26th November 1998 Archive
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Microsoft's attorney is exposing Warren-Boulton's sketchy knowledge of the industry
Potentially the most dangerous witness against Microsoft -- consultant economist Dr Frederick R Warren-Boulton - is being set up by Michael Lacovara, a counsel for Microsoft. W-B has now had three days of cross-examination, with the prospect of a full fourth day and then rebuttal testimony by Richard Schwartz for the DoJ when the court sits again after the Thanksgiving holiday (and that makes four days of holiday in the first six weeks of the trial, plus Fridays off). Judge Jackson twice became irritable at Lacovara's slow pace, but stopped short of giving him a formal deadline to conclude his cross-examination, or "cross" as it is called in the court. Close study of the very tedious testimony shows that W-B is in trouble. He is far from being knowledgeable about the industry, as he claimed, and is being tempted to make silly statements beyond his expertise as an economist. These are likely to have the cumulative effect of making him appear to be a less expert expert. Lacovara mildly knocked W-B for having no formal background in computing, and obtained an admission that he had no experience in the industry either. It also became very evident that W-B had a very poor memory for documents he had referenced in his written testimony. This was mitigated by possibly greater ignorance of the industry by Lacovara, apart from the questions he had prepared in advance with help from Microsoft of course. Lacovara kept firing questions asking for industry statistics and facts that W-B did not know. W-B thought that DR DOS and OS/2 were programming languages until corrected by Lacovara. W-B's written testimony was in serious need of editing, since it contains gaffes like: "Operating system software is software that can be part of the operating system". W-B was pleased to agree that "information management and retrieval" software was "an operating system function" and Lacovara was pleased at his response. W-B had only a very hazy notion of utilities, and said that a disk cleanup facility "was simply operating system software that was not part of the operating system product." Oh dear. It didn't help W-B when he said that "In fact [sic],I think about 14 per cent [or PCs] are shipped naked [with no operating system]". Equally bewildering was: "I define the operating system market as running on the PC operating system." The history of OS/2 was mis-remembered by both sides, making the discussion of no value. W-B volunteered that "When OS/2 first came out, it was the first 32-bit operating system" but he'd have been better advised not having volunteered this. It's a matter of semantics of course, but we can recall 32-bit (and 36-bit) hardware in the 1960s. W-B was unable to name "a competitive or successful software product produced by IBM for the PC in the last 15 years". [Er... VoiceType?] But the best was yet to come from W-B: "In fact [ominous words] I think IBM would now almost describe itself as a software company, in the sense that more than half its revenues probably come from software." We rest our case about W-B's industry knowledge. W-B was on firmer ground on economic issues, and made the important point that a P/E of more than 50 coupled with 38.5 per cent net profits (that's after tax) was astounding and greater than any other Fortune 500 company. Lacovara quickly moved on after W-B mentioned that there was speculation that Microsoft would change its accounting method to show a lower net profit in future. W-B distinguished between merger cases (where the question was 'What happens if prices go up?') and monopolisation cases (this one - where the question was 'What would behaviour be like if prices were lower?'). Monopolists raise prices, W-B said - and Microsoft OEM VP Joachim Kempin had convincingly confirmed in an email to Gates that Windows prices had gone up over the last ten years. It was W-B's opinion that the existence of fringe competitors did not mean that Microsoft did not have monopoly power. Lacovara played the card that poor little Microsoft was threatened left, right and centre. CNET had dared to say that the number one trend this year was "Move over Microsoft" (and what took CNET so long to work that out?). Linux, Omega and Be were reducing the applications barrier to entry with similar applications to those used on Windows, and so would be familiar to Windows users. Lacovara tried to use data from Zona Research to suggest to W-B that Netscape had 60 per cent of the browser market, and was gaining market share over Microsoft. W-B referred to IDC data that showed the opposite trend. A long discussion of run rate ensued, but it turned out they were not talking about cricket, but new Internet connections. Lacovara said that Zona predicted that four out of ten people (in the US) getting a new Internet connection in 2001 would not choose Microsoft. W-B pointed out that internal Microsoft documents indicated that Microsoft thought it had wrested