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Steve Case, a 44-year-old Hawaiian native, presided over a decade and a half of incredible growth at America Online. Many analysts credit AOL with almost single-handedly introducing Americans to the Internet. Investors took notice and bid its stock into the stratosphere. With AOL's high-priced shares, Case was able to buy the giant media conglomerate Time Warner. The acquisition was announced January 2000 and consummated in January 2001. On January 12, 2003, last Sunday, Steve Case announced he would resign at the May 5 stockholders meeting as AOL Time Warner chairman but that he would remain an outside director and co-chair the board-level strategy committee. Here's a few of things he said following the resignation announcement: "There was overwhelming support for me to remain as chairman." There were only "one, maybe two voices which were raised" on the board about him, according to a report in the Wall Street Journal. "The bottom line is this: I love the company and will do whatever I can to make it successful. I believed in America Online when we built it; I believed in AOL Time Warner when we created it; and I continue to believe in the great potential of this company and its people." While my role will change, my enthusiasm for what this company can accomplish won't diminish." "Case told several news outlets that he "would love to serve as chairman" for many years to come. "This is a difficult environment. Whether it is right, or not right, or fair or not fair, is not relevant. Given the risk of greater distractions as we headed toward May, I concluded, on balance, that even though this was a difficult personal decision, that it was the best thing for me to do." As quoted in a Washington Post interview. "Given that some shareholders continue to focus their disappointment with the company's post-merger performance on me personally, I have concluded that we should take steps now to avoid the possibility of that effort hindering our ability to pull together as a team and focus fully on our business." "The promise of the merger still burns bright in my head." "In reality, despite all this swirl, in the past year only one investor came to me and suggested I step aside and only one director came to me and suggested I step aside. So maybe there was some smoke but less fire than people perceived. Perhaps it's a lesson learned - even though you think you may be right, if the environment is such and the facts are such, it requires you to take a more pragmatic way and perhaps a more selfless view. That is what you have to do." "My case, it's about putting the company's interests first," he told David Dukcevich of Forbes. "I am a fighter. If it was just about tenacity, I will assure you I would continue to fight on, but it can't just be about Steve Case and his character, if you will, it has to be about what is best for the company." He claimed reaction within AOL Time Warner to his announcement ranged from "surprised to stunned," but that most were "very appreciative" that he was staying until May. "It would be irresponsible for me to just walk away," he told the Atlanta Journal and Constitution. "I recognize a lot of people have bet on this company and are disappointed by the results. But it's never over until its over," he said on the AOL Time Warner-owned CNN network. Case said he made the decision
on Friday, the three-year anniversary of the AOL-Time Warner
merger announcement. He called company chief Richard Parsons
with the news on Saturday. The public announcement came late
Sunday afternoon, January 12.
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Parsons To Succeed Case as Chairman AOL Time Warner said Thursday at press time that CEO Richard Parsons would become chairman, replacing Steve Case, and keep his CEO position. Independent corporate governance groups have, in the wake of the business scandals of the last few years, discouraged companies from making the same person both chairman and CEO. Of course, the move would allow AOL to name someone else CEO later on. It has certainly had enough management turmoil and turnover since it let AOL acquire it, a chairman and a co-COO forced to walk the plank by upset employees and shareholders distraught at seeing their AOL TW shares decline in value by two-thirds. Making Parsons chairman should stop, at least temporarily, the rumors and speculation about who would succeed Case. That'll give AOL time to consider its options and thoroughly check out any potential candidates. One thing AOL doesn't need is more coming-and-going in the executive suites. AOL TW may want to avoid the risk that an outsider might not work out and have to start the whole messy management shuffle again in a couple of years. None of the America Online "outsiders" has made the grade and their failures have severely damaged the company. Waiting also gives AOL time to
scour its own ranks and "groom its own" class of
potential CEO candidates. A little internal competition, if
managed carefully, can produce outstanding corporate results
and one or more suitable future CEOs.
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RealNetworks Unveils Multi-Format DRM Most digital rights management (DRM) software protects only one file format from piracy. For example, Microsoft's DRM only protects its Windows Media format. RealNetworks has launched Helix DRM, which promises to protect several formats at the same time including MPEG-4 and H.263; audio formats MP3, AAC and Narrowband AMR audio; as well as the company's proprietary RealAudio and RealVideo streaming formats. Music and movie companies have been slow to make digitized versions of their products available on the net out of fear of piracy. Making perfect copies of unprotected digital content is easy with today's powerful microprocessors, big memory and large capacity hard disks. The media companies face a Hobson's choice: Either digitize their content and DRM it as best they can or wait for the Internet pirates to digitize it and make it available for free. RealNetworks claims its new Helix DRM will provide exactly what's needed. "It used to be that content owners would have separate DRM for each format that they wanted to support, and consumer electronics makers would have to implement a separate DRM engine to decrypt those files on their devices," said Dan Sheeran, vice-president of media systems for the Seattle, Washington-based RealNetworks. "This, for the first time, enables content owners to deliver secure content to any PC or non-PC device using a single DRM and gives device makers a single engine to support all formats," he said. As proof of the product's prowess, RealNetworks is waving around some of the deals it's closed: Sony Pictures Digital Entertainment, Starz On Demand, Movielink and Triggerstreet.com, as well as music label EMI Recorded Music including its EMI, Capitol, Virgin and other record labels. The day before the Helix DRM announcement, RealNetworks' neighbor and rival Microsoft tried boosting its own digital media by cutting the prices it will charge for its proprietary Windows Media 9 technology and offering licenses to run Media 9 on non-Microsoft operating systems such as Linux or Symbian. Microsoft hasn't said whether its DRM will work with formats other than its own. The Helix DRM product should
also make Apple happy because it doesn't currently have a DRM
offering for its MPEG-4-compliant QuickTime. It lost at least
one big deal with Movielink because it couldn't come up with
DRM protection. Apple declined to comment on the RealNetworks
announcement.
