21st > October > 1998 Archive

The Register breaking news

The true costs of Linux development

Microsoft's claim that any talented individual can compete effectively with it has been challenged, as one might expect. Yesterday a Microsoft attorney (see earlier story) cited Linus Torvalds in court as an example of how one person can produce a sophisticated OS, but Register reader Eric Green of Linux Hardware Solutions has some numbers that make interesting reading. "You might be interested in my current estimates of the resources involved in the Linux project. "Start of project: The formation of the Free Software Foundation in 1983 (most of the core libraries and utilities of GNU/Linux are owned by the FSF, as well as the core C compiler used to compile the beast). Meaning: 15 years since start of project, GNU/Linux is finally a threat to NT Server. "Estimates of programmer time: Linux kernel: project began in 1993. In the five years since, an average of 200 programmers has been hard at work part-time, approximately 500 man-years. "Meaning: approximately $50,000,000 investment in the kernel. "The core OS itself (kernel + API libraries + core OS utilities) has taken over 1000 programmers close to 15 years to complete (to be fair, the first few years were done with only 20-30 programmers). Figure 10,000 man-years involved in the core operating system. Meaning, approximately $1,000,000,000 investment in the core GNU/Linux operating system. "Add in the other software bundled with the typical Linux distribution and you have an approximately $4,000,000,000 investment contained on that one single CD-ROM. My current estimate is that it will take another $200,000,000 worth of programming time over the next three years focused on ease-of-use and ease-of-administration issues in order to make Linux competitive with Microsoft's core Windows 98 and Windows NT Workstation products (currently it only competes with Microsoft's Windows NT Server product, which accounts for a very small percentage of Microsoft's OS shipments). The fact that the programming time is mostly donated does not reduce the magnitude of the investment needed to write a modern OS. The kernel (which has been written by a team of hundreds since a few months after the start) is the smallest part of the investment. "The sad part is that most of the general public is ignorant enough to buy Microsoft's argument." If Eric's numbers are out by even a factor of two or three, we could still note that effective Linux R&D development spend is of an order to match Microsoft's annual development spend, which kind of puts things in context. But the point Microsoft's attorney was failing to make, and should have made, is that it can be seen to be possible, from the Linux experience, for a single individual to start a massive ball rolling, ultimately placing that individual's innovation in a position to challenge Microsoft. QED Microsoft is not a monopoly. Yes, we realise it's a tenuous argument and Linux is a special-case phenomenon, but it's a better shot than the one they fired. The funny part, we reckon, is that Microsoft can't comprehend an explanation that doesn't involve just one person driving. Complete Register trial coverage Click for more stories
The Register breaking news

EU denies fixing mobile phone market in Europe's favour

An EU spokesman has denied US claims that it was attempting to exclude US mobile phone companies from Europe in defining third generation cellular standards. Earlier this week US trade representative Charlene Barshefsky said the European process was aimed at shutting US companies out (see US vs Europe wireless trade war looms). Barshefsky's aim seemed nothing less than the dismantling of the entire European wireless development process, and its replacement by a far looser and 'more competitive' international one, via the ITU and other bodies. But from what Jochen Kubosch was telling reporters yesterday, this isn't going to happen. The EU standard defined by ETSI, UMTS, is a candidate for consideration as a global standard. Kubosch points out that several US companies support ETSI, and that Europe's standards are not intended to be exclusionary. The most obvious US company to feel itself excluded (although Lucent has rattled some sabres) is Qualcomm, which says its technology won't work with UMTS, and which is withholding what it says are eight key patents needed for UMTS to go into service. These patents will be the subject of a veritable firestorm as third generation development continues. Yesterday Qualcomm reportedly claimed that Ericsson had to all intents and purposes abandoned a lawsuit against it over five of them, withdrawing claims under three patents and admitting the invalidity of two others. The actual truth of this isn't currently entirely clear, as Ericsson has yet to comment. Qualcomm is however on the receiving end of other actions from major manufacturers, including Motorola, and is by no means home free with its 'key patents.' ® Click for more stories
John Lettice, 21 Oct 1998
The Register breaking news

