24th August 1999 Archive
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'Plumbers' to be legalised -- if it gets through Congress...
Crypto works the same horrifying voodoo on government control-freaks the world over, but cultural distinctions will colour their response. If the British Nanny State would become a cruel bully, its American companion aspires to become a twitchy, sweaty sneak thief. Or such is the impression we get from the Department of Justice's recent draft proposal for what it calls a "Cyberspace Electronic Security Act". Whereas Her Majesty's Government might rudely chuck you into the slammer for defying a warrant to decrypt files it chooses to examine and be done with you, Auntie Sam prefers to tiptoe into your house under cover of night and secretly install a device or an application to disable your crypto scripts and record your online communications and personal files in plain text. This would be made possible by expanding a little-used law enabling the Feds to obtain a warrant to sneak into private premises and install hidden listening devices. Only 50 such warrants were issued last year in the US, making it perhaps the least popular law-enforcement tactic known. It's a bit clumsy: the first warrant merely authorises installation of the device; a second warrant is required to examine the evidence it collects. For the proposed PC bug, a "recovery agent" would perform the dirty deed and maintain the data in a secure manner until such time as a judge empowers a law-enforcement agent or an officer of the court to view it. We weren't sure just what's meant by a "recovery agent". Is it some spymaster sysadmin working for our local ISP? A local police detective posing as an incontinent computer repairman cheerfully performing "free system upgrades"? A cat burglar who owes the DoJ a favour? The DoJ wasn't quite sure either. This is one of the bits of the proposal still being worked out. It would be fair to imagine that a recovery agent could be any of the above, but most likely a lab-coated technician examining a confiscated hard drive for potential evidence in a more-or-less IT workshop environment down at police HQ. American libertarians are alarmed, but we find the proposal more comical than sinister. We were much amused by Assistant Attorney General Jon Jennings' letter to House Speaker Dennis Hastert, entreating him to drum up congressional support for the scheme. Jennings appeals to the need for speedy action in such emergencies as "stopping a terrorist attack or seeking to recover a kidnapped child, [where] time is of the essence and may mean the difference between success and catastrophic failure." The Reno DoJ rarely fails to exploit the vast American cult of infant worship when paddling near the falls with due process, and there we have a classic example. Nice try, but in situations where a kidnapper's computer can be located and physically modified without his knowledge, finding the brat would be a no-brainer. Or does the DoJ expect kidnappers to communicate ransom demands to traumatised parents via ICQ? The most amusing flaw in this plan is not legal but rational. Auntie Sam may have got herself so worked up over innocent children in bondage that she fails to grasp the obvious: users sophisticated enough to employ IT in high-level crime are those least likely to be tripped up by an anti-crypto application, or the sudden materialisation within their computers of an unidentified black box. But what are the Feds to do? The Reno DoJ has been in fits over crypto for the past three years. Its preferred goal is to assemble a library of keys to be used as needed, but Congress has thus far been dragging its feet as only Congress can. This proposal may be something of a "Plan B" for Justice in case it fails to achieve the holy Grail. To be fair, the surreptitious installation of applications and devices would be a most unusual tactic under the proposal. The act, if it were passed, would be used chiefly to prevent any data not considered evidence from being made available to law enforcement agents. Sound paradoxical? Not at all: this is a pre-emptive strike at legal objections which might convince a judge that seizing a computer exposes too much of its owner's private data to law enforcement agents. Hence the clause, "recovery information shall be used to decrypt data and communications only as specified in the order, warrant, or other determination." These limitations are standard in US law, stretching back to the Constitution. Article IV of the Bill of Rights states in delightfully unambiguous language that, "no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." In other words, if the police serve a warrant to search your flat for a stolen piano, they've got no business mucking about in your medicine cupboard. The seizing of a computer and subsequent wholesale decrypting of its contents would amount to searching the medicine cupboard for a stolen piano, and no decent judge would authorise it. What Justice is aiming at here is not the authority to seek a warrant to seize or otherwise monitor a computer -- it already has that authority. The real aim here is to improve the odds that a judge would issue a warrant upon request, simply by limiting the amount and kinds of information to be revealed. It's an extremely clever tactic. When Congress returns from holiday in September, the DoJ will comb the Hill in search of a sponsor for this, its newest siege engine against the crypto bastion. Certainly there are members with simplistic enough law-and-order mentalities to bite the hook; but a bill such as this would be political poison to most, and the chance it would pass both houses is remote. The mainstream press have already stigmatised it as blanket authorisation for a plethora of black-bag jobs. A pity, really. If the alarmists would take a moment to think clearly, it would soon dawn on them that bureaucratic confusion, government incompetence, and jurisdictional disputes will render this amusing bit of legislation harmless, at least in comparison to the alternative. ®
Business 24 06:15
Slippage points to next century...
From The Register -- a year back Gartner Group is the latest outfit to advise its clients to steer clear of Windows NT 5.0 for the next couple of years. The company is joining the ranks of those who feel a usable version of NT 5.0 won't ship in 1999, and under these circumstances widespread deployment will have to wait another year. Advice of this sort is seriously bad news for Microsoft, which is currently bracing itself for the onslaught of NetWare 5 next month, and scrambling to get a second beta of NT 5.0 out by the end of Q3. The company's key next generation operating system has already slipped badly this year. Beta 2 is now targeted for the end of the summer, and the goal is to move swiftly through a third beta in time for shipment early next year. But not many analysts are going to bet the farm on Microsoft making that schedule. Seeing NT 5.0 miss 1999 entirely is a less probable result, but the predictions are in a sense self-fulfilling; the complexity of the software is likely to mean that the production version, even discounting the fact that it is becoming an increasingly rushed job, will have holes in it that need fix-packs. So a shipment in mid-1999 with fixes in Q3 could easily force deployment back into 2000. Microsoft also faces the Year 2000 problem - the later NT 5.0 is, the less likely corporations are going to be to expend resources on it until after they have Y2K out of the way. Microsoft sources however are insistent that NT 5.0 is closer than the pundits claim, and that a usable version of beta 2, complete with a usable Office 2000 suite, will be out on schedule. But if that does happen it will still put the company in a tricky position, because although it needs to make a noise to stop Novell running away with the show, it can't afford the PR damage of stuffing the market with less than 100 per cent versions of something that is supposed to be 'mission critical' when it ships. Meanwhile the 'multimedia enhancements' of Windows 98 are reportedly going to be available for download from Microsoft's Web site from 18 August. Initially described by some ignorant journalists (guilty) as a 'service pack,' this little bunch of goodies is nothing of the kind, says Microsoft. But aside from stuff like DirectX 6 and Media Player the (can we call it a patch then? Thought not...) thingummy will apparently include a couple of fixes. Just little ones, we trust. ®
Business 24 07:43
Is the 26th September date a typo?
