25th January 1999 Archive
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After the war is over...
Both companies are claiming to be winners following the settlement between Intel and AMD, and both have a right to do so. But the biggest winner was AMD, despite the fact that it will end up paying Intel more than Intel is paying it. AMD, you see, is still alive, and has a coherent business plan. Intel's aim throughout the long-running feud wasn't actually to put AMD out of business, that was just a side-effect of its true objective of keeping a lock on x86 technology, but with shells going off all around it, AMD's objective was clearly to not go out of business. The settlement gives AMD the rights to 386 and 486 technologies that would have been useful a couple of years ago, and leaves the companies to head off in their own chosen directions, Intel with the Pentium, P6 and VLIW, and AMD with the K5. Cloning per se may be about to become a dead issue. The fact that AMD stayed alive long enough to develop the business plan is however the thing that's most important for the company. Five years ago, AMD's business plan went something like, "we can sell faster CPUs cheaper than Intle does, and although we know there's Intel code in them, we own it really." This was a pretty hand to mouth way to run a company, and success was determined by whatever the most recent lawsuit result was.It did however have the advantage of allowing AMD to stay in business while it thought of soemthing smarter, and while the K5 could be categorised as that something, The Register thinks the ongoing deals with Fujitsu are smarter still. Intel has historically been keen to diversify from the x86 line, but has historically had patchy success. The company still sees flash memory as a good strategic diversification, but hasn't really given it the focus, hasn't really convinced people that this is one of the places the company will be long term. Its desperate need to own things all by itself might also have something to do with it. So while Intel might have philosophical problems in harnessing the might of a company like Fujitsu, AMD doesn't, and the latter two's flash joint ventures give AMD the opportunity to develop in an area where its muscle could potentially become greater than Intel's. And clearly the company now has a saleable case, as the week before the Intel settlement it convinced a consortium of eight banks to give it a $150 million for development. ® From The Register No. 11
Business 25 08:33
Not the right time to help Intel make x86 more proprietary - Maritz
Intel and Microsoft were locked in wrangles over NSP and Java in 1995-96, and Microsoft has denied pressuring Intel to drop NSP and downplay Java. But internal Intel and Microsoft documentation from the period points to a situation rather different from what either company has been claiming - basically, they were wrangling over intellectual property. This casts a rather different light on Paul Maritz's suggestion in his deposition (Intel could sue OEMs over Katmai, IA-64 that Intel has been extending its IP control from MMX onwards so that it will be able to sue rival CPU companies. The Microsoft documentation does indeed strongly suggest that this is the case - but it also makes it clear that Microsoft was prepared to help Intel do so, if the terms were right. In May 1995 Paul Maritz wrote to Bill Gates: "It is clear that their [Intel's] strategy is to get as widespread usage as possible of their DSP algorithms via the NSP software layer, and then accelerate it via the 'few SIMD' instructions in the P55C (which they have been careful not to give us or others IP protection on." Maritz therefore sees Intel's NSP technology as a potential Trojan Horse that will allow Intel to spread its technology through the market, and then put a lock on it via P55C (i.e. MMX) IP protection lawsuits. Given the tutting tone of Maritz's deposition on this very subject, we can surely presume that he's agin this. No, not entirely: "given other dynamics this may not be the right time to help Intel start to make the x86 instruction set more proprietary." Which does make it seem awfully likely that there might be a right time, some other time. Note that the earliest PC9x documents, which were jointly devised by Intel and Microsoft, and which were current while OS/2 was a threat, were to a great extent tied to Windows operating software - so locking other people out is a concept not entirely unknown to and unpractised by MS. A year later deals were still possible, and Maritz writes: "I discussed with brasi [Brad Silverberg] whether it might not be wise for us to accommodate Intel in some way wrt [with reference to] the 'process' in return for them getting 100% behind our architecture... The reason for doing this is that I think we need to have some way of slowing down/containing Netscape - I fear that they can use security to screw us in a big way." Microsoft at the time had been pursuing an independent security strategy called WinSec, while Intel wanted to be more industry standard. So a deal over this is perhaps being suggested - Microsoft comes on-side, Intel backs away from Netscape. Tantalisingly, this particular exhibit has been heavily legaled - a whole page and a half from Brad Silverberg which may or may not explain what's going on has been removed. In June of the same year, Gates' thoughts have turned to Merced IP, and he writes to Maritz: "Merced - I told Andy [Grove] that we were quite optimistic things will get resolved with HP in the next few weeks and then we will move quickly to sign the Merced LOI... Intel is disappointed we seem to think that their 98 date has a lot of risk. They don't feel that it does. Andy wanted to understand our DEC 64bit announcement." So here we are still circling warily over IP, and Alpha is being used as leverage. Whatever was being resolved with HP didn't get resolved though. Maritz claims in his deposition that HP and Intel have specifically declined to give Microsoft IP assurances over Merced. Gates' memo here makes it clear that there this was the sticking point in the deal Microsoft was trying to negotiate. ® Complete Register trial coverage
Business 25 09:24
The works, including a tempting 'advertising services agreement'
Microsoft won a small victory from Judge Jackson late Friday when he agreed that Microsoft could see certain documents connected with the AOL/Netscape/Sun deal. Microsoft had filed for discovery, since the DoJ automatically got to see the documents because of its separate role in approving the merger. The documents were designated as "highly confidential" under the terms of the May 1998 Protective Order, so that they may only be seen by identified persons. Normally this means lawyers, and they are prevented from passing the information to marketing people, for example. It was also ordered that the states may also see the same documents. The documents to be produced are: the AOL/NS agreement and plan of merger; the AOL/Sun strategic development and marketing agreement, joint development agreement, a side letter amending the Sun technology and licence agreement, a service provider agreement, a dial-up network services agreement, and an advertising services agreement. No wonder Microsoft was interested. Judge Jackson's reason for this decision is probably to make it more difficult for the Court of Appeals to overturn any decision for the DoJ, using as a ground for appeal the denial of what it would call critical evidence. ® Complete Register trial coverage