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DirectBand FM Is Key to Microsoft SPOT Devices At Comdex and again at the Consumer Electronics Show, Microsoft's chief software architect Bill Gates showed off Smart Personal Objects Technology (SPOT)-based wrist watches that'll deliver news, traffic updates, weather reports, to-do lists, sports info and e-mail. "The only screen you carry around with you and you can just glance at is a wrist-sized screen," Gates told Reuters. "If we get 5% or 10% of the people who have watches, it's a huge, huge number." The data will be delivered wirelessly via an unused one-way FM spectrum Microsoft has purchased and is calling DirectBand. SPOT watches from Texas based-Fossil, Finnish-based Suunto and Japanese-based Citizen will embed FM receiver chips from National Semiconductor. Nat Semi's complete widgetry includes an application chip with an ARM7 CPU, ROM, SRAM and a tiny sensitive 100MHz RF receiver chip. "These watches won't be geek gadget wear," claimed Fossil VP of technology Donald Brewer. "These watches are going to be pretty damn fashionable." The first Fossil watches are expected to ship late this year with price tags between $100 and $250 and a monthly data subscription fee of about $10. The watches must be recharged every two or three days. DirectBand is a set of technologies for transmitting information off the web to Microsoft-equipped smart objects. DirectBand uses a custom radio receiver chip costing less than $10 and a wide area network based on new FM radio protocols to update Microsoft SPOT-based devices continuously with new information. Microsoft and its DirectBand partners, Clear Channel Communications, Entercom Communications, Greater Media and Rogers Communications, have created DirectBandNetwork, a continuous broadcast network across the US and Canada. DirectBand data will be broadcast over 250 FM stations. Expected to go live this fall, it will initially cover over 100 top metropolitan areas across all 50 states, plus the top 14 Canadian cities. Microsoft worked with SCA Data Systems, a leader in FM sub-carrier technology, to design the unique high-bit-rate, noise-tolerant radio system. The FM spectrum that DirectBand will use can handle limited amounts of data transmitted by the radio stations and is typically used to broadcast radio station call letters and sometimes song title information for display on car radio LCD and LED screens. Roger Gulrajani, Microsoft's director of marketing for SPOT, said the company looked at a number of wireless technologies before settling on FM. "It was really a matter of size and battery life," he said. "When we looked at Wi-Fi, there was just no way we could fit that into a watch. The FM spectrum turned out to be this great, underutilized asset. The bandwidth is pretty transparent. To the user, it's blazingly fast, because the weather report is right there when they want to look at it." The watches are "always online," and will be fed a continuous stream of information so their data is always up-to-date rather than downloaded on demand. With a single click on the watch, the user will instantly see the latest information - no waiting to connect and download. "This is what we call 'glanceability,' Gulrajani said. Microsoft expects that both it and the watch makers will offer DirectBand information services. National Semi CEO Brian Halla expects that the prices on SPOT watches and other SPOT devices will become inexpensive enough that people will make impulse purchases. "The watches will be shrink-wrapped in 7-Eleven next to the Altoids, and people will get them for $20 including the information service," he said. The first smart devices will emphasize custom information that has high value and is relevant to the time, context and location of the user, said Chris Schneider, Microsoft's program manager for SPOT. Consumers will be able to select the data they want displayed, for example, buying a sports watch, then logging onto MSN and specifying that only data from a favorite team be displayed. A SPOT-based wallet might show the checking account balance, a SPOT-based compass might display the maritime weather forecast. Other SPOT-based devices are expected to be alarm clocks, pens, wallets, key chains, "smart buttons" with LCD displays, refrigerator-magnet clocks and accessories for laptops and PDAs. National is working on designs for several SPOT devices, including a DirectBand receiver that would fit into the SecureDigital memory slot on handheld computers. "FM is a great way to go for this kind of connectivity," Halla said. "You get much better access, and most of the network is already there." Wireless seems to be
"where it's at" these days. Microsoft's SPOT adds a
third method of delivering information to consumers, following
the enormously successful cell phone and the about-to-blossom
Wi-Fi technology.
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The Online Reporter received the following e-mail from Leonardo Chiariglione: As you will by now have
realized, I react to your writing about MPEG only when your
lack of information reaches a certain threshold. Thank you. Mr Chiariglione.
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Scale Eight Nabs Big One Down Under San Francisco-based storage
solutions provider Scale Eight has landed a big order with
Australia's OzHosting.com, a partner in Australia's largest
digital music provider. OzHosting's clients are Universal
Music, EMI, Warner Music and BMG who store music files with
OzHosting that are distributed to Australian consumers.
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Hitachi Chooses Sonic MyDVD To Bundle with DVD-RAM Cameras Sonic Solutions says that
Hitachi will include its MyDVD software with Hitachi's new
DVD-RAM cameras worldwide. Sonic's MyDVD provides users with a
way to turn their home videos, music and digital photos into
Hollywood-style DVDs with motion menu backgrounds, animated
buttons and high-quality slideshows. The new cameras allow
users to capture video directly onto recordable DVD discs
inserted into the cameras. The completed DVD projects can then
be played back on any of the millions of set-top and PC-based
DVD players around the world.
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Irish Student's Internet Browser Quadruples Surf Speed Now here's something AOL could use to help retain its dial up modem accounts, unless MSN and Bill Gates beat AOL to Dublin. Adnan Osmani, a 16-year-old student at Saint Finian's College in Mullingar, Ireland has developed a browser that quadruples surfing speed. Osmani won the top prize at an Irish exhibition for young scientists after spending 18 months writing the browser's 780,000 lines of code. Known as XWEBS, the system works with an ordinary Internet connection using a 56K modem on a normal telephone line. Scientists at University College, Dublin tested the product and confirmed that it boosts surfing speeds between 100% and 500%. The browser has its own media player for music, movies and videos in a variety of formats. Osmani said, "It has got every single media player built-in. It is the first Internet browser in the world to actually incorporate a DVD sidebar. So you can watch a DVD movie in whatever screen size you want and browse the Internet at the same time." It also accesses 120 Internet search engines. To make the software more user friendly, Osmani added a talking animated figure called Phoebe. He only patented his invention last Thursday. "Five or six companies have approached me about it. I am keeping a lid on it for the time being. I am just waiting until after the exhibition and then I will try to get it all organized." He wants to study computer
engineering at Harvard University and eventually set up his
own Internet or computer company.
