30th > July > 1999 Archive

The Register breaking news

IS MS ducking the Win64 question?

Microsoft has taken a very low key approach to the 64-bit version of Windows, codenamed Janus, so low that it was not even mentioned at the recent financial analysts conference. This suggests that it is not even slideware yet. The search engine on Microsoft's web site includes a reference to an article in CRN that says that Janus is the code name for the Windows 2000 Data Center server, but does Microsoft does not confirm this otherwise. Microsoft has provided some information on how to support Win64 data models in its developer network documentation, and the Microsoft Platform SDK, but that's about all officially, apart from a Microsoft preliminary document on large memory enabled device driver and software requirements. This is very basic, and was only posted earlier this month. There is a warning that device drivers must be recompiled for Win64 because 32-bit device drivers, even if they an address a 64-bit address space, are not supported in Win64. ISA cards are also taboo for Windows 2000 and will not figure in the hardware compatibility list. It therefore looks as though Win64 hardware devices and drivers will not be ready until later next year, so it would be optimistic to expect Janus to appear before 2001 - perhaps to cries of Hal-lelujah? Meanwhile, Compaq yesterday announced that it has set up a Win64 porting centre in Bellevue, near Redmond, with 64-bit Alpha-powered machines to help developers test their applications. All that's missing is Win64. Microsoft intends that Win 64 will support Merced. However, it is not expected that Win64 will not be available until after the first Windows 2000 bug fix, which will be maybe second half 2000, plus a sack or two of salt, so probably at least a year. There's plenty of scope here for the Wintel duo to blame each other for the delays. Microsoft has given out confusing messages as to whether Windows 2000 Data Center was to be a different product from Win64. The plan is to bring out the Data Center version some months after Windows 2000, where "some" is upwards of three months, probably with a 32-bit version of Windows 2000, and then rejig it when Microsoft gets Win64 working. Microsoft has been briefing some of its friends about Win64, but has said nothing officially. Should it bring out a duff Win64 and claim it to be a Unix killer, Microsoft will be laughed all the way back to Unixland. Putting together all the leaks and clues from the briefings, and the recent Fusion meeting in San Francisco for Microsoft partners last weekend, it looks as though Microsoft already knows that its Active Directory is not up to the requirements of a zero-downtime Win64, so it is having to be reworked, especially as Novell's NDS is being taken very seriously and NetWare is selling like hot cakes. Windows 2000 will not initially have load balancing and failover support, something that IBM and Compaq have already for NT 4.0. The advantage of 64-bit addressing is of course that there can be direct addressing beyond 4 Gigabytes. Intel's own chip sets will limit the addressable space to 64 Gigabytes, but third parties will probably produce Terabyte chip sets. The Janus codename may be a bit of a joke too: Janus was the two-faced Roman god of doorways, gates, and quite likely windows. It looks as though Microsoft will need all the help it can get to crank up Win64, and two heads could be better than one. ®
Graham Lea, 30 Jul 1999
The Register breaking news

DoJ prepares to demand break-up of Microsoft

MS on Trial Against expectations, the DoJ has been asking investment bankers how Microsoft could be split up. It had been thought that only the states, co-plaintiffs in the case, wanted this solution. However, it would be wrong to assume that just because the DoJ has made some enquiries, that break-up is the favoured course of action. In a complex case, it is normal practice to examine all possible remedies in some depth. Gina Talamona, the DoJ spokeswoman, confirmed that "experts" had been approached, but that nobody had been retained. Talamona confirmed that all options remained open, and that there was no focus on a particular remedy. The investment banks concerned not only did not want to be identified, but refused to help because their interests are completely opposed to harming Microsoft, largely because they almost certainly have positions that would be improved by Microsoft's continuation. In the longer term, break-up would probably cause even greater growth, but US investment bankers work from year-to-year, if not hour-to-hour, rather than having a five-year perspective, which largely accounts for the gold rush atmosphere in US markets. The other downside to even considering involving investment bankers is that they are particularly poorly informed about the industry, as can be seen from Microsoft's recent financial analysts meeting where the presentations were at a superficial level, befitting their lack of understanding of industry issues, and even worse, their serious lack of objectivity. A report in USA Today suggested that the DoJ was interested in where the logical break points were in Microsoft, and to know what the market reaction would be. If true, and it sounds doubtful, it is undesirable that the DoJ should be concerned with market reaction. The case, after all, is about the harm to consumers as a result of Microsoft's actions, and how the industry has been distorted to focus on areas where Microsoft is not dominant. For what it's worth, Jim Cullinan, who was spoking for Microsoft yesterday, said that Microsoft was not focussed on remedies, and that "we believe the facts will show we competed fairly". Verb sap. ® Complete Register Trial coverage
Graham Lea, 30 Jul 1999
The Register breaking news

