20th > July > 1999 Archive

The Register breaking news

Glittering MS financials mask declining trend

Microsoft's Q4 results "beat the street" again? Monotonous, isn't it? We'll explain how it happens. Wall Street financial analysts produce their estimates ahead of the results, and in this case the suggestion was that Microsoft would ear 36 cents a share. This estimate is then followed by a "whisper" figure that is little higher - 37 or 38 cents, these professional whisperers said in this case. But lo and behold, Microsoft reported 40 cents/share, with revenue of $5.764 billion for the quarter (up 29 per cent over the year earlier quarter, but a mere 15 per cent over the third quarter, which was in turn 12 per cent down on the second quarter), and net income of $2.202 billion (15 per cent above Q3). Since Microsoft's results are product driven rather than seasonally driven, there is now hard evidence that Microsoft is slowing down. In the conference call after the results were announced, Jerry Masters, senior director of planning and reporting, noted that there were "a few twists", and that Microsoft had "reclassified certain activities" that increased reported revenue but "there was no impact on the bottom line ". There was $200 million of coupon revenue from Office 2000 (the free upgrade for those who bought earlier versions recently). With only $285 million difference between the net income for Q3 and Q4, the real reason for Microsoft's change in accounting practices becomes clear: without the tricks, Microsoft would have shown a second quarter of decline in net income - something that will not be reported by most media, we suspect. Microsoft presented the results skilfully, with a long, boring justification that very carefully steered the less-than-astute financial analysts away from the true picture. It turns out that Microsoft's 30 June conference call for the analysts was to forestall any difficult questions about the changes in accounting practices that were needed to make Q4 look better than it was. In its defence, Microsoft can claim that the flexible rules of accounting allow a wide variation in how the accounts are presented. It will be interesting to see if the current Securities and Exchange Commission investigation of Microsoft finds evidence of Microsoft manipulating its share price by such means. Nobody seemed to be saying that the results were excellent evidence of monopoly profits, but it may not escape Judge Jackson when he decides whether Microsoft has competed illegally. Microsoft's business model is evolving towards licensing and away from packaged software. The sales pressure is to get organisations to sign multi-year licences, with the bigger deals being negotiated directly by Microsoft. Masters said this has resulted in lower channel inventory and hence lower returns from the channel, giving a saving of $250 million. For the financial year that ended 30 June, Microsoft banked $19.747 billion of revenue, up 29 per cent over the previous year, and had net income of $7.785 billion, up 73 per cent over FY 1998, a figure so obscene that Microsoft is too embarrassed to include it in its full announcement of the results. Although the balance sheet for the end of the FY shows $17.236 billion in cash and short-term deposits (compared with $13.927 billion a year earlier, the significant change is that "equity and other investments" went from $4.703 billion to $14.372 billion as a result of Ballmer's recent spending spree. Geographically, weak results in Latin America were disguised by including them within the result for the Americas, where a 30 per cent increase in revenue to $7.249 billion for the year was reported, and 48 per cent for Q4. EMEA reported a 24 per cent increase for the year, and 33 per cent for Q4. Asia was up 20 per cent on the year, and 53 per cent on the quarter, suggesting some recovery in Japan. OEM sales worldwide were up 37 per cent on the year, and 27 per cent on the quarter, which shows slowing OEM sales. The value of OEM sales exceeds EMEA and Asia sales combined. Microsoft only breaks down sales by product into three groups: Windows (up 35 per cent on the year, and 32 per cent on the quarter); "productivity applications & developer" - Office and tools - (up 25 per cent on the year, but 47 per cent on the quarter); and "consumer, commerce and other" (up 25 per cent on the year and 26 per cent on the quarter). There was deafening silence about contingency reserves if Microsoft loses the Caldera case, and the only mention of Microsoft's legal woes was that it had spent $150 million on "non-recurring legal expenses". We shall see. The true cost of Microsoft's various legal actions is many times this figure because of the executive time being spent on the defence. ®
Graham Lea, 20 Jul 1999
The Register breaking news

Bright Light offers free spam busting for the masses

California e-mail outfit Bright Light Technologies has just made its spam elimiation service free to individual users. Previously available only to corporate accounts and ISPs, the company's Bright Mail service can be set up at their web page to intercept spam destined for any POP account. According to the company, Bright Mail has been shown to eliminate up to 90 per cent of spam without errors involving legitimate e-mail. Bright Mail's staff of digital dustmen use numerous dummy e-mail accounts to attract the offending substance, then enter its address of origin into their database. A tedious, thankless job, no doubt; but there is an advantage: it's far less likely to can a piece of legitimate mail than user-defined filters which only search headers for keywords. After all, "XXX" can as readily indicate a sleazy come-on from a porno site as hugs and kisses from Gran. The Register wondered how Bright Light can afford to make its services available free to the rude masses. The company sees in it not so much a giveaway as word of mouth advertising: the hope is that "satisfied users of free Bright Mail will encourage their ISPs and employers to implement commercial versions of the service," Bright Light CEO Sunil Paul explained. Not bad: composing the odd memo to the sysadmin seems a fair price to pay for a free digital dustman. ®
Thomas C Greene, 20 Jul 1999
The Register breaking news

