13th > January > 1999 Archive

The Register breaking news

Judge reserves rights to unseal MS pricing data

The transcript of Monday's trial session shows that just 33 pages of testimony were heard in camera - not, in fact, very much. It appears that the judge will be studying the exhibits later, as it was hardly possible to consider each one in the time in closed session. A consortium of media put the argument that as little as possible about Microsoft's pricing should be held in closed court, because of the first amendment right of access to open courtrooms and to trial materials. It was recognised that the Court could not sensibly determine on a document by document basis what should be kept under seal. Apparently around 20 charts were involved. An attorney for Dell pleaded that Microsoft's royalty and pricing information for Dell should remain confidential. Were it disclosed, it "would cause significant competitive injury". Dell's claim was that "it has a competitive advantage now because of its unique build-to-order model. "Dell negotiated very hard and intensely with Microsoft to come to an agreement on the terms that Dell believes is in its best interest. Part of that involves the royalty-and-pricing terms. That is highly confidential information. It's confidential by contract with Microsoft. . . . disclosure of that to Dell's competitors and the public would cause serious competitive injury." Compaq was next to make its plea to keep seven internal documents secret: "Compaq, like Dell, filed a motion in October seeking to have certain select documents placed under seal and received only in camera. We have a slight twist on our presentation, however, your Honor. Some of the documents we wish kept under seal are internal Compaq negotiating strategies for how to get the best deal with Microsoft. "Part of our interest here, while we view Microsoft as an important strategic partner, is we also don't want them to know how we decide to form a negotiating strategy with them. These are documents that are current, late '97 throughout late 1998. In addition, our pricing information, we submit, is proprietary and, more important, what Compaq has agreed to do in the form of marketing initiatives and joint-venture activities with Microsoft to earn any price concessions which we may be able to obtain through negotiation." John Warden for Microsoft said that if the exhibits were made public and labelled "Company A", Company B", etc it would still be possible to identify the companies. David Boies for the DoJ found himself in agreement with Warden. The reason was probably that the DoJ did not wish the indusry to become hostile to the DoJ for revealing its secrets. Stephen Houck for the 19 states and DC asked Judge Jackson to review the transcript and determine what should remain sealed. The judge then closed the court to look at the proposed exhibits and to hear about the intended testimony. He then announced in open court that "I have, on the basis of the representations made to me, or the proffer made to me of the government's evidence and arguments of counsel on the matter, determined that the testimony that is proposed that Dr Fisher give and the exhibits he intends to rely on are, indeed, confidential, commercial information, the disclosure of which would present danger of a clearly defined, serious commercial injury to both the defendant and non-party movants for a protective order. Therefore, I will be taking Dr Fisher's testimony, as to the specifics of these exhibits, in camera. I also have determined that I am going to follow Mr Houck's suggestion and, at the conclusion of the testimony, when furnished a transcript of the testimony taken in closed session, cause a redaction to be made and release as much of it on the public record as I deem can be done at this time. I also want to make clear for all parties that the sealing order will remain in effect for the duration of this case, but does not encompass, ultimately, any decision that I render, to the extent that I find that that information that will be taken under seal is a material part of any decision that I render and must be released on the public record. "What I am doing is reserving a right to revisit the issue of the sealing of this information at the conclusion of the case." The fact that the judge had considered unsealing the exhibits at the end of the case, when he had not been requested to do so, tends to suggest that he favours the DoJ at present, and that unsealing could be one of a number of remedies against Microsoft. Microsoft is claiming that the DoJ was wrong about Microsoft's pricing of operating systems and has posted a document entitled "Microsoft pricing fact sheet" on its Web site. Microsoft says that the price of each of Microsoft's operating systems products has remained essentially flat since 1990. Microsoft does not explain how it derives the prices it quotes - for example MS-DOS "changed [i.e. increased] by a mere 73 cents between 1991 and 1996", and that for the Microsoft-DOS and Windows 3.x combination, the change was "by only 52 cents between 1991 and 1996". ® Complete Register trial coverage
The Register breaking news