Bong – LineOne signs up ITN for news service

LineOne has teamed up with independent news bunnies ITN to deliver broadband content to its Net users. The online service provider's (OSP) 350,000 members can expect to receive all the latest audio and video news directly to their desktop -- but only once they've upgraded to a broadband service provider. News of LineOne's latest venture into the broadband world (it has been part of BT's ADSL trial in London for some time now) came on the same day BT fleshed out its plans to rollout ADSL technology in the UK. It is also an indication of LineOne's eagerness to be among the frontrunners of broadband services when the race to attract audiences really begins in earnest. "I'm a big believer that broadband is going to happen," said LineOne MD Ajay Chowdhury speaking to The Register today. But he did concede that BT's high wholesale tariff would prohibit many people from signing up to the service when the technology is rolled out to six million homes and businesses next spring. "This is an early adopter pricing strategy but the price [of broadband access] will come down quite rapidly," he said. Chowdhury said this was just the first of a number of significant announcements that would be made in the coming months about LineOne's broadband services. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

Amiga chip choice confusion continues

So what the heck is Amiga's choice of chip for the company's next generation hardware platform? Last week at the World of Amiga (WOA) show, held in London, a videocast of a speech by Amiga president Jim Collas contained comments from Linus Torvalds, creator of Linux, the open source operating system that will now form the basis of Amiga's upcoming Amiga Operating Environment (AOE). Curious thing though: while Linus was there to discuss his Linux role and possible involvement with Amiga's Linux development effort, he appeared above a Transmeta logo. Transmeta is, of course, a chip developer and widely rumoured to be Amiga's processor partner. So, is all this coincidence? Was the Transmeta logo used, as some Amiga fans have suggested, simply because that's the company Linus works for? Well, it's hard to imagine Torvalds getting time off from his day job within Transmeta's chip development to give the guys at Amiga a hand -- unless the two companies are working together in other ways. And the only other way they really can work together is in chips, and that suggests that Transmeta is supplying the Amiga NC's processor. Then again, Wolf Dietrich, head of German Amiga upgrade supplier Phase 5, recently claimed Amiga has already selected MIPS' CPU -- and he cited a recent Amiga recruitment drive for MIPS programmers as evidence. Phase 5 is currently pursuing what's effectively an anti-Amiga strategy by developing an Amiga-style machine of its own, so Dietrich has an agenda here that may throw some doubt on his comments. That said, Amiga itself has done enough to irritate its supports, so Dietrich arguably doesn't need to stir things up. Then we have Motorola. It's planning a big roll-out announcement later this quarter for its PowerPC 7400 (aka G4) CPU, and has promised it will be joined by "many system vendors from many markets", according to the company's chief spin doctor, Will Swearingen. Of course, the only real connection Amiga has with Motorola is that the original Amiga hardware was based on the 680x0 family, but that's still a very strong connection. More importantly, perhaps, is pricing. Unlike Transmeta and MIPS, Motorola has economies of scale in place that could make the G4 a very attractive proposition for Amiga. Motorola's development programme for G4 involves some very interesting multicore, multiprocessing technologies. For a company like Amiga that's so keen on promoting its upcoming offering as "revolutionary", those technologies might well be just what Amiga's looking for. So too, though, is the Transmeta chip. Details of its CPU are very scarce, but it's likely to be quite different from what we're used to from a desktop processor. Amiga needs not only some whizzo new software technology -- that's what AmigaObjects is all about -- but some hardware that will draw in the punters. Especially if it's to shed its reputation (at least outside the Amiga user community) as a moribund platform long past its sell-by date. Transmeta is almost certainly a better bet on that front than anyone else. And, as we've seen, it has Linus Torvalds on its payroll. Does that make Amiga's choice, as hinted at during WOA, certain? If only. It's entirely plausible that Amiga still can't make its mind up about the CPU it wants or, more likely, hasn't yet okayed the deal. Until it does -- and names names -- speculation will continue to mount. ®
Tony Smith, 30 Jul 1999
The Register breaking news

