16th June 1999 Archive
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First of its kind?
Fervent DEC and Compaq watcher Terry Shannon, who edits Shannon knows Compaq is reporting that he saw a four way SMP AlphaServer ES40 running at DECUS. DECUS is the former DEC User group, a highly influential forum for putting pressure on the former Digital and the church of latterday Compaq (The Big Q). According to Shannon, to the best of his knowledge, Compaq is the first big vendor to get four way symmetric multiprocessing running on Linux. ®
Business 16 07:20
Remind us, Ray - what is it that the company that paid for your Porsche does?
Babbling happily to the New York Times' redoubtable John Markoff about the continuing boom in Silicon Valley, Oracle president Ray Lane tells of how he was apparently 'forced' to shop on the Internet. Oh dear. What's that thing Oracle's so keen on? Begins with 'I', doesn't it? Isn't Oracle supposed to be some kind of big noise in e-commerce? Lane, bless him, has apparently been moaning that there's so much money around that he couldn't find a single dealership with the new Porsche he wanted in the whole of Northern California. So he bought one via the Internet instead. Oh dear oh dear. Better take a look at his default settings, Larry. ®
Business 16 08:20
The trial transcript seems to point to another demo fiddle
The transcript of computer scientist Edward Felten's cross-examination by Steve 'Jack-in-the-Box' Holley exposes the trick that Microsoft played to get Felten's prototype IE removal program to fail. It turns out that Felten's program would not work if there were two browsers, so Microsoft chose to introduce a laptop with two browsers for a demonstration in court. Before Jack started his cross-examination, Steve Holtzman for the DoJ invited Felten to summarise the potential effects of removing Internet Explorer from Windows 98, using the prototype removal program as an example. Felten replied: "The prototype removal program is a proof of concept that demonstrates four things. First of all, Microsoft can deliver the Internet Explorer web browser separately from Windows 98 and give the user a choice of which browser they want to use or to use no browser at all. Second, Microsoft can do that in such a way that it does not change any of the non-web-browsing functions of Windows 98. Third, doing that would make Windows 98 run faster. And fourth, doing that would save a significant amount of memory on the computers of users who don't want to use Internet Explorer." Holtzman asked what was the difference to consumers between removing code on the one hand and removing a browser on the other. Jack-in-the-Box Holley popped up with an objection: "I wasn't aware that Professor Felten is an expert in the perception of consumers." It was a bad move, since Judge Jackson wanted to know: "Speaking as one consumer, I think we will let him express his opinion." Did this mean that Judge Jackson was struggling with Windows 98, trying to figure out for himself how to stop IE appearing all the time, even if Netscape is made the default browser? Felten told him: "To me, removing code is not such a big issue. From my standpoint, what I care about is whether I have a choice of which browser I'm going to use, and whether I have to pay the costs in performance and in memory of taking a browser that I don't necessarily want to have." When Jack started his cross-examination, it was as though he had not listened to a word that Felten had said. Felten was not phased by his intimidation, or the repetition of attempts to debunk his removal program, or his deliberate mischaracterisation of it. It became clear that Jack was working towards some revelation about the program, but Felten sensed this and phrased his responses carefully. Felten said that his program attempted to counteract Microsoft's attempts to force the system to use IE instead of the default browser. The two browser trick Holley then produced a Toshiba laptop that Microsoft had kept in its custody since 7 June when it had, in the presence of Felten's assistants and DoJ reps, been taken out of the box and used to create a shortcut to Earthlink. But had Microsoft interfered with the laptop? The machine had been put back in the box and the box sealed, Jack explained, until just before he was on stage. Felten by this time had grave suspicions, and pointed out that his program was not designed to be run in such circumstances. Since Microsoft had had his program for sometime, there was no doubt that there were going to be problems. Jack kept popping up with the same question: would it be possible to browse the Internet after Felten's program had been run? Felten said that it would be possible to browse, because "The removal program was never meant to be run in this situation ... you can browse the Web after removing the IE web browser because the NCompass browser is on this system. There is another web browser there. And the removal program only removes the Internet Explorer web browser." Felten managed to take most of the spring out of Jack's box, but Jack wanted to press on with his act, albeit with a weak spring. Judge Jackson had caught the drift: "Wait a minute. He says there is another browser on this machine." Jack was crestfallen, and started to squirm: "There is another user interface ..." but Felten interrupted him: "Actually, your honour, there is more than one other browser in this system." But in the absence of any objection from Holtzman, Jack was allowed to continue. The first admission by Microsoft that there was something different about the supposedly identical machine that Felten had been given by Microsoft was when Jack admitted that plug-'n-pray had helped itself to a monitor driver, for the courtroom display. Felten ran his removal program, and it was found that the IE icon on the desktop and quick-launch bar had disappeared, as expected. Holtzman then objected to the demonstration on the grounds that the test (which was of a proof of concept, not a production version) was not being performed under fair conditions, since the OEM had put a second browser on the laptop, and any results would be irrelevant. Judge Jackson said that it was entirely up to Felten as to whether the demonstration should proceed. Felten said he couldn't be sure if the test would prove anything, or of the outcome with the program being run on a machine with two browsers. Jack was disingenuous: "Your honour, the only other browser on this machine is the NCompass browser, which the Department of Justice says is Internet Explorer. That's their position in this litigation. The NCompass browser is nothing but a custom user interface that sits on top of the Internet Explorer components of Windows. So, it is not like there is some Netscape browser on this machine or any other browser." Hey, IE's come back! The judge replied: "Mr Holley, as much as I respect your tactical knowledge, you cannot provide the authentication for this", but he allowed the demonstration to proceed. Jack sprang out of his box and asked Felten to press CTRL+N. The result was of course the Windows update window appeared, from the other browser. Jack's demo just showed that Felten's program was not designed to deal with two browsers, and Microsoft was indulging in its usual nefarious practices. After some ineffective huffing and puffing, Judge Jackson called "time" and said: "I think you've both made your points, and any further experimentation isn't going to change the mind of either one of you." Jack tried again to score the same points, until the judge said "Once again, I think both of you have made your points, and you're in a state of semantic non-reconciliation, and you're never going to reach - " at which point Jack rudely interrupted, so judge Jackson announced: "I'm going to take a five-minute recess now, or ten-minute recess." The fat attorney sings When they resumed, Jack wanted to enter into evidence the source code of just one of Felten's programs. To the judge's surprise, Holtzman did not object, despite the exhibit, and an earlier one, being incomplete. Some further sparring between Jack and Felten allowed Felten to draw attention to "the distinction between Microsoft making things available and Microsoft forcing people to install them. Microsoft making things available is helpful in most cases, but Microsoft forcing people to install a web-browser product, I don't think, is helpful." Just before Holtzman began his brief redirect examination, Judge Jackson remarked: "Mr. Holley, have you ever sung the role of Figaro? The way you handled those lines of code is absolutely awe-inspiring." This curious remark suggests that the judge was being superficially kind to Jack and wished the record to reflect that he was not antagonistic. This is not an unusual move when the judge has formed a very negative impression. Felten lost a chance for revenge when he had no useful response to Holtzman's question as to why Microsoft would