MS pricing strategy exposed – cheap when there's competition, but…

We thought we would take a trip along memory lane to show that the truth is somewhat different, and that Microsoft uses price competition to freeze out competitors to its monopoly. In 1981-1982, MS-DOS was priced at about $2-$5, to establish market share. By 1988, the price had become $25-$28, in contrast to price trends for similar products such as ROM BIOS which remained less than $5 and decreased in price, because there were several suppliers. When Digital Research's DR-DOS entered the market, MS-DOS prices dropped to $3-$18 where Microsoft was competing with DR-DOS. In the case of operating system software, competition does not keep prices at reasonable levels. Microsoft's pricing policy is directed at eliminating competitors by predatory pricing, and then subsequently to abuse its dominant position by increasing prices. Microsoft is prepared to reduce its prices to a level that is below cost, in order to compete with any software developer. One example was seen in Microsoft's un-hooking practices, to persuade OEMs to stop selling PCs with DR-DOS. Price was not an obstacle when it came to unhooking an OEM who had contracted to use DR-DOS. Rich Kalgard quoted Gates in Forbes on 28 February 1994: "We have such good alert systems that if there is an OEM design that we're going to lose, even a hint we're going to lose it. . . Say it's some PC guy in Mexico or Indonesia. Joachim Kempin [senior vice President, OEM sales] will have emailed an alert to me like that! His guys are trained. There's only one deep fatal sin, and that's not to say that you're losing an account. It's OK to lose it, as long as you spotted that you're going to lose it. [Pause] Actually it's not OK to lose it." In 1991, Microsoft offered DR-DOS customers in the Asian market MS-DOS and Windows (as boxed products) for $6. This price included import tax, delivery, the manufacturing cost of the discs, documentation, and the sales costs. The US suggested retail price at the time was $199. DR-DOS customers wishing to take advantage of these prices had to make a public announcement that they had switched to MS-DOS in response to an "industry trend", as did the Taiwanese OEM Unitron: "Unitron Inc, a company actively involved in designing and manufacturing PCs, has signed a contract with Microsoft Taiwan to bundle MS-DOS and MS Windows software in their PCs shipped to the Euro/American market. The contract ceremony was held by General Manager Yang of Microsoft Taiwan and Vice General Manager Chang of Unitron Inc. According to Mr Chang, Unitron used to be a customer of DR-DOS. Now, in order to go with the industry trend, Unitron has decided to use MS-DOS and Windows on an enterprise-wide basis." [PC Week Taiwan, 3 August 1992, translated from Mandarin]. In late 1992, Microsoft was offering OEMs an MS-DOS 5.0/Windows 3.1/Windows for Workgroups bundle for as little as $8 per unit [Infoworld, 30 November 1992], providing the OEM agreed to CPU licensing terms for all three products, which at the time was seen as an anti-competitive pricing action against a DR-DOS + NetWare Lite bundle from Novell. Microsoft also says "it did not seek any additional royalty in connection with its release of Windows 98" but again the truth is different. Professor Fisher has seen Microsoft's secret prices and David Boies was able to sneak through some interesting responses in his redirect examination. Fisher said: "The [OEM] price of Windows 95 in the third quarter of 1998 rose, and it rose to be essentially the same as the price for Windows 98. . . . If this were a competitive market, and Microsoft didn't have some power over price, then when the better product came out, you would expect to see the price of the older product at least stay the same and, quite possibly, go down, but it didn't. It went up." Fisher did not twig as to why this happened: Microsoft of course wanted OEMs to move to Windows 98 as quickly as possible so that users would have the welded-in IE and not the Windows 95 loosely-attached version of IE. Microsoft's claims using, presumably, averages, do not tell the real story: the truth is that Microsoft uses pricing as a predatory weapon. Microsoft's pricing document claims that the DoJ is comparing apples and oranges when it says that Microsoft has been raising prices, but Microsoft's own claims are a lemon. ® Complete Register trial coverage
The Register breaking news

Squaddies to make up IT skills shortfall

GIs who have had enough of razor sharp haircuts and square bashing are being offered the chance to retrain for a new career in IT by networking giant Cisco Systems. Instead of marching off into civvy street to fend for themselves, Cisco is offering high-tech training to demob-happy military personnel leaving the services to prepare them for jobs in the Internet industry. The cornerstone of this initiative is Cisco's Networking Academies programme, which already teaches IT skills to students at over 1,000 high schools and community colleges throughout the US. Launched in association with the US government, it's hoped the initiative will help meet the demand for skilled IT staff. A spokeswoman for Cisco in the UK said she thought it was a great idea. "If it proves successful in the US it's possible a similar scheme could be introduced in the UK," she said. In the UK, 25,000 personnel leave the armed forces each year. A spokesman for the Ministry of Defence said that it already had a comprehensive resettlement scheme in place to help servicemen and women retrain for life outside the armed forces. ®
The Register breaking news

Top chip companies took major hit in 98

Only six of the top 20 semiconductor companies showed revenue growth in 1998, according to Dataquest’s preliminary rankings for the year. Intel was top dog with revenues of $22.6 billion, but even The Mighty Satan could only achieve 4.3 per cent year-on-year growth. The other winners were Philips, Siemens and STMicroelectronics, in positions 8, 9 and 10 respectively, Lucent (14) and AMD (16). Siemens actually managed to turn in the top revenue growth, of 12.4 per cent, suggesting that taking harsh decisions works, and producing revenues of $3.87 billion, neck and neck with Fujitsu, which was one of the major casualties. The worst performers, as might be expected, were largely Far Eastern. Hitachi clocked up a stonking drop of 26.2 per cent, but NatSemi came next with -19.3 per cent, followed by NEC (-19.1 per cent), Samsung (-18.9 per cent), TI (-18.4 per cent, but with a special allowance for hiving-off its DRAM business to the luckless Acer), Toshiba (-16.5 per cent) and Fujitsu (-16.4 per cent). The rankings in the top 20 overall haven’t changed significantly because of the failing fortunes of many of the players, but if the trends continue this year they could start to. Samsung for example is currently in the number 6 slot with $4.75 billion revenues, and Philips and STMicro aren’t that far behind with $4.5 billion and $4.02 billion. ®
The Register breaking news

