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Sony Shows New Piece of its Digital Media Strategy Sony Japan previewed some of its strategy for linking home digital media appliances to each other and the web when it showed a digital video recorder (DVR) called the Channel Server CSV-E77 with a 160GB hard disk, two TV tuners and more functional user software. It's the first of what Sony calls its Cocoon digital media line that it hopes will be an alternative to the PC for accessing the Internet and networking at home. Available November 1 but only in Japan, Channel Server's expected retail price will initially be about $1,100. "What It Isn't" Is Strategically as Important as "What It Is" 1.Channel Server isn't based on SonicBlue's ReplayTV or Tivo's technology. Sony was very careful in pointing out what it perceived as two advantages over Tivo: Channel Server's broadband connection (which newer Tivo models also have) and larger storage capacity (a matter of which hard disk the manufacturer puts in the box). 2.It does not use any Microsoft
operating system or application software. Sony's operating
system is MontaVista Software's embedded Linux 2.4.17. By
embedding the OS in the hardware, electronic devices like the
Sony Channel Server CSV-E77 run faster because the computer
doesn't have to wait for the hard disk to spin around and load
software into memory - it's already in memory, and since there
is no disk drive, the unit can be smaller and cheaper. (See
http://www.mvista.com and http://foldoc.doc.ic.ac.uk/foldoc/foldoc.cgi?query=embedded+system) 3.Intel is not supplying the microprocessor for the Sony Channel Server CSV-E77. It uses a Mips Technologies' chip running at 350MHz. Microsoft and Intel have taken almost all of the profits from PC makers. HP, IBM and Gateway have admitted that they lose money in their consumer PC operations. Even Dell, which seems to be able to make money at everything it does, is probably hard pressed to produce significant profits on its home PC sales especially if SOHO sales are excluded. 4.Sony didn't include software that would permit the Channel Server CSV-E77's Ethernet port to be used to copy video files to a PC. And there is no Firewire (IEEE1394) wireless port that would also have permitted files to be transferred to a PC. Sony did not disclose its plans for connecting the device to a home digital media network. Sony is one of the world's largest content producers with its music and movie properties so piracy protection is as important to Sony as selling home appliances. Sony's president said, "Until now our home network strategy has been PC-centered, but in the broadband era, in addition to the PC, we'll have non-PC gateways such as audio-video products and mobile terminals. The TV will change fundamentally." Sony's Vaio PC has done well by focusing on digital media applications and its worldwide market share is believed to have drawn equal to Apple's. Sony said that it will offer
four gateways for home digital media users: TVs, PlayStation
game consoles, mobile phones (mobile terminals) and PCs. It'll also analyze a viewer's
previous selections and the media files stored on his hard
disk to guess his viewing preferences and record programs that
meet that profile. If the viewer rejects a selection, it
apologizes. For an additional fee, the user can program the
unit from a cell phone or any PC connected to the web. Two TV
tuners permit viewing one channel while recording another, but
you can't record from two channels simultaneously. There's
also a VHF/UHF/cable tuner and a connection for an external
satellite receiver, cable set-top box or some other video
source like a handheld digital video recorder. Recorded
programs and movies are instantly accessible. They are
arranged in 10 virtual TV channels like news, drama and
sports. Viewers can cycle through the "channels"
just like channel-surfing on a regular TV. There's also a
preview mode to find content quickly with small clips from
each "channel" arranged in a circle on screen that
the user can cycle through. Melee In LA: RIAA & the File Swappers - Round Three The third big courtroom battle between the record labels, led by its association the RIAA, and the peer-to-peersters will be held in a Los Angeles federal court in front of Judge Stephen Wilson. Joining the fray for the first time in this suit will be the MPAA, some of its movie studio members, and the National Music Publishers Association. Originally the trial was scheduled to start October 1, but the judge has now consented to entertain briefs on summary judgment motions that both sides requested this week. His action puts the case on a summary judgment track and schedule. One or more of the defendants
has now claimed issues of confidentiality and as a result the
briefs from both sides were filed under seal. Consequently the
briefs and supporting documents are not available to the
public or the press. Separate from the rest of the
defendants, StreamCast filed its own summary judgment motion
this week asking the court to rule that its file-swapping
software is legal. It is responding to the original suit filed
on October 2 last year by the RIAA, the MPAA and 28
entertainment companies suing it for copyright infringement.
StreamCast's name then was MusicCity. That suit, the match
that lighted this particular fire, has since been expanded to
drag in six other defendants and alleges that their software
and networks facilitate copyright infringement by letting
users swap unauthorized copies of music and movies. The suit
called the networks "a 21st century piratical bazaar
where the unlawful exchange of protected materials takes place
across the vast expanses of the Internet." StreamCast's
filing this week requests a summary judgment and end to the
suit based on its claims that its Morpheus software has
substantial noninfringing uses and that StreamCast does not
know the copyright status of the files that its users are
sharing for downloading. Judge Wilson will then decide
whether anybody rates a summary judgment, whether discovery
should continue or whether to re-schedule a trial date. * Kazaa BV f/k/a Consumer
Empowerment BV, the Dutch company that originally owned and
developed the FastTrack technology, the KaZaa Media Desktop
software and the Kazaa.com web site; The record labels want a preliminary injunction against the defendants that would stop copyrighted material from being made available for downloading. The preliminary injunction request specifically names Sharman Networks, StreamCast, Grokster and KaZaa BV. Zennstrom and Friis are not named in the preliminary injunction request. Zennstrom and Friis developed the FastTrack networking software at Kazaa BV. In January the company sold its client-side P2P technology, the so-called Kazaa Media Desktop (KMD), and the Kazaa web site to Sharman Networks. The record labels sued Kazaa in the Dutch courts and in late May Kazaa BV conceded defeat, potentially making it liable for millions of dollars in damages, but before a judgment could be handed down, it said it was folding because it was bankrupt. Kazaa BV's attorneys said in papers filed with the Dutch court, "Simply put, plaintiffs have run Kazaa out of business." In the meantime the FastTrack technology was sold to Joltid, which was possibly called Blastoise at the time. Besides claims like the ones
made against Napster and Madster, the record labels, movie
studios and music publishers have made two additional claims
against this new crop of defendants - that they purposely
designed their software so they wouldn't have any control over
it in case they were called on the carpet and that two of
them, Sharman and Grokster, incorporated offshore in places
where copyright laws don't exist. Hemming. Sharman's CEO, told
The Online Reporter that the island of Vanuatu was selected
only for tax purposes and that Sharman intended to follow
Australian copyright law. Grokster, however, told the court,
"Grokster admits that [Judge Wilson's] court has subject
matter jurisdiction." 1. The now famous 1984 Sony
Corporation v Universal City Studios case in which the Supreme
Court ruled that Sony could continue to sell its Betamax video
recorders despite claims that the recorders could be used to
infringe copyrights. In filing for a summary judgment Monday StreamCast argued that distributing its software is legal because it can be used for many uses that don't infringe and because Streamcast can't control exactly how people use it. Streamcast's legal defense is being provided - for free - by the Electronic Frontier Foundation (EFF), the cyber-liberties legal group, and the law firm of Brobeck, Phleger and Harrison. Their filings argue that Morpheus file-trading software has demonstrable differences from the infamous Napster service, which was shut down by court order last summer and has since gone bankrupt. Napster's architecture relied on a centralized database that gave it explicit control over the files its users traded. Morpheus, on the other hand, purportedly relies on a decentralized database that StreamCast has no knowledge of or control over. The EFF argues that this point puts Morpheus in the same camp as the winning 1984 VCR defense that contended that Sony made and sold a device that could record video but had no control over how people used it. A Dutch appeals court ruled in