control of the browser market from Netscape, and so won the browser war. W-B concluded that "people's incentive to use non cross-platform technologies is greatly increased [with Microsoft's dominance in the browser market]". So far as AOL was concerned, W-B revealed that the minimum of 85 per cent IE distribution was in fact 92 per cent. Lacovara tried to make the case for Hot Java being the third most popular browser, although W-B did manage to mention Opera. The players managed to keep the show going even when they couldn't remember their lines and had to ad lib. There were earnest discussions about whether Netscape could convince developers to write cross-platform applications in 2001, which was more futuristic than the movie: HAL would have been scornful. Then Lacovara had Mosaic being developed at Cornell University rather than at the University of Illinois (bad handwriting, we suspect). As we predicted, Microsoft began to question W-B's market definition of operating systems with Intel processors. Lacovara wanted to include Macs to make Microsoft's dominance seem less of course, but W-B would not have it: Microsoft was a monopolist with Windows he maintained. Microsoft's Java strategy is a "fight them on the beaches" and Microsoft's non-standard Java is a Trojan horse, W-B observed. As part of Microsoft's "everybody does it" defence to its business practices, Lacovara made the valid point that when Navigator was dominant, Netscape incorporated an email application. W-B was able to point out that Netscape subsequently made email an option in response to user comment. There was much discussion about switching costs (a legally important notion: how much it costs a user, reseller or OEM to change from, say, Wintel to Linux), but neither side won any points. The discussion got round to network effects [winner (with most apps) takes all, you might say], and W-B admitted that there could be strong consumer benefits as a result. Just before the holiday break, and playing to an almost deserted gallery, Lacovara asked W-B if a clock radio was one product or two. W-B did not hesitate: it was three, he claimed initially, but elaborated: "It is , if you like, a third product that's a combination of two separate products." Of course -- how silly of us not to see that earlier. There were flashes of truth disguised as possible abnormal situations: asked if he had experience of a browser with Windows 98, W-B said he had knowledge of "running Netscape on Windows 98 which may not be typical since I seem to crash a lot." W-B agreed that "Microsoft both bundles and ties the Windows 98 operating system . . . in Internet Explorer" and that this was anticompetitive. When the subject of the AOL-Netscape deal came up, Lacovara made a complete ass of himself by claiming that Sun was going "to acquire Netscape's software technology, or much of it, including its browsing technology." Even Judge Jackson was surprised by this one: "Sun is acquiring the Netscape browser technology?" Lacovara: "that was what was reported on - it was reported on MSNBC, a reliable news source, half-owned by Microsoft, your honour." ® Complete Register trial coverage
Business 26 10:35
But what about the servers, the notebooks and the consumer units?
Dell has topped Compaq in business sales for the first time. Last quarter saw Dell's market share climax at 29.8 per cent, surpassing Compaq's 23.6 per cent, according to ZD Computer Intelligence. This compares to the second quarter, where Compaq was hanging onto the leadership with 27.8 per cent to direct manufacturer Dell's 22.6 per cent. Texas-based Dell is the only name vendor currently showing significant growth in this area. In an IDC report, Compaq blamed losses in market share on distribution problems and difficulties with integrating Digital. Analysts say Dell's sales surge really started last year, with market share doubling over the last five quarters. Compaq, IBM and Hewlett-Packard are all lagging behind - either declining or staying flat in this area. An International Data Corporation (IDC) report also recorded Dell had by far the strongest vendor growth in Western Europe, standing at almost 90 per cent. This impressive performance outdid Compaq, which blamed distribution problems and difficulties with integrating Digital. IDC went on to record encouraging general PC sales growth of 20 per cent year-on-year during the third quarter in Europe, the Middle East and Africa. Despite his company's success, Dell CFO Tom Meredith has no intention of easing off on the competition. Meredith recently told Wall Street analysts the company planned to squeeze margins to maintain current 50 per cent growth rates. Dell customers can now also pay for their PC via the Dell credit card. Introduced in the US this Christmas season, the Dell Platinum Visa card enables customers to earn "Dell Dollars" for every purchase made. There is no payment or interest for 120 days, after that customers will pay a 9.99 per cent fixed rate.®
Business 26 10:37
Too much capacity already