have chosen a PC with two browsers. But an excellent chance came when he was asked about Windows 98 bugs. It turned out that the source code marked known bugs with the annotation "BUG BUG BUG", and - get this - there were more than 3,000 known bugs in one seventh of the code. Being a scientist, Felten was reluctant to make the assumption that there were probably therefore 21,000 known bugs, plus many thousands yet to be flagged - perhaps 25,000 in all. So far as the desire not to have browsing built in, the CEO of Intuit had testified that Intuit preferred Windows 98 not to have a browser. Allchin had been asked whether it was an option not to have or to get rid of IE, and replied: "They don't have to use it. So, I mean, the rest of the system is, depending on its functions, so it's not like we could remove it. I mean, we can't remove those DLL's. It will not work. We can't remove the - well, obviously, it's software, so we can change anything." Felten agreed that Microsoft could change Windows 98 so it had no Web browser incorporated. Holtzman brought up the subject of Shane Brooks' 98Lite again and quoted Smart Reseller magazine: "This isn't just a parlour trick. For several weeks, Smart Reseller has evaluated 98Lite and found it, for all practical purposes, to be a fully functional Windows 98 operating system. In particular, such ordinary Windows applications as Microsoft Office 95 and 97, Netscape 4.0 and 4.5, Pegasus Mail 2.5 and Lotus Notes 4.0, all worked perfectly. When it comes to productivity, Windows 98 without Internet Explorer 4.0 works ...." Felten said he had no reason to contradict that finding. Jack had one final go at Felten, but Felten remained at the crease and was not out when stumps were drawn. Jack wanted a return match, to be videotaped, but Holtzman had observed that Jack had had the opportunity to do this, and "for his own reasons, chose not to do that." Umpire Judge Jackson pulled the stumps and said: "Motion is denied." David Boies then said that the DoJ would have some additional evidence to produce, and the judge replied: "That's why I'm not asking you to rest [the defence] at this point." The DoJ did not introduce more evidence when play next resumed, but will presumably be asking that Microsoft's cross-examination on the matter be struck because of the trickery. After all, only a gentleman could be castigated for ungentlemanly behaviour. ® Complete Register trial coverage
Business 16 08:23
Assembly of PIIIs moving "elsewhere"
An Intel representative confirmed today that assembly jobs at its plant in Ireland will disappear, but said that workers were being offered redeployment in the fab plant. The representative said he could not give the number of staff affected, but the Irish Times says 750 jobs will go. Intel said: "We've got two plants in Ireland, an assembly operation and a fabrication plant. We've been informing employees in our standard process of adjusting our manufacturing capablities." He said that staff had been told that their jobs will be redeployed, from the assembly line into the fabrucation plant. Currently, the 750 staff are producing packaging for the Pentium III and Pentium III Xeon line, he confirmed. According to the Irish Times, Intel is planning a further $300 million investment in its Leixlip plant, which is near Dublin. That suggests it is considering shifting it to the .18 micron process over the next year or so. ®
Business 16 09:00
But could have year end fever
A source with an interest in doing down Intel has told The Register that rev B1 of Camino i820 silicon has reached board manufacturers but it is still rather unwell. According to the source, who we know but who wishes to remain anonymous, rev B1 Camino drops dead when power is supplied to it. If this rather unremarkable problem is not just a minor glitch, that could mean we may not see Camino powered PCs until November, December, or even the year 2000. Intel does not comment on unannounced products. If any of our friends in Taiwan would like to confirm this new problem with Camino, we will be happy to keep their names out of the Intel hit list. ®
Business 16 09:09
A tasty little come-on for Apple, in the run-up to the G4, mayhap...
IBM could deliver the first of its SOI (Silicon On Insulator) PowerPC chips with copper interconnect to Apple within the next two months, according to US reports. This would give Apple the opportunity to be the first company to ship machines using the new technology, which offers a claimed 30 per cent performance gain over non-SOI chips. SOI increases a chip's switching speed, and like copper is viewed by IBM as one of its major secret weapons. The superior performance of copper interconnect chips has helped keep Apple interested in IBM's flavour of PowerPC, and SOI may help some more. The chips to be offered to Apple will be PowerPC 750 copper/SOI at 0.22 micron, and could be used by the company to add greater beef to its mainstream machines in the advance of the appearance of Motorola's PowerPC G4, which Motorola assuring us is on target for Q3 (G4 not delayed - Motorola) If it's not, IBM may be poised to pounce. It'll be moving to copper/SOI at 0.18 and then 0.13 micron, and is roadmapping a 1GHz 64-bit chip for 2001. ®
Business 16 09:18
Athlon? Sounds like Athlete's Foot...
We've been sunning ourselves in the Italian lakes for the last few days so managed to miss Dirk Meyer's presentation on the K7 last week. Sorry about that. He told an assembled group of diners that the K7 has a SpecFP a groovy 40 per cent higher than Intel's Xeon with a full speed cache. The K7 only has a half speed cache. As we ate our schinken, we were not thinken about the name AMD will give the K7. Some hardware sites say it will be called Athlon. Curious name, if true. We'll try to find out. ® RegiStroid K7 While Athlete's Foot appears to be the name of a chain of sports shops in the US, it has a different meaning here. It's a fungal infection you get between your toes...
Business 16 09:32
Do not waste company resources -- or else, warns employer
An IT manager has been sacked for surfing the Web during her lunch hour. Lois Franxhi lost her tribunal in Liverpool yesterday after her employer said she used the company's resources to scour the Net in search of cheap holidays. Franxhi maintained she was sacked by Focus Management Consultants in Cheshire because she told them she was pregnant. The tribunal heard how Franxhi used her office PC to make around 150 personal searches on the Net when she should have been working instead. But Franxhi claimed she surfed the Web for just 111 minutes over a four-day period -- the equivalent of just two lunch breaks, she said. "It's outrageous and unfair to be sacked for [surfing the Web] for such a small amount of time," Franxhi was quoted as saying in the Daily Telegraph. Believed to be the first case of its kind in the UK, the tribunal decided that Franxhi's personal use of her office computer made her guilty of misconduct. It was also revealed that she had been warned a few weeks earlier about the misuse of office stamps. Last month Rolls Royce sacked five people at its Bristol office for using its corporate network for sending "grossly offensive" hardcore porn. ®
Business 16 09:33
Statement by Simon Murdoch, managing director of Amazon.co.uk concerning the withdrawal of The Committee "It is the policy of Amazon.co.uk to offer our customers a full catalogue of all books legally available to be sold in the UK. This is based on our fundamental belief in the importance of free speech. We also believe strongly that it is not our responsibility to decide which books are acceptable to sell. Rather than impose our beliefs or prejudices on our customers, we believe that this is a role that should be the responsibility of elected government, their delegated body or the Courts. Anything else amounts to private censorship. "Let us be clear. There are no government or court restrictions on selling this book in the UK. "It is therefore with great reluctance that Amazon.co.uk will not be accepting further orders at present for this title. We have been put on notice that the book contains defamatory allegations. Our legal advisors have told us that, although we have a legal right to sell this book, if we continue to do so, under current UK defamation laws, we could be compelled to defend in court defamatory allegations (if any) made in the book against Liam Clarke, Trevor Forbes, Barrie Penrose, David Trimble and others. As we have no way of proving or disproving any such allegations, we have no option but to withdraw this book from our catalogue." Back to story
Business 16 10:01
But The Committee still available from US site
