesterday that Microsoft is making no financial contribution, but it does have the CD-ROM rights. Nigel Newton, CEO of UK publisher Bloomsbury, was at pains to point out that it was Bloomsbury who approached Microsoft in 1991, and that the project has been quietly under way for the last three years in conditions of considerable secrecy. There is a team of 250 lexicographers, science specialists, etymologists, phoneticians and grammarians in touch by email, working from a single database for English and its American variant. Newton forecast that in ten years' time it will be the most widely used dictionary in the world. There will be 100,00 head words, and the style of entries is best described as being for the home user with a modest education. The work will be simultaneously published in August 1999 in English and US English, in paper form and on CD-ROM. Much was made about the uniqueness of the single database, but the end-product can only be a dumbed-down product that may not find its mark in an age where spelling goes by the board. Curiously, Microsoft has no plans to incorporate the word list in the Office spelling checker, which suggests that Microsoft is becoming too large to benefit from potential synergism. However, further products from the strategic alliance are anticipated by Bloomsbury. The New York-based St Martin's Press, and Pan MacMillan Australia (both are owned by the German Verlagsgruppe Georg von Holtzbrinck) will be licensed to produce the US and Australian publications respectively. ® Click for more stories
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Microsoft demands academics hand over Netscape, AOL info

Microsoft yesterday asked a federal judge in Boston to compel Michael Cusumano of MIT and David Yoffie of Harvard to hand over tapes and transcripts from their interviews with Netscape and AOL executives. These form the basis of a book entitled Competing on Internet time: lessons from Netscape and the battle with Microsoft. The authors, backed by their universities, have refused to do this, claiming 'scholar's privilege'. Both had to sign non-disclosure agreements before the interviews. Legally, Microsoft appears to have a good case in this instance, since in Massachusetts there are no laws that shield journalists from disclosing unpublished material, as is the case in some other states. If Microsoft can convince the judge that the information required is central to the case, it is likely to prevail over First Amendment rights to academic freedom. Microsoft has a copy of the forthcoming book, which it obtained from Netscape as part of its subpoena, since under the terms of the NDA, Netscape had the right to see the text. One line of Microsoft's defence in the DC federal court will evidently be to attack Netscape for having what Michael Toy, a Netscape employee, described as browser code that was "slapped together originally and had never been fixed". His remarks of course apply pretty well to the whole software industry. The snippets that Microsoft has disclosed are in the end just value judgements, and if there were not a diversity of opinion within a company, it would be most exceptional. This line of defence suggests that Microsoft is finding that the evidence in its own documents is so damning that it must attack. In Netscape's case, Microsoft argument will be along the lines that users thought IE superior to Navigator, and that there is evidence that Netscape's product was cobbled together and has remained that way. Microsoft will also apparently try to show that AOL chose IE, and that -- according to former Netscape VP Ram Shiriram -- this was "Netscape's own fault". It is probably more significant that AOL CEO Steve Case disputes this story, and is saying so. Cusumano previously co-authored a book entitled Microsoft Secrets which was notable for its lack of said secrets, the slavish desire not to upset Microsoft and the failure to retrofit management principles to Microsoft's erratic progress over the years. It brought a refreshing naivete to studies of Microsoft. ® Click for more stories
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Samsung introduces network version of SRAM

Samsung Electronics said it has released samples of synchronous RAM (SRAM) aimed at the high speed networking market. The memories, called NtRAM are intended for network switching applications and are 8Mbit parts that run at 150MHz. The company said it will release a 16Mbit part in 1999. The 8Mbit samples cost $79.85, and operate at 2.5 volts, although Samsung is also selling a 3.3 volt part. Toshiba and NEC have joined Samsung's NtRAM initiative and will also manufacture and market similar products. ®
A staffer, 02 1998
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Apple drops out of UK's only Mac show

Apple has pulled out of the UK's only Mac-oriented event, Apple Expo, less than two months before the show is scheduled to take place. The move could kill the show, which has now lost the right to use the Apple name. Dissatisfied with the approach taken by show organiser Emap Trenton, Apple has said it is planing a Mac show of its own. Apple officials attributed the decision to Emap Trenton's move split the event into two, co-located shows. Apple Expo became an area devoted to home, small business and education users, while Total Design Technology would focus on creative professionals -- and take a cross-platform stance. "We have been concerned for some time that Emap Trenton's strategy would not deliver a compelling product to either exhibitors or Apple customers," said Apple UK marketing manager Alan Hely. Apple gave Emap Trenton time to develop the plan, but a recent reviewed found the organiser's efforts wanting, he said. Certainly it has failed to attract some key developers. Of the major Mac software providers, only Macromedia is exhibiting. Adobe, Microsoft and Quark, long-time Apple Expo supporters, will not be exhibiting this year. Without Apple too, it's hard to see how the show is unlikely to pull in the punters. Ironically, there is clear interest in the Mac, thanks to the ongoing success of the iMac consumer machine. Pre-registrations are up on last year by 150 per cent, Emap claimed. Emap Trenton's TDT plan was laid down last year at a time when Apple was still stuggling to get back on its feet. Back then, there was a real fear that Apple's traditional market, the creative professional, would migrate to Windows NT -- hence the decision to make TDT cross-platform. The decision to split the event into two was provoked by the perennial complaints from big league exhibitors that the presence of resellers' in-show outlets was lowering the tone and discouraging serious Mac users from attending. Apple is keeping mum on its plans for a show of its own apart from claiming it will take place sometime next year. ® Click for more stories
Ted Maul, 02 1998
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Winbond move to DRAM not surprise