Semiconductor vendors have been tightfisted for two years on the trot, according to Dataquest. Capital spending for 1998 is projected down 22 per cent to $31.6 billion from last year. According to analysts, overcapacity problems lie at the core of most capital expenditure thriftiness. Investment in advanced technology for this year is expected to be minimal, in an industry in its second year of a decline in spending. The top 20 semiconductor spenders are only estimated to part with $21.6 billion, down 15.6 per cent on 1997. These businesses represent 68.3 per cent of worldwide spending. The Asian financial crises and DRAM declines are blamed for Asia/Pacific chip companies suffering, with capital investment in this area expected to fall over 25 per cent during 1998.®
Business 26 10:46
Despite the AOL-Sun alliance, Novell thinks it can still sell AOL key technologies
AOL's 'AOL Anywhere' strategy (See Story) could be launched with the aid of Novell software, despite the fact that in this area Novell is competing directly with AOL's new strategic partner, Sun. In the wake of its Netscape takeover AOL has started talking about an ambitious strategy that will take it out beyond the PC-Internet and onto devices and appliances. Java will be a key component of this, but so will Sun's Sun.Net - or Novell's NDS. Both of these are intended to support 'anywhere to anywhere' network logins. Ultimately this means that a user could log onto any device, anywhere (for example, pick up a phone or switch on a hotel TV), and be recognised, and have access to all of their data and applications. AOL clearly needs technology that will support this, and Sun's WebTop approach, where users have a 'personal WebTop' that follows them around the world, would now seem the logical way to go. But sources close to Novell claim that the company has been in negotiation with AOL for some time, and that despite the latest deal, Novell remains confident of victory. According to the sources, Novell's major advantage is that it already has mature directory services technology deployed, and can build on that. Sun, on the other hand, is making Sun.Net up as it goes along, says Novell. Sun.Net is due for launch early next year, but could well suffer from 'version 1.0' syndrome. One sign that Sun doesn't quite have its act together on Sun.Net was its purchase of i-Planet in October. The company is a remote access specialist, and was acquired so that its RemotePassage product which provides secure access across the Web, can be incorporated in Sun.Net. ®
Business 26 11:37
Maybe somebody suggested Siemens might as well torch the lot...
Siemens Semiconductor's vision of light at the end of the tunnel has taken on new meaning - Siemens is to merge its lightbulb subsidiary, Osram GmbH, into the semi business to form a joint venture in optoelectronic semiconductors. Aside from being one of the world's top manufacturers of lights and lightbulbs Osram has expertise in LED technology, and this will be an important part of the new ventrure. The new operation will be called Osram Opto Semiconductors. Siemens Semiconductor itself has been a major loss-maker for Siemens because of the collapse of the DRAM market. The company is however now making optimistic noises about the division's future, and these are likely to be connected to plans to float it off in 2000. ®
Business 26 12:02
Semiconductors are bad, but Japan's economic problems are bleeding the company as well
Hitachi has turned in a whopping Y142.23 billion (around £750 million) consolidated loss for its first half, to the end of September, and blames the unprecedentedly bad figures on a combination of memory price falls and collapsing domestic demand in Japan. The company's semiconductor business lost Y60 billion, compared with Y20 billion the previous year, and the red ink is by no means under control - Hitachi reckons it will lose Y110 billion on semiconductors over the whole financial year. But Hitachi sales dropped everywhere, with LCD and TV tubes hit by competitive pressure, household appliance sales down and industrial and electrical systems whacked by the slump in Japan. Overall, the company posted a group operating loss of Y39.93 billion, compared to sa profit of Y146.80 billion the previous year. ®
Business 26 12:21
Another of Japan's finest falls victim to slump
Mitsubishi has chalked-up its first drop in overall sales in over five years, as the loss for its first half rose to Y31.79 billion (about $240 million). The company has been hit by both falling sales, like Hitachi (see separate story), and by restructuring costs. Its figures include a charge of Y18 billion related to its withdrawal from semiconductor production in the US. For the same period (to 30 September) the previous year Mitsubishi lost Y26.28 billion. Sales for first half fiscal 98 dropped 2 per cent to Y1.79 trillion, and the company has also been hit by increased borrowing costs, both in Japan and overseas. ®
Business 26 12:34
Pays $73 million for the privilege
