19th > October > 1998 Archive

The Register breaking news

Microsoft considers buying banknote printing outfit

Microsoft is planning a bid for the international banknote printing outfit De La Rue, according to a report in yesterday's Sunday Times. Such a move would transcend satire: Gates in move to secure supply chain? Microsoft to challenge Intuit through integration of Money? Sorry, we give up. But although the scheme might on the surface seem predatory to an extreme, there's a great deal of logic to the plan as reported, and Microsoft might be able to package it in such as way as to avoid clashes with regulators. De La Rue may have a licence (in around 150 countries) to print money, but it's had financial problems recently, and its share price has collapsed, so it's cheap. Microsoft also doesn't want the whole of the company, but is said to be planning a break-up, holding on to a couple of key areas for itself. De La Rue produces certificates of authenticity for Microsoft's software packages, and as part of its own diversification programme has been getting into smart cards and associated software. Microsoft doesn't want to print money (there's no need - trucks of it arrive daily, and anyway physical money is going to go into decline fairly soon. It does want to establish key standards and technologies for the electronic and card-based systems that will start to replace it, and its acquisitions strategy is going to have to reflect that. De La Rue therefore looks like a good, not too threatening place to start. Compare and contrast with what would happen if Microsoft decided it wanted, say, a 20 per cent stake in Mastercard. ® Click for more stories
John Lettice, 19 Oct 1998
The Register breaking news

Gates wanted to buy Palm's software business, says report

Microsoft made an offer for 3Com's Palm Pilot software business in August, but was rebuffed, according to this morning's New York Times. The story seems genuine, and (along with the company's plan to buy De La Rue) suggests that Microsoft has decided to resume an aggressive acquisition strategy, no doubt taking the view that this would make no significant difference to the level of the DoJ's attacks on it. Since the regulators warned Microsoft off of its proposed takeover of Intuit in 1995, Microsoft has been relatively cautious in acquisitions. WebTV has been one of the more significant ones, and it's made a string of fairly low-profile investments in small technology companies. Even these have attracted the attention of rivals, the criticism being that Microsoft buys stakes in companies to bind them closer to it, and deny them to the competition. But the Palm business would have been a different matter altogether. 3Com got Palm when it bought USR, which itself had bought the start-up earlier. At the outset it didn't seem that 3Com saw the Palm Pilot as being an important product line, and although it's been making more enthusiast noises since then, it's not what you'd call core business for a networking company that has other problems to deal with. Palm technology could have applications that are more closely related to core business in the future, but today it's largely a useful high volume moneyspinner. It's been outselling Microsoft CE devices by a factor of 2:1, and the CE sales are split between numerous manufacturers, whereas the Palm Pilot only has one significant one. Microsoft's plan seems to have been to take over the software for the Palm Pilot, and then run it according to the Dos script. Microsoft owns the OS, licenses it and develops it, and defines standards. According to the NYT Bill Gates told 3Com chairman Eric Benhamou that he would make 3Com's Palm hardware business "the Compaq Computer of the hand-held market." If this is the case, Benhamou was probably right to turn Gates down. The Palm platform is available for licensing, but has only had a couple of takers so far. Gates' argument would have been that Microsoft backing would have accelerated this, but it could equally well have scared potential licensees off and/or confused them. It would also have left 3Com with a fuzzy role in the whole deal - if we're talking the Dos model here, how does 3Com get to be Compaq? And wouldn't it rather be Intel? 3Com could maybe have made money from licensing technology to other Palm Pilot manufacturers, but by releasing control of the software to Microsoft it would have been releasing control of its means to develop the platform into something more obviously a part of its core business. Basically, Bill was pitching the wrong plan to Eric. But it's interesting that he's now prepared to try to buy a whole software strategy lock, stock and barrel. And it's also worth noting that he couldn't have been thinking much about the regulators - if the deal had gone ahead the terms and conditions would have been gone over with a fine tooth comb by the DoJ, which would have been looking for anticompetitive market carve-ups by the two companies. It also makes it clear that although he's still pitching CE as the industry standard low-resource platform, he's prepared to buy another one if it looks like being more appropriate for pocket devices like phones and personal organisers. Just telling Bill 3Com isn't interested in a deal doesn't help the company figure out what it's going to do with Palm Pilot though. 3Com needs to come up with a credible strategy for taking it further, and may well not be able to do that on its own. The two founders of Palm Computing jumped ship from 3Com earlier this year, and a couple of weeks back opened up shop as J D Technology, a venture-backed outfit that proposes to have hand-held devices on the market late next year. So 3Com needs to show their departure hasn't left it with a vision deficit, or people will start to think Palm is a high volume platform that isn't going anywhere. ® Click for more stories
John Lettice, 19 Oct 1998
The Register breaking news