Amazon.co.uk has cleared its shelves of Sean McPhilemy's book, The Committee, after a senior Northern Irish politician sued the e-bookshop for libel. David Trimble, Northern Ireland's First Minister and a joint Nobel Peace Prizewinner, claims that the book contains defamatory allegations about his past. Despite Amazon's decision, it is still advertising the book by on its UK Web site. If someone tries to buy the book they are shown a message explaining that, due to legal action, the book has been withdrawn from sale. Amazon.co.uk's parent company, Amazon.com, confirmed it will continue to sell the book in the US where, in its own words, "the laws relating to defamation encourage free speech". Indeed, a statement issued to press last night by Amazon.co.uk's MD made an impassioned plea about censorship affirming the e-bookstore's commitment to free speech. The full text of the statement can be read here In a mood of defiance he said: "Let us be clear. There are no government or court restrictions on selling this book in the UK." Under UK law Amazon.co.uk was left with no choice but to withdraw the book from sale, he said. While Amazon's stand is laudable, it could be interpreted as being highly provocative if the libel action ever gets to court. ®
Business 16 10:10
ARM CPU plus software better than ASICs, DSPs, apparently
ARM yesterday made its move on the digital audio market with the launch of software designed to play back MP3 and Dolby Digital files on a standard ARM CPU. The plan is to promote ARM processors and the new software hardwired into ROM chips as a low-cost alternative to ASIC-based decoders. The software was developed with Cirrus Logic, which is building it into its own single-chip digital audio decoder, the EP7209, based on an ARM core. ®
Business 16 10:24
Gordon Bell produces facts and figures
The Elbrus E2K processor, dubbed the Merced Killer, has received unexpected endorsement from a senior Microsoft executive. Gordon Bell, who heads the Microsoft research unit, and developed DEC PDP and Vax, presented a table at this year's International Symposium on High Performance Computing which shows Merced in a poor light compared to the Russian chip. The slide Bell showed gave the E2K's clock frequency as 1.2GHz, compared to Merced's .8GHz, SPECint85/SPECfp95 as 135/350 compared to 45/70, Due size as 126 sq mm compared to Merced's 300 sq mm, power dissipation as 35 watts compared to 60 watts. For the E2K, bus bandwidth as 15Gbyte/sec, cache sizes as 64/256K, GFLOPS as 10.2 and system ship in Q4 2001. Bell's slide showed these last four categories as non appplicable to the Merced microprocessor. By the way, has Merced taped out yet, anyone? ® See also Battle royal breaks out over Russian chip claim Intel uses Russian military technologies Russian Merced Killer to achieve 600MHz Russian chip makers get to .35 micron Moscow government to support Merced Killer
Business 16 10:29
Speculation mounts big time despite UMC money
Sources close to 3Dfx emphasised today that the company is still interested in buying up S3, despite money the latter received yesterday from Taiwanese foundry UMC. In a tidying up operation, S3 will receive one UMC share for every one of its 252 million shares of USC stock. That places S3's capitalisation at an estimated $500 million. While 3Dfx capitalisation is around $250 million, there is an extra $600 million of STB capitalisation in the pot. Our sources say the talks between S3 and 3Dfx are now on, "with a vengeance". ®
Business 16 10:41
Portable MP3 player not a recording device -- official
Diamond Multimedia was feeling very pleased with itself yesterday when the US Appeals Court ruled that the company's Rio MP3 player is not a digital audio recording device. In turn, that means Rio doesn't need to ship with a copy-protection mechanism, as required by the US Audio Home Recording Act of 1992. The original case against Diamond, brought last autumn by the Recording Industry Association of America (RIAA) sought to ban the Rio because, as a recording device without a copy-protection system it was in contravention of the Act. The RIAA's argument was thrown out by the judge, and so the organisation appealed against his ruling -- only to hear yesterday that it had been upheld. "Because the Rio cannot make copies from transmissions or from digital music media such as CDs and tapes, but instead can only make copies from a computer hard drive, it is not a digital audio recording device," said the court. In a sense, though, yesterday's ruling was irrelevant. Since Diamond began shipping the Rio, it pledged it would, after all, add a copy-protection system to the next version of the player, due this summer. It will use InterTrust's MetaTrust system. It has also joined the music industry's Secure Digital Music Initiative (SDMI). Since the Rio's launch Diamond has shipped over 200,000 units, many of them at $200 a pop, so even a ruling in the RIAA's favour may not have inconvenienced Diamond too much. Indeed, the possibility that the RIAA might win out has kept various players out of the digital player market, allowing Diamond to build up its marketshare before the consumer electronics giants move in on its territory. "When people are shipping first-generation units, we'll be shipping second-generation devices," said a Diamond spokeswoman, smugly. ®
Business 16 10:49
Engineers tip us the wink about .12 micron etching and more
A couple of years ago, The Register was down Satan Clara way and bumped into the P7 engineers in a bar. They got tipsy and tipped us the wink on future Intel marchitectures. Now, it appears, AMD engineers enjoy a tipple or two, too. A source who got drinking in an Austin bar with some AMD engineers a few weeks ago gleaned some good info on K7 yields and process technology. He says the K7 will now be built on a .18 micron process, not .25 micron as previously thought. This matches Intel's intention to produce a 600MHz PIII using Coppermine .18 technology. Key parts of the K7 are etched at .12 micron and samples are already running at 1GHz in AMD labs. And AMD has ordered machinery for Dresden that will work at .10 micron. Further, production yields on the K7 are around 50 to 55 per cent, better than planned for this stage. ®
Business 16 11:19
Trail to go live in August, but first find your music providers
Magex, the e-commerce subsidiary of UK high street bank NatWest, yesterday kicked off its attempt to win the support of online content providers with the launch of a pilot digital music publishing programme. Called CranberryGrove, the scheme will begin offering music to the public around the middle of August. Right now, the scheme's host, iGroup, part of computer dealership Computacenter, is looking for "qualified music labels and distributors" to sign up to support the pilot. The Magex system, launched earlier this month, is essentially a new take on the old 'digital money' concept, allowing users to buy goods and services with virtual currency loaded into a wallet application using a credit card payment. Built into the system is InterTrust's digital rights and copy protection software, which the company claims provides a genuinely secure way of getting content to buyers and ensuring that content can't be copied unless the provider says so. The service will offer music player software from MediaScience and MusicMatch, but since they only offer Windows versions, that rather rules out all those Mac, Linux and Unix users out there. Given Magex's desire to become a universal e-commerce standard, it's got a funny attitude to supporting multiple platforms. iGroup has been developing CranberryGrove for some time, but had to wait on the launch until Magex itself had had its official unveiling. Magex itself is keen to trial its service, which is due to go live in the autumn. ® Artists and record labels can register for CranberryGrove here
Business 16 11:23
There's aluminium in them thar hills
Chip company AMD has been awarded a patent for a method of fabricating copper and aluminium metallisation. The patent number is 5,913,147, granted today and applied for on 21 Jan 1997. The inventors are Valery Dubin and Chiu Ting. The patent is a method for fabricating copper aluminium metallisation using the technique of electro-less copper deposition. The method provides a self-encapsulated copper aluminium metallisation structure. Got that? ®
Business 16 11:36