CCM dips toe in e-commerce waters

CCM Distribution will launch an e-commerce site for resellers by the end of the year. This is the component distributor's first dip into the cyber selling pool, according to CCM MD Brent Cutler. This is because he thinks the Web's merits are over-rated by the distribution channel. "E-commerce is not the be all and end all. People in our business are putting too much emphasis on it," said Cutler. "But we appreciate the market is changing." Cutler believes that the most important thing is making and keeping relationships with the dealer channel. "You can't build that level of trust up over the Internet," he said. But, according to Cutler, resellers now need rock-bottom pricing as well as reliable service from a distributor. Cutler is dismissive of the distribution price war, saying: "Some businesses sell stock at cost price, making no margin. They can only do that for so long or they go under. The trouble is, they can ruin it for everyone else." He added that the channel was about to see a new CCM. "We are getting more aggressive with our marketing. And we know what we are doing -– CCM is one of the most profitable companies in our area in the UK." ®
Linda Harrison, 30 Jul 1999
The Register breaking news

ADSL market set to explode

Half a million people will be using broadband ADSL services in the UK by the end of next year. Three quarters of these early adopters will be small or medium sized companies. The rest will be made up of well-off home users who can afford to pay around £48 a month for an ADSL service. These predictions were made by London-based Online Research Agency which forecasts a rapid take-up of BT ADSL technology once it becomes available. "BT will alter the Internet landscape with their new offering," said Nick Rosen, research director of the Online Research Agency. "People will be able to enjoy the Internet much more. With ADSL it will no longer be possible to dismiss the Internet as the World Wide Wait," he said. This is not everyone's opinion, however. Today's Daily Mail calls the launch of ADSL as "a £250 million gamble" and says the City is shocked at the prices BT is planning to charge for the service. The paper quotes Steve Scruton, a broker form HSBC. "I don’t think people will pay those prices," he said. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

ISP severs contract with Microworkz

Internet access device developer Microworkz had some real bad news yesterday when its ISP, EarthLink, pulled out of its deal with the company and leaving it unable to deliver on its promise of bundled Net access. An EarthLink spokesman told US newswires Microworkz was in breach of contract, so the ISP had no choice but to terminate its agreement. The spokesman would not say how Microworkz had broken their contract. Existing customers will continue to be provided with Internet access, said EarthLink, but new ones won't be. Microworkz' strategy has centred on offering ultra-cheap Net access devices, such as the $299 Webzter Jr or the $199 iToaster, with a period of free Internet access. Losing EarthLink's support will be a major blow to that plan. Still, Microworkz seems to be shifting its focus away from offering its hardware to end users and is targeting ISPs, allowing the company to focus on building systems rather than selling them. That certainly seems to be the reason behind the talks the company claims to be having with UK free ISP Freeserve and similar discussions with AOL. ®
Tony Smith, 30 Jul 1999
The Register breaking news

Samsung slips laptops its 16.5-inch whopper

They say size isn't everything, but Samsung might disagree. The Korean giant has developed a 16.5in TFT LCD for notebook PCs. The screen has Super Extended Graphics Array (SXGA) resolution, which Samsung claims gives 1.9 times the resolution of existing XGA displays. The 16.5in whoppers won't go into volume production until early next year and Samsung hopes to shift around 10,000 units per month. Earlier this week, Apple invested $100 million in Samsung's LCD business. ®
Sean Fleming, 30 Jul 1999
The Register breaking news