Business 25 09:43
Level two cache on die
Intel today introduced its mobile Pentium II processors as well as Celeron chips aimed at the notebook market. The mobile PIIs come at speeds of 333MHz and 366MHz, have smaller packaging, use less power and include 256K of level two cache on one die. That combination produces high performance than the Slot One Pentium II design where cache is separate from the processor. The last time we saw P6 architecture in this form was with the Pentium Pro. The processors use a ball grid array package which allows Intel to manufacture the PII/mobile to a height of one tenth of an inch. Several OEMs are today expected to announce notebooks based on the design. Intel has also upgraded its lower speed 266MHz and 300MHz mobile Pentium IIs to also include 256K level two cache on the processor. The company has now extended its Celeron range to the notebook market and has introduced two parts, the 266MHz and 300MHz mobile Celerons with 128K of level two cache incorporated into the chip die. The company claims that these mobile Celerons will give up to 56 per cent faster performance than the Pentium/MMX for the mobile platform. Intel has introduced the 440DX chip set to support the mobile Celerons. The PII/Celerons will cost $106 and $187 when bought in quantities of 1,000. ®
Business 25 09:58
Currys, PC World, Dixons Retail have separate management
Giant retailer Dixons this morning announced it is restructuring the group. Its successful Internet subsidiary, Freeserve, will be spun off as a separate unit. John Clare, chief executive of the group, said three strategic business units have been created, each with its own group managing director. At the same time, Clare said that he had formed two new companies under the plc wing: Freeserve and Dixons Group Retail Property. The reason for the restructuring, said Clare, was because the core retail brands faced broadening competition. "It's vital for our future that those core brands are best positioned to exploit opportunities before them and the group as a whole." Trevor Bish-Jones will become group managing director of Dixons, David Gilbert will head up the Currys division and David Hamid will head the superstore PC World group, with control of PC World Business Direct and PC Service too. Clare himself will look after the fast growing Freeserve division, and Mark Danby will act as general manager. ®
Business 25 10:06
And how Bill might have traded AMD support for a Java-free Intel
Microsoft played an unexpected good fairy role in the adoption of AMD's 3DNow! graphics technology. But then Bill Gates went and spoiled it all by suggesting he'd dump the technology if Intel dumped Java. AMD had explained what Microsoft was then describing as "3DX" to Microsoft executives in early 1997, against a background of continuing deterioration in the relationship between Intel and Microsoft. Jim Allchin wrote to Bill Gates and Paul Maritz: "During the meeting we discussed some new instructions that AMD wants us to support called AMD 3DX. The instructions (about 24 new opcodes) are very focused to make games fast." But Allchin is suspicious of Intel: "Intel will want to stomp on whatever instructions they use to hide the 24 new opcodes. They are going to take a currently illegal instruction and encode all 24 instructions within it. And even though AMD will pick an instruction away from the MMX codes giving Intel expansion room (assuming Intel does MMX2), Intel still might decide to 'accidentally' use whatever instruction area they pick to hammer them." Allchin is basically appealing to Gates to use his relationship with Intel's Andy Grove: "It might take a conversation with Andy at some point if Intel does decide to do this. By the way, AMD says they will give everything to Intel without strings so that Intel could support the instructions also." Register digression: The Gates-Grove relationship actually turns out to be one of the more intriguing aspects of the Microsoft trial so far. Although the prosecution seeks to portray Microsoft bullying Intel into doing things, and although Gates does seem pretty ballistic about Intel in a lot of his internal emails, his talks with Andy seem different. After he's had these, he generally reports back to his execs at length, and he's calmer and positively enthusiastic about Intel technology. His decision to give full support to MMX is a case in point, and we can only conclude, well, what an old charmer that Andy Grove is. But back to the story. Supporting Allchin, Mark Kenworthy points to the difficulties associated with having incompatible instruction sets between competing CPUs. "If the average application is directly using these special instructions, I believe there is a significant risk to platform stability, since we have no control over the processor instructions." He's not keen on AMD's plans to get lots of different companies writing, and sees this leading to chaos. Nor is he keen on people using special multimedia instructions inside drivers, as this will "cause us (the OS) [they just can't stop it, can they?] to lose control of the CPU for extended periods of time … Also, the drivers they are supporting … are outside of our DirectX and OpenGL APIs." Instead, Microsoft should use the instructions "inside our OS multimedia components." Microsoft will move to accepting processor-specific optimisations in DirectX 5 and DirectX 6, and will "ship companies like Intel and AMD source to these key inner loop routines for them to optimise." Notice how Kenworthy sees AMD support as an opportunity for Microsoft to extend its control. Where does that pesky line between hardware and software lie, friends? He's already taken on board Intel's moves in the graphics arena, and suspects the company will try to trash the graphics adapter business by moving it all onto the chip. : "AMD could be a valuable ally in keeping competition open in the graphics arena, besides the processor arena." Having seen all this, Gates is basically in agreement, and writes to Allchin and Maritz: "I agree with all of your thoughts here." But there may be circumstances under which AMD won't get the support after all: "If Intel has a real problem with us supporting this they would back off from their work on Java which is terrible for Intel. I have a call with Andy on this topic coming up on Monday." ® Complete Register trial coverage
Business 25 10:20
300A is overclockable and will disappear. Slot One will stay. And there's a shortage of 370 Socket parts...