Oracle is slashing 325 jobs, around one per cent of its workforce, in a rejig to focus on the Internet. The company's quarterly profits easily beat market expectations yesterday, thanks to a boost in database sales. The software maker saw profit jump 31 per cent to $527.4 million, or 36 cents a share, for the fourth quarter ended May 31. This compared to $402.8 million, or 27 cents, a year ago. Sales were up 22 per cent at $2.94 billion from $2.41 billion. Analysts had expected the California-based giant to earn 32 cents per share, according to First Call. Oracle said sales in its software, which helps companies automate manufacturing, payroll and finances, had bolstered results. This quarter is traditionally the strongest for Oracle. But it reported slower than usual growth for its third quarter, and there were fears that it might disappoint investors again. Share prices climbed to $29.50 in after-hours trading, after falling 5 per cent to $25.13 yesterday before the results were announced. Licence sales, or new software revenue, in Oracle's applications business rose 28 per cent to $277.2 million from the same period last year. New sales of database software increased 21 per cent to $1.21 billion, with database services revenues also rising 21 per cent to $971 million. For the full year, Oracle posted $1.29 billion net income, or 87 cents a share, up from $813.7 million, or 54 cents a share. Sales were up to $8.83 billion, from $7.14 billion. "When you blow through the numbers like that, you've got to feel pretty good," Christopher Shilakes, analyst at San Francisco in Merrill Lynch said. Other analysts cautioned that the real challenge lay in Oracle getting consistency in its results. "Oracle hasn't historically had a terrific track record on that score," said Andrew Brosseau, analyst at SG Cowen. ®
Business 16 11:42
We're not shouting loud enough about the new industrial revolution. Apparently
If you already thought the Internet had been blown out of all proportion -- think again. Apparently, there's not enough hoop-la and hyperbole spoken about the Internet. That's just one of the conclusions from a new report by Cisco Systems which claims that the Net is set to be as influential as the Industrial Revolution in the 18th Century. The Impact of the Internet Economy in Europe claims that the Internet Revolution mirrors the changes that ripped through society during the Industrial Revolution. The difference at the end of the 20th Century is that the seismic socio-economic changes are taking just a third of the time as they did two hundred years ago. "If you thought the technology bubble was about to burst, think again," said James Richardson, President of Cisco EMEA. "Everything you ever thought possible through Internetworking technologies will pale into insignificance compared with what is about to come in the next few years," he said. On the basis of this evidence, the Internet is actually being under-hyped, rather than over-hyped, in terms of the impact it will have on people's lives, said Richardson (no relation). Part of the blame could be that there simply aren't enough quality rooftops available to allow people to really shout out about the Net. Or maybe not. The report was written by the Henley Centre and Commissioned by Cisco. ®
Business 16 11:48
Angst at Chipzilla Central sure to follow
Several of our readers wondered why we didn't cover AMD's Dirk Meyer's speech last Thursday. Thanks, those who emailed. The answer is as follows: we were at a wedding in Italy, near Lake Orta, and didn't take our ThinkPad or any other technology with us, apart from our mobile phone. And by the way, a black mark for Al Italia, who couldn't seem to get us home on time last night. Our invoice will be in the post. Now we've had a chance to look at the available material, it's worth summarising it. The K7, whether its called the Athlon or not, has half clock level two cache but still manages to be 36 per cent faster than the Pentium III Xeon in a spec95 floating point comparison. The correct comparison seems to be that a K7-600 beats a PIII/800MHz in floating point performance. And the K7 will better an equivalent Pentium III by around 40 per cent or even greater, Meyer seemed to be saying. AMD will offer different level two cache configurations this year, and Meyer said there will be no overhead when switching between MMX, 3DNow! or x.87. A further 19 integer instructions have been added to 3DNow! According to Meyer, the K7 will move to .18 micron in Q4, although this somewhat contradicts the story we have written here elsewhere today. The K7 will have 22 million transistors on a 184 square mm die. Motherboards at launch will use the AMD chipset, but our friends at Via, ALi and SiS are developing alternative chipsets, as reported here. As an aside, we wonder how Intel-only distributors will react to the introduction of the K7, as for the first time AMD's marchitecture threatens their mid-range and high-end business... Our thanks to AMDZone and JC for doing much of the spadework on Meyer's speech. ® RegiStroid .10 micron A dirk is a wee Scottish dagger that fits nicely in your sock and will probably deliver a fatal blow if you find the vulnerable point in a dinosaur's hide.
Business 16 11:55
So don't they work then? Or is it just a childish squabble?
An alert (you may call him sad, we couldn't possibly comment) reader tips us off to the non-existence of Intel CPUs in Microsoft's Windows 98 SE compatibility list. All the other major-to-middling chip companies are there, and Intel products have a whole five pages to themselves in the list, but CPUs? Nope. Check it out yourself at the SE compatibility site. If you search by CPU it'll kick up the list of companies covered, and just looking at the list prompts you to wonder what happened to Intel. So aren't Intel chips SE-compatible? As compatible as anything else, surely, so one wonders why, in that case, they're not listed. There are several possible explanations, most of them hinting heavily at the level of gang warfare that passes for negotiation in the Wintel alliance. It could, first of all, have been a mistake, but it's very difficult to conceive of Microsoft's morlocks missing a whole pile of products, particularly when they've done such an anally-retentive thorough job on the rest of them. Check the system requirements page too, and you'll see there's no direct mention of Intel. Minimum hardware requirement is a 486DX2 (remember them?) or better, and that's it. Calculated insult then? You can imagine them sniggering as they miss the Intel chips out, especially as Microsofties have relatively recently been exposed deliberately 'publishing' Java code by burying it in places on the site where nobody can find it. But we'd still need an excuse for the calculated insult. Which maybe leads us to the likeliest explanation. Obviously in order to certify something as compatible, the Micromorlocks have to have it submitted to them. If they have not had it submitted to them, then obviously they can't list it as compatible. Why then wouldn't Intel submit CPUs to Microsoft for compatibility testing? (Can't you just hear the flick-knives coming out?) As the pair of buddies are still working together on PC99 and beyond design guidelines for the industry, they've obviously got to talk to one another about Intel chips and Microsoft operating systems (albeit not enough, if recent OS prestidigitations are anything to go by), so why the needle at this level? Anyone in the know, please elucidate... ®
Business 16 12:03
Supplier's shelf-clearing suggests it will be
BeOS 4.5, the next major release of the self-styled MediaOS, could ship as early as Monday 21 June. Alternative OS-based hardware supplier SupremeGS is this week giving away free copies of the current BeOS release, version 4.0. The giveaway ends Friday, suggesting this is an exercise in clearing the shelves in preparation for the release of version 4.5. If that's the case, BeOS 4.5 could be officially released on Monday. Anyone who wins a copy of 4.5 will receive a free update to 4.5, the company said. In addition, the company said it had already received a test release of 4.5 and had begun evaluating the OS on its hardware. Meanwhile, Be itself has begun redesigning its Web site in preparation for the official roll-out of 4.5. Version 4.5 is believed to offer much wider hardware support than previous releases, particularly for Wintel machines and peripherals. The new release also marks Be's first attempt to interest consumers and more mainstream PC users in BeOS, in addition to its core base of users in the content-creation market. ® See also Be IPO based on set-top box role for BeOS
Business 16 12:08
Member of £40 million bootlegging ring
An American received Germany's first prison sentence for software piracy yesterday. The Texan, identified only as John S, was sentenced to four years without probation. The German regional court of Aachen found the 39-year-old guilty of importing illegally copied Microsoft computer programs. The landmark case was the first time Germany had issued a prison sentence for counterfeiting software. The move followed the seizure by German customs officials of thousands of illegal copies of Microsoft software programmes and manuals last August. Microsoft said fraud had been proved in several instances in the case, with total damages totalling around 120 million marks (£40 million). "This sentence is a breakthrough in Germany and shows that counterfeiting software is really a serious crime," said Rudolf Gallist, general manager of Microsoft GmbH. Earlier this month the Business Software Alliance and the Software and Information Industry Associated reported that almost 40 per cent of all business software installed last year was done so illegally.®
Business 16 12:20
Oops, there goes another kilowatt plant...
