22nd > September > 1999 Archive
Consumer publishing houses are crowding into the UK's underdeveloped Women's website sector.
Pentagon planners clearly have time on their hands, as well as their minds. A Defense Department planning memo sent from the Joint Chiefs of Staff last week deals with the possibility of a sneak attack on the US being made under cover of Y2K chaos. The memo apparently went out to US commanders throughout the world, and lists all sorts of things that are likely to make the local US peace-keeping forces twitchy come 31st December. The highest alert level, Y2K Posture Level One, anticipates widespread Y2K-related failures and the civilian authorities asking for military help. So careful about asking GIs for the time - you could get martial law. The document anticipates the possibility of "information operations attacks," i.e. hacking of the US infrastructure by enemy forces and agents, and "opportunistic engagements," meaning surprise attacks coinciding with Y2K problems. The US defence secretary will apparently be deciding on the appropriate alert level for the military towards the end of the year. If it's level one, and the news leaks out (watch out for troop movements in key strategic areas, such as Wall Street) then the Dow Jones will no doubt go through the floor. But will the Russians invade? In the Pentagon's tortured logic, the US is likely to be disadvantaged in the event of a Y2K meltdown because of its heavy reliance on computers. Tech-starved rivals, on the other hand, will presumably be better positioned. So when the PC clocks in Moscow wind back to 1900, the Tsarist armies will begin to roll and the Imperial High Seas Fleet will cast off in the direction of the Eastern United States. Register factoid: Last time this happened the fleet was headed for Japan, but got so confused it accidentally shelled Lowestoft (Eastern UK) on the way. ®
MS on Trial Everyone seems to have performed as expected during the Microsoft antitrust trial closing arguments yesterday. The DoJ said Microsoft was an anti-competitive monopoly, Microsoft's attorneys and courtroom steps spin doctor said the DoJ hadn't proved its case, and the judge... Well, some people had been hoping Judge Thomas Penfield Jackson would enliven proceedings with a couple of his interjections, but he sat there, largely silent. The battle-lines were drawn up months ago, prosecution and defence have shot-off all their ammunition already, and the judge most likely knew everything he wanted to know before yesterday's proceedings drew a line (spin doctoring permitting) under this phase of the affair. DoJ attorney David Boies did however contrive to inject some reruns of BillTV. Three clips from Gates' video deposition, which will go down in history as one of the great US legal catastrophes, were played. Bill, in between squirms and evasions, insisted that in 1995 Netscape wasn't a threat to Microsoft. Boies then reprised the large stack of internal documentation that showed that the company, from Bill down, thought Netscape a very real threat then, and was taking steps to neutralise it. "Microsoft was seeking to preserve its operating system by eliminating the threat that you could have application browsers ... that could then be readily used in other operating systems," said Boise. It's worth noting that although Microsoft has been pretty successful in the browser wars campaigns that followed its 1995 moves, the notion of the 'application browser' hasn't gone away. The reverse, in fact. In response, the MS defence went for the theatricals gambit. Lead attorney John Warner described the DoJ case as melodrama, and said the evidence consisted of "red herrings, misstatements and omissions." An uncharitable Register might here observe that many of these omissions were caused by Microsoft and its pals at Compaq and elsewhere moving heaven and earth to keep the smutty bits out of the public documentation, but we won't. Now, Judge Jackson is alone with his thoughts. He's expected to come up with his initial ruling on findings of fact (i.e., whether or not MS dunnit) in the next two months. At that point, if he (as widely expected) concludes MS did dunnit, we can expect a frenzied negotiation period as Redmond tries to cut a deal before he produces his final conclusions, penalties and all. ® Complete Register Trial coverage
