29th > October > 1998 Archive

The Register breaking news

Barksdale suggests splitting Microsoft operations

After finally concluding his marathon questioning, Netscape's Jim Barksdale came up with the hoary old suggestion that Microsoft separate its OS and applications developers. But if the case went against Microsoft, this remedy would be unlikely to work, because Microsoft could merely redefine everything to be operating systems work. Or Microsoft could simply move its headquarters outside the US, as Gates and Ballmer have threatened, and carry on as it wishes. By that time, Microsoft would have around $30 billion in the bank, and with that, it could even buy a few countries. The company's trial attorney, John Warden, re-examined Barksdale during Tuesday afternoon, but made no significant progress. Attempts at hypothetical questioning -- what if Internet Explorer and Windows 98 were disintegrated, would you start charging for Navigator? -- got nowhere: Barksdale just said: "I would be competitive." Nor did Warden get the answers he wanted when he tried to get Barksdale to agree that Netscape's market tactics -- making the browser the seed corn for the more lucrative server business -- were similar to Microsoft's approach. Barksdale replied that although he had used the term "seed corn", he meant that the browser generated brand recognition. Warden had clearly not been well-briefed by Microsoft, since he asked questions that elicited answers that did not reflect well or usefully on his client's case. An example was when he tried to multiply Netscape's revenue of $45 million in 1995 and a distribution of 15 million browsers, when the retail price was $39, and he couldn't get the arithmetic to work. Barksdale explained volume licensing to Warden. Warden was able to score a few points when he introduced an email from Paul Maritz of Microsoft that referred to eight areas where Navigator did not apparently follow standards, particularly in dealing with JavaScript. The exchange began to become heated, with Warden saying that the pot shouldn't be calling the kettle black, but before Barksdale could respond, Judge Jackson sent then back to their corners. Barksdale began to get the measure of Warden, and when protesting about being asked to read Reback's four-page letter before answering questions about it, Warden said that he had been able to read it pretty quickly. Barksdale chipped in: "You're a much smarter man than me, Mr Warden." Lawyers like to pretend to be poor, so Warden retorted: "That's why you're worth $100 million and the bank owns my house." "You're doing alright, Mr Warden, from what I can see," responded Barksdale. But the truth was that Warden's client was not doing alright after the first government witness. The prospect of an intransigent Bill Gates appearing for the DoJ on the court screens, and probably on many of the screens that had not-so-long previously carried the Clinton evidence, could hardly be comforting for Microsoft. ® Complete Register trial coverage Click for more stories
Graham Lea, 29 Oct 1998
The Register breaking news

Microsoft paid Apple $150m to settle QuickTime suit

David Boies, attorney for the DoJ, noted that John Warden, for Microsoft, had omitted to quote part of a handwritten note by Fred Anderson, Apple's CFO, in which Anderson wrote that "the [QuickTime] patent dispute was resolved with cross-licence and significant payment to Apple." The payment was $150 million. This is very interesting news indeed, because it closes another chapter that has a hitherto secret ending in the saga of Microsoft's murky business practices. It's an interesting and little-known story. The confirmation of the payment appears to be the first hard news that Microsoft had been forced to back down in Apple's case against Microsoft and other defendants (including Intel) in the San Jose District Court in 1994. Microsoft and Intel had been shocked to find that Apple's QuickTime product made digital video on Windows seem like continuous motion, and was far in advance of anything that either of them had, even in a planning stage. The speed was achieved by bypassing Windows' Graphics Display Interface and enabling the application to write directly to the video card. The result was a significant improvement over the choppy, 'slide-show' quality of Microsoft's own efforts. Apple's intention was to establish the driver as a standard for multimedia video imaging, so that Mac developers could sell their applications on the Windows and Mac platforms. Microsoft requested a free licence from Apple for QuickTime for Windows in June 1993, and was refused. In July 1993, the San Francisco Canyon Company entered into an agreement with Intel to deliver a program (codenamed Mario) that would enable Intel to accelerate Video for Windows' processing of video images. However, although Intel certainly knew that Canyon had developed key parts of the code for Apple, it did not specify that this must be undertaken in a clean room, which is a damning condemnation in view of Intel's experience of such matters following its own litigation with AMD. A month later, Canyon delivered the program to Intel containing code that was an exact copy of the code that it had previously delivered to Apple. Intel gave this code to Microsoft as part of a joint development program called Display Control Interface. Canyon admitted that it had copied to Intel code developed for and assigned to Apple. In September 1994, Apple's software was distributed by Microsoft in its developer kits, and in Microsoft's Video for Windows version 1.1d. Apple noticed a suspicious improvement in the performance of Microsoft's video driver. Sure enough: Apple's code was being used. Apple produced a videotape with a clip of Video for Windows, with and without the Apple code. The difference was striking: without the Apple code, the clip was staggered and jerky, whereas the version with Apple's code was smooth and had clear frame transitions. Apple was desperately waiting for Microsoft to send it a beta copy of Windows 95, and found itself in a similar position to Netscape in this respect. Following a bizarre intervention that took the form of a late-night telephone call to Microsoft head-lawyer Bill Neukom by Ann Bingaman, the head of the DoJ's antitrust division, in response to a request from Edward Stead, then Apple's general counsel, this was at last supplied. The next day, Apple added Microsoft to the list of defendants in the San Jose court case. The sub-text of the dispute also began to emerge: "Apple is also claiming that Microsoft has been using the code in question to mess up [Apple's] attempts to make QuickTime a standard." Industry observers saw a clear desire by Microsoft to get developers to develop only for Windows. Now who, you may ask, was at the centre of various false claims, false counter-claims, and cover-ups about what had really been happening? Step forward Brad Silverberg, the absent Microsoft VP, who would have a tale to tell to Judge Jackson's court if only Microsoft would invite him along to the party. ® Complete Register trial coverage Click for more stories Click for story index
Graham Lea, 29 Oct 1998
The Register breaking news