Remember the briefie story we wrote about Intel sponsoring a site for Linux developers a week or so back? Well, one of our kindly readers has pointed out that www.udigwg.org is actually running Microsoft-IIS/4.0 on NT4 or Windows 98. Ahem... ®
Business 16 12:21
Thought police fail to stop top chip blagger
A story in local newspaper The Arizona Republic has revealed that local cops have nabbed a thief who has robbed over $1 million worth of chips from Intel fabs, worldwide. According to the newspaper, suspect Christopher Michael Lovato, used to work for Intel but was able to use his old badge to shimmy into fabs and pocket shiny new Pentiums. The newspaper quoted a local cop as alleging Lovato had hit Intel Chandler four times since December. He is alleged to have nicked stuff from New Mexico (Albuquerque), Oregon State and Washington State too. He had an Intel Ireland badge, and the thought police allowed Lovato in, even after looking at his badge. He then flogged the chips using online auction house ebay, the paper claims. Lovato has admitted the theft, the local rozzers say. Heads are likely to roll at Intel Albuquerque, wethinks, although questions must be asked at Intel Ireland too. Of course, if the chips were (are?) Pentium IIIs, they could be easily identified... ®
Business 16 12:31
It might as well rain until September
Compaq analyst Terry Shannon is reporting in the latest edition of his newsletter Shannon knows Compaq that Merced samples are not now expected until September. The latest take on the plagued processor is that the taping out has taken longer than thought, Shannon reports. This confirms reports throughout the year that Intel is struggling to produce samples. Earlier today, we reported that Microsoft is putting money on a Russian, rather than an American chip. You can see Shannon's DECUS coverage at Shannon knows Compaq ® RegisTroid Q fact US English is closer to English than UK English because of the Pilgrim Fathers. In the UK, Fall is called Autumn, a redundant word in the US.
Business 16 14:47
Self contradictory statements, pressure group claims
The Campaign for Unmetered Telecommunications (CUT) has written to the British government to express its disappointment at last week's debate on the cost of Net access in the UK. In an open letter to DTI minister Michael Wills, CUT accuses the Minister for Communications of making "self-contradictory statements on the floor of the House". Alastair Scott, Moderator of CUT, said: "We were very disappointed with Mr Wills' response. "Steve Webb MP, who initiated the debate, made an excellent speech which covered almost all current issues and made some very pointed remarks about what could happen in the future." CUT claims Mr Wills evaded answering the questions raised and is gobsmacked by Mr Wills' assertion that that the take-up of Internet access is not dependent on the cost of that access. ®
Business 16 14:47
A porn site that reportedly makes $225 million a year now wants to get in to the gambling business. The company behind sex.com, Ocean Fund International, has issued a statement saying it had offered $3.6 billion to acquire a number of Caesar's casinos. This is despite reports the another company has already reached an agreement to buy the casinos from Starwood Hotels and Resorts for $3 billion. Analysts have dismissed the Ocean Fund offer as "bizarre", according to a report by AP.
Business 16 15:00
Buys in name auction house for respectability - but how respectable is Sotheby's?
Amazon.com has spent $45 million on a 1.7 per cent stake in auction house Sotheby's to secure its help in beating online auctioneer eBay at its own game and add a little bit of respectability to its own service.
Business 16 15:01
How low can a share price go?
US wires are reporting that major PC vendor Compaq is continuing to cut prices on its system units, whichever chip is used. But that could cause things to redound in Compaq's face, after ex-CEO Eckhard Pfeiffer warned earlier this year that Free PCs were the way of the future. Compaq's triumvirate, headed by Ben Rosen, has still not appointed a CEO to replace Pfeiffer, who with his cohorts, transformed the company from a bit-PC player into a network giant. According to the reports, Compaq will now introduce a Presario at $599. It is finding itself between a rock and a hard place. The rock is Dell and the hard place are no-name, skeletonic manufacturers, most of which can knock out PCs at well below any price Compaq can sell at. Compaq also followed Dell's lead in introducing a Net service. Compaq's share price continues to dive on Wall Street. ®
Business 16 15:25
So prosecute them, then
Almost a third of software in Britain is illegal, according to a report out this week. Over 200 companies took part in the survey by FAST (Federation Against Software Theft) and KPMG. It claims that 29 per cent of all software in use in the UK is illegal. Previous statistics suggested the country’s businesses were riddled with unauthorised software -- up to 80 per cent, said FAST. But the UK fares better than many other European countries. The equivalent study in Greece found it had the highest proportion of illegal software in the continent, with 74 per cent. Spain had 57 per cent, with Ireland a close third with 56 per cent.The best performer was Germany, at 28 per cent. FAST CEO Geoff Webster told The Register: "The results confirm our suspicions that corporate UK does see itself using copied software, but there is still a lack of awareness by senior management." FAST and KPMG warned that UK managers were leaving themselves open to civil and criminal prosecution by ignoring unlicensed software on company PCs. While two thirds of respondents were convinced that their own organisations had enough controls in place, the same number claimed many firms were using counterfeit products. Paul Diamond, KPMG information risk management senior manager, said: "For some companies, illegal software may be no more than games or go-faster programmes installed by employees. But for many it is more serious than that with copies of unlicensed software including Microsoft being used. "This may well be simply due to not having evidence of ownership or confusion as to how many copies are actually being used." As well as leaving companies open to charges of piracy, managers themselves could be prosecuted, said Diamond. Only 12 per cent of respondents were adamant that they could stop staff illegally installing unlicensed software.®
Business 16 15:39
End of the road
A couple of weeks is a long time in the IT industry and you really notice it when you go away. I’ve returned to find a distribution sector in even more turmoil. Profit warnings, resignations and job cuts at the once almighty Ideal Hardware, profit warnings at Datrontech and at Northamber, and more job losses at Ingram Micro. There have also been some not insignificant events at Illion (the loss of Cisco) and changes at Computer 2000 – but the latter company seems to be the only one that is really keeping its head well above water right now. There are a lot of companies and a lot of circumstances here which we could explore, but what these events mean in the broader term is that we are coming to the crunch – and it HAS been coming – for the old models of distribution. Ian French, Ideal’s new MD, has said as much in his comments in the press over the last week. The old linear model is dead, distributors now need to be either very large and extremely efficient logistics operations – and they can perhaps provide back-room logistics for resellers as well with drop-ship and private label type services, or real specialists that focus on a particular technology, vendor or market space. RBR is a great example. That company sells Cisco and nothing else and it is growing very quickly indeed. Equinox is another example; it is not as focused as RBR but it only carries a few vendors and they are higher-end networking vendors. It only works with a few resellers and it works really closely with them. Little to choose OK, there may be little to chose between these firms and systems integrators but there is a difference. In effect they are real specialists, with real focus who lend their skills to the reseller. They are also in the back room. Their focus means that they can’t sell direct because, to put the whole system together, you need other skills as well. Skills are key here – you have to have something the dealer does not have – but this means putting ime, effort and money. So your margins – products or services have to be really good. At the other end of the scale you need massive volumes at the low low margins available to support a really good logistics back end. It costs an awful a lot to keep that running efficiently and if your wafer-thin margins collapse you are struggling. Try to do both and you could end up in a lot of trouble – vulnerable to margin fall-out in the volume game while not having enough money to plough into