Adaptec has completed another step in its reorganisation with the disposal of its storage chip design team to STMicroelctronics. STMicroelectronics will pay around $73 million cash for Adaptec’s Peripherals Technology Solutions (PTS) Division. The company will take on the PTS team, along with the PTS “product portfolio, intellectual property and patents, license know-how related to disk controllers, interfaces and read-channel technology, and purchase certain fixed assets”. This technology will enable ST to drive forward what it dubs the “super-integration of the read-write channel and disk controller”. Throughout 1998, Adaptec has slashed headcounts and hived off non-core technollogies, in an attempt to boost profits. It will concentrate on its key strengths in SCSI adapters and RAID controllers. It also thinks there is an opportunity in Storage Area Networking (SAN), a new technology that manages to be at the same time hugely lucrative and deeply dull. Adaptec effectively threw in the towel on semiconductor design , following the FTC- inspired collapse of the company’s proposed takeover of Symbios from Hyundai in June. Lacking economies of scale, the company was finding it increasingly difficult to justify the capital expenditure needed to stay in the game. Also, many customers in the hard disk drive manufacturing sector had grown to the point where they were designing their own silicon, Adaptec interim CEO Larry Boucher told US news wires. Adaptec is the second storage vendor in recent weeks to divest its semiconductor activities. Seagate Technology last month announced its intention to shut down its chips for disk drives facility in Scotland with the loss of more than 200 jobs, after failing to find a buyer.®
Business 26 12:49
DoJ running scared, and expert is a know-nothing, apparently...
Microsoft will introduce a Motion to dismiss the case after the DoJ has finished presenting evidence from its twelve witnesses. This is a common legal procedure, but usually has more in common with fisticuffs than legal merit. It would perhaps have been better if Microsoft had not pre-announced its intention before all the evidence had been heard, but such moves are all part of the running PR campaign outside the courtroom. David Boies, the DoJ's special trial counsel, said that this is the sixth time that "Microsoft has proclaimed the government's case dead". Microsoft is of course trying to suggest that the AOL-Netscape deal shows just how volatile the industry is, and is cheeky enough to claim that the case should be dismissed as a result. Perhaps Microsoft should re-read the Complaint that started the case: nothing has changed so far as Microsoft's business practices are concerned. A cooler interpretation is that Microsoft's actions made Netscape vulnerable to the deal that will cost it its independence. Boies said: "What you see here is an exit strategy for Netscape." John Warden of Sullivan and Cromwell, Microsoft's main outside lawyers, claimed that the government "has tried to develop a second case that Microsoft is attempting somehow to gain a 'chokehold' on the Internet". He continued in pugilistic vein: "[The DoJ] is running scared; they're running hard against Microsoft." Warden has even taken to making courthouse steps statements with Microsoft counsel Bill Neukom and company spokesmen - something that he claimed he had not done just a few days ago in a barb aimed at Boies. Dan Gillmor of the San Jose Mercury News characterised the situation of Microsoft spokesman Mark Murray as being like that of a tobacco company spokesman. Microsoft is using all the propaganda tricks in the book: repetition of three claims: that DoJ witnesses are incompetent (and/or helping Microsoft with its case); that innovation will decline if the government gets to control the software industry; and that Microsoft is a tough but legally correct competitor in a rough game. Microsoft press statements are now openly attacking the current witness, economist Frederick Warren-Boulton, who has certainly made many silly mistakes. The DoJ is doing little to balance the rhetoric, but Boies has a few one-liners ("Mr Gates knows where the courthouse is" - a reference to Gates' taunt that the DoJ had not chosen to call him as a witness, and Boies' suggestion that Microsoft calls Gates). But the DoJ's ace is undoubtedly the Gates' videotaped testimony, which is changing Gates' image in the USA: Americans still love his money, but don't really want to be like the pathetic character that they have seen see being deposed on their television screens. Wall Street however has a different view: Microsoft shares are up around their highest ever value, which shows how nutty the Street is, since the likely practical result of the AOL-Netscape-Sun deal is to ensure that MSN will not dominate the Internet. However, irrational behaviour is a two-way street. It took a very long time before IBM shareholders, disappointed at the beginning of the 1990s when IBM shares fell to around $40, decided to include IBM again in their portfolios. Past may yet be prelude. ® Complete Register trial coverage
Business 26 12:52
As new. Unwanted present,one careful owner $500,000 ono.
