16th > February > 1999 Archive

The Register breaking news

How MS OEM contracts block Windows refunds

Unsurprisingly the protestors who showed up at Microsoft's offices yesterday for Windows Refund Day did not achieve satisfaction. Microsoft reps trotted out the official line that if they want a refund for the OS, they should take it up with their PC manufacturers. Indeed they should. But as Register readers will be aware, when it comes to the terms and conditions of Windows OS sales, although the PC manufacturer bears responsibility the audit trail leads directly back to Microsoft. One of the problems people attempting to get refunds from PC companies have faced is that Windows is frequently claimed to have been "run" the moment the PC is actually switched on, because the machine goes directly into an install procedure that takes the distribution files off the hard disk, leading the user into the various install choices and taking them up against the licence agreement. It's obviously absurd (and no doubt illegal under many countries' consumer law) to claim that a customer has agreed a licence simply by running the software that allows you to get as far as reading its terms, but that's the kind of claim that's being made by the manufacturers. If we look at why machines are sold this way, however, we needn't look any further than Microsoft's OEM contracts. From fairly early in the days of Windows 95 the OEM contracts specified the initial boot sequence, and squeezed-out manufacturer-specific routines from the install procedure. Some of the earliest Windows 95 machines included the ability to install Windows 3.11 or Windows 95, so then users did have a choice (of sorts), but choice is no longer offered, and Microsoft's control of the boot sequence via its OEM agreements probably precludes manufacturers being allowed to reintroduce choice - say, buttons that offered you Windows 98 or Linux as the OS. Why do you actually have to install the software in the first place? Couldn't machines just come ready set up, with the OEM licence number already entered, and then you could use the add/remove function to tailor bundled software to your requirements? Well you could, if Microsoft's licences allowed it. PC OEMs have expressed an interest in doing this, but have been told by Microsoft that it's forbidden. The reasons for this are simple enough. Microsoft wants users to register with Microsoft in the first instance, and then to have the ability to pass the registration on to its OEM customers. This was a major factor in the tightening of the rules on boot sequence, flushing-out any PC manufacturers' registration procedures, and when online registration of new Microsoft software becomes compulsory, you'll see why Microsoft has done this. Microsoft intends to own the customer base, it won't let the PC manufacturers have it. Then there's the matter of why it's so difficult to buy a PC without an OS anyway. Many people who are buying PCs with Windows 98 on them now will be replacing PCs they bought a couple of years ago with Windows 95 on them - so how come they can't just transfer the licence? Microsoft has been concerned about this possibility in the past, as can be seen from internal documentation revealed during the trial. If the cost of Windows gets too high, then the Microsoft share of revenue from each PC sold will become too much of a burden to customers and OEMs, so there might be a revolt. That has been one factor that's helped limit Microsoft's price levels, and the sort of reduction a customer might get if they could buy a machine without Windows on it is small enough (the few refunds made have been between $25 and $50) for it to be not worth hassling for, for most people. For the OEMs selling $500 machines, however, $50 is becoming significant. But it's also been important for Microsoft to tie the software as closely to a particular piece of hardware as possible. The distribution files on the hard disk can't be easily moved to another computer, and can't, without some engineering and a breach of the licence agreement, be used to install Windows on that computer. Microsoft is now prohibited from charging OEMs a Windows licence fee for every machine they sell, whether it ships with Windows or some other OS, but that change in Microsoft contracts was made in 1995, and the company is clearly still getting a fee for practically every PC that ships, because practically every PC comes with Windows on it anyway. That's partially because of Microsoft pressure. OEMs are nervous of offending MS and thus having their discount structures interfered with and their agreements tightened some more. But it's also because of the simplicity (from the OEM's point of view) of just offering one OS, and because there still isn't a real competitor to Windows in the mass market. So the basic Windows refund problem is that it can't go much further than publicity stunt level until there is a real competitor. Given that $25 is neither here nor there, we're not going to see a mass user revolt, while for the PC manufacturers the pain-gain ratio will remain tilted in Windows favour, unless of course demand for, say, Linux in the consumer market forces their hand. As some of the demonstrators yesterday pointed out, the issue is choice, not money, and it won't be solved until the PC companies start offering choice. ®
John Lettice, 16 Feb 1999
The Register breaking news

