27th > November > 1998 Archive

The Register breaking news

Court documents reveal MS moves to lock-in OEMs, users

Another batch of documents has been released by the DoJ over the past few days. Here are some highlights. The document reference numbers are given in each case -- GX means government exhibit, followed by the number. Boot-up Sequence Microsoft VP Brad Chase wanted a "proprietary hook" (aka an undisclosed call) in Windows that would make it possible for Microsoft "to move the Sign Up Wizard into the boot up sequence somewhere before we give control to the OEM. This way we can increase the likelihood that an end user gets the option to sign up for solutions that promote IE before they get into the desktop... " He went on to note that an OEM could run a DOS program that could defeat this, but "most OEMs won't go through the hassle to develop such a DOS utility". Of course, Microsoft eventually achieved this objective by a condition in the licence that prevents an OEM from modifying the boot sequence. [GX176] Those who harbour deep suspicion about Microsoft's registration wizard will find a detailed description of the REGWIZC.DLL in a document supplied to Packard Bell by Microsoft in May this year. [GX1195] Microsoft and Browser Market Share In April 1997 at a Microsoft internal market review, Kumar Mehta had a slide that showed that 81 per cent of Navigator users who knew about IE -- some 6 million users -- would not switch to IE. The main reasons were: prefer what I have (30 per cent); no reason to switch (20 per cent); IE is unreliable/bugs/problems (12 per cent). This challenges Microsoft's marketing pitch that users overwhelmingly prefer IE (when they have a choice). Twice as many users who were aware of IE and Navigator thought Navigator was better, Microsoft admitted to itself. Despite what Microsoft had been claiming in court, its own belief was that "OEM is [the] leading distribution channel for IE", and that "Navigator outsells IE by a million copies at retail", and "five times as many Navigator copies had been distributed by IS". [GX415] Paul Maritz held an executive retreat in February 1996 at which the threat from Netscape was the main topic. At that time, Microsoft was well aware it was behind in market share, perception and browser features. However, even at that early stage, Maritz was concerned to "neutralise Java" and "get control of Java with Java support/tools". The idea to "make Windows the Intra/Internet browser" was discussed. [GX503] Microsoft's Tough Agreements The text of a Microsoft Agreement that prevents OEMs from modifying the boot-up procedure was given in an exhibit. It was hardly surprising that the DoJ was so hot under the collar about the anticompetitive measures that Microsoft had included in such agreements. Microsoft would not allow any interference by the OEM from switching on the PC until the desktop screen was displayed. If Microsoft found any OEM not following the Agreement (as happened notably with Compaq), apart from remedies such as refusing to license Windows 95, Microsoft also reserved the right to charge "an additional royalty equal to 30 percent of the highest royalty for the product(s)." This is confidential, so don't tell anyone: Microsoft charged AST $35 per system for the English version of Windows NT Workstation Upgrade Version 4.0, and an additional $6 for non-English versions. These gems are in an addendum to AST's agreement, dated 9 July 1996. [GX1035] There is also a copy of the Active Desktop Agreement between Microsoft and CNET that sets out the onerous support and marketing requirements for Active Platform licensees. There were support requirements and promotion requirements. It has to be admitted that Microsoft works very hard to develop such detailed requirements - even if Active Channel is a flop. For example, so far as COM objects (ActiveX Controls or Java Applets) are concerned, they must be included: "COM objects are self-contained pieces of code that bring unique interactivity to sites not possible with HTML-only pages. COM objects can be written in many languages such as C++ or Java. Web site must use at least one such control on at least one of its top 5 most visited pages." Than goodness the Opera browser allows animation to be switched off. [GX1163] Gluttons for punishment will also be interested in the 52-page Disney Active Desktop Marketing and Distribution Agreement. [GX1176] Complete Register trial coverage
Graham Lea, 27 Nov 1998
The Register breaking news