It's a sad fact of life but $500,000 doesn't buy much these days. It might just about get you a good time at Comdex. It may even buy you an even better time in Vegas while you're there. But if you're after one of the hottest domain names on the Web, it will barely pay for the deposit. Kevin Sinclair, who currently owns computer.com, is looking it sell it to the highest bidder. And his asking price of half a million bucks -- cash -- is just for starters. He thinks it's worth a lot more and expects the price to go higher -- much higher. Network Solutions, the company responsible for domain name registrations, isn't usually keen on this kind of entrepreneurial exploitation. But Sinclair maintains that he's had the name since 1994 which makes it all perfectly above board in his book. Anyone with some spare cash lying around and interested in bidding for this Web prize should contact Gary Kremen (firstname.lastname@example.org). Funny enough, online auctions have made a bit of a splash this week. The regional newspaper group Newsquest said it was setting up a Web-based auction in the UK. And a bunch of kind-heated celebrities including Mel Gibson and Brooke Shields agreed to auction their Y-fronts, boxers, knickers and G-strings on-line all in the name of charity.®
Business 26 13:12
Hold on, the prices have only just gone up
South Korean DRAM makers are threatening price stability by suddenly ramping up memory output to record levels. Memory vendors are hiking 64-megabit production by up to 40 per cent, after months of cutting back due to oversupply and rock bottom prices. Leading DRAM maker Samsung last week confirmed a 40 per cent jump in 64-megabit output, to 17 units monthly by the end of the year. LG Semicon will increase 36 per cent and Hyundai 25 per cent, both to 15 million per month. But distributors in the UK fear the surge will disrupt current price stability, causing an adverse impact on the market and reversing higher DRAM price predictions. Distributor GSI said the last ten weeks had seen serious price increases, with major products up by 50 to 60 per cent. Richard Goddard, GSI MD, said an upturn in production could result in another worldwide stockpile. He said: "At the moment, everyone can buy stock with confidence. If the vendors step up production now we will have the same problems as before." Alan Stanley, Dane-Elec general manager, agreed it could cause a damaging surplus. Stanley said delivery time had been growing this quarter, with many products taking from 12 to 16 weeks to arrive from South Korea. He believed this hand to mouth activity was pushing up and stabilising prices. Distributors predicted the Christmas demand would soak up the increase without upsetting the market for now, but said it could hit by mid-1999. The production boost has been attributed to the vendors wanting to cash in on firmer DRAM prices and a shift to finer chip-feature sizes.®
Business 26 13:23
Must be good with compooters
The Government is to appoint a "digital ambassador" to lead the country's bid to become the e-commerce centre of the world. The ambassador will work with Government and industry to promote e-commerce within the UK and throughout the world. Peter Mandelson, Secretary of State for Trade and Industry, announced the new position during the debate on the Queen's speech. The proposal was greeted with hoots of laughter from Conservative benches as the government pressed ahead with providing a legal framework for e-commerce on the Net. "The Digital Envoy will add a great deal of value to the work already underway," said Mr Mandelson announcing the new position. "The Envoy will ensure that UK business and consumers are able to take maximum advantage of the opportunities which are opening up," he said. The successful candidate will also be charged with promoting Britain abroad acting as a public figurehead for the Government on e-commerce, and promoting the UK as a centre for hi-tech investment. "This is an approach that works well in other countries, especially in the United States," said Mr Mandelson. "I want e-commerce to be the engine of growth in the UK that it already is in America," he said. The Government is expected to advertise the position within the next few weeks but a spokesman for the DTI said it was in no hurry to appoint someone although he understood the pressing need to "get moving". "We're after a "Digital Ambassador", someone of a high calibre who can promote e-commerce in the UK," said the spokesman. "But we're prepared to wait for the right candidate." Remuneration is likely to be in line with that paid to top civil servants, he said. Since the position was only announced yesterday it's too early to say who the front runners for the job will be but it appears Alan Sugar has already ruled himself out of contention. A spokesman for Mr Sugar said he already had his "hands full" with other matters. The Digital Envoy - the people's choice Who do you think should be the first Digital Envoy? Alan Sugar? Sir Clive Sinclair? One of the four remaining Spice Girls? E-mail your suggestions to Vote, Vote, Vote for Tim Richardson We'll keep you posted on The Register's front top candidates for the post. Remember, it's the people's vote that counts. ®
Business 26 13:41
Music industry leaders sing the Big Blues...
