Despite the reams of paper spent on financial results by large companies, it's really rather easy to figure what's happening at a company by reading between the lines. Intel, for example, turned in its yearly results last year and this can be expressed easily in one sentence. In fiscal 97 it turned over $25 billion and made a whopping profit while in fiscal 96 it turned over 20 per cent less than that and made a whopping profit. Fortunately, US rules make large corporations go a little bit further than that, breaking things out by the quarter, and it's those items which make compulsive reading for journalists. For example: "Unit shipments of Fast Ethernet connections and switches were up from the third quarter, unit shipments of hubs were down from the third quarter." Bad news for 3Com then. What about this item, too? Intel's gross margin in Q4 was up slightly from 58 per cent in Q3, "partially offset by the impact of purchased components used on the SEC cartridge for the Pentium II processor". This is sophistry, because it spent a lot more on SRAM when it was telling the world how wonderful the Pentium Pro was. It turns out, too, that Intel won't suffer as much as others might from the problems in South East Asia, because most of its revenue stream doesn't come from that region or from Japan, for some reason taken out of the equation. Intel now has 64,000 employees, up from 48,500 at the end of 1996. Here's the fact about Intel and DEC Alpha that many hacks got wrong, spelt out in some detail: "Intel announced during the quarter that it plans, subject to government review, to purchase Digital Equipment Corporation’s semiconductor operations for approximately $700 million. As part of the deal, Intel will serve as a foundry for Digital for multiple generations of Alpha microprocessors. Other key components of the deal include a 10 year patent cross license agreement and Digital development of a full line of systems based on Intel’s IA-64 processor family. (Our italics). ® NB 11 January 1999. Intel's and AMD's yearly results are released later this week.
Sources said the Federal Trade Commission (FTC) is widening its scope against Intel in the run-up to its anti-trust case which starts in February. According to the sources, FTC officials are calling a number of vendors and analysts with questions relating to other aspects of Intel's business activities. The case against Intel, set to start February 19th, rests on allegations it unfairly acted against Compaq, Digital and Integraph, after they took legal action concerning patents they held. There is currently a separate anti-trust case which Intergraph is making against Intel. But our sources claimed that Intel had talked to a number of other parties, including IBM, Motorola and Apple over the PowerPC platform. Intel refused to decline on the reports but adamantly maintains it does not have a monopoly in the chip market. AMD, Cyrix, Rise and IDT all make x.86 microprocessors which compete with Intel at some levels. Until recently, however, Intel could be seen to dominate the high end of the chip market, at the server and SMP level. Any FTC case against Intel could well be undermined by developments with the Alpha technology which have emerged over the last six months. ® Related Stories The FTC complaint against Intel
Late last week Dell moved to keep details of its OEM relationship with Microsoft secret. Microsoft OEM data is due to be covered in a closed session of the court later today (Related Story), but several news organisations have been trying to have the sessions made public. This mirrors the pre-trial arguments over whether or not depositions should be taken in public - the news outfits originally won that one, but in the case of the OEM figures, their chances don’t seem good. Microsoft wrangled long and hard over the level of access the DoJ would get to the numbers, with some reason, because they really are the crown jewels. The DoJ’s view is that it can use Microsoft pricing, volume and bundling deal data plus associated restriction clauses to show that Microsoft uses monopoly power to maintain and to enhance its dominant position. Its pricing does vary by volume, through exclusivity agreements and by OEM, and the argument in court today will therefore be over whether there is a nefarious pattern to this or whether - as Microsoft will no doubt maintain - the outfits that buy the most product from Microsoft obviously get the best prices. Dell, naturally, is one of the outfits that buys the most product from Microsoft, and as a long-term down-the-line Wintel partisan could (one speculates) be fruitful territory for the investigators. One recalls that when Bill Gates was, after initial squirming, hauled before the Senate Judiciary Committee to testify last year, one Michael Dell was one of the supporters Bill hauled in to speak in his favour. Mikey was of course crashingly dull, but his heart was in the right place, so there’s a certain piquancy to the latest legal manoeuvring. ® Complete Register trial coverage
Further details have emerged about a joint strategy between AMD and Compaq to leverage the Alpha platform. And the companies are including the Linux OS as part of their plans.