Trial unnecessary, and we don't have to be polite – Microsoft lawyer

The thrust of Microsoft's opening two-hour statement by its leading external lawyer, John Warden of Sullivan & Cromwell, was that it had done no wrong and was not obliged by law to be soft on competitors, since the antitrust laws are not a "code of civility in business". Microsoft "firmly believes the trial to be unnecessary", Warden claimed. He was on thinner ground when he said that there was nothing wrong in "urging your partner not to ally with your competitor", since Microsoft is accused of accompanying such "urging" with dire threats as to what Microsoft would do to the "ally" if it did not give into Microsoft's demands. The case documentation shows many examples, such as threatening to stop supplying Windows 95 to Compaq if Compaq did not agree to include Internet Explorer, and not allowing AOL to have its icon on Microsoft's Internet access Web page if it did not use IE exclusively, despite preferring Netscape for technical reasons (AOL has subsequently denied this). Warden struck an old-fashioned pose by failing to use a computer-driven screen, as had David Boies in opening for the DoJ. "There are a few of us who still use fountain pens," he said as he used an overhead projector. Interestingly, Cromwell & Sullivan's law practice also uses WordPerfect, as do many lawyers, and is far down the list of high technology legal practices in a recent survey. "The effort to demonize Bill Gates... is emblematic" of the DoJ's approach, Warden suggested. The cliche-du-jour was that the DoJ opening remarks were the old chestnut "long on rhetoric, short on substance". Warden turned the decision by Microsoft not to charge for IE into a benefit to consumers, rather than a competitive loss-leader for which the cost would be recovered elsewhere. Warden did admit that Microsoft had forced Netscape to withdraw the fee, which may not help the case later as it is evidence of predation and monopoly leverage. So far as Microsoft's contracts with ISPs were concerned, Warden claimed they were "not only completely unobjectionable but pro-competitive". It is hard to see how Microsoft can make progress with this argument here, since reducing competition is hardly pro-competitive. Warden claimed it was a different issue as to whether Microsoft required PC makers to keep the IE icon on the screen. The DoJ says they are exclusionary and therefore illegal. Warden was always seeking to deliver one-liners for the media, but it is unlikely that Judge Jackson will be moved by them: "Microsoft doesn't deny the consumer choice, they are the consumer choice." Of course, there is no hint at what the "choice" might be in the high street when it comes to operating systems, for example, and why that choice does not exist, and why the price of Windows is an increasing proportion of the price of a new PC, or why Microsoft's gross profit is so high. Microsoft was not a monopolist, Warden maintained, because there were few barriers for those who wanted to enter the business. Of course, entering may be easy, but staying alive is another matter. ® Complete Register trial coverage Click for more stories
Graham Lea, 21 Oct 1998
The Register breaking news

Smoking memos that support Netscape's carve-up tales

"Netscape had what the government would consider a monopoly in the market for Internet browsers until the Great Satan [clearly a Register reader] Microsoft came along," John Warden, Microsoft's trial lawyer said in his opening remarks. Referring to the meeting between Netscape and Microsoft at which it is alleged that a carve up of the browser market was discussed (or "some sort of collaborative effort", as Warden put it), he described the account by Marc Andreessen as "a fantasy that arose from the naivete" of a Netscape executive, deprecating Andreessen for his youth, it would seem. Warden also had another explanation if this claim of a collaboration for the benefit of mankind generally were not believed: it could have been a Netscape fabrication to gain the government's protection in the marketplace: "The evidence will show it was either one or the other," Warden claimed, apparently unsure which story would be the crowd pleaser. It sounded as though Microsoft was on a fishing expedition in the courtroom, which happened to be in the same building where Monica Lewinsky told her version of other events. Warden also claimed that "there was no proposal by Microsoft that Netscape cease development of an Internet browser for Windows 95", but this is hardly surprising, since had Netscape decided to go along with Microsoft's indecent proposal, it could not have given up officially on Windows 95 browser development since to do so would be to invite a serious antitrust investigation for illegally dividing the market. Documents that came to light last week have created a new and serious problem for Microsoft about this meeting, because a Netscape attendee at the meeting emailed an executive at Apple the day after the meeting with an account as to what had happened, noting that "if Netscape didn't do the deal, Microsoft would crush them". This memo is a particular problem for Microsoft because it has claimed that Netscape concocted its account of the meeting much later, after it began to lose market share to Microsoft. And how strange that Microsoft also wanted a seat on Netscape's board, unless it were to watch that its wishes were being followed. This development does not augur well for Microsoft. ® Complete Register trial coverage Click for more stories
Graham Lea, 21 Oct 1998
The Register breaking news