Qualcomm snuggles up to Beijing

Reports that Qualcomm is lobbying Chinese telecoms regulators to adopt its CDMA standard must surely be false, considering the fact that the company opposes Europe adopting a single third generation phone standard. But then again, the US' 'let the market decide' policy doesn't play well in Beijing. Recent sabre-rattling between Brussels and US trade negotiator Charlene Barshefsky has certainly had a Qualcomm angle. The CDMA company is concerned about being locked out of the European third generation UMTS standard, and so far the US government seems ready to give it some backing. In China, CDMA has won a couple of trials, but Qualcomm has seen the irresistible GSM juggernaut roll across the country. All those billions of users are getting away. Qualcomm is arguing that technical superiority and greater capacity for CDMA make it a better bet for Beijing in the long term, but says it's difficult to get China to invest in a second infrastructure -- as indeed it would be. Humorously, there's some suggestion that Qualcomm might be able to improve its position if US trade negotiators pushed harder for China to open up its telecoms markets. ® Click for more stories Click for story index
John Lettice, 29 Oct 1998
The Register breaking news

Intel and IBM save SCO, says Michels

SCO CEO Doug Michels says the company is heading back into profitability, and now has an opportunity to move upscale into the enterprise market. But as he explains how he sees this happening, it becomes fairly obvious how close to the abyss SCO came. In an interview with CNBC yesterday, Michels said that SCO could become the industry standard in the enterprise data centre with the help of partners Intel and IBM. These two relationships certainly strengthen SCO, but Intel's Unix plans only really tilted SCO-wards a few weeks ago, while the IBM alliance was only announced a few days ago. Michels is effectively pushing the continuation and extension of SCO's age-old policy of cornering the market in Unix on Intel, but he's making it clear that the company needed partners if it was to survive and prosper. An Intel partnership takes it some distance towards being the 'official' Intel Unix (but not the whole way -- Intel is friends with lots of other outfits too), while IBM theoretically gives it greater enterprise leverage. Michels describes this as being "an opportunity to see tremendous growth beyond anything we have seen before", but this is surely pitching it too strong. The IBM deal has for the moment reduced the chances of SCO being taken over, but doesn't necessarily come with stacks of new customers for the company. ® See IBM-SCO Unix deal may raise question over PPC future Click for more stories Click for story index
John Lettice, 29 Oct 1998
The Register breaking news

Forrester predicts terminal slump for PCs

Forrester Research has predicted the onset of a three-year decline in PC sales from 2000, as the Y2K effect vanishes and buyers migrate to appliances. The outfit says PC industry revenues will peak at $55 billion next year, boosted by companies accelerating their purchasing programmes to replace non Y2K-compliant hardware. So it'll be a good time to cash your stock options. After that revenues for 2000 will slump to $47 billion, and PC manufacturers with excess inventory (most of them, no doubt) will be slashing prices to move it out. The next bad news to kick-in will be that customers won't want to replace machines ever two years or so, and instead will be looking at Internet appliances, and at using thin client techniques to keep their older machines in service. "The PC industry will never regain the $8 billion in corporate sales it loses in 2000," says Forrester's Carl Howe. "By the time companies complete their year 2000 remediation, a new class of simpler and cheaper Internet appliances will keep the PC market from ever regaining its 1990s glory." So when you cash those stock options next year, put the money into Oracle and Citrix. ® Click for more stories Click for story index
John Lettice, 29 Oct 1998
The Register breaking news