NatSemi in rumoured takeover talks

Forbes is reporting that National Semiconductor is ripe for takeover. According to the magazine, STMicroelectronics and Texas Instruments (TI) could acquire NatSemi. The magazine says that NatSemi has rid itself of divisions which lose money and wants to re-invent itself as an analogue and DSP business. (See Forbes story) The reports suggest that TI and STMicroelectronics are interested in lucrative NatSemi customers including Nokia and Ericcson. But the cost of NatSemi would be something approaching $7 billion on current market valuation. That could make a takeover prohibitive. ®
Mike Magee, 20 Jul 1999
The Register breaking news

AMD fab ramp pulls rug from under IBM deal

A year ago Posted 21 July 1998 -- a year ago US reports said that Advanced Micro Devices (AMD) has pulled the plug on a deal it had with IBM Microelectronics to manufacture its K6 processors. Although AMD will retain the option of using IBM Micro fabs in the future, the reason why it has decided not to begin using them is because it has ramped up its own manufacturing capacity, according to the reports. IBM Microelectronics, however, has advanced 0.18 micron process technologies at its fabrication plants, while AMD is still using its 0.25 micron process to manufacture its chips. According to distributors in the UK, there is now no shortage of AMD K6 parts while demand for the microprocessors is still high. This means that it is likely that AMD has managed to increase output at its existing plants. Next year, a state of the art AMD fab is scheduled to open in Dresden, Germany. No-one from AMD was available to comment on the reports at press time. ®
Mike Magee, 20 Jul 1999
The Register breaking news

Rambus real loser in PC133 wars

The admission by Intel yesterday that it is now "evaluating" the PC133 synchronous DRAM standard will cause many in the industry to breathe a sigh of relief. (Story: Intel changes mind on PC-133) Although Intel has consistently denied through the course of this year that it would support PC133, its own customers and the rest of the industry had already voted with their feet. Sources began to tell of problems with Direct Rambus yields, speeds and prices right from the beginning of the year, and at a so-called "plugfest" Intel held in June, its major partners HP, IBM and Compaq all pleaded that it reconsider its decision. But at last February's Intel Developer Forum, the company vehemently denied it would ever back PC-133. If Intel had backed PC133 right from the start, as it did with the PC100 DRAM standard, it would have made life far rosier for the OEMs and motherboard manufacturers. At the Computex trade fair in Taiwan last June, the PC133 consortium, with Via holding the banner high, seemed to have convinced most motherboard manufacturers that this was the way forward. Many motherboard manufacturers were, privately, furious that Intel was still pushing Direct Rambus. And in private, even Rambus partners like Apacer, an Acer subsidiary, were admitting that there were problems with the modules. Mosel-Vitelic, the biggest Taiwanese DRAM company, openly criticised Direct Rambus when it announced its own PC133 part. Intel also had a problem, but with the Camino i820 chipset, which it was forced to admit earlier this year. That chipset is now slated for a late September release, and was supposed to be the tinder that would ignite the Rambus flame. The chip giant will now have to re-engineer both its i810 and its Camino i820 chipset to support PC133. This will probably not be particularly hard. Our information from insiders at Intel is that there have been contingency plans for such an event right from the beginning of the year. The real loser is likely to be Rambus, although Intel comes out of it not only with egg on its face but with some financial damage too. It is an investor in Rambus and part of the reason it put money into both Samsung and Micron was to push the Direct Rambus standard. Intel has also antagonised many of its partners, who may now well feel tempted to go for an alternative chipset such as Via's (released yesterday) or other third party players. Yesterday, Rambus shares fell by a staggering $14 on news of Intel's volte face. It closed at $98 5/8 on Wall Street. ®
Mike Magee, 20 Jul 1999
The Register breaking news