Four of the music industry's six key players -- Sony Music, Time-Warner, EMI, MCA/Universal -- and IBM have announced the first major move in the business' bid to take command of the Internet music scene. The plan, dubbed the Madison Project, will see the participants co-operating on an experimental music distribution system set to commence operations next year, according the Financial Times. Madison is clearly being driven by Big Blue, which the FT reckons has invested some $20 million in the project so far. The work to date has centred on the development of a secure system that allows music tracks to be bought and downloaded but remain connected to the buyer through a serial number to prevent music being copied illegally. Anti-piracy measures are essential to winning the support of music companies paranoid about the threat the Internet poses to their sales, yet eager to take hold of the opportunities it offers. IBM is said to have spent months in negotiations with the US record companies persuading them that it has the right solution. Major label support is essential if any online music distribution system is to reap big rewards. So far, commercial sites have largely worked with individual bands or small, independent labels. Estimates for the money to be made from downloadable music range from Market Tracking International's prediction of $687,500 by 2000, a figure that represents just 0.0125 per cent of total US music sales, to three per cent of total US music sales by 2007, according to online music specialist the Internet Underground Music Archive. Of course, the real loser here is Liquid Audio, the digital music software developer that has a working music format that minimises music piracy right now. Liquid Audio has been working hard to build alliances with music vendors and storage suppliers (users are likely to want to be able to move their music from machine to machine) in order to put itself in a strong position to win the backing of the music majors as and when they turn to the Internet in earnest. IBM has yet to release specific information on its music distribution technology, but it seems unlikely that it will be based on Liquid Audio's work. That leaves Liquid Audio having to compete head-to-head with Big Blue. That's been done before, and done successfully. But its hard to imagine the music industry giants ultimately siding with the little guy instead of a multinational as conservative as they are. ®
Business 26 14:10
Chip vendor acts as Microsoft continues to charge $35 for patch
Microsoft's penny-pinching attempt to force owners of K6-2 based PCs who have experienced a bug in Windows 95 to cough up $35 for the patch has been scotched by the chip manufacturer itself. Faced with the Great Satan of Software's apparent refusal to admit its mistake and eliminate the charge, AMD has made the fix available from its Web site free of charge. As reported here earlier (see AMD users go through roof at $35 fix for K6-2 crash), Microsoft not only charged $35 for the patch but, according to users, didn't exactly go out of its way to point K6-2 owners to the patch's location. Users quickly alleged the company was using the $35 charge to encourage users to migrate to Windows 98 rather than fix a glitch in 95. At the time, a senior source at AMD told The Register: "I can't understand why there's a commercial issue here for Microsoft. We try to give whatever treatment is possible for our end users." The bug prevents the K6-2 from working properly under Windows 95, which was never designed for high-speed CPUs. A senior software engineer recently told The Register he believes the bug can also affect other high speed (350MHz or more) processors, including Pentium IIs and Cyrix chips (see Win95 bug could spread to other CPU platforms than AMD). When news of the $35 charge emerged, we asked Microsoft to comment. It has still to do so. It has also yet to release a fix for versions of Windows 95 before the OEM Serive Release 2 update. ®
Business 26 14:46
Please give generously... No donation too small...