When we reported a week or so back that Dabs Direct was listing a PIII .18 Coppermine chip available at the end of next month, our local Intel rep responded by saying it was probably a typo. (Story: PIII/600 with 133MHz FSB outed!!!) We now admit it may well have been a typo. It should have been the 27th of September. According to the excellent roadmap over at Roan's, which we confess we haven't spotted before, the release date for the Cumine beastie is the 27th September. In an email, Roan says his information is highly reliable. His information is that Intel will release 600-700MHz parts, with 256KB cache, Screaming Sindy extensions and using a 133MHz FSB in a Slot One format on that date. Next week, Intel is expected to announce how it will square the SDRAM-Direct Rambus circle. ®
Business 24 07:58
Young Turks beat Old Guard's head in and blame media
After a series of reports that HP would ditch Merced in favour of its successor, McKinley, the company has been forced to issue a formal statement of rebuttal. We have to admit that we joined in the fun too, and may indeed have fanned some of the flames, but HP's main media target is news.com. The statement said it "corrects" a Cnet report on August 19th that "inaccurately characterised" HP's position. We think HP is being a little unfair to Cnet. One mole on the COMP.ARCH newsgroup had this to say: "This is fun stuff. Get a little circular thing going in comp.arch these days .. it works its way to the trades and HP makes a press release. Man they have to be in pain out there, no doubt? You wonder if Clow of the HP Old Guard has gotten a good tongue lashin'. One wonders..." ®
Business 24 08:07
Killing it off is a great victory for Java, apparently...
Around 15 months after announcing the project, Sun and IBM have pulled the plugs on JavaOS for Business, which was intended to produce a Java-based operating system for network computers. Allegedly. The joint effort also had a lot to do with combining the weight of the two companies to defend "pure" Java standards against the onslaught of Microsoft and - occasionally - HP. Appeal court decisions aside, that threat has receded somewhat in the interim. Customers don't seem to have been particularly turned on by JavaOS for Business, however, the consensus appearing to be that yet another OS for thin clients, even a JavaOS, is at least one too many. The alternative approach of running a JVM on the operating systems the customer already uses, or of using an open source OS like FreeBSD or Linux as a base OS for a thin client, seems to have been more effective so far, and to hold out greater promise for the future. Sun itself is hailing the demise of JavaOS for Business as an indication of how wonderfully Java is doing. This might seem a bizarre stance initially, but there's some truth in it. If the customers can get whatever they need to support Java without installing a whole new OS, then why bother? ®
Business 24 08:16
And do you think MS Deutschland is ethical? Visionary? Arrogant?
Microsoft Germany has been doing some soul searching regarding Linux, reports Germany's c't magazine. The company has been conducting telephone surveys of German journalists covering its own perceived image, but also including a large section specific to the Linux OS. MS wants to know what the strengths and weaknesses of Linux are, and what could interfere with its success. Among Microsoft's suggestions in this area (leading the witnesses - tsk) is lack of games. But on the plus side MS suggests developer enthusiasm as a major advantage for Linux. And its own image among German journalists? We don't seem to have the results here, but MS wants to know how it's rated, on a scale of 1-9, in a number of areas. Does it have high ethical requirements, for example. Is it a company you trust? Does it have clear visions? Is it, uh oh - arrogant? ®
Business 24 08:18
Considering how fast the old guard is falling off the perch, it could be a smart career move
SGI CEO Rick Belluzzo resigned unexpectedly yesterday, and is now being tipped to take charge of Microsoft's Internet operations, including the Microsoft Network. This is one of the poison chalice jobs at Microsoft -- the company has been searching for somebody to run it for nigh on a year, without success until now. SGI has promoted Bob Bishop to Belluzzo's slot, and expressed some surprise at their former leader's decision to jump ship for less than a CEO post. But Belluzzo didn't need to walk, and will have extracted a high price for taking the post that long-serving MS execs have viewed as pretty much a suicide mission. Brad Silverberg, he of the prodigiously long sabbatical, was unsuccessfully solicited for the job earlier this year, and insiders (those who haven't already departed on extended leave, that is) are generally too fat on stock options to consider taking this kind of risk. Belluzzo, however, will slot in at the top level at Microsoft, and considering the growing power vacuum being created as the old guard cashes its chips, if he's successful with the interactive business the sky could be the limit. That's one big 'if', of course, but with Microsoft continuing to throw money at the problem, it may be less intractable than it looks. And of course, there's the possibility of big bucks for Rick as and when Microsoft decides to spin the operation off. ®
Business 24 08:21
He got his drill out and off his golden fingers went
A Japanese site is claiming that it has succeeded in clocking an AMD Athlon 500 to 650MHz. Over here is an explanation, in Japanese, of how he achieved the speeds, together with some tables of results. (The tables are in English). According to Daiki, this site is not the first to achieve an overclock. He says the first to win this distinction is the oddly named Tomato site, which clocked a 500MHz chip to 550MHz. That, he says was followed by the also oddly named Bunny's Workshop, which managed to clock a 600MHz part to 650MHz. Our Lernout & Hauspie machine software puffed and blew a bit over the technical terms, but it seems that to achieve the overclock, the engineer fiddled around the Athlon's so called "golden fingers" and even got his drill out. He appears to have changed a set of resistors on the microprocessor. The so-called "golden fingers" are a couple of contacts on the microprocessor which allow for overclocking. Third parties are expected to announce gizmos for this purpose very soon. If you have a K7 Athlon, we recommend you do not try this at home. ®
Business 24 08:51
Q maintains it will keep Win NT 64 going
Further details of Compaq's plans over Windows NT development has emerged in a leaked memo posted on a US web site. Enrico Pesatori, senior VP at Compaq, sent out the memo Friday, and the memo is posted on the Shannon knows Compaq web site. Pesatori claims that Compaq is taking steps to simplify its platform strategy, and confirms the company will end systems development with the delivery of V4 SP6 at the end of this year. In the memo, he is eager to maintain that Compaq is still a staunch partner of Microsoft, and claimed his company will continue to develop 64-bit NT for the Alpha. He also maintains Compaq's commitment to the Alpha platform remains high. According to Shannon, sales of the Alpha chip have risen 11 per cent in the last year. ® See also Compaq Alpha cuts pull rung from under Microsoft's 64-bit NT Compaq set to fire Alpha NT developers
Business 24 09:14
Survey finds that sometimes people at work aren't actually working -- no way!