Pentium III/600 & Celeron 500 – the NDA emerges

Sources close to Intel's plans have now disclosed that the chip giant has released box versions of the Pentium III/600 and Celeron/500, available to channel partners. Dealers can only buy a maximum of three each, but are bound by one of Intel's fearsome non disclosure agreements (NDAs). This is the Intel line on the pre-release of the parts: "Early access to the boxed Pentium® III processor 600 MHz and Intel® Celeron processor 500 MHz "Intel is offering designated dealers early access to the boxed Pentium® III processor 600 MHz and Intel® Celeron processor 500 MHz so that they may purchase and integrate them into systems and have them ready to sell on the day of Intel's formal corporate launch on July 31, 1999. Intel is pleased to invite you to participate in this program subject to your agreement to the below terms of participation. "* If you desire to participate, you may purchase a total of up to three boxed Pentium® III processors 600 MHz and Intel® Celeron processors 500 MHz beginning July 26, 1999 from any authorized or participating distributor. Ordering pre-launch product from more than one distributor is strictly prohibited. Again, this program only applies to boxed Pentium® III processors 600 MHz and Intel® Celeron processors 500 MHz through authorized distributors. "* As always, this program is dependent on distributor supply and participation. Supply will vary by distributor, so contact your distributor as soon as possible. "* Until the boxed Pentium® III processor 600 MHz and Intel® Celeron processor 500 MHz is formally released by Intel for public sale on 7/31/99, the product is Confidential Information of Intel's. Our distributors and any of their authorized customers may only purchase the product under Non-Disclosure Agreement (NDA)". Our sources tell us the price of the boxed parts are the same as we published last Sunday. Major distributors are already accepting orders. (See Intel's PIII/600 for sale). However, it is unclear whether these prices will apply at release. ®
Mike Magee, 20 Jul 1999
The Register breaking news

Intel's IA64 programme threatened by IMS patent

A source close to the ongoing spat between Intel, Techsearch and ILDF has suggested that the possession of an emulation patent could threaten Intel's royalties on Merced. Details of the International Meta Systems (IMS) patent are contained in this story. There are also references there to previous stories. It emerged earlier that Intel had formed a shell company in the Cayman Islands in an attempt to blag the patent. IMS has gone belly-up, and the patent is now assigned to Techsearch. According to the source, the IMS patent is technically unremarkable, but does offer clever features to help one processor emulate another, using microcode. He said the patented technique, by itself, is not an earth-shattering invention and anyone clever enough, including Intel engineers, could have come up with a similar technique. Intel is interested in the patent because it is concerned it has infringed the IMS patent and could also accidentally infringe the patent with future processor designs. The technique in the patent is likely to be used by Intel to ensure compatibility between future and current processor designs. Any infringement of the IMS patent could potentially mean Intel has to pay billions of dollars to the patent owner (now Techsearch). Although the chip giant claims the patent is void because it was disclosed earlier, that is a matter which is under dispute. Meanwhile, other sources tell The Register that the FBI, the SEC and the FTC are taking an interest in the case... ®
Mike Magee, 20 Jul 1999
The Register breaking news

64M memory parts rise 25 per cent in two weeks

The prices of 64Mbit synchronous DRAM parts have risen by as much as 25 per cent over the last two weeks, to around $6, after rumours circulated in the industry that Micron had problems making them. However, last week, Micron took the unusual step of publicly refuting a Dresdner Kleinwort Benson report that it had production problems. Two weeks ago, we contacted Micron which denied then that there were any problems. (Micron says it has no problems with memories, whatever) In a company statement, CEO Steve Appleton said: "Although the company normally does not respond to comments made by industry analysts, the misinformation contained in the Dresdner Keinwort Benson report is so inflammatory and rumors have persisted for so long that the company felt it was appropriate to respond. It is unfortunate that Dresdner would propagate this misinformation in the marketplace and that others would continue to irresponsibly report these inaccurate claims. We are currently reviewing our legal options." Micron also said it has submitted a complaint to the Japanese Fair Trade Commission. Richard Gordon, senior memory analyst at Dataquest Europe, said: "The prices [of 64Mbit SDRAM] rose in reaction to those rumours before Micron officially denied it." He said: "The more interesting question is why spot prices have remained high ever since." Gordon said that it was likely that there was a lot of stock holding going on in a bid to keep the memory price stable. But, he said, such moves were only likely to have a short term effect, and Dataquest anticipated memory prices falling again over the coming quarter. ®
Mike Magee, 20 Jul 1999
The Register breaking news