Viglen Technology has posted steady growth for its end-of-year, saying sales to the schools market remained a focal point of its operations. The London-based systems builder saw sales rise to £90.1 million for the year ended 30 June 1999, against £87.2 million the previous year. Pre-tax profit was up slightly to £4.2 million from £4 million. Viglen is also returning £15.9 million in a special dividend to shareholders, because it can't think of anything worth spending its money on. Prices for potential acquisition targets are simply too high, the company reckons. Viglen said it was staying with its focus on the higher margin areas of networking and the education market because PC prices were still falling. Education sales grew 12.2 per cent to £32.3 million during the year, and over 500 schools had installed the company's own Classlink software. Viglen said the main benefit of the education drive would be felt in the year 2000. Public sector sales grew 11.6 per cent to £22.1 million. Corporate and cash sales were down 5.9 per cent and 21.8 per cent respectively. Viglen said its acquisition of Xenon was helping to grow its corporate business, while it was carrying out its plan to move away from retail and cash sales. It also said £1.9 million had been generated through indirect business, though Viglen had now completely pulled out of this area. Alan Sugar, Viglen chairman, said: "Viglen is committed to growing its share of the schools market, and as such we forecast that our workforce will continue to grow to meet the demands of supporting sales into the schools market. "Despite these additional costs I am confident that we will continue to see the group strengthen and grow. Due to the return of £15.9m by way of a special dividend and the fall in UK interest rates there will be a lower contribution from interest income to the group's profitability in the year to 30 June 2000." ®:
Compaq and Cabletron are to work on a joint initiative which sees Compaq make an equity investment in its new partner. The two will work to reposition Cabletron's Spectrum network management business. The deal follows Compaq's buyout of Digital last year. Digital's networking division had been bought by Cabletron. Through the preliminary agreement, Compaq will still resell Cabletron product through its professional services group. The Digital-branded network product line will continue - but it is expected customers will switch to buying these through Cabletron and its resellers rather than through Compaq. Compaq will invest an undisclosed amount in the business and make a multi-year purchase of Spectrum products and services. It had previously been planned to spend $300 million rebadging Cabletron switches and routers as Compaq kit. ®
Intel may have had a working Merced on show at its developer forum a few weeks back, but sources within the chip behemoth report that the next CPU, scheduled for launch next month, has yet to find its way to OEMs. The delay is possibly caused by the bringing forward of the 700 and 733MHz parts, originally due at the end of the year, but now believed to be targeted at mid to late October. The first 133MHz FSB parts from Satan Clara are due out next week, alongside the much-delayed 820 chipset, but these are revamped Deschutes parts, rated at a measly 533MHz. Intel's original roadmap showed Coppermine debuting at 600MHz, but continuing pressure from AMD's Athlon means that wouldn't have been nearly enough in the rapidly-escalating Megahertz war. ®
This is greedy. Carly Fiorina, HP's new hotshot CEO, is to receive stock and options worth up to $90 million, as part of her pay package. HP is to dole out the shares over a four-year period. We can assume there's some performance-related hurdle to overcome. Ex-Lucent exec Fiorina also gets $1 million annual salary and an annual bonus of between $1.25 million and $3.75 million. Boy, she must be really, really good to warrant that kind of pay packet. Or maybe it reflects the scarcity value of Fortune 500 IT company CEO material that can play well with Wall Street. HP shares underperformed its competitors over the last two years, so Fiorina simply has to play catch-up to "earn" a vast fortune. Let's get one thing straight. Entrepreneur Fiorina ain't. She joins a vast and successful company which needs only a little fixing. Her "compensation agreement" represents a straightforward transfer of capital from shareholders outside HP to a hard-negotiating company insider. It also shows that HP's executive compensation committee lives in a bubble entirely disconnected from the real world. ®
3Com wrongfooted analysts yesterday by posting Q1 net income 38 per cent up on the same period last year. The Street had anticipated flat year-on-year earnings. The profits leap had more to do with cost-cutting, or "operational improvements "than with soaring sales. The company's commodity NIC and modem businesses are continuing their journey south, with sales at $539 million, a 19 per cent decline on Q1 last year. High end sales of switches, hubs, remote access concentrators, routers and network management software are up 9 per cent to $674.2 million from a year ago. Good, but not quite good enough, in a high growth market. Meanwhile Palm salesjumped 50 per cent to $174 million. Last week, 3Com announced its intention to spin-out this division. ®