MP3.com Q2 revenues way up, profits way down

Web-based music supplier MP3.com yesterday followed the trend of Internet IPO'd companies by announcing major revenue gains accompanied by large losses for its latest fiscal quarter. MP3.com's second quarter, ended 30 June, saw revenues rise 769 per cent year-on-year to $1.9 million. That figure also represents growth of 286 per cent over the previous quarter. However, the company's loss increased much more dramatically, widening from $23,000 last year to $6.3 million this time. Taking charges relating to the company's recent IPO and other "stock-based compensation charges", MP3.com's Q2 loss was just $3.5 million, compared to $75,000 for the same period last year. MP3.com's IPO, which took place earlier this month, netted the company $361 million, so it has plenty of cash to cope with its losses. Still, if it's to justify the faith of the its long-term investors -- assuming it actually has any; as a Net stock, you have to wonder -- it needs to expand its artist roster with the kind of names that will significantly boost its CD and download sales. That means focusing more on developing its role as a label and less as a online retailer. ®
Tony Smith, 30 Jul 1999
The Register breaking news

Same old show on my Internet radio

LineOne is to launch its own Web-based radio station as part of its contribution to the broadband revolution, The Register can reveal. ITN will provide some of the news and feature-based content although the exact make-up of the service has still yet to be ironed out. A senior but as yet unnamed figure from the radio industry has been drafted in to head up the new radio station -- or should that be audio station, since it won't be broadcast over the airwaves? A source close to LineOne said there will be "all different kinds of content" -- and he refused to rule out the possibility of a music station too. As far as this reporter is concerned, executives at LineOne need only answer one question about the future of their audio station. Will they give a solemn undertaking to play Jethro Tull albums such as Aqualung, Minstrel in the Gallery and Songs from the Wood in their entirety instead of a non-stop diet of pop pap? Come one LineOne, the too-old-to-rock-n'-roll-too-young-to-die generation has a right to know. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

BT disappoints City with Q1 profits

BT unveiled disappointing first quarter profits yesterday, triggering a drop in its share price as the City reacted to results which were at the bottom end of analyst forecasts. Shares dropped 44p to £10.86 at the close of business as pre-tax profits for the three months to 30 June recorded only a seven per cent improvement to £772 million, compared to the £723 million figure recorded at the same time last year. Negative City sentiment to BT's "lacklustre and unaggressive" ADSL announcement didn't help either. The fall in share price is in sharp contrast to earlier this week when BT's shares rose on the back of news that the company had gained full control of the UK's second largest mobile phone operator, Cellnet. Sir Peter Bonfield, the telecomms giant's chief executive, cited the cost of developing new business, acquiring mobile customers and increased payments to other UK operators in a climate of increased competition as depressing the results. ®
Chris Steel, 30 Jul 1999
The Register breaking news

Profits up for Maxdata

Maxdata, the monitor manufacturer has reported a 42 per cent increase in profit in the first half of its fiscal year, and a 33 per cent increase in its turnover. Net income rose to DM28.6 million, or $15.7 million, and the tax bill fell by a massive 67 per cent to DM6.5 million and cash flow increased by over 50 per cent to DM35.7 million. The company said that the strength of the dollar flattened its operating profits, which dropped by 14 per cent, despite the big increases in sales. Investment in e-commerce and overseas expansion had also taken their toll, the company claimed. There was a one-off cost associated with the purchase of sister company, Vobis' production line. ®
Lucy Sherriff, 30 Jul 1999
The Register breaking news