More than a third of all employees "surf the Web constantly", according to another tedious and wholly pointless Internet survey from the US. Published by online IT recruitment company VaultReports.com, the report warns that more and more employees are spending time online instead of working. The findings of this report will, no doubt, be used to support the claims made by a bunch of American psychologists on Sunday that six per cent of all Web users are addicted to the Net. In this latest report, researchers polled 466 people and asked them: "How often do you surf non-work related sites?" The answers have startled many industry watchers. Thirty two per cent of respondents admitted to surfing non-work related sites for "a few times a day" while 21 per cent owned up to a sneaky peek "a few times a week". A staggering 37 per cent said they surfed the Web "constantly". And the one in 10 who responded with "Never! That's unethical" surprised even the most hardened analysts. Among the most popular sites visited by surfing employees was kungfuonline, dogpile.com and porn sites. ®
Business 24 09:34
And the appeal court agrees Sun has a good case
There was a mixed decision yesterday by the Court of Appeals in the long-running Java corruption trial in which Sun has accused Microsoft of trying to pollute Java. Yesterday's unanimous Opinion resulted from an appeal by Microsoft over some technical issues about the preliminary injunction. The essence of the decision is that Judge Ronald Whyte in the District Court did not give a sufficient explanation of his decisions. Accordingly, the preliminary junction by Judge Whyte was vacated and the case sent back to the District Court for elaboration. But the appellate court agreed that it was likely that Sun would win the substantive case at trial, although a date has not yet been fixed. The legal issue centres on whether Sun's suit is properly one for copyright infringement or breach of contract. The important distinction is that if it is a copyright case, Sun is entitled to a presumption of irreparable harm, which is more valuable to Sun in that a contract case limits damages. Judge Whyte will now have to give his reasons for deciding it was a copyright case, and it would appear unlikely that he would reverse his own conclusion. Normally a copyright owner that grants a non-exclusive licence to use copyright material waives the right to sue the licensee for copyright infringement, the appellate court noted, but went on to observe that if a licence is limited in scope and the licensee acts outside the scope, the licensor can bring an infringement action. The court noted that the issue is at the intersection of copyright and contract law, an area of law that is not well developed. The appellate court Opinion made it clear that it favoured that a party that demonstrated likely success on merits would be entitled to a presumption of irreparable harm, provided it established that copyright had been violated. Another claim by Microsoft was that in the unfair competition claim, under California law any injunction must be based on future as well as past conduct. Sun had filed a motion under the California Business and Professions Code alleging unfair competition. Microsoft's claim was agreed by the appellate court and referred back, so Judge Whyte will have to address this. Again, it is likely that the judge will just tidy up his decision. The case draws attention to deficiencies in the speed with which the courts act in high technology cases, and shows that contracts can be wilfully broken by a party without much fear of effective punishment. Java was licensed to Microsoft "on a rushed basis" in 1996 for an annual fee of $3.75 million. In late 1996, Sun became concerned that Microsoft was attempting to pollute Java by creating a version that would only run with Windows. Sun sued in October 1997 and won a preliminary injunction in November 1998 that required Microsoft to pass Sun's Java compatibility tests if it shipped a product that included Java technology. The Order was clarified in May. With the weight of evidence in the Washington trial being strongly in favour of Microsoft having acted deliberately to sabotage Java and protect its operating systems monopoly, yesterday's decision adds weight to the need for monopolists to be dealt with effectively by the courts, since high tech contracts and technology licensing require goodwill on both sides if they are to be effective. When the licence was negotiated, the Java Native Interface did not exist, so was undefined. Nevertheless, the court found yesterday that there was "considerable evidence that JNI falls within Microsoft's compliance obligations". Overall, the case still looks good for Sun since the appellate court was firmly of the opinion that: "There is significant evidence to support the district court's holding that Sun has a reasonable likelihood of proving that Microsoft's Java compiler violated the compatibility provisions" of the contract. The court also found "considerable evidence" supporting the finding that Microsoft's extended (and incompatible) compiler mode is not permissible. The appellate decision made it possible for both sides to claim victory. Sun said that it thought "Judge Whyte will make the necessary findings to sustain the injunction." Microsoft said it is not anticipating making any "substantial product changes" as a result of the appellate court decision. Sun and Microsoft are not discussing any settlement, but Sun said yesterday it would welcome any interest by Microsoft in talks. ® Complete Register Trial coverage
Business 24 09:54
Lorry driver held hostage in armed robbery
Armed thieves made off with £1 million worth of Compaq kit on Saturday after disguising themselves as police officers and holding a lorry driver hostage. The driver was stopped on the M6 near Knutsford, Cheshire, by what he thought were officials or police. He was ordered out of the Scannia lorry at gunpoint, and three men bundled him into the boot of their car. His ordeal lasted six hours and he was finally abandoned in Warwickshire, near junction 12 of the M40 at 9.15pm. A total of 1450 Compaq laptops were stolen. The man, who Cheshire police refused to name but was reported to be Claus Weichert, had been driving the Compaq kit to Ayrshire, Scotland. The 41-year-old driver was not physically injured, but was said to be seriously distressed by the incident. The lorry was found empty and abandoned the next day on the M40 in Oxfordshire. Police said the hijackers were dressed in black trousers, white shirts and green luminous vests. Two of the gang were white and a third was black. Their grey car had a strobe light fitted inside, which fooled the lorry driver into thinking they were police officers. Cheshire police were today appealing for witnesses who saw the blue and white lorry on Saturday or Sunday. A police representative issued a plea to the computer industry: "We are especially keen to hear from anyone in the IT industry. This is a large number of machines to store, and they would only be stolen if there was a market for them." Now, it transpires the haul was the property of Inventec, the company which builds Compaq notebooks -- and not the Big Q itself. Compaq told The Register last night that the kit pinched in transit was on its way to Inventec's factory in Scotland. However, the robbers only made off with base parts –- the basic box of the laptop, without keyboard, software and hard drive, according to Compaq. Although the product was destined for destined for Compaq customers, Compaq stressed that it had not bought the kit from Inventec at the time of the robbery, therefore making the loss Inventec's. ® Information can be given confidentially about the robbery on 0800 555 111
Business 24 10:15
Sounds like a good idea, perhaps the UK government should get one too