AOL exec disputes ‘IE was better’ claim

Microsoft attorney John Warden had been having some trouble with witnesses: AOL exec David Colburn didn't quite go all the way in helping him establish his case. Warden's objective in his cross-examination of Colburn was to show that Microsoft did not stifle competition in the online market. The 9 January 1996 and 12 March 1996 emails Warden put forward from AOL execs in an attempt to do this weren't very convincing, and it was clear that Warden was scraping the bottom of the barrel. More convincing was Warden's point that in March 1996, when AOL agreed the deal to favour Internet Explorer to get a position in the Windows 95 Online Services folder, AOL was already an option on some 90 per cent of consumer PCs. Warden asked Colburn why AOL continued to ink deals with OEMs if the Microsoft deal was so important. Colburn said that one of the advantages for AOL was being tightly integrated into the Windows 95 Internet Connection Wizard. Colburn would not agree that OEM deals were more important than the Microsoft deal, saying that the Microsoft deal lowered marketing costs. Colburn pointed out that Microsoft had great power over OEMs, and could tell them not to deal with AOL if it so chose. Warden then turned to AOL's 10K financial accounts and tried to show that an increase of $30 million, to $480 million, in AOL's marketing costs from 1996 to 1997 indicated that the Microsoft deal had not reduced marketing costs. Colburn told him that the full effect had not been seen until the following year. Warden made no headway in trying to show that AOL users could still obtain Navigator, because it required some technical ability to install it. In his written testimony, Colburn had drawn attention to draconian provisions in Microsoft's agreement with AOL that required AOL to guarantee that 85 per cent of browsers shipped would be IE, eand that AOL would not promote Navigator. AOL saw MSN as a major competitor, and Warden clearly had problems skirting around the issue as to why Microsoft should shoot itself in the foot by allowing the AOL presence to compete with MSN. Only when it came to the componentisation of IE was there some agreement that AOL was more convenient, but Colburn would not concede that IE was technologically superior to Navigator. Warden produced an email to Colburn from an AOL executive favouring IE, and an AOL chart from February 1996 that ranked IE and Navigator, and which Warden claimed showed IE was superior. Colburn did not go along with Warden's claims. Warden tried another line in an attempt to show that others were doing what Microsoft was accused of doing. Warden asked Colburn if a 1996 AOL proposal to Netscape whereby Netscape would agree not to enter the online services area if AOL did not develop its own browser was not similar to the market-sharing agreement with Netscape that Microsoft is alleged to have proposed. No, said Colburn, "our primary goal was to enter a short-term relationship with Netscape... we didn't want to turn a partner into a competitor". Warden produced an email from Steve Case, AOL's CEO, in which he said he agreed with Netscape's Marc Andreessen when he wrote in an email about the threat that Microsoft posed to both Netscape and AOL: "We can either be defeatist and give up the battle now, or we can use our unique respective strengths to go kick the shit out of the Beast From Redmond that wants to see us both dead." Asked if that was the common view, Colburn continued in "don't know" mode, suggesting that AOL still fears Microsoft. ® Complete Register trial coverage Click for more stories Click for story index
Graham Lea, 29 Oct 1998
The Register breaking news

Quantum/MKE deck wafer facility

Quantum and MKE have dissolved their recording heads JV in Shrewsbury, Massachusetts. The companies said that losses in the MKQC business were unsustainable, because of current over capacity in the recording heads industry and the lack of volume. Ron Torton, director of programmes for workstations storage at Quantum, said that the joint venture and the head business had presented the companies "with some challenges". The closure of the plant does not affect the relationship between MKE and Quantum. The Japanese outfit will continue to manufacture drives for Quantum and heads will be sourced from other OEMs. ® Click here for more storage
Mike Magee, 29 Oct 1998
The Register breaking news