Motorola licenses Citrix for wireless apps

Motorola is to embed Citrix’s ICA client in its wireless handsets and smartphones following a licence agreement with the thin client company. Initially Motorola intends to use ICA in order to give users of its iDEN wireless system access to Win32 apps, but ICA is likely to be built into a wide range of future products, including cellular ones. Motorola’s iDEN is a two-way wireless system which the company sells in many parts of the world, but not European ones. The company offers iDEN handsets that combine cellular, wireless and pager in the one unit, so the addition of Citrix adds yet another feature to these ‘do everything’ products. In the fairly near future Motorola will be offering ICA clients that reside on iDEN users’ notebooks, following this up with versions embedded in the handset later, and then moving on to more strictly cellular-based ICA implementations. ®
The Register breaking news

Lucent and Ascend tie the knot at last

Lucent Technologies today ended months of speculation and agreed to buy Ascend Communications in a $20 billion stock deal, increasing competition in the communications networking arena. The phone equipment maker will exchange 0.825 of its shares for each Ascend share. That values networking manufacturer Ascend slightly higher than expected at $89 a share based on Lucent’s close yesterday. The acquisition will turn up the heat on Cisco Systems, the networking giant. Now that Lucent has netted Alameda, California-based Ascend’s powerful computer switches, it can compete in the market for Internet equipment sold to phone companies. Lucent chairman and CEO, Rich McGinn, said: "The merger positions Lucent to be a clear leader in communications networking and will have a significant impact on enhancing shareholder value." Ascend chief executive Mory Ejabat will stay with the company for "a transition period", according to Lucent. ®
The Register breaking news

AMD K7 set to ship on 23 June

AMD has pegged 23 June as the release date for its K7 processor, OEM sources in US have revealed. That date, if correct, will mean the chip will just meet AMD's original first half of 1999 release schedule. The news, reported this week on US newswire TechWeb, confirms what The Register learned back in October 1998. The report quotes "industry sources" who claim the K7 will ship with either 512K or 1MB of off-chip L2 cache. That also suggest AMD has yet to reveal the speeds the new processor will ship at. However, when we spoke to Dirk Meyer, AMD's head of engineering for K7 (see AMD K7 snatches at Intel high-end crown), he said K7 was designed for speeds of 500MHz and up. In contrast, Intel's Pentium III will initially ship at 450MHz and 500MHz. Meyer also confirmed K7 will support up to 8MB of L2 cache, initially separate from the chip, but possibly brought on to the die in later versions to match the approach the company is taking with the forthcoming K6-3. Interestingly, TechWeb's sources state K7 will ultimately be made available in a "socket" version to offer compatibility with cheaper PCs. That contrasts with Meyer's statements that Socket 7 would be adequately supported by K6, suggesting K7 would only ship with a Slot A interface. If the sources are correct, it would appear AMD is moving away from its earlier strategy of pushing K7 at the high end and the K6 family at the low end in favour of an across the board push with K7. ®
The Register breaking news