Open letter to AOL about instant messaging

Mr. Steve Case President & CEO America Online Inc. 22000 AOL Way Dulles VA 20166-9328 Dear Steve, We are sure you are aware of the issue regarding interoperability between the instant messaging services of AOL and other vendors and of AOL's efforts to block instant messaging clients from other companies. These actions have led to an unproductive game of cat and mouse as we respond to your blockages to turn interoperability back on for users and you block us again. Steve, AOL is to be applauded for its early leadership in this space and for the foresight to purchase ICQ. The consequence of these efforts is your strong position in the marketplace. But now is the time to unlock the broadest possibilities of this technology and the Internet by tearing down the walls between vendors so that all customers can talk to one another. Certainly this is in our interests but it is also in the interests of our mutual customers. Surely, we can all agree that it's important for people from all walks of life to be able to communicate with one another in an unfettered and open fashion. Indeed, imagine a world in which users of one particular telephone service were unable to interconnect with users of another service. Similarly, imagine if AOL members could only email other AOL members. Such a world is not in the best interests of customers. Consequently, in the spirit of doing what is right for consumers and our industry, we'd like to convene a meeting of our respective companies to begin the far more productive process of creating an industry standard. Together, representatives of each of the companies' that have signed this letter intend to advance the IETF's Instant Messaging and Presence Protocol effort as quickly as possible. As you know, The Internet Engineering Task Force (IETF) is a large open international community of network designers, operators, vendors, and researchers concerned with the evolution of the Internet architecture and the smooth operation of the Internet. It is open to any interested individual and has taken leadership on many similar issues. Details on the Instant Messaging and Presence Protocol effort can be found on the IETF Web site. We would like to ask you to join us in this effort and put your full support behind the creation of an industry standard as soon as possible. In the meantime, in the spirit of co-operation, and to provide users with an interim solution, we ask that you suspend blocking users of non-AOL clients from AIM and provide a means for these clients to talk to ICQ as well. We believe that this is the most practical and fair process for developing a standard that will allow millions of instant messaging users the ability to communicate seamlessly with each other while at the same time providing some needed solutions to customers today. We would appreciate your commitment now to join us in this important effort. We will of course work with your staff to ensure that we schedule this process in a way that facilitates AOL's participation. We would appreciate hearing from you by the end of next week. Sincerely, Joe Kraus, Senior Vice President, Content Excite@Home Inc. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

AOL chief gets open letter on messaging war

The biggest guns from the Net industry have sent an open letter to AOL calling for a truce in the battle over Instant Messaging (IM). The "Dear Steve" letter was posted yesterday and calls for the adoption of an industry standard on IM as soon as possible. Microsoft, Excite, Yahoo! and the others wouldn't want their gesture described as a "white flag of surrender" but they are keen to call a halt to the verbal violence of the last week. They want all the parties concerned to get together for a pow-wow and take a few tokes of a peace pipe before settling on an amicable way forward. In the interim, they want AOL to suspend blocking users of non-AOL clients from AOL's IM and provide a means for these clients to talk to ICQ as well. "We believe that this is the most practical and fair process for developing a standard that will allow millions of instant messaging users the ability to communicate seamlessly with each other while at the same time providing some needed solutions to customers today," the letter said. AOL's Steve Case has until the end of next week to reply. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

US judge blocks Web kiddie porn law

A law designed to stop the distribution of pornography to children over the Net has been put on hold, for the time being at least, because a US District Court Judge ruled the legislation was unconstitutional. The preliminary injunction was delivered by Judge Arthur Tarnow who ruled that the Michigan Law was too broad and would have been in breach of the US Constitution's first amendment right to free speech. Anyone who violated the new Net law, which was due to have come into force on 1 August, would have been liable to two years in gaol and a $10,000 fine, reported Reuters. Civil Liberties groups are reported to be up in arms at the decision. Elsewhere, Olympic skater Nancy Kerrigan, is leading a crusade against porn merchants who publish digitally altered images of celebrities on their Web sites. Earlier this month she filed a lawsuit against NYGateway.com after it published salacious images of her. Although Kerrigan managed to get the site shut down after she contacted the Web hosting company, she has had little joy in seeking legal redress. It seems the law simply can't cope with the fly-by-night operators of porn sites. "These pornographers can pop up, you slap one down, and [then] four others pop up under different names," Kerrigan's lawyer Victor H Polk Jr told the New York Times. "They are really judgement-proof, and the legal system can't deal with them well," he said. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

Congress urged to extend Net tax-free zone

Net bosses in the US voiced their concerns about the future of Internet taxation during a day of talks with politicians in Washington DC. Lobbyists from the US Net industry schmoozed with Capitol Hill's finest to try and influence the direction of future legislation. In particular, they're worried about what will happen when the three-year moratorium on Internet taxation -- a concession granted from the Internet Tax Freedom Act passed last year -- is lifted. Executives from companies including Buena Vista Internet Group and Yahoo! met politicians in Washington DC as part of the Association of Interactive Media (AIM) business group. "The only way the Internet industry will be able to defend itself from government regulation is meeting face-to-face with members of Congress, especially those most interested in protecting this burgeoning marketplace," said Ben Isaacson, Acting Executive Director of AIM. "Every day a new piece of Internet legislation appears somewhere in Congress. Only through meetings like this can these issues of interest be brought to the forefront of the industry's attention," he said. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