Pfeiffer to re-engineer Compaq as Internet company

Eckhard Pfeiffer, CEO of Compaq, breezed into London today and predicted that his company would achieve $50 billion worth of revenues in the year 2000. At the same time, he claimed that Compaq aimed to become the leading Internet company in the world. Pfeiffer said: "Financial analysts are predicting turnover of $43.5 billion in 1999. For 1998, our figures included only six months of Digital revenue. The growth from an annualised level is certainly ambitious but also achievable." He said: "We have developed a new goal for Compaq in the coming years. Our top strategy is Internet leadership. The Internet is fundamentally changing the way all companies do business." Some predictions said that revenues from the Internet will be worth nearly a trillion dollars in a few years time, and currently there are 320 million users online, Pfeiffer said. Compaq's decision to spin off AltaVista as a separate company was taken because it was a completely different kind of business, Pfeiffer said. He gave no indication as to when AltaVista would go public. However, he said the aim was to make it the leading site for both content and for e-commerce. He sought to put to an end speculation that Digital and Tandem products were of less priority than Compaq's other business. He said, to put an end to such speculation once and for all, it was committed to developing both the Alpha architecture and products as well as Tandem products. Pfeiffer only mentioned return on investment (ROI) once in his half an hour speech at the gruesome Landmark Hotel, near Baker Street. ®
Mike Magee, 16 Feb 1999
The Register breaking news

Big Blue to ship Linux on x86, PowerPC systems

IBM will next month announce its intention to bundle Linux on a wide range of systems and that it will develop its own version of the OS for its RS/6000 machines. The announcement, due to take place at next month's LinuxWorld show in San Jose, California, will see Big Blue licensing a range of Linux distributions from the leading vendors. Red Hat, Caldera, Pacific HiTech and SuSE have been suggested by sources as likely suppliers of the OS for IBM's Netfinity servers and a Linux edition of its PC300 desktop line. IBM will also offer Linux editions of its low-end RS/6000 servers and workstation. Initially, it will bundle LinuxPPC's PowerPC incarnation of the OS at least until its own distribution of the freeware OS is complete. Sources suggest the decision to support multiple versions of Linux -- beyond the need for distributions aimed at different processors -- arose because the company was unhappy with sticking with a single supplier. And there's another advantage: tying specific distributions to specific systems will allows IBM to spread the technical support burden across multiple suppliers. ®
Tony Smith, 16 Feb 1999
The Register breaking news

Computers in Ireland purchased

ITG Group has snapped up Computers in Ireland for the tidy sum of £8.75 million. The figure is made up of £5.5 million cash and £3.25 million, payable by the issue of new shares in ITG. Computers in Ireland sells hardware and services under the brand names Computerland and Work Stations. Work Stations Training was bought by Computers in Ireland on 8 February. The book value of the net assets of Computerland and Work Stations was £1.27 million as at 31Oct, with net profits before tax of £441,772 for the previous six months. ®
Will Knight, 16 Feb 1999
The Register breaking news

Morse gears up for £300m stock market float

Morse Holdings, the parent company of Morse Group is to float on the London Stock Exchange. The flotation is expected to give Morse a market capitalisation in the region of £300 million. The initial offering will be valued at around £200 million, £70 million of which will be new money raised for the company. The remaining £130 million will be made up of shares sold by existing share owners. Morse is 75 per cent owned by venture capitalists (3i has a 55 per cent stake, and PPM Ventures has 20 per cent). Its executive directors own 12 per cent, senior management own six per cent and the company’s staff have a stake of two per cent. The remaining founders of Morse, Nick Read and Richard Styles, retain five per cent between them. The bulk of the offer is expected to be made up of shares currently held by the venture capitalists. There is a plan for an employee share offer, as the offer will not be a public one. Morse Holdings has appointed Richard Lapthorne as non-executive chairman of the company. Lapthorne is also a non-executive director of Orange Telecommunications and Robert Fleming Holdings. He was described by a Morse representative as "a steady and experienced hand on the tiller" for the float. Morse Group marketing director, Mark Byatt, said the float would help the company boost its services offering and enable it to expand further into Europe. Currently, Morse has a division in Germany and is believed to be considering a move into France. "There are immense opportunities in this market," he said. "The trick is to focus on them." Rumours that Morse was planning to float began to circulate last year, when the company was given a speculative value of around £600 million. These stories were refuted by a source close to the company who said they were "pie in the sky figures." ®
Sean Fleming, 16 Feb 1999
The Register breaking news