the high-level services that will generate really good margins in specialist areas. This is what has happened - to some extent – to all the companies issuing profit warnings. Add to this the increasing use of the Internet for ordering and a simultaneous drop in growth rates and fall in prices, and it’s little wonder that profits are sliding. For Ideal this has been a particularly difficult time with disk drive prices and market growth both falling. It has also had the continuing Digital/Compaq merger to contend with, and been trying to adjust to its changes in management. In many ways, it has just been caught out by circumstances. But results are what counts to the City and after last year’s under-performance, the market will be very unforgiving this year. Especially after the experiences they have had – and continue to have with other listed distributors. Azlan, Illion, Datrontech, Northamber – they have all had their problems and continue to find it tough going in the UK. What is the future for these companies? Radical change is needed or they will find themselves in trouble. They must decide – are they volume players that add value through logistics, or high-value adders that focus on a particular area of the market? Broadliners The broadliners are the ones that, ultimately, have the best chance of handling the volume business as they have the scale. Tech Data/Computer 2000 is a massive force now. Ingram should not be written off in spite of its present troubles here – but it does need to get its act together fast. Nor should CHS be dismissed as a competitor; it too has had problems but on a pan-European and global scale, still has the potential. It’s interesting to note that Computer 2000 seems to be the only company sailing along comfortably right now. Yet it has focused business units inside the company so isn’t that trying to do both jobs? Well, that depends how far Computer 2000 goes with the mix; if one part of the business is being used to prop up another, it won’t work. But if it is being used to focus sales and support on the supply side, and to isolate costs and profits inside the business, then it probably can work. It looks like it does! And Computer 2000 is not trying to be a real specialist with all its products and services. In disk drives for example, volume products are handled by the components division – not the specialist storage business. And the networking division would not claim to have the level of expertise in particular areas that an RBR or an Equinox might. It is interesting to see Ingram now adopting a business unit model – albeit with much fewer divisions. But does any of this really matter? It depends who you are? If you are a director, employee or shareholder of the companies in question it matters a great deal. If you are a direct customer of those firms it might also matter – in the short term at least. For the employees and directors of the companies concerned it is a stressful time and you have to feel sorry for them. But they, as individuals and as companies, must decide where they are going and implement the changes quickly to have any hope long-term prosperity. For shareholders, it’s all pretty gloomy and those people have every right to feel aggrieved. Profit warnings are always demoralising and perhaps its time that the expectations of the City were managed down a lot more – better to under-promise and over-deliver than be over-optimistic at first and apologetic later. People who lose money don’t forget how they lost it in a hurry. For reseller customers it might mean a problem in terms of service delivery for a while but no-one will win any prizes for jumping off struggling ships. There will always be someone willing to sell you products of course, the question is what value they will add. Resellers only need two things – the logistical backup and the skills back-up, distributors have to provide one or the other or they are not going to survive. For end-user customers the fall from grace of the middle-ground distributor that mixes volume and value is not really of any major significance. It may look like bad news and a lot of disruption, but really it’s of no consequence. Someone will still be there to sell you products and services. All that is happening really is the computer industry is adapting and changing itself to meet the needs of the market today. That means plenty of choice, low-cost and, if you want it, direct shipments. Good skills and services are what you need and, if the current shake-out in the distribution channel means that, in the end, distributors provide better support for resellers and systems integrators, that has to be positive news. It will, however, take time to filter through. ®
Business 16 15:54
That Seattle mo-board and that Network Show
First the bad news. The guy offering the Seattle Mobo from Intel (Pete Sherriff) has still to adjudicate on your answers to proxy servers. Please email him herePete Sherriff and remind him that he has to make a decision, and that decadence is not enough. (BTW, Pete Sherriff and Lucy Sherriff are entirely different creatures). But we have two winners for those VIP Network Show tickets worth a stunning £1,200 each at the fabulous National Exhibition Centre (NEC), we can confirm. After a flood of entrants eager to attend the network show, the organisers have come up with two winners. And the winning lines to the question as to why Networks 99 is important? 1) Networks telecom is important in my IT calendar because... ...convergence is emergence and non-attendance is insurgence (Jason Orin) 2) Networks telecom is important in my IT calendar because in the rapidly expanding world of CTI it is the only place to be where people and equipment come together. (John Gibb). As regular attendees at the Network Show in Birmingham, we can confirm that it is an irregular haunt of Register staffers... ®
Business 16 16:20
And from the sound of it, things could get pretty messy in there...
They're off again - and this time it's personal. The latest round of the Linux versus NT grudge benchmarks kicked off at PC Week Labs in Foster City, California at the beginning of this week, and the results should be out in around a week's time. A couple of press were apparently invited to the opening skirmishes on Monday morning, but as they forgot us again we're beholden to the excellent Salon magazine for its colourful report. The adversaries consisted of the marketing team for Microsoft, appropriately enough, led by Jim Ewel, who is leading the Microsoft Linux destabilisation effort and whose fingerprints are all over the original and subsequent MS Linux benchmarking efforts. Microsoft even had a minder from its scariest and longest-serving PR company, Waggener-Edstrom. Linux fielded two engineers from Red Hat and one from Penguin Computing, and this is probably significant. One of the major Linux beefs with Microsoft benchmarking has been that the tests have been on rather more powerful systems than Linux is yet comfortable with, and that Microsoft's 'NT beats Linux' headlines have been based on tests where the hardware has been specifically of a category where NT is going to beat Linux. Well, Linux hardware vendor Penguin ships 4-way Xeon Linux machines and demoed an 8-way at Spring Internet World two months ago, so it knows a few things about this part of the market. From Salon's report it would seem that the preliminaries were entertaining. Mark Willey, Penguin's representative geek, derided the original benchmark, which was run by Mindcraft and commissioned by Microsoft, as "bench-marketing." He also (this guy sounds fun) persistently mimed finger quote marks every time the term "independent test lab" was used to describe Mindcraft, and provoked Mindcraft president Bruce Weiner into complaining: "You are challenging my integrity." (See below for further challenges) Good stuff, but unfortunately they seem to have kicked the press out before things really warmed up. Salon seems to have a reasonable take on what the outcome is likely to be (unless of course Weiner screws the ZD test's integrity by running Willey through with a RAID controller). Microsoft is likely to win, because of Linux's current weaknesses in the part of the computing spectrum the tests will largely cover. But the Linux community has already begun reacting to weaknesses identified in the earlier Mindcraft test, and in the somewhat more credible ZD tests that followed it. And that Penguin presence is fascinating. Give a geek from a Linux SMP hardware outfit a week's immersion course in ZD labs and you'll probably create the conditions for a serious counter-attack. ® Linux Challenge Bedtime Reading List: Tests cited by MS prove flaws in Linux study Can Linux avoid MS' trap? MS challenge to Linux Linux camp slashes out at 'NT beats Linux' study
Business 16 16:22
Turn on to the IT Network