Free-PC offers free Net access to boot

US give-away company Free-PC is back and embarking on an IT freebie frenzy that promises to ship 20,000 machines by the end of the year. Starting in September, the company plans to shift 5,000 free PCs with Web access every month. The bonanza follows last month’s launch, where the US company shipped 10,000 such freebies. At the time, Free-PC claimed that over one million punters had applied to get a Compaq Presario Internet-ready PC. The company randomly selected 10,000 lucky consumers for its first shipment. As part of its latest scheme it is offering applicants waiting on the Free-PC list - but already have a computer - free Internet access. Customers will get the free Web access immediately, and get the machine delivered when one becomes available. Free-PC makes its cash through its advertising-supported service, FreePCNet. It also sells personal information about its users’ buying habits. Don LaVigne, Free-PC CEO, said: "The response to Free-PC by our initial customers and advertisers has exceeded our expectations." "We are moving ahead aggressively to scale our one-to-one marketing network with the distribution of more Free-PCs." LaVigne said the company eventually aimed to give all its applicants a free PC. Current advertisers using the machines include Amazon.com, Hewlett-Packard and Symantec. The company has also announced plans to launch in the UK this year. ®
Linda Harrison, 30 Jul 1999
The Register breaking news

AOL UK trials ADSL

AOL UK is to start trialing BT's ADSL technology in the late autumn, a company spokeswoman confirmed today. The launch of the national trials to provide high speed, flat-rate access should also enable the OSP to introduce flat-rate pricing for those taking part in the trial. Despite the expected high cost of the service, it should bring AOL UK another step closer to its European goal to 'stop the clock' on high local call charges for Internet access, the company said. "We plan to deliver the AOL experience to multiple PC and non-PC devices and will be making further announcements this year," said Andreas Schmidt, President and CEO of AOL Europe. AOL in Germany has recently concluded tests and similar moves in the US appear to progressing well, a spokeswoman said. ®
Tim Richardson, 30 Jul 1999
The Register breaking news

Network Solutions International under fire from EU

Network Solutions International (NSI) has come under fire from the EU in Brussels following allegations that the US Internet domain name registrar is abusing its dominant market position, ahead of future liberalisation. The European Commission is conducting an investigation into the issuing of licensing agreements between NSI and two Scandinavian companies carrying out work on its behalf. The Commission claims these agreements contain exclusivity clauses that prevent the two companies from dealings with possible future competitors to NSI. NSI has -- for now -- the exclusive right to register top level domain names for Internet addresses such as .org and .com, giving it a natural dominance in the marketplace. It'sstatus as a profit-making organisation was called in to question by a UK rival. "NSI will want to keep prices high for as long as possible because they have shareholders," said Dr Willie Black, managing director of Nominet, the .uk domain name awarding body. "While I would not want to comment on whether they are abusing their monopoly position, in the UK we operate on a not-for-profit basis," he continued. ®
Chris Steel, 30 Jul 1999
The Register breaking news

Ecommerce beats Y2K spend – soon

IT spending is set to climb 50 per cent by 2002, spurred on more by ecommerce than Y2K, says GartnerGroup. Worldwide sales will reach $2.2 trillion this year, with around Y2k upgrades accounting for 40 per cent of the total. By 2002, however, the market will grow to £3.3 trillion with ecommerce accounting for 50 per cent of IT spend. Gartner predicts a major sales surge in 12 months time, again mostly due to e-business. IT will become more mainstream, with ecommerce integrated into businesses, it said. Gartner advocates an "holistic" approach to ecommerce. One all-encompassing business plan with e-business driving all technology would be more successful than lots of different project strung together, it said. "Enterprises must properly integrate e-business and IT planning into the core business planning this year, or they may have to make that IT expenditure again next year," warns Lou Marcoccio, a Gartner research director. ®
Linda Harrison, 30 Jul 1999
The Register breaking news