IBM turns in strong Q2

After IBM caught financial analysts 10 per cent too low with its first quarter's results, they put the squeeze on and estimated 88 cents for IBM's latest quarter. In the event, IBM still pipped them again by returning 91 cents on sales of $21.905 billion (up 16 per cent on a year ago, and 8 per cent on the previous quarter). Net income of $2.391 billion was up 65 per cent on a year ago, and 63 per cent on the previous quarter. There were some important exceptional items however. There was $2.1 billion from the sale of Global Network in the US, British Isles and Japan, with the disposal of the remainder of the network expected in the present quarter. The facility in Essonnes, France will be part of a joint venture with Infineon Technologies (a Siemens subsidiary), with DRAM production being changed to logic chips, and $770 million of charges for restructuring moves, including some in its storage business ($208 million of charges there). Toshiba will take over IBM's 50 per cent interest in the Dominion Semiconductor Company from the end of December next year, resulting in a charge of $104 million. IBM is taking full ownership of the MiCRUS joint venture with Cirrus, where CMOS components are produced, giving rise to a charge of $92 million. Curiously, IBM decided to implement an accounting change to depreciate its internal PCs in three years instead of five years, the same day that Microsoft announced it would use three years for Windows depreciation calculations rather than two years, so it looks like three years is now official for PC life. Hardware revenue of $9.379 billion for the quarter was up 22 per cent over the year-earlier quarter. AS/400 revenue is beginning to fall, but RS/6000 and S/390 both showed increased revenue. The PC business "continued its year-over-year improvement" Lou Gerstner said, but he did not give a figure. OEM revenue was $1.9 billion, up 21 per cent over the previous year. Services showed 15 per cent growth compared with a year ago, while software was up 9 per cent, financing up 4 per cent, and investments up 16 per cent. Geographically, the Americas rose 16 per cent to $10 billion, with EMEA up 14 per cent to $6.4 billion and Asia-Pacific up 19 per cent to $3.6 billion. IBM declines to speculate about future results because of the complexity of its business. It is also interesting to see the difference in style between how IBM announces its results, led from the front by Gerstner, and how Microsoft puts in to bat two medium level executives and the CFO, who just a quarter ago was considering leaving the company. Perhaps Gates and Ballmer are on holiday. ®
Graham Lea, 20 Jul 1999
The Register breaking news

Red Hat opens European operation

Leading Linux distributor Red Hat yesterday announced the formation of a European operation, to be based in the Guildford, UK and Stuttgart, Germany. Both sites will carry out sales, marketing and support roles under the supervision of Colin Tenwick, previously with Sybase Europe as VP and general manager. The move is a sign of the growing commercialisation of Red Hat, itself driven by growing demand for Linux among the business community. Coming to Europe puts Red Hat into closer competition with rival Linux vendor, SuSE, which is increasingly expanding its own commercial operations. ®
Tony Smith, 20 Jul 1999
The Register breaking news

Orange adds Wildfire virtual PA to mobiles

Cellular company Orange has launched a cyber secretary that can call your contacts, hold a conversation and prioritise incoming messages. Wildfire, a voice-activated PA, will store contact details and even interrupt your conversations if you have a call waiting. The voice only comes in female form, and according to Orange will organise your life by responding to voice commands. By ordering Wildfire to "Call John", the female voice will ask you "Where? At home, work or on his mobile?" How it responds to "For god's sake woman, just find him, OK?" isn't clear. Wildfire can also put incoming messages into order or priority, leaving users free to pick them up and return them without having to hang up or redial. The service is available for a one-off £10 fee to Orange customers, and was designed by US company Wildfire Communications. Orange is the first network to offer the Wildfire service. Users pay normal Orange tariffs, but voicemail charges are paid to Wildfire. Costs vary between 7.5 pence and 8.5 pence to pick up voicemail -- cheaper than most Orange rates. "Orange believes that many services will be operated by spoken commands, and keypad entry will seem old-fashioned and cumbersome," said Bob Fuller, Orange COO. Fuller said the device pushed technology further towards a single speech-activated interface for voice telephony, voicemail, fax and data services. ®
Linda Harrison, 20 Jul 1999
The Register breaking news

Vodafone-Airtouch spends $1.36bn on US outfit

The European invasion of the US wireless business has gathered pace, with Vodafone Airtouch spending $1.36 billion on CommNet Cellular. The move will expand Vodafone's coverage of the rural west of America and is part of the company's plan to plug the gaps in its coverage. (See also Euro giants poised to pounce) CommNet made a loss of $60 million last year on sales of $170 million. The company's previous owner, Blackstone, says that the red ink reflects exceptional costs related to its earlier leveraged buyout. The $1.36 billion payment includes $764 million in cash and $600 million in assumed debt. It values the shares at around $31 each. Vodafone's chief executive, Chris Gent, said that CommNet fitted into Vodafone's operations "like a hand in a glove." CommNet has 360,000 customers, primarily in Colorado, Montana, North and South Dakota, Utah, Wyoming, Idaho, Iowa and New Mexico. Vodafone is also negotiating with Bell Atlantic to fill in other gaps in its network. In the States, service providers must pay each other a cut of any call cost if their customer wanders into a competitor's territory. Vodafone says that this can increase costs to customers. Bell Atlantic has cast a shadow over the attempted network sharing by pulling out of previous agreements. Two separate deals have been worked out to co-operate, but Bell Atlantic wants to dissolve the agreements. Observers have put this down to sour grapes over Vodafone's (so far) successful invasion. merger with Airtouch. But even without deals, Vodafone will be able to fill out its coverage by gobbling up small companies. ®
Lucy Sherriff, 20 Jul 1999
The Register breaking news

