12th > January > 1999 Archive

The Register breaking news

Microsoft catches up with counterfeit software

The continuing popularity of the Great Satan of Software – and its products -- kept British police busy over the Christmas holiday. The latest in a long line of anti-piracy raids brought in the biggest haul of counterfeit Microsoft Office 97 CDs to date. The 55,000 CDs, with a street value of £20 million, were seized by Microsoft investigators working with Berkshire CID and local Trading Standards Officers. Two lock-up premises were raided, resulting in the arrest and bail of two men. Microsoft believed the CDs, which were packaged in jewel cases, were some of the 100,000 fake stock it issued a pre-Christmas warning about. This haul brings the value of illegal Microsoft software recovered in the last four months to more than £70 million. The seizure should bring a post-Christmas glow to the cheeks of software vendors, who were up in arms last week when a Sheffield-based gang of software pirates could not be prosecuted due to a lack of funds. If you have any worries about pirate copies of Microsoft software, please do not contact The Register. Instead, you should call the Microsoft anti-piracy hotline on 0345 02000 xtn 999. ®
Linda Harrison, 12 Jan 1999
The Register breaking news

Acer postpones share issue again

Acer has yet again had to postpone its long awaited share issue, blaming stock market uncertainty and currency fluctuations for the hold up. Originally planned for last year, the issue of 200 million shares has been subject to delays as the world’s number two PC manufacturer struggles against less than favourable market conditions. Philip Peng, Acer’s financial director, said the issue could go ahead in May - but not before. On the first day of trading this year, the Taiwan stock market index dropped by four per cent - reflecting continued concerns about its overall financial health. Last August, Acer’s chairman, Stan Shih, announced he was taking a 30 per cent pay cut to ease the financial burden on the company. Other senior Acer execs were called upon to follow suit. Around the same time, Acer said it expected to make a loss of NT$4.9 billion for 1998. While PC sales are growing apace, Acer continues to be dragged down by its semiconductor business. ®
Team Register, 12 Jan 1999
The Register breaking news

The chips are no longer down

Global semiconductor sales grew to $11.38 billion in November, the highest mark since December 1997. According to the Semiconductor Industry Association (SIA), the jump in sales was brought about, primarily, by increased demand from Japan and the Asia-Pacific markets. The SIA’s Global Sales Report said Japanese sales grew by seven per cent and by 4.8 per cent in the Asia-Pacific region, with an overall jump in sales of five per cent over the October figures. Back in August, Japanese chip sales were down 30 per cent on sales in August 1997. SIA president George Scalise, said: "November is the third consecutive month of strong chip growth, reversing a trend of sluggish sales, which bottomed in July this year." Chip sales in Europe were also up in November, jumping 7.3 per cent from October’s level. In the US and Canada, sales saw a steady increase, climbing a modest two per cent. ®
Team Register, 12 Jan 1999
The Register breaking news

HP machines with Celeron inside ship this week

Hewlett-Packard will this week start shipping PCs with the latest Intel Celeron chips. The HP Vectra VE, aimed at the corporate market, and HP Brio PCs, for small and medium-sized businesses, will both sport the Intel technology. The PC models include the following configurations and UK estimated prices before VAT. The HP Brio, with Intel Celeron 366MHz, 4.3GB Ultra ATA hard drive, 32MB SDram and Matrox MGA G-100 AGP graphics with 2MB Vram - £731. HP Brio, Intel Celeron 400MHz, 64MB SDram, 8GB Ultra ATA hard drive, Matrox MGA G100 AGP graphics with 2MB video memory and 32x CD-Rom - £964. HP Vectra VE, Intel Celeron 366MHz processor, 128KB integrated L2 cache, 64MB SDram, 4.3GB Ultra ATA hard drive, Matrox MGA G100 AGP graphics with 4MB SGram video memory, 32x CD-ROM and 3Com Etherlink XL 10/100 TX LAN card - £1,014. ®
Linda Harrison, 12 Jan 1999
The Register breaking news

Class action hits latest Intel acquisition

Ecommerce vendor iCAT is being sued by shareholders in the wake of its sale to Intel, claiming their interests were misrepresented. Intel acquired the assets of iCAT for only the price of existing debt, which means that shareholders - who had invested $40 million in all - will get nothing back from the deal. The deal was announced back in November. The writ was filed in King County Court, Washington, by Alan J Bossio, an individual investor in iCAT. Bossio is hoping to gain access to documents surrounding the deal’s details. Previous requests to see the documents in question were turned down by iCAT’s legal team. ®
Team Register, 12 Jan 1999
The Register breaking news