Music companies block Diamond Rio launch

A US judge has barred Diamond Multimedia from producing its Rio portable MP3 player for ten days, pending discussion of a permanent injunction on 26 October. Diamond and the Recording Industry of America (RIA), which is backed by the major music companies, are locked in legal combat over the device, which was due to ship this month. The Rio is a pocket unit which is able to save and replay an hour of music stored in the MP3 format. The RIA claims that it will allow users to download pirated music from the Internet, and is therefore in violation of the 1992 US Audio Home Recording Act. We're baffled by this, and actually rather worried as well. The music industry would appear to be arguing that an item of recording equipment is illegal because it can be used for piracy and, um, can't quite a lot of things be used for this? Effectively, the big outfits are starting to flex their muscles in a bid to police and to control the distribution of music on the Internet, and the next logical step is for them to get the courts to implement more legal requirements for devices to have anti-copying systems built into them. That's what they want Diamond to do with the Rio. As we've argued here in the past, one of the logical steps after that is a sort of Krystalnacht of analogue recording equipment - for so long as people can plug this stuff into speaker sockets, the cunning plans of the musos won't work. So first stop building them, then kill-off the installed base. Diamond's counter-argument is that the 92 Act specifically exempts computers, and as the Rio uses computers to store the audio files, it's also exempt. But here's another logical next step - quite a lot of audio gear today is pretty computerish, and tomorrow it will be more so. So where's the join? ® Click for more stories
John Lettice, 19 Oct 1998
The Register breaking news

Wal-Mart busts Amazon in ‘espionage’ case

US retail giant Wal-Mart is suing Amazon and another Internet sales operation, Drugstore.com, claiming theft of trade secrets. Remarkably, the highly traditional low-cost chain founded by Sam Walton is suing on the grounds that it thinks the e-commerce outfits have been trying to swipe the secrets of its computer systems. But there are clear grounds for Wal-Mart to be suspicious. The company says about 15 staff have been hired away from it, and that these are people with knowledge of its Retailink system, which is used to monitor purchases in Wall-Mart stores and then feed the data back to suppliers. And although Wal-Mart looks conservative, its logistical and inventory computer systems are among the best in the business. This is one of the logistical and reporting areas that online vendors are going to have to crack if they're going to first duplicate and then supplant the services provided by conventional store chains. The Wall-Mart suit also refers to Silicon Valley VC outfit Kleiner Perkins Caufield & Byers, which funded the two companies from start-up and was involved in drawing up their business plans. So will the darlings of the Valley come out of this smelling of ordure? One of Wal-Mart's key questions is how come the glossy Californians have been hiring people from its HQ, which is in somewhat less glossy Arkansas. Obviously the answer is because they knew about and were good at the kinds of systems the companies needed to put in place. The question will be, did they know too much? ® Click for more stories
John Lettice, 19 Oct 1998
The Register breaking news

Typhoon Zeb disrupts DRAM supplies

Memory prices have started to improve, despite problems caused by typhoon Zeb in the Far East last week. That is the feedback from two memory majors in the UK. According to Roy Taylor, joint managing director of Vanguard Microelectronics UK, said: "The typhoon did affect supplies, as well as killing some people, but now we're catching up." Prices, he said, had risen over the last two weeks. "Fast page mode 16Mb now costs $4, while EDO is $3," Taylor said. "It's gone up and it's going to stay up. People are not making product any more." That news was confirmed by Dane-Elec, a French company with both UK and US offices. Figures supplied to The Register showed a steady upward trend last week. Taylor said the reason for the rises was that when the large manufacturing companies made a series of announcements that they were cutting down on production, earlier this year, nothing much happened. "It was like turning a big oil tanker round," he said. "But now the tanker has turned round." ®
Mike Magee, 19 Oct 1998
The Register breaking news