EDS back in profit, but debts climb

EDS returned to profit in its Q2, after losing $21 million in the last quarter as a result of savage staff cuts - and not that there was a whiff of earlier woes in its quarterly report, which showed revenue of $4.6 billion, up sequentially 6.6 per cent on the previous quarter, and just 6.9 per cent over the year-earlier quarter. Net income for the quarter was $240 million. As a consequence, EDS finished the quarter with $542 million less cash, and long-term debt increased by $953 million, compared with the end of 1998. The debt is now $2.137 billion. The staff reduction programme continues, with 8,000 old-timers (that means more than 50 years old to EDS) being offered early retirement. The "offer" may be made compulsory, since EDS also plans to sack more people before the end of the year. They will join the 5,200 employees who were given the boot in April, and 3,200 terminations in the first quarter (with a restructuring cost of $380 million). A restructuring cost is included in the accounts for the quarter just ended, which is strange to say the least, and leads to the suspicion that EDS wanted to show an improved quarter, and has found some way of holding over the restructuring cost to the next quarter. In 1996 and 1997, 4,750 staff were terminated involuntarily, and 1,750 opted for early retirement, at a cost of $270 million. The latest terminations are part of CEO Richard Brown's plan to cut $1 billion from the estimated $17 billion annual expenses bill. EDS now has around 125,000 employees. Formal reports from EDS are littered with phrases like: "severance costs", "involuntary terminations", "business exit", "facilities consolidation", and "asset write downs". It makes one wonder how such supposedly hot-shot consultants (AT Kearney is in the EDS stable) could have got their staffing requirements and business management so wrong. Ironically, EDS is also recruiting for its e-business and services sector which it claims has 20,000 people, although it also says its E.Solutions unit is new, suggesting EDS is very late to the game. The quarter was marked by a strategic alliance with Microsoft that looks like reducing the options to be thrust at EDS' clients in many cases, forcing them to suffer the slings and arrows of Windows 2000. In April, EDS acquired MCI WorldCom's information technology services unit MCI Systemhouse, which had 1998 revenues of $1.7 billion, for $1.65 billion in borrowed cash. Three other deals with MCI are pending. The recent downside for EDS is that the state of Connecticut came to its senses and decided not to go ahead with a $5 billion privatisation contract that it had been tentatively awarded against rivals IBM and CSC. Governor John Rowland said he was not certain that the computer service would be guaranteed in six or seven years if the state put itself in the hands of EDS. Perhaps Governor Rowland had been visiting some UK EDS sites, like that of the Royal Borough of Kingston-upon-Thames, where there has been an almighty cock-up. But EDS' greatest concern should be its debt. Six of the last ten quarters have shown reduced earnings, so there is no certainty that EDS can earn itself out of debt. It is increasing its debt with a $500 million commercial note, which Moody's hopes will be used to against its $2.5 billion bank facility. If the US boom stops, EDS could be in deep trouble. ®
Graham Lea, 30 Jul 1999
The Register breaking news