The MD of loot.com has slammed the prospective valuation of rival auction service QXL.com. "I'm very much against hot-air internet stock valuations AND I do not believe that this is the right time for investors to invest in the internet," Graham Tolhurst said. "Businesses, including internet-based businesses, should be founded on sound economic principles, rather than Hollywood-style values where hype is everything. Tolhurst said QXL would need the best of luck for its flotation, planned for next month. " They They haven't made a penny profit since they launched their auction service in the UK several months after us.' He said The Internet will be the dominant medium of the future, but the "winners will be those with profitable, watertight business models rather than those who create new models, and hope they will stick by putting huge marketing spends behind them. "In the world of internet users, money won't buy you love. Customers today are very fickle, so it is still a fact that having customers today does not necessarily mean that a company is profitable. "The relationship building lessons of the late 80s and 90s seem to have been forgotten by most internet businesses which means that promiscuity is all too prevalent, with customers changing brands all too readily. Businesses should experiment by all means, but they shouldn't expect investors to cover the costs. I advise investors to strongly avoid investing in trial-and-error management. "Internet businesses need to be based on strong principles such as customer care and service: give your customers something they will truly value. Even if your service is free, treat them as if they'd paid - a single solid value that loot.com tries to express in everything that it does." Loot.com is the Internet arm of Loot, the UK's biggest free classified advertising paper. The company claims it was the first online auction site in the UK and it has a ABCe certificate confirming site traffic at 9.5 million pages a month. The company also claims it is the UK's number one classified site, which would not be surprising, given its roots. But financial stats are somewhat thin on the ground. ® Related story QXL scales down IPO expectations
Amiga CEO and president Tom Schmidt has come clean about the company's new direction. As reported previously, the company is getting out of the hardware business to pursue a multi-platform middleware strategy. In his latest Executive Update, posted last week, Schmidt takes the hints he dropped in his previous Update a stage further. He admits the company is focused on "setting software standards for the coming generation of Internet appliances". Those standards, he claims, "will open up the an exciting new era of software development". It's a shame Schmidt doesn't go into details. The Update suggests Amiga is continuing to develop the successor to AmigaOS, the so-called Amiga Operating Environment (AOE) with its basis on the Linux kernel. But Schmidt also says the company is working with "other operating systems that support Java". That opens the company to all the mainstream OSes out there, and suggests Amiga is porting its AmigaObjects technology to them. AmigaObjects was always based on Java, and Schmidt's statement implies that all an OS needs to support Amiga's middleware is an up-to-date Java Virtual Machine. So here we have Amiga offering an operating system for set-tops and the necessary technology to allow those set-tops to talk to PCs on the home network and servers via the Internet. Of course, offering software is one thing -- getting set-top vendors to use it is something else. Still, casting off hardware development should help Amiga convey to potential customers that it's not out to compete with them and that it's eye really is on the Internet appliance ball and not constantly glancing back to its hardware heritage. However, Schmidt does out a hand to any hardware vendors who would like to pick up where Amiga's now abandoned multimedia convergence computer (MCC) project left off. If Amiga's plans to deliver the MCC were "unrealistic" -- a none too subtle dig at his predecessor, Jim Collas; "after the change of management, we reviewed all our product plans" -- others may fare better, Schmidt reckons, and is willing to license what remains of the MCC project. In essence the MCC will remain as the reference platform for other vendors' set-top hardware projects if they want one, but Amiga is keener on selling them a software set-up. Anyone interested in pursuing the original Amiga platform will fare less well. While Schmidt states his willingness to seek out partners willing to pursue that market, reading between the lines it's clear the new Amiga won't be much help. Schmidt's partners will develop "a next-generation Amiga computer and operating system [our italics]". In short, Amiga is no longer working on AmigaOS or even AOE's backward compatibility with it -- bodies likes the Phoenix Platform Consortium will have to do that themselves. ®