President Clnton has appointed a 39-year-old woman to become the e-commerce czar for the US. Elizabeth B Echols has been appointed director of the Electronic Commerce Working Group, according to a report in the New York Times. Among other things, Echols' job is to stand up for consumers' right online and to create a "global e-commerce framework". Part of her portfolio will be to co-ordinate all the different government agencies which have an influence over the legislative future of ecommerce. In contrast, Britain's own plans to appoint an e-commerce envoy have ended in abject failure. Despite announcing in November that the Government wanted to appoint a "digital ambassador" to lead the country's bid to become the e-commerce centre of the world, nothing has been done. The decision has rested with Prime Minister Tony Blair since March. He is currently abroad on holiday. No one from the Department of Trade and Industry was available for comment this morning. ®
Business 24 10:19
Dixons supports Athlon and volumes good
The jury, in the shape of the press and the various Web hardware sites, has now been out for a month on the performance of the AMD Athlon microprocessor. Practically all of the reviews of the Athlon K7 we've read have given it glowing reviews, and reported strong performance gains over the Pentium III. Further, senior analysts at the major market research companies believe AMD is in with a chance. Joe D'Elia, senior microprocessor analyst at Dataquest Europe, told us at launch time earlier in the month that for the first time, AMD has a clear technology lead over Intel. And according to AMD distributors, there are significant volumes of the Athlon in the market, with the chip company set to push into third and fourth tier PC manufacturers. The list of companies carrying Athlon parts is already significant in the UK. Over the weekend, Dixons, the mammoth high street group, started selling systems through its chain. Time, part of the Granville Group, and a significant player in the market, is also selling Athlon PCs. Soo too are Mesh, Evesham Micro, Panrix, Actinet, Compute It and Carrera. Dan Technologies, we understand, now wants to jump on the gravy train too. Said Sukh Rayat, managing director of Flashpoint, a major UK chip distributor: "I have to say we've seen significant revenues coming from the K7 already." He claimed the Athlon is "taking the market by storm". Said Rayat: "We're very happy with sales and volumes and the next stage will be sell into the tier three and tier four market." Luke Ireland, marketing director at Evesham Micro, said: "We're very happy with the way Athlon sales are going. I don't believe Intel has anything to match AMD in the near future. " Ireland disclosed that AMD was getting much higher yields than 650MHz K7s and he confirmed Evesham is pleased with the volumes his company is receiving. Evesham has been a long time supporter of AMD technology. We met them first at the launch of the K6-2. Meanwhile, Intel's decision to cut its high end desktop processor prices last weekend, is a tactical move and a cunning plan, which does, however, have the possibility of misfiring. By sacrificing price margins on its Pentium IIIs, Intel is hoping that it will drive the upstart out of the marketplace. According to an Intel representative yesterday, it took the decision to slash the price of the Pentium III/500 in a bid to aim for the lucrative Christmas market. However, if there is a problem with the Athlon, it could be that of motherboard support. We have reported over the last weeks of problems with component parts. The Taiwanese mobo makers need to ramp up their volumes to support the K7. If there is a bottleneck, it will be there. One big question now remaining is whether AMD will manage to resist price moves from its giant opponent. If it succumbs to this pressure, things may not be quite so rosy. ®
Business 24 11:25
Management cull as chairman outlines turnaround hopes
Beleaguered PC vendor, Packard Bell NEC, has taken an axe to its top level management as part of its continuing efforts to stage a comeback. Paul Greenwood becomes general manager of the company's consumer division - prior to his new appointment, Greenwood was executive vice president of operations and manufacturing. Greenwood's replacement is Ken Ueltzen, who had been vice president of manufacturing. Another senior level job swap accompanies Greenwood's promotion. Almarie Falbo becomes executive vice president and general manager of Packard Bell NEC's consumer services & support division. Falbo is replaced by Tom Bekefy, director of purchasing. Making way for all this new blood, a number of Packard Bell NEC old-timers may have left some of their blood behind on the carpet. The following were all pruned to make room for new growth. Gordon Chapple - replaced by Paul Greenwood. Packard Bell NEC said Chapple had "left the company to pursue other professional opportunities." Zur Feldman - replaced by Almarie Falbo. Feldman "has also left the company to pursue other professional opportunities" we are told. C.Kimball McCusker, vice president and national (US) sales manager for its consumer division - according to Packard Bell NEC, McCusker " resigned from the company effective immediately." Packard Bell NEC's chairman, Alain Couder, described the reshuffle as part of the company's plans for prolonged turnaround. He said that losses at the manufacturer are expected to be much lower for the current year than last year. He said: "It is no secret that we've been fighting an extremely tough battle in the past year. Just as it's no secret that we've made dramatic progress in our turnaround effort." Packard Bell NEC is by no means a dead ducky just yet. According to international research analysts IDC, the company took fourth place in the UK PC market share figures for Q2 99. With six per cent of the UK PC market, Packard Bell NEC is not the force it once was, but it experienced a 71 per cent growth rate on the previous quarter. During the same quarter, Dell knocked Compaq off its perch to become the leading PC vendor in the UK. ®
Business 24 12:06
Former electronics giant takes only way out as LG steps in to take over
LG Electronics is to assume full ownership of Zenith Electronics, as the latter collapses into bankruptcy. Zenith makes a wide range of business and consumer electronics. It filed for Chapter 11 status yesterday at the offices of the US Bankruptcy Court in Wilmington, Delaware. It was once the leading TV set company in the US, but has struggled in recent years. The computers and IT division of Zenith was sold to Bull as Zenith Data Systems. This latest instalment in Zenith's history comes as no real surprise as the company had planned as long ago as last year to file for bankruptcy. It does so leaving debts of $200 million for LG to swallow. The transfer of debt was part of the deal which sees LG - already a majority shareholder in Zenith - assume full control. LG bought a 55 per cent stake in Zenith in 1995. It has described the fruits of this investment as "disappointing" which has to be one of the summer's best understatements. Last year, Philips pulled out of a deal to buy Zenith's TV tube manufacturing plant putting 2,000 jobs in jeopardy. ®
Business 24 12:27
Armed robbery prompts unexpected confession
Compaq has admitted that it does not build its own notebooks, following Saturday's armed robbery of £1 million of kit in Cheshire. The PC giant came clean last night, telling The Register that the notebook base parts that were stolen in transit were actually the property of Taiwanese OEM Inventec. Last month, The Register revealed which Taiwanese OEMs were making notebooks for which big name PC companies. Compaq has long maintained that it was the manufacturer of its notebooks; product manager after product manager has trotted out the same spin that the Big Q is responsible for the design and build of its products. Now that's all changed. The theft of Inventec built notebooks en route for final assembly and then delivery to Compaq has prompted Compaq to confirm the truth behind its notebooks. "The inventory belonged to Inventec - a Compaq alliance partner - but the product was destined for Compaq customers," a Compaq representative said. "Inventec has advised Compaq of this loss, and contacted the police." ®
Business 24 12:28
Stone me...don't they sign NDAs?