Korean outfit unleashes $399 PC on US

Korean-backed Emachines is turning up the heat in its bid for a slice of the US low-cost PC market, introducing a $399 machine for sale via retail outlets. Emachines, a joint venture by manufacturer Trigem and Korea Data Systems, has added Circuit City to its range of outlets, which now covers five out of the top six US electronics retailers. The company claims it shipped more than 180,000 sub-$500 Etower machines through US channels in the last six weeks of 1998, and is targeting sales of 300,000 in Q1 1999. ®
Team Register, 12 Jan 1999
The Register breaking news

MS didn't hurt nobody, and anyway it was scared – defence witness

Microsoft’s case for the defence began yesterday with a massive 328 page deposition from MIT’s Richard Schmalensee who – as conspicuously telegraphed by Microsoft on many a courthouse step – dismissed the government case as spurious. The core of Schmalensee’s pitch is that we should ignore the vast number of apparently damaging emails the DoJ has painstakingly assembled in an attempt to incriminate Microsoft, and focus instead on the real issue, which is whether or not Microsoft has used a monopoly position to damage its competitors. His argument – note that he is operating as an advocate of Microsoft, and is therefore arguing for the company – is that there has been no measurable damage done, QED there is no case to answer. One might suggest that this is a neat piece of footwork, but not quite neat enough. If we accept the pitch that no damage done equals no antitrust case to answer then we can indeed ignore documentation which indicates plans to inflict damage. But do we want to do that? And how do we decide whether or not damage has been done? These are holes in Schmalensee’s deposition which lawyers should be able to drive large tanks through. He argues that, as the Windows component of typical total system cost is less than 5 per cent, Microsoft’s pricing can’t be judged as being monopolistic. But this is surely a desperate thrust. Windows prices, as Microsoft OEM boss Joachim Kempin has made clear, is not going to go down with the fall in total system prices, so the take has already climbed way beyond 5 per cent. DoJ evidence also shows that Microsoft’s prices have increased over the years, while prices of other software and the base hardware have fallen. For his next trick, he points to what he says is a fundamental inconsistency in the DoJ’s case. It argues that Microsoft is a monopoly which keeps entry costs to its market high, while at the same time claiming that Microsoft is prepared to spend vast amounts of money because it’s scared of, say, Netscape. If it owns the market, why should it be scared? It clearly was scared, he says, and that explains the tone of so many of these emails. Microsoft isn’t a monopoly, and is constantly worried about losing business to rivals. “Microsoft itself was extremely insecure about its leadership in operating systems,” he says. Whilst retaining our usual impartial stance, we at The Register can’t help observing that this is gobsmacking stuff. But onwards and upwards. Schmalensee moves on to Netscape, pointing out that although the government argues that Microsoft has moved heaven and earth to destroy the company, Netscape has managed to increase users of Navigator by 14 million over the past two years, and adds that Microsoft’s requirement that OEMs ship IE with their machines actually increases the choice available to users. An interesting perspective, this. Microsoft’s attempt to flush Netscape out of the market clearly didn’t work anything like as effectively as the company anticipated, because although Netscape’s share has fallen, it’s been a long, hard slog for IE. But we don’t know where Netscape would be if Microsoft’s allegedly anticompetitive actions hadn’t taken place, and the notion that stitching up exclusive contracts and bundling deals amounts to offering more choice is bizarre. Is he drowning in his attempt to execute his pro-Microsoft brief? Similarly he cites AOL’s success and MSN’s failure as proof that placement on the desktop isn’t important, despite the fact that Microsoft’s high command was (and remains) convinced that control of the desktop is vital. AOL seemed to think it was important too, otherwise it wouldn’t have cut that deal with Microsoft that got it placement there in exchange for money and switching to IE. Schmalensee on the contrary says that the desktop isn’t a “particularly important channel of distribution.” Complete Register trial coverage
John Lettice, 12 Jan 1999
The Register breaking news