Quantum changes mind on fibre

Quantum has announced that its Atlas 10K and Atlas IV hard drive families be ready to roll in the first half of next year. At the same time, Quantum has said that it will now enter the fibre channel arena and will show devices at Comdex/Fall in Las Vegas in November. Ron Torton, director of programme marketing for Quantum's workstation storage group, said: "The Atlas 10K is the performance flagship. We have the fastest seek time, which is clearly beneficial." The 10K incorporates Ultra 160/m SCSI, the latest interface for the standard. The Atlas IV family will be available in Q1 of 1999 and comes in 9GB, 18GB and 36GB sizes, with pricing around $595, $895 and $1495 respectively. The Quantum flagship product will arrive in Q2 of 1999, with pricing at around $795, $1195 and $1995, respectively. The shock protection system Quantum builds into its drives mean failure of components after shipping from its factories is much reduced, claimed Torton. ® See Quantum/MKE deck wafer facility Click for more stories Click for story index
Mike Magee, 29 Oct 1998
The Register breaking news

Feds bust 44 Internet stock tipsters

The US Securities and Exchange Commission has produced a list of 44 tipsters who it claims have fraudulently recommended 235 small companies' stocks on the Internet. The outfits accused all seem small, but the range of offences the SEC alleges suggest that it's a jungle out there -- as if we didn't know already. The tipsters are claimed to have been illegally touting securities and misrepresenting themselves as providing independent advice when in many cases they were being paid by the companies they were promoting. They sometimes had shares in these companies, or were rewarded with stock, and sold the shares once the price jumped after they'd recommended it. Richard Walker, SEC director of enforcement, says that in all cases the promoters purported to be giving independent opinions when those opinions were in reality "bought and paid for". The amount paid totalled $6.2 million cash, and 1.8 million shares. Although the tipsters were frequently individuals or very small outfits working from home, they appear to have been able to have considerable influence on small stocks. Companies buying their services paid as much as $300,000, says the SEC. And hard cash doesn't seem to have been the only factor involved. The SEC reports that one promoter sent out six million emails promoting his father's chain of restaurants. ® Click for more stories Click for story index
John Lettice, 29 Oct 1998
The Register breaking news

Ziff Davis says Bog Off Santa Claus

Dearie dearie me. A source at mighty ZD tells us that a corporate directive has been sent to all subsidiaries ordering them not to have Christmas parties. Journalists at Ziff Davis can come to ours. It's on the 17th of December.
Eric Hippeau, 29 Oct 1998
The Register breaking news

Ingram manages healthy Q3 rise

Ingram Micro managed to increase its profitability by a factor of 40 per cent in its third quarter. Sales rose by 35 per cent, meaning better margins for the giant distributor. Turnover amounted to $5.7 billion for the quarter, compared to a figure of $4.1 billion in the same quarter last year. Profits amounted to $59.8 million, which compares with $44.3 million, period on period. Ingram now looks set to comfortably become a $20 billion a year company. ® Click here for more Satans
A staffer, 29 Oct 1998
The Register breaking news

Sony prepares for first loss in six years

Sony has admitted it will post its first loss in six years when it eventually releases its results for the second half of the fiscal year, ending March 1999. The Japanese giant predicted it will issue a loss of $313 million for the six-month period. It blamed the global economic downturn, price wars in many of the markets in which it operates and the recent surge in strength of the yen against the US dollar. Sony's profits in the first half of the year fell just 5.4 per cent compared to the same period in the previous fiscal year, leading to a profit of Y86.05 billion. Taking into account the predicted H2 loss, the company reckons it will make Y170 billion, based on current yen/dollar exchange rates, down from its earlier prediction of Y215 billion. Last year it made Y222 billion. The company cited major price cuts in the computer display, cellphone and CD-ROM drive arenas as key components in creating the loss. Prices in these markets fell 40 per cent, 50 per cent and 35 per cent, respectively. However, Sony did point out that sales of consumer electronics goods such as MiniDisk, video cameras and DVD units had remained buoyant. The company has also experienced strong sales of the PlayStation, it said. ® Click for more stories Click for story index
Team Register, 29 Oct 1998
The Register breaking news

Red blood stains Acer's balance sheet

Acer Inc showed a slump in profits of 60 per cent in its third quarter, with DRAM the main reason for the haemorrhage. Its profits fell to $NT225 million, compared to the $NT558 million result Acer reported in the same period last year. Acer made a $NT1.6 billion loss at Acer Semicon during the period and also turned in less money from its PC sales. The reason for the drop in PC profits is because of fiercer competition in the market. ® Click here for more stories
A staffer, 29 Oct 1998
The Register breaking news

Of Reps and Men

'Value Add' has become such an over used phrase that the mere mention of it brings a groan from most weary managers. Unfortunately the western world's (France excepted) obsession with the bottom line means that we are not likely to see the phrase disappear any time soon. An examination of any business therefore leads to the …
Roy Taylor, 29 Oct 1998
The Register breaking news