‘How much to screw Netscape’ memo sheds light on AOL IE deal

It will not help Microsoft's case that AOL has a document which details a meeting between Microsoft and AOL executives, where Gates was trying to persuade AOL to drop Netscape and use Internet Explorer only. The document is dated 21 January 1996, and was written by David Cole, an AOL executive. To make matters even more difficult for Microsoft, it was widely distributed at AOL, making its repudiation essentially impossible, especially as the meeting took place only three days earlier. It is noted that Microsoft was also willing to offer a "significant long-term commitment to buying advertising from AOL... on the order of tens of millions of dollars of advertising and promotion". The note includes: "Gates delivered a characteristically blunt query: how much do we need to pay you to screw Netscape?" Microsoft is dismissing this as "a third-hand reflection of the meeting" but as has been said before in another case (by Mandy Rice Davies during the Profumo scandal), "they would say that, wouldn't they?" The beautiful irony about this is that the AOL internal memo would not have been disclosed by AOL, because of its ongoing fear of Microsoft, had it not been for a subpoena served on AOL by Microsoft demanding all such documents, which automatically gave the DoJ access to the document. The document also reveals that Microsoft's Netscape strategy was to "bundle increased functions in their existing product lines and turn the screws on their channels". It is good evidence that Microsoft did indeed add Internet functionality to Windows to harm Netscape, and that Microsoft did pressure OEMs and ISPs to stop including Navigator. ® Complete Register trial coverage Click for more stories
Graham Lea, 21 Oct 1998
The Register breaking news

Beebug scuttles away from Acorn

Veteran Acorn dealer Beebug is shutting down its retail arm on 13 November. Retail manager Jeremy Botterill, who joined the St Albans, Herts company in July, has been made redundant, along with three other staff. The retail business comprised a catalogue operation and a retail outlet in St. Albans. Founded in 1982, Beebug began life as an "independent user group for owners of the BBC Microcomputer". Describing itself as one of Britain's largest Acorn dealers, the fact that it has fewer than ten full-time employees, gives some indication of the size of the Acorn market. Following the reorganisation, Beebug will employ five people full time, providing networking and support for Acorn and PC platforms in the educational sector. The company also supports a range of Acorn software. Botterill blamed the company's decision to withdraw from the Acorn market on Acorn itself. The company retains Acorn Centre of Technology status -- but this is "moribund", he said, as "there is no Acorn hardware to sell". Acorn last month announced its decision to scrap future development of the Risc PC platform. "We are very disappointed -- every one in this company is Acornist - but sales had been slowly diminishing in schools and this was rubbing off here. Everyone has become very pessimistic," said Botterill. However, he remains committed to Acorn technology and retail. He is striking out on his own with a part-time venture called Digita Computers. You can contact him on 07775 960027. ® See also Acorn builds castles in the air Click for more stories
Drew Cullen, 21 Oct 1998
The Register breaking news

Microsoft results ahead of expectations, as expected

Microsoft's oft-expressed surprise at the success of Windows 98 became even more puzzling when the company released its latest quarterly results yesterday. It said it earned $1.52 billion, and that from 25 June to 30 September it had sold ten million copies of Windows 98. That's just over three months, so would put the company on a run-rate of 40 million copies a year, which would be pretty good if it were just retail. But it's not -- the number includes retail and OEM sales, and how many PCs ship world-wide in a year? Exactly. The 'success' of Windows 98 was entirely predictable to Microsoft -- all it had to do was look in its OEM order book. And while it's difficult to say how well retail upgrades did, as the total number of sales will have been impacted by continuing sales of 95 during the quarter, in the long run -- as always -- the OS won't be a successful retail product. As for the results, they were as always ahead of expectations (56c a share against the analysts' 49c), and sales were up to $3.95 billion from $3.13 billion. Net income was $1.68 billion against $663 million the previous year, although that included a $296 million write-off for buying WebTV. ® Click for more stories
John Lettice, 21 Oct 1998
The Register breaking news

Gates didn't threaten Intel's Grove, says Microsoft attorney

Bill Gates did not threaten Andy Grove, then CEO of Intel, during a three-hour dinner with him in 1995 at which native signal processing was discussed, John Warden, Microsoft's trial lawyer claimed. Gates was just urging Intel to drop the development of native signal processing because the technology was technically incompatible with Windows, and not because it would remove some of the need for Windows. Microsoft has not released the memo, but Microsoft's threat to be friendly to AMD if Intel did not obey Gates' wish is sufficiently well established. The DoJ claims that Microsoft successfully discouraged Intel to drop the development. DoJ lawyer David Boies said on Day One that "what you see is a consistent pattern [of Microsoft] using its monopoly power, using its leverage, using everything it has". According to an internal Microsoft account of a three-hour dinner that Gates had in 1995 with Andy Grove, Gates admitted in a July 1995 email that "we are trying to convince [Intel] basically to not ship NSP". NSP would have made it possible to substitute chip instructions with software other than Windows, written in conjunction with PC makers. In October 1995, Gates said that he thought Intel was living up to its side of the bargain, but that "if Intel is not sticking totally to its side of the deal, let me know". The implication as to what might happen if Intel did not follow Gates' desire was clear. ® Complete Register trial coverage Click for more stories
Graham Lea, 21 Oct 1998
The Register breaking news