UFOs claim Web CEO's scalp

The founder of Internet consultancy USWeb resigned from the company on Friday, citing his belief in UFOs. But yesterday Joe Firmage was claiming he’d been misquoted by the San Francisco Chronicle, which had run a piece where he described his very own close encounter.
John Lettice, 12 Jan 1999
The Register breaking news

Microsoft to roll out defence today

When Microsoft opens its defence later today, John Warden will almost certainly start with an artillery bombardment by introducing a Motion for dismissal. And unless there is an unexpected eclipse of the Sun, Judge Jackson will deny it. There will then be the usual communique from Microsoft, after which the sniping will resume. This is not the first time that Microsoft has asked the court to let it off the hook. Judge Jackson denied a Motion for summary judgement in September, before the trial started, in a 16-page decision that concluded that there were "many material issues of fact genuinely in dispute". It was in this decision that the judge said that Microsoft did not have to distribute Netscape's browser along with Windows, which was a pretty potty request by the DoJ anyway. Microsoft also presented a silly argument -- that Windows could not be subject to US state antitrust law because Microsoft had a federal trademark. The judge threw that one out too, saying that "copyright does not give its holder immunity from the laws of general applicability, including the antitrust laws". As an amusing aside, the last time we checked Microsoft's UK copyright application for Windows -- a few weeks ago -- it hadn't been granted. The next development in this game of legal snakes and ladders was when Microsoft held a press conference in Washington in December and handed out a document it entitled A case of trial in error, which sounded more like a libretto from Gilbert & Sullivan than what it set out to be. Microsoft falls back all the time on its 23 June 'win' in the Court of Appeals to back its case for not having done anything wrong, but this misrepresents what the appellate court actually said in its 2-1 decision. Microsoft was allowed to integrate IE in Windows if "there is a plausible claim that it brings some advantage". Judge Jackson noted that the appellate court also said that its view of the Windows integration was "tentative". So far, the DoJ has established quite well that there are no discernable advantages of integration, and Judge Jackson was evidently impressed with evidence from Avie Tevanian of Apple, who was asked directly by the judge if, from a technological perspective as opposed to a marketing one, there was any benefit to integration of the browser. Tevanian responded: "We determined that it caused confusion for some users in some cases. We determined it caused an extra overhead when it wasn't necessary. And there were often simpler ways to accomplish things." Judge Jackson then repeated back to Tevanian: "You do not think it was a benefit to the ultimate user?" Tevanian replied: "That's right." ® Complete Register trial coverage
Graham Lea, 12 Jan 1999
The Register breaking news

ALi licenses Rambus technology

Acer Labs Inc (Ali) has licensed 800MHz memory interface technology from Rambus, and will use it to produce chipset products for consumer PCs in 1999. According to ALi president Dr Chin Wu the company sees Rambus technology as a key element in its product strategy, and as "a primary interface to DRAM for PC main memory controllers for 1999 and beyond." With a performance of up to 1.6 gigabits per second of peak bandwidth from a single device, Rambus DRAM devices use conventional cores, fab techniques and memory modules. It’s therefore relatively simple for companies to move production over from conventional DRAM-based systems. "ALi’s record of being able to quickly ramp leading-edge PC chipsets in high volume will help accelerate the proliferation of Rambus memory throughout the PC market," commented David Mooring, VP and general manager of the Rambus PC product division. ®
Team Register, 12 Jan 1999
The Register breaking news