Maxtor gets over hard time

Maxtor Corp delivered surprisingly upbeat financials for the third quarter, reporting net income of $6.1 million as opposed to a $31.4 million loss last time. Revenues were up 53 per cent to $599.7 million and shipments grew by 15 per cent to 4.3 million from the second quarter. The disk drive manufacturer is majority-owned by Korea’s Hyundai Electronics Industries which floated Maxtor last year to raise cash after taking it private only two years previously. CEO and president Mike Cannon is a former IBM luminary and he joined Maxtor in 1996, performing a remarkable turnaround at the beleaguered company, focusing single-mindedly on desktop products and key OEM customers like Dell, IBM and Compaq. He said the industry is going through a challenging period but that, “Maxtor distinguished itself by increasing gross margins… and demand for products was strong, especially from our OEM customers.” The company is getting leadership products to market early and into volume production quickly, said Cannon, adding: “Our rigour in maintaining commonality in core technologies across product lines and our flexible, cell-based manufacturing strategy have contributed to our time-to-market and time-to-volume.” Cannon commented that conditions in the desktop hard disk drive industry appeared to improve during the quarter, with company-held and channel inventories down across the industry and pricing pressures easing off towards the end of the quarter. ® Click here for more storage
Janice McGinn, 29 Oct 1998
The Register breaking news

Shuttle cocky after SCM buy

SCM Microsystems has snapped up Shuttle Technology Group for a cool $33 million. The seven-year-old Shuttle, founded by British entrepreneur Alan Jones, specialises in ASIC connectivity for e-commerce and digital video broadcasting. Jones said that SCM’s worldwide presence will strengthen Shuttle’s existing customer networks. Jones will stay on board with a significant stockholding in SCM and a seat on the board. He will be responsible for product development. Shuttle operates in the UK and in India, Taiwan and Fremont, developing secure access and interface technologies for a number of OEM manufacturers, including Hewlett-Packard, NEC, Panasonic and SyQuest. Steve Humphreys, SCM’s president and CEO, explained the rationale for acquiring Shuttle. He said that both companies' products, technologies business model and operations are highly complementary. Shuttle’s portfolio generated over $18 million in the past year, and Humphreys said that SCM will focus on its ASIC development and the engineering centre in Madras, both described as world-class. He added: "As we have stated repeatedly, it is important for SCM to migrate our technology to the silicon level to drive down costs and provide OEM customers with greater flexibility. Shuttle’s expertise will be important across our entire product line." SCM’s executive chairman, Robert Schneider, added: "Shuttle provides us with a substantially expanded presence in the UK and allows us to tap into the engineering talent in India and combine our US operations in Silicon Valley." ® Click for more stories Click for story index
Janice McGinn, 29 Oct 1998
The Register breaking news

Amazon loss widens in Q3

Amazon.com revealed massively widening losses when it posted its third-quarter results, yesterday. The company was in the red to the tune of $24.7 million, well up on the $9.6 million it posted last year. The Q3 loss also excludes merger and acquisition-related charges, which took the loss to $45.2 million. Still, the loss was less than Wall Street had anticipated -- analysts were predicting a 57c per share loss, compared to the 49c per share the company posted -- thanks to the strength of Amazon's music sales. The company has sold $14.4 million of CDs in Q3. It opened its music section in June. Overall, its revenues reached $153.7 million around four times as much as it made for the same period last year. Amazon also said it 1.2 million more customers used its site druing the quarter, bringing the total number of accounts to 4.5 million. It also claimed over 64 per cent of its Q3 business came from repeat orders. ® Click for more stories Click for story index
Tony Smith, 29 Oct 1998
The Register breaking news

Mitsubishi to end US chip operations

Mitsubishi Electric is to shut down its US chip manufacturing operation and close its wing at a cost of Y80 billion, it emerged today. The compamy also posted a list of other US-based operations that it intends to close. Mitsubishi Electric America, which operates out of California, and North Carolina-based Mitsubishi Semiconductor America will close their doors for the final time by the end of December Both businesses employ 131 and 200 people, but the company said it did not intend to make them redundant, presumably to offer them relocation or voluntary severance. Mitsubishi Semiconductor America's design group, for instance, will be folded into Mitsubishi Electronics America's semiconductor marketing operation. Mitsubishi Electronics America itself will become the company's key representative in the US, along with Mitsubishi Consumer Electronics America. The latter is to shut its cellphone assembly plant -- it will rebadge Solectron phones instead. The company's Astronet subsidiary, which develops and markets antenna stations for carphones, will also be closed. Mitsubishi said it had posted an extraordinary loss of Y18 billion for the six months to September to cover the cost of the closures, but the overall expenditure will come to some Y80 billion. ® Click for more stories Click for story index
Tony Smith, 29 Oct 1998
The Register breaking news