MS can control prices because it's ‘the only game in town’ – expert

Professor Franklin Fisher did a very much better job yesterday during the redirect examination by David Boies than under cross-examination, and made some effective, substantive points. He had apparently spent some 330 hours preparing for the case (for a fee of around $165,000 at his rates). To this, he'll be able to add the time he has spent on the stand, which will amount to six days, as his redirect examination was not finished on Tuesday as expected. David Boies asked him to give the bases for his conclusion that Microsoft had monopoly power in PC operating systems. Fisher replied that when OEMs were asked what would they do if Microsoft raised its prices: "These are the people who, when asked if Microsoft were to raise its price, where would they go? And the answer was no, no, no, they would stay with Windows. "There isn't any other choice. That's what the market demands. One of them is, as I already testified, write a letter to Microsoft that says, 'if you were not basically'--in substance--'if you were not the only game in town, we certainly wouldn't deal with you,' but they are the only game in town." Fisher also drew attention to market share data: "The notion that operating systems such as Linux or Beos or OS/2 or even Apple are really going to succeed in taking away much, if any, of the business from Microsoft Windows, is a joke. Of course it's not true." It was reassuring to hear being said what everyone in the industry already knows to be true. Fisher also noted that the substantial price discrimination in OS prices to OEMs "is an indicator of some market power". He continued: "I have looked at what's happened to Microsoft's operating system price over time, and it isn't falling, and I don't believe it's falling even on a quality-corrected basis. And for that matter, it isn't even constant. It's rising, and Microsoft appears to have set its price without regard, not for competition." Boies asked Fisher about the significance of Microsoft's price discrimination. He replied: "if Microsoft is... charging remunerative price to the people to whom it's charging a low price, then, presumably, it is the case that it's charging a more than remunerative price to the people to whom it is charging the high price. That requires a certain amount of power. Microsoft is obviously not particularly worried that the people to whom it charges a high price are going to go off and buy or license some other operating system. "Secondly, I think the price discrimination in pricing to the OEM's is part of a system in which Microsoft does two things. One, it exercises its monopoly power in ways other than simply charging a single high price for its operating system. And second, it rewards various of the OEMs, as it rewards other people as well, for co-operation in a system which tends to reinforce both Microsoft's later revenues and... the barriers to entry into competing with Microsoft and its OS monopoly." Boies raised the applications barrier to competition, but both seemed unaware that any truly Windows-competitive OS would have to be able to use Windows programmes. That in turn would require full disclosure of present and future Windows APIs - something that the court may yet decide to order as a remedy. So far as anti-competitive conduct was concerned, Fisher pointed to Microsoft's conduct not being profit-maximising, but designed to hamper or destroy competition. In addition, Microsoft paid people money or compensation in kind to use IE. Microsoft efforts to thwart cross-platform Java was described as "kill Java with polluted Java, subversion is our best weapon", Fisher said. Furthermore, Microsoft went out of its way to persuade other companies not to be allied with Java or Netscape. When Boies brought up one exhibit, Lacovara objected, saying that Boies had covered the same point the previous Thursday. Boies denied it, but in fact Lacovara was right although it gave Boies the chance to repeat a particularly damaging extract: "Intel to stop helping Sun create Java multimedia API's, especially ones that run well (i.e. native implementations) on Windows." Fisher's telling comment was that "It's got to be in Microsoft's pro-competitive interest to have things run well on Windows. "It's the improvement of a complement. That's got to increase, if anything, increase the demand for Windows. And what goes on here is that Microsoft wishes Intel to explicitly stop that happening." Boies asked if it was necessary to eliminate Netscape entirely as a competitor to preserve Microsoft's monopoly power. Fisher replied that "This is not a case about the destruction of Netscape. This isn't a suit being brought by Netscape. This is a case about the destruction of competition. And in this case, we are talking about a situation in which that destruction of competition takes the form of preventing a threat to Microsoft's operating system monopoly, and the answer to your question is as I indicated: that does not require the complete destruction of Netscape." Fisher produced a better summary of the significance of the Adknowledge data than under cross-examination, and probably removed any lingering doubts in the judge's mind as a result. A telling point was that Microsoft had used exactly the same methodology on another data set. The day ended with a discussion of what Fisher described as a well-recognised phenomenon: "raising rival's costs" which was exactly what Microsoft had been doing with Netscape by effectively foreclosing the two most efficient ways of distributing its browser: through OEMs and ISPs. ® Complete Register trial coverage
The Register breaking news

French users call second Net boycott

French Internet users are planning a second Net boycott at the end of this month as part of their ongoing attempt to force France Telecom to cut dial-up call charges. User group the Association of Unhappy Internauts first called for a boycott of the Net on 13 December. That strike went ahead and was hailed a success by the group in terms of user support, if not through France Telecom (FT) cutting prices. The Association claimed 50-90 per cent of French Net users followed its call -- FT said the figure was more like ten per cent. The Association wants FT to introduce a flat FF200 ($36) fee for unlimited local calls. FT, however, said that it prefers to offer discounts for heavy users. However, after the strike FT did introduce cuts to the charges it makes to other telecoms companies who offer competing services across its network. The second strike has been set for 31 January. ®
The Register breaking news

Dixons sees sales and profit grow

Dixons expects to create around 2,000 new jobs in the wake of healthy financials for the six months ending 14 November. Pre-tax profit was up five per cent to £80.9 million, up from the previous year’s figure of £77.1 million. The group said its retail sales had gone up by 11 per cent to £1.43 billion, against £1.28 billion for the same period last year. The group’s retail division saw profit slip by five per cent, recording an operating profit of £62.6 million, compared with £65.8 million last year. Dixons’ chairman, Sir Stanley Kalms, said: "Retail sales for the first eight weeks of the second half (of the year) increased by 14 per cent in total and three per cent on a like-for-like basis." ®
The Register breaking news

Yahoo! Q4 results beat Wall Street predictions

Yahoo! yesterday reported a $25.04 million profit on revenues of $76.41 million for Q4 1998. That put the Internet portal's earnings at 21c a share, well ahead of Wall Street's expectations of 16c a share. For the same period last year, Yahoo! recorded revenues of just $26.58 million, and profits of $1.9 million Taking fiscal 1998 as a whole, Yahoo! took in $203.27 million, almost three times the $70.45 million revenues it recorded for 1997. Profits for the year totalled $49.93 million, up from last year's overall loss of $425,000. The company also announced that its base of registered users had reached 35 million individuals. December 1998 also saw Yahoo!'s average daily page view rate reach 167 million, up from 144 million in September. ®
The Register breaking news

MS witness cites Linux advance in OEM channel

The incredible rise of Linux as documented by Microsoft’s highly-paid consultant proceeds apace. In his deposition (Cites 960 per cent Linux growth rate) he rolls his eyes over the OS’ amazing penetration in retail and OEM markets. But don’t get your hopes up. Says Richard Schlamensee, somewhat deeper embedded in his testimony than we could get yesterday, "The Micro Center computer store down the street from my MIT office has a rack devoted to Red Hat’s Linux software, which includes similar features [to a Caldera product which he says competes with NT Small Business Server]." So there you are - Red Hat’s rack of software in the store near Schlamensee’s office turns up as evidence in the antitrust testimony of a Microsoft star witness. But what about that OEM take-off? "OEMs are also selling PCs with Linux pre-installed." This is of course the sort of dynamite stuff that gets Linux readers going everywhere. So what special privileged information does Schmalensee have? Is this finally 'Dell to offer Linux as standard?' Um, no. Tear down to footnote 91, which provides the reference for his statement, and it turns out to be the systems list from linux.org. Fine companies all, but perhaps a tad too small to be trading punches with Wintel’s tier one PC outfits right at the moment. @reg; Complete Register trial coverage
The Register breaking news