Professor Franklin Fisher many times states the obvious and contributes little that is new in his direct testimony, which was prepared in September before the trial started. It would have been more valuable had he prepared it more recently. He reiterates that Microsoft has monopoly power with Windows (which Microsoft obstinately refuses to admit, despite the fact that this in itself is not illegal). Fisher says that Microsoft foresaw the threat to Windows from a browser platform and from Java, and took many anti-competitive actions as a result to protect its monopoly. Microsoft's profits will come not from IE, but from the adverse effect that Microsoft has had on competition. So far as barriers to entry into the PC operating system market is concerned, Microsoft has taken a number of steps to maximise these barriers, including tying IE to Windows; largely excluding browser competitors from distribution channels; having agreements with OEMs such that they may not remove IE; having agreements that boycott or disfavour Netscape; and making IE "free" "forever" in a deliberate move to harm Netscape. Microsoft tries to show that it is easy for a competitor to enter the PC OS market, but avoids explaining why there are no effective competitors in the world's greatest monopoly market (although Fisher omits to make this observation). Other barriers include economies of scale, which are significant in the software business, and network effects, which can be briefly summarised as less-informed people thinking it is safe to do the same as most others - essentially a herd instinct. Again, the presence of network effects is not illegal per se, but it does make monopolisation easier. Fisher points to the absence or ineffectiveness of competitive constraints on price, output, product decisions and quality. It seems that Fisher overlooked the small amount of work that Microsoft claims to have done with focus groups, for example over Windows 98 pricing. He briefly considers substitutability from the point of view of consumers and OEMs, and concludes there are no reasonable substitutes for Windows on Intel-compatible PCs (but had he written his report a little later, he might have had a better understanding of Linux). In discussing predation, he defines it as an act that is not expected to be profitable unless supra-normal profits are made as a result of the adverse effects on competition. Fisher quotes a telling passage from the deposition of Joachim Kempin, Microsoft VP of OEM sales, in which Kempin admitted he set Windows 98 royalty rates without reference to other vendors, which of course confirms that Microsoft does not have to look over its shoulder to set prices. The work Microsoft did with focus groups was to find psychological pricing points for revenue recognition. Unfortunately, most of the 90 or so depositions in the case will not be entered into evidence in their entirety. It is ironic that Microsoft's major competitor is itself, but even here Microsoft has taken steps to ensure that Windows licences are not transferable, and virtually all PCs have Windows whether the user wants it or not. The outcome of a case to test Microsoft's end user licence agreement (EULA) against the UK unfair trading terms act would be very interesting - a case that Microsoft would no doubt do its best to avoid. Microsoft's licence prohibits the development of a secondary market in Windows licences unless it is challenged in this way. Fisher opines that Microsoft will obtain monopoly power in the browser market, and says there is a substantial market for browsers separate from operating systems. He quotes from the deposition of Cameron Myhrvold, VP of the Microsoft Internet customer unit, that Microsoft markets IE to ISPs as a browser: "If you're selling tyres, you probably don't want to sell them as a piece of a Ford." Fisher highlight's the section in Gates' Internet Tidal Wave report from May 1995 where he outlines the plan to change Microsoft's HELP command to a format that requires the use of IE. This was a disservice to users that has received little adverse comment. Fisher summarised the market-splitting arrangement that Microsoft proposed to Netscape and which has made Microsoft wriggle very uncomfortably. Andreessen's forwarding of his very detailed account of the Netscape-Microsoft meeting to David Kaiser the very next day gives the story the ring of authenticity that makes it very hard for Microsoft's department of fiction in its ministry of truth. An aspect of this that appears to have passed without comment, including from Fisher, is that when Microsoft is turned down in a courtship, it has a long history of doing its utmost to bring about the demise of the vendor, as Digital Research DR-DOS, Stac (compression), Adobe (font technology), Apple (QuickTime) and many others know to their cost. Gates' and other Microsoft communications to Intel detail the extent of Microsoft's bullying and market power. Although it can be expected that Microsoft will offer an alternative explanation with its witnesses, the damage has been done since the first account tends to get believed in the absence of a compelling alternative. Microsoft will not easily be able to use any documents that it has not already produced to the DoJ in response to its CIDs (civil investigative demands), lest it be accused of the criminal offence of withholding evidence. Microsoft's post hoc verbals cannot be as convincing as contemporary documents. Few students of Microsoft doubt that a number of smoking-gun Microsoft documents might just have never made it as trial exhibits, or that there are others that may be lurking around and not have been produced. Even had there been a real will to produce documents, this is likely to have happened. It is rumoured that in Germany, Microsoft the sudden arrival of new PCs resulted in email messages between Microsoft and Vobis being destroyed. Fisher usefully summarises the evidence of threats by Microsoft to competitors where the threat makes no sense from a business