Barksdale holds ground in three hour cross-examination

Jim Barksdale, CEO of Netscape, spent three hours yesterday being cross-examined by John Warden for Microsoft. Barksdale's written testimony was formally added to the court record, and despite the length of the session, Warden only reached page 13 of the 127-page deposition. Barksdale was calm throughout and resolutely failed to give way on any point. He will return today -- and possibly for further days if the cross-examination is as slow as yesterday. Projecting forward, this could make the trial last months rather than the anticipated six to eight weeks. It suggests at the moment that Microsoft's strategy may be to drag the trial out for as long as possible, so that the media will become bored with it. Barksdale said in his testimony that "Microsoft's new business plans also include plans for how to eliminate Netscape as a competitor because of the threat the browser posed to the Windows monopoly". In his cross-examination, Barksdale noted that the press frequently reported Gates saying that he "was going to take my company out of business". Warden has not yet reached the part of Barksdale's deposition dealing with the critical June 1995 meeting, but when Barksdale confirmed the widely-reported market share carving proposal by Microsoft, Warden said he would return to that in due course. Barksdale also said that in 1996, Netscape licensed between five and ten million copies of Navigator, but these had dwindled to fewer than a million in 1997, as a result of Microsoft's actions. One of the key remarks by Microsoft, that it would "cut off Netscape's air supply", was attributed by Barksdale to Paul Maritz, a Microsoft VP, within the hearing of a responsible reporter. Unfortunately, this remark is likely to be ruled inadmissible by Judge Jackson, who will have to treat it as hearsay. Asked if pressing the government's action was "a key element in your strategy", Barksdale said he always regarded the DoJ action as a sideline because Netscape had more important things to do. He did reveal that he had advocated that the DoJ file an antitrust action last year, instead of the contempt action that failed. Netscape did not file a private antitrust action as this would have been too expensive, Barksdale said. Warden was unable to get Barksdale to agree that Navigator was a threat to Windows, probably because it wasn't, although Warden would have liked such an admission it seemed. It was a bit tricky for Warden to accuse Netscape of behaving like Microsoft when Netscape had a legal monopoly in browsers, as if Warden were too critical, Microsoft would be accusing itself of similar tactics. Barksdale was asked if he had any evidence that Microsoft wanted to eliminate Netscape as a competitor. After a hesitation on Barksdale's part, the Netscape CEO was helped out by Judge Jackson, who paraphrased the question: "What he wants to know is, is he going to get sandbagged with anything later on?" Barksdale's reply was revealing. "Maybe," he said. ® Complete Register trial coverage Click for more stories
Graham Lea, 21 Oct 1998
The Register breaking news

IE 4 security bug latest

Microsoft Internet Explorer 4's method of parsing IP addresses could allow unscrupulous Webmasters to run code on users' machines, it has emerged. The security hole centres on the way IE distinguishes between two alternative ways of formatting IP addresses. If the browser encounters an address in the commonly-used form of four numbers separated by dots, such as 1.2.3.4, it treats the address as a Web site. However, IP addresses can also be represented by a single value derived by expressing the four-number address as a power series of 256, ie. (1 x 256 x 256 x 256)+(2 x 256 x 256)+(3 x 256)+4. IE assumes such single-value IP addresses locate intranet-based sites. If the user has applied less stringent security checks to intranet-sourced content, as well they might, a malicious Web site administrator could use the hole to run active content on the user's computer without first obtaining the user's permission to download and run it. The glitch was discovered by Danish Webmaster Sune Hansen. Microsoft has since admitted the presence of the hole and, according to Windows platform product manager Mike Nichols, a patch is being prepared. ® Click for more stories
Team Register, 21 Oct 1998
The Register breaking news

Apple denies it's cancelled would-be NT killer

Apple's MacOS X Server is alive and well, and will ship by the end of the year, the company claimed yesterday, seeking to scotch rumours that it had cancelled the OS. "As Apple has said, MacOS X Server is on track to ship this year," company spokeswoman Staci Sheppard told US Web site MacWeek.com. Apple was forced to make the statement by claims made on several Mac-oriented Web sites that an Apple representative questioned at an Apple Austria press conference in Vienna said the project had already been cancelled internally but as yet no official statement had been made. This despite the heads of Apple's Austrian and German subsidiaries presenting at the same conference a MacOS roadmap which included a Q3/Q4 release slot for MacOS X Server 1.0. The unnamed spokesman's comments came in response to a request for a more specific date for the OS' release than the one given in the presentation. ® Click for more stories
Tony Smith, 21 Oct 1998
The Register breaking news