Lion Azlan roars – softly

A few years ago, a staffer here at La Registra found himself on a tube to Turnpike Lane -- by mistake. On said underground line he picked up a Turkish newspaper and was a little surprised to find that it ran an astrology column and that the sign for Leo in that language is Aslan. Aslan, as the more literate readers of this sign will remember, was a pseudonym for a messiah in books such as The Lion, the Witch and the Wardrobe. Major corporate reseller-cum-distributor Azlan, is of course a different kettle of fish. We hear, somewhat reliably, that it has just told its corporate staff that they must trade in their expensive BMWs for something a little smaller… Could it be an Abyssinian Cat, The Register speculates. Click here for more Katty stories Registroid 256K modem: The sabre tooth tiger was remarkably inefficient because of its big tusks and turned into a vegetarian -- hence its demise. ®
A staffer, 29 Oct 1998
The Register breaking news

AMD prices finally arrive

Sources close to AMD told The Register today new prices for the K6 parts. All week, we had been questioning the chip company which appeared strangely reluctant to deliver them. However, details are as follows, with prices in units of 1,000 (OEM prices). The K6-2 300 now costs $78, the K6-2 333 $100, the K6-2 350 $135, the K6-2 380 $180. Further, when the 400 is launched it will cost $260. The prices are likely to make Intel quake. It has seen its share of the market eroded by its x.86 competitors throughout the year. ® Click here for more pricings...
Mike Magee, 29 Oct 1998
The Register breaking news

AOL, Netscape colluded to beat ‘Beast of Redmond’, claims MS attorney

Microsoft attorney Mark Murray has taken to doing the courthouse steps speech for the company when it is felt that Microsoft's trial lawyer, John Warden, has failed to make the point well enough in court. Yesterday, Murray's theme was that there was "startling new evidence" that both Netscape and AOL had worked together against Microsoft, and that the draft agreement between them was "far more explicit" than the accusation against Microsoft for a market sharing agreement. David Boies, the DoJ's trial lawyer, said afterwards that he was not surprised that companies tried to cooperate against Microsoft. "Did you disclose [to the DoJ] that you'd made a market division proposal" [to Netscape in meetings to discuss going after] 'The beast from Redmond'?" Warden asked AOL VP David Colburn. "You're wording, not mine," replied Colburn, rather testily, adding that he wouldn't call the agreement "market division". Colburn was equally firm that whether Microsoft's software worked was only the fifth most important factor for AOL, after such considerations as securing parity with MSN, and how much AOL would have to pay. An interesting snippet to emerge in the case was that AOL CEO Steve Case told Bill Gates in January 1996 that he expected to close an agreement with Netscape that month. Gates emailed his executives: "He said he views us technically as behind Netscape but credible enough to do a very good job." He then offered Internet Explorer free to AOL, the email also said. In the face of such evidence -- Gates acknowledging that AOL thought Navigator superior, and the technical capability of IE being only fifth in order of importance to AOL -- Microsoft's claim that it won the contract "on the merits" of IE is an unsustainable position. ® Click for full Register trial coverage Click for more stories Click for story index
Graham Lea, 29 Oct 1998
The Register breaking news