April this year that Kazaa BV was not responsible for
copyright infringement by its users. The court basically said
Kazaa could not be held responsible for how its technology was
used. A stunned Dutch music rights group Buma/Stemra, which
sued Kazaa late last year for copyright infringement,
considered taking the case to a higher court but then KaZaa BV
declared bankruptcy. In November last year a Dutch judge had
ruled in favor of the copyright holders, but the appeals court
overturned that decision. Altnet is a second virtual P2P network developed jointly by Brilliant and FastTrack-owner and Kazaa BV founder Niklas Zennstrom. Altnet is based on FastTrack but uses digital rights management (DRM) to protect content from being tampered with or from being duplicated without authorization. Brilliant licensed Microsoft's DRM to protect AltNet's content. Unlike Kazaa's FastTrack client implementation, what gets on the AltNet network is centrally controlled. Altnet content providers have to go through Brilliant to get their content distributed on the AltNet network. The only known FastTrack
licensee not to be named in the suit is Israel-based iMesh. 1. Kazaa Media Desktop -
2,693,382 downloads Number three with 759,215 downloads was ICQ, an instant messaging and chat program also used to swap movie and music files. Most, but not all, of these downloads represent new users. On average at any one time about 3.5 million people are connected on the different P2P networks and sharing files with each other. Various estimates put the total number of users who have downloaded and installed Kazaa, Grokster, Morpheus, WinMX and other file-sharing software at over 70 million. Napster, at its peak, probably had about 20 million users. "This is a time of crisis for the music industry and the RIAA is trying to fight a battle on multiple fronts," IDC analyst Susan Kevorkian said. In round one a year ago February Napster was knocked to its knees with a partial injunction and then KO'd in July 2001 by the permanent injunction handed down by San Francisco federal judge Marilyn Hall Patel. In round two on September 4 Madster/Aimster was thrown against the ropes by federal judge Marvin Aspen in Chicago. Round three, the melee in LA,
promises to be the most interesting one. Yet. Back
to Headlines
Meow. First Bid For Napster Is XXX-Rated A "premium quality adult" entertainment company, Barcelona, Spain-based Private Media Group (PMG), said Thursday that it had made a bid for Napster's trademarks and the napster.com domain name. It bid 1m shares of its private common stock but no cash. PMG's U.S. office is in Las Vegas, NV although it was first incorporated in Utah as Glacier Investment Company. Private Media Group said it would use the Napster name and URL to create a peer-to-peer network that would offer adult entertainment content. President and CEO Charles Prast said the adult entertainment industry was increasingly concerned about the piracy of its products and estimated that 35% of all downloaded content was adult entertainment. He estimated that 150m users now use the Internet to access or download adult content. He also claims that PMG has 37 years of legal compliance and owns the largest library of quality adult content in the world. PMG uses the Internet, DVDs, video tapes, magazines and broadcast to distribute its content worldwide. PMG reported sales of $20m in its most recent quarter ending June 30, 2002. PMG's web site says that Fortune magazine said it was one of the best top 20 small companies in the world for 2002. Fortune also called Enron one of the best managed companies in America for five years. See http://www.prvt.com/
Back
to Headlines
US bankruptcy judge Peter Walsh on Monday surprised Napster's creditors by calling a hearing much sooner than expected to move Napster from a Chapter 11 orderly reorganization to a Chapter 7 forced liquidation. Under Chapter 7, a trustee is appointed to liquidate quickly the assets. A Chapter 7 bankruptcy liquidation typically produces less money than an asset sale made under Chapter 11. The court appointed U.S. Trustee urged Judge Walsh to put Napster into liquidation immediately because he said that Napster had no management, no money and no prospects of reorganization. Bertelsmann as the debtor-in-possession had loaned Napster $5.1 million of which Napster had $440,000 left. Once the Bankruptcy judge had last week denied the sale of Napster's assets to Bertelsmann, Napster was in default on the loan and Bertelsmann had the right to demand that Napster transfer to it the remaining $440,000. Consequently Napster had to terminate all employees except CFO Lyn Jensen. Bertelsmann said that it would not grant Napster any additional funds and favored an immediate Chapter liquidation. Reacting promptly and with full
force, Napster's creditors quickly assembled the record
labels, songwriters and music publisher to make a joint appeal
to Judge Walsh to extend the time for them to attempt an
orderly sale. Judge Walsh responded, "I think it may be
worth some effort to salvage this case before a possible
conversion to Chapter 7. But it can only be done with
appropriate corporate governance." Judge Walsh gave Napster
shareholders until Friday, September 13 to elect a board of
directors or face immediate liquidation. Napster's unsecured
creditors had appointed Trenwith Securities to find a buyer
but need Judge Walsh to give Trenwith more time to do so.
Napster's shareholders and creditors will propose this Friday
that Lyn Jensen, former and current Napster CFO and its lone
remaining employee, be appointed as the company's sole board
member, its president and its secretary. If Judge Walsh
accepts the proposal, it will fulfill Delaware's governance
and bankruptcy laws and give Trenwith time to sell Napster's
assets as a more valuable whole rather than piecemeal. The allure of that money is the attraction that has made the music industry the strange bedfellows in this attempt to resuscitate Napster. Perhaps the music industry will even be willing to pre-negotiate and grant music licenses to Napster in order to get some of the money it claims Napster owes for permitting its users to share copyrighted music. The world-wide appeal of the
Napster name, the millions of music lover e-mail addresses,
the new Napster piracy-proof technology and pre-negotiated
music licenses with the record labels - now wouldn't that be a
dainty dish to set before a king? Back
to Headlines
IBM & MovieLink Put Movies on the Net MovieLink, the joint venture of five of the biggest movie studios, has picked IBM to provide the technology and run the service that'll deliver and protect Hollywood's most valued properties over the Internet. Selected movies will be downloaded on a pay-per-view basis to PCs at home. Warner Brothers, MGM, Viacom, Sony and Vivendi Universal own MovieLink. MovieLink expects the service to be up and running by year-end. IBM will provide MovieLink with hosting services, site development, systems operations, network management, technical consulting and other computer services. The web site will be hosted on servers and storage housed at IBM's US data centers. The MPAA estimates that 400,000-600,000 pirated movies are downloaded every day. There's an urgency about getting a paid service online before people who now accept paying to watch a movie become accustomed to getting them free. MovieLink intends to let users download a movie and keep it on their computers for up to 30 days before watching it. Once they watch it will be deleted from their computer within 24 hours. According to MovieLink CEO Jim
Ramo, each studio will decide what movies to release and when
and how much they'll cost. Priority will still be given to
making a movie available in theaters, on pay-per-view, on the
TV networks and in movie rental stores. IBM continues to beat out rivals Sun Microsystems and HP for Hollywood's digital media business. Recent wins included digital media equipment and services for Viacom's computer operations at its MTV, Paramount, Showtime and CBS interests. Another movie service, CinemaNow, has already started delivering movies over the net. It charges $3 for older films and $4 for more recent releases. Once downloaded, the films can only be seen on the PC that downloaded it and are deleted 24 hours after it's watched. Shortly after the MovieLink joint venture was first announced, U.S. Department of Justice officials opened an investigation into Movielink and a similar venture, Walt Disney Co.-backed Movies.com, focusing on issues of pricing and exclusivity, according to published reports. A Movielink spokesman said the Justice Department conducted a preliminary review of the venture when it was first announced, but could not provide more recent information. The studios have delayed making
movies available in digital format over the Internet for as
long as possible while searching for a piracy-proof technology
to safeguard them. The studios realize that if they wait any
longer they might be Napsterized like the music industry was.