We all know The Register's a bit of an oracle, but it comes to something when we're the first place businesses read about what they're up to. Yet that's exactly what happened to one of our beloved memory distributors this very afternoon. After dutifully logging onto our newsfeed for his daily dose of IT entertainment, (surely you mean news - Ed) Alan Stanley, general manager of Dane-Elec, found his company was the lead story. And what's more, that Dane-Elec had won the honour of qualifying for the Intel Gold scheme, run by CMTL. "I'd just like to find out a bit more about it," spluttered a red faced Stanley. "About what, exactly," we asked, trying not to laugh. "Well, CMTL, for example. Have you got a contact number?" According to Stanley, Dane-Elec was aware it had applied for the prestigious Intel programme, but didn't know it had actually netted the qualification until reading it on our site. "Don't tell anyone, will you?" pleaded Stanley. No problem Alan, your secret's safe with us. Ah, the naivety of the channel. ®
The World Trade Organisation has ruled against a US tax scheme designed to boost exports, and according to Brussels, US software companies have been prime beneficiaries of what the WTO now says is an illegal subsidy. Do we hear the M word? Well yes, we do. Noises coming out of the EU's Directorate General for Trade (DGT)indicate that major winners from the scheme have been Boeing and, yes, Microsoft. The total subsidies (for the whole of the scheme, not just Microsoft) are estimated by DGT at S2.5 billion. It works like this. The US allows US companies to set up Foreign Sales Corporations (FSCs). These have to be incorporated in one of a clutch of US offshore locations (e.g. Virgin Islands, Samoa or Guam) or in another qualifying country. There's quite a long list of these, but the DGT says Barbados is the second most common location (after Virgin Islands), and the list also includes Ireland, which houses Microsoft's European Operations Centre and is the hub of the company's European software distribution operations. The FSC scheme reduces tax paid on export income. The EU argued, and a WTO disputes panel agreed last week, that this constituted an illegal export subsidy. New trade commissioner Pascal Lamy welcomed the ruling, and commented that the subsidy "has created an important distortion of international trade by granting an unfair advantage to US products in third markets, and has expanded over the last decade to more sectors, including computer software and agricultural products." (Our italics) Unsurprisingly, The Register hasn't had a vast amount of success in tracking down US software company subsidiaries with FSCs established in nice places that are tax-efficient. Nor does the DGT specify precisely how much the software business benefits from the scheme. But we did find a Cirrus Logic sub in Barbados, dealing in "purchasing and billing functions." Nice. Any other bids, readers? ®
One of the industry's prime candidates to suffer in the wake of the Taiwan quake turns out to be AMD. Currently riding high on a wave of success following the launch of the Intel-bashing Athlon, Chimpzilla may be about to have the carpet pulled out from under its feet. Commenting on the disruption caused to motherboard production on the island, one Register reader said: "Where are you going to put your AMD chips now?" A quick trip to AMD's Web site and a spot of easy searching will throw up a list of all the mobos recommended for use with the Athlon. The roll call is this: FIC, Gigabyte and MSI. All are dependent on Taiwan for board manufacture. Earlier this month, AMD was hit by problems with some mobo makers' boards not working. Having the supply of boards dry up altogether is a much more serious matter. With another possibly even larger earthquake expected to hit the island within the next 24 hours, AMD and its army of system builders face a bleak run up to the busy Christmas period. No one from AMD UK was available as this story went to press. ® See also: Athlon Powers hasn't got his mobo working