Caldera Thin Clients renamed to focus on embedded Linux

Linux distributor Caldera's hardware operation, Cadera Thin Clients, will today change its name to Lineo, a move designed to highlight the business' shift towards the embedded arena. Lineo's new strategy will focus on getting its embedded version of Linux, Embedix, into set-top boxes and the like, broading the scope of the open source OS away from its computing roots. The company will continue to offer DR DOS as an alternative embbeded OS -- Linux will join, not supercede, that operating system, Lineo CEO Bryan Sparks told US newswires. That said, the name change does suggest a rather more Linux-oriented focus than that. And Lineo is actively engaged in porting its DR DOS apps over to the open source OS, including its WebSpyder browser, to be rechristened Embrowser. Meanwhile, Lineo also promised it will announce a major tie-in with "the world's leading provider of embedded computing technology" -- though it wouldn't say who -- at Linux World in four weeks' time. ®
Tony Smith, 20 Jul 1999
The Register breaking news

BBC shrugs-off Web float rumours

The BBC is thinking about floating Beeb.com, its commercial Internet service, according to rumours floated in the UK this morning. Fire-brigading BBC spin doctors speedily hosed the notion with cold water, but you can see why it might be tempting. Privatisation of any part of the BBC would be a political hot potato, but the outfit has been getting more and more commercial since the heady days of Thatcherism, and it's spent an awful lot of money on its -- generally well-regarded -- Internet activities. "It's because of the Davies Panel examining our funding," a spokesman said of the rumour. "People are saying that we are planning to sell off everything except the Teletubbies. It really is total speculation." Estimates based on the Freeserve valuation would put the value of the Beeb.com at more than £500 million. The corporation currently brings in annual revenue of £2.15 billion from licence fees, so the hypothetical sale of Beeb.com would not go far to replace the money that would be lost if the licence fee was scrapped, but would come in very handy if it was cut, or frozen. Another spokeswoman for the BBC said that the corporation had no formal plans to sell off any of its appendages. "It is very speculative," she said. "The Davies Report isn't even written yet and there will be a consultation period and so on. All this speculation has been sparked by the article in the Sunday Times about the possible sale of BBC Worldwide." Beeb.com is funded by advertising and the sale of its content to other web sites. Official ABC figures for March put monthly page impressions for the site at 8.8 million and recorded 402,000 individual users. This is a mere bagatelle by the standards on BBC Online sites, clocking in excess of 80 million a month, but it's still not at all bad. ®
Lucy Sherriff, 20 Jul 1999
The Register breaking news

3Com boss announces Palm-based cellphone

3Com CEO Eric Benhamou yesterday promised a Palm handheld PDA with built-in cellphone functionality. But don't hold your breath: he also said such devices will hit the market in the next several years. US newswires have largely interpreted Benhamou's comments, made during a Q&A session at Computer Associates' CA World 99 event, as a real product announcement, but what he said was actually a little more pie-in-the-sky. Nor is what he said any great surprise. The natural convergence between handheld computers and wireless communications systems makes some kind of Palm-based cellphone, something along the lines perhaps of Nokia's Communicator, highly likely. After all, Palm has to continue to find market opportunities, and the network convergence arena is one it can't afford to ignore. The recently released Palm VII, with its built in wireless Internet access, is clearly a step in that direction. Benhamou appeared to imply that Palm itself is working on such devices, and it may well be doing just that, but it's important not to forget that the licensing programme put in place by general manager Janice Roberts and later expanded by ex-Palm president Robin Abrams was designed to encourage other companies to manufacture these kind of Palm-based gizmos. Abrams' promised Palm clones would appear in the third quarter -- one is expected to be Apple's re-entry into the PDA market -- so we may well see Benhamou's Palm-based cellphone rather sooner than he predicted. ® See also Palm to launch low-end Palm IIIe PDA 3Com names new Palm president
Tony Smith, 20 Jul 1999
The Register breaking news