Singapore kicked by HP when it's down

Japanese wires said that Hewlett Packard has decided to shift assembly of PCs in the domestic market from the island of Singapore. According to Nikkei Net, the move will happen next year and the decision was taken because it will help it to cut costs and delivery times, as well as satisfy local customer needs. It will also use local, unnamed OEMs to help it build the PCs, the reports said. That is undoubtedly prompted by HP's cutbacks following lack-lustre results this year. Singapore has suffered from more than its fair show of IT cutbacks due to the Asian economic crisis. Two months ago, the Singapore embassy in London refused to say how many jobs had been lost. Many low paid staff working on assembly lines were guest workers from neighbouring Malaysia, connected to the island by a causeway. ®
Mike Magee, 19 Oct 1998
The Register breaking news

Linux plugless and playless without Intel-Aid

A serious lack of support of IO for the Linux OS is set to hamper its onward thrust in the commercial market, it has emerged. Linux lacks support for both USB and the 1394 Firewire interface, deficiencies which will seriously hamper its adoption by the corporate marketplace. And a remedy for those deficiencies is not likely to arrive soon, despite Intel's support for the OS. That will leave Microsoft with a clear lead in the market. But Intel will come to the aid of the quirky OS, which has a toy penguin as its emblem, not only with hardware support but with a slick compiler. A source from HP told The Register: "Where Linux has to get its act together is in non-legacy IO, USB and 1394. Why, it is even behind NT in this respect. Intel can help here but the whole Linux community needs to come up with a PnP driver model on a par with WDM." He said that if the community was "really devious", it could come up with a clean room implementation of WDM. "That's another thing Intel could help with," he said. But an Intel compiler, according to the same source, "kicks everyone else's butt". He said that comes with the VTUNE SDK, and is the only compiler to really take advantage of the P6/PII CMOV opcodes. "Intel could do a commercial Linux version for a few dollars or just give it away and encourage all the Linux folk to build apps which don't run on Pentium, AMD or Cyrix boxes," he added. An Intel representative commented: "We've put some money into Red Hat so that we can enterprisify the OS. We're trying to make it industrial strength." At the moment, he agreed, the OS was "dweeb strength". He said: "It's the old chestnut that we're agnostic about operating systems." At the present, the whole discussion over Linux has, however, every sign of being a religious war, with little agnosticism present. The Register has received every manner of communication from Linux devotees, some showing signs of religious fanaticism over what is, after all, only software. ®
Mike Magee, 19 Oct 1998
The Register breaking news

Excite posts profit and loss

Excite has posted its first profitable quarter. The company announced a profit of $1.3 million on revenues of $44 million for Q3 1998. That said, the Internet company also made a cash payment to Netscape under the terms of the two operations' agreement to co-operate on an new Net search system. The payment dragged Excite's results into an effective loss of $6.8 million. That's more in keeping with the company's previous results, which saw it record an $80 million loss on revenue of $33 million. That too featured a payment to Netscape, of $56.8 million, some of which was brought forward into the third quarter because the SEC objected to such a large write-off. Further charges relating to the Netscape deal will continue to impact the company by $7.6 million every quarter until after April 2000, Excite said. ® Click for more stories
Team Register, 19 Oct 1998
The Register breaking news

DSL standard due by Friday

A preliminary specification for a Digital Subscriber Line (DSL) modem standard is due to be released by the end of the week. According to Intel Architecture Labs senior product manager Holland Wood, quoted on the C/Net newswire, there's "cautious optimisim" the standard will be determined in talks at the ITU this week. Intel is participating in the negotiations. The would-be standard is designed to cover the G.lite category of DSL modems. G.lite modems connect to the PC just like an analog device and allow users to initiate voice and data connections simultaneously without the need for extra hardware at the phone socket. DSL modems offer connection speeds of 1.5Mbps -- way ahead of today's analog modems and ISDN connections. If this weeks talks prove successful, a final DSL standard could be ratified by next June. According to Wood, modem manufacturers will see such an early ratification as proof the standard's validity and could begin developing products safe in the knowledge that they won't be exposed to the sort of standards war seen in the development of the 56kbps modem. ® Click for more stories
Tony Smith, 19 Oct 1998
The Register breaking news