3dfx CEO Greg Ballard has confirmed that the next generation of the company's Voodoo 3D acceleration technology, codenamed Napalm, has been delayed. Ballard's latest statement, posted as an email on a public financial forum (assuming it's genuine, of course), said that 3dfx has begun to "inform investors that we have determined that Napalm will not ship in the fourth quarter or if it does, [it will be] too late in the quarter to have a meaningful impact on revenues. We now expect it to ship in mid-February, with an outside chance of mid-March." The sad tale gets worse. Ballard's email suggests we should all expect 3dfx to lose in both its third and fourth fiscal quarters. The reason: the company's revenues will remain static, but its margins will decline. Actually, Ballard admits even revenues may fall -- by up to ten per cent -- though even that is looking optimistic. By failing to deliver Napalm, 3dfx will enter the holiday season with its Voodoo 3 range, which is fast but will soon be going up against faster (and certainly much, much better looking) technologies from Nvidia and S3, specifically the GeForce 256 and Savage 2000, respectively. 3dfx still has the old Voodoo brand recognition on its side, but it will be interesting to see how much that counts compared to the slicker output of rival products. Of course, with OEM deals now the name of the game, retail sales are much less important to 3D companies than once they were. Christmas PCs will have already been designed and orders for 3D parts taken, so Napalm was probably never going to figure too highly in 3dfx's revenue projections anyway. Still, getting new technologies out of the door are key to winning OEM business, so 3dfx needs to get its act together here -- running great-looking T-buffer technology on four Voodoo 2 cards isn't the same as running it on real silicon. According to Ballard, all existing problems with the Napalm silicon have been resolved, and the company feels "very good" about the current schedule. They should be: Ballard also said Q1 and Q2 2000 will be "very strong" quarters for the company and would lead its return to profitability. ®
The Internet blew out 30 birthday cake candles today, trumpeting that the clicks and mortar revolution had only just begun.
Junglejuices may sound like a dodgy Caribbean cocktail, but it is to be the latest venture from IT entrepreneur Steve Bennett. Jungle.com plans to launch Junglejuices in January to sell online wine, according to Bennett, the Web site's founder and chairman. He hopes to create the world's largest ever online wine tasting experience. And Bennett confessed his dream to enlist the help of Jilly Goolden, wine connoisseur of BBC 2 programme Food and Drink, to lead the cyber-sloshing event. "Users would come to Jungejuices and buy a certain bottle of wine, but be told not to uncork it until a set time. They would then all taste it and comment in a chat-room under Jilly's guidance," he said. Bennett also went on to reveal that he was due to re-release the pop track The Lion Sleeps Tonight next month, and was hoping for a smash chart hit. In keeping with the jungle theme, he thought this song – the re-make of which was previously crooned by Paul Da Vinci for the group Tight Fit in the 80s - would be perfect for promoting his Web site. So he tracked down Da Vinci, who has been working at Butlins in Devon, and trekked to the holiday camp to persuade him to re-record the track. After spending three days in Da Vinci's house, Bennett said the singer succumbed to his charms. The song, which is currently used in the background of jungle.com radio advertisements, is due to re-inflict itself on the nation at the end of October. Don't say we didn't warn you. ®
Check out HardOCP for the award presented by Intel's Craig Barrett to Jason Au, for his school science project on -- overclocking! The link's a wee bit old - dating back to May, but we think it's worth reviving for all you overclockers out there. Chipzilla is really on your side.®
Widespread Y2K catastrophes are unlikely, but the number of non-fatal inconveniences and service interruptions caused by computer stuff-ups will be far more numerous than anticipated, according to a report released today by Senate Y2K Committee Chairman Robert Bennett (R--Utah). The chief problem is widespread readiness self-reporting, which the Committee likens to "letting students grade their own tests." Certainly a fair number of the rosy reports we've been getting don't bear a close examination. The Committee notes, for example, that while the power industry cheerfully reports itself to be 99 per cent ready, only 60 per cent of electric utilities have submitted themselves to outside review, only 25 per cent have actually tested their fixes, and only 24 per cent have disclosed the actual details of their preparations. And this from an industry the Committee regards as among the best prepared. Among the worst prepared are