Resellers hit by legal action

Info’Products UK and Compel are being sued for unfair dismissal by approximately 60 former employees who were made redundant last week. Around one third of the 150 Info’Products staff laid off since Compel agreed to buy the company will today present a joint claim against the two resellers to a solicitor. The redundancies came less than a month after Compel agreed to buy Info’Products, and only days before the official hand over. The legal claims are being co-ordinated by George Fodor, who was Info’Products legal manager until he was made redundant last week. Fodor told The Register he is claiming that the ex-employees are entitled to 90 days pay – instead of the 30 days offered – regardless of how long they had been at the company. Those with over two years’ employment at the Chelmsford-based reseller also received one week per year worked. Today’s move could lead to the solicitor issuing Protective Awards against Info’Products and Compel – regarding the extra 60 days salary owed. The two parties are expected to receive legal papers by the end of next week. The group also cites contraventions to TUPE (Transfer of Undertakings [Protection of Employment] regulations), regarding the transfer of Info’Products’s staff contracts in the take-over. According to Fodor, Compel acquired the staff of Info’Products in the eyes of the law when it agreed to acquire the company itself. It was not, therefore, permitted to lay-off employees in the interim period between agreement to buy and the finalisation of the deal. UK employment law states that if more than 100 employees at one "establishment" are made redundant then those staff are entitled not only to a longer consultancy period, but also to a minimum 90 days salary. There is, however, no concrete definition of the term "establishment" - which may prove vital to the outcome of the case. An independent legal source told The Register that there are examples of case law where "establishment" had been defined as a single company with a number of separate offices. This will come as bad news to Compel, who may be hoping to prove that laying off Info’Products staff from a number of different sites will exempt it from these regulations. Over half the group that had worked for over two years at the Chelmsford-based reseller may then go on to pursue these other grievances in separate court cases. Fodor, who was at Info’Products for almost five years, said: "(The Compel takeover was) handled appallingly, and in my personal opinion, was done without due regard for the employees." Mark Howling, Compel UK managing director, said this afternoon he was not aware of the lawsuit. He said the redundancies were a joint decision, adding: "Once we agreed to acquire Info’Products, we worked with them on the number of redundancies." Howling said Compel had sought professional legal advice and believed the process was fair and lawful. "We’ve been through a fair and proper procedure. I’m surprised they’re doing this and that they think they can win." In response to Fodor’s statement about the takeover, he commented: "You do get employees who feel emotional and unhappy. But I think, for the majority of staff, we’ve been considerate. It was fair and fast. We’ll just have to let the process take it’s course. But they don’t have a case they will win." ®
Linda Harrison, 12 Jan 1999
The Register breaking news

Semiconductor firm launches MP3 chip-set for set-tops

US-based ESS Technology has released a chip-set designed to allow set-top boxes and hi-fi separates to play back digital music encoded in the MP3 format. The ES4280 chip-set can play not only downloaded MP3 files but also MP3s recorded on a CD-ROM. It also supports other digital audio formats, including Real Audio and Microsoft's Windows Media Player format. The company said it had chosen to support MP3 because it had become the de facto standard format for digital music distribution. ®
Tony Smith, 12 Jan 1999
The Register breaking news

Speculation mounts over Lucent and Ascend

Lucent Technologies, the telecommunications equipment maker, yesterday moved into the communications software arena amid mounting speculation of a $16 billion merger with Ascend Communications. Lucent has already splashed out $1.48 billion to acquire telephone billing software manufacturer Kenan. But rumours were still rife that a far more consequential deal could be on the cards with US data networking group Ascend. Today’s Financial Times reported the long-rumoured Ascend deal should be announced within days. Valued at around $151.6 billion, Lucent could pay more than $80 a share for stock in Ascend – which has a market value of about $15.5 billion. The partnership would challenge networking giant, and top Lucent rival, Cisco. Buying Ascend would fill the networking gap in Lucent’s product portfolio. It would gain access to Ascend technology, backed up by Lucent’s weighty financial resources and large sales force. Lucent, spun-off from AT&T in 1996, was said to have been working closely with Ascend for months. Industry sources said that Lucent was waiting for its stock to hit the right level before it could offer Ascend a worthwhile deal. ®
Linda Harrison, 12 Jan 1999
The Register breaking news

Leading UK reseller to promote different approach to ecommerce

Computacenter is to start providing a new range of electronic commerce products and services as part of a partnership with California-based InterTrust Technologies. The technology in question addresses the need for the secure distribution and control of content on the Internet, allowing users to protect intellectual property from piracy. It also enables them to track potential users and buyers of almost anything -- from documents and pictures to music -- in a safe environment. As InterTrust's first UK-based integration partner, Computacenter confirmed it was already working with a "global" company using InterTrust's MetaTrust technology to develop a remote Web site monitoring service. Simon Scott, Computacenter's general manager for eBusiness refused to say who the deal was with but confirmed that there would be further announcements throughout the year as more customers adopted the technology. According to Scott, the partnership reflects the increasing importance of information as a key business asset. What's more, he believes the technology involved could have far-reaching consequences for the commercial development of the Web if it succeeds in "creating a single e-commerce platform". In the first arrangement of its kind for Computacenter, the company has licensed the rights to use InterTrust's products and technologies. And in a simultaneous announcement, InterTrust said that its Commerce 1.1, and accompanying Enterprise Edition 1.1, applications were now available through its MetaTrust partners. Last month Computacenter announced it was conducting more than £2 million of business on-line each day. ®
Tim Richardson, 12 Jan 1999
The Register breaking news