A Taiwanese components company is to start manufacturing DRAM at a time when existing suppliers are feeling memory pain. Winbond started producing DRAM last July, according to reports, but will step up production to a point where by the year 2000 it will have two fabs. The company has struck a deal with Toshiba, where Winbond makes the memory using the Japanese firm's technology. Winbond, in return, gives Toshiba two thirds of memory produced. The decision by Winbond to move into memory manufacturing is not as strange as it at first seems. Winbond has put back its plans by six months. That decision is in line with a recent report from Dataquest which predicted that memory prices will begin to stabilise next year and other analysts predict that prices will begin to rise again. ® Click here for more stories
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UK home Internet usage accelerating

Domestic Internet use in the UK grew by nearly 40 per cent during the last six months, according to new research from BMRB International. And more and more users are going on time to buy books, CDs and computer software. "Nearly 7.5 million people, representing 16 per cent of the UK's adult population, have used the Internet in the last six months," said BMRB. "This compares with 12.4 per cent or 5.4 million in the previous six months." E-commerce is proving a major incentive for users to get online, BRMB said. "Nearly one million users engaged in e-commerce in the last six months, spending an average of £195, worth £187 million [in total]," said BMRB analyst Patrick Diamond. "This compares with an average spend of £183 for the previous six months and revenue of £115 million." Books are the most purchased commodity, he added, just ahead of software. CDs, computer hardware, travel tickets, flowers and hotel accommodation were the next most popular buys. Still, according to research from The Henley Centre, online spending will account for only 0.09 per cent of UK consumer spending this year. ® Click for more stories
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Symantec to axe five per cent of workforce

Symantec has confirmed it plans to lay off 100 employees next year. The company blamed slow summer sales. The job losses are part of a cost-cutting exercise, said Symantec senior spokeswoman Amy Savage, and will take in five per cent of the company's 2500 workforce. "Sales have been soft for a couple of months, and that has an effect," she said. "We're trying to get expenses in line with revenues." In addition to poorer than average sales, Symantec also faces a $5 million loss thanks to its compliance with the restraining order placed in it as part of its legal fight with CyberMedia. The company will also take a hit from its purchase of Intel's antivirus business (see Intel-Symantec deal begs questions about primitives), though it denies either this purchase or the $5 million loss provoked the job cuts. ® Click for more stories
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Users don't rate retailers

Retailers and helplines have come in for some harsh criticism from Which? magazine after it collected the experiences of UK home computer users. The survey found that 20 per cent of new buyers have major problems settuing up their PC purchases, and 40 per cent experience diffulties during their first year of ownership. And customers seeking help were often directed to support desks at the end of premium rate phone numbers, ensuring they could easily end up paying £30 per hour. Retailers fared little better. Black marks were awarded to Dixons, Currys, Comet and PC World -- most surveyed users said they would not buy computer equipment from these stores again. Only John Lewis and independent retailers won much in the way of positive feedback. Instead, the clear result of the survey was users generally have a better experience buying Direct. Manufacturers Dan, Dell, Gateway and Apple were all highly rated by users for reliability -- most users of these companies' machines said they would recommend them to other buyers. ® Click for more stories
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PC vendors climb aboard LCD bandwagon

Fifteen PC manufacturers will incorporate a new digital interface for LCD monitors in their PCs this autumn, according to graphics card vendor ATI Technologies. The new LCD monitor interface transmits digital signals directly from a graphics board to the monitor. The current analogue interface in use today is inferior because signals must be reconverted to digital signals for the LCD screen. This in turn can cause signal deterioration, according to ATI. The company also claims that use of the new interface will help reduce LCD production costs. ATI is a member of The Digital Flat Panel Group, a vendor consortium which aims to promote the interface as a standard feature in consumer PCs. The 15 PC makers installing the interface were unnamed by ATI, but Compaq, Fujitsu and Acer are all DFP members. ® Click for more stories
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Let's see those Bill Gates movies, says judge