It now appears that chip giant Intel is in a considerable state of confusion over the future of Slot One Celerons. Last week we reported, on the basis of Intel information, that Slot One Celerons will continue until the year 2000. (see Intel to keep S1 Celerons until year end). But now information from an internal document Intel has sent to its retailers plus other information from distributors, makes it appear that the platform is doomed to extinction, and quite soon. A source at an Intel UK distributor, who declined to be named, said: "From a supply point of view, there will be no Slot One Celerons from February onwards. There is currently a shortage and I expect Intel to attempt to migrate smoothly in a few months. I was expecting Intel to bin it at the end of February, but currently availability of 370-Socket boards is short." And a letter, seemingly originating from Intel, on the Ars Technica site seems to confirm the Slot One Celeron is doomed. It says that Intel now recommends customers convert Intel Celeron processor-based PC offerings to higher performing Intel Celeron processors now. "Intel has begun to transition the Intel Celeron processor product line from SEPP to PPGA packaging." A representative from Intel said: "All Celerons this year will co-exist in both packages." However, it is common knowledge now that Intel will phase out the 300A, which can be successfully overclocked. Overclockers might therefore be advised to buy the 300A at around $70 and overclock like mad, knowing that they'll lose their warranty. It won't be possible to overclock the faster Celerons, so people will be able to pay their money and take their choice. ®
Business 25 10:45
Meanwhile, US privacy furore roars on
Chip giant Intel now says that OEMs will have the ability to switch off a registration number embedded in Pentium III chips. That means the Compaqs, Dells and HPs of this world could ship product without antagonising US privacy groups. There is already an ability to switch off the identification number using software shipping with PCs. The move follows a growing controversy in the United States over a potential threat to privacy. An Intel representative said: "We're not forcing people to use [the serial number]. OEMs will have the option to switch off the serial number." He pointed out that, in any case, it is relatively easy to trace people's identity when they use the Internet through their IP numbers. Intel had gone through a process where it contemplated whether or not to ship Pentium IIIs with the serial number switched off or on. He said that when people wanted to trade and buy across the Internet, it was conceivable that the transaction could depend on the serial number being switched on. He said that Intel had struck no deals with companies like Visa or Mastercard, but said large organisations wanted security for financial transactions. AMD has not yet said whether it will introduce a similar system on its chips. ® Related Stories Intel says it won't track individuals Intel adds serial numbers, random numbers to PIII
Business 25 11:15
Shares nearly double in value before close of first day's trading
NVidia went ahead with its IPO on Friday, as predicted by The Register (see earlier story). The day's trading saw the $12 shares begin trading at $21, rise to over $23 and close at just under $20. Not bad for a stock initially believed to be issue at just $7. ®
Business 25 11:33
UPDATED Is it just part of Liquid Audio's plan for world domination?
Nearly 50 players in the MP3 digital music distribution business, including the influential MP3.com, have joined forces to form the Genuine Music Coalition (GMC), a partnership geared to promoting the MP3 format in the face of increased pressure from the recording industry's major labels. This is the second such body formed by MP3 companies -- last October saw the formation of the Diamond Multimedia-led MP3 Association (see Diamond Multimedia forms MP3 lobby body), though little has been heard from it since. But while the MP3 Association was a broad alliance of companies who came together to oppose the actions of the Recording Industry Association of America (RIAA), which was seeking to ban Diamond's Rio MP3 player, the GMC has more specific aims. According to Wired News, the Coalition will guarantee that music issued by its members is legitimate. The GMC will use watermarking technology developed by Liquid Audio, also due to be announced today, to brand legal copies and to prevent them from being bootlegged. The watermark will contain a unique serial number, copyright information and links to the copyright owners Web site(s). In effect this creates yet another downloadable music format, one that's halfway between 'pure' MP3 and Liquid Audio's MP3-based Liquid Tracks format. Liquid Tracks is MP3 with watermarking and e-commerce functionality layers bolted on. Only last week Web site Global Music Outlet launched its another digital music format based on AT&T's a2b technology (see earlier story). GMO's format is called MP4 in a deliberate attempt to make MP3 fans assume this is the latest incarnation of their chosen format -- it's not a proprietary technology. While the GMC's approach to MP3 addresses the mainstream music industry's main concerns with the technology, it's unlikely to win the big labels' wholehearted support now they have embarked on their own attempt to develop a universal piracy-proof digital music format, the Secure Digital Music Initiative (SDMI). So for the music sites involved in GMC, it won't change the situation much. However, for Liquid Audio, it is a strategically shrewd move. Liquid Audio is a member of the SDMI and is pushing hard to have Liquid Tracks adopted as its chosen format. Setting up as the force behind the first real attempt to push MP3 as a legitimate (at least in the anti-piracy sense) format can't but help its case to the SDMI. It could also begin the process of ultimately bringing together MP3 and whatever format the SDMI selects, and viewing the language in Liquid Audio's announcement, it's clear the company sees it that way too. ®
Business 25 12:16
Everyone sounds keen, but will they do the business?