ML Integration buys itself a piece of telephony channel

Networking reseller ML Integration has acquired the Woking-based European subsidiary of Computer Communications Specialists (CCS), making it the first CCS reseller in the UK. ML Integration has already moved most of the 20 CCS staff to its division in Reading. Stuart Loins, ML Interactive divisional manager, said the sale made sense as part of CCS’s plans to take on a channel model in the UK. He added that CCS was recruiting more UK-based Vars, especially telephony and voice processing specialists. ML Integration will add CCS’s data and voice integration products to its portfolio of network management and existing voice, data and infrastructure packages. Based in Reading, the firm has 200 employees and offices in Nottingham, Brighton and London. ®
The Register breaking news

AMD releases Mobile K6-2

AMD has at last released a version of its K-2 CPU aimed at the notebook market, as predicted here (see AMD to launch K6-2 for mobile market too). And Toshiba has announced it will use the part in its Satellite 2520 notebook. However, the machine will initially be only be made available to Japanese buyers. Originally, sources close to AMD had predicted Compaq would be the first major notebook supplier to release a Mobile K6-2 based machine. Clocking in at 266, 300 and 333MHz, the Mobile K6-2 supports Socket 7 and Super 7 interfaces -- the latter adds support for a 100MHz frontside bus and AGP graphics. The chips operate at 1.8V and consume less than 8W of power, AMD claimed. They are based on 0.25-micron technology. Prices (in units of 1000) begin at $106 for the 266MHz version, $187 for the 300MHz processor and $299 for the 333MHz part. ®
The Register breaking news

Freeserve to hit one million accounts soon

Whether you love it or loathe it, it's impossible to ignore the Freeserve phenomenon that in just 16 weeks has turned the UK ISP market on its head. Today, Dixons -- the company behind the free Net access service -- said that it now had 900,000 customers, making it the world's fastest-growing ISP. But as quickly as some parts of the country have been covered in a thick covering of overnight snow, so too might Freeserve's dominance thaw and melt away into nothing. In February, telecoms watchdog OFTEL will publish a consultation document on Number Translation Service (NTS) and ask for comments from the industry on whether this should be revised. Officials at OFTEL are keeping mum about any proposals they have but you can guarantee that Freeserve -- and all the other companies involved in providing "free" Net access -- are waiting anxiously for it to come out. Put simply, OFTEL could end up revising the pricing structure that is being used to fund these "free" services. If that happens, and the revision is significant enough, then the charging infrastructure used by free ISPs could collapse -- and so could Freeserve. Either way, every dog must have its day and Freeserve isn't going to let this minor detail spoil the party. Even when it admitted that only 700,000 accounts (of the 900,000) were active, it still makes it the UK's number one service -- something that must make executives at AOL purple with rage. The company added that, on average, 8,000 people joined its service each day -- 40 per cent of whom were new to the Net. And in a thinly veiled attempt to silence critics who maintain that Dixons is making money out of the £1 a minute charge for technical support calls, it claims that it saves consumers on average £150 a year by providing the free service. Now, how can anybody not fail to be impressed by that? ®
The Register breaking news

Iomega gobbles up SyQuest for $9.5 million

Iomega has announced it has agreed to buy "certain assets" of its erstwhile storage rival SyQuest for a cash payment of $9.5 million. The deal will give Iomega SyQuest's technology and intellectual property plus its inventory and US fixed assets. The purchase is conditional on the transfer of Iomega of inventory and equipment from SyQuest's Malaysian subsidiary. However, the agreement does not transfer any of SyQuest's liabilities or material obligations, such as warranties and customer support, or any debts owed to SyQuest by third partes. All these will remain the responsibility of SyQuest itself. The deal follows SyQuest's collapse and filing for Chapter 11 protection in November 1998. Soon after, SyQuest lawyers announced it was pursuing a buyer, and Iomega was widely tipped as the most likely purchaser. Last week, SyQuest's Web site became active again to provide customer support and technical information (see SyQuest re-emerges from oblivion). The company's lawyers said a deal was in the offing and that it hoped to get SyQyuest up and running normally very shortly. While the deal will effectively see the end of SyQuest as a force in the storage market -- with no intellectual property or fixed assets, there's not a lot it can do -- it is good news for the many owners of malfunctioning SyQuest kit, much of it held at the company's premises for repair. With a $9.5 million cash injection, what's left of the company should be able to get working drives back to their owners. However, the fact that Iomega was in a position to dictate terms -- ie. we want all the important stuff but none of the liabilities -- suggests SyQuest was in a parlous state indeed. ®
The Register breaking news