UK schools offered free Web access, free PCs and cash back from support calls

Thames Valley Internet company Voss Net, could be catapulted into the premier league of Internet Service Providers if its plans to offer free Net access to the UK's 32,000 schools take off. The AIM-listed company has signed a four-year agreement with registered charity Free Computers for Education (FCE) to provide the service. Not only will free Net access be available to the UK's two million schoolchildren, Voss Net's chairman and CEO, Roger Carter, is also hoping to persuade pupils to also use the service at home. It will also be offered to staff at Local Education Authorities when it's launched next month. Unlike other subscription-free services, Carter said Voss Net will pay back a proportion of the local call charge revenue to participating schools. The more schools, students, parents, teachers and governors use the service, the more money they will receive, he said. And unlike other subscription-free Net access services, calls made to technical support help lines will be charged at local rate and so won't incur a premium. FCE is planning to install between 500,000 and 1,000,000 recycled PCs in schools this year. The machines -- which are stripped down and used as dumb terminals -- are being donated by companies including IBM, NTL and NatWest and distributed by Rotary International in Great Britain and Ireland. Although the PCs are free, schools have to pay for the server and network links although they can receive a government grant to offset the cost. ®
Tim Richardson, 16 Feb 1999
The Register breaking news

Not all ISPs are on the make, of course

Some are concerned for your spiritual well-being… Hats off to Thames Valley ISP Voss Net. The company never misses a trick when it comes to spreading the gospel about the wired world. To prove it, just phone them up and ask to be put on hold. No limp musak -- but a wonderful exaltation citing the latest e-commerce facts and figures. No cons there. Amen to that. ®
Tim Richardson, 16 Feb 1999
The Register breaking news

What’s in a name?

Well, in this case quite a lot… Could the organisers of ISPCON -- branded the only dedicated industry forum for Internet Service Providers -- have thought of less flattering name for their event later this month? What? No comprendé? Do we have to spell it out for you? ®
Tim Richardson, 16 Feb 1999
The Register breaking news

Civil rights Web site blocked in Tunisia

Civil rights organisation Amnesty International has hit out at a bogus Amnesty site, www.anmesty-tunisia.org, based in Tunisia that has been spreading propaganda about alleged human rights abuses. The Tunisian government is accused of committing human rights abuses including arbitrary arrest and torture, but the bogus site is claiming that such accusations are not true. Amnesty believes that this site was set up by supporters of the Tunisian government. It also claims that the Tunisian government has blocked access to the real Amnesty site in Tunisia. The Tunisian government is understood to be the only service provider in the country and can restrict -- and monitor -- its citizens' Web access. Rather than sue the owners of this site, however, Amnesty has set up a page at its own site called Rhetoric vs. Reality . This shows the pro-Tunisian government site in frames and Amnesty’s rebuttal alongside. It contains a testimony from a Tunisian human rights activist and a general fact-file on Tunisia. The London based human rights organisation discovered this site by chance and believes it has been operating for around nine months. Brendan Paddy an Amnesty representative, said: "Legal actions can be very long winded, whereas setting up a parallel Web site can have immediate effect." ®
Will Knight, 16 Feb 1999
The Register breaking news

Compel sees turnover up, profit up in wake of Info’Products buy

Compel Group’s interim results today showed a 36 per cent increase in pre-tax profit to £4.97 million. Turnover for the period was up 40 per cent to £121.6 million, for the period ending 31 December. The company declared a dividend of 2.4 pence, from 2.1 pence last year. Earnings per share were up 29 per cent to 11.6 pence. Compel said all areas of the group had performed well. On 8 January 1999, Compel bought the reseller Info’Products, which is expected to make an operating loss in the second half of 1999, before returning to profitability next year. Compel said it would do this by reducing Info’Products’ cost base before improving its business margins by increasing the level of services provided. Compel added that it had paid materially less for Info’Products than its net assets in anticipation of the loss. Neville Davis, Compel chairman and chief executive, said: "The Group enters the second half of our financial year in a strong position; the board is confident about the prospects for this period and beyond." ®
Linda Harrison, 16 Feb 1999
The Register breaking news

Disney to buy Pixar and… er… Apple?