Judge Robert Bork has called for the release of the videos of Bill Gates' testimony to the Department of Justice, arguing that if one Bill has to endure public exposure, then the other one shouldn't be allowed to hide behind confidentiality clauses. It is however doubtful whether Bill G's depositions would command quite as large an audience as Bill C's. Bork, a consultant to Netscape, says that the law clearly states that antitrust depositions should be made in public, as was argued unsuccessfully by various news media a few weeks ago. Although the judge in the antitrust case originally ruled in favour of public depositions, Microsoft successfully overturned this on appeal. According to Bork this was wrong, although he concedes that confidential material might still be heard in camera, which does sort of seem to undermine the whole thing - quite a lot of the material that has been spouted in connection with the various Microsoft lawsuits has already been scissored, and the good judge may just be accidentally calling for more chaos, more delays as the lawyers argue over what should and should not be public. But video is a subject close to Judge Bork's heart. In the 80s he was a Reagan nominee for the Supreme Court, but after a public filleting he didn't quite make it after all. One of the humiliations he suffered in the process was the public release of his video rental list. This was subsequently deemed to have been an unreasonable infringement of his personal privacy, and the 1988 'Bork' law was passed to stop such outrages in future. ® Click for more stories
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IBM introduces Power3, promises gigachip by 2001

IBM will on Monday announce a spate of products based around its RS business unit including iteration three of its Power processor intended for serious number crunching. Future iterations of the Power 3 will use CMOS 7S copper interconnect technology, and silicon on insulator (SOI). A gigachip will arrive in 2001. The company said the Power 3 will be used in its 43P Model 260 graphical workstation, and has eight execution units fed by a 64Gbps memory subsystem. It will also use a method called hardware memory pre-fetch. Other products IBM will introduce include Intellistations workstation using the Pentium II 450 Xeon chips, IBM Workgroup Conferencing for AIX, the RS S70 advanced, and a fresh revision of AIX, version 4.3.2. Ian Roscoe, business manager of the RS/6000 unit at IBM Emea, said that his company was maintaining a dual strategy on workstations, with some working on Unix and some on NT. "There's a large number of customers in the Unix environment who look at getting high performance," he said. In addition to the RS 43P model 260, IBM will also introduce the 43P model 150. The Intellistations are the M Pro, aimed at 2D and 3D applications, and the high end Z Pro. Subsystems include a maximum capacity of 2Gb of 100MHz ECC memory and 82Gb storage capacity. The S70 Advanced uses the RS64-II PowerPC chips, but IBM said that it can now be attached to its RS/6000 "Stealth" SP as an external node. This forms part of IBM's plans to connect many of its boxes together -- next year, Big Blue will create a way of linking Intel NetFinity servers to SPs. Roscoe said that version 4.3.2 of AIX gave better workstation and graphics performance, scalability and interoperability. "We've created a level of stability for the OS from now until the end of 2000 by introducing dot revisions," he said. Part of the reason for that was because customers needed to be sure that different issues including Year 2000 compliance, and the introduction of the Euro, were secure, he said. ®
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Acer's Shih hands over day-to-day control to Simon Lin

Acer's CEO, Stan Shih, has relinquished control of the day to day running of his company and will retire in six years time, according to a report in the Wall Street Journal. Simon Lin, currently CEO of Acer Inc, the Taiwanese company's the US division, will step into his shoes, the newspaper said. But that news could signify the beginning of a strategic withdrawal from the USA market, as Lin takes on his additional responsibilities. No one obvious candidate exists to take over Acer Inc. in the US. Shih, aged 54, has long had a dream to conquer the US market, making Acer a global player. But earlier this year, Acer reorganised its international structure, combining its European and US divisions, while Shih concentrated on turning round the company's flagging DRAM and semiconductor business. ®
A staffer, 02 1998
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Court considers cooking cookies' book

In a bizarre case in a federal court, the secrecy of cookie files has become an issue. The case concerns the US Freedom of Information Act right for the public to access government-held information. Some 80 miles east of Nashville, Tennessee, Geoffrey Davidian, who produces an online newsletter called The Putnam Pit, has sued the City of Cookeville after it refused him the right to examine cookie files on the City's PCs. Davidian's purpose, he says, is to find out whether city employees had been accessing non-work-related sites (ie. porn) at local taxpayers' expense. The City has just won the first round, since the federal judge granted a summary judgement against Davidian, but he says he will appeal because his First Amendment rights have been violated. The wider issue is whether cookie files, which record details of some Web sites visited and any user preferences or search patterns stored there, should be treated like itemised phone bills, which are in the public domain at all levels of government in Tennessee. So far this has not been resolved in the courts, but if it were, it presents a potent weapon. The case serves to draw attention to other files that could be important legally. Such a list would include swap files, any list of Web sites visited, and bookmarks. It is not unknown for a hard disk to be dumped around the time of an employee leaving, or as a random check of employee loyalty. It's an issue that is not going to go away. Oh yes, the cookies are in cookies.txt... ® Click for more stories
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Siemens completes restructure