DoJ data reveals Intel and Microsoft's slices of PC cake

A document recently released by the court [GX439] shows that both Microsoft and Intel have been steadily getting a higher and higher proportion of the cost of a system. Microsoft's operating system cost has increased 2.6 times, and Intel's share of systems' cost increased 2.2 times, over the period 1990 to 1996. Microsoft must be concerned at the exposure of such internal data, and wish that the data disclosed in DoJ exhibits had been kept confidential, especially as Microsoft's PR line is that it has reduced prices. With all the ire being directed at Microsoft at the moment, it is worth bearing in mind that Intel's share of systems' cost is considerably greater. ® Complete Register trial coverage
Graham Lea, 27 Nov 1998
The Register breaking news

Siemens preaches insurrection with Trekkie PC

Tesco's exclusive Christmas PC launch with Siemens is targeting both old time Trekkies and the new generation. The supermarket giant will sell Star Trek themed computers, a limited Siemens edition boasting the first infra-red head-activated joystick. In anticipation of Paramount Pictures' Star Trek: Insurrection, Siemens has unveiled Star Trek: Insurrection themed home PC. Priced at £7799.99, the Xpert 7620C Star Trek package comes with Intel Celeron A 300 MHz, 32MB SDRAM, 3.2GB, 32XCD-Rom, 15" SVGA monitor, 3.5", 1.44MB floppy diskette drive, internal model and Windows 98. Available from the end of November, the PC is bundled with Microprose Star Trek: theme game - Klingon Honor Guard - and includes a headset to control the activity of screen characters. ®
Linda Harrison, 27 Nov 1998
The Register breaking news

Share sales by MS high command

November Securities and Exchange Commission reports for Microsoft share trading show that Bill Gates sold $1.7 billion of Microsoft shares last month. The selling dates were in late October, after the trial had commenced. The first Gates videotape extract was played in court on 2 November, so the sale was not an emotional reaction to that event. But in terms of Gates' previous selling patterns for shares, this was a pretty significant sale. Gates has 141,221,948 Microsoft shares remaining, worth about $62 billion. Other executives reporting sales were Jim Allchin ($4 million), Paul Maritz ($69 million), Nathan Myhrvold ($160 million) and Bernard Vergnes (Chairman, Europe -- $2 million). Pete Higgins reported the sale of $17 million of shares in November, but they were sold in August, making him in breach of SEC rules that require reporting by directors and officers of a company by the tenth of the month following the disposal. Sloppy reporting of insider dealing at Microsoft was common until the start of the present case, when Microsoft evidently decided it wanted to avoid irregularities in share dealing. Paul Allen sold a total of $710 million, on his own behalf and to the account of several of his charitable foundations. He is a regular substantial seller of Microsoft shares, and has around $17 billion remaining. He also has substantial cable TV holdings, and upgrading these for interactive services will cost a pretty penny. It will be interesting to see next month, when the SEC filings are known, if there is a panic by Microsoft insiders as a result of how the case is going that tempts them to sell while the Street is looking so favourably at Microsoft: with the share price at $124.25, there would seem to be plenty of downside potential in the weeks and months to come. ®
Graham Lea, 27 Nov 1998
The Register breaking news

Korean companies see exports rising through slump

Korea's electronics industry will slowly dig itself out of the mire next year, against a background of continued domestic slump, says the Electronics Industry of Korea. The EIA says exports will grow 8.2 per cent in 1999, although the Korean economy itself isn't expected to start turning around until the middle of the year. Exports will hit $41.6 billion, with industrial electronic appliances reaching $10.4 billion on the back of increased PCS and telecoms equipment exports. The local economic squeeze, however, means that investment in the industry won't be significant, and Korean companies will therefore have to tackle an investment backlog as and when the turnaround comes. The EIA, which bases its data on a survey of 120 companies, says complete recovery won't happen until beyond 2000. But despite the gloom, a certain Korean optimism remains -- the companies reckon it'll take another two or three years to get back to the average annual growth rate of 15.1 per cent Korea was running at until recently. ®
Team Register, 27 Nov 1998
The Register breaking news