Microsoft wriggles to keep DoJ off its data

Microsoft has refused to comply with Judge Jackson's Order to give the DoJ access to sales, shipment and pricing data for Windows and Internet Explorer. On Friday, the DoJ presented an Emergency Motion to the federal court asking for an Order requiring Microsoft to give immediate access to its OEM databases. Microsoft claims that the Request from the DoJ and the states joined in the action does not cover the data requested. The DoJ in its Motion points out that its Request covers "all data contained [in the databases] or other contents thereof". This intransigence is a dangerous course of action for Microsoft. Non-compliance is likely to result in the refusal of the court to accept evidence from Microsoft on the issues concerned, as well as contempt of court penalties that could escalate to become criminal contempt and even cause Microsoft executives to spend some time off-site in a federal prison. The reasons for the refusal become more and more interesting. It may be that Microsoft does not want the DoJ to see other data that it says is not relevant to the immediate case. There is also the issue that a further need for discovery might result from what is found in the databases, and by delaying, Microsoft makes it too late to consider any such data. Microsoft's lawyers are also claiming that if the data is not specifically labelled "OEM transactions" the DoJ may not have access. This doesn't altogether square with the company supplying all relevant data, never mind the DoJ's demands for all data. ® Complete Register trial coverage Click for more stories
Graham Lea, 19 Oct 1998
The Register breaking news

Microprocessor Forum 98

The Register attended this year's Microprocessor Forum, held in San Jose. Highlights at the Forum included announcements from Intel, AMD, Motorola, Cyrix, IDT/Centaur and Rise Technology:
Tony Smith, 19 Oct 1998
The Register breaking news

Round up: Markets 16th October

The news from Japan is that corporate bankruptcies in September were at their highest level ever, with Y3 trillion of indebtedness. Nevertheless, the Nikkei was up 2 per cent on Friday, the Dow up 1.5 per cent, and Nasdaq essentially unchanged. Adobe is looking cheerful after the failed takeover bid by Quark and the gloomy Q3. Products are rolling out: PhotoDeluxe Home Edition 3 in a Windows edition appeared last week, and a Chinese edition of Photoshop will be released in Hong Kong in November. Illustrator 8 and ImageStyler were also released in the current quarter. Adobe also said its Q4 ending 27 November may exceed financial analysts' expectations:it's anticipating revenue around $240 to $245 million, up from $227 million a year ago, with eps of 60 to 65 cents, beating the 56 cents consensus. The results will be announced on 16 December. Apple was reckoned to have had a good week, with its first profitable year since 1995 and now news that with Mac unit shipments up 28 per cent, Apple is now regaining a little market share -- half per cent so far, with perhaps more to come. An entertaining move was the selling of .tv Internet domain name suffix by Toronto-based The .TV Corporation, on behalf of Tuvalu, some nine atolls, including one uninhabited, in the South Pacific with a population of less than 10,000. There are 236 two-letter country names, cribbed from an ISO list, and include .tm for Turkmenistan, .co for Columbia, .to for Tonga, and .nu for Niue. Not surprisingly, registrations are somewhat more expensive than those for .co.uk or .com. Financial analysts are now looking more carefully at the tricks used in deferred revenue accounting. BMC, the Houston-based business software developer had very good results last week, with revenue up 45 per cent to $236 million in the latest quarter, net income up 66 per cent to $75 million, and eps up to 33 cents, beating expectations by 2 cents. However, it was to no avail, as the shares fell 14 per cent on Friday because of downgrading by Goldman Sachs and Prudential Securities as a result of the quality of earnings, since $124 million of deferred revenue had been recognised, possibly as a result of deals to making it into the quarter just ended. Intel finally announced on Friday it was taking a 6 per cent stake in Micron for $500 million, following rumours for some time. The reason? Intel wants the adoption of Direct RDRAM, developed by Rambus. Micron expects to have the technology in the third quarter next year. The shares didn't move on the news. Baan, whose profits warning last week caused a further fall from favour with shareholders, is being hit with a US shareholder's suit alleging that between January and last Friday, the company used fraudulent accounting methods to keep the share price artificially high. Some Baan managers are also being accused of insider trading. Wall Street has developed a thick skin to Microsoft's legal woes, evidently believing that whatever the outcome of the case that starts today, the bottom line does not look threatened at the moment. Nonetheless, if the situation looks tricky as the case develops, the first to bail out of their positions will be the bankers and investment houses, and this could result in a significant fall in the share price. ®
Graham Lea, 19 Oct 1998
The Register breaking news