Siemens AG and Siemens Nixdorf Informationssysteme AG finally became one yesterday. The retail and self-service products sector will continue to operate as Siemens Nixdorf, a subsidiary of Siemens, and retain the SN logo because of the recognition of the brand name. SNI is mostly now part of Siemens Public Communication Networks (OEN) and Private Communication Systems (PN), and there are three new groups: I&C Services, I&C Networks and I&C Products. Siemens was established in the middle of the last century (one of the founding brothers, Sir William Siemens, took British nationality, and won fame for inventing street lighting -- in Godalming, Surrey). There was a grand plan by Heinz Nixdorf to set up a European consortium, later pushed by Olivetti, who wanted SNI and Bull to coordinate activities, but it was never to be. The German government was concerned at the loss of jobs if Nixdorf were allowed to fail, and it was widely believed that Siemens was promised re-equipment orders from East Germany, illegal under EC tendering rules, if Siemens bought Nixdorf. The absorption of Nixdorf Computer AG, 51 per cent acquired in 1990 by Siemens, had always presented problems. The CEO of Siemens at the time, perhaps taking his analogy from French fromagenous diversity ('How can you govern a country with 200 different cheeses?') wondered how the 200 different internal systems within Siemens and SNI could be harmonised: the answer was 'with difficulty', and it took 16 months to merge the order-processing systems. The IT and data processing businesses were merged into SNI, and Siemens became the largest indigenous European computer company. In 1992 Siemens made an unexpected bid for SNI, following DM780 million SNI losses in 1991, in order to protect its position. In February 1997, SNI was told by Siemens to pull its socks up, or be put up for sale. However, Gerhard Schulmeyer, the CEO of SNI, proposed a new plan and became the architect of the merger between Siemens and SNI. He is now president of Siemens Inc, based in the US. Siemens says that the merger results from "changing conditions in the global markets". Siemens had a 1997 revenue of DM107 billion, and 386,000 staff. ® Click for more stories
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Aureal responds to Creative Labs suit

Soundcard specialist Aureal has responded to arch-rival Creative Labs' allegations that it engaged in false advertising and made misstatements about Creative products (see Creative sues Aureal. Again). Aureal suggests both parties come to the table and hammer out their differences regarding the claims each has made about the others' products. "We challenge Creative to join us in efforts to clarify information published by both our companies regarding both companies' products," said Brendan O'Flaherty, Aureal's VP and general counsel. It's more likely they'll end up hammering each other, such is the apparent animus between the two parties, founded on a series of suits and countersuits that has been running throughout the year. Aureal denies making knowingly false claims about Creative's SoundBlaster Live! Card, the subject of its rival's suit. In fact, it claims to have derived the information it published from Creative's own publicly available product description material. It says it modifies any inaccuracies or adjustments as and when they are brought to its attention. Creative, says Aureal, didn't do so, preferring instead to call in the lawyers. "Creative seems to prefer to bring these issues to a courthouse rather than resolving them either directly or in the marketplace," said O'Flaherty. "They and other competitors have made and published misleading statements regarding Aureal's technology in the past. If we ran to a judge each time this happened, no one would have time to develop products." All of which is dangerously close to the 'we both tell lies about each other, but at least we don't go running to teacher when it happens to us' argument. Expect Creative to respond with a 'my dad's bigger than your dad' statement shortly... ® Click for more stories
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Memory Corp licenses IP rights to Taiwanese, US companies

Memory Corp has licensed elements of its intellectual property rights to a Taiwanese and a US company. At the same time, it has revealed it will expand its presence in other territories, including the US. The UK company, which is listed on the AIM stock exchange, signed a deal with Vincom, in which the Taiwanese company will pay Memory Corp an upfront fee in addition to royalty payments. It also signed a deal with Sunnyvale company Modern Media Memory (MMM). This is a FLASH memory licensing and distribution agreement where MMM will use the Memorys controller in all future FLASH card designs. DMC, a joint venture between Memory Corp and distributor Datrontech, will distribute the cards in Europe. David Savage, CEO of the company, said that he was looking to expand Memory Corp business, which has grown 500 per cent year on year, into the US. "Our relationship with Datrontech is working very well. The question is how you get to market and to customers and we needed some channels to market," he said. "We're using intellectual property and trying to avoid owning large amounts of memory technology," Savage said. "We have a very strong presence in Europe, in Taiwan, and in Japan where Sumitomo represents us," he said. "We have less of a presence in the US." The company turned over £10 million in the first half of 1998, and its next quarterly results will arrive in the second week of October. He said that the memory business had definitely reached the bottom and that Memory Corp was seeing 64Mbit parts stabilise. ®