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Was Time Warner's Gold Mine in its Own Backyard Some pundits now ponder whether the gold mine that Time Warner was looking for when it consented to AOL acquiring it was already inside Time Warner's cable division. TV cable companies like Time Warner Cable have been the biggest beneficiaries so far of the American consumers' move to broadband as their preferred Internet connection. The local telephone companies Digital Subscriber Line (DSL) Internet offerings have trailed badly in their fight for market share against the cable TV companies' cable modem connection. In the rest of the world DSL is overwhelmingly the market leader. America Online's problem with its broadband offering is that it must contract with the cable companies and the local phone companies to make the actual physical connection to the home. There is no law or regulation that requires the cable companies even to sell service to AOL so the price they charge is high. Reports are that America Online paid Comcast a "wholesale" price of $38 a user a month - that makes it very difficult for AOL to make a profit competing against the cable companies' own retail offering of $45 a month. That's why newly appointed AOL CEO Jonathan Miller had to draft all the company's best brains into a multi-month session to put together plans and content offerings that would entice potential AOL broadband subscribers to pay it a $55-a-month rate or a $15-a-month premium. The local phone companies are regulated by the Federal Communications Commission, which currently requires them to offer favorable "wholesale" DSL rates to the likes of AOL, Covad, Earthlink and AT&T Broadband. However, the phone companies, seeing cable TV companies surge into the market lead for broadband, are increasingly reducing their retail fees. In addition, FCC chairman Michael Powell has rumbled several times that he would like to "de-regulate" so the telco could jack up the "wholesale" prices they charge AOL, Covad, AT&T Broadband and Earthlink. If that happens, as seems likely, AOL could really feel the squeeze. Tom Wolzien of Sanford C Bernstein told the New York Times that "Cable is in the more powerful position right now." AOL is going to be caught in a fierce crossfire between the telcos and the cable companies and the weapon of choice is going to be price, not content. AOL Time Warner could win, but
not with AOL. Its Time Warner cable outfit could, even in its
limited geographical coverage, garner more broadband
subscribers than America Online. Now wouldn't that be "a
merry sight to set before the king?" Time Warner, having
lost its shareholders billions and Gerald Levin and Steve Case
their jobs and stature in the industry, suddenly realizes that
its own cable TV service has more broadband users than AOL?
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Which Wireless? Cellular or Wi-Fi TeleChoice has issued a white paper titled "A Broadband Wireless Framework for 2003: Which Wireless Technologies Deliver Broadband" that addresses the many definitions of broadband and compares wireless data services. The study concludes that services currently offered over mobile telephone networks are not fast enough to be considered broadband, and that the popular 802.11 LAN technology (also known as Wi-Fi), as it stands today, has severe limitations that hinder its viability as a broadband access platform for carrier-class network-based solutions. The report sets the minimum
bandwidth requirement for portable and mobile wireless
offerings at 384Kbps downstream and 128Kbps upstream to meet
user expectations for high-speed Internet and data access.
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Apple Upgrades its Wireless Offering At MacWorld, Apple kept a jump
on the Windows PC market by introducing its next-generation
wireless technology, dubbed Airport Extreme. Its original
Airport products were based on 802.11b standards (11MB/sec).
Apple's new Airport Extreme is based on newer 802.11g
specifications (54MB/sec). Apple chose 802.11g over the
competing 802.11a standard (also 54MB/sec) due 802.11g's
compatibility with original Airport equipment. It will sell
Airport Extreme base stations for $199.
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RIAA Denies Its Spreading A Virus The RIAA denied reports that it hired a group of hackers to create a worm that would infect peer-to-peer networks. Several security experts confirmed its statement. A group called Gobbles Security claimed the RIAA hired it to create and deploy anti-piracy tools. Gobbles said its programmers then created a "hydra" - a worm capable of spreading - that infects all major music software. The only known vulnerability found was in a relatively unknown MP3 player. "It's a complete hoax," said an unnamed RIAA spokesman. "It's not true." An independent security expert, Steve Manzuik, told CNET that the true vulnerability is not found in any of the major music players such as Windows Media Player, WinAMP and Xmms, but only in the MPG123 music player, a relatively unknown piece of open-source software. Irish Internet expert Ian
Clarke told webzine Zeropaid, "This is almost definitely
a hoax. The most likely explanation is that this is a rather
transparent attempt by this 'hacker' to get some publicity. It
is almost inconceivable that the RIAA could be so foolish as
to open itself up to criminal liability, since writing
computer viruses has been illegal for some time, and it still
is. If the RIAA is involved in any way, it is more likely that
they encouraged this person to make these false claims as a
scare tactic."
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What Internet Company Turned its Ad & Subscriber Business Around? Who "embarked on a turnaround in early 2001, hired a new chief executive and overhauled its management team, in part to assuage complaints about its insular culture?" Who "started wooing traditional advertisers, offering mea culpas to ad agencies it had angered with its arrogance during the boom?" Who "devised strategies to turn its users into paying subscribers while it tapped other non-advertising areas such as job listings for revenue? Who? No, not America Online. It was Yahoo, which also saw its Internet boom-related ad revenues ride to the downside two years ago (from $1.1 billion in 2000 to $717 million in 2001) but has been taking steps to fix its problems. Yahoo reported this week that
earnings for Q4 were $46.2 million in contrast to a year-ago
fourth-quarter loss of $8.7 million. Sales were $285.8
million, up 51% from a year earlier. Excluding its employment
web site, HotJobs, which it acquired early 2002, its sales
would have risen 31%. - Yahoo has 2.2 million paying
subscribers who generated $9.4 million for its broadband and
dial-up Internet service, its online personals service and
several other offerings, up from 375,000 subscribers a year
ago. For 2002 Yahoo's sales were $953 million. For 2001 they were $717 million. For 2001, at the height of the Internet boom, sales were $1.1 billion. Yahoo forecasts 2003 sales between $1.14 and $1.21 billion. Yahoo sells its broadband service co-branded with SBC Communications, the regional local phone company that services only about one-third of the US. "Sometime this year, if you are a Yahoo user, you will have the ability to be part of Yahoo broadband all over the country," Yahoo CEO Terry Semel said. Semel figures that cable companies, which have only sold their own broadband service, may be open to companies like Yahoo, America Online, Earthlink and Microsoft's MSN offering their portal services over their networks. The cable TV companies, unlike the regional phone companies, are not required to let third-party companies sell Internet connection services over their wires. Semel said Yahoo would detail an expanded broadband strategy next month. Most Yahoo users connect to the Internet with AOL and MSN. Semel did not say whom Yahoo would partner with, but it can only be the cable companies or the telcos unless Yahoo intends to start pulling wires to America's homes. Microsoft's MSN has non-exclusive deals with Verizon, SBC, and Bell South to carry MSN traffic. It previously signed a deal with Qwest and took over Qwest's own ISP business, melding it with its MSN subscriber base in the areas of the country that Qwest serves. Those are the four largest Telcos with local phone service, the fifth being Sprint. The cable TV providers have been reluctant to make deals with value-added broadband outfits like Yahoo or America Online, or at least deals that they could sell at a price high enough to make a profit on. The cable TV services would like to keep the broadband market for themselves and have, in fact, been more aggressive and more successful than the phone companies signing up broadband subscribers. Safa Rashtchy, an analyst with
US Bancorp Piper Jaffray, said, " SBC hasn't produced a
lot of revenue for Yahoo yet, but we estimate it will be $100
million this year. If they get the other two-thirds of the
country, that could be $300 million a year." And that
would come primarily out of America Online's pockets.