Simon Meredith is a leading UK channel journalist</> In the statements he has made to the press over the last few days, Ideal’s new MD, Ian French, has more or less said that the old model of distribution is redundant and that the group would now derive more income from its Unisolve services business and the product-comparing on-line database venture, the IT Network. But just how important is the IT Network now to InterX and to Ideal? And can it generate sufficient business and profitability to propel the company into a new era. Several questions that, in all fairness, can only be answered by the passing of time, will need to be answered before we know if it can. The IT Network is Ideal’s new wave, the one that would roll the business on after the crest of the Ideal distribution business had hit the beach. It’s not time for it to start delivering results. It started off a few years ago as the Business Television Network – a satellite TV station designed for resellers. When that did not catch fire, Ideal modified the concept and the IT Network was born – this was a mix of on-line news content services using both text and video, publications, and marketing services for resellers and vendors. Product comparator That seemed to work at least in part, but last year the company tore up the plan and announced that it was going to create an on-line database service that would allow users to compare like-for-like products in every critical detail. It will launch this service on 28 June with, it says, over 100,000 registered members and committed revenues of over £650,000 – just about enough to pay the restructuring and redundancy costs that Ideal is incurring. This year, the IT Network is forecast to break even and it will make a material contribution to group profits next time. But it has not been cheap to get off the ground and the launch costs ballooned to £3.7 million - £500,000 higher than original estimate but this is due, says the company, to the "overwhelming" response they have received for the service. So, on the face of it, things look good. But can IT Network make this pay off in the long-run. The first three months will be crucial for the venture and will probably tell us if the whole system can succeed long-term. All or nothing The IT Network idea is an all-or-nothing one; to work, the users must utilise it as part of their buying process and the vendors who are contributing their information and their money to it, must see it working and support it. If the evidence is not there, vendors may get jumpy and start to reconsider how much effort they put into it. A withdrawal or a lack of up-to-date information would undermine the whole concept immediately. What use, for example, would a database that compares desktop PCs be without the details of any one of the leading three vendors? Without comprehensive information the service is of limited value - to the user and to the vendor. So, getting users to use the service is absolutely crucial. The registration numbers look good so IT Network can be optimistic about achieving this aim. But the company must not be complacent even if it does achieve good numbers initially. To succeed in the long-term users must go on using the service. IT Network must ensure that they adopt the service as an integral part of their product selection and buying service and use it repeatedly. If they do not do this, the honeymoon will soon be over and real life may be much less pleasant. How much the company may be able to influence users in this respect is difficult to judge – only time will tell, but one thing it will have to do is continually market the service and ensure the content is bang kept up-to-date. Challenge This is a considerable challenge. We all know about the speed of product life-cycles and the database will need to be bang up to date with all the information from all the vendors. This will, to some extent, be the responsibility of the vendors but once again, it is something IT Network must make sure it achieves as any slippage between availability of the product on the market and the information on the database will devalue the latter. If it works, the marketing will become less of a requirement as word about a good service soon travels. But it will be more vital and eat up cash if uptake is slow. The service has to work first time and needs to get off to a good start to avoid incurring more costs. But IT Network has already spend considerable time and money in researching needs and setting up the system so, that base should also be covered. Assuming it does work, what will be interesting is the scale upon which it works and how it interacts with the Ideal and Unisolve businesses. Within InterX these three companies are, ostensibly, independent of each other. However, they are bound to crossover to some degree. Clearly, Unisolve is going to provide services for Ideal Hardware customers and, surely, IT Network will endeavour to point users in the direction of the reseller channels that Ideal and Unisolve feeds. Channel-oriented But how will the vendors feel about it? Or more to the point, how will other distributors and services companies feel? It is hard to see how they could claim it is unfair as long as Ideal and Unisolve remain channel-oriented, all the IT Network would be doing is generating leads for them - and for the vendors. Other distributors then might have to respond and develop their own services but how could they differentiate them from IT Network? That, we can assume, is a question they will ask themselves when they have to – first of all the IT Network has to succeed – in itself first of all and in generating business for vendors and their resellers and, perhaps, for the other parts of InterX. Then final question is to do with money. How much will the It Network be able to generate and how much will it contribute to InterX sales and profits? InterX is a £300 million group; the IT Network will have to fly very quickly if it is to make a substantial contribution to the overall business. In spite of what French is saying, Ideal and Unisolve will have to continue to generate decent levels of business and profitability themselves while the new wave starts to gather strength. ®
Business 16 16:36
Credit lines reined in
The current sorry-state of most distribution businesses in the UK may be of little significance to the majority of end users and to many resellers – particularly those with big spending power i.e. the corporate resellers. But to the smaller resellers it’s pretty awful news. Most small resellers are already sick to the back teeth of being mistreated by most major distributors and the current collapse in profits and the knock-on effects it will have in spending is not going to make things any better. Over the next quarter more distributors are likely to rein in credit lines and chase up debts harder as they try to keep the cash moving. Services may also get the squeeze as they seek to cut costs. Ingram and Ideal are both losing staff and while they will, we can be sure, make every effort to keep service levels and morale high, it is bound to have an impact on the interface with the customer. The present situation emphasises the need for closer ties between smaller resellers and distributors, for a better understanding between them and for greater flexibility. The trouble a lot of distributors have now is that they are tied absolutely to their financial success. Once you are on the stock market you have to do well, or the investment goes and so does the confidence. To get back on track you have to make cuts and change fast, you can’t easily develop and implement a new long-term strategy. Image that you are one of these distributors and that today you are totally dependent on hardware sales; how will you keep generating cash and some profit if you abandon that and skill-up to be a services business? You can’t do it. The City won’t accept it and unless you have massive cash reserves, your creditors and bankers will being to get nervous. Market confidence also takes a hit and what these distributors don’t need right now is an exodus of nervous customers or people beligerently refusing to pay bills. More than ever they need loyalty in the customer base – but how do you get that? It is no good looking for it when the trouble has already started, you need it to be there when it starts. Most smaller resellers won’t feel sorry for the distributors currently experiencing problems because they don’t feel that they have been treated well over the years by these firms. And smaller resellers will suffer as a result of their problems. One way in which distributors can cover themselves against the harder times is by engendering loyalty in the reseller base. But they need to do it when they are doing well – they need to shut the gate while the horse is there, not try after it has bolted. For the distributors who are not doing so badly, the next few months could present a good opportunity – to build that understanding and loyalty while many others are forced to re-group and keep everything very tight.