PCI-X Gang of Three challenges Intel with Future I/O

The PCI-X gang of three has recruited Adaptec to the fold, and announced a "Future I/O alliance" intended to build a high-performance I/O standard to replace PCI/PCI-X. In September (Earlier story) Compaq, HP and IBM peeled away from Intel to push the PCI-X. Intel gave the new standard a guarded welcome, but muttered through its teeth that PCI-X would have to be the last iteration of the old bus standard, and that a "fundamentally new architecture" would be needed for the future. By fortunate happenstance, Intel has a number of candidates for just such a new architecture in the labs. Future I/O however makes it clear that the PC companies aren’t going to let go of this one. According to the principles the group is to be an open industry alliance with the goal of "creating a new input/output standard to maximise data transfer between high-performance systems." Significantly, they point out that "the combined server market share of Compaq, Hewlett-Packard and IBM will be a significant factor in driving the openness and broad industry support for the Future I/O standard." This means they see it applying initially to servers, and anticipate using their dominant share of the PC server market to push the standard through. But this also means they’re going to be going head-to-head with the Intel-backed NGIO standard (Bus wars loom). With PCI-X Intel seems to have taken the view that it could assimilate the gang of three. The PC companies are all members of the PCI SIG, and have put forward PCI-X for consideration by the SIG. Life is going to be trickier with Future I/O and NGIO, however, and the overlap between the two could result in an outbreak of hot war. Future I/O is intended to work alongside PCI and PCI-X for a period, but is clearly being pitched as a replacement in the longer term. The specification will allow for "continued innovation with the standard [sic]... easier and more regular performance enhancements, better fault tolerance and fault isolation... more scalable and balanced systems,... and more cost-effective and manageable I/O overall. It will use point-to-point links, allowing devices to operate at optimum performance, and whereas existing bus technologies are difficult to upgrade because all connected devices have to move in step, point-to-point allows improvements to be made in considerably less time. The companies stress protection of investment, and say PCI and PCI-X will run alongside Future I/O for "many years," but the new standard is intended to be universally applicable. Said Karl Walker, VP technology development for Compaq: "We designed the technology to be deployed across our entire spectrum of business solutions from the desktop to the enterprise at a cost and manageability level better than existing PCI solutions." ®
The Register breaking news

Bus wars loom as Intel and PC outfits form rival SIGs

Bus wars seem certain to break out between two rival camps, Intel-led NGIO and Future I/O, which was announced today (PCI-X gang challenges Intel). The new model has the PCI-X triad, Compaq, IBM and HP, as ring-leaders, but will be locking horns with a heavyweight bunch of rivals, including Dell, Hitachi, NEC, Siemens and Sun. With the announcement of Future I/O it begins to seem that last week’s announcement of an NGIO Forum "to develop and implement a new open I/O architecture for optimising information flow and reliability between mission critical servers2 was a pre-emptive strike. Funnily enough the Future I/O Inititiative "will follow an open industry development and governance model similar to that of the PCI SIG... the governing body responsible for the open development process that has successfully managed the PCI standard over its [apparently shortly to be terminated] lifetime." Quite clearly Compaq, HP and IBM see Future I/O as the successor to PCI, while over in NGIO the idea seems to be more or less the same. "The NGIO Industry Forum, with broad industry participation, will ensure that the architecture is robust, broadly adopted and available for product beginning in 2000. A founding principle of the Forum is that contributions to the core specification should be licensed on a mutual royalty-free basis." But compare and contrast. Future I/O won’t get to product stage until 2002, so Intel’s indulgent support of PCI-X can be seen in that light - carry on lads, while we slide a non-competing future bus standard (PCI-X for the desktop, NGIO for servers and workstations, right) in between it and your next generation. And licensing may be a problem. Rather than being mutually royalty-free, the Future I/O Initiative will recognise "the input from multiple vendors with reasonable and non-discriminatory licensing terms that are very similar to those in many other standards." Sounds pretty shifty, doesn’t it? Round one to the Great Satan of chips. ®
The Register breaking news

News Corp mogul talks down the Web

Media tycoon, Rupert Murdoch, has publicly distanced himself from new media and the Internet. Speaking in Singapore yesterday, the boss of News Corporation said he didn't believe he was being left behind in the race to colonise the Web and that there was plenty of time to get involved should the right opportunities present themselves. He added that the explosion of new media would not be "the death knell of the old" citing other media revolutions such as TV, which failed to wipe out more established media. But he did concede that: "The Internet will destroy more businesses than it will create in the sense that it will wipe out the middlemen." And commenting on the over-inflated price of Internet stocks he said: "We certainly won't be making take-overs of large, or already overcapitalised companies." Expect something big -- very big -- to happen very, very soon. ®
The Register breaking news

Cyrix releases new M II price list

Here are the latest M II processor prices from Cyrix. Prices are quoted in OEM quantities of 1000 as per usual. M II-233 $45 M II-266 $47 M II-300 $52 M II-333 $60 ®
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PC sales rebound in 1999