Psion founder steps back, appoints CEO

Psion founder David Potter, currently company chairman and CEO, is to hand over the latter role to a certain David Levin from 22 February. Levin is currently COO of Euromoney Publications, which he joined as group financial director in 1994. According to Psion, Potter now intends to concentrate on strategic development, leaving day to day management to Levin. In an unfortunate coincidence this morning Euromoney shares fell back sharply as the company warned that world financial problems would probably hit its profits in its first half. ®
John Lettice, 27 Nov 1998
The Register breaking news

Intuit Q1 loss widens

Personal finance software developer Intuit, producer of the Quicken family of products, has posted a net loss of $49.2 million for its Q1 results. Sales for the quarter, ended 31 October, were $112 million, an increase of 17 per cent on the same period a year ago. Intuit blamed the loss, which included a goodwill charge of $22.8 million, on the seasonal nature of its business -- the company typically produces all of its profits in the January and April quarters, it said, as buyers prepare for the end of the financial year. However, a year ago, it lost just $12.8 million. The company noted the acquisition of tax software specialist Lacerte in June and the cost of its ongoing attempt to expand its Internet-based business as key contributors to the increased size of its quarterly loss. ®
Team Register, 27 Nov 1998
The Register breaking news

Compel guns for Sun

Compel has announced an agreement with Sun Microsystems that threatens existing Sun dealers' position in the mid-range hardware arena. Hamilton Systems, Compel Group's subsidiary mid-range reseller, will resell and rent Sun systems and associated services in a multi-million pound deal. UK-based Compel yesterday issued a statement to the stock exchange regarding the deal, which it believed to be worth tens of millions of pounds. Sun's main resellers in the UK are Morse and Computacenter. Compel said it had now secured relationships with the top three mid-range manufacturers, but stressed there was no animosity involved. A spokesman for the group claimed HP and Compaq had both shown "a very mature attitude" to the deal. The agreement had been discussed with Hewlett Packard before it was finalised, Compel confirmed. ®
Linda Harrison, 27 Nov 1998
The Register breaking news

AOL speaks out on Mozilla support

AOL CEO Steve Case has made his first official statement on the future of Mozilla, the open source browser project set up by Netscape earlier this year. According to Eric S Raymond, president of the Open Source Initiative (OSI), a self-appointed body that seeks to promote open source software, who claims to have been in communication with Case, the AOL supremo promised his company will actively back the Mozilla project. "We certainly intend to continue to support Mozilla and the open source community," Raymond reports Case as saying. "Indeed, I hope our involvement will further energise Mozilla.org and rally even more support among developers." Case was also reported as saying: "We share your view that the agenda of Mozilla is and should be set by those who contribute to it. We will contribute too -- in part by maintaining the autonomy of mozilla.org." Case's statements come after increasing concern that AOL might seek to sideline Mozilla, formed by Netscape to oversee the open source development of version 5.0 of its Communicator suite, which includes the Navigator browser (see AOL Netscape deal questions open source commitment). The key phrase is "we will contribute too" -- Case's other words, as reported by Raymond, are positive but don't actually commit AOL to anything. After all, anyone can say they support something -- providing real backing for a project can be another matter. The message 'I hope the sky doesn't fall in, and I hope my hope that the sky doesn't fall in will encourage others to hope the sky doesn't fall in' isn't actually going to stop large chunks of the big blue yonder plummetting to the ground. But what contribution does Case have in mind? Good question, and from what he's been reported to have said, we can't say. "Maintaining the autonomy of Mozilla.org"? Well, there's not a lot AOL can do about that -- the source, as they say, is out there. What will really show AOL's backing for the open source model is a categorical statement -- or an effective statement, demonstrated by action -- that AOL will ensure future iterations of Netscape's browser software will be released under an open source licence and that it will take the work of the open source community on board. The only trouble is that Case's statements, as reported, do not provide that guarantee. We're arguably in no more optimistic a situation than we were when the Netscape buyout was announced -- open source supporters would perhaps do well to take Case's comments with more than a pinch of salt. ®
Tony Smith, 27 Nov 1998
The Register breaking news