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CES: Aberdeen's View Is SPOT On High-tech consulting house Aberdeen Group's Russ Craig, on being asked what his overview of CES was, replied: -"The big picture theme
was wireless video in the home." SPOT will wirelessly deliver via a one-way FM broadcast, which Microsoft calls DirectBand, selected, up-to-the-minute and personalized information 24 hours a day in the top 50 cities by year-end and in most of the populated towns in the US and Canada later on. SPOT enables pre-selected information - updated regularly - to be pushed to a wide range of appropriately equipped products such as watches, clocks, cars or PDAs. Craig was particularly impressed with the work that chipmaker National Semiconductor had done on the chips, including an FM receiver, small enough to fit in a wristwatch. He also forecasts that "The street price of watches will start in the affordable $100 range. If the information service pricing is right, one-way pagers and information-based short message services on cell phones will take a hit. Adoption of Wi-Fi wireless technology on PDAs may well stall since weather, stock ticker, flight delay and other data can be downloaded to SPOT. Finally, the service is likely to create a price cap on 2.5/3G and associated Wi-Fi hotspot information services for data like stock quotes, making the telco economics even more tenuous than they are today. His report is at http://www.aberdeen.com/
ab_company/researchareas/dctces1.htm
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Microsoft's security vulnerabilities have followed it into the cell phone business according to a report on the UK webzine The Register. Cell phone service provider Orange was the first out with a phone based on Microsoft software, its SPV unit made by the Taiwanese High Tech Computer. "The Orange SPV has
achieved the dubious distinction of being the first Microsoft
smartphone to have its security cracked. Orange has set the
phones up so they will only run Orange-certified applications,
but as yet hasn't got much further than promises when it comes
to telling people how you develop for it, get apps certified,
get development systems and so on. Which means a lot of deeply
unhappy would-be SPV developers - until now. It's not
absolutely clear to us who first came up with a crack, but
MoDaCo has checked it out, it works and there's a certain
amount of happy cackling from that direction."
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Merrill Lynch Reports Happy Holidays for HP Wall Streeter Merrill Lynch
reports, "We believe HP had a solid holiday season in
consumer products. Although business was weak year-over-year,
our checks suggest sales met the company's expectations."
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Yahoo Adds Audio, Video to Dating Service Ads Yahoo Personals, the web's
second-largest online dating service, will let voice and
pictures be added to personal ads for free. It will accept
30-second voice and/or audio kickers for the ads. Contacting
someone requires a $24.95-a-month subscription. Match.com,
owned and operated by Ticketmaster Online-CitySearch (TMCS),
is the biggest such service, with an audience over 6.6 million
people.
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CinemaNow offers a package that
gives subscribers unlimited access to almost 400 films in its
so-called premium collection. The monthly fee for downloading
or streaming programming is $9.95. CinemaNow is also offering
unlimited access to its site for seven days as an incentive.
Backed by Blockbuster, Microsoft and Lions Gate Entertainment,
the company competes with Movielink.
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Motorola used the Consumer
Electronics Show last week to show off its Simplefi wireless
digital audio receiver that lets users listen on their stereo
to MP3 music files or Internet Webcasts (radio) played from
their PC. A remote control with a display permits browsing
through playlists and tracks. The $379 unit has an 802.11b
(Wi-Fi) connector and connects to the stereo through standard
RCA jacks. A new remote is due out later this year that will
have an LCD displaying song titles and other track
information. See http://www.gi.com/noflash/ simplefi.html
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Reuters To Cut Another 1,000 Jobs A Reuters spokesperson said the
company may cut more jobs, speculated to be 1,000. Reuters and
rivals Bloomberg and Thomson are caught in a slump that has
led to massive layoffs in the banking and financial services
industries that make up their core constituency. Reuters has
cut its payroll by about 2,500 people in the past 18 months.
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Ex-Homestore Exec Pleads Guilty, Agrees To Spill the Beans In a matter that may or may not be related to Steve Case's decision to resign, the ex-Homestore senior manager of mergers and acquisitions Jeffrey Kalina pleaded guilty to one count of criminal securities fraud and settled a civil inside-trading charge that the SEC had made against him. He was the fourth exec to plead guilty as a result of a Justice Department investigation of Homestore for overstating its revenue by reporting non-existent advertising income. Typically such guilty pleas are accompanied with a promise to "tell all" and provide evidence against others. The government accused the four of falsely inflating Homestore's revenues by $46 million in 2001. The first three also copped a plea and agreed to cooperate with a continuing investigation of other Homestore and non-Homestore employees, which may have led to Kalina's guilty plea. AOL was the point of a triangle of companies, the third being Purchasepro.com, involved in an scheme called round tripping in which a sum of money gets sent around or between companies in the disguise of revenue and finally comes back to the one that started it. One example would be if three companies agreed to advertise on each other's web site - in the end no money actually changes hands but each firm reports the transactions as revenue. No one loses except the stockholders who bought shares in the companies based on revenue figures that weren't real. In the dot.com heyday, revenue was king. Analysts told potential investors that revenue should be their main consideration in evaluating Internet companies, not profits or a realistic business plan or management experience or expertise. The better the revenues, the better the investment, the higher the stock price would rise. Company insiders then sold their shares to people who believed the false overstated revenue numbers. In this case of round tripping, Homestore would buy goods and services from a small company and require the company to spend the money on AOL ads. AOL would then buy the same amount of advertising on Homestore's site. Both AOL and Homestore were able to report that revenues were higher than they actually were. It's reported that one of the Homestore executives, Peter Tafeen, dealt directly with AOL's number two dealmaker Eric Keller in structuring deals that looked proper but were fraudulent. Government investigators wanted to pressure the Homestore execs who pled guilty to get the goods on Tafeen. They then wanted to pressure Tafeen to spill the beans on the AOL executives. Keller worked for and followed the business pattern set by his then boss, AOL's chief dealmaker David Colburn. Colburn was head of AOL's business affairs unit under AOL COO Bob Pittman and chairman Steve Case. In August AOL Time Warner executives had Colburn abruptly locked out of his office after announcing that the DOJ, the SEC and AOL itself had begun investigating the accounting practices used at AOL Online for certain transactions. Keller was dismissed last August as a result of an internal investigation into the deals with Homestore and PurchasePro.com, another now-bankrupt Internet outfit. America Online vice-chairman Ted Leonsis immediately hired him as a consultant for his professional hockey team, the Washington Capitols. Leonsis said he fired Keller in July, 2002 but the Wall Street Journal says Keller answered the phone at the team's offices as late as the end of August and still had an active voice-mail account there. Apparently documents exist that
prove AOL executives knew that the money the company was
getting from "advertisers" was actually coming from
Homestore.