Open Group closes doors on De Feo

The Open Group is in financial and leadership crisis again. Joseph De Feo, President and CEO, is now leaving "to focus on his other business interests", according to a confidential letter to members only. He left his job as IT supremo at Barclays but failed to deliver on his grandiose ambitions. The PR spin is that De Feo "re-aligned the company with 21 century technology issues" but the Group "may no longer have a large research and development function". The Group intends to concentrate on what it terms its core competencies like testing and branding, which has been successful.
Graham Lea, 19 Oct 1998
The Register breaking news

Dane-Elec's daily DRAM prices – prices continue to rise

1 x 32 EDO moved from £4.40 to £5.00 2 x 32 EDO moved from £6.90 to £7.40 4 x 32 EDO moved from £14.90 to £16.00 8 x 32 EDO moved from £29.50 to £32.00 On the PC66 SDRAM front... 2 x 64 moved from £11.50 to £12.50 4 x 64 moved from £20.90 to £22.90 8 x 64 moved from £47.10 to £49.00 16 x 64 moved from £95.80 to £98.00 On the PC100 SDRAM front... 4 x 64 moved from £22.25 to £24.00 8 x 64 moved from £48.50 to £51.00 16 x 64 moved from £97.30 to £102.00 All prices are courtesy of Dane-Elec Limited and reflect changes within a day. Look out for tomorrow's prices...tomorrow...®
A staffer, 19 Oct 1998
The Register breaking news

Concurrent in concurrence with profits forecasts

Concurrent Technologies consolidated its recovery in the third quarter, reporting net profits of £1.8 million on £2.1 million turnover, up from £0.5 million on £1.6 million turnover last time. Concurrent’s retained profit after a £1.8 million loss on currency translations is only £440,687, so no dividend this time, but an improvement on last year’s £0.08p per share loss. Glen Fawcett, managing director of the single board computer manufacturer, said that 1997 had been a year of consolidation with investment in premises and people. He added: “The first half of 1998 has seen this investment bear fruit… and we are confident that shareholders will see the benefit in 1999.” A round of investment in July attracted £1 million from institutional investors, enabling Concurrent to move into new plant premises in Colchester and increase staff numbers from 29 to 40. Despite the currency hit, Fawcett said that unlike many companies operating in the sector, Concurrent is cushioned from the current economic crisis since it does little business in Asia, South America or Eastern Europe. He said the company’s profits would have been higher but for significant investment in products and systems, resulting in two new VME products earlier this year, with a further three on the launchpad. The bulk of Concurrent’s customers are split between the US, UK and mainland Europe, and most of Concurrent’s work is won on a contract by contract basis, primarily from the military and aerospace markets along with transport, telecomms and the health markets. Established in 1985 and headquartered in Colchester, Concurrent’s North American business is in Cincinnati, Ohio, and a South African operation is headquartered in Pretoria.®
Janice McGinn, 19 Oct 1998
The Register breaking news