viewpoint other than to harm a competitor. The best example of course is with Apple's multimedia authoring tools. Fisher calls this the essence of predatory anti-competitive conduct. Paying companies to take IE, and spending an estimated $100 to £200 million on browser development made IE pricing negative, in reality, not zero, and is prima facie evidence of predation against Netscape. When Netscape finally had to stop charging for Navigator, although Netscape's revenue from it was only around 13 percent of its revenue at the time (an important detail that Fisher missed), it was forced on Netscape despite Microsoft's attempts at establishing an alternative story. Gates is known to have directed that studies of Netscape's sources of revenue be undertaken. When Microsoft decided to offer IE at no charge, between 20 and 50 percent of Netscape's revenue came from its browser. Fisher resurrected Gates' rather candid comment to the FT (10 June 1996): "Our business model works even if all Internet software is free . . . We are still selling operating systems. What does Netscape's business model look like? Not very good." Cameron Myhrvold said in his deposition that Microsoft's ISP referral service "doesn't even pay for itself, much less generate any profits . . . so no, we don't make any money from IE." If Microsoft made a mistake in its pricing policies, it was the failure to claim in its internal documents that the purpose of its predatory pricing of IE was to increase the sales of Windows. If this had been true, Microsoft would have been happy that any browser could have helped its objective of selling Windows, but as is well appreciated, Microsoft "cared greatly", as Fisher puts it, "who made the browsers used with Windows." In addition, making a version of IE for Apple actually encourages a reduction in the sales of Windows. Microsoft's desire was very clearly to disable Netscape and increase Microsoft's share of browser sales so that the potential threat to the Windows monopoly was dissipated. It will be tough for Microsoft to talk itself out of these conclusions. Fisher repeats that Microsoft's predatory pricing "lost money in order to raise rivals' costs and exclude them from the market". Microsoft also sought to deprive Netscape of revenue "by inducing ICPs to agree not to pay Netscape for carrying or promoting the ICP's content or logos . . . Microsoft was prepared to give away valuable concessions to ICPs to secure such agreements." Then there was Microsoft's threat to Apple to cancel Office 97 for the Mac if Apple did not "prefer" IE, and Microsoft's disabling of Apple's QuickTime with IE4. The evidence that Microsoft deliberately tied (or bundled – in this context there are elements of both) IE with Windows for anticompetitive reasons rather than for genuine efficiency reasons will be hard to disprove. Microsoft forces users to take IE, whether it is required or not. There is some irony about this since there are some logical reasons to bring increased functionality to the operating system, except that the way that Microsoft combined IE and Windows was to make the separation as difficult as possible, and not to help users. Microsoft decided to combine IE and Windows to foreclose competition rather than to achieve efficiencies, Fisher opines, quoting a number of Microsoft emails that give evidence of this. In addition, Microsoft has designed interdependencies between IE and Windows, claiming this to be a rationale for bundling. Fisher concludes that "the anticompetitive effects are large and that the technological benefits appear to be very small or non-existent". Microsoft's arguments about desiring users to be able to have a uniform experience with Windows/IE is unsustainable. Fisher quotes a deposition from Joseph Kanicki of Dell in which he says that "Dell negotiated and obtained an exception to this requirement for instances in which a customer requested a Windows 95 or Windows computer without Internet Explorer." Fisher notes that Microsoft would not have allowed this if it were really true that doing this would undermine the quality of the operating system. It is a pity that there is no information on the record as to how Dell achieved this: whether Microsoft helped, or Dell just removed the icon in some way similar to Felten's procedure. Michael Cusumano and David Yoffe quote in "Competing on Internet Time" a remark by Gates in March 1996, just after Microsoft agreed to give AOL favourable access to Windows for preferring IE: "We have three options for how to use the ‘Windows box': first, we can use it for the browser battle, recognising that our core assets are at risk. Second, we could monetize the box, and sell the real estate to the highest bidder. Or third, we could use the box to sell and promote internally content assets. I recognise that, by choosing to do the first, we have levelled the playing field and reduced our opportunities for competitive advantage with MSN." Fisher says very little about the Adknowledge data sets that were used to analyse how Microsoft's share of the browser market varied across ISPs, and user hits by ISP and browser type. The data support Fisher's summary of evidence about the effect of Microsoft's practices on Netscape. The chilling conclusion is that the message sent to developers is that "Microsoft will impede any innovation that threatens Microsoft's monopoly in operating systems. This will lessen developers' incentives to develop products that provide alternatives to the Windows platform. . . . If Windows were truly a superior product, it would succeed on its merits. The actions Microsoft is taking will prevent that from being necessary." Fisher's final conclusion is: "Microsoft has engaged in anti-competitive conduct that has no compelling economic justification but for its effect of restricting competition. These actions will allow Microsoft to protect its monopoly in the market for operating systems and establish a monopoly in the market for browsers. This situation can never make consumers better off than they would be with unfettered competition, and is likely to make consumers worse off." The last sentence is legally important, since it provides an expert opinion that satisfies a primary criterion of the Sherman antitrust act: that there must be an adverse effect on consumers. Complete Register trial coverage