CRTs beat back flat panel challenge

CRT monitors will continue to dominate the data display market for the next seven years, despite "mounting competitive pressure" from flat panel displays. Worldwide CRT sales will produce $17 billion revenues from 90.5 million units, according to research firm Stanford Resources. By 2004, the worldwide CRT monitor market will reach 134.7 million units, but market value will edge up only slightly to $18.9 billion, as average selling prices continue to decline, Stanford forecasts in the twelfth edition of Monitor Market Trends. The 19- inch CRT monitor is the fastest growing screen size, with expected shipments of 2.4 million units leaping to 23.2 million units in 2004. "With the introduction of new CRTs featuring flatter faceplates, shorter necks, and larger viewing area, CRT-based monitors continue to offer the best price/performance equation for computer applications," Stanford Resources analyst Rhoda Alexander said. Both 17- and 19-inch CRTs are the focal point for growth in the CRT monitor industry into the next decade,while formerly price-prohibitive 20- and 21-inch monitor markets are now becoming increasingly affordable for general computer users," Alexander said. Stanford Resources
A staffer, 21 Oct 1998
The Register breaking news

Ericsson selects Secure's SoftToken for intelligent phones

Ericsson has concluded a deal worth over $1 million to build SofToken technology from Secure Computing into its future generation of 'intelligent' mobile phones. Ericsson is also a shareholder in Symbian, the joint venture building intelligent phones based on Psion EPOC32 OS. The move was made to address the fears that many organisations still have over the security of mobile data, even though digital mobile networks are inherently far more secure than the previous generation analog networks. Users' security concerns are particularly strong in North America where analog mobile phones still dominate. The two companies have yet to decide exactly how SofToken will be incorporated into Ericsson mobiles but the intention is to secure communications between the mobile phone and servers -- whether those links are direct or through the Internet. Secure's server technology, SafeWord, uses dynamic password authentication to control remote access. The Ericsson mobile phone will therefore utilise SofToken to generate the necessary dynamic password to gain access to secure servers. "This is a tremendous validation of our technology by one of the world's leading telecommunications companies and will result in ongoing SafeWord server sales to the Ericsson mobile user base," said Tony Caine, Secure Computing regional sales director. The agreement will, for example, enable mobile phone users to participate more readily in e-commerce, he added. ® Click for more stories
Tony Dennis, 21 Oct 1998
The Register breaking news

Action halfway to £500m target

Action Computer Supplies Holdings reported its 1998 results, ramping up turnover by 45 per cent to £250 million, but still way short of meeting its stated ambition to be a £500m company by the year 2000. Financial director Ian Wakelin said the objective still stands, although the timetable may have changed, but given the 45 per cent growth rate this year, Action is still be on the acquisition trail. “We’re actively looking for companies but don’t expect to see anything happen in the short-term,” said Wakelin. Chairman Henry Lewis said that Action is seeing the benefits of its recent acquisitions, and he confirmed that while the Board expects continued organic growth, “it intends to pursue further selective acquisitions." Pre-tax profits were up 39 per cent to £7.7 million and retained profits after a £990,000 exceptional charge inched up to £3.2 million from £3.1 million last time. Excluding the effect of acquisitions, the company increased network sales by 38 per cent, software sales are up by 45 per cent, PC sales by 19 per cent and e-commerce activities trebled over the year from £6.4 million to £19.2 million. Lewis said the IT market has shown good overall growth during the year, and against negatives trends like falling PC prices, he cited positive growth areas like internet usage and e-commerce. Action said its large base of customer’s order frequently from a widespread range of products, and the customer base grew to 86,513 from 71,680, including the effect of two acquisitions, Fraser Associates Plc in October 1997 and the beleaguered SHL Reseller Division in May 1998. Both acquisitions were almost entirely for cash and funded by a £8 million four-year term loan. Fraser Associates cost £3.5m, SHL Reseller Division was £7.9m and the goodwill amounted to £2.9m and £5.7m respectively. Wakelin said the growth in Action’s customer base was almost entirely from the organic businesses, expanding at around 300 customers per month. At the interim stage Action stated that a reorganisation provision of £1 million was anticipated for the SHL purchase, which almost spot-on since the final charge was £990,000. Both Fraser Associates and the SHL Reseller Division are now integrated into one division, and Action said its rationalisation of facilities and computer systems is on target with benefits expected throughout the current year. The company shed around 47 staff in July, closing two of three warehouses and one of two configuration centres.®
Janice McGinn, 21 Oct 1998
The Register breaking news