ITG pumps up the volume with The Ministry of Sound

The Ministry of Sound is stepping out with ITG, the UK’s largest independent ISP, launching a new branded Internet and subscription service called ministryofsound.net. ITG’s chief executive, Laurence Blackall, said: “Agreements like this are the beginning of a trend where services address a very specific community of interests. In this instance it’s dance, but we’re seeing it across the board and Bowie.net is a good example, where an ISP is specialising in services for David Bowie fans.” Blackall said that this type of alliance strengthens bonds between brand name companies and their customers and that ITG is now looking more closely at the entertainment sector. “To date, media groups, banks and retail organisations are the most advanced operators,” said Blackall. ITG will operate the dedicated connectivity service from December 16, and the service will be promoted and launched by a CD-ROM distributed on the January edition of the Ministry magazine.®
Janice McGinn, 19 Oct 1998
The Register breaking news

South Korea's Kim holds out for DRAM reform

President Kim Dae-Jung has resisted pressure from the largest companies in South Korea. He still wants them to amalgamate their businesses, despite internal pressures. Last week, the federation of chaebols (family-based companies) criticised Kim and his government for attempting to force through changes they didn't want. Especially vociferous were Hyundai and LG. Kim wants them to decide their future semiconductor mergy strategy. Samsung too, has semi fabrication facilities but has so far not been drawn into the bitter argument. Today, President Kim delivered his next year's budget, showing that he would continue to push for de-regulation, and defying the chaebols' stance. That is because the country is also under pressure from the International Monetary Fund (IMF) which is pushing South Korea to deliver on its promises. The South Korean budget added statements saying that it would seek to cut corruption in the country. It will add support to small and medium sized enterprises (SMEs) and the bill for the budget next year is $64.10 billion. According to reports, Kim said: "The government will demand that the top five conglomerates keep their promises to focus on their core businesses". ®
The Register breaking news

Intel beefs up remote access with Shiva buy

Intel is to buy Shiva in a stock transaction valued at around $185 million. The deal gives Intel access to a product line which includes a range of small to medium business remote access and Virtual Private Network (VPN) technology. Shiva is to operate as part of the Intel Network Products division, and according to Intel will help the company to rapidly expand its sales in the small business and campus and branch office arenas. Shiva's areas of specialisation include ISDN/dial-up, WAN and VPN solutions, and it also comes with a ready-made customer base. "We engaged Shiva because of its talented people, innovative technology and well-developed channel," said Network Products Division general manager Mark Christensen. "Networking plays a strategic role in Intel's vision of a billion connected computers." Shiva will initially continue to sell its current product line, but Intel says its technology will ultimately be integrated into Intel's networking portfolio. ® Click for more stories
John Lettice, 19 Oct 1998
The Register breaking news

Memory Corp continues comeback route

Memory Corporation coined the really neat idea of repairing and selling damaged DRAM chips, but new prices plummeted and the bottom fell out of Memory’s market. The Scottish company could have been history, but it had a makeover and looks to be staging a stylish comeback. CEO David Savage said earlier this year that Memory would post an operating profit for the first time in three years, and while Friday’s third quarter results were written in red, a £710,000 loss versus £1.2 million last year, gross profit was £800,000. Turnover grew from £10.2 million to £11.4 million, higher than the £10.2 million reported for the first six months of 1998, and Savage said the company is seeing significant progress on all fronts. He expects to report a breakeven profit in the fourth quarter, and the outlook for 1999 is encouraging. “We’ve won’t make number forecasts but we are confident of breaking even,” he said, and the one-time DRAM repairer remains committed to an EASDAQ listing this autumn. It’s not so long ago that Memory went to market for fresh working capital, raising £4.5 million through a rather controversial rights issue to fund product development and make the transition to an intellectual property company. Alongside that diversification, and core to its high expectations, is the performance of Dtec Memory Corp, a 51% joint venture formed with Datrontech Plc. The integration of Memory Plus and Datrontech Hong Kong in July is now complete, and the subsidiary is performing well ahead of expectations. “Established in February it’s been in profit ever since,” said Savage. Memory has new licence agreements with Toshiba, Taiwan’s Vincon and Modern Media Memory, and new product developments are picking up speed with release of the V6 Synchronous VCM ASIC and FLASH card controllers. Savage expects DRAM prices to pick up sometime in 1999, and he backs Rambus as the next generation technology that will shape the industry. He said: “We’re committed to it but life will become more difficult for smaller and niche companies because of the high investment and the need for critical mass.” ®
Janice McGinn, 19 Oct 1998