Viglen shareholders jump for Sugar offer

Viglen Technology's shareholders have ignored executive chairman Alan Sugar and accepted his bid to buy them out of the company. Shareholders accounting for 22 per cent of the company accepted the purportedly reluctant takeover bid of Sugar's wholly-owned holding company, Amshold. Sugar's 24p per share offer for the PC builder is now unconditional, following the result, which increases Amshold's control of Viglen share capital to 63.76 per cent. Viglen shareholders acted against Sugar's recommendation to refuse the offer -- which undervalued the company, he argued. The move came after Sugar, also Tottenham Hotspur chairman, bought more than nine million shares last month at 24p, taking his stake in the company to 41.7 per cent. This obliged him under Takeover and Mergers rules to make an offer for all remaining shares. Nick Hewer, Sugar's spokesman, denied shareholders were bailing out because they had lost confidence in the Middlesex-based company. He stated: "When the offer went in, the shares were at 14p. Sugar's offer was 24p. They saw it as a good deal." IDC analyst Terry Ernest-Jones countered: "Viglen's shareholders probably feel insecure because the company is in a state of change at the moment." ®
Linda Harrison, 27 Nov 1998
The Register breaking news

Move over IMF, World Bank – here comes Larry Ellison

Never let it be said Larry Ellison doesn't think big. Oracle is to lend ailing city Moscow $360 million to allow them to build a unified computer network, Russian daily newspaper Izvestiya has reported. The system will be based on Oracle software -- clearly, this is a 'here's the money to buy our software' deal, reminiscent of the hard sell approach taken by Oracle's sales reps in the early 80s... Hardware and installation will be provided by Russian computer companies. Talk of Russian computer companies recalls to The Register's group mind paranoid stories printed in the UK IT press in the last decade claiming that the Soviet army used Sinclair ZX-81s (known to our transatlantic colleagues as the Timex 2000) to control ICBMs. This led to much speculation about whether the Communist Horde's ability to launch a nuclear attack on Western Civilisation might be severely hampered by RamPack wobble. ®
Tony Smith, 27 Nov 1998
The Register breaking news

Sega issues ‘Dreamcast bonds’ to fund console launch

Sega has come up with a curious method of financing the launch of its next-generation video games console, Dreamcast -- it is selling what it calls 'Dreamcast bonds'. The Japanese company today issued Y10 billion ($81 million) of bonds, each with a three-year term and a 2.15 per cent rate. Every bond comes with a Y500 card that can be used as petrol stations and convenience stores, and offers buyers the chance to win one of 100 Dreamcast consoles or 1000 memory modules. It's a novel concept for Western IT companies, but not uncommon in Japan. Sega, which recently posted a 75.9 per cent collapse in half-year profits, makes a pile of cash up front and promises to pay bond-holders back plus interest out of the money it hopes to make out of the new console. Of course, the snag is part of the money made from these bonds will be used to pay off previous bond issues -- it has too; the company hasn't made enough money in the meantime to cover the repayments through its own profitability -- leaving the company in a potential debt spiral unless the Dreamcast generates the high level of profit Sega is gambling on. ®
Tony Smith, 27 Nov 1998
The Register breaking news