Another complete computer system from Intel arrives tomorrow

Intel will announce tomorrow the latest in the InBusiness range of server appliances to include a mass storage box aimed at small business users. The StorageStation -- a snip at $999 -- sits on a LAN and contains 12GB of storage with a Pentium 266 processor (remember them?) to drive it. A 24GB variant will be available in two month's time at an expected price of $1399. Using the same web-based controls as the existing Internet and Email Stations, the new box runs on 10 or 100Mb LANs and features directory level security and automated backup alongside private folders for individual user's files while reducing server load and resources by separating file services from the application server, all in a dinky little unit a tad larger than a VHS video cassette. Cynics will be pleased to note that this is the first InBusiness product to use an Intel, rather than NatSemi, processor. ®
Pete Sherriff, 20 Jul 1999
The Register breaking news

Apple's PowerBook G3 is FireWire friendly

Apple's latest PowerBook G3 models are compatible with the company's FireWire software after all According to Register readers, a report from troubleshooting Web site Bug.Net, that Apple's laptops don't like FireWire, is just plain wrong. "Apple's FireWire on the G3 PowerBook works -- and well, I might add," wrote one reader. Bug.Net tried to run the installer that would upgrade their test PowerBook to version 2.1 of the FireWire software. Instead, the installer reported back that "this program cannot run on your computer". However, Register readers report that you can install the software, if you use the correct installer -- one provided by Apple for the new PowerBook G3 models. "The FireWire installer will not install on a PowerBook, so in a sense you are correct that FireWire will not work on a PowerBook, since you cannot install the correct drivers," said Newer Technologies product manager Jeff Chasick. However, "there is a set of installers created specifically for the PowerBook and FireWire 2.1 that will ship with the Newer Technologies FireWire 2 Go card, and they do work", he added. Other readers report successful installations based on software shipped with other FireWire cards, including one from Ratoc, and ProMax's FireMax-P card. Indeed, the 'fault' here appears to be the supplier of Bug.Net's FireWire card. Apple's line on this is that "FireWire 2.1 enables the use of FireWire CardBus cards with the Macintosh PowerBook G3. However, this extension is not included in this Web download. Third-party FireWire CardBus kits will include the FireWire 2.1 CardBus extension on their software CDs". So the relevant third-party clearly isn't shipping the software. Though why Apple's doesn't provide it itself, is a very moot point. If it's so keen Mac users should embrace FireWire, maybe it's time it started supporting it properly -- ie. supplied users with all the software they need. ®
Tony Smith, 20 Jul 1999
The Register breaking news

Intel puts cash into e-firm Resonate

An e-business company has received an injection of $13 million from a gaggle of investors including Intel. The money is not the first Resonate has received from Intel, which over the last year has pursued an Internet strategy which has sometimes resulted -- as in Level One's case -- in a takeover. Resonate customers include DoubleClick, Sun, Excite, E*TRADE, Fedex and GeoCities. Resonate's other partners include Tivoli, Sun, Siebel and Red Hat, and its products and solutions are aimed at keeping Web site availability high and optimised. ®
Mike Magee, 20 Jul 1999
The Register breaking news