If the latest rumours about the company are to be believed -- and it's a real big 'if' -- Apple is about to become a subsidiary of Disney, as a pawn in a multi-billion deal between Steve Jobs and the Great Satan of Cartoons and Themeparks. Sounds bizarre, no? But let's just think for a moment about how such a deal might work. The lynch-pin is Jobs' other interest, Pixar -- the computer animation company he bought off George Lucas back in 1986. Pixar's links with Disney were forged in 1991, when the two companies signed a three-picture distribution deal on the basis of Pixar's various award-winning short films Luxo Jr. and Tin Toy. The first was movie was Toy Story and the second, A Bug's Life, has just opened here following a US premiere back in November. Both Toy Story and A Bug's Life have done remarkably well at both the box office and the toy store, thanks to some highly lucrative merchandising deals. The current speculation, according to sources cited on the AppleInsider Web site, has Disney talking to Pixar about extending their movie distribution agreement which is then parlayed by Jobs into a takeover deal. It sounds fine: Jobs makes a huge pot of money, and gets to devote all his time and effort to Apple, dropping all this 'interim CEO' stuff. However, the current round of speculation has Jobs bringing Apple into the deal too, allowing Disney to buy Pixar and Apple in a colossal share-swap in return for Jobs becoming Disney CEO in place of the current incumbent, Michael Eisner, who would become chairman. A grand plan, indeed, and one that would certainly appeal to an ego like Jobs', but would it make sense for anyone else? Disney is clearly keenly interested in new technology and the opportunities it offers an entertainment company. It has software operations and recently launched the Go Network with Infoseek, bringing together the portal with Disney's numerous commercial Web sites. But does it need a hardware operation? Well, probably not. As an entertainment operation, Disney is fundamentally platform-agnostic company -- it will merchandise its movies on whatever system will generate the highest sales. Right now, that's Wintel for software and the Internet for content. In any case, Disney is a such a conservative company it's far more likely to move into the Wintel space. Apple might be making inroads into consumer computing with the iMac, but it still has a some way to go to before it can show it's a key player and not a flash-in-the-pan. For Apple, the deal would be advantageous, providing it with a firmer financial footing and a major thumbs-up as an entertainment platform. That said, the Disney name alone is unlikely to persuade all those software developers who ship far more units than Disney does to embrace the Mac. No, what they want to see is rather higher unit shipments than Apple is currently achieving, though it is at least and at last moving in the right direction. On the other hand, ending up as a Disney subsidiary could well kill what reputation Apple has a one of the big guns in the computer business. People simply don't take subsidiaries as seriously as independent players -- somehow it's seen as a sign that they just can't cut it on their own. Of course, that won't stop the respective boards of Apple, Pixar and Disney doing they deal if they think, for whatever reason, it's a good idea. But while a Disney takeover of Pixar seems very likely, we're sceptical about the deal's extension to Apple. ® Oh, and for anyone who thinks a Disney takeover of Apple would be a really cool thing, may we suggest you take a look at Miami Times journalist and top crime novelist Carl Hiaasen's interesting tome Team Rodent: How Disney Devours the World...
Tony Smith, 16 Feb 1999
The Register breaking news

Madge bolsters top tier management

Madge Networks has reinforced its leadership with the appointment of four new vice presidents, Emilia Knight, Graham Allan, Simon Gawne and Scott Zarriello. Emilia Knight comes to Madge’s corporate marketing and business development division from the anti-piracy organisation the Business Software Alliance, where she was European vice president and managing director. Graham Allan joins Madge’s worldwide sales department after working as managing director for Nortel/Bay Networks. Nortel has wasted no time in replacing Allan. The telephony and networking vendor has appointed David Hill as its Bay Networks UK managing director. Hill had been in charge of integrating Bay into the Nortel parent and before working at Nortel/Bay he had been worldwide VP at Micom. Simon Gawne and Scott Zarriello are both promoted within Madge. Simon Gawne becomes vice president of marketing and business development. Scott Zarriello becomes vice president of sales and marketing within Madge’s video networking division. ®
Will Knight, 16 Feb 1999
The Register breaking news

Compaq buys Zip2 for over $220 million

Compaq's Internet portal subsidiary, AltaVista, has bought Zip2, a developer of localised portal-building technology. Financial terms of the deal were not disclosed, but AltaVista CEO Rod Schrock told US wire Cnet that the company's cash purchase of the privately-held Zip2 had exceeded its $220 million takeover of Shopping.com. AltaVista will use Zip2's technology to provide localised information and connect users to online businesses in their area. The company claimed that local e-commerce accounts for 90 per cent of all Internet business transactions. "We plan to partner with local media companies and extend the Zip2 platform for the local merchants to sell products locally," said Schrock. Zip2 already has partnerships with numerous media companies throughout the US. Its Business Directory service lists over 16 million companies across the States. In addition to its own portal, Zip2 licenses its technology to local content providers. ® See also Pfeiffer to re-engineer Compaq as Internet company
Tony Smith, 16 Feb 1999