ATI confirms Chromatic buyout

Graphics card specialist has confirmed its intention to acquire media processor developer Chromatic Research in a deal worth $67 million. As predicted by The Register (see ATI prepares Chromatic buyout), ATI's interest lies in Chromatic's work on system-on-a-chip (SOC) products for set-top boxes. Chromatic has been developing an SOC since it became clear its Mpact 2 2D/3D graphics acceleration and video chip had failed to win the support of PC manufacturers, largely because users prefer the power of a dedicated graphics acceleration system of the kind that ATI produces. "Chromatic's development to date adds significantly to our technology portfolio and allows us to extend our competencies into fast growing markets," said ATI VP of engineering Adrian Hartog. ATI is undoubtedly hoping Chromatic's technology will enable to break into the emerging set-top box market, predicted by market research organisation IDC to grow by 76 per cent per year between 1998 and 2002, with some 55.7 million devices in use by the latter date (see Digital TV to lead information appliance market). And ATI's role as the leading supplier of graphics acceleration technology to PC manufacturers puts in a strong position to provide core technology to those of them who wish to extend their product lines into the information appliance market. Its relationships with PC vendors are going to be essential if ATI is to compete with the likes of National Semiconductor's Cyrix subsidiary, which is also developing information appliance-oriented SOC product, and embedded specialists like Motorola. ® Click for more stories
Tony Smith, 21 Oct 1998
The Register breaking news

Ideal Hardware founders ease the reins

Ideal Hardware founders James Wickes and Kevin Harper are relinquishing hands-on management at the company. They are joining fellow directors Simon Barker (operations) and Simon Miesegas (finance) in Ideal's new holding company -- called InterX -- where they will focus on "business opportunities for the whole group". Day-to-day responsibilities at the storage distributor will be handled by a new operational board, staffed by the company's 12 most senior managers. Ideal -- or InterX -- as we must learn to call it, reorganised itself into three separate trading arms: product distributor Ideal Hardware; Ideal UniSolve, its consulting arm; and The IT Network. Ideal MD James Wickes said the restructure was intended to "unlock the value that we perceive exists within the company". He denied suggestions that the reorganisation was a prelude to hiving off non-core businesses. Neither, is the reorganisation intended to curry favour with investors, according to Wickes. "Our shareholders would see through that one immediately. They are not interested in stories. The only thing shareholders are interested in is our ability to do the numbers on the core business," he said. Ideal Hardware accounts for more than 80 per cent of group turnover. The IT Network, InterX's multimedia arm, is slated for a multi-million pound investment, and a massive relaunch early next year. ® Click for more stories
Drew Cullen, 21 Oct 1998
The Register breaking news

Lucent unveils voice-over-IP line

Lucent has announced a line of enterprise-oriented voice over IP products based on technology developed by ACT Networks. The ClearTrac line brings voice calls from a PABX and IP, IPX and SNA data traffic together onto a wide area frame-relay network. To minimise bandwidth, the products offer built-in data compression. Lucent is offering two families of ClearTrac products: the V series, designed to integrate voice and data traffic at central, regional and branch sites, and the D series, which is designed for small offices and remote sites. Both series are based on ACT Networks' NetPerfomer devices, and represent the fruits of an OEM agreement between ACT and Lucent. ® Click for more stories
Team Register, 21 Oct 1998
The Register breaking news

Bristol's Microsoft antitrust suit cranks on

With Microsoft's "A" team of lawyers busy in Washington, a "B" team was equally pressed in Bridgeport, Connecticut where Bristol Technology is seeking a preliminary injunction against Microsoft for, allegedly, abusing its operating system monopoly by indulging in anticompetitive behaviour, manipulating the Windows APIs, and violating the Sherman Antitrust Act. During the hearing, Bristol said that its survival is threatened by Microsoft's unwillingness to license NT code on reasonable terms. Jean Blackwell said that "My entire business is at stake" and that Bristol had failed to close deals with Silicon Graphics and other customers as a result of Microsoft's intransigence. The present hearing is in response to Bristol's request for a preliminary injunction for it to have continuing access to NT code. Microsoft is maintaining that the case concerns a contract dispute, and that Bristol is just trying to get better terms by bringing the case. The three-year contract for part of Windows NT code expired in 1995, and Microsoft is seeking a 400 per cent increase in the licensing fee, and claims that Mainsoft has accepted essentially the same terms. Bristol has come against a change of mind by Microsoft over licensing NT code, particularly as Microsoft now sees Bristol as encouraging competition for NT with Unix, since Bristol's Wind/U tool allows applications to run on both NT and Unix - something Microsoft does not now want. The preliminary hearing has stretched to four days. Bristol produced Professor Richard Langlois of the University of Connecticut as an expert witness. He said that Microsoft is well on the way to having a monopoly in the OS market. Bristol has won access to all Microsoft documents in the DoJ, Sun, and Caldera cases. Microsoft had fought this, and having lost is now claiming that the access to such documents is "standard procedure in these kinds of cases . . . for discovery purposes, not for evidence." Bristol said that documents had been admitted as evidence for its case, flatly contradicting Microsoft's claim. Bristol's counsel Pat Lynch said that the matter was not primarily a contractual dispute, and that Microsoft is talking out of both sides of its mouth, having referenced the Bristol case in Sun v Microsoft, and now referenced the Sun case in Bristol's case. Microsoft produced Professor Richard Schmalansee from MIT, who gave an opinion that there would be continued head-to-head competition between Unix and Windows. He also noted that Wind/U's customers wrote only $100 million of software over the last two years, which was minuscule compared with the $45 billion of worldwide Unix software application sales in 1996 and 1997. It would be interesting to know how he came to this figure, which seems to be very high. He also suggested that the disappearance of Bristol's product - and by implication Bristol - would have no significant impact on the competition between Unix and NT. It is interesting that he should introduce the argument of Bristol's size and influence: is he seriously suggesting that "might is right"? Bristol maintains that Microsoft used the NT licensing programme as a Trojan horse to entice Unix developers to NT through tools like Wind/U. Bristol also said that Microsoft was demanding that it must receive royalties on the licensing of each developer's kit. The next stages are for the two sides to submit general synopses to the court. A ruling on a temporary injunction is now expected next week, as well as a decision as to whether the matter will proceed to a full trial. ® Complete Register trial coverage Click for more stories
Graham Lea, 21 Oct 1998
The Register breaking news