The studios are making their move now before the file-sharing
peer-to-peersters make too many of their films available for
free. What the studios are trying to do is simply, "Head
'em off at the pass." Back
to Headlines
Analysis: Will People Watch Movies on Their Home PC? A major obstacle to the success of movie services is only being able to play downloaded movies on a PC. PC makers have not innovated enough to offer home entertainment-based PCs that will attract the style-conscious buyer. PCs are still bulky, cable-ugly, noisy, heat producers that few people want to have prominently displayed in their home. Microsoft's recently introduced and innovative, but poorly named home entertainment operating system, Windows XP Media Center Edition, will only be available this year on a homely HP machine. (See TOR 311 "Hewlett-Packard's New XP Media Center PC" and TOR 312 "HP PC Sales Are Down, Again, and Losing Money." Also see http://www.g2news.com/tor313/hp.html) Certainly most college dorms and many teenage bedrooms are set up to watch movies on the PC's small screen. But those PCs aren't equipped with the remotes that people are accustomed to using for starting and stopping a rented movie. HP's Media Center PC has one but the PC's size doesn't lend itself to a small room like the all-in-one units from Apple and Gateway. While music is downloaded to a
PC, most users then copy it to a CD or a small MP3 player so
they can listen to it offline. Most people aren't accustomed
to watching movies on a PCs. Until PC makers can catch up to
what the consumer wants and offer attractive, compact
computers, the PC isn't going to become the home's
movie-watching center. Back
to Headlines
Warner Brothers Offers New & Classic Movies through CinemaNow CinemaNow said this week that Warner Brothers has agreed to let it put a few dozen films on the Internet to be downloaded. They will include last year's great hit "Harry Potter and the Sorcerer's Stone" for $3.99 "as well as classics like "Dial M for Murder" and "Mars Attacks" for $2.99. CinemaNow CEO Curt Mavis said, "This is more than just a test. We're beginning to roll out a larger number of films. This is something that more and more of the studios feel they're willing to do." Funded primarily by Lions Gate Studios along with Blockbuster and Microsoft, CinemaNow has over 1,000 films from Lions Gate, Trimark Pictures, Avalanche, Allied Artists, Tai Seng and Salvation available for download on its CinemaNow.com site. Under the new deal, CinemaNow will offer first-run pay-per-view and library titles to its subscribers. The films will be offered in downloadable format and protected from unauthorized duplication by its proprietary video-on-demand digital rights management (DRM) software called Patchbay. CinemaNow downloads will allow for 24 hours of unlimited playback and have safeguards to deter subscribers from copying and distributing them. CinemaNow uses Microsoft's Digital Rights Management software to prevent piracy. Warner Home Video executive VP of video-on-demand and pay-per-view Jeffrey Calman said that CinemaNow's anti-piracy software was a key factor in selecting CinemaNow. Second in priority to anti-piracy concerns is picture quality. The image quality is expected to match videotape copies and will be 400MB-500MB in size. For most DSL and cable modem connections, that'll mean about two hours to download. CinemaNow executive VP Bruce Eisen said, "Making major studio content available to download in a secure and legal manner marks a tremendous leap forward for online distribution." CinemaNow delivers nearly two million video streams to roughly one million users a month. PatchBay manages user profiles and pay-per-view services as well as copy protection. Warner also makes a few films
available through Intertainer but those are streamed rather
than downloaded. Back
to Headlines
Analysis: Sodapop, Popcorn and a PC? Will Hollywood's Internet Initiative Succeed? Considering that there are 13 million homes and 10 million dorms rooms with broadband access and only 2 million homes with pay-per-view cable, the studios want to find out whether a direct approach to movie fans via the Internet may be more efficient and reach more movie enthusiasts than pay-per-view cable and satellite. Pay-for-view Internet movie services have a number of advantages over the free file-sharing peer-to-peer networks: 1. Better quality. Most movies on the file-swapping networks are poor quality. Some were even shot in theaters with a video camera making them difficult to watch and hear. Others display foreign captions. 2. Three to five dollars is not an exorbitant price. It's comparable to what people are used to paying to rent a movie or watch it on cable or satellite. 3. Most people don't want to steal movies (or music for that matter). Offered a quality service at a reasonable price, most people would prefer to pay for movies rather than steal. For examplem there are many methods for getting cable and satellite service for free. But, most people don't want the inconvenience of doing that or the bad conscience. 4. Other people are determined to get movies for free under any circumstances. But, permitting millions of other people to pay for movie delivered over the Internet and making money off of them will not increase by one whit the number of those determined to get free movies. It might even decrease the number. 5. What are you most likely to do? Get in a car and drive to the video rental store to rent a movie, hoping you won't forget to take it back on time? Or, make a couple of mouse clicks and rent it over the Internet. The second choice saves two trips to the video rental store. 6. Habits are hard to break. People are accustomed to paying for movies, even the ones that they watch at home. By making a paid service available now, people won't become used to getting free movies over the Internet. 7. It takes longer to download a movie - up to two or three hours even with a broadband connection. But the wait time will become shorter as broadband speeds increase and compression technologies become more efficient. 8. The motion picture studios
haven't alienated their customers the way that the RIAA and
the record labels it represents have. Amazingly, the record
labels still don't offer and haven't announced plans to offer
a paid Internet music service with a comprehensive list of
songs for a fee. The two services that it offers, Pressplay
and MusicNet, are so crippled by restrictions that they are
considered failures and further evidence of the labels' greed
and customer indifference. The only way to get most songs on
the Internet is to use free file-swapping services like Kazaa,
WinMX, Morpheus and iMesh. Music played on the radio and TV is free to the listener. The music labels consider that to be advertising. In fact, the labels spend millions of dollars every year on "independent" promoters who in turn pay it to the radio stations to get the radio stations to play their songs under the guise of a fee to the radio station for reporting to the promoter the songs it has played. This new form of "payola" is like the elephant in the living room that no one wants to talk about. (See TOR 312 "Where's That Hit CD?") On the other hand, the movie studio expects to get paid every time someone watches a movie, either by the viewer at the theater or pay-per-view or by the TV network that shows the flick to a national audience. The movie studios don't show a movie on TV to entice people to go to a theater and buy a ticket to see it. Once someone has seen a movie the desire to see it again, in most cases and for most movies, fades away. A favorite song is something that people usually want to hear multiple times. From that standpoint the moviemakers have the most to lose. Having seen a movie that's been pirated means a person probably won't want to see it again. The movie studio either makes money the first time it's seen or not at all in most instances for the typical film. There are, however, "classic" and cult films that people do want to see multiple times. The record labels were late to
the Internet. They waited until the file sharing networks were
well established and heavily used before taking any legal
actions to protect their properties. They still do not at this
late date, September 2002, offer their products on the
Internet in a way that their fans find acceptable. They and
their industry association, the RIAA, have been widely
criticized because their anti-piracy campaign has been a
heavy-handed, ruthless, threatening, take-no-prisoners crusade
based entirely on legal issues, not customer considerations.