US net snooping plans debunked

Terror spread across the Net on Thursday when New York Times correspondent John Markoff broke the Big Story: a National Security Council draft proposal will put the FBI in control of "a sophisticated software system to monitor activities on non-military Government networks, and a separate system to track networks used in crucial industries." Ghastly. The body to be created will be called the Federal Intrusion Detection Network, or FIDNET. Big Brother by another name, no doubt. Libertarian alarmists and conspiracy paranoiacs dropped their daily meds and rose angrily, if unsteadily, to arms. "The plan... specifies that the data [FIDNET] collects will be gathered at the National Infrastructure Protection Center (NIPC), an interagency task force housed at the Federal Bureau of Investigation," the Times went on, adding that "the plan strikes at the heart of a growing controversy over how to protect the nation's computer systems while also protecting civil liberties -- particularly since it would put a new and powerful tool into the hands of the FBI." But it so happens that The Register has its own copy of the draftt proposal, and unlike the New York Times, we've actually read ours. Let's just have a peek at the text. The first observation we make is that the text states plainly, "the GSA (General Services Administration) is responsible for establishing the FIDNET Program Office: this includes creating an interagency management team from the defence, intelligence, technical, legal, and law-enforcement communities." According to our reading, FBI's NIPC team will come in later, when FIDNET data gathered by the GSA suggest criminal activity. Again we take the unconventional approach of consulting the text: "FIDNET will provide raw/filtered data from network sensors and the Federal Computer Incident Response Capability. NIPC will continue to be responsible for further data processing." We remain at a loss to explain why the NYT reported that FIDNET would "put a new and powerful tool into the hands of the FBI." On the contrary, it appears that the Bureau's NIPC will be a tool of the GSA, if and when it decides the government has been cracked. Michael Vadis, FBI's Director of NIPC, made it clear during testimony to the Senate Y2K Committee yesterday that the FBI will respond only where there is evidence of a federal crime. The only language we found in any way alarming was, "FIDNET will interface with the currently planned intrusion detection systems being developed for DOD (Department of Defence) and national security agencies." We didn't quite know what the pseudo-verb "interface" was intended to mean, but we know that American law enforcement and the military are forbidden to do a great deal in the way of "interfacing". As the very existence of America's Act of Posse Comitatus indicates a history of some difficulty in distinguishing between civil and military purviews, this little snippet naturally raised our eyebrows. On this matter the Department of Justice computer crimes division declined to be helpful. The level of interdependence between military and non-military bodies being contemplated is indeed a controversial issue, but it seems unlikely that the final product will initiate military involvement in civilian affairs enough to invite a popular backlash. Elections are coming up, after all; and the FIDNET system will present itself as a tempting target for cyberterrorists if its management becomes odious, thereby having the ironic effect of decreasing security for government systems. Assuming that the language of the proposal does get tidied up a bit, we can expect a much softer line in reference to DOD's role in FIDNET. This still leaves the matter of DOD participation in case of an emergency. The president is permitted by law to suspend the Act of Posse Comitatus in difficult circumstances, such as insurrection, mayhem in the streets, foreign invasion, or those the Y2K rollover might possibly present. A further bit of constitutional intrigue will undoubtedly emerge if a foreign military organization should attack a US civilian network related to banking, energy, transportation or some other essential service. It does not necessarily follow that the DOD would need access to civilian networks in order to reply on behalf of the USA. Vadis for one thinks an organised attack is inevitable. He declined to go into specifics, but left us with the strong impression that hostile military bodies overseas are developing the means to disable military, government and civilian networks remotely via an internet-based attack. Clinton's National Security Advisor, Sandy Berger, said on Thursday that there exist "governments that we know are developing systems to get access to our computer systems." Not an especially comforting thought. "We know that, in fact... there have been intrusions into sensitive systems," Berger added. Whether or not such an attack is being planned, it is certain that the US government expects one. We wonder if the increased level of connection among government systems needed for FIDNET to monitor them effectively might not lead to increased vulnerability. Whether it happens, or when it happens, it is sure to be a jurisdictional nightmare; and the FIDNET proposal does foreshadow that confusion with its own vague language. A crucial point here is that the proposal leaked to us is in draft form and now seven weeks old. The Register's contact on the White House National Security Council, who goes by the name of "an administration official," made it clear that the final draft will not be ready for submission to the President until September at the earliest. The FIDNET document is at present quite fluid, and on its way past numerous reviewers including the Department of Justice computer crimes division, the General Services Administration, the Department of Defence, the National Security Council and the FBI. Furthermore, our source at NSC tells us, the proposal currently being circulated does address and tighten up the unfortunately vague "interface" language. The level of involvement between DOD and non-military government agencies is intended to be little more than an advisory relationship and a sharing of new quirks, bugs and attack techniques much as "one police department might share tips with another in a different jurisdiction." The language which led to an assumption by many that FIDNET might one day monitor private-sector networks is also being clarified. NSC says that there will not be even an opt-in programme for private users to voluntarily choose such monitoring. FIDNET will, however, share its tricks with private enterprise, and leave it to them to implement what it chooses, on its own nickel. The Register will report fully and eagerly on the specific changes to the FIDNET proposal as soon as the latest version is leaked. It might actually make sense to withhold judgment on the piece until after it's been reviewed and polished. Just a thought. ®
Thomas C Greene, 30 Jul 1999