A report on HardOCP says that Dabs Direct is advertising an Abit Camino i820 motherboard in the UK. That lends further credence to stories we have already written suggesting that the Camino chipset will arrive earlier than expected. According to the report, the mobo is PC99 compliant with no ISA sockets, uses a Slot One motherboard, and support for both 100MHz and 133MHz front side buses (FSBs). Over the last few weeks we have heard several times of Intel coming up with the 133MHz FSB earlier than expected. No one from Intel was available for comment at press time. ®
Business 24 12:40
The third part of our analysis of the DoJ's case
The DoJ's and plaintiff States' Joint Proposed Findings of Fact is the first time the DoJ has been able to set out logically its evidence concerning Microsoft's attempt to split the browser market. It would be wrong to portray the issue as being Netscape versus Microsoft because the focus is on whether Microsoft has used illegal anti-competitive practices to the detriment of consumers, and not whether Netscape has suffered. That's a primary reason why Microsoft's attack on the AOL-Netscape-Sun deal and the subsequent fishing trip through the associated documentation was a red herring, used by Microsoft to find out business secrets, rather than because it truly needed to see the documents to defend itself. The DoJ did not go into battle on behalf of Netscape, but rather to defend the principle of fair competition (and the resulting benefits this brings to consumers), as embodied in US antitrust law and particularly the Sherman Act, sections 1 and 2. To be sure, there are many other issues where the DoJ is challenging Microsoft, but the primary issue remains the alleged illegal monopolisation. Microsoft's primary justification for its action of incorporating IE into Windows 98 was that it had always "integrated" technology into MS-DOS, that this had been planned before Netscape existed, and the Netscape knew about the plan. The difference between incorporating a browser and incorporating memory management, compression and the like is that this time there was the possibility that Microsoft's operating system monopoly would be successfully challenged. As a consequence, Microsoft drew out all it claws and attacked everything in sight. Gates recognised that non-MS browsers threatened to commoditise Windows. Gates' May 1995 "Internet Tidal Wave" memo is not particularly perceptive, except that he identified Netscape as " a new competitor 'born' on the Internet". Windows general manager Ben Slivka's report "The Web is the next platform" was more to the point: "We should be extending the Web with as many Microsoft technologies as possible, even if we have to modify those technologies in ways not original [sic] intended by their designers". The DoJ lists seven further examples where Microsoft recognised the threat posed by browsers to its monopoly. Although the incident in which Netscape Chairman Jim Clark, in "a moment of weakness" in late December 1994, tried to re-open negotiations about Microsoft paying Netscape a flat fee "of a couple of million dollars to take us out of the game" is known, the circumstances at the time have not been explained, although we do know that Clark made the move without consulting the Netscape board. Gates had announced Marvel (MSN) in November 1994 and there was much speculation that Microsoft would be able to dominate what was then the online services business because of the power it was expected to have as a result of having the MSN icon (exclusively, it was then thought) on the desktop. It was very likely that Clark was intimidated by the market strength that this was expected to bring MSN. In the event of course, Microsoft did not succeed with MSN as an online service. Clark deal - why didn't MS bite? What remains unexplained is why Microsoft rebuffed Clark's attempt at negotiations. The DoJ merely says that "the discussions [with Clark] went no further and were not renewed". At the time, Microsoft was negotiating to license Mosaic, and agreed this two weeks later. Logically, even if negotiations for Mosaic were well advanced, and Microsoft had started building a team to turn Mosaic into IE (and it is known that very little work was done on Mosaic to create IE 1.0), the prize of a neutralised Netscape would have far exceeded the alternative. Possibly some Microsoft egos were at stake, but if the opportunity were really there, Microsoft's failure to move seems quite illogical. The first suggestion from Microsoft that Netscape should not compete was at a meeting on 2 June. The DoJ says "Microsoft suggested that Netscape consider abandoning its independent base of platform-level browsing code on Windows 95 and merely build on top of Microsoft's code". Barksdale, Netscape's CEO, subsequently visited Microsoft and had discussions with Dan Rosen, Paul Maritz and Nathan Myhrvold about the possibility of Microsoft bundling Navigator. Reardon, in his deposition, salivated at the "lots of value-added stuff beyond HTML rendering in Navigator". Barksdale had evidently not appreciated that Microsoft wanted Netscape to use Microsoft's browser code and just build applications on top of it. Barksdale even suggested that Microsoft "distribute [Navigator]". There is further evidence in Microsoft's internal documents after the 2 June meeting that Microsoft's strategic plan was to convince Netscape to abandon Navigator. Rosen emailed Maritz optimistically, expecting Netscape to concede, but Maritz did not agree that "Netscape is 'ready for a broad strategic relationship' ". On 21 June, at a meeting between Microsoft and Netscape, Microsoft "proposed to Netscape that the two firms divide the browser market" with Netscape ceasing to develop a browser for Window 95 and Microsoft not producing IE for Unix or the Mac. It was at this meeting that the idea of a "line" was developed. Although Microsoft has made a crafty case for questioning Andreessen's actions concerning his notes for the meeting on 21 June 1995 in which browser market splitting was discussed, the DoJ has provided a full account that counters Microsoft's innuendo. The DoJ has put all the documentary evidence into chronological sequence. Daniel Rosen, Microsoft's lead negotiator, wrote an internal Microsoft email to Maritz and others on 14 April 1995 asking "Will they [Netscape] cede the client [Navigator] and its standards to us?" Co-opting Netscape On 15 May, Rosen noted in another email to Maritz that "our goal should be to wrest leadership of the client evolution from [Netscape]". Thomas Reardon of Microsoft was even more direct in an email on 25 May to Rosen that an exchange of protocol specs [for browsers] "would really be a veiled effort on our part to move [Netscape] off the Windows client". Maritz replied in an email to Gates and Rosen that it was "imperative ... to co-opt Netscape" and that he was open to any strategy to achieve that result. The deposition of Chris Jones, an IE product manager who played a key role in the 21 June meeting for Microsoft, confirmed that "Oh, I believe there was a discussion of that nature [market splitting]". This essentially scuppered Microsoft's claim that no such discussion occurred. It is important to distinguish between perfectly legal persuasive efforts by Microsoft to ask Netscape to drop Navigator, and an illegal proposal of market splitting, which goes against the user interest. This is one of the most important things to emerge from the evidence, and would make it hard for an appellate court to overturn Judge Jackson if he rules for the DoJ. The judge will also have noted that Microsoft changed its story. In its Proposed Findings of Fact, Microsoft did its best to undermine Andreessen's credibility, but the clinchers are that he is known to be a very fast typist (and talker, come to that); that his notes were distributed quickly after the meeting (making it rather difficult to have concocted them); that a copy was sent to Apple the next day; and that all the other evidence from the time supports this. Only Microsoft's subsequent testimony attempts to reinterpret what happened. Barksdale was convinced that Microsoft's purpose was "to get access to certain code and APIs necessary for ... product development". Rosen gave his account of the meeting in a draft email the same day, noting that "Much of the conversation centred on how the lines would be drawn" between the respective roles of Microsoft's and Netscape's roles in a divided market. But it was Jones' email comments that confirmed what had been put to Netscape and was damaging to Microsoft since his story closely confirmed the accounts by Barksdale and Andreessen. He wrote: "Because of our priority to own client and server platform, if they can agree to use our client code on Win95 and use our BackOffice and NT APIs, and promote these as the solutions ..." then Netscape would be neutralised. Rosen emailed Gates saying "the test of this alignment will be Netscape's agreement to use Microsoft's client code on Win95" and ending that Netscape "seemed to embrace this strategy". Reardon, Maritz and Gates were sceptical that Netscape would agree to the proposal, but the email chain shows without any doubt that market splitting was proposed by Microsoft. When Microsoft realised the antitrust problems that had resulted, in the DoJ's words, it made an "after-the-fact assertion that its market division proposal was simply exploring forms