Perhaps the MPAA would rent its maestro and master spokesman
Jack Valenti to the RIAA and its members for a few months to
set them on a more fan-friendly path. Back
to Headlines
Valenti Optimistic about MovieLink An ever-energetic 81-year-old MPAA chairman Jack Valenti expressed cautious enthusiasm for MovieLink's upcoming launch. The persuasive, but realistic, Valenti said, "Piracy is the one issue that unites all the creative community in the world." His remarks were made at a film festival and reported in the trade paper Variety. He said that the MPAA used Ranger Online to find illegal copies of movies on the Internet and that the 1998 Digital Copyright Act had been useful in giving authorities the tools needed to prosecute. The MPAA has so far sent out 54,000 cease-and-desist letters. (To read about how this is done, see The Online Reporter 303-07 "Ranger Online Rolls Out New File Scouring Service" and 308-02 "The Media vs. The Pirates: The Third Front.") Always fan conscious, Valenti boasted, "We haven't ever gone after an individual, only Internet Service Providers." But he also noted, "Whatever legislation may be put in place in the future, it's probably too late for stuff that's already out there." He said that the MPAA plans a campaign aimed at 10,000 colleges and universities to establish a code of conduct that will keep their broadband networks from becoming pirate ships dedicated to illegal file sharing. He reckons that the cure for piracy is "ultimately going to be technological but there's something to be said for appealing to consumer honesty." He said that an anti-piracy campaign in Taiwan, which showed actress Michelle Yeoh refusing to date a guy who wanted to show her a pirated DVD rather than take her to the theater and buy tickets has gotten a lot of positive feedback. Valenti can deal with the facts
of the matter in a realistic way and convince you that his
view is correct without hammering on the issue or attacking
personally. Has any industry ever had a more effective maestro
and spokesman? Back
to Headlines
Senate Bails on Copyright Bill Senate support for the proposed Anti-counterfeiting Amendments of 2002 has all but collapsed because of some last-minute changes that were sneaked in just before Congress went on vacation. The bill was originally designed to crack down on big-time piracy operations that make fake versions of the holograms that mark software packages as authentic. But the Senate Judiciary
Committee modified the bill to make it a crime to distribute
faked digital watermarks. The changes alarmed
telecommunications firms and made no exemptions for ISPs.
Senator George Allen (R-Va), a key supporter of the original
bill who chairs the Senate's Republican High-Tech Task Force,
said the altered bill oversteps the bounds intended and could
punish innocent parties. "Opening this legislation to the
digital realm," Allen said, "has caused the
virtually unanimous industry support behind it to evaporate,
and it has raised a host of troubling liability issues that
cause substantial harm to Internet service providers."
Back
to Headlines
Streamcast Networks Inc, developer of the Morpheus file-swapping client, is catching some heat from the open source community. The latest edition of Morpheus, rev 2.0, relies on an open source library called Jtella. Open source advocates accuse Streamcast of breaking the Lesser General Public License (LGPL) that Jtella is distributed under. The LGPL requires that software developers who use LGPL code prominently advertise the fact that their derived work is based on open source code. Streamcast doesn't do this. The Electronic Frontier
Foundation (EFF), a cyber-liberties group, is currently
defending Streamcast in court against copyright infringement
charges. The open source community and the EFF make common
cause in wanting the Internet to be as free and open as
possible. Streamcast is getting free legal council from the
EFF and free software from the open source community. If it
alienates them, it could loose their support and have to write
its own code and pay its own attorneys. Back
to Headlines
Sony Launches Wireless Home PC Sony says that it'll introduce PCs this month that will feature a wireless connection between a user's PC and his TV set. The user will be able to watch TV programs and movies that have been recorded on a PC on their TV set. It will also let the user play music stored on the PC on their stereo. The PC becomes the hub for the digital media home entertainment center using the TV to view recorded movies and TV programs and the stereo to listen to music and other audio recordings. The stuff will only be available in Japan initially. Microsoft recently gave NEC an
initial exclusive - in Japan - on its new PC-based home
entertainment operating system XP Media Center Edition. NEC
and Sony are fierce rivals in several segments. Microsoft's
Xbox is also competing with Sony's market leading PlayStation
game console. Hmmm. Back
to Headlines
Streamwaves Adds Warner Music Group License Streamwaves has signed a non-exclusive deal with Warner Music Group (WMG) that will give Streamwaves' North American subscribers instant access to WMG-controlled music. WMG is the third major music house that Streamwaves has signed up after EMI Recorded Music and Universal Music Group. Music publishers have been the last hurdle in getting legitimate music sales online. Three-year-old Streamwaves wants to put together a distribution network of online (clicks) and offline (bricks) music and non-music retailers that will offer Streamwaves-delivered music under their own brands. The main offline outlets (bricks) will be retail chains where potential subscribers "buy" it and go home and start listening to Streamwaves streaming music on their own PC, sort of like the long distance calling cards you see in grocery and convenience stores. If the retail outlet has PCs and a broadband connection, potential subscribers could try the music service before signing up. Streamwaves' first distribution agreement is expected to be announced shortly; it's supposed to be with a chain with thousands of stores. Streamwaves' competitors are eMusic, Pressplay, MusicNet and listen.com. Streamwaves CEO Jeff Tribble said, "We live in a real-time on-demand society...Our interface, coupled with Warner's music catalog will deliver what people want - premium selection at a fantastic value." In other words, subscribers will get the music they want (from three of the big five labels so far), when they want it (as long as they're at home) at a reasonable price. But, not yet where they want it because the music will only be streamed, not downloaded. Streamwaves' music subscription
software lets users view a selection of genres, artists, songs
and the user's playlists on one screen. The Streamwaves player
is embedded in the browser so no additional software or player
has to be downloaded. Streamwaves delivers new music to the
user based on what he's selected for his play lists. For a
preview See: http://www.streamwaves.com
Back
to Headlines
Intel Starts Wireless Digital Media Initiative Intel this week announced a reference design for a "digital media adapter" that will connect home entertainment appliances like PCs, stereos and TVs wirelessly. It will eventually let people play TV programs or movies stored on a PC on a TV or music files downloaded to the PC on their stereo. The adapter uses Intel's Xscale PXA processors, is expected to retail for $99 to $199 and will be available as an external device by the end of 2003, according to Intel VP, Desktop Platforms Group Louis Burns. Intel hopes electronics manufacturers will ultimately build the adapter function into their appliance and cut costs. Intel also said that future versions will be able to transfer files from a PC to an MP3 player or another PC. The adapters use the Universal Plug and Play specification, which should simplify connecting and making various devices work together. Intel's widgetry supports JPEG, MP3, and Windows Media Audio digital content and uses the 802.11b wireless protocol for networking. For media output, it supports NTSC/PAL/S-video TV and AC-97 stereo connections. Gateway, Dell and China-based Legend demonstrated prototypes at the Intel Developer Forum. Sony is expected to demonstrate a PC that wirelessly plays video files on a TV and music files on a stereo at its Dream World confab in Japan later this month. It is unclear if the Sony product is based on Intel's design. Intel wants to sell chips so it creates reference designs and makes them available to OEMs. That reduces the OEMs'engineering costs, speeds time-to-market and reduces parts costs. Of course, Intel's reference designs specify Intel parts. The initial digital media adapter that Intel showed uses Linux as its operating system but Intel carefully explained that the Microsoft Windows CE operating system could also be used. Today's Digital Media Devices