Worldwide PC shipments are slated to rise 15.4 per cent in 1999, against last year's growth rate of 9.5 per cent, according to the Nomura Research Institute. It forecasts sales of desktop, portable and handheld computers jumping to 106 million units -- with desktop sales up 14.5 per cent to 86.1 million units, laptop PCs up 18.2 per cent to 18.1 million units and handhelds up 33 per cent to 1.8 million units. Nomura pinpoints growth to US corporate investment in network computers, Internet-access fuelled sales into US and European homes, and a jump in sub-$1,000 PC sales -- presumably also ending up mostly in homes. ®
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Dell joins Compaq in mass storage premier league

Storage Area Networking, Fibre Channel and RAID may be heartsink stories (as in most journalist hearts sink when they have to write about them), but they also increasingly look like licences to print money for the seven, mostly hardware giants that dominate the storage systems scene. These companies -- Compaq, IBM, EMC, Sun, HP, Hitachi and -- big surprise here -- Dell -- hoovered up more than two thirds of the $27.7 billion storage systems market in 1998. And they are set to gain even greater collective market share, according to IDC. "Shrinking server margins, EMC's success, and the realisation that the server companies had a captive distribution channel that was underutilized, led many to focus on storage and associated software and services," last year, the research firm says. This is not very difficult to work out for yourself , considering that storage can account for 75 per cent of cost of -- say - a $100,000 Windows NT server. Margins are higher in high-end storage than in servers because punters don't know the prices. In terms of product breadth there is effectively only a big five -- Compaq, IBM, EMC, Sun and Hitachi -- HP is effectively an OEM for EMC, while Dell is an OEM for the world. Leading the pack in 1998 was Compaq with 20 per cent share and $5.5 billion sales. The takeover of Digital enabled the company to leapfrog IBM, the traditional number one in this market. With 14.3 per cent share, IBM's worldwide sales nudged $4 billion in 1998. At number 3 with 11.5 per cent share, EMC is on the biggest growth curve, with 1998 revenues up more than 30 per cent to $3.2 billion. Sun is number 4 with $1.9 billion in sales and 7 per cent share, while HP takes fifth slot on 6.6 per cent share, representing $1.8 billion in worldwide revenues. Hitachi is the great underachiever in this sector -- great products, lousy market share -- at 5.1 per cent, and $1.4 billion in worldwide revenues. Unlike its rivals, Hitachi storage revenues for 1998 were flat, "owing to heavy discounting and the decline in the Japanese economy," according to IDC. It also notes "challenges in developing a distribution strategy outside of the current direct sales force". But to us that looks like placing too much emphasis on the power of the channel. Hitachi is struggling to keep up with the market leaders because it has a puny captive base outside Japan -- and its off-base brand awareness is poor. So resellers and disties can afford to ignore the company. Maybe Hitachi needs a new storage sales director -- selling direct (and direct only) has done EMC no harm. Nor Dell come to that matter. Dell took 3.4 per cent ($934 million) in 1998, enough to get it into the premier league for the first time.It is a bit of a bottom feeder --shipments consist "almost entirely of Windows NT (2000) and NOS, the two operating environments for which IDC expects the highest growth rate in disk storage systems from 1998-2002". Dell's rise shows how useful an captive server is in building a successful storage systems business. ®
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Yahoo! takes pot shot at marijuana look-a-like

Spliff merchants behind the pro-cannabis Web site Yahooka! have until today to provide written assurances that they will close down their site and hand over their domain names to Net portal Yahoo!. Washington DC legal firm Finnegan, Henderson, Farabow, Grrett & Dunner, sent the letter last week informing the potheads that their site infringed the Yahoo! trademark. It stated that Yahooka! was likely to cause the public to "mistakenly believe that the site is connected with, sponsored by, or approved in some way by Yahoo!". Unless written assurances were received today, the law firm said it would pursue the case which could carry "serious consequences, including the possibility of injunction relief and substantial monetary damages," the letter said. Yahooka! has launched a hazy defence and has even taken steps to distance itself from the portal by posting a disclaimer. "We feel that the likelihood of confusion, mistake, or deception is non-existent, man," said one Yahooka! smokesperson. "We feel that Yahoo! is unfairly targeting us and implying that our content would somehow tarnish Yahoo!'s "good" name. "The content on our site is neither shoddy, unwholesome or unsavoury but a site which stands for freedom of speech," he said. Right on, bro. The lawyer in charge of the case was unavailable for comment when The Register telephoned earlier today so it's still unclear whether Yahooka! has yielded to Yahoo!'s demands. But if Yahoo! is so keen to protect its status, perhaps someone can explain why Yahooka! is still listed under the portal's search engine? Surely, this would have been one of Yahoo!'s first actions to weed them out. ®
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Schools hit by pirated Novell software