of legitimate cooperation" that was a pretext and "contrary to the evidence". Microsoft's contention that "it was not trying to get Netscape out of the browser business is erroneous" and that "even on Microsoft's version of the facts, its proposal to Netscape was a naked attempt to eliminate platform-level competition and to divide markets". Rosen's testimony was "inconsistent", the DoJ added euphemistically, and proceeded to devote nine pages to a detailed examination of the "inconsistencies". Nor does Microsoft's story that it was engaging in joint venture discussions correlate with the evidence, the DoJ claimed with 13 pages of detailed document and testimony citation. Has Netscape agreed to Microsoft's market division proposal, the DoJ noted, Microsoft's OS monopoly would have been maintained and a Microsoft monopoly in the browser market would have resulted. Of course, since the evidence was concluded, Microsoft has achieved a browser monopoly in new PC browsers since a monopoly is usually defined as having 70 per cent of the market. Developments have moved faster than the courts, with the result that IE is now dominant, Netscape's circumstances have changed radically, and there is no easy way in which the so-called IE-Windows 98 integration can be undone without harming consumers. With the prospect of an appeal before there is any final resolution of the matter, it could just be that Microsoft's own effort to evolve Windows 98 into the NT code base will flounder before any final legal conclusion is reached. At the same time, some measures by the court to curtail Microsoft's expansion by acquisition, some enforced divestment, some controls of licensing and pricing, and some further erosion of the hardcore executive staff (and particularly its chairman) could finally bring about a gentler, kinder Microsoft. ® Other Sections Part II Part I DoJ damns MS with facts Complete Register Trial coverage
Business 24 13:51
Part two of our analysis of the DoJ's case
From the beginning, the Plaintiffs' Joint Proposed Findings of Fact (PJPFF) uses Microsoft's statements and documents to great effect. Where better to find that a browser is an application [and not a part of the operating system] than in the Microsoft Press Computer Dictionary? The DoJ starts with the meat of the case - that Microsoft has monopoly power over operating systems - and relentlessly shows this in the PJPFF. The concern that consumers were not much discussed in the evidence is neatly dealt with at one point with the argument that OEMs are "surrogates for determining the commercial alternatives reasonable available to consumers". So forcing OEMs to accept IE (as a licensing condition for Windows 95); obliging them to agree to costly restrictions on their ability to customise PCs; and stopping the inclusion of competitive products were tantamount to a direct restriction on users. There is an important argument that the DoJ does not address, and that is that many people are perfectly happy in an all-Microsoft world, and don't particularly care about the software. Of course, Microsoft cannot validly claim that these consumers made a choice for Microsoft since in most cases the possibility of choice has been anti-competitively restrained. In addition, Microsoft has historically included increased functionality in its operating systems, and incorporating browsing is merely a continuation of this. This is certainly not illegal in itself, but what has become an issue is the way in which Microsoft has done this, and its parallel predatory acts. The arguments that the DoJ offers, and the fundamental questions it poses, emphasise that this is not a case primarily about Netscape, but one about a predatory pattern of conduct that affects an industry. A strong argument used by the DoJ is that Microsoft "would not have rationally have reduced the value of Windows to end users [by its predatory conduct] unless it anticipate that doing so would create or increase monopoly power and thereby enable it to earn even greater monopoly profits". The DoJ demolishes Microsoft's claim that there is no applications barrier to entry, which is an important criterion in proving a monopoly (the other criterion is of course the high market share, which cannot be disputed). Microsoft's arguments about other platforms such as browsers and Java are reduced at a fundamental level by the DoJ's simple observation that the platforms cannot function without an operating system. Server operating systems like NetWare and Solaris are excluded by the DoJ's market definition. It was interesting that Joachim Kempin disclosed that Microsoft internally tracks its share of operating systems for Intel PCs, and that internal Microsoft documents analyse competition as "other x86" operating systems, which gives strong support for the DoJ's market definition and makes nonsense of the claim by MS witness Schmalensee that a market definition was not possible. Control via price hikes Some information from a sealed session shows the extent to which Microsoft raised the price of obsolete versions of Windows, which provides dramatic proof of its market power. We knew that IBM "agreed" to pay more than double for its Windows 3.11 licence or face losing $75 million in market development agreement discounts for Windows 95. Microsoft knew that there was no alternative for IBM, which in itself shows market dominance and pricing discretion. Microsoft was able to control IBM's royalty rate according to whether IBM kept its shipments of Windows 3.11 below 8 per cent of all Microsoft OS shipments - Microsoft's objective was to move users to Windows 95. But it is now also revealed that Microsoft also raised the price to OEMs of Windows 95 when Windows 98 was released, which the DoJ says is not consistent with there being a competitive market, since prices for older products would normally be expected to drop. The DoJ reveals enough of sealed sessions to make it clear that Schmalensee did not investigate this, and contradicted his own evidence. The DoJ also revealed that there were three other places in the sealed evidence where there was proof that Microsoft had raised OS prices to OEMs in absolute terms, apart from DoJ witness Franklin Fisher's statement that OS prices were not falling on a quality-corrected basis, and were rising. Microsoft's study as to whether it should charge $49, $89 or $120 for the Windows 98 upgrade (because of the fall off with higher prices, it decided on $89) shows Microsoft's power over pricing. It's also worth recalling that Microsoft's shipments of Windows increased from 11.4 million units in 1990 to 51.9 million units in 1996 [and must now be approaching 100 million units/year - the absence of a competitor speaks volumes about the power of the monopoly]. Windows cloning was a non-starter, the DoJ concludes, citing not just John Soyring of IBM (IBM "lacked the technical capability or the legal rights" to Windows 95 source code to ensure that Windows applications would run on OS/2) and Bryan Sparks of Caldera (who related how cloning proved impossible when he was at Novell), but also Joachim Kempin. In December 1997, Kempin had noted that cloning Windows APIs would be "a lot of work and potentially" pose "patent problems for someone attacking us". Best of all was Gates' comment about Microsoft's rendering engine, code-named Trident: "I think we want to make Trident extremely hard to clone. I think we want to patent the elements of Trident. I think we want to make extensions to Trident on an ongoing basis". It was prima facie evidence of intent. Evidence is assembled to show that Microsoft takes a proportion of its monopoly profits not in cash but in the form of costly restrictions on its customers and their commitments to behave in ways that will augment and maintain Microsoft's monopoly power. Penalties for shipping 'naked' PCs On the subject of naked PCs, there is evidence, some sealed alas, that Microsoft discourages OEMs from shipping such machines by penalising OEMs that do so. Microsoft claims of course that it does this to discourage piracy, but since it is perfectly possible to set up a hardware or software copy protection scheme, the excuse is inadequate, although the subject was unfortunately not raised in evidence. At first sight, the section headed "Alternative platform-level technologies, especially Internet browsers and Java, threaten Microsoft's operating system monopoly" looks as though it might have been penned by Microsoft. However, the purpose is to establish that Microsoft had reason to be concerned that there was a threat, and that it acted illegally by way of response. The DoJ is confused when it suggests that middleware could increase OS competition, since by definition middleware is between the OS and the application - and where is the browser in its middleware scenario? Is the middleware to control the browser as an application, or is it passively accepted that the browser does belong with the OS? It looks very likely that the DoJ will win the argument that Microsoft possesses monopoly power over operating systems, and that it will be found that alternative platforms did threaten Microsoft's monopoly and cause it to engage in various predatory campaigns to remove the browser threat to its monopoly in operating systems. ® Other Sections Part I Damning MS with the facts Part III - Browser Battles Complete Register Trial coverage
Business 24 13:57
Win98SE problems to blame?