CHS juggles finances following collapse of Vobis buyout

CHS Electronics stock plummeted two weeks ago and it announced yesterday that it is now renegotiating earnout payments for companies it has acquired, including big-hitters like Metrologie and Karma International. CHS would have the option of paying in cash or stock, reducing the number of diluted shares outstanding. The second aspect to CHS new financing model is to raise cash finance through asset-based lenders. Chairman and CEO Claudio Osoria said the strategy could raise around $800 million, reduce interest debt and enable CHS to buy shares at lower prices. Industry observers say the plan is akin to mortgaging the future and it creates an enormous self-inflicted pressure to get bigger and bigger to fund the earnout payments. CHS stock's 52-week high of 27 fell to 52-week low 4.5, and it's now hovering around 10. When the sale of Metro AG's Vobis Group to CHS Electronics Inc collapsed earlier this week, Metro said the Miami distributor failed to raise the cash, and it warned that it may take legal action against CHS. Metro AG spokesman, Dierke Kowalke, said Metro will take all necessary actions to protect its legal position. "We are in the Schiedsgericht, which is a pre-court arbitration process, discussing our positions and that of Vobis and its subsidiaries, Maxdata and Peacock AG," he explained. Kowalke added: "If the CHS board can find the money then there is no problem." It looks unlikely since Claudio Osorio, CHS chairman and CEO said last week that it was Metro AG that did not meet the sale conditions and he said CHS will safeguard its legal position against Metro AG. ® Click for more stories
Janice McGinn, 21 Oct 1998
The Register breaking news

PhoneLink profitability in sight says CEO

"We've been described as a stock-market dog," said Graham Ramsey, CEO of PhoneLink, the loss-making Tel-Me online content provider, "but our acquisition strategy is working and we're very bullish about the future." In 1996 PhoneLink reported £4 million turnover and a £7 million loss. By March 1997, turnover was static but the loss doubled to £6 million. By March 1998, the loss was only £3 million, but then again, so was turnover. Come August 1988, turnover shot up to £55 million and the newly made-over company said it was poised to move into profitability. "We had to generate organic growth but we knew it wouldn't be enough," explained Ramsey, who was brought in to mastermind PhoneLink's recovery and acquisition strategy, and the company paid around £16 million for two very profitable businesses, GB Mailing and Seaforths Travel Agency. Both deals included deferred and share elements, but Ramsey said the share swaps indicated mutual confidence, and that PhoneLink's current wellbeing justifies that confidence. The Seaforths Travel Agency has an online commerce product called Ticket Window that interfaces with the Galileo reservation system and PhoneLink integrated it with the Tel-Me service. "Over the past 18 months we've seen 20 per cent of business come from Seaforth," said Ramsey, and PhoneLink has picked up a raft of awards for Seaforth, including the Service award in BT's Electronic Business Awards for Innovations in E-Business. Electronic business is a growth area for PhoneLink and the company is hatching new products and services. The second acquisition, GB Information Management, specialises in addressing systems and they dovetail neatly with PhoneLink's bureau telephone numbering services. So is it all rosy again at the one-time high flier? No, not quite, according to Ramsay. The company is due to report in December and it's in the closed period now, unable to make any financial forecasts, but Ramsay confirmed that the core business remains unprofitable. PhoneLink employs 220 staff, no change from 1996, but it has shed over 170 employees and implemented stringent cost-cutting in the core business, according to financial director Richard Law. Ramsay is confident that the business will be profitable, but its recovery may owe less to the original Tel-Me technology than to the added value systems from Seaforth and GB Information. Input from acquisitions has fuelled PhoneLink's recovery, and while Ramsay sees lots of opportunities for dynamic growth, "we won't discount future acquisitions," he said. PhoneLink has still to convince the market and its share price, once an over-hyped £4.40, hovers around £0.40 today. ® Click for more stories
Janice McGinn, 21 Oct 1998
The Register breaking news