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Sony: 8.5m Playstations Sold in November-December Sony says it sold 8.5 million
Playstation 2 game consoles worldwide in November and
December, up 24% over the same period in 2001. Over four
million of them were sold in the US, up 42% year-over-year. It
says it's selling 7.7 games per console. Reportedly
Microsoft's Xbox and Nintendo's Game Cube are running
neck-and-neck for second place.
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Sony on a Path away from Microsoft "Sony has made a strategic
decision to go the route away from Microsoft." - Tom
Bajarin, Creative Strategies International president
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CES: Aeon, Petters, Polaroid Launch DVD/CDR-W Player/Recorder The Petters Group has used technology from Aeon Digital to make the first Polaroid-branded DVD/CDR-W player/recorder to include a TV Tuner and is Ethernet-ready. The unit, expected to be available in Q2 for under $300, incorporates Microsoft's Windows Media 9 Series playback and encoding, allowing the consumer to do more than just play DVD movies. The new unit will allow users to both view and listen to Windows Media 9 Series streaming video and music content found on the Internet. The built-in TV tuner will enable them to record up to two hours of their favorite television shows or home video to CDR-W and give them the capability of affordably recording digitally today. Aeon's hardware design enables the unit to record two hours of content to a CDR-W 2. Ethernet-ready, the unit streams Windows Media 9 Video content from the net onto a TV using a cable modem or DSL. Consumers can also transfer home movies from their camcorders to view, record and save them in digital format. Aeon Digital CEO Giovanni D'Andrea says, "Aeon Digital is the first company to license out a hardware set that encompasses Windows Media 9 Video encoding. As more and more consumers bring broadband into their homes, the bandwidth will no longer be dedicated just to their home computer but will be utilized in the living room via the family home entertainment center." "This is a great example of the kind of new devices Windows Media 9 Series can now help enable," said Dave Fester, general manager of Microsoft's Windows Digital Media Division. "Aeon Digital has achieved an exciting milestone in the home entertainment marketplace by helping to bring Windows Media content into the living room." The unnamed device will be able to stream selected content from featured partners such as CinemaNow.com straight to a TV. Aeon is working with CinemaNow.com, a leader in IP-based video-on-demand distribution and technology, to deliver film trailers and short films. "Aeon Digital is pioneering the effort to stream Internet content into the living room for the growing content-on-demand market," said CinemaNow CEO Curt Marvis. "As leaders in Internet video-on-demand distribution, we look forward to working with them to bring our content to the television." Polaroid Update Polaroid also licenses its
brand name to companies to use on other non-camera products.
The Petters Group has a license to use the Polaroid brand on
DVD players and recorders. Other companies have licensed the
name for batteries. Polaroid says it does quality control on
both the products and the use of its name on non-Polaroid-made
products.
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San Francisco-based CNET Networks, the technology-focused media company, will lay off another 80 people. The move comes two weeks before the company releases its Q4 financial results. Employees were reportedly notified Monday that layoffs would be forthcoming. The company cut about 190 people last June. "This is part of a plan to achieve sustained operating profitability," CNET spokeswoman Martha Papalia said. The company will release the results of its fourth quarter on Jan. 30. Last year, it said it planned to achieve profitability by the fourth quarter, and Papalia, citing SEC rules that prohibit disclosing financial information between the end of the quarter and the formal announcement, refused to say whether the company was in the black for the year-end quarter. In October, CNET announced a third-quarter loss of $307.2 million ($2.21 per share) as revenue slipped 19 percent, from $69.3 million to $56.3 million. Peter White of British research shop Rethink said, "CNET only has $64 million in cash and $69 million in investments (which are probably worth less than that). Its cash burn rate meant it had to get numbers down. Last quarter it had a $300 million loss, a lot of it was non-cash asset impairment, but it wasted $32 million in cash. It got some tax back but on the current number it has less than 12 months to live, hence the cut. The cut isn't deep enough though and it will get bought within 12 months - that's my view." Back to Headlines
Internet 2 promises to deliver unparalleled quality digital audio and video. Concerts, sports and other entertainment could be delivered in a quality higher than anything currently available and show it on a theater screen size in local movie houses thanks to new technology. The Integrated Media Systems Center (IMSC) at the University of Southern California (USC) developed the technology and demonstrated it last fall on its campus in Los Angeles to 500 top Internet researchers. The audience saw and heard an amazingly high-quality presentation delivered over the Internet of a recorded performance by the New World Symphony of Miami Beach on a 30-foot theater screen in USC's Bing Theater. The Integrated Media Systems Center (IMSC) is the National Science Foundation's exclusive engineering research center for multimedia and Internet research. Many movie theaters are converting to digital systems. The addition of a readily available, affordable high-speed Internet connection could bring high-quality performances via Internet 2 to thousands of theaters. IMSC researchers used a commercial high-speed Internet link to transmit multiple streams of picture and sound from an IMSC dynamic media server located at USC's Information Sciences Institute East, in Arlington, Virginia. The server delivered on-demand, high-resolution digital video and multichannel audio content. IMSC's breakthrough Internet technology, termed Remote Media Immersion (RMI), includes a Yima Streaming Server and selected retransmission protocols. The video was transmitted at 45 megabits a second, and the audio as 16 uncompressed audio channels. The demo was part of a fall meeting for members of the Internet 2 Consortium, which is composed of 200 universities working in partnership with industry and government to develop the next-generation Internet. USC, which hosted the meeting, is a member of the consortium. IMSC has developed unique immersive technologies such as 3D face modeling and animation, immersivision panoramic video technology and immersive audio. It says major progress is also being made in haptics (touch-related technologies), data compression and wireless communications. IMSC's integrated research
approach is progressing toward Immersipresence, the center's
vision for the future of the Internet. IMSC views
Immersipresence as the next big breakthrough in digital media,
one that will dramatically change the world this decade,
transforming the 2D world of computers, TV and film into
immersive 3D environments.