Big Blue, StorageTek cuddle up – greatly

StorageTek Corp reported record third quarter revenues and earnings per share only days after chairman and CEO David Weiss announced a new open storage management architecture, the Virtual Intelligent Storage Architecture (VISTA). The ambitious aim is to move data between any storage device, irrespective of platform or environment. Speaking at this year’s annual User Forum, Weiss said: “Our architecture will lower the total cost of ownership and improve performance with the goal of working with any server, any operating system, any application – even other vendors’ storage devices.” Alastair Blackburn, head of StorageTek’s storage networking business group in Europe, added: “We’ll provide the connectivity and data management to deliver content to users as and when they need it… and we will support non-StorageTek devices.” StorageTek’s strategy is based on the concept of Storage Area Networks (SANs), where intelligence is located in the network rather than the disk controller. “That way there’s no lock-in to the device, “ Blackburn said. It sounds neat, but details are thin and Blackburn acknowledged that networked data sharing is probably three years away. There’s another factor at play. StorageTek is extremely close to IBM. Some observers are wondering about the relationship and if StorageTek, which is no stranger to Chapter 11 bankruptcy, can ever afford to be truly independent of Big Blue. It was in June 1996, only a month after being promoted to CEO, that David Weiss signed a non-exclusive OEM contract deal with IBM to manufacture mainframe storage products for Big Blue. StorageTek’s Iceberg system was renamed the RVA and marketed extremely successfully by IBM, which enabled StorageTek to get on with the business of developing rather good storage technologies. This was the period when IBM seemed incapable of developing any high-end storage, having squandered a fortune on the 3990-6 and Ramac 3. Phil Payne, analyst with Isham Research, sees the IBM alliance as a double-edged sword, and he believes that, after 1996, “StorageTek lost the ability to sell disks.” Payne argues that IBM lost the ability to develop and StorageTek lost the ability to sell. The upshot was a close interdependency, and Payne now sees very little difference between their strategy directions. StorageTek calls it VISTA and IBM calls it Seagate. Payne met Jean-Marie Mathiot, IBM’s vice president Storage Systems EMEA at IBM’s IT analysts Forum in Stuttgart: “He gave us the futures pitch we expected. Keywords were 'virtual’ and ‘total cost of ownership’. IBM is talking about using very rich software from Seascape to provide multi-platform access, and he confirmed that the deal with StorageTek has been extended.” He continued: “Their strategies are very similar and equally vague. All about taking bits and pieces and putting them together in a mix and match way with no overriding architecture. It looks like they’ve thrown in their lot together, both in terms of technology and the marketing arguments. Both companies now talk about heterogeneous access and cost of ownership, as opposed to price performance benchmarks.” Payne warns that any marketing campaign based on cost of ownership is a more difficult sell than price performance benchmarks since each customer has different costs of ownership. “Cost of ownership is unique to each user.” StorageTek’s Blackburn denies that IBM and StorageTek are so close as to be conjugal, or that Seascape and Vista are one and the same. Similarly he takes issue with the accusation that the architecture is vague: “Products are emerging and there will be major announcements towards the end of next year. The Storagenet Access Hub has some data sharing capabilities already, and Vista compliance will appear next year in the Iceberg disk array, a new Eagle tape drive and Virtual Storage Manager software.” “From StorageTek’s perspective the deal with IBM has been very lucrative and given us good research and development capabilities, but we have retained our intellectual copyrights,” said Blackburn. Still, Payne maintains that StorageTek as dependent on IBM to a worrying degree. He commented: “It’s too close for comfort. IBM may be perceived soon as StorageTek’s sole marketing arm for disks. It’s just like the relationship between St Michael’s and Marks & Spencer.” ® Click here for more storage
Janice McGinn, 29 Oct 1998
The Register breaking news

Kewill homes in on Tracer

Kewill Systems Plc is buying the e-commerce logistics systems supplier, Tracer Software Inc, in a deal worth $19.6 million, $14.4 million in cash and the remainder in new shares. In August the Marlborough, Massachusetts-based company signed a major technology transfer agreement with FedEx Technology Inc, licensing FDX Corp companies to distribute Clippership, Tracer's multi-carrier flagship product. The software enables users to track the progress of consignments by interfacing to carriers' own tracking systems. FDX Corp is the holding company for Federal Express Corp and Caliber Systems Inc. RPS Inc, also a member of the FDX group and the number two business-to-business small package delivery service in the US, is installing Clippership across it nationwide systems. The acquisition is being performed through Kewill's US subsidiary, Kewill Systems Inc. Geoff Finlay, Kewill's CEO said: "Tracer fits in with Kewill's focus on e-commerce supply chains. It adds depth to our warehouse management systems, and Kewill has a range of products to offer Tracer's reseller channels… the agreement with FDX provides the opportunity for a rapid increase in the number of Clippership installations." @reg; Click for more stories
Janice McGinn, 29 Oct 1998
The Register breaking news