Acorn has taken another step away from its traditional stomping ground by selling its half of Xemplar. The other joint owner, Apple, now takes full charge of the educational supplier. The deal valued Xemplar at £6 million, with Acorn bagging £3 million for its share. For the year ending 31 December, Xemplar recorded a pre-tax profit of £200,000 and its net asset value was estimated to be around £4.2 million. Acorn has said it will use the proceeds of the sale to fund further developments in the digital TV and multimedia industries, where - it says - its new focus lies. Stan Boland, chief executive of Acorn Group plc said: "The disposal of our stake in Xemplar was a natural step, given (Acorn's) business focus. It reinforces our commitment to becoming a major player in the rapidly growing digital TV market." Xemplar’s cross-platform approach is unlikely to change -- much of Xemplar's success has been founded on its non-partisan approach to systems -- but as a fully-ownned subsidiary of Apple UK, machines like the iMac and the forthcoming consumer/education-oriented portable, codenamed P1, plus Apple's MacOS X Server software, which is designed to make it easy to centrally manage iMacs running in Network Computer mode are more likely to be promoted more strongly. ®
A US startup company has developed a system which expands the speed of PCI on networks and high end and networking systems by a factor of 30 over existing 32-bit bus technology. But although the company has developed a much faster PCI system, there seems to be little connection between its technology and the proposed PCI-X extensions suggested by Compaq, IBM and HP last year. Sebring, whose Web site is here, has developed a ring system which uses a dual counter rotating architecture, employing differential signalling. The Sebring Ring resembles the scalable coherent interface (SCI), with nodes using dual 512 byte FIFO buffers acting as on and off ramps to the network. The company completed a $5.5 million round of VC funding in the middle of last year and will sell integrated chips to OEMs which, it claims, build on the standard PCI bus while offering the increased speed factor. ®
The Apache open source Web server has marginally increased its lead over Microsoft’s rival products over the past year, according to the January 1999 Netcraft Web server survey. Netcraft regularly polls Web servers for data, and this month covered 4,062,280. According to the recent numbers Apache grew its share to 54.22 per cent against 53.78 per cent in December, while Microsoft in the number two slot declined from 23.5 per cent to 23.33 per cent. Both companies still saw healthy growth, however – sites running Apache increased from just under 2 million to 2.2 million, while Microsoft also put on nearly 10 per cent. The Netcraft figures put Netscape a poor third with 4.22 per cent of the market, but this probably understates the company’s position - Web server numbers seem pretty variable, depending on who you ask. Netcraft’s data (Click if you want more) also shows Web server uptake as a whole in a steep ramp, approximately doubling since January 1998. Microsoft’s failure to close the gap between the Apache and the Microsoft upward curves must however be dispiriting for the company. Apparently its efforts to push its own software are having no discernible impact at all. ®
Reports in the Korean press said that Hyundai will hang onto its hard drive subsidiary Maxtor but will spin off other units to raise cash for an LG takeover. According to Hyundai, it is to seek a new rights issue on Wall Street this year but still wants to retain the hard drive company which it sees as having a future. Yesterday, Hyundai said it would get rid of a number of technology and non-technology subsidiaries to raise the cash it wants to pay for LG. Those include its LCD business, its telecoms businesses and a chip packaging firm. However LG is now pushing for further concessions from LG, including a demand that it re-employ its semiconductor staff for a period of between five and seven years. LG is also insisting it be paid more for its semiconductor business, for a period of up to twenty years in the future. ®
Microsoft's fear of the testimony of economist Franklin Fisher is seen in its extraordinary response to his testimony it has posted on its web site. It is far longer than any other Microsoft response to testimony, and it seems that Fisher's summary of Microsoft's anticompetitive actions has indeed touched a painful nerve. Microsoft's document was released a day before Fisher's testimony became available, so keen was Fort Redmond to have its PR say. Fisher is criticised for directly contradicting the view he expressed in a book in 1983 after the dismissal of the IBM antitrust case, in which Fisher was chief economic witness for IBM. Microsoft quotes Fisher as saying: "Monopoly profits are earned through high prices and inferior products." Some might say this is an extremely good description of Microsoft's situation. Microsoft claims a "dramatic ideological reversal" by Fisher such that readers of his testimony reading his 1983 book would get whiplash. Fisher is accused by Microsoft of arguing for fewer choices for consumers – but in fact he does not. What Fisher did say was that because of network effects, there are many Windows applications and that this creates a barrier to a new operating system that could not use this applications base. "It is not possible to remove Microsoft's Internet Explorer technologies from Windows 98 without breaking the operating system," Microsoft trumpets. But Felten did this, and it worked. Nor does Microsoft admit that it specifically allowed its chum Dell to sell Windows 98 PCs