A week-old company is offering resellers the chance to use an on-line forum to source products. The site, run by Zygonet, hopes to persuade distributors to register so they can be emailed resellers' requests. Distributors will then e-mail their quotes to the resellers and compete on pricing. The service will be free for both parties at first, but distributors will eventually be charged £2.75 per day. There will be no advertising on the site. The head of zygonet.com, Paul Stokes, was adamant there were advantages for both sides. He said distributors would gain new leads, while resellers would get more competitive deals. Channel players were sceptical, but agreed it could be a good idea in principle. Ed Ewing, general manager of communications at Computer 2000, said the distributor was keen in investing in on-line trading and was interested in the idea, but he admitted it was hard to tell how successful it would be. Ewing said: "The only stumbling block I can see is that people don't just buy on price. A lot of other things go into the mix, like service levels and credit provision." Peter Rigby, CHS director of marketing and communications, described it as pseudo e-commerce. He said: "It's definitely the way things are going, but it sounds complicated, and isn’t the kind of process that's indicative of the business at the moment. It needs to be immediate." Resellers were similarly dubious. They believed it was a reasonable concept, but said they were mostly loyal to existing distributors. Steve Rush, marketing director of Surrey-based Rapid Group, said: "Volume is the key to everything. We have our favourite distributors, and put a lot of business their way. In return, they keep their prices down for us." Others said the success of Zygonet would depend on enough distributors being willing to pay for the service. Distributors said they were interested in talking to zygonet.com, but would be unwilling to plough cash into the venture at present because it was hard to tell how successful it would be. ®
Business 25 12:26
Allows manufacturers to offer MP3-aware hi-fi
Digital music distributor GoodNoise is to work with Adaptec, developer of the best-selling Toast CD authoring application, to create a system that will allow consumer CD players to read MP3 files stored on CD-ROM. Currently, digital music buffs who want to play downloaded tracks when their away from their PCs have to either copy them to Diamond Multimedia's Rio player, or convert them to standard CD Audio files then burn then onto a disc. The GoodNoise/Adaptec solution contains two components: a version of Toast that would be used to create specially formatted CDs from downloaded MP3 files, and firmwire built into the playback device, whether it's a hi-fi separate, DVD player or in-car entertainment system. Success, then, depends on sufficient numbers of consumer electronics companies agreeing to add the GoodNoise/Adaptec to their products. At the moment, neither company will say which, if any, manufacturers have expressed an interest in the technology. Not that this is the only solution for such companies. Earlier this year, ESS Technology unveiled a chip-set that will allow consumer electronics devices to play back all of the most commonplace digital music formats (see Semiconductor firm launches MP3 chip-set for set-tops). ®
Business 25 12:51
The Register goes to the movies
AOL, the online service provider that boasts more than 14 million members worldwide, could be up for an Oscar for its outstanding performance in the new romantic comedy You've Got Mail. AOL co-stars in this remake of the 1940 movie The Shop Around the Corner acting as the conduit that unites Tom Hanks and Meg Ryan. In the movie, they play two rival bookstore owners who loathe the sight of one another. But in cyberspace -- thanks to AOL -- they fall in love. Enchanting as this simple tale may be, AOL's performance is faultless, which is perhaps why so many film pundits are calling for AOL to be honoured by the Academy of Motion Picture Sciences. But AOL is also in the running for best special effects. The speed at which both characters were able to log on to the Internet was simply breathtaking. Neither Tom Hanks nor Meg Ryan had to endure a busy dial tone when logging on. Or, for that matter, the usual modem handshaking period. Nor did they find themselves left dangling in cyberspace limbo as their connection failed midway through drafting one of their simmering e-mails. And when they did log on swiftly and effortlessly, they were never confronted with a huge advertisement trying to sell the AOL Guide. It was brilliant, just brilliant. Not since Jurassic Park have the creatives in the special FX labs had such a testing job trying to convince audiences to suspend their disbelief. Of course, some critics who attended the AOL-sponsored preview of the movie will be unable to see past the movie's product placement, an IBM ThinkPad for him and a lovely Apple PowerBook laptop for her. And as well as reels of screen shots, AOL also managed to plug its instant messaging service too for a well-rounded performance. Despite all this, there is just one matter that evades some measure of understanding. If computers and the Internet are supposed to make communication so much faster -- instantaneous, some say -- why is this film 20 minutes longer than the 40s original when Margaret Sullivan and James Stewart had to rely on the US postal service to ferry their innermost thoughts? You've Got Mail is due to be released in the UK on Friday 26 February. ®
Business 25 12:52
But portals seen as starting point when it comes to surfing
The BBC may be losing its audiences among the UK's army of TV-watching coach potatoes but on the Web it's a different story. BBC Online has been named the second most popular Web site in the UK beating portals, including Lycos UK, Excite UK, MSN UK and AOL UK. Yahoo! UK & Ireland was the only site with a larger audience reach. The findings, published by Fletcher Research, show that 61 per cent of UK Web users visited Yahoo! UK & Ireland within the last two weeks. Some 42 per cent said they visited BBC Online, followed by Lycos UK with 30 per cent. The Web sites of AOL and Compuserve filled ninth and tenth places respectively each with a six per cent reach. News of BBC Online's success will further dampen any disquiet among critics who feel the £19 million a year earmarked for this public service would be better spent elsewhere. "Brand awareness has been key to their success," said a representative of Fletcher Research, who admitted to be being somewhat taken aback by BBC Online's "incredible" performance. "Media companies should now be waking up to the Internet, especially some of the major newspapers," he said. And it is not just the newspapers that should be sitting up and taking notice. Arguably, BBC Online's success is a triumph of content over the utilitarian nature of many search engines. Even though many are going out of their way to become more content rich, it is still difficult to disguise the fact that people still see portals primarily as search engines. ®
Business 25 14:11
Developers eliminate Apple patents -- but how quickly can they deploy it?