IBM exits DRAM, PCs still (probably) deep in the red

On the surface IBM's Q2 financials (IBM turns in strong Q2) seem somewhat straighter than Microsoft's nicely massaged Q4s, but a couple of nasty questions occur. Was that not, for example, chairman Lou finessing an exit from the memory market? And exactly how much did the PC operation's numbers improve? IBM made various restructuring moves in the DRAM manufacture area, and as the raw numbers are generally what Wall Street in interested in, Lou Gerstner's words on the subject haven't been widely reported so far. The overall picture is fine, and IBM is taking the necessary corrective actions to maintain shareholder value (Lou's speciality). But Lou's words on the subject were as follows: "The actions we're taking in our microelectronics and storage areas are intended to strengthen our technology segment substantially over the long term. With these actions, we are well down the path of exiting the high-volume manufacturing of DRAM chips, while shifting our resources toward the faster-growth, higher-margin custom chip area. In addition, we are taking various steps to integrate development and manufacturing activities in our hard disk drive business while reducing expenses. These steps will not only improve the competitiveness of our technology segment but will further strengthen IBM's overall business portfolio." A little analysis of the above yields tasty red meat. IBM has been a committed long-term player in memory manufacture, and during the crises of the 80s was, apart from Micron, just about the only significant US survivor. Its joint venture with Toshiba (which it also recently dumped) was intended to maintain its position in DRAM. Gerstner has now made the exit strategy clear, and it's therefore worth recording that an area once seen as strategically vital is now basically toast. Check out the nature of the exit strategy, and one of the associated partners, too. Infineon Technologies (aka Siemens) will be co-operating in a joint venture turning the Essonnes, France plant into a custom chip operation. Siemens (a major European DRAM holdout from the 80s, so a mirror image of IBM) has been muttering the 'custom chip' incantation a lot itself recently. Bottom line: we've got all this DRAM fab capability that's desperately unprofitable, and we've lost the will to keep going. 'Custom chip' is an implausible bolt-hole being put forward by outfits like Siemens and IBM as a valid route they can take to keep their old DRAM fab churning. But custom chips are not the same as DRAM - they're custom, and you need custom customers to go with them. It's a dubious fig-leaf, says The Register. Now take a little look at that storage comment. Lou intends to "integrate development and manufacturing activities in our hard disk drive business while reducing expenses." Rather than quizzing him as to what he means by this, we should just check with our nearest discount supplier. Here in Europe extremely tasty hard drives produced by the IBM plant in Hungary tend to be extremely cheap, to the extent that we've been convinced for some considerable time that IBM cannot be making money out of this business. Lou is obviously trying to slash costs here, QED IBM is probably losing a bundle on the business. And PCs? We'll switch to CFO Douglas Maine. Earlier this year IBM admitted the PC business had lost a sum not unadjacent to $1 billion in 1998. Now Maine is making hopeful noises. Overall operations relating to the PC business were profitable in the first half, he said. Overall operations relating to? What do you reckon that's supposed to mean, if it's not a bit of accounting creativity that incorporates a deal of business that isn't directly related to the business of selling PCs? More clues: Maine says the PC business is on track to deliver "attractive returns" - so it's not profitable, and as an "attractive return" isn't necessarily a profit, it's quite possibly not going to be. And then we've got the optimistic upside that moves attention away from the bit that's bleeding. Maine said that demand for some ThinkPad models exceeded supply during the quarter. Which makes you wonder about demand for PCs in general, or even for ThinkPads (the bit of the business that works) in general. ®
John Lettice, 20 Jul 1999
The Register breaking news

Intel products rest in peace

We ought to have spotted this lot earlier but somehow missed them. Intel has discontinued its Socket Eight Overdrive processor (sniff) and its Celeron 333MHz and Pentium II Xeon 400Mhz. The Socket Eight Overdrive was Intel's way of allowing people to upgrade from the late and lamented Pentium Pro to the zippy new Pentium II. The deaths have all occurred over the last four weeks or so. Next of kin have been notified. ®
Mike Magee, 20 Jul 1999
The Register breaking news

US government props up Iridium

The US government continued its attempt to prop up troubled satellite-based cellphone company Iridium, yesterday. The Department of State signed a $1.4 million cheque for 1000 Motorola-made Iridium handsets. The US government is rather keen on Iridium -- it bought another huge pile of phones back in June. It has its own gateway into the network, and according to the release issued about yesterday's purchase, "other US government agencies" plan to make use of it. While we can understand these departments' interest in Iridium to help them "expand their communications capability", it's the network's role in ehancing "their security posture abroad", that concerns us. Any fool can see the value Iridium might have to the spooks -- we haven't forgotten the claims made earlier this year that at least one Iridium ground station is being used for interceptions. Presumably, Iridium, for all its current financial woes, will stay in orbit thanks to extensive US government contracts, until such time as sufficient numbers of ordinary punters sign up for the service. So Motorola, prime beneficiary of the last government deal, needn't be quite so worried about losing a ton of money if Iridium files for bankruptcy -- the security services (or rather, let's be honest, US taxpayers) will ensure it doesn't make such a filing. ®
Tony Smith, 20 Jul 1999
The Register breaking news

South Korea dominates LCD market

Survey A report by Japanese market research company TSR has said that two large chaebols (family concerns) are ahead of other players in production of TFT flat panels. Samsung and LG Electronic are the leaders, with the former holding 19 per cent worldwide, amounting to 1.84 million LCDs during the first half of 1999. LG has 15 per cent market share, managing to produce 1.5 million. Display Technology and Sharp were in third and fourth position in the league table, followed by NEC and Hitachi. There is currently a drought of LCD panels, as reported here earlier, with production unlikely to improve until next year. That will have an effect on the price of notebook PCs. ®
Mike Magee, 20 Jul 1999
The Register breaking news