without IE. Microsoft still makes the argument that Windows 95 with IE is a "single, integrated product," and quotes Netscape saying that it was Netscape's understanding that no portion of IE could be deleted from Windows 98; but this is what Microsoft told Netscape. Microsoft also claims that Fisher's testimony does not establish that the integration of "free browser technology into Windows amounts to a ‘predatory anti-competitive act'. " The response suggests that Netscape can distribute Navigator through PC manufacturers, but Microsoft has essentially precluded this by making it compulsory for Windows 98 licensors to take IE as well, whether or not it is required. Curiously, Microsoft quotes an article in which it is said that Netscape's browser is used by 40 per cent of Windows 98 users and nearly half of Windows 95 users. Microsoft is therefore saying that many users do not want IE. It is also untrue for Microsoft to claim that all ISPs can enter into business relationships with Netscape, while it will no doubt amuse Intel to read that the disagreement with Microsoft about NSP was the result of "nothing more than two companies disagreeing about how best to deliver new technologies to consumers". ® Complete Register trial coverage
Samsung has finally managed to rid itself of its long-term albatross, AST. The financially barren AST computer unit has been bailed out by ex-Packard Bell high flyer, Beny Alagem. The former Packard Bell chairman and chief executive yesterday agreed to acquire the ailing subsidiary for an undisclosed sum. Samsung will hang on to 25 per cent of the company. Alagem gets the AST brand name and its technology patents. The deal is thought to be worth about $200 million. The fate of AST’s other assets, such as employees and factory equipment, has yet to be decided. AST will reopen under the name of AST Computers, moving from its present base in Irvine, California to Los Angeles. It will abandon one of its traditional markets - the corporate user - and instead will concentrate on the home and small to medium business market. Beverly Hills-based entrepreneur Alagem will be chairman, president and CEO. The sale sees Samsung cutting its losses - it is believed to be accepting around half the price of its $377.5 million investment in AST, which began four years ago. It follows years of considerable financial losses and recent job cuts at the unit. Samsung will retain an initial 25 per cent minority stake in AST, which will remain private. The PC unit was a thorn in Samsung’s side ever since it acquired 40 per cent of what was then AST Research. Analysts say the Korean electronics giant is unlikely to recoup all of its investment through the deal. Paulo Puppoli, a market analyst at Dataquest, saw the sale as good news for both Samsung and AST. He said the PC unit had been a cash drain on Samsung, which it was desperate to offload. AST itself could also benefit from consumer rather than corporate branding, he said. But the buyout alone is not enough to restore the faith of some former AST business partners though. Jackie Raybould, Elcom operations director, said Elcom withdrew from distributing AST computers about 18 months ago and was in no hurry to reacquaint itself with the brand. "We’re not interested in it. AST as a brand has dropped below the market noise level," she said. Raybould added that the manufacturer would have a hard task to break back into a market which is facing tougher competition than at any other time. ®
An UK Internet company is taking legal action in the US in an attempt to protect its customers from junk email. London-based BiblioTech has pledged that if any of its customers falls victim to spam, it will track-down the offending individual or company and get them to stop -- even if it means going to court. BiblioTech runs Postmaster, a free e-mail service with 50,000 users in the UK and Europe. It has already won an out of court settlement with four people in the US who have agreed to give up the practice -- or face being hit with a $2 million bill from BiblioTech. A fifth man is contesting the charge. It is also preparing its case against another US company which will be heard later this year. BiblioTech has also enlisted the help of Sanford Wallace -- the one-time "King of Spam" who has since reformed his ways and, in true poacher-turned-gamekeeper style, is now an anti-spam consultant -- to help track down and identify persistent offenders. "We have to deal with hundreds of thousands of spam each hour," said BiblioTech's finance director Chris Verdin. "Spam is the scourge of the Internet. We lose one man-day each week just dealing with the problem," he said. But it seems BiblioTech is at the head of a one-company crusade. Verdin knows of no other UK ISP which has gone to such lengths to stamp out spam. A spokeswoman for the Internet Service Providers Association of the UK (ISPA) said she knew of no other companies taking legal action but said all ISPs take spam very seriously. "I guess we're carrying the flag against spam but I wish more ISPs would follow suit," said Verdin. ®
Michael Lacovara's excruciatingly boring cross-examination of Fisher must have had as its primary purpose to blunt Judge Jackson's recollection of Fisher's direct testimony. Lacovara's wins occurred with his frequent planting of landmines to catch Fisher, who performed appallingly on the witness stand. He resorted to "I don't remember" (TM B Gates) more than 50 times, and used an array of similar statements many more times than that. Even this wouldn't have been so bad had Fisher been able to find the answers to questions quickly from the five ring binders he brought to court, but he couldn't. The ultimate problem was that he really did not understand the technology, and often hazarded a silly guess, or went along with what Lacovara suggested. There were many questions about the Adknowledge data samples, and it soon became clear that Fisher had little first-hand experience of the data, and that assistants had done much of the