Peripheral and PC vendors are believed to be developing a modified version of FireWire, aka IEEE1394, in an effort to sidestep Apple's latest '1$-a-port' licensing fee (see Apple caught charging crafty FireWire fee). According to a report in, a number of developers are proposing what they call 1394B. Not only is the specification twice as fast as current FireWire technology but avoids relying on the Apple-patented signalling techniques that Apple is using to justify charging a licence fee. 'Apple-free' 1394 would operate at 800Mbps instead of the current 400Mbps and use a signalling system borrowed from the Fibre Channel world. The next stage of the design process would be to incorporate support for current FireWire devices in a way that also eliminates the key Apple intellectual property. However, Michael Teener, CTO of US-based Zayante, a 1394 infrastructure company, quoted in the EE Times report, reckoned it would take two years to progress the backwards-compatible 1394B specification to the point at which it could be widely deployed. In the meantime, vendors will have to live with whatever agreements they can come to with Apple, while those who have already signed earlier, one-off royalty payments (see Apple's FireWire licensing -- the debate rages) will churn out high-performance FireWire peripherals. As will those who realise that what they lose in royalty payments to Apple, they gain in not having to equip devices with power supplies. ®
Business 25 14:16
Analogies become more and more bizarre, as Schmalensee finishes up
For Microsoft, Richard Urowsky last week conducted a redirect examination of defence witness Richard Schmalensee. His objective was to convince Judge Jackson that Microsoft was not a monopoly, that it was threatened at every turn by powerful rivals, and that the barriers to market entry in the most valuable monopoly in the world were trivial. Puzzlingly, although Schmalensee's ability to remember data earlier had been poor, this time around he was readily able to come up with information in response to most of Urowsky's questioning. The examination sounded like a Microsoft sales presentation at times. Urowsky elicited from Schmalensee a number of 'facts' that were either untrue, or carefully chosen to be just part of the truth and misleading. He said that the first graphical version of WordPerfect was written for OS/2, but did not add that it was not actually released for some mysterious reason. He gave as his non-expert opinion that there were problems with OS/2 performance, "particularly on computers that didn't have abundant memory". Evidently the breakfast cereal expert had not tried running Windows 95 with the minimum hardware suggested. Schmalensee also related a story as to how a VP for information systems of a "large utility company" where Schmalensee was on the board chose OS/2 because the VP was of the opinion that it would be the successor to DOS. Schmalensee seemed to be rather pleased that "he is no longer with the company". Of course, it was not mentioned that writing for OS/2 was the official recommendation by Microsoft at the time. Schmalensee's arguments about higher prices for operating systems being "more than made up for by the increase in quality" is certainly questionable. Schmalensee also claims that Microsoft engages "in relentless innovation", something he says is not typical of monopolists. What innovation could he mean? Microsoft seems to have bought-in every significant development that works. Several times Judge Jackson questioned Schmalensee: "Why must you always assume that the monopolist maximises the price?" he asked at one point. Since the previous response had been about how reasonable it would be if Microsoft charged $2,000 for Windows, the judge's use of "monopoly" strongly suggested he does not accept Microsoft's arguments that it is not a monopoly. He went on to consider "a cigarette company which is a monopolist. We can all conceive of reasons why a cigarette company would price at the low end of the scale, notwithstanding that it is the only source of its product." Schmalensee went on: "Microsoft wishes Windows were [as] addictive [as cigarettes]. . . . The argument that you've made that Microsoft is concerned with expanding PC usage is, I think, correct. What differentiates it from cigarettes, I think importantly, is that there isn't any evidence of that kind of addiction. One can expand the market for computers that isn't necessarily Microsoft's market ten years from now." At this point, Judge Jackson asked a very strange question of Schmalensee that did not follow from the preceding remarks: "Do you have kids?", to which Schmalensee replied affirmatively. The judge pursued the matter no further, but it was a mystery as to why he asked. [No it's not. He's worried about DirectX 7 - Ed) Surely he wasn't considering amelioration for a custodial sentence? Perhaps he holds strong views about smoking. Another interjection by Judge Jackson occurred when the subject of differing airline prices for the same seat was brought up. The judge found it "exasperating" and went on to relate his experience in this matter. After Schmalensee had opined that Microsoft did not have monopoly power, but did have the ability to affect the distribution of products through pricing, the judge said "Answer that question again. The ability to affect distribution is no indicium of monopoly power?" The rhetoric was clear. Schmalensee launched into a theoretical example of the distribution of canned corn in supermarkets and the suggestion that a parking lot for the supermarket would not be paved if the supermarket sold a rival's corn. The judge didn't buy it: "Isn't that, in essence what is being alleged here?" After an unsatisfactory attempt to disagree, the judge said: "As I understand some of the testimony here, it has been, in effect, precisely to that objective, that by use of the operating system and its alleged monopoly in the operating system and its refusal