Net will need 20-fold increase in servers, says Intel CEO

Intel CEO Craig Barrett reckons that the Internet is going to need 20 times as many servers as it has now in five years time. And he also reckons that the number of Internet users will increase sixfold, to 1 billion in five years time. You no doubt spotted the strange imbalance there, and figured out all by yourself how happy a man that makes Barrett. Clearly he's anticipating a disproportionately large increase in the volume of stuff each user is going to be taking delivery of across the Internet, and is therefore becoming even keener on deploying vast Intel server farms to pick up the load. That's one of the upsides for Intel. Another, says Barrett, is the happy appearance of the free computer phenomenon. Sign up with an ISP, and you'll get a computer. This of course is a nerve-jangling prospect for PC manufacturers and ISPs who're operating on razor-thin or negative margins, but it's cool for Chipzilla. Even if somebody buys up the entire WinChip excess inventory and shoves it into set-top boxes, Intel will still be there afterwards to sell the chips for free PCs. And they don't make WinChips any more. Oh, and one last nugget from the wit and wisdom of Mr. Barrett. He predicts a move towards consumer-oriented PC designs, and 'instant on' machines. So although (Check the story) Intel pulled the plugs on its instant on Kahneeta reference platform recently, as the Web site says, it's working on a sucessor, so watch this space. ®
John Lettice, 20 Jul 1999
The Register breaking news

Match-makers are Virgin on the ridiculous

Looking for love? Try a Virgin. Please don't snigger, we're serious. Virgin Net has launched a matchmaking service in collaboration with Match.com. Match.Com, on-line matchmaking specialist, will be Virgin Net’s exclusive provider of on-line dating services. All visitors to Virgin.Net will have access to the 1.9 million people subscribing to Match.com. And if you are still not convinced, Match.com is claiming responsibility for 700 marriages as a result of its services. Alex Dale, director of publishing at Virgin Net commented: "We believe that Match.Com will be extremely attractive to Virgin Net users and, in the long term, beneficial to both businesses. If I wasn't a married man I wouldn't hesitate in giving it a go." Uh huh. Here at The Register, we wonder if Virgin Net will adopt the slogan of its sister company Virgin Cola for the match-making service - "you can taste our love every time you swallow." If you are truly unable to contain yourself, go here. ®
Lucy Sherriff, 20 Jul 1999
The Register breaking news

Channel split over the free PC

Tiny Computers launched its "free" PC offer last week to a mixed reception from its rivals. Not everyone will follow Tiny's lead. The deal ties customers into a year’s telecomms contract with the TinyTelecom company. In return for making a minimum £25 of calls per month, users are given a PC base with keyboard and Internet access. A couple of Tiny's competitors are ready to jump into the free PC pool, according to industry sources. But other rivals remain reticent – with some seeing the issue of the free computer as a moral question. According to Bordan Tkachuk, CEO of London-based PC assembler Viglen, users of the free PC must be ready to sell their souls. A tall order, even for the most ardent technology supporter. Viglen would never travel down the PC give-away road, said Tkachuk – who does not see it as a valid model for the UK at present. The free PC idea has flaws as the technology deployed in these PCs has a relatively short shelf life. Plus, people still have to pay for the machine by buying goods through advertising or by line or other charges, said Bordan. "A PC for nothing comes with some catches. People will have to wrestle with the trade-off between privacy invasion or hidden charges, and a 'bargain' machine." Others, like Dabs Direct, believe the concept is viable, but will not get involved. "I think the whole idea will work and am not surprised that Tiny has embarked on this deal," said David Atherton, Dabs Direct MD. "I expect other PC companies will do the same. Dabs would like to, but we are held back in two ways. Firstly, we are no longer a PC manufacturer, so we are largely reliant on the technology other vendors offer us. Also, the lower-end customer subscribing to this kind of offer will demand substantial technical support costs," he said. Software Warehouse dabbled with the free PC idea around two years ago with its "Space Station" project. It will not try it again, according to the reseller’s founder and MD Steve Bennett. "People in the UK still haven't grasped the concept of the free PC," said Bennett. "But anything that grows the market is fine by me – especially when people are free to buy things from the Internet but I don't have to sell them the PC to do it," he added. ®
Linda Harrison, 20 Jul 1999
The Register breaking news

Insiders spill beans on Apple iBook

Sources close to Apple's plans in the US have told us that its notebook, the iBook, which will be announced at MacWorld tomorrow, has already started production. The machine is being made by a Taiwanese company AlphaTop, according to the same reliable source, and hundreds of pieces are already with customers as samples. Steve Jobs is expected to proudly show off the machine, formerly codenamed P1, at MacWorld. Production is expected to hit volume this September. ® See also Analyst claims iBook to launch 21 July Taiwan firm wins iMac notebook contract
Mike Magee, 20 Jul 1999
The Register breaking news

Nvidia, SGI bury hatchet

Silicon Graphics and Nvidia have settled their differences and announced a strategic alliance to work together on future graphics technology. SGI has dropped its patent infringement suit against Nvidia, while the latter has licensed SGI's 3D graphics patent portfolio. Financial details of the agreement were not available. The different CEOs did the usual gig of slapping each other on the shoulders and saying how wonderful the world is... ®
Mike Magee, 20 Jul 1999