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CES: Sony CEO: TV Set Will Be Entertainment Central Consumer Electronics Show
keynoter Sony president and COO Kunitake Ando said, "The
first 50 years of color television was just the infancy stage.
The PC has been a champion in the industry. But now the
television is about to be reborn." He predicts that
future TV sets will be the center of home entertainment
networks, allowing consumers to access data and services found
on other devices connected to the home network that will be,
in turn, connected to the web. "The pieces are coming
together...the broadband wave will wash over us, and it is
coming fast. My message is we need to collaborate now in order
to realize our broadband dreams," he said. CoCoon is a Linux-based digital
home-entertainment hub, like a giant music/movie/video/photo
jukebox that's connected wirelessly to other devices like TVs
and PCs for playback. Sony has been selling it in Japan for
several months. They're called Blu-ray because
they use a blue-violet laser ray instead of the red laser ray
that DVDs use. Their main use is initially expected to be in
storing large video files. Recording a HDTV movie takes about
four DVD disks; it'll only take one Blu-ray Disc. (See TOR
315-40 After DVDs Will Come Blu-ray Disc)
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Apple claims users have
downloaded more than 500,000 copies of its new Safari web
browser, announced at MacWorld. "Mac users have gone wild
over Safari," said Philip Schiller, Apple's senior VP of
worldwide product marketing.
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CES: SonicSolutions Boosts XP Media Center DVD Burning Novato, California-based-Sonic Solutions has launched a new version of MyDVD for Microsoft's Windows XP Media Center Edition along with a new product, called PrimeTime. Both will burn a DVD of movies and TV programs recorded from a television broadcast that is playable on most DVD players. Microsoft limited the XP Media Center software so that any TV programs it records will only play on PCs or a few standalone DVD players that support Microsoft's Windows Media file format. Consumers accustomed to playing videotape recordings on any videocassette player don't understand the limitation that Microsoft imposed. Microsoft plans to sell lots of its Windows Media software to the music and movie companies so it's been walking a tightrope, trying to keep the media companies happy while not aggravating consumers with irritating DRM. SonicSolutions gives Microsoft
a back door Kevin Eagan, general manager of
Microsoft's Windows eHome Division said, "Feedback from
Windows users has been strong and clear - consumers want
simple, convenient ways to store personal content onto
DVDs."
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Windows Media Rakes In Licensees Microsoft says that 40 more
devices now support its Windows Media format, taking the
number of Windows Media-compliant CD players, car stereos and
other portable devices to more than 200. Companies announcing
new DVD players with Windows Media Audio support included Apex
Digital, JVC and Toshiba. Bill Gates showed the first new DVD
recorder/player to support Windows Media Video, a
Polaroid-branded pre-release unit.
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CES: Michael Dell: The PC Rules Dell CEO Michael Dell used the
opportunity of giving the first CES Industry Insider speech to
assert that PCs would be the dominant digital media
entertainment device. Sony president and COO Kunitake Ando
claimed in an earlier keynote that "smart"
televisions would be the center of the home's digital
entertainment center. Dell said, "Whether the TV or the
PC is the center of the universe is an interesting debate, but
I don't think it's that relevant. I would stick by my belief
that the PC is becoming the center of the entertainment
experience."
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Ominous Note Sounded for Network Gear Makers More ominously for makers of
networking gear, Dell said his company would bring its
considerable cost-reduction strengths to bear on network
hardware. "We're seeing a networked lifestyle where more
and more devices are able to talk. We find that in a lot of
these markets, people are paying too much for these products,
and the efficiency of Dell's business model can benefit
them."
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Dell said that last year's
experiment with using kiosks in shopping malls to demo Dell
gear and answer product questions was successful enough to
continue. "Some customers clearly want to touch and try
out new products before they buy them, and this gives us a
very flexible way to do that - we can put them up and take
them down as necessary," he said. "It means the
customers get the benefits of a retail environment with all
the benefits of the direct model."
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CES: Zenith Throws Hat in the PVR Ring Zenith Electronics has jumped into the digital video recorder fray with two models. Both enable users to digitally record shows automatically, pause live TV on command and record their own DVDs. The new models are designated the XBH312 DVD/PVR combo and the DVR313 DVD recorder. The XBH312 DVD/PVR combines a DVD/CD player with a 40GB hard drive. The XBH312 features an internal NTSC tuner for high-quality program reception, and an electronic program guide to make finding and recording TV programs easy. Viewers can record one program while watching another, program TV shows for later recording, show still images in thumbnail format and use a variety of editing and file management features. The company also previewed an
LCD Rear-Projection HDTV Receiver/PVR that combines an HDTV
personal video recorder (PVR) and a giant 60-inch wide screen
LCD rear-projection HDTV that's less than 18 inches deep.
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Sony America chairman and CEO Sir Howard Stringer appointed Andrew Lack to be Sony Music Entertainment (SME) chairman and Chief Executive Officer a few hours after SME's long-time chief Thomas Mottola bailed out to start his own music company. Lack, who has been president and COO of NBC since June 2001, and was president of NBC News for eight years prior to that, will join Sony in early February. "We are delighted that Andy will join Sony and lead our music company," Stringer said in making this announcement. "He is the most rare of senior entertainment executives, equally adept at business, management, strategy and value creation, as well as a consummate and proven developer of content, talent and ideas. His skills and energy will be of enormous value as we move to transform our music business in this most challenging time for that industry." Lack takes over the Sony label at a time of diminishing revenues and profits in the once-booming music business. Mottola oversaw a declining operation; Sony Music recently reported operating losses of more than $140 million and had only a 15.64% market share. "It kind of makes sense, in a weird mutant way, to bring in someone from outside the traditional business. We can use a fresh look," said Carl Stubner, president of music management at Santa Monica-based Immortal Entertainment, which represents acts like Fleetwood Mac and Everlast. "It's a period in the business where we are all searching for a new way." Four deals had to be made for
the transitions to occur so they were obviously being
negotiated for a while: Mottola leaving Sony Music, Mottola
negotiating a deal with Sony Music to back his new venture,
Lack leaving NBC (probably took the least amount of time since
he was apparently odd man out in a squeeze play between NBC
chairman Jeff Wright and NBC Entertainment chief Jeff Zucker)
and Lack signing up to run Sony Music. One can only speculate
on the sequence of events and who was the biggest beneficiary:
Stringer, Lack, Mottola, Wright or Zucker.