to extend its operating system to potential competitors or potential distributors of applications, other software, except upon unfavourable terms, it has done exactly what you were doing with your supermarket or, rather, let's say, your parking lot, your paving monopoly." Schmalensee tried another example, suggesting that the monopolist said that the parking lot would not be paved unless the paver's own brand of toothpaste was distributed. He then, foolishly, said "I'm not trying to do law here" but the judge carried on, attaching theoretical conditions to the distribution of the toothpaste: "Rival brands would have to be on the bottom shelf, and only for three days a week" to which Schmalensee said that that would not constitute a material disadvantage. The judge said "I'm saying that it is, and you can make the argument that there are other channels of distribution. You could go through pharmacies or through convenience stores and things like that. But the fact that toothpaste is not - your competitor's toothpaste is not being distributed except on very unfavourable terms in your supermarkets . . . " He did concede, apparently without believing it, that a non-monopolist could try to impose such conditions. It was a grave mistake by Microsoft's defence to stray into legal areas with a witness who was clearly not an expert in understanding the legal definition of a monopoly. Urowsky compounded the problem by not having the flexibility to adjust his redirect after these colloquies with the judge. He invited Schmalensee to consider a series of theoretical questions assuming that Microsoft did have monopoly power. It was then claimed that the meetings between Microsoft and Netscape, Apple and Intel (at which monopolisation was discussed) could be ignored. The judge interjected again: "Is it not also important to your having ignored them that they are of consequence only if you start from a premise that there is monopoly power? And your whole thesis is predicated on the absence of monopoly power." Using conjuring tricks with data, and not giving all the assumptions, Microsoft's witness claimed that Netscape would have 60 million total users in 2002. Judge Jackson was cynical about the simplification that was being attempted (disguising Microsoft's considerably greater market share), and said: "This is simply a rising tide that raises all boats". Schmalensee seemed to think that PCs had fallen in price in the US from $5,000 to "closer to $3,000". He certainly hasn't done any research in the matter, and nor had his helpers from NERA. He apparently did not realise how foolish it was to compare prices for operating system software and utilities in 1989 with today, to claim that Windows is a bargain because it has incorporated utilities. Schmalensee was also wrong when he said that the DoJ's economists had seen his direct testimony. Fisher said he had not, and it was not released at the time Warren-Boulton was giving his evidence. Furthermore, the judge directed that Fisher should not see it until he had finished giving evidence. Microsoft had released Schmalensee's testimony earlier than had been agreed, probably in an attempt to take headlines from Fisher. It was denied that Microsoft's practices increased Netscape's distribution costs, or that Microsoft could foreclose Netscape from distributing through the OEM channel. It now seems that when many users had too little hard disk, OEMs were wary of distributing two browsers, but with the large disks eliminating this problem, and a desire not to offend users who preferred Netscape, OEMs are now loading it again. Netscape's decline was put down to the "superior" quality and technical superiority of IE, but religion would appear to play a greater part in these assessments than objective criteria - and who was paying the piper. Urowsky asked predictable questions about the Fisher evidence and received predictable and probably rehearsed replies. He ended with an attempt to explain away the embarrassment of the survey where Gates had asked for a 90 percent result that showed that developers thought it a good idea to have the browser welded into Windows. However, the old story still showed through the attempt at covering it with whitewash. The ending in mid-afternoon meant David Boies could not be briefed the next day by technical experts for his cross-examination. The result was that Boies missed many of the points that should have been raised in his re-cross examination. He did draw attention to inconsistencies in the data used by Microsoft to establish its view of browser share, for example when Netscape browser usage was said to have dropped from five million to four million in one quarter, and increased from four million to six million in another quarter. These extraordinary claims were derived from very small sets of data with 200 to a little over 300 respondents to a telephone survey. Microsoft had used a chart showing the number of Netscape users rising until 2002, but had omitted a chart showing that Netscape's market share was declining. Schmalensee did not think that Netscape would be offering a platform to compete with Microsoft in the foreseeable future. There will be a final secret session on Monday morning, with Paul Maritz scheduled for the afternoon. ® Complete Register trial coverage
Business 25 15:58
Fab 30 on a roll, Fab 25 on Sharptooth, so maybe Compaq will use it...
AMD confirmed it is in the final stages of producing silicon at its Fab 30 plant in Dresden, Germany. According to a senior PR officer at the fab, Dresden started production of K7 silicon on the first of November. He said: "We are now in the final testing stages." He confirmed: "The products we will produce in Dresden are the K7s. Sharptooth and other K6 products will be produced in Austin, Texas." That means that K7s are likely to arise in volume earlier than anyone had anticipated. ®
Business 25 16:27
Sunk in VXD hell, Microsoft felt it just couldn't deal with any more crap...