Are Too Pricey The word "seamless" was nearly worn out in all the Intel announcements, especially "seamless connectivity." The point is that today a PC can't be easily connected, if at all, to a TV monitor and there are only a few ways to connect a PC to the stereo. Motorola recently introduced a wireless PC-to-stereo adapter. (See "TOR 310-34 Motorola Serves Up Three.") What Intel wants is for the PC and the electronics entertainment appliance makers to standardize on its wireless networking to give it the dominance it has enjoyed in PCs. Burns specifically appealed to Microsoft, the other half of the Wintel duo, and Sony, which increasingly seems now to be charting its own course in the home digital media market. Microsoft and Sony's absence at the meeting was noticed. Burns said that home digital media devices should work together based on widely accepted, open standards such as IEEE, IP networking protocols and Universal Plug and Play device protocols. He said, "What people want is the ability to have any device - be it a PC, a notebook, a PDA or a consumer electronics device such as a TV or stereo - to interact seamlessly with any other device, anytime, whether they're at home, in the office or on the go." Intel Wireless Communications and Computing Group senior VP Ron Smith showed how handheld devices like cell phones and PDAs, using Intel technology, could use cell phone networks to access home or office PCs and view videos, pictures or play MP3 files. Performance versus battery life remains the big challenge for such devices. Intel believes that its "wireless Internet on a chip," which combines computing, communications and memory functions, will be a solution. Intel believes that cost is the
major obstacle to increased digital media networking in the
home. That is why it is pushing what it calls the extended
wireless PC initiative. In a short paper explaining its digital media approach, Intel said that the PC has become a "universal and indispensable tool" for "finding, storing and editing" digital media files. "However," Intel said, "when consumers want to sit back, relax and enjoy their favorite digital media, they usually want a more comfortable setting than their PC desk - especially when they want to share the experience with others. The home stereo and TV are better designed for listening to music, showing off vacation photos and watching family videos." Intel has released a software toolkit designed to help developers write wireless digital media applications that work with both the Microsoft NET Framework and Linux. Before digital media devices are allowed to enter the living room, either one of two things must happen: the PC must be transformed from a noisy, bulky, cable-ugly box into a stylish living-room device or single-function digital media consumer electronics devices like Tivo's must come down in price. Today, PCs are cheap but still unattractive, while sleek single-function electronic digital media devices usually cost more than PCs. Currently, Walmart.com is
selling a $199 computer without a monitor. There's not a
digital media consumer device on the market that costs less. Meanwhile, Tivo's cheapest DVR goes for $400 and Sonicblue's is $350. Mary Browning, VP of marketing at digital media software developer BroadQ LLC, says consumer devices are so expensive because manufactures design them to do too much, a symptom she calls "PC envy." Intel's home network concept might have what it takes to bring down the cost of networking digital media devices. Its scheme would reduce redundancy and share functionality among digital devices. Rather than build storage into every device, for example, why not use a cheap PC to store, organize and backup digital media files? It's the strategy BroadQ is using with its $49 QCast Tuner software, which turns a Sony PlayStation 2 into a digital media center. The product uses a home network to stream music and movie files from a PC to the game console. The software generates a menu that's displayed on the consumer's TV. Consumers use the console's joystick controls or Sony's DVD remote to select files and arrange play lists. The selected media file is then streamed over the home network to the game console, where it's decoded. The music or video can then be played through the home stereo system or television. HP is on the home network track
too. "It's not just the gigabytes, it's the
megahertz," Masterson said. He believes PCs can do a lot
of the heavy lifting for digital media, so the trick is to
figure out where to offload the functionality from the
appliance to the PC. Part of that decision depends on home
networks. HP's next home entertainment product line will use
wireless networking to stream content from a PC.
Back
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Consumers Have Digital Rights Too On July 17, the Commerce Department's Technology Administration held a Digital Rights Management (DRM) summit in Washington. Called the "Understanding Broadband Demand: Digital Rights Management Workshop," the vested interests of Hollywood, Tin Pan Alley and high tech were invited but not the people who pay for all the media makers' content and the computer makers' hardware and software, the consumer. Consumers are also the taxpayers and voters. Companies don't vote. And it's the individual consumer who pays the taxes that the corporations pass along to them in the price of their products. A group of consumer advocates tried to crash the meeting and get their comments heard but the Commerce Department's bureaucrats refused to recognize them or let them give their opinions. (The transcript is at http://www.ta.doc.gov/ reports/TechPolicy/DRM-020717.htm) It seems the Commerce Department has now seen the error of its ways and has scheduled a private September 17 meeting to hear the consumer's side of the story. All the advocates who expressed interest in a follow-up meeting have been invited. Asked why the meeting was to be small and private, the best a Commerce spokesman could offer was "to give all the groups a chance to respond." Linux advocate Jay Sulzberger
said, "This time computer owners will be heard. This
time, the makers and users of the Internet will be
heard." He also urged a public meeting at which media and
computer makers would meet with computer and media users.
Back
to Headlines
RIAA Submits Injunction Wording in Madster Case Last week the federal judge in the Madster case overwhelmingly ruled against Madster in a copyright infringement brought against it by the RIAA and the record labels. (See TOR 313-06 RIAA & Record Labels Squash Aimster/Madster) The judge gave RIAA attorneys until September 13 to submit proposed wording for a preliminary injunction against Madster that would force Madster to remove all copyrighted files from its network. After submitting the proposed injunction wording, RIAA SVP legal affairs Matt Oppenheim said, " Our brief proposes a practical plan for Madster to halt the infringing content on its site. There are digital audio fingerprinting technologies available to facilitate digital downloads of licensed copyrighted music with the permission of the copyright holder. [Madster founder and CEO] Mr. Deep himself says that he has such technology available to him. There is no reason why he should not be able to implement this type of filtering system that respects the rights of copyright holders." The judge gave Madster two days
to reply before an injunction against its service is put into
place. Back
to Headlines
Sony Holds PC Sales Forecast While Others Decline Sony Japan's mobile products head Kejji Kimura says Sony has no intention of revising its PC forecasts downwards. Market researchers have said that HP, Gateway, Dell and IBM are all suffering from weak consumer PC sales everywhere and Intel just said last week that Japan and the Asia-Pac region was currently softer-than-expected. Still Kimura is hanging tough and saying, ""The business environment remains harsh for personal computers in the domestic as well as global market. But we will strive to hit our target of 4.4 million." The Japan Electronics and
Information Technology Industries Association reported that
consumer and corporate shipments of PCs in Japan had declined
13% in the first quarter. Worldwide, Sony's market share has
recently drawn equal to Apple's. Back
to Headlines
Audiogalaxy Goes Legit with Rhapsody The former free music-swapping
service Audiogalaxy is cleaning up its act. It's licensed the
Rhapsody music service from online digital music company
Listen.com and is reselling an Audiogalaxy-branded version of
it. Its service costs $9.95 a month and offers consumers
unlimited access to a large library of music.