health care, especially the 911 emergency phone network, small businesses and educational institutions. Numerous 911 "answering points" remain unprepared for the rollover; a mere 37 per cent of schools and universities were compliant at last tally; and "nearly half of small- and medium-sized businesses are taking a wait-and-see approach to Y2K," the Committee finds. The Committee confirmed Federal Reserve Chairman Alan Greenspan's optimistic assessment of the US financial sector, as The Register reported yesterday. The Fed has made extra currency available, based on an estimate that all Americans will withdraw an average of US$500 in cash just before the rollover. The credit market looks healthy, and so far producers show no signs of rushing to stockpile inventories. The news gets worse on the overseas front, with several of America's largest trading partners, China, Russia and Italy, racking up some of the lowest scores on the Y2K report card. The overall state of preparation in Eastern Europe, Africa, Asia and South America is alarmingly poor. Furthermore, oil-producing nations, some of which are barely developed, will be especially vulnerable. "Severe disruptions to crucial supply chains are likely to occur," and may well slow the wheels of international commerce for an extended time. We note that stock, bond and currency profiteers in the most developed countries like to panic in the face of minor threats, and can often turn financial glitches among vulnerable countries into major economic catastrophes once the herd gets spooked and stampedes hysterically towards the nearest point of exit. Courage, patience and steady nerves will be the best vaccine against a global Y2K financial meltdown; but, as the behaviour of investors in Asian markets illustrated in 1997-98, such attributes are rare among their kind. ®
Easynet has jumped into the ADSL fray, joining Freeserve in the great BT trials. The ISP, the UK’s biggest remaining independent, is offering businesses in London and Manchester ADSL connections for six months -- but is only charging for three months. This will cost customers around £2,000, David Rowe, Easynet chairman and CEO, says. The service goes national next year, as BT rolls out ADSL to more exchanges. The company will position the service between ISDN and leased lines, offering guaranteed contention for businesses. Contention means that when an ISP says it is supplying you with a 2Mb pipe, you really are getting a guaranteed 2Mb pipe, and not having to share it with other punters. AOL, Video Networks and BT Interactive, a new unit within BT’s multimedia division, have indicated their interest in joining the ADSL gang. Up to 12 Internet access providers are expected to participate in the BT trials, which run until the end of March. We can’t imagine ADSL not going live more or less immediately after that. In the BT trials, there are three categories of ADSL supplier: the Video Stream, targeting broadcasters such as BskyB which could be interested in video on demand; Data Stream, targeting business customers; and IP Stream, targeting consumers. ®
"In most businesses in the free market the customer is in charge. But in the computer software business a company can behave like a feudal landlord. They rule by controlling access to knowledge." The Guardian 18 September. Red Hat's Bob Young certainly knows how to give good quote, and he's a history graduate to boot. And it doesn’t take a Machiavelli to work out he’s aiming that learned boot at Microsoft's well-upholstered behind. But does this feudal landlord/software company analogy really bear close examination? Very briefly, the medieval feudal system was organised on the lines of vassals (Microsoft resellers/dealers) who held lands(distribution rights) from lords-superior (Microsoft) on condition of military service(dealer accreditation fees). At the very bottom of this rigid caste system was the serf (Microsoft customer), a person in -- our Chambers says -- "modified slavery (Microsoft customer), especially one attached to the soil (er…)". And let's not forget droit du seigneur, also known as jus primae noctis, the formerly alleged right of a feudal superior (Bill Gates) to deflower a vassal's bride... (this analogy stops right here). If Young is interested politico-historical analogies, we could always work up a comparison between Linux and anarcho-syndicalism, an ideology that flowered briefly as a movement in 1930s Barcelona (Linux activists) before it was mercilessly crushed by ruthless Communists(Red Hat), ensuring that the Peoples' Front(Linux Community) fell into disarray rendering it entirely unable to fight off the Fascists (Microsoft). No? ® You can email me here if you want to comment on this story.