Love is in the air

The day that all single people dread is fast approaching, and Interflora will use software to ensure that all those Valentine’s roses arrive safely. So, if you don’t get blooms from the one you love, it’s no good pretending they must have got lost in the post. Interflora’s 2,500 UK florists are taking on QuickAddress Names from QAS Systems. This crafty device uses a postcode to generate a complete address and list of residents as shown on the Electoral Role. The flower specialists say bunches will not go astray thanks to this technology confirming delivery details. The normally hard-hearted Team Register melted when Andrew Little, QAS Systems MD, made the following romantic speech. "When love is in the air, it is nice to know that something as impersonal as software can play its part in engendering the spirit of romance. I welcome anything that helps Interflora work their magic even more effectively," he said. (Good grief,Ed). 14 February is the busiest day of the year for many florists. Seven million red roses are given by British would-be Romeos on that fateful day, with an estimated 50 million given worldwide. All Valentine’s day presents will be gladly received by: The Register, Maddox Street, London W1 ®
Linda Harrison, 12 Jan 1999
The Register breaking news

Mistaken missive gets man sacked at Bible society

A man who was accused of sexual harassment, after a colleague used his email address to send a saucy message to a female executive at a Bible society, has won his case for breach of contract. But an industrial tribunal in Bristol turned down Roy Johnson's claim for sexual harassment after computer technician Richard Kirby admitted sending the email to Lesley Walker -- which simply read "Sexy". Johnson said he received a written warning and was hounded out of his job even though Kirby later admitted he sent the email. Johnson was awarded £3,500 after losing his £20,000 a year job with the British and Foreign Bible Society in Swindon. News of the incident coincides with a warning from IT consultants Commslogic that companies should be more aware of the risks posed by email. In particular, Commslogic believes companies are leaving themselves exposed to libel and should implement a code of conduct to help combat the problem. "Companies must be able to show that they have taken reasonable care to prevent their employees using the email system to commit libellous, offensive, racist or defamatory acts," said Richard Hutton, a senior consultant at Commslogic. Hutton said all companies should establish a clear messaging policy setting out the rules of use for a company's email system. Under UK law, an employer can be held liable for an employee's emails if the defamatory act was committed in the course of employment, even though the act was unauthorised by an employer. ®
Tim Richardson, 12 Jan 1999
The Register breaking news

Lotto Co to raise £12.5m for Web game promo

A Web-based lottery company hoping to make at least 2,000 dollar millionaires come the millennium has confirmed that it has already secured £1 million in funding and will have a further £1.5 million in place by the end of the month. OFEX-listed Electronic Fundraising Company plc (EFC) is to use the cash to drive a major marketing campaign to publicise the lottery in the run-up to the millennium. A further £10 million will also need to be raised in the coming months, the company said. London-based EFC has obtained a licence from Liechtenstein to operate the Millions2000 lottery across the Internet. Veteran broadcaster Sir David Frost is helping to promote the venture. If the company can sell all 465 million tickets not only will it create 2,000 millionaires -- and one jackpot winner of $50million -- it will also raise $1.5 billion for charity. It will also be the highest value draw ever. Tickets cost just $10 and the chances of winning are 2.32 million to one. So far, EFC has just sold one block of tickets, at least guaranteeing one millionaire come Jan 1 2000. It needs to sell another 11 to break even but executive chairman David Vanrenen believes it will do this easily, maintaining that there is an "enormous appetite for this type of gaming." Despite the high-tech nature of the Web lottery, winning numbers will not be drawn by a computer. Instead, the company will be relying on good old fashioned balls. ®
Tim Richardson, 12 Jan 1999
The Register breaking news