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Clear Channel Re-Nets 45 Stations Webzine RAIN reports that Clear
Channel and Hiwire have made a deal that'll put about 45 of
Clear Channel's radio stations back on the web. The stations
ceased their Internet simulcasts December 31. Hiwire CEO Steve
Goldberg and Clear Channel director of technology Brian
Parsons described a new "all-in-one" pricing plan
under which Hiwire provides streaming and ad insertion and
covers all royalty fees for one fixed price per listener-hour.
http://www.kurthanson.com/
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Immersive Online Community Developer Raises $11m, Launches Beta There Inc, the developer of an immersive 3D online environment for entertainment and communication, has raised $11 million in new financing and launched a public beta test of its online world. There allows users to create their own avatar and build and decorate virtual houses with virtual currency called Therebucks. In development for four years, There said its target market are adult men and women whose main activity online is "socializing." "There leverages the popularity of online socializing and the growth of massively multi-player games (MMOGs) to deliver compelling experiences and personal connections better than chat rooms or online games can provide on their own," said CEO Tom Melcher. Angel investors included 3DO
CEO Trip Hawkins, CNET founders Halsey Minor and Shelby
Bonnie, DoubleClick CEO Kevin Ryan and Wired co-founders Jane
Metcalfe and Louis Rosetto.
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Sony Sells Ring Tones to Sony Ericsson Here's a deal where the seller probably didn't have too much trouble getting a foot in the door to make a sales pitch. Sony Music's Mobile Products Group has closed a deal with cell phone maker Sony Ericsson Mobile Communications America to offer Sony Music embedded in its new cell phones. It would be hard to imagine Sony Ericsson picking Disney or Warner Brothers, wouldn't it? The integration of ring tones featuring music from both new tunes and classics into some Sony Ericsson mobile phones will start this quarter. Sony Ericsson mobile phones sold in the Americas will arrive pre-loaded with up to four embedded polyphonic ring tones. The ring tone options will represent a variety of music such as pop, youth/urban, country and contemporary. The featured ring tones will be updated and refreshed on a regular basis. Sony Ericsson is a somewhat troubled joint venture of Sony and Ericsson set up to develop and make cell phones competing primarily with Nokia, Siemens and Motorola. Sony Music's Mobile Products
Group was set up in November when Sony acquired New York-based
ring tone company Run Tones. Besides ring tones, the company
also operates RunPics, a personal photo service, Mobile Media
Hub services, offering private label wireless portals and a
mobile media production division. Other Mobile Products Group
customers and partners include Adobe, AT&T Wireless,
Ericsson, Nokia, Openwave, Sony Pictures Digital Entertainment
and the Warner Music Group. The operation provides music and
promotional content such as album previews and reviews to cell
phone users.
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CES Keynote: TI's Tom Engibous Consumer Electronic Show keynoter Texas Instruments president Tom Engibous' speech focused on embedded technology specifically "signal processing." According to him, signal processing has been the core technology for digital audio, video, cell phones, broadband communications and wireless networking. He demonstrated an array of new
PDAs, cell phones, camcorders, audio-video players and digital
cameras, all of which illustrate how signal processing has
brought Internet connectivity to CE products and increased
their functionality.
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Thoughts from FCC Chairman Powell CEA president and CEO Gary Shapiro held a one-on-one session on technology policy with Federal Communications Commission chairman Michael Powell. Shapiro and Powell discussed the need to balance copyright concerns with consumer rights. Powell praised the TiVo he got for Christmas, calling it "God's machine." Powell cited the need to expand access to broadband technology as a national priority. "I view broadband as a national priority that holds amazing promise to stimulate the economy," he said. Powell said that the FCC will hold five major proceedings in the new year to help speed up the process. Shapiro and Powell also discussed spectrum issues including the maximization of current demands and uses of the spectrum and the need for a new model harnessing technology that creates better sharing of the existing spectrum for future use. When asked about his view on adding anti-piracy broadcast flags to digital television signals in order to prevent people from recording a TV show or movie and then rebroadcasting it over the Internet, Powell sidestepped, "The FCC is not the copyright office." The FCC is collecting public comment on a proposal that would require broadcast flags in DTVs, but Powell admitted he wasn't sure "what role, if any the FCC should play" in making such a decision. He listed the FCC's top three
priorities in the coming year as spectrum, broadband and
business competition policy.
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CES Industry Insider: RealNetworks's Rob Glaser - One Billion Internet-Connected Devices RealNetworks founder and CEO Rob Glaser delivered an Industry Insider Series talk at the Consumer Electronics Show last week and looked at media delivery over digital networks. He forecast that "Over one billion devices will be connected to the network by the middle of the decade. There already are 300 million today." He pointed out three challenges to overcome before these Internet devices can proliferate: - Ensure devices can talk to
each other. DivX-capable Home Theater-in-a-Box for Europe Sigma Designs Inc, makers of media processors for consumer appliances, along with KiSS Technology, a leading European vendor of DVD players, and Jamo, a leading European manufacturer of loudspeakers, jointly announced the development of a complete home cinema center with DivX Video compatibility. The new DVR-50 DVD receiver will be marketed in Europe by Jamo and will reach retail stores in May. The Jamo DVR-50 DVD receiver
offers playback of DivX Video and DVD scan technology that
enhances the visual experience, along with an AM/FM tuner and
a top-quality 5x50 Watt surround sound amplifier. Based on the
Sigma Designs EM8500 advanced DVD decoder chip, the DVR-50
offers support for a wide range of audio/video formats,
including progressive DVD, MPEG-4, DivX Video, CD/MP3, CD-RW,
SVCD, VCD, DVD-RW and DVD+RW playback. It also offers a unique
MP3 playback feature with an advanced user interface and a
photo album for digital photo collections.