work. Fisher's written testimony drew attention to some deficiencies in the data sets, but Lacovara tried to find more. Either Microsoft did not like the findings from the data (which is unlikely because they were little discussed), or the questioning was part of Microsoft's attempt to discredit Fisher and provide plenty of material, so Microsoft can claim in the higher courts that Fisher was incompetent in some of the areas in which he responded to questions. There was no real point to many of Lacovara's questions, other than to provide a base for discrediting Fisher. Lacovara established that Fisher had done no academic work on Java or streaming media, which was hardly surprising since Fisher does not represent himself as a computer scientist. Most of the cross-examination wasn’t on Fisher's area of expertise, and included OLE and OpenDoc which have no discernible relationship to the subject of Fisher's testimony. Nor was it relevant or useful to quiz Fisher on earlier evidence. Turning to Fisher's record as an expert witness in earlier cases, Lacovara found that in Kodak versus Polaroid, Fisher's testimony had been criticised as "unreliable and contained assumptions, biases and errors". Fisher said he thought the court had been misled by an "intellectually quite dishonest witness". During the second day of Fisher's cross-examination he was subjected to a viva [Oxbridge stuff that Graham knows about ‘cos he’s a toff – Ed] on the subject of computing, and of course performed poorly: he couldn't name any of the companies supporting NCs. However, Fisher did opine "I do not" in response to a question about the AOL-Netscape merger: "Do you think that transaction affects the likelihood that Microsoft will gain monopoly power in what you call the market for web browsers". Later in the morning, Judge Jackson produced his own Court Exhibit 1, an item from the Washington Post. Again it was confusing as to what Fisher intended by his reply to the court's question: The Court: The thrust of the article is that there is no intention on the part of the AOL/Netscape/Sun consortium to compete with Microsoft. When asked whether or not he was going to compete, Mr Case is quoted as saying, "of course not." Quote, "we have no flight of fancy that we can dent in any way, shape or form what is a monopoly in the operating system business." And the question I have of you, assuming these quotations are accurate, is this, to use Mr Lacovara's phraseology, consistent with your understanding of what the impact of this consortium is likely to be insofar as developing viable competition for what is alleged to be a Microsoft monopoly.” Fisher: It certainly is. Lacovara: Can I direct your attention to the paragraph that begins with "the simple rationale for the Netscape acquisition". And I will read it into the record. It says, "the simple rationale for the Netscape acquisition," says Case, "is that it will help AOL dominate two of its key businesses, providing a 'portal' or gateway to the Internet; and helping business learn to use the Internet for electronic commerce." Is that consistent with your opinion as to the likely effects of the transaction? Fisher: I have no reason to believe that that isn't so -- that that is what they want to do, yes. . . . Lacovara: Okay. And do you see a couple of paragraphs earlier where there is a discussion of alternative operating systems? Do you see a paragraph that begins with "Case dismisses the idea that AOL can develop alternative operating systems?" Do you see that? Fisher: I do. Lacovara: Now, I didn't ask you whether you were of the opinion that AOL would become an operating system vendor, did I? Fisher: I don't think so. Lacovara: Okay. Now, do you see the next sentence where it says, "That idea is ballyhooed by Sun CEO, Scott McNealy, and other computer analysts, who envision a post-PC world where Microsoft's PC-based monopoly will crumble of its own weight?" Do you see that? Fisher: I do. Lacovara: Are you familiar that that is a concept that has been ballyhooed by Sun and by other people -- excuse me -- by other analysts in this industry? Fisher: I don't know about the other analysts. Sun has, for a long time, been the principal proponent of Java as a way to unlock the world, in effect, and it would be quite surprising if they didn't still believe that that was going to happen or might happen. Fisher offered opinions that WordPerfect had been developed by Novell, and that "Apple abandoned QuickTime for Windows". It was particularly damning when Fisher admitted to including a remark about wrapping an API as a Java API in his report. Lacovara asked him the meaning of this, which Fisher fumbled, and then asked him what efforts he had made "to make sure you understood what this really meant". Fisher's reply was: "Oh, I didn't think it mattered." Many press reports had been stating that AOL had around 15 million subscribers, but Fisher thought it was "on the order of 10 million". When Fisher was deposed, he was asked "Do you know what a Java Virtual Machine is?" He replied: "an application written in Java that will run – that means it will run typically independent of the operating system". During cross-examination he admitted that this was wrong. He was then asked if Java was the first language to make cross-platform application development possible. Although Fisher had a brave stab at answering and mentioned emulators on IBM/360, he really should not have tried to answer computer science questions. Perhaps his having used Visual Basic made him think he was a programmer. The judge became increasingly impatient that Lacovara did not give Fisher time to look up the answers to questions that required numeric data. He also said that it was no test of a witness' credibility simply to put him through a memory test here, and that although Lacovara was entitled to test the basis of Fisher's opinion, it was not a fair test of testimony if he couldn't remember some data. Lacovara introduced an extract from the deposition of Jim Clarke of Netscape