Ericsson support fails to make contact

In September Ericsson confessed to an embarrassing problem with its top-of-the-range SH888 handset. The defects, the company said, had related to early production models "mainly in the Swedish market," and would be dealt with "at no cost to the customer." No doubt this was the case in Sweden, but defective units would appear to have escaped to other countries as well, and this problem seems to have been compounded by complete ignorance of the defect on the part of local Ericsson operations and Ericsson dealers. The following may therefore be of some interest to our US readers, who we believe have had their first opportunity to buy a localised version of the SH888 this month, just in time for Thanksgiving. We at The Register are the somewhat chastened owners of a stratospherically expensive 888 which started malfunctioning a couple of weeks back, the symptom being that the battery felt loose, and that the phone would switch off when the loose battery broke contact with the handset. We've been in contact with several other 888 owners in the UK who've had similar problems, and the level of service we and they have been able to achieve from Ericsson and its UK resellers doesn't say much for either category, or indeed for their knowledge of UK and EU consumer protection legislation. Customer number one told the reseller (Vodafone) that the phone switched off when being carried on his belt. The salesman helpfully suggested he turn it off while it was being thus carried. (Register fact - top UK cellular operation Vodafone operates an intensive training scheme for its operatives under the Vodafone Academy brand. The Register wrote some of the documentation for this, so possibly bears some responsibility for pig-ignorance on the ground.) Customer number two (The Register) visited Carphone Warehouse, pointing out succinctly that the product was defective and therefore of unmerchandisable quality under UK consumer legislation. Carphone Warehouse's staff said they had no knowledge of SH888 defects, and insisted that as their company policy was that they didn't exchange after 30 days, we'd have to put the phone in for repair. A backup visit to a second branch of Carphone Warehouse confirmed this story, and added the further allegation that the 30 day limit was Ericsson policy. The Register called Ericsson VP marketing and communications Jan Ahrenbring earlier today, and he denied this was the case. Which is just as well, considering it would be illegal. Under UK law Carphone Warehouse's returns policy is justified provide the customer has a reasonable period to identify product defects, but as the defect was one of manufacturing, and was admitted by Ericsson (fairly quietly - we can't find it on the Web site, for some reason) on 23rd September, Carphone Warehouse is clearly liable for a product refund. Calls to Ericsson UK customer support (as recently as this afternoon) confirmed that Ericsson UK had no knowledge of defects in the 888, so the standard route for malfunctions would apply - take the phone to an Ericsson approved service centre. Nobody in the management of Ericsson UK was available to confirm that neither Ericsson customer support nor Ericsson's dealer base had been informed of potential problems or of any form of repair programme. If they have been, we can only surmise that they're awfully forgetful. Jan Ahrenbring did however confirm that there was a problem, and finally, we could confirm what it is. The contact between the handset and the original battery is too loose, and the problem can be fixed simply by switching to a different battery. Our friend customer number two finally ground UK customer support down sufficiently for them to courier a replacement battery to him, but as after this had happened customer support was still insisting to us it wasn't aware of the problem and referring us to a service centre, Ericsson's communications systems obviously take a while to percolate through to all customers, as opposed to those who shout loudest. So what have we got? A major company has admitted a problem, and proactively press-released its readiness and eagerness to fix it at no cost to the customer. Then it hasn't told its subsidiaries or its dealers, who therefore default to eye-rolling surprise whenever a defective unit walks in the door. Most of the customers will therefore settle for a repair, rather than a replacement or a refund, and the visibility of the problem is a lot less than it would have been otherwise. A happy coincidence, you might think, but we reckon it's just a cock-up interfacing felicitously with the corporate machine.
John Lettice, 27 Nov 1998
The Register breaking news

Kyocera rejigs printers with Mita mate

Kyocera is to extend its Ecosys printer brand by licensing the products to OEMs. But Koji Seki, director of the Japanese firm's printer business and now trustee of the bankrupt Mita group, claimed the move will not weaken the Ecosys brand. He said that Kyocera wanted to penetrate markets where it currently has no presence and one of the ways was to license the Ecosys range to OEMs. The company has enough capacity at its Kamichi Japanese plant to do that, he said. Seki said that Kyocera will leverage its trusteeship of Mita in a number of ways: "It has copy fax and multi-function machines and marketing and sales for them. It also has a worldwide sales channel." Those could benefit Kyocera, he said. "I can think of three areas where it could help. One is the research and development it has, the other is that it covers the copy machine markt from the low end to the high end. And a high speed printer is required by the market." He said that Mita has the technology to develop such a printer. "On Mita's side, they don’t have digital technology," Seki said. "The sales channel that use products is the same channels. Nita can add printer products into their channels." Japanese courts have appointed Kyocera to sort out Mita's affairs until October 1999. At that time, Seki, who is the Kyocera director in charge of the plans, has to deliver a set of proposals to the courts. But it is all but certain that the courts agree to a merger of the two companies. Meanwhile, Yoshihiro Mita, ex-president of the company, was re-arrested by Japanese police on Tuesday and charged with bribery. Two weeks ago, he and another Mita employee were charged with fraud. ®
Mike Magee, 27 Nov 1998