Chipzilla has sneaked out a bunch of new products, but apparently forgot to tell its spin paramedics. The Cayman 810 Celeron mobo now has a presence on the Intel support web site at http://support.intel.com/support/motherboards/desktop/ca810/ where users will no doubt be thrilled to discover yet more incompatibilities with the all-singing, all-dancing Win98SE. Also shuffling quietly onto the stage are two new USB video gizmos featuring the ability to capture video and TV feeds for editing on a PC. The PC Camera Pack and the PC Camera Pack Pro are revealed on Intel's developer web site, but not at Chipzilla Central. Priced at around $130, they come with software optimised for Pentium III which means smaller file sizes, apparently. And launching to the blare of, well, nothing at all, is the new InBusiness Internet Station. The original Internet router in the InBusiness (aka Dayna) range was obsoleted by Win98SE and Win2000 which offer Internet modem sharing over a LAN as standard, so Intel needed a swift rethink. The result is the Internet Station 56K which combines the routing function of its predecessor along with a 56K modem and a four port 10Mb hub, all in one dinky box. Yours for $349. ®
Business 24 14:11
When we said crucial, we meant crucial, dammit...
A shortage of vital chips could cut output from some computer motherboard makers by more than half during the next two months, industry sources say. Yesterday, The Register exclusively reported vast shortages of passive components. (Go here) Manufacturers are currently trying to increase production in preparation for the peak Christmas season. Demand for Intel's BX and ZX chipsets is exceeding supply, admitted Deborah Yen, public relations manager at Intel, Taiwan. Chipsets are an essential component of the motherboard - the main circuit board in a PC. Intel is the world's largest manufacturer of chipsets, and the BX chipset, despite being introduced more than a year ago, remains one of the most popular. Yen warned that the shortage could be exacerbated by motherboard manufacturers who ordered more than they needed in the hope of securing supplies of the chipsets. Intel is attempting to increase production, she said. "We were allotted about 60,000 chipsets by Intel," said Jeremy Smith of motherboard maker, Abit, "but we had requested about 200,000 [for this month], then after that there's nothing and we still need another 200,000. The discrepancy is huge." Abit plans to send a delegation to Intel's US headquarters to discuss the situation soon, he added. Abit's maximum monthly output, which has been reached recently, is around 300,000 motherboards, Smith said. A source at another motherboard manufacturer, Shuttle, said earlier this week that supplies of the BX and ZX chipsets were at half the normal level. Executives at major motherboard manufacturer, Asustek Computer, were either unavailable or refused to comment on the chipset shortage. "I think the main impact of the shortage is going to be in the next two months," Smith predicted. Tony Yang of Acer Group affiliate, AOpen, admitted that the shortage was affecting his company. However, he claimed that Intel was trying to maintain supplies to 'first tier' motherboard manufacturers like Aopen. As a result, he said, Aopen's supplies of the BX and ZX chipsets were only around 15 per cent below normal. AOpen makes almost 200,000 motherboards per month, 70 to 80 per cent of which use the hard-to-find chipsets. Motherboard makers are trying hard to find other solutions to the shortage, said one industry source. "There are gray market possibilities, but I don't know if Intel approves of that, and of course, the prices are much higher." AOpen is offering customers the option of using a newer Intel chipset, the 810, or chipsets from local companies like VIA Technologies. Douglas Wang, an analyst at Jardine Fleming, Taipei, pointed out that the Intel 810 and BX chipsets were aimed at very different market segments. Other motherboard manufacturers say that, like Aopen, they are looking to other companies' chipsets to meet the shortfall. Dr. Chin Wu, president of local chipset manufacturer, Acer Labs Inc. (ALi), believes the shortage is only a short term situation. While there will be some increase in orders for companies like ALi, Wu said, he does not expect the effect to be very great. Wu questioned the reasons for the continuing shortage, speculating that Intel may want motherboard manufacturers to start using the newer 810 chipset. The chipset has suffered technical problems, attracted criticism for poor performance, and been slow to win acceptance. However, Intel has denied this and Jeremy Smith of Abit also disagreed. "We've been told by a contact at Intel that it's not that Intel's trying to force manufacturers over to the 810 and 820, but rather it was just a mis-forecasting... a misjudgment on their part." ®
Business 24 14:11
Now it has plans to sell 'ecommerce in a box'
PSINet is to buy Transfer Network Services (TNS), the ecommerce and data processing specialists, in a cash and stock deal worth an estimated $720 million. The move is widely regarded as being a shot across the bows of other ecommerce players, such as IBM, UUNet and AT&T. According to reports on Newsbytes, Gary Arlen, president of research firm Arlen Communications, said the buy would boost PSINet's position on the world stage. "They've carved out a place for themselves in the business enterprise sector," he said. "Now they're doing an awful lot to brand themselves." TNS processes about 20 million transactions per day. It provides ecommerce services and secure data communications to the financial sector. On completion, PSINet plans to sell an 'ecommerce in a box' package to TNS's 2 million small and medium sized business customers, according to PSINet's CFO, Edward Postal. PSINet will pay TNSI $350 million in stock and 7.8 million common shares, the remainder will be paid in cash. PSINet expects to gain around $170 million annually thanks to cost savings and increased revenue through the purchase. The two companies plan to finalise the deal by the end of this year. ®
Business 24 14:49
Never mind the base units, there go the TFTs