in which he said that Gates had told him, before the first beta of Navigator and probably in September or October 1994, that he was going to give away the browser in the operating system. Gates wanted to use Netscape's browser, but as usual the sticking point was the terms: Gates wanted to pay a flat fee whereas Netscape wanted a per-copy royalty. The negotiations collapsed. Bored court reporters leapt at some small and insignificant incidents. Lacovara asked Fisher about the amount of work he had done on the case by the time he took the stand. The judge asked Lacovara if he would like to withdraw the question, to which he replied: "I don't mean to get the witness agitated, your honour. If he feels he wants to do it now, it's perfectly fine with me. The court: Ask him to do so. Fisher: Mr Lacovara, if I appear agitated to you, I apologise. Emphatic, I would have said. A few minutes later there was another small incident Fisher: [Name not recorded properly] says that they want to colour the world the colour of goose shit. If Microsoft forced upon the world one browser, that would make it really simple. That's not what competition is about. That's not what helping consumers is about. Giving choice is what competition is about. Lacovara: Now, you do seem agitated, sir. Fisher: I am agitated. I feel strongly on this point. Lacovara: If I represented to you, sir, that more than half of all people who buy personal computers today have a choice of browsers, would you agree? Would anything you looked at support that statement? Fisher: I do not agree that they have a real choice of browsers. Microsoft has influenced the choice so that they end up in one place. And we're going to live in a Microsoft world, and it may be a nice world, but it's not a competitive world, and it's not a world that's ultimately consumer-driven. Lacovara: Okay. Do you need a break or can we continue? Fisher: Hey, my blood pressure doesn't rise during these. A third minor incident brightened the late morning: Lacovara: Can you tell me what Microsoft did to try to disable Netscape? You said Microsoft - Fisher: No. No. No. No. No. I am just dumfounded at the that ameliorates this confusion problem that you just question [sic]. Not because I can't answer it. Lacovara: What did Microsoft study and try to implement to try to disable Netscape? [sic] Fisher: Microsoft studied Netscape's business model and studied its source of revenue. Microsoft priced its browser for free and bundled its browser and put a lot of effort into – put a lot of effort into promoting, bribing and forcing people to take its browser. A good deal of that appears to me and appears, I think, from Microsoft documents, to have been directed at thwarting the threat that Netscape represented to the operating system monopoly. Lacovara continued to trawl through some of the more sensitive testimony in the hope of tempting Fisher to a silly response to a question, but there were no further disasters. David Boies started his redirect examination, which he estimated would continue for a further two hours or so on Monday. It is also expected that Microsoft will introduce a Motion to have the court cleared so that what Microsoft regards as confidential OEM data may be discussed. Some ten news organisations will attempt to intervene to stop the secrecy, but it is unlikely that they will succeed. ® Complete Register trial coverage
The latest in handheld computing devices means US couch potatoes need never miss their favourite soap or radio show again. The Command Audio handheld unit, about the size of a television remote control, offers audio-on-demand from any location. US subscribers can receive over 100 programmes, including radio, TV or print magazine articles, through satellites and a nationwide network of transmitters. Broadcasts include National Public Radio, TV show Nightline, or readings of magazine articles from Time and People. The shows are available on demand, so TV addicts don’t need to panic if they miss the follow up to that crucial soap cliffhanger. The FM transmitter built into the playback unit allows a customer to route the signal to their car, home or office radio. The Denver and Phoenix areas will be the guinea pigs for the service, with eight more undisclosed US cities to be added by the end of the year. Command Audio hopes to have national deployment by the end of 2000. The device was designed and built by RCA, a division of Thomson Consumer Electronics and will cost $199 with a monthly subscription of $15. ®
A cheery Judge Jackson last week introduced a lighter, poetical note to the trial. The court: Counsel, before we get started, I thought I would call your attention to a news item that was called to my attention recently, and I just pass it on to you. It's entitled "Serenity in the midst of madness." "In the wake of the federal antitrust suit against Microsoft, Sony has announced its own computer operating system now available on its hot new portable PC called the Vaio. Instead of producing the cryptic error messages characteristic of Microsoft's Windows, Sony's chairman, Asai Tawara, said, quote, 'we intend to capture the high ground by putting a human, Japanese face on what has been, until now, an operating system that reflects Western cultural hegemony. For example, we have replaced the usual impersonal and unhelpful Microsoft error messages with our own Japanese haiku poetry.' The chairman went on to give examples of Sony's new error messages." Chaos reigns within. Reflect, repent and reboot. Order shall return. First snow, then silence. This thousand dollar screen dies So beautifully. Windows NT crashed. I am the blue screen of death. No one hears your screams. Three things are certain: Death, taxes, and lost data. Guess which has occurred. Out of memory. We wish to hold the whole sky, But we never will. ® Complete Register trial coverage
Well, at 2 pm London time, Intel finally gave in to The Register and announced, as first revealed here a year ago...sigh...the Katmai is called the Pentium III.