Sun sets sights on telecomms

Sun Microsystems today targeted the telecommunications market by unveiling a Java-enabled network management framework and server in both the US and UK. The Solstice Enterprise Manager 3.0 and Netra ft1800 server were launched in a cross-Atlantic operation – in New York and Bagshot, UK. The Solstice includes several Java tools, including the graphical installation wizard, Development Environment, and Java Agent Management. It also includes an integrated Java Dynamic Management Kit (JDMK), which simplifies development gaps between Java and existing network standards. The Netra 1800 offers telecom-equipment companies the necessary gear to build fail-safe phone systems to handle the emergency services and directory authentication services. Prices start at $160,000, or Eur 194,500, but an average system will cost several hundreds of thousands of dollars. Sun’s products, aimed at the fast growing telecommunications arena, will go head-to-head with high-priced machines from Compaq’s Tandem division. Sun claimed its products cost as much as 50 per cent less than its competitors, and estimated the market for telcom-related equipment to top $110 billion a year. ®
Linda Harrison, 12 Jan 1999
The Register breaking news

Sun, IBM lead telecoms Java alliance

Sun, IBM, Bellcore and Trillium Digital Systems have teamed up to develop an implementation of Java for the telecoms business, JAIN, or Java in Advanced Intelligent Networks. JAIN is a telecoms industry framework for combining Web and intelligent network (IN) technologies, and is based on Sun's JavaBeans architecture. Sun intends to work with IBM and Bellcore, an IN developer, to produce JAIN interfaces for IN that are independent of underlying network infrastructure. Bellcore and Trillium will define JAIN standards for Signalling System 7 software protocol stacks. The first JAIN specifications will be issued for review later this year. ®
John Lettice, 12 Jan 1999
The Register breaking news

MS starts network counterattack with BackOffice 4.5 beta

Microsoft has begun the counter-attack against its server rivals with the release of the beta of BackOffice Server 4.5, which addresses a range of weaknesses Novell and the Unix vendors have been exploiting in the absence of Windows 2000. Win 2K may not be with us for a while yet, but BackOffice Server 4.5 is due in the first half, and the beta features give us a clear idea of how Redmond intends to hold the line. The new version will include SQL Server 7.0 and Systems Management Server 2.0, and is intended to speed up and simplify the deployment and management of servers - for example, the company says that while previous versions involve going through up to 100 screens during deployment, with 4.5 the number will be down to 10-20. The SMS component - which is critical to Microsoft's Y2K strategy for business - helps in the detection of current configuration and in recommending component and service pack upgrades. BackOffice Server 4.5 also speeds up the setup process by providing default settings for common parameters, and allows managers to generate setup scripts automatically once they've established a standard server configuration. Historically Microsoft has been slow to introduce automation procedures for installation, and has therefore faced an uphill task in selling larger numbers of servers that need to be individually configured. Fewer, more easily managed platforms from rivals have often seemed a better bet, while NetWare 5's ability to manage from a single console and roll out updates to clients from there has been a major achilles heel for Microsoft. Aside from scripts, version 4.5 also includes a deployment wizard that allows IT managers to replicate a single server script across hundreds of servers automatically, updating machine names and parameter settings as it goes. It also includes a branch office setup system which will automatically default to the right settings for a remote location. Another critical feature for Microsoft is the addition of a management console which provides a single point of administration for common tasks, plus four other consoles optimised for entry-level helpdesk technicians, and Web, branch office, and central IT administrators. Improvements on the application server front are designed to make it easier to roll out and manage WinDNA architecture, including application server components such as a Web, email, collaboration, database and search server. This little lot may not add up to Win 2K, but it's certainly pointed in that direction. ®
John Lettice, 12 Jan 1999
The Register breaking news