The lorry-load of Compaq notebooks stolen this weekend represented around five per cent of the vendor's anticipated UK quarterly laptop sales. According to IDC, Compaq sold around 21,000 notebooks in Q2, and 31,000 in Q1 this year. Which means the 1,440 base units stolen on Saturday could put a dent in shipping. In all, 810 Compaq Armada 1500Cs and 630 Armada 1750s were nabbed in transit, Cheshire Police said this morning. Andy Brown, IDC analyst, said it would not have a huge effect on Compaq supply. However, he warned that the most serious aspect of the theft involved the TFT screens. These screens are like gold dust at the moment due to an international industry shortage. "The effect on Compaq laptop supply will be noticeable, but depends on how quickly Inventec's production line can recover the loss," said Brown. "Compaq shouldn't suffer too much, but the problem will be in terms of lost time as well as equipment." Brown added that the robbers were probably after finished laptops, and may find the kit difficult to shift. It might look suspicious if someone puts in an order for 1,450 hard drives and keyboards. "These guys obviously thought they were getting the whole machines," he said. Police this morning said there had been no further developments in tracing the three armed hijackers. ® See also: Gunmen grab £1m Compaq machines Compaq admits Inventec makes its notebooks
Business 24 15:10
First half is a tale of mixed fortunes
Dialog's pre-tax profits dropped to £1.7 million from last year's £7 million, for the six months ended 30 June. The database provider saw sales fall slightly to £87.3 million from £88.8 million for the same period last year. Results for the second quarter were up on the first quarter – net profit grew 200 per cent to £1.3 million and turnover rose 4.6 per cent to £44.7 million. London-based Dialog blamed falling profits for the first six months of on increasing costs and rising interest payments. Allen Thomas, chairman of Dialog, said the company was still in talks regarding refinancing its considerable debt. "Discussions continue regarding refinancing of the group's debt so as to release internally generated cash from operations," said Thomas. Dialog's newly appointed financial advisors, Chase Manhattan Bank and Salomon Smith Barney, were in talks with a number of parties, he added. Analyst Richard Holway commented: "I have always believed that Dialog has considerable potential. But the debt and management style of Dan Wagner [chief executive] are serious millstones. "Whereas other Internet stocks (and Dialog has more claim to be one than most others) get given high ratings on zero revenues and large losses, Dialog will still have to demonstrate its worth first by producing some good positive results." ®
Business 24 15:12
Disk drive price war claims more scalps
Seagate Technology is to cut 1,600 staff in Singapore as part of its restructure. The disk drive maker is reviewing its business globally and is set to make changes over the next few months. A Seagate representative said this would involve reducing the company's headcount. No figure had been placed on the number of jobs to be cut, but Seagate is planning further announcements before the end of the current quarter - 2 October. Bob Peyton, IDC analyst, told The Register job losses were an inevitable result of the price war in the disk drive market. "Disk drive prices have been decreasing, yet technology has been accelerating at a faster rate than in the past. It's difficult to see how anybody is making any money at it." Unless prices stabilise or rise, things will only get worse, according to Peyton. "It's a difficult situation, and impossible to predict when it will end," he said Seagate's move comes in the same month as rival disk drive firm Quantum announced it would shed 800 jobs in the US and Ireland and re-jig its hard disk-drive business. Quantum also accused Seagate of pricing its products below its costs, thus forcing a price war. ®
Business 24 15:37
Two brands for the price of one
People wearing sandwich boards and carrying placards declaring "The N is nigh" helped launch AOL UK's new subscription-free ISP Netscape Online. Scores of anonymous human billboards trudged around London today in the drizzle stopping only occasionally to be photographed by bemused tourists. Yet behind the glamour, today's launch is a public admission by AOL UK that it had to do something to counteract the tidal wave of subscription-free services that have swamped the UK. Speaking today Andreas Schmidt, president and CEO of AOL Europe stressed that Netscape Online should be regarded as another brand and not something to replace existing services. "[Netscape Online] is the next step in our multiple-brand strategy and provides the best services available to this market segment," he said. He also announced that the service would be distributed in 789 Woolworth stores as part of a deal with its parent Kingfisher plc, a move which allows AOL UK to take the service "direct to the high street for the first time". Netscape Online has all the hallmarks of the 100 or so subscription-free services currently operating in the UK. Aimed at young, "value-conscious" users who don't need anyone to hold their hand when they surf, the service will go live on 1 September. It will make its money partly from interconnect revenue and partly through ecommerce and advertising revenue. Calls to the telephone help line will cost 50p a minute and users will also be able to use Netscape Communicator instead of Microsoft Explorer to browse the Web and handle email. Of course, the real appeal for many users will be the reliability of using the AOL network to access the Net. "Netscape Online benefits from the both the power of the Netscape brand and the AOL's state-of-the-art infrastructure," said Schmidt. Unfortunately, Schmidt's enthusiasm was called into question by AOL UK's new MD Karen Thomson who said that people would be able to get online "pretty much every time" they try. AOL UK refused to say how many people it expected to attract but did say that around a couple of thousand people had already pre-registered their interest. The MD of LineOne, Ajay Chowdhury accused AOL UK of being caught in two minds over its pricing policy. ®
Business 24 15:58
Launch of free service to erode AOL user base
The MD of LineOne has mocked AOL's decision to launch a subscription-free ISP accusing his rival of being caught in two minds. He said the launch of Netscape Online showed AOL's pricing strategy was confused. "Either you believe in the [subscription] free model or not," said Ajay Chowdhury speaking to The Register earlier today. "The subscription-free model [for Internet access] is here to stay," he said. "But it seems AOL is desperate to hold on to its subscribers and its subscription revenue stream for as long as it can," he said. Chowdhury predicted AOL UK would begin to haemorrhage users once they realised they could get many of the services and content offered by AOL UK for free with Netscape Online. He said AOL UK's subscriber based would eventually wither away. Chowdhury's remarks coincided with an announcement that the subscription-free online service LineOne now has 400,000 members -- an increase of 320,000 since March. It also launched a new instant messaging service for LineOne users called PING! and a Web navigation tool called the Assistant. ®
Business 24 16:00