The Archbishop of St Louis has successfully obtained an injunction against a Web site covering Pope John Paul II's visit to the US later this month. Archbishop Justin Regali and the Archdiocese of St Louis obtained the temporary order from a federal judge claiming that the site (www.papalvisit1999.com) contained sexually explicit advertising. The adult entertainment company, Internet Entertainment Group (IEG) -- the firm behind the unofficial papal site -- immediately moved the offending material to one of its erotic sites. "The papalvisit1999.com site contains no erotic information, although it does include a factual history of sexual abuses in the Catholic Church, " said Seth Warshavsky, president of IEG. "We have every legal right to publish information about the Pope's visit, and the name of the site is legally registered," he said. "The archdiocese seems to object to our advertising the www.clublove.com Web site, but of course we have every right to promote our products," he said defiantly. Warshavsky is convinced he will get the restraining order lifted at the full hearing on Wednesday. IEG was one of the companies involved in one of the most notorious hoaxes in Net history when two "college students" agreed to lose their virginity live on the Net. ®
A reader from America points out that the fine a Belgian got, not for slapping a cream pie in Bill Gates' phace but for expressing the group's indifference to the Euro is less than the cost of an upgrade fee to Windows 98. ®
The Metropolitan Police's Web site has helped capture a man wanted for questioning in connection with the brutal killing of four people from the same family three years ago. Forty-year-old Ibrahim Aderdour was stopped at Amsterdam airport on Christmas day as he tried to leave Holland. Custom officials detained him after seeing his photograph -- and details of the crime -- on Scotland Yard's Web site. According to a spokeswoman at the Met, this is the first time in two years that someone wanted for questioning has been detained directly because of the Web site. Despite this recent success, the police cannot count on PC Internet’s help in every case. A Web appeal for the safe return of three newborn piglets -- stolen from a city farm in London -- appears not to have been quite as fruitful. Reported missing last week, the piglets -- from a breed called 'Kune Kune' worth between £200 and £300 each -- needed to be returned to their mother before the weekend if they were to have any chance of surviving. No details have been forthcoming about the piglets’ well-being. ®
After a troubled few years, Banyan, which once ruled the roost in name services on networks, has now agreed to team up with Microsoft to provide similar services for Bill Gates' customers. Banyan will receive a total of $10 million from Microsoft over a three year period and the deal means that 500 professional people will be trained up, and also provide marketing and product support. In return Microsoft is to buy nearly two million common stock Banyan warrants, according to today's issue of the Wall Street Journal. Each is worth $10. ®
Sybase has cut its workforce by about eight per cent in an attempt to maintain its recent return to profit. The database vendor has laid off approximately 400 people as part of a wider shake-up, which has divided the company into four divisions. In December, Sybase broke the company into four divisions, Internet applications, business intelligence, mobile and embedded computing to try and refocus the company. It faces stiff competition in the database arena. The US company has managed to crawl back to profitability, but has failed to show revenue growth. Sales were down to $210 million for the quarter ended 30 September 1998, against $233 million the previous year. Next week the company will report its results for the quarter ending December. ®
Staff from The Register have a stand at this year's Computer Trade Show in Birmingham on the 20th and 21st of this month. We have some surprises for you. But then, there's nothing different about that, is there? The show has garnered many more visitors than last year's show and you can be guaranteed to meet lots of people from the trade. Never mind the press. This is the Web site for the show. ® The Computer Trade Show is not an investor in The Register
Compaq's decision to buy beleaguered Shopping.com for its AltaVista Net guide only serves to fuel speculation that the world's second largest computer company is getting ready to flog the portal it acquired last year, The Register can reveal. The $220 million deal announced today would give Compaq a 90 per cent stake in Shopping.com. More importantly, it would make AltaVista even more attractive to prospective buyers since the portal would also include a major, and potentially important, revenue earner. In a pre-prepared press statement, senior Compaq executive Rod Schrock said: "Our intent is to make AltaVista the leading guide for both information and ecommerce on the Internet." And he is hoping to drive even more traffic to Shopping.com by using the AltaVista portal and Internet-enabled Compaq PCs. No one from Compaq was available for comment on rumours of the sell-off. ®
Fresh from its success in making headway in retail stores in the USA, sources at Cyrix-NatSemi said today they had made new inroads into the home market. The source said UK superstore Tempo will now sell Compaq Presarios using Cyrix chips. And, real soon now, John Lewis -- whose motto is never knowingly undersold -- will follow suit, we are given to understand. The news is destined to cause depression in the Intel camp. Its results are out tomorrow, however, and stock brokers reckon the dividend will be $1.10 per share. ®