When the claims that Microsoft had strong-armed Intel into dumping NSP first arose, Microsoft retorted that it had opposed NSP because of the low quality of Intel software. Bill Gates took the lead on this (see Intel writes lousy software, says Gates). The line is being repeated now by Gates' lieutenant, Paul Maritz, who says: "Unfortunately, because the PC software produced by Intel is mainly done to 'jump start' the demand for new hardware, it often falls below the high quality standards of Microsoft software. Testing -- a vitally important part of the software development process -- is often insufficient. Moreover, Intel often devotes insufficient attention to providing compatibility between its software products and other software products. Providing such compatibility is a major focus of Microsoft's development efforts." Silly old Intel, thinking it can do amazing things with a couple of dodgy little hacks and no back-up. But as we pointed out a while back (see Lousy Software II), Intel itself claims title to large swathes of the software innovations in Windows 98. And if you check out the email traffic between Gates and Maritz at the time of the NSP spat, you get a slightly different picture. There were issues as regards Intel software development, the most specific one being that Microsoft -- perfectly rationally and reasonably -- thought that Intel's multi-unit and unco-ordinated approach to software was difficult to work with, and difficult to make work. Pot and kettle though -- Microsoft at the time had numerous different bits all working independently on Web-enabling diverse Microsoft products, and one of Maritz's headaches was getting them all to point in the one direction. But what about NSP support? Microsoft today says it wasn't supporting NSP because Intel's software was bad, and because it didn't support Windows 95, which was due out in a few months. But from the email traffic it's clear that Intel was lobbying Microsoft to incorporate NSP support in 95. Maritz, however (May 1995), is having trouble with dealing with this: "I fear that: we have a baroque enough mess already in our MM plumbing without having to stitch iSPOX in." Microsoft's problems with its plumbing would unfortunately appear to be ones of its own making. Says Gates as part of the same exchange: "Unfortunately our wide open VXD architecture is causing us immense problems and is just going to get worse in general." So it would appear Microsoft Windows development was at the time sinking into VXD hell. It's puzzling stuff, particularly if you check out Maritz's explanation in his deposition of why Microsoft succeeded while IBM and OS/2 failed. He points out that Microsoft took a twin-track approach to operating systems, going for Windows and NT at the same time, and that if IBM had taken different decisions at the time, the outcome would have been different. The reality of course was that VXDs were a dodgy hack used to implement 32-bit in Windows in a way that was massively inconvenient and destabilising to OS/2 (that's not to say IBM wouldn't have screwed-up anyway, of course). But three years on, it would appear that "our wide open VXD architecture" is coming home to roost. ® Complete Register trial coverage
Business 25 16:41
Direct notebook vendor sniffs out indirect route
Direct sellers Rock Computers will launch a new range of notebooks which it is planing to sell exclusively through resellers to avoid conflict with its direct sales business. The Warwickshire-based manufacturer will offer its Iridium range of notebooks to the channel in around 4-6 weeks' time. Rock currently has around 700 dealers. It started experimenting with the channel around 18 months ago. The company will change its name to Rock Group and operate as a parent company with two trading divisions beneath it. One will be called Rock Computers, and will continue to sell direct to end-users, and the channel focused notebook division will be called Iridium. Iridium dealers will sell the products exclusively through the channel. Retail prices will range from £899 to about £2000. Nick Boardman, Rock Computers' MD, said the Iridium range would not be aimed at resellers who sold big numbers of laptops, but rather for the occasional notebook sale. ®
Business 25 16:45
Dealers can re-sign, but only if they guarantee sales
Apple is to terminate all contracts with its UK resellers at the end of February, The Register has learned. The vendor will then re-sign them provided they match a specific set of sales criteria. According to sources, Apple is demanding a minimum quarterly sales target that totals £60,000 per annum, and expects resellers meet its expectations in a number of other areas, including staff size and having "acceptable premises". That smacks of the company's long-discontinued AppleCentre scheme, which applied extensive restrictions on participants, including tight controls on the quality of furnishings in each AppleCentre. The move follows the scrapping of the company's dealer list price and the granting to distributors C2000 and Ingram of the right to charge dealers what they like for Mac kit -- effectively giving benefits to volume resellers at the expense of others. Previously, resellers paid the same per Mac irrespective of the number of machines they ordered. That provoked much criticism from Apple resellers, many of which claimed they would be placed at serious disadvantage to larger, mail order dealers. One claimed it would force smaller dealers to increase their prices by as much as eight per cent. That would effectively cancel Apple's recent iMac price cut. Together, both actions suggest Apple UK is pruning its channel of low-volume resellers in an attempt to break away from image it has in the UK of a minority market supplier. Indeed, one reseller who did not wish to be named, said: "It's highly political at the moment. Apple feels there are too many resellers in the channel," quoted in a UK trade paper. These moves are ways of dealing with that, he added. At the same time, the extremely tight margins on Apple's current top-seller, the iMac, especially now they are being sold in batches of five, to ensure the manufacture of five different colours of machine is economic, has put pressure on Apple and its channel to ramp up volume sales. ®
Business 25 16:51
There's hacking, and then there's hacking off...