Web advertising spend leaps ahead

Businesses spent $423 million on Web-hosted advertising in the second quarter of 1998, a year-on-year increase of 97 per cent, the Internet Advertising Bureau (IAB) has reported. The IAB also said it expects 1998's overall Web advertising revenue to reach $2 billion. However, Forrester Research analyst Chris Charron reckons the IAB's overall revenue figure to be wide of the mark. Forrester's own calculations suggest companies will spend something closer to $1.3 billion. The IAB's chairman, Rick LeFurgy, was quick to damn this apparent criticism of his organisation's research. "I'm perplexed, confused and not clear why people continue to think this data does not reflect the marketplace," he complained on ZDNN. "We do not associate with the advertisers, we don't report what sites are doing what, we have no incentive to fudge the numbers." LeFurgy is nevertheless being just a mite disingenuous here. The IAB is a consortium of many of the largest US emedia players, the very people who make money from selling Web advertising space. There's no evidence to suggest they've banded together to generate false data -- which is what LeFurgy's comment suggests he thinks the IAB's critics are implying -- but clearly they would all prefer the numbers to paint a more optimistic picture of the market. After all, all the IAB -- and Forrester, too, for that matter -- can do is ask as many companies as possible (200 in the IAB's case) how much money they made from advertising, and then factor that figure across the commercial Web as a whole. Any statistical process like this is open to slight systemmatic error. It's why people who take their numbers really seriously -- physicists, mathematicians and their ilk -- always quote the estimated error attached to their results. So, it's reasonable to say Web advertising will have generated around $1.6 billion by the end of the year. That's still a tidy sum in anyone's books, even if it is still less than one per cent of the entire ad spend of the world's businesses. Interestingly, on 95 per cent of ads are actually paid for -- the remaining five per cent are placed on a barter basis. Again, anecdotal evidence suggests the figure may be higher than that. ® Click for more stories Click for story index
Tony Smith, 29 Oct 1998
The Register breaking news

Gateway touts leasing at couch potatoes

Gateway Plc is running a TV campaign promoting it's inelegantly-named Your:)Ware programme, a PC leasing package aimed at the consumer marketplace. Aileen McCracken, Gateway's consumer segment manager, said: "Your:)Ware takes the build-to-order model one step further… and consumers can choose a PC that suits their needs and on what financial terms." She said that almost 60 per cent of customers who buy a PC purchase additional software in the first month of owning their system, so Gateway is offering a range of software bundles from £50, including games, business, reference and education. It claims that users will save an average of £150 per bundle. Customers can finance new PCs on a monthly repayments basis, trading them in at two to four years, and using the residual value against a new PC. Gateway won't make value forecasts at the time of purchase, and trade-ins will be based on the Ziff Davies guide to PC residuals. No commitment to a set rate, but Gateway said the current interest is 18.9% in the UK, 15.4% in the Republic of Ireland. Depending on the hardware and software options, it calculates that a Pentium II-based home computer and software costs around £29 per month. It is planning a similar programme for the small and medium business sector.
Janice McGinn, 29 Oct 1998
The Register breaking news

Updated: Intel to junk current Celeron strategy in two week's time

A senior executive from the Intel Corporation said it will re-vamp its entire Celeron roadmap in two week’s time. OEMs will be the first to know full details of the changes, he said. Mike Aymar, VP and director of Intel's Platform Launch Operation, on a fleeting visit to the UK, said that Intel had realised that competitors, such as Advanced Micro Devices (AMD), had made inroads into its market share. Said Aymar: "We will not allow that position to last." Intel, said Aymar, was still committed to capturing the lower, volume end of the market. His company would not make precipitous price moves to re-capture share but was constantly re-considering its position at the low end. Aymar suggested that there would be a range of higher powered Celeron processors. From what he was saying, it seemed that we would begin to see these from the beginning of next year. He said that Intel would match AMD’s aggressive pricing strategy, step by step, by introducing faster and faster Celerons that its competitor could not possibly match. ® Click for more stories Click for story index
Mike Magee, 29 Oct 1998
The Register breaking news

Intel seems to be developing cunning MMX3 channel plan

A senior Intel executive would tonight neither confirm nor deny that his company was changing its channel strategy and selling 370-pin Celerons complete with motherboard and other integrated features. But Intel has to do something to recover the situation, given that AMD has wooed its distributor channel tactically and strategically. Mike Aymar, director of Intel US' platform operation and who heads up the Katmai microprocessor family, did, however, say that his company was actively wooing the channel. A source close to Aymer (ie. sitting three people away from him) said that Intel had realised that competitor AMD had gained some channel partners because of its previous strategy. Aymar was adamant that Intel had several plans up its sleeves. He would not say whether those included extra MMX instructions (MMX3), but explained that Intel’s engineers were capable of adding that kind of functionality to the chip. The engineers could add as many as they wanted, he claimed. That would give them an edge over companies like AMD and Cyrix, he suggested. Intel could not drop its prices to a situation where it would lose money, he agreed, and illustrated this by drawing on the table of the Chinese restaurant in Chinatown. AMD, as usual, was totally unavailable for comment, being occupied in buying ever more sophisticated tape recorders, said a source. ® Click for more stories Click for story index
Mike Magee, 29 Oct 1998