Business 16 16:47
Simon Meredith reads the form card
Distribution is moving in two opposite directions – one is taking the big companies into a high-volume model with highly automated ordering and delivery systems, the other to a high value specialised model and one that will closely align with the reseller community. This does not mean that all the distributors in the middle who have a bit of volume and a bit of value and not much in between, will disappear; but some of them will. Here’s my brief summary of how I think the main players are doing, what they need to do in the future and how good or bad their prospects look. Computer 2000 Seems to be doing well with its business unit model and a big logistical operation behind it in Europe. Recent changes to support offerings only reflect the need for it to focus on providing cost-effective back-room logistics for the resellers and to cut out duplication between what it and the reseller can and does do. Aside from logistics, its strengths include the fast-growing In-Touch on-line ordering system and strong cost-control awareness. The business units help to keep that under control. As part of Tech Data group it has strong financial backup. Recent changes to management in central Europe are not too much of a concern – not to the UK business at least. But changes are bound to come as the two businesses look to maximise the use of resources and get closer together. It is in a strong position on the global stage. Computer 2000 now needs to capitalise on these strengths and consolidate its position – here and across Europe. Other distributors won’t lie down and in particular, it needs to avoid becoming the giant that everyone likes to throw stones at. Development of high-value businesses such as networking in which it has become very strong. Retail is also growing and the new management appointments there could be important. It’s programme for SME resellers could also be important as other distributors may not be able to service this market very well given their present difficulties. As long as it does not rest on its laurels and continues to adapt and develop, long term, and right now, Computer 2000 is certainly a winner. Ingram Micro The dust from the recent and massive changes to management and to redundancies needs to settle before Ingram can even start to make a recovery. The loss of the established channel people last year was probably the biggest long-term blow to Ingram and Meinie Oldersma undoubtedly has his work cut out. The recent departure of Simon Aldous will not have helped either. But Ingram does have a massive global organisation and resources behind it. The company also has the logistics capability. What it now needs – desperately – are good people and renewed confidence. This may mean some inspired leadership is called for in the UK and across Europe. But with jobs going and costs under pressure, it is hard to see where the people and the inspiration is going to come from. Ingram is too big to disappear though, it must surely make a comeback, but it will be a long hard road and, I suspect, there will be more fall-out before the company turns the corner i.e. more senior management changes and only moderate financial performance. In the short and medium-term, Ingram is not going to look like a winner. In the long-run it must surely pull through. CHS Like Ingram it is too big to go and has massive resources and logistics. But it will take time for the company to put its recent troubles behind it and rebuild. Out of the major broadliners, CHS perhaps looks most likely to be involved in a major merger or acquisition. If Computer 2000/Tech Data gets away from Ingram and CHS, it may be a battle between the two for the second spot on the global scale. There is probably no room for more than two pan-global and only perhaps three more pan-European distributors, thereafter the businesses will need to be nationally-focused. CHS needs to ring the changes and make the results clearly visible, if it fails to respond to the present challenges – both internally and in the market – it’s chances of surviving as a unit will diminish. Short term, CHS is losing, in the longer analysis, it’s future looks uncertain. Northamber It looks bad right now but we’ve seen this before and should not be deceived. Northamber is a shrewd company and it has been there longer than almost any other distributor as an entity. The profit warnings were not good but if, as David Phillips says, this is because Northamber is moving towards a higher-value model, then he has made his move early and may be able to turn the business around faster than some rivals. The only question for Northamber is whether it is going far enough in terms of changing its model as the lower-end is eaten up more and more by on-line trading. It is incredible that Northamber has resisted all temptation to be bought yet and if it cannot pull through this present challenging period successfully, it may be compelled to go down that road. However, do not bet against Northamber coming through it all in good shape and continuing to fulfil the role of the straightforward non-nonsense company that does only what it has to with the products it has to and no more. In the short term Northamber may look like it is down on luck, but so is everyone. It is a survivor and in the medium- to long-term will almost certainly come through. Datrontech A company that was too dependent on components business and too complicated is rapidly moving its dependency away from the old business into higher value areas and looking to simplify its business but selling off non-core activities. This is the right strategy for the immediate future but Datrontech will have to re-invent itself further still if it is going to stay in the fight as a major force. The distraction and difficulties of the Eastern European businesses has not helped, but they are now performing reasonably well. However, Datrontech can’t afford to rely on that region and must put its house in order at home as well. It then needs to look hard at the volume and value mix in its business because, if it is to compete in the networking arena, for example, it will face stern and increasing competition. It needs to decide what sort of business it is and put the building blocks in place now. Short and medium term, Datrontech will be fighting its way back but long-term there will need to be more changes. The company’s future as a cross-market-line player is certainly in question, as a focused player it may have a better prospects. Ideal Hardware In the short term, Ideal is the company that seems to have taken the biggest hit and it now has to get itself back on its feet and get back in there. Recent events will have dented its image and its morale but there is potential. Dependency on the volume disk drive business must go - the company recognises this and is acting. It already has on-line ordering and it needs to ramp-up the use of that system and cut cost out of its model. Redundancies will help start that process. It must move to higher value business and services and this is also recognised by the firm. Can it do that quickly enough is the question? Much is being made of the IT Network and what it might do but that may only be a holding position. The real money must be in the services area. If Ideal can be brave and make wholesale changes and implement them right away, its prospects must be good. The company has a good reputation, but it must shake off the core disk drive legacy now. In the short term there may be little good news from Ideal but if sister company IT Network can score an immediate success, it may regain some of its swagger. The most positive sign for the longer term is the candid recognition by management that things must change - and that they must change now. ilion It is just one damn thing after another at ilion. Senior management changes, the departure of Wayne Channon, takeover speculation and now, accounting irregularities, the loss of Cisco and suspension of two seniopr staff. What next? The recent blows will make it difficult for Illion and, if it cannot haul itself back into the market this time, it will once again look vulnerable to a takeover. The chances of an MBO must have receded with these recent events but that can’t be written-off. What ilion does have is a good team of people now. Although it has been quiet it has been getting on with the business - that’s what make the recent blows all the more crushing. To survive now, ilion must pick itself up and use its understanding of the networking business to claw itself back into profitability. If it cannot do that it will surely fall into the hands of a rival. But the recent quiet recovery of Azlan shows that it is possible. ilion has the people and the ability to survive as a network specialist, but perhaps with less strength and influence than it once enjoyed. In the short term there will be no really great news though and the longer it continues to struggle the more a sell-out looks on the cards. ®
Business 16 16:54
Four-part report by Simon Meredith
Simon Meredith writes... Simon is one of the most well-known and well-established channel journalists in the UK. This week he assesses the prospects of the UK's biggest IT distributors. More information about Simon’s work can be found at his Web site. Distributors in turmoil The Ideal answer What about the little guys? Winners and losers
Business 16 17:02
You don't have to be mad to work here, but it helps
Nortel Networks has got its wrists slapped for using a man in a straitjacket in a magazine advertisement. The Carers and Users Support Enterprise for Mental Health objected to Nortel’s recruitment advert in the Belfast Telegraph. Headed "We’re coming to take you away", it featured a wide-eyed man with a manic grin, in a straitjacket. The Advertising Standards Authority deemed the article capable of causing "serious or widespread offence", and asked Nortel not to use a similar approach again. Also in the ASA doghouse is Tech Imports Company. It was asked to stop making claims that its "radiation eliminator" reduced health damage from mobile phones. The Surrey-based company said its product eliminated up to 97 per cent of radiation emissions. The ASA said there was no proof the eliminator worked, or that mobile phones would continue to operate normally if it did.®
Business 16 17:42
Gateway 2000 has earned itself a ticking off from the UK advertising regulator for claiming its G6-350 computer is "expandable". Gateway said the model’s 64MB 100MHz SDRAM was expandable to 768MB. However, the 256MB memory chips that were needed for this upgrade were not available in the UK. The Advertising Standards Authority decided the advert was misleading because it inferred customers could order the G6-30 with expanded memory or they could easily obtain and fit the chips themselves. The PC builder said the term "expandable" referred to future, not present, capabilities. Gateway was asked to remove the claim. Tiny Computers was chided by the ASA for claiming all its PCs were compatible with present and future software and hardware. During its "You can afford to think big at the Tiny sale," the company said its PCs had been certified by Microsoft as "PC98". This "futureproofed" the products, according to Tiny. The complainant said technology developed so quickly that to predict PCs’ future compatibility was impossible. Tiny agreed to amend the claim.
Business 16 19:54
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