Novell UK has reached a six-figure settlement with GTi Networks, after the Salisbury-based reseller was found selling illegally copied software. Novell uncovered sales of the counterfeit copies of NetWare to more than 100 establishments across the country. The scam had been running for more than four years and had mostly targeted schools and vets’ practices. According to Novell, NetWare 3.11 and 3.22 are priced according to the number of users – costing around $3,500 per 25 users, and $7,000 per 100. Most of the sites affected had 25 or less users, but some schools had over 100. Simon Swale, Novell regional licensing investigator, confirmed that customers would not lose out financially. He said that anyone that had bought an illegal copy of NetWare from GTi would receive a free replacement from Business Data Systems (BDS), the Edinburgh company that is in the process of buying GTi. BDS has agreed to take over and service all GTi existing customers. Swale said: "Our customers have been defrauded through no fault of their own. A condition of the settlement was that the cost of the legal software provision would be covered by GTi." He noted that businesses in these areas were particularly at risk to piracy. He said: "This case is important for us, customers like schools and small businesses are especially vulnerable. They trust the people providing the goods as they often have no internal IT departments of their own." Neither Novell nor BDS were able to comment on what would happen to the remaining GTi staff – believed to number around 50. ®
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Advertising watchdog okays Compaq Y2K claims

The UK's advertising industry watchdog, the British Advertising Standards Authority (ASA), rejected complaints that Compaq advertisements claiming full Year 2000 compliance were misleading. The ruling provides a neat 'get out of Y2K hassles' card for hardware vendors -- even if a system as a whole isn't Y2K compliant, as long as your hardware will deal with the Year 2000, you're safe. The question of the validity of Compaq's claims were raised by UK Y2K testing company Prove IT 2000. It claimed that while Compaq PCs' BIOS may be able to cope with the change from 1999 to 2000, their real-time clock (RTC) was not certified for Y2K compliance. Compaq's ads said: "Will your computer call it a day on 31st Dec 1999? Ours won't. Every computer in our range is guaranteed to pass the National Software Testing Laboratories' YMARK2000 hardware test." However, "the Authority understood from expert advice that virtually all commercially available software took the date from the BIOS and direct interrogation of the RTC was generally discouraged," said the ASA report into the complaints. "The Authority accepted, therefore, that the hardware of Compaq was ready for the Year 2000." Or rather, that Compaq PCs are ready for the Year 2000 as per US company National Software Testing Laboratories' (NSTL) YMARK2000 certification programme, which is essentially all that Compaq claimed, according to its VP and general manager of the Enterprise Solutions Division, Ronnie Ward. NSTL claims its YMARK2000 software tests for both BIOS and RTC Y2K compliance. Some 50-odd Compaq machines were tested by NSTL and passed for Y2K compliance, according to NTSC's Web site. Prove IT 2000 also claimed that Compaq's advertising gave "the impression that those who bought a Compaq computer would not suffer disruption after the year 2000". Again, the ASA ruled that this was not misleading since Compaq said it "meant the advertisement to highlight only the year 2000 readiness of their hardware. They assumed that, because Compaq was widely known as a hardware company, readers would take that meaning". However, this is more of a moot point, since most buyers buy a computer system not specific hardware and, separately, a specific OS -- they therefore expect the whole thing to work post 2000, and may not be too happy when Windows 95 falls over (Microsoft has admitted Windows 95 may never be Y2K complaint) even though the hardware hasn't, since without a functioning OS hardware alone is effectively useless. Still, the ASA and its experts are clearly happy that Compaq has done all it needs do to keep its customers computing. ®
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Intel makes more money than playing Monopoly

Intel caught analysts cold with a superb set of Q4 results, smashing in-house records for revenue, earnings per share, net income, and shipments in all territories -- including the blighted Asia Pacific. Giving the FTC and conspiracy theorists something substantial to chew their teeth on, Intel declared total 1998 sales of $26.3 billion, up 5 per cent on 1997, and net income of $6.1 billion, down 13 per cent on the previous year. All the bad news for Intel took place in the first half of the year. The company hailed a storming Q4 and noted seasonally strong demand for P6 parts in the second half. Q4 revenue of $7.6 billion was up 17 percent from fourth quarter 1997 revenue of $6.5 billion. Fourth quarter revenue was up 13 percent from third quarter 1998 revenue of $6.7 billion. Record fourth quarter net income of $2.1 billion was up 18 percent from fourth quarter 1997 net income of $1.7 billion. Net income in the fourth quarter was up 32 percent from third quarter 1998 net income of $1.6 billion. The Register thought Intel’s X.86 clone rivals were supposed to putting up a serious challenge for the budget market. If so, it certainly isn’t reflected in Intel’s results. The way things are going, 1999 will better for Intel. It enters 1999 with a full roadmap for every market segment, and with its current batch of Celerons, it has low-end chips that OEMs actually want to buy. PC shipments are projected to rise more than 15 per cent this year, according to the Nomura Research Institute -- and we can reasonably assume that Intel will power the lion’s share of these machines. Intel anticipates a gross margin of 57 per cent for 1999, compared with 54 per cent for all of 1998 – suggesting it expects strong sales for high-end, high margin Pentium III and Pentium III Xeon sales during the year. The Great Satan of chips is also turning the screws on its rivals on the technology front. CEO Craig Barrett said the company will soon begin the transition to 0.18 micron manufacture. It is also pumping in $3 billion into R&D, up from $2.7 billion in 1998. The company is putting some brakes on capital spending in 1999, setting aside a budget of only $3 billion. In 1998, capital spending was $4 billion -- although this amount included $475 million of capital assets bought from Digital. The smaller budget for 1999 is "primarily a result of reduced investment for new facilities and improved utilization of manufacturing equipment". ®