A sex change operation due to be broadcast live on the Web this Thursday is a definite no-no for anyone remotely squeamish. Doctors will take from between four to six hours to remove a penis and construct a vaginal canal for a 49-year-old person born with "ambiguous" sexual organs. A man once known as "William" who has been receiving hormonal treatment for many years will leave a US hospital somewhere on the West Coast as the woman he has always longed to be, said a spokeswoman for Internet Entertainment Group, which is broadcasting the operation. Three cameras in the operating theatre will beam pictures of the operation live onto the Internet. The operation starts at 11.00am EST (4.00pm GMT) and anyone who wants to watch will have to pay $9.95 for the privilege. IEG confirmed it was using some of the subscription costs to subsidise the cost of the operation. "We've had an overwhelming response from medical professionals and those people who also suffer from similar conditions," said Heather Dalton of IEG, who accepted that the event might draw some voyeurs. "But our main concern is to deliver a quality product. This is an educational tool -- that's why the surgeon has agreed to do it," she said. Last year IEG was connected with the much-publicised hoax when two high school kids -- later revealed to be cherryless actors -- were set to lose their virginity live on the Web. According to Dalton, the hoax was uncovered after IEG told the world it was just an elaborate scam. But in a bizarre twist, Dalton said today that Ken Tipton, the man originally behind the hoax and who brought in IEG after the project became too big for him, is suing IEG for loss of earnings. "The whole thing is an absolute joke," said Dalton. And she isn't kidding. ®
Business 25 16:51
Cyrix does not say yes -- there's no decision yet
AMD is showing marked reluctance to follow Intel's lead in putting serial numbers in its chips. (Previous story today with links to more previous stories: OEMs can switch off PIII serial numbers) That emerged after Cyrix spokespersons in the US said they would follow Intel's lead with the Pentium !!! (Katmai). According to US reports, National Semiconductor, which owns x.86 clone company Cyrix, is following Intel's lead, knowing that it does not pose a security threat to end users. But AMD was tight-lipped at press time, suggesting it has not finally made its mind up about the platform. The company, based in Sunnyvale, California, promised it would give a definitive answer by the end of the day. However, at close of play today, National Semiconductor denied it had made any decision on whether to follow Intel's lead. We're still waiting to hear from Advanced Micro Devices (AMD) in Sunnyvale at close of play. ®
Business 25 16:52
Holland, Hungary, Scandinavia, SA, Poland et al -- this is the Full Monty
Hungarian, Dutch and Italian journalists have also come in for special treatment according to Intel press guidelines. And Polish, Scandinavian and South African journalists are also treated in a document The Register has seen. According to the document, which unfortunately we were only shown at a Computer Trade Show in Birmingham last week, so had to take detailed notes, "political issues" must be avoided when dealing with Hungarian hacks. Price and reliability, however, will capture their hearts. Dutch journalists are generally a good lot, thinks Intel. They are down to earth but like the Brits dislike the "Goliath's" (sic) of this world. And, claims the document, journalists from The Netherlands operate counter moves against anything that is successful. Those journalists who meet Intel from Italy are privileged. The document says they are warm people and much more intimate than those from cooler climes. "Italians are often late to interviews and press conferences," says Intel. But employees of the chip giant should not think this is a mark of disrespect. And Italian journalists are luckier than those from the UK, the USA, or Russia. Intel employees should always pay the bill. Scandinavian journalists are a bit like those from the UK but the Danish are more emotional than the Norwegians or the Swedes. Intel employees should never compare one Scandinavian country with another. The document is unclear whether Finns are included in the general description. Polish journalists and those from the Czech Republic receive independent treatment from Intel's press briefing document. In Poland, Intel employees should keep a physical distance from the journalists. There are hardly any taboos in the country, thinks Intel. You have to wear a smart suit and tie when talking to Polish hacks. In the Czech Republic, trying to bluff is not advised, hacks are well educated and unlike Russian journalists, not underpaid intellectuals. Politeness is a sine qua non. Finally, and this is the last in The Register's series from the booklet, Working with the European Press, in South Africa you have to behave in a normal US or British way. However, if Intel employees get aggressive, the locals think this is old fashioned. And politics and race/creed have to be avoided at all costs. Now if only Intel had thought that before it released the booklet to its PR people across the world. ® Related Stories Euro journalists get Intel treatment Grove's Intel attacks UK journalism Spanish journalists get Intel dictat
Business 25 17:25
Willing to pay more than $100 million
Datatec is making its debut in the US reseller market through the acquisition of HP specialist dealer Bloomfield Computing Solutions. South African-based Datatec is divvying up $30 million upfront for BCS, and will pay a maximum up to $102 million, if BCS meets profit targets. Based in Michigan, BCS sells exclusively HP enterprise products and services. The company will become part of Logical Networks, Datatec’s end-user reseller division. Datatec last year bought Westcon, a US distributor of networking equipment. The $1 billion t/o group intends to place all its wholesale activities under the Westcon brand.®
Business 25 17:52
Wants to eat Freeserve's lunch
The UK's second largest Internet access provider has begun distributing more than five million copies of its latest software as part of a multi-million pound marketing campaign. Gold copies of the final version of AOL's 4.0i for Windows 95 and 98 will be dropping through people's letterboxes in the next three months or so as AOL tries to claw back some of the ground it has lost to the free Net service Freeserve. More than 25,000 AOL members have already downloaded version 4.0i from the company's Web site since mid-December. AOL 4.0i offers a number of new features and enhancements including a spelling checker and the ability to attach multiple files to an e-mail. ®
Business 25 18:17
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