Infobank International has launched an £8.9 million fundraising bid to help develop the company's range of e-commerce software. If unsuccessful, then the options for the Berkshire-based software company will be "significantly restricted", it admitted yesterday. Last month, Infobank finally launched its InTrade e-commerce solution after extended product development led to its delay. InTrade is a Net-based procurement system which automates the entire process from the desktop. Replacing traditional paper-based processes, it is an e-commerce tool the company claims could cut costs by half within a year. The launch of InTrade and Infobank's quest for further funding follows a difficult period for the company. In September, David Fraser stepped down as executive chairman, although he stayed on as a non-executive director. At the same time, managing Director Joe Pillai left the board and Graham Sadd, co-founder and executive director, was appointed interim chief executive. The company also decided to channel sales of InTrade through partnerships with groups that use the product after its software reselling arm, Software Corporation, failed to obtain sufficient access to customers. Despite the company's continuing failure to meet its financial targets, Graham Kemp, analyst with Collins Stewart, Infobank's broker, said the product showed great potential. Speaking in the Financial Times, Kemp said he is forecasting a pre-tax loss of £7.4 million in the year to 30 December, after exceptional reorganisational costs of £700,000. ®
Business 26 14:56
Only 400 more days to get your Millennium Bug panic pieces written, warns editor
Staff in Britain's IT departments were put on alert again today, following claims that the Y2K bug will outlast the turn of the century and continue to provoke the media to churn out panic stories for the next 1000 years of human history. According to almost daily reports in all the leading IT papers and Web sites, companies remain totally unprepared for the switch from 1999 to 2000, despite the millions they have spent on upgrades and fixes. "We have spent thousands of dollars on special Y2K news sections and dedicated reporters, yet it's quite clear that IT departments are continuing to ignore news stories regarding the Y2K problem," said a spokesman for a famous newswire. "They may be sick to death of Millennium Bug panics, but it's our duty to continue filling column inches. Think of what might happen if we don't..." Latest stories include the anticipated collapse of all of Britain's jam factories. "Alarm clocks will also be affected," claimed one pundit, "so most Britons will fail to get up on time on the day after the Millennium celebrations." Overseas, one US site predicted the bug will hit the world's infrastructure six weeks ahead of 1 Jan 2000: "Today's microprocessors running many times faster than those of the early 80s. The cumulative increase in performance from, say, a 3KHz Motorola 6809 to a 350MHz Intel Pentium II means computers will think the Millenium has arrived weeks before it actually has." "Fortunately," the report continues, "because of the direction of rotation of the globe, the Japanese and Ruskies are going to get it in the neck a full 12 hours before we do..." ®
Business 26 15:29
Software developer preps server, personal editions for early 1999
Mac software developer Terra Soft Solutions (TSS), best known for its Terra Firma clip-maps, is attempting to become the Red Hat of the Macintosh world with the launch of Yellow Dog, a subsidiary dedicated to distributing a PowerPC version of Linux. Yellow Dog will be offering two Linux packages. The first, Champion Server, is aimed at Web hosts using PowerPC 750-based PowerMac G3 hardware. Due to ship around the middle of next January, Champion Server contains Linux 2.2, a standard set of Web server-oriented applications and utilities -- Gimp, Netscape, Apache, Python, etc. -- plus TSS' own Web Manager site content administration package. Gone Home, Yellow Dog's home-oriented Linux package, is scheduled to ship in Q2 1999. It offers the same set of tools and kernel as the server edition, but omits Web Manager. It will also run on most PCI-based Power Macs. Both products come with only limited installation support -- 30 days for Gone Home and 90 days for Champion Server -- so Yellow Dog clearly reckons its some way off attempting to target corporates in the way Red Hat currently is. Champion Server will cost $74.95; Gome Home $49.95. ®
Business 26 16:45
Could French connection save ailing distributor?