Back
to Headlines
Deep: "Can't Shut the Internet Down" A federal judge in Chicago said last week that he intended to enjoin Madster and order it to shut down. Madster founder and CEO Johnny Deep claimed, "There's nothing I can do to shut it down. It's the Internet. I can't shut the Internet down." The peer-to-peersters say Madster can't be shut down by one person because, unlike Napster, it doesn't rely on centralized servers for indexing. They say that Madster users can create their own "buddy lists" and share files and chat. One of Madster's original purposes was to be able to add AOL "buddies" so that students, co-workers or people with a common musical interest could create their own private Madster networks. Based on its research into Napster, the RIAA believes that Madster is almost exactly like Napster and, despite what Deep says, is a centralized network. In its motion for an injunction it says that "Aimster predicates its entire service upon furnishing a 'road map' for users to find, copy and distribute copyrighted music....The evidence leads to the inescapable conclusion that the primary use of Aimster is the transfer of copyrighted material among its users." The RIAA has submitted its proposed wording for the injunction. After that Madster has until September 13 to reply. It remains to be seen what
happens if Deep then continues to maintain that Madster can't
be closed down. Back
to Headlines
Intel Makes Innovative PC Awards. Huh? At Intel's Developer Forum this week, it gave out Innovative PC awards for desktops. In making the awards, Intel said, "As part of Intel's PC Ease-of-Use Initiative, the first innovative awards were given at IDF, Fall 1999 to recognize PC designs that measurably improve set-up, usability, expansion and maintenance. Through work with the industry and global PC manufacturers, Intel has expanded the award to include innovative design. [Our emphasis.] Gateway 700XL (Consumer Desktop Category) "The Gateway 700XL is a feature-rich consumer desktop, offering cutting-edge performance with all of the latest technology. All of this is powered by the Intel Pentium 4 processor running at 2.8 gigahertz (GHz). DVD-R, 18-inch LCD Flat Panel display and an optional five-piece sound system with sub-woofer help make this machine a true multimedia powerhouse. A total of six USB ports give the user many connectivity options." The only award-winning desktop PC that's available in the US is Gateway's. The other one is made by the Chinese company Legend. The link to see this "innovative" machine is at http://www.gateway.com/home/prod/hm_ 700xl_ProdDetail.shtml It makes one shudder to think that Intel counts the number of wires that can be attached (six from the USB ports and five more for the speakers, just to start with) as an innovation. Hasn't it heard about wireless innovations like 802.11b and Bluetooth? A wireless or even a near-wireless PC is innovative. Both the Gateway and the Legend PCs look like ordinary, bulky, noisy, cable-ugly computer boxes. No wonder consumer PC sales are in the doldrums. Gateway has done some
significant innovation in the design of its all-in-one Profile
4 products. (See http://www.gateway.com/
products/desktops/prf4/sweepstakes/all media.shtml) The
Profile 4 PCs are products that most people would be proud to
have seen in their home, but that's not true of either of
Intel's award winners. Guess the Profile 4 didn't have enough
cables or noisy fans to win an Intel Innovative PC award.
Back
to Headlines
AOL Deals Covad a Five-Year Agreement AOL Online will sell DSL broadband services supplied by Covad under a five-year pact the two companies have signed as The Online Reporter Issue 308 predicted. The agreement adds significantly to AOL Online's potential broadband subscribers. Covad's network passes 40 million homes and businesses in 94 US metropolitan areas. AOL Online will pay Covad an undisclosed amount each month for each subscriber. In addition, Covad issued warrants so AOL can buy 3.5 million Covad shares, representing 1.5% of the company, for between $4 and $5 a share. Covad estimates it will garner about $3.5 million from the sale. Being careful to do the proper bookkeeping and to announce (the "visibility" word rules these days) its accounting, Covad said that the transaction was recorded on its books as a deferred customer incentive. The deal is a major boost for Covad. Between August 15 and December 13 of last year, Covad was in and out of bankruptcy. Its one-time DSL competitors, NorthPoint and Rhythms, are out of business. All three were victims of the same plague - the immense cost of building a nationwide DSL network and a revenue stream nowhere near big enough to cover it. Perhaps it's just a fluke, but Covad's the only one of the three that Microsoft didn't have a stake in. Microsoft lost $60 million when NorthPoint, the DSL carrier for the Microsoft Network (MSN), went down the tube. It lost a $30 million investment on Rhythms. The deal is AOL's second major broadband alliance. Last month AOL said it would get access to part of the AT&T Comcast cable network for three years once Comcast's acquisition of AT&T's cable business is completed later this year. (See TOR 311-17 "AOL Online Gets 10 Million Broadband Prospects.") AOL also has agreements to get DSL broadband access from several Baby Bells. Since acquiring Time Warner, AOL has offered broadband to Time Warner's cable customers. Under the deal AOL made with the Federal Trade Commission to get its acquisition of Time Warner approved, Time Warner Cable had to permit another broadband service provider to piggyback on its facilities. As a result, AOL rival Earthlink has been able to offer its service to Time Warner cable subscribers too. AOL has had poor results with it broadband offerings so far. It makes less money on its broadband subscribers than on its narrowband dial-up modem customers. (See TOR 312-22 "AOL To Pay Comcast $38 a Month Per Subscriber.") Other Covad resellers include
Earthlink and Sprint (see TOR 308-18 Covad Sprints To Sell DSL.
More Digital Media Plumbing to the Home). Covad has also
started selling direct to consumers and businesses.
"We're a national DSL provider whereas the other DSL
providers, such as the phone companies are regional in
nature," said Kimberly Odom, Covad's director of product
management. Back
to Headlines
A Message to Microsoft and Intel Three of your four biggest
customers, HP, Gateway and IBM, are losing money selling your
main product in their PCs. How long do you expect them to do
that? Perhaps this quote from the June 24 the New York Times
will set you thinking of ways to help your customers, the PC
makers, make money again: "A shift in PC use from tasks
like writing documents and sending text-based e-mail to
entertainment uses like music, photos and video could touch
off a new cycle of demand for PC hardware and software."