Censors strike MS testimony

The written deposition of Microsoft's first witness, Richard Schmalensee of MIT, makes copious use of Microsoft-confidential data. But because it is confidential data, some of it makes weird reading. In various passages any information likely to vaguely useful to the hapless reader attempting to understand what the good (we use the term advisedly, see below*) academic is on about is defeat by a black blob covering the relevant number. We're pretty sure we haven't got the lot, but what follows is a provisional Register summation of the excisions made by the Redmond censors. If enough of you in the know tip us off with the real numbers we'll prepare a patch for Schmalensee's testimony, allowing readers to substitute the real figures for the blanks. Here it comes: "As I showed in Section VIII, only [blank] percent of AOL's new subscribers in 1998 came through the OLS Folder [i.e. via Windows referalls]. The cost of obtaining those subscribers through agreements with OEMs who place AOL icons on the Windows desktop would have been about [blank] in 1998, approximately [blank] percent of AOL's marketing budget that year. That is an infinitesimal amount of money relative to the potential gains from selling a popular software platform. It amounts to [blank] percent of Microsoft's estimated… As I showed in Section VIII, the space provided by Microsoft was worth no more than [blank] in 1998-less than [blank] percent of AOL's marketing budget that year-and probably a good deal less. "The combined 1994 prices of MS-DOS, Windows 3.1, PC Tools for Windows, and Internet Chamelion [sic] amounted to about $261, or $287 in today's dollars-again compared with about [blank] for Windows 95/98, which provides… "a consumer who bought an Intel-compatible computer today would probably have obtained Windows 95/98, for which the OEM would have paid Microsoft about [blank]. Windows 98 also provides features that go far beyond those available in 1989 from a… "Microsoft charges OEMs an average of about [blank] for a copy for Windows 95/98. That price is less than 3 percent of the roughly [blank] that it costs to buy an average Intel-compatible computer system. Under plausible assumptions about the demand for personal computers, a firm with monopoly power over the operating system would charge at least 16 times-over [blank] -what Microsoft charges. The fact that Microsoft charges less than one-sixteenth of the monopolistic price reflects the fact that it faces significant competition from numerous sources. Indeed, Microsoft acts as if Windows-equipped PCs face a demand schedule with an elasticity of at least [blank] -a very high elasticity of demand and one that indicates that Microsoft acts as if it faces intense competition for the operating system category. (An elasticity of [blank] means that a 1 percent increase in the price of a Windows-equipped PC causes demand to fall by [blank] percent.)" * Richard Schmalensee has been a paid consultant for Microsoft since 1992 (which we should concede he states in his introduction). His deposition runs to 328 pages, and just shy of 90,000 words. If we'd produced something like that we'd have charged something in the region of $40-50,000, but hey, we're just cheap Eurohacks. Not a lot of change out of half a mill, we'd reckon. ® Complete Register trial coverage
John Lettice, 12 Jan 1999
The Register breaking news

MS cites 960 per cent Linux growth rate in defence

Linux rears its head again as Microsoft's Exhibit A in the argument as to why there's plenty competition in the OS business, really. Richard Schmalensee's testimony cites it on numerous occasions, points to an annual growth rate of 960 per cent since 1991, and says Linux in 1998 had 7.5 million users. But hold hard there, folks. 960 per cent annual growth rate has a pretty spectacular impact on that 7.5 per cent. With our faulty maths (you Linux guys out there are good at this stuff, mail us) we'd figure that should take Linux past the 50 million mark within three years. As he says, "The growth of Linux exemplifies the exceedingly low barriers to entry in the software business. Linux is a version of UNIX that was written by Linus Torvalds while he was a college student in Finland. He posted an initial version of the source code on an Internet site in 1991 and invited people to develop the program further. Many programmers accepted his invitation. As Forbes Magazine noted, 'Within a year Torvalds' software had taken on a life of its own.'" One does wonder where on earth Microsoft's case would have been if Linus had immersed himself in the more usual undergraduate activities of sex and drugs instead: "Linux provides a striking example of how the chicken-and-egg problem for operating systems is solved in practice and how the existence of this problem does not bar competitive entry into operating systems. Linux developed a base of dedicated, technically sophisticated users around the world. These users provided demand for applications. The development of additional applications is making Linux a viable alternative for a wider range of users." That is, he's pitching Linux as a viable threat to MS. MS doesn't necessarily truly believe this, of course, but it's important to talk it up right now. Here comes the advertising: "Corel's WordPerfect 7 is available for Linux, and Corel just released WordPerfect 8 for Linux and is developing a suite of business applications for Linux. In addition, IBM, Oracle, Netscape, and Informix have announced that they are going to make some of their software applications available for the Linux operating system." And there's more (of course): "[Linux] is widely touted as a serious threat to Windows NT in server applications. InfoWorld reported recently that Linux is becoming increasingly popular at small- to mid-sized companies. Computing Canada reported that 'Linux as a serious, commercial alternative to [Windows] NT could happen quickly. Lotus already has UNIX ports of its Notes client and server software.' Computer Reseller News reported that 'Many observers see Linux as a viable alternative to the Windows operating system.'" ® Complete Register trial coverage
John Lettice, 12 Jan 1999