Troubled networking distributor Ilion has posted yet another profits warning -- its third in a year. In a statement issued this afternoon, the company announced that its pre-tax profit would be "materially below expectations" for the current year ending 31 December 1998. Ilion's problems have been consistently blamed on slow sales and low profitability in the UK organisation. A year ago the company warned that profits for the year would be down by around £2 million from the £8 million anticipated initially. And as recently as September, the company said performance was impaired by slower growth in the UK than was expected and by losses in some Continental subsidiaries. News of the warning sent the Surrey-based company's share price sliding by more than 15 per cent to 61.5p from a high today of 83.5p. The shares rallied marginally at the end of the day closing up 1p at 62.5p, a drop of nearly 14 per cent. Despite the bad news, Ilion's chairman and chief executive, Wayne Channon, remained optimistic and said: "I believe that the actions which we have taken in the UK to reduce our cost base and to strengthen our management team will be reflected in a more satisfactory performance in 1999." He confirmed that the sale of ilion's operation in Germany remains on course, and that France and the other Continental countries in the group "continued to perform well". He also wished to dampen press speculation that about a possible takeover, and confirmed that while the company had received a number of approaches from buyers, it was not currently in talks with any of them. Unfortunately, when The Register tried to speak with Mr Channon we were told that he was "out of the country". An ilion spokesperson refused to confirm his whereabouts -- or, indeed, any suggestion that he may be on business in France, perhaps negotiating an MBO of the French subsidiary as one senior source close to the company suggested. ®
Business 26 17:28
The company is planning evolution, but can't stop revolution
Microsoft's 'review' of licensing policy looks set to result in the demise of 'per station' licensing fees early next year. According to US reports, the company will attempt to hold the pass by making some allowance for people working from home, and for Internet access - but here be dragons. Large numbers of Microsoft corporate customers want to deploy thin client-style server-based computing systems, and to save money on hardware and administration costs by using cheap terminals that their users can't reconfigure/break. The numbers stack up on the hardware side, but Microsoft's current policy (as doggedly defended by Solveig Whittle at Citrix's Thinnergy ) dictates that each and every client requires a Client Access Licence (CAL) for NT, and an NT Workstation licence. It doesn't matter whether or not the client is an NT workstation (it would be a strange thin client if it was) - it's accessing NT Server apps, so it has to pay the licence. IT management also has other Microsoft-related problem here. They could deploy thin client systems broadly, giving many users the ability to run Win32 apps even if they're only likely to do so on an occasional basis, Microsoft requires a licence fee for every station that has the ability to do so. Microsoft has phased out concurrent licensing, where only the total number of simultaneous connections is billed for, so this isn't a cost-effective route - if you stick with Microsoft. The Web is the third problem, and potentially the biggest hole in the dam that Microsoft has been trying to maintain. Logically, if you're running a Web application on NT Server, and your customers can visit your site and use it, then somebody in this loop has to pay Microsoft for the CAL and the NT Workstation licence. You could just about figure out how to do this if Microsoft billed for concurrent connections, but the present policy clearly can't work. How many people hit your Web site? When they get there, are they doing something that requires Microsoft licences? Exactly... The easy problem Microsoft seems poised to tackle is home use. Some allowance is going to be made for people who work occasionally from home, who don't have NT Workstation installed there, but who nevertheless need to connect to an NT server at the office. It also seems to have dawned on Microsoft that the Web drives a very large tank through its finely-crafted licensing policy, so something's going to be done about that. What, is not entirely clear. From Microsoft's statements on the subject so far, it seems crystal clear that the company is going to do the bare minimum it needs to in order to stop the entire structure falling apart. But what this bare minimum is is a lot less obvious. Microsoft's pricing structure is based on larger amounts of money coming from the client end, whereas in the world of total connectivity (which will be upon us Real Soon Now) you can bill at the server end, and as and when (not yet) you can microbill at the client end, the sums are going to be very small, and the pricing model is going to be entirely different. We turn to our good friends at InfoWorld for conclusive proof that the Microsoft licence model ain't working. We note that they quote the VP of information and technology of the House of Blues chain as complaining about Microsoft's Terminal Server licensing model, and favouring Citrix instead. When Microsoft rolled out Terminal Server earlier this year one of the case study businesses it used to support the product was, er, House of Blues. ®
Business 26 17:30
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