Back
to Headlines
AOL Time Warner said it expects the results of its AOL Online unit to be off 6%, or $100 million lower than its most recent forecast. It said better-than-expected results in other of its businesses such as cable TV, HBO and magazine publishing will offset AOL Online's shortfall enough for the company's overall revenue and cash flow to meet prior guidance. AOL figures that AOL Online's revenues from e-commerce and advertising will reach $1.7 billion at best and might even be 5% or $85 million less. AOL Online's cash flow from advertising, e-commerce and monthly subscriptions are now expected to be between $1.7 billion and $1.8 billion, down from the estimate of $1.8 billion-$2 billion estimate made in late July. By comparison, last year America Online had revenues of $2.7b so the year-to-year decline of approximately $1b is substantial even for a company of AOL Time Warner's size. America Online's problems run deep: slow or no growth in its mainstay Internet narrowband dial-up service, its inability to get significant growth out of its broadband service, lower margins on its higher-priced broadband than its less expensive dial-up; declining ad revenues as its dot.com deals expire, poor relations with many of its advertisers due to its tough "take it or leave it" negotiating tactics during the dot.com boom, high management turnover, its inability to develop a workable "synergy" plan with Time Warner's content, investigations into its accounting and business practices by the SEC and Department of Justice, an arrogant attitude that alienated Time Warner executives and a management team too ineffective to deal with these problems. Unlike rival Bill Gates, Steve Case was unable to attract and develop managers who could build the company beyond a point it reached several years ago. Under Case's leadership, AOL executives and management developed a haughty customer indifference that is proving costly to AOL Time Warner shareholders. US Bancorp Piper Jaffray analyst Safa Rashtchy told the New York Times, "The ad agencies hate AOL. People who have clients who spend $10 million or $15 million say they can't get their calls returned." Forecasts being made by AOL Time Warner top brass 12-18 months ago have proven to be false promises. CEO Gerald Levin was forced out in December and COO Robert Pittman was run off this summer. AOL founder and current AOL Time Warner chairman Steve Case has been noticeable by his absence and his inability to right the floundering AOL Online unit. The adults at AOL Time Warner appear to be taking up the reins, however. Blaylock & Partners analyst John Tinker told Reuters, "I think [the targets] may come down again but I think what people want is just common sense combined with openness. And that's what [AOL Time Warner management] seems to be doing." It was Time Warner management that recently hired former USA Interactive exec Jon Miller to replace Case's former right-hand man Robert Pittman and fill the management void at the once high-flying Internet outfit. Miller is expected to make a massive reorganization at America Online to pull it out of its nosedive. The business affairs unit that David Colburn was forced to resign from after the SEC began investigating several questionable deals he negotiated is expected to be downsized and stripped of its independence. The interactive marketing unit run by Robert Sherman and the AOL service unit run by James de Castro will each take over its activities. Lisa Hook's broadband unit should get more resources and corporate attention as AOL attempts to rejuvenate its failing broadband services. She previously headed AOL's wireless unit. Vivendi and Bertelsmann have
already put most of their Internet mistakes up for sale either
to another company or in a public stock offering. AOL Time
Warner can hardly spin off or sell its America Online
operations at today's market prices. And then there is the
prestige problem. How could the Time Warner directors and top
executives admit they made such a costly blunder? Back
to Headlines
Gracenote, the company that operates the CD database (CDDB) used to identify CDs in digital media applications, has secured $9.5 million in third-round financing lead by venture firm Sequoia Capital. Sameer Gandhi, a Sequoia partner, has joined Gracenote's board. Gracenote says it plans to use the cash for working capital and "strategic initiatives," but was tight-lipped on what those might be. CDDB, Gracenote's best-known service, works by correlating the number of tracks on a CD and their length to a specific release. Although the database is accessed by many kinds of software, the company has to invest in new services now to stay relevant. The main purpose of the CDDB is to display artist and song information about the tracks that are on a CD. Standard CD audio disks like the ones you buy in the stores don't have this information, but CDs with tracks in digital media formats do. As digital media formatted CD usage grows, the need for Gracenote's CDDB offering will shrink. Not surprisingly, Gracenote is picking new technology. In July, it bought the technology and intellectual property assets of Cantametrix, a music waveform analysis and identification firm. Gracenote is using it to offer advanced media services that recognize audio signals from terrestrial radio and other analog sources. Gracenote has become a sort of
music popularity authority as well. It made news several
months ago when its database revealed rampant bootlegging of
rapper Eminem's most recent release. A few days before the CD
hit the shelves, the record became the second-most-played CD
on computers. CDDB's numbers indicated that mass-produced
bootlegs were in wide circulation. Back
to Headlines
New Maxtor Hard Disk Holds 230 Movies or 65,000 Songs Maxtor announced new DiamondMax
high-speed (7200 rpm) hard disks with up to 160GB capacity.
That'll hold about 230 DVD-quality movies, which is more than
Hollywood produces in a year. Or music lovers can store about
65,000 songs in MP3 format. The drives will be in new PCs by
year-end. Maxtor also announced a 320GB hard disk for
corporate enterprise servers and storage. Back
to Headlines
Toshiba has introduced a 1GB
CompactFlash card that it boasts has the highest density of
any card of its kind. Measuring a mere 1.4 by 1.66 inches, the
thing is roughly half the size of a business card. With 1GB on
board, it makes exchanging full-length movies as easy as
trading baseball cards. However, the cards cost $700 each, so
consumers won't be giving them away to friends anytime soon.
The cards have a maximum write speed of 1.5 MB/s and maximum
read speed of 6.5 MB/s, which makes them too slow for
full-screen movies anyway, but plenty fast for MP3s. One
gig'll get you nearly 12 hours of MP3 music, by the way.
Back
to Headlines
Brilliant Digital Scores $1.07m Brilliant Digital Entertainment
Inc, the online advertising agency with a controlling stake in
the Altnet P2P network, raised $1.07 million after selling
some stock to MarKev Services LLC, a venture firm co-owned by
Brilliant chairman and CEO Kevin Bermeister. Independent
investors Ronald Lachman, David Wilson, Scott Hergott, Harris
Toibb and Bob Haya bought slice of the stock as well.
Back
to Headlines
Companies To Test Coax Home Networking Comcast, the cable firm, Broadcom, the networking chipmaker, and Ucentric Systems, an ISV, have partnered to test a home networking system that uses existing coax. Similar to the HomePNA networks that use ordinary phone lines, the venture is relying on the coaxial wiring that brings cable TV into the house. Because coax can support a much higher bandwidth than phone lines, the threesome expect the network to be used for multimedia applications such as streaming video and audio in addition to basic Internet services. Broadcom's HomePNA iLine32 chip
is used to provide the network's physical protocol layer over
the coax. Ucentric is developing digital media software to
take advantage of the high-bandwidth network. Comcast is
working with Ucentric to develop software that manipulates
cable TV streams such as a Multi-TV PVR. PVRs, often called
DVRs, or digital video recorders, digitally record TV programs
to a hard drive. A Multi-TV DVR would work like any other DVR
except that it could be shared over a home network.