Airline startup AB gets thumbs down from IT execs, spin doctor and hacks

A UK airline startup got the thumbs-down from an IT distributor, a spin doctor and four independent journalists today for tardiness and lack of service. AB Airlines got the thumbs down from all six people. A straw poll The Register conducted elicted negative reactions from European chip company Dane-Elec, its PR company Chaz Brooks Associates, and two journalists from major reseller trade magazines Microscope and PC Dealer. Alan Stanley, managing director of Dane-Elec UK, which used the airline to ferry four journalists to his Galway facility, said: "This is crap service, and that's crap with a capital C." Stanley, who works for a memory company worth many millions of dollars, was trained as an aeronautical engineer. He said that the company, AB Airlines, which floated on the UK stock exchange in April this year, had delayed his plans to ferry the IT journalists to its memory fab in Galway. Stanley said he would never use the airline again. The journalists AB flew out yesterday agreed it was not a pleasant experience. One said: "I will never use this airline. Even if it gave me a free trip I wouldn't use it. I'd give the free trip to my worst enemy, if I had one." Chaz Brookes, of the PR company CBA, agreed with his client's appraisal of the airline. He said he was very disappointed not only with the level of service but also with the late arrival on Tuesday, which did cost his client money. Ian Burley, a freelance journalist who is a specialist in plane technology, agreed the service was not what he expected. AB refused to comment. ®
Mike Magee, 21 Oct 1998
The Register breaking news

Microsoft draws blood in Netscape battle

Microsoft finally drew blood this morning when it produced a 1994 memo from Netscape co-founder Jim Clark. Late in December of that year Clark was approaching Microsoft, lobbying for the company to licence Netscape's browser, protesting that Netscape wasn't interested in the client market, and suggesting that Microsoft invest in Netscape. Said Clark: "We want to make this company a success but not at Microsoft's expense; we'd like to work with you. Working together could be in your self-interest as well as ours. Depending on the interest level, you might take an equity position in Netscape with the ability to expand that position later." Clark's offer was turned down, and Netscape's counsel later suggested that Clark had been a little nervous at the time. As well he might have been - Netscape had quite a way to go down the line before it turned a profit, and spent the early part of its existence as a miraculous combination of productless wonder and stock market darling. For sure, Clark was twitchy. But it's not entirely clear what his testimony proves. He made the approach to Microsoft's new technology general manager Dan Rosen in secrecy, the offer wasn't taken up, and he's no longer managing the company. He wasn't interested in the client market, but by the time of the disputed 'carve up' meeting, Netscape patently was, and it was a threat. So the video deposition of Bill Gates on day one of the trial included a note where he said: "We could also give [Netscape] money as part of the deal, buy a piece of them or something." These are basically two separate cases. Microsoft is trying to establish that Netscape wanted to do a deal, while at the same time denying that it offered Netscape a deal some months later. The establishment of the first does not per se prove Microsoft's case regarding the second. More interestingly in general terms, Clark's testimony claims that Bill Gates told him in October 1994 that Microsoft intended to give its browser away free. This appears to have influenced Clark's strategy somewhat: "I decided to give it away free because Bill Gates told me he was going to give it away free before our first beta ... I felt like we would have to in order to survive against Microsoft." Well, as we know, Netscape didn't exactly give it away free, but determined on a halfway house. You could have it free, but you were unlicensed, and corporate customers could be tapped to pay the licence. But Clark comes on as somewhat more naïve than Marc Adreessen, the Netscape exec now being accused of youthful recklessness. Bill Gates has a long track record of undermining potential rivals by talking about products that were almost entirely imaginary. The other side gets spooked and their development cycle goes into chaos mode - Bill's being doing this since the 80s. As Clark's own testimony reveals, in October 1994 Microsoft did not have a browser. His message to Rosen in December of that year was allegedly an attempt to stop Microsoft licensing Mosaic for its browser, and to get it to use Navigator instead. So he knew there was no browser, and he ought to have known that Gates was threatening to give away smoke. ® Complete Register trial coverage Click for more stories
John Lettice, 21 Oct 1998