Back
to Headlines
Intel To Embed Certificates into Next-Gen CPUs Intel says its next generation of processors will have embedded electronic certificates in them, a feature that Microsoft and other software makers can use to build stronger security and anti-piracy software. Code named LaGrande, the anti-piracy technology will protect memory and storage as well, so data can be routed directly to peripherals without traveling through the PCI bus. For example, on PCs today, data that is destined for the sound card must first go through the PCI bus. By design, the PCI bus is completely accessible by software, so programmers can write software that intercepts the data on its way to the sound card. Once the data destined for the sound card has been captured, users can easily make unauthorized digital copies of the content. LaGrande's embedded certification offers software developers a way to tie applications to specific hardware. For example, Microsoft's Windows XP authentication system relies on a complex PC audit to link a software license to a specific PC. If the user does a major hardware upgrade such as switching a hard drive, then the profile has changed and the system will stop working. With LaGrande, Microsoft simply has to tie the software license to the embedded certificate, which simplifies the licensing terms: one CPU equals one XP license. Content owners could use
digital rights management (DRM) that uses the CPU certificate
to make sure digital media will only run on a specific PC. If
the files are copied, then the media files will no longer
work. Back
to Headlines
Sonicblue Develops First Intel-based Portable Video Player Consumer electronics house Sonicblue says it's developing a portable video player (PVP) called the ReplayTV PVR based on an Intel reference design. The player is basically a miniature version of Sonicblue's ReplayTV digital video recorder (DVR). DVRs are set-top boxes that record TV shows onto an internal hard drive. The ReplayTV PVP uses Intel's low-power XScale processors, which are designed for compressing and decompressing motion video. Rather than use an MPEG-based compression format or license a format from Microsoft, DivxNetworks or RealNetworks, the PVP will use a compression format developed by Intel. The device will be able to download recorded shows from Sonicblue's ReplayTV DVR so people can watch on the road what they've recorded at home. The device can be connected to a PC as well so consumers can transfer MP3s and other digital media formats to the drive. No word yet on how much it will cost, what size the screen will be or how big the internal hard drive will be except that it will be a "large-capacity hard drive." The ReplayTV PVP will ship sometime next year. (See TOR 297-21 Intel Publishes Home Media Reference Design) Sonicblue's PVP isn't the first device of its kind. French consumer electronics maker Archos already has a PVP on the shelf, retailing for $400. The Archos player has a 1.5-inch (3.5cm) screen, a 20-gig hard disk that consumers can load with files from their desktop using a built-in USB 1.1 connector, an optional USB 2.0 or a Firewire connector. It supports DivxNetworks' Divx file format, MPEG video files and MP3 music files. It can also display BMP and JPEG photos. (See TOR 307-06 "France's
Archos To Ship Personal Video Player Months Ahead of
Intel" and 313-05 "Archos Ships First Divx
Handheld") Back
to Headlines
Hello PC Makers! Consumers Are Buying, But Not PCs Retail electronics chain
Circuit City reported that same store sales increased 10% in
its second fiscal quarter ending August 31 but that the
increases did not include sales of PCs. People are buying more
electronic gear for the home while PC makers bewail the
decline of home PC sales and blame their woes on "lack of
demand." Duh. Maybe people just don't want what they're
selling. The PC industry used to be known for innovation and
its ability to create market demand by providing new functions
that users wanted. Now it sits around and waits for
"demand to increase." Hello! Back
to Headlines
How Risky Is Investing in High Tech? "To say 'tech investing
involves risks' is an understatement. During the last 12
months, 31% of the tech stocks globally experienced single-day
drops of at least 20%. In contrast, only 13% of the non-tech
stocks fit this description. Moreover, it is extremely
difficult for the investment community - including ourselves -
to project the financial results of tech companies, since
their operating models are highly volatile and unpredictable.
A full 70% of the S&P tech companies reported earnings at
the end of 2001 that were either 20% above or below the
consensus estimates at the beginning of the year. Neither
traditional nor non-traditional valuation measures have
provided much insight into how these stocks trade." - UBS
Warburg. Back
to Headlines
The Million Users Club: Napster, Kazaa and WinMX Of all the peer-to-peer
networks, only Napster, Kazaa and WinMX have had over 1
million users. Morpheus had over a million when it used the
Kazaa protocol but its Gnutella implementation has not reached
anywhere near the million mark. Imesh, from an Israeli company
of the same name and one of the original peer-to-peer
networks, is knocking on the door however with 900,000 users
online simultaneously. Back
to Headlines
EBay Faces Potentially Crippling Patent Suit Auctioning is right up there
with messaging, e-mail, browsing and music downloading as the
most popular uses for home PCs. EBay has certainly been an
amazing Internet success standing tall above all the dot.bombs.
Now its software and business model is threatened by a patent
lawsuit from MercExchange and its founder Thomas Woolston. An
eBay spokesman said that if the patent claims hold eBay would
be crippled by having to pay significant damages and royalties
or by having to make major changes in its business model.
Back
to Headlines
Microsoft Learns about Depending on Sole-Source Suppliers Manufacturing hardware is more
complicated than it looks especially if you are dependent on a
single supplier for an important component as Microsoft is
learning with its Xbox venture. Microsoft had to call in
arbitrators to force Nvidia to keep supplying graphics
processor chips while a pricing dispute is being settled.
Microsoft claims Nvidia overcharged it to the tune of $46
million. The interim ruling forces Nvidia to sell Microsoft a
"reasonable requirement of chipsets." It's generally
accepted that Microsoft's Xbox manufacturing costs, believed
to be $325, exceeds its $199 U.S. retail price. Red Herring
reported that Microsoft probably lost $750 million on Xbox in
the fiscal year ending June 30 and expects it to lose $1.1
billion this fiscal year. Video game console makers help
compensate for losses by collecting licensing fees from game
software companies. Xbox product manager David Hufford said
that Microsoft could not replace the Nvidia chip with one from
another supplier because the graphics processor was designed
specifically for the thing. In other words, Microsoft designed
the Xbox so that Nvidia is the sole supplier of a key
component, the graphics processor. Intel, HP, Dell, IBM,
Gateway and other PC makers must be laughing out loud behind
closed doors at Microsoft's predicament. Back
to Headlines
Wall Street Analyst Says PC Consumers Won't Pay for Incremental Features and Functions. Duh! Brokerage Credit Suisse First
Boston (CSFB) said in a research report that consumers won't
pay for incremental increases in a PC's features and
functionality. CSFB said things Intel said at its Developer
Forum this week confirmed its thesis. Wow, Wall Street
analysts are really getting sharp - consumer PC sales have
been declining for two years while Intel, Microsoft and the PC
makers have added no significant functions for consumers in
over four years. You see any correlation? Back
to Headlines
Kazaa Is Number One Searched for Site at Lycos Lycos, which claims to be the
world's largest "global Internet network," says that
Kazaa was the number one searched for site the week ending
September 7. NFL football was second and a PC game was third.
Hmmm. Music, sports and PC games. What happened to that other
activity we're supposed to be so fond of? The complete list is
http://50.lycos.com/ Back
to Headlines
11.3 Billion Pop-up Ads So Far This Year Nielsen/NetRatings estimates
that 11.3 billion pop-up and pop-under ads were launched in
the first seven months of this year. (Yeah, but why all on my
PC?) One company, X10 Wireless Technology, launched almost 10%
of them. Pop-Up Stopper and InterMute both claim to have
software to stop the pops. Back
to Headlines
During May, June and July,
150,000 Australian households signed up for broadband Internet
access according to Nielsen/NetRatings. That makes a total of
500,000 broadband-connected homes Down Under. At the current
growth rate, 50% of Australia's Internet users will have
broadband access by 2007. Back
to Headlines
Preserve Us from Blank Checks From VCs "If I had [had] a blank check from a VC...things might have gone much worse." - Pierre Omidyar, eBay chairman and founder.
Back
to Headlines THE online REPORTER focuses on:
If ever that overused phrase "paradigm shift" was apt, it's now, about the Digital Media industry. There's not a company in the industry that's not worried about where it'll still be standing after the deluge - and that goes for leaders like AOL Time Warner as well as that feared monolith Microsoft. Its format is concise and pointed, its style a touch brash and, with any luck, a bit controversial. Its object is to break the stories that give its readers the real inside track. It is pledged to fact and fair comment. THE online REPORTER - Intelligence for decision makers.
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