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InterVideo Integrates DivX into WinDVD Platinum DVD Player DivXNetworks Inc, creator of the patent-pending DivX video compression technology, and InterVideo Inc announced a partnership under which InterVideo has licensed DivX and DivX Pro video compression technology for its line of digital video and audio multimedia software products, including its $70 WinDVD Platinum DVD player. WinDVD Platinum, the most recent version of the world's best-selling DVD player, is the first InterVideo product to feature DivX mojo. InterVideo plans to integrate DivX and DivX Pro encoding technology into other future products. The two companies will co-market the DivX-powered InterVideo products through their web sites. www.DivX.com is a marketing channel of international tech-savvy digital video consumers, with a reported 10 million visitors a month. Intervideo also developed the WinDVD Recorder, which has all the features of WinDVD Platinum and can burn CD/DVDs, for example, from a DV camera or TV tuner card. WinDVD Platinum includes a number of new features such as SRS headphones, Movieffecter filter for improved video quality and Dolby virtual speaker technology for surround sound using only two speakers. WinDVD Platinum is now integrated with the DivX decoder, enabling users to play back full-screen, high-quality DivX video files. DivX video compression
technology is a popular video encoder/decoder that offers
DVD-quality video at file sizes seven-10 times smaller than
MPEG-2. It is one of the most popular media players,
reportedly with over 70 million downloads, an average of over
two million downloads a month. The advanced DivX Pro includes
a set of advanced encoding techniques and built-in video
processing tools for digital video professionals
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Wall Street Advice for Gateway: Bring Back the Cows Wall Street hammered Gateway shares down again after Gateway CEO Ted Waitt said that the usually booming holiday shopping season brought fewer sales to the company than it had forecast. The company says its decision to sell digital media products in its 272 retail stores was a good one. As an example, Gateway CFO Rod Sherwood said the firm is getting orders for more than 100 plasma TVs a day, enough that the $3,000 42-inch sets are now backordered until late February. Waitt and Sherwood said the company is exploring new ways to cut costs, promote its computers and increase efficiency. One major problem confronting the company is what to do about its retail outlets. Although expensive to operate, the stores give Gateway an edge on Dell and HPQ as a way to show potential prospects how digital media products function and what their benefits are. Gateway is not dependent on retail channels like HP. Dell has found that its web site and telesales people can't demonstrate digital media products effectively and has begun opening its own company-owned kiosks in shopping malls as a backstop. Apple long ago recognized the need for retail outlets that it controlled. Sherwood admitted that the stores have "a ways to go" before becoming profitable. Gateway has said it is not planning layoffs, but it also has said it is scrutinizing its stores to decide whether some should be closed. "We remain convinced that no combination of everyday pricing and occasional promotions will return Gateway to profitability given its current cost structure - the company needs to close stores," Salomon Smith Barney analyst Richard Gardner says. Gardner figures Gateway will lose a dollar a share this year. He thinks that its troubles are Gateway-specific, not a result of the troubles in the PC market. On January 14 Gateway said it would close four stores whose leases had expired, leaving 70 workers without jobs. Another 120 Gateway stores have leases that expire this year and a company spokesman said under performing ones would be closed or relocated. "The closings are a good
thing if they help reduce losses. But, it's my contention that
the staggered closings don't address the major issue. In my
opinion, they have lost their way," said Charles Wolf, a
Needham & Co analyst who owns shares in Gateway.
"When they first began to open Country stores in '96 and
'97, the raison d'être was to provide a level of service not
available in the typical retail outlet," he said. Over
the years, Gateway "lost the confidence and trust of
consumers in the brand because of poor execution and poor
advertising and marketing." Some industry experts are
puzzled over why Gateway expended so much money and energy
"re-branding" itself away from its folksy,
cow-spotted heritage. Wolf says they should "Bring back
the cows."
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IFPI Helps Recover Beatles Tapes from Thieves The International Federation of Phono-graphic Industry (IFPI) has had its investigators working to find a batch of Beatles tapes that were stolen 30 years ago. The investigation culminated when Dutch cops raided a building outside Amsterdam on January 9 and recovered 500 purloined reel-to-reel recordings. The Dutch police arrested three people and two more were arrested in London - none of whom were identified initially. The London police issued a statement saying, "The tapes themselves are the only original recordings made and may contain material which has never been previously released. This fact renders the tapes to be priceless to the record industry and collectors of Beatles memorabilia." The recordings were made in 1972 for a project the Beatles called "Get Back" that was never completed because they had so many disagreements they ultimately split up. A few of the tunes became part of the subsequent "Let It Be" album but the rest disappeared. Bootleg recordings from the project appeared from time to time. The IFPI investigators never gave up and their perseverance has paid off. Detective Inspector Paul Johnston of the City of London's Central Detective Unit said, "This is a good example of how an international multi-agency approach by both the private sector and police agencies can combat offences of this nature. Inquiries are continuing". Paul McCartney, one of the two surviving Beatles, plans to issue a special edition of the "Let It Be" album later this year to coincide with the re-release of the movie of the same name on DVD. IFPI chairman and CEO Jay
Berman said, "We applaud this exemplary police operation,
which reflects the extraordinary level of international
coordination that is needed to tackle the sophisticated
cross-border strategies of today's organized music
pirates."
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Tivo Goal: Become "THE" Digital Home Gateway Tivo announced a $99 upgrade to its US$99 its Series2 DVR units at the Consumer Electronic Show that will make them networkable. IDC analyst Abner Germanow told the webzine NewsFactor, "For TiVo, the ultimate objective is to be the gateway into the home for content distribution. Once they establish that, Tivo can start offering a number of new services using a broadband connection." An advantage is that customers can remotely control their home TiVo recorders when away plus access Tivo files from their Windows PC or Apple Macintosh through a wired or wireless Ethernet network connection. Among the new services being touted by the company are streaming music and transmission of digital images from the PC to the TV using the TiVo remote. Video can be streamed from a TiVo in the bedroom to a DVR in the living room. The unit becomes the home's digital media entertainment center. Once a customer has activated
the upgrade, any additional software required can be
downloaded from Tivo's web site. Besides streaming
entertainment through the home, subscribers will be able to
access their Tivo remotely, whether from the office or
elsewhere in the house and schedule it to record an upcoming
TV program or movie just like they would sitting in front of
the Tivo.
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CES: Samsung Previews Home Media Center Samsung previewed a Home AV
Center at the Consumer Electronic Show that it expects to
release later this year. The device will channel Internet
access, DVD movies and digital music to a TV, as well as
record and store television programming. It runs Linux, not
Windows.
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"The PC has been a
champion in the [digital media] industry. But now the
television is about to be reborn." - Sony president and
COO Kunitake Ando at the Consumer Electronics Show
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Intel's Barrett on Networking and PCs "What's at the center of
the network? I don't think there is a center. The PC is the
most versatile and interactive piece of equipment in the house
that can manage and create rich content. As digital media
becomes more pervasive, you'll see the growing significance of
the PC" - Intel CEO Craig Barrett at CES
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TI Exec: TV Will Be Digital Home Center, Not the PC "The broadband pipe is
going to come to the TV. The TV is the center of the universe
I think the PC would like to be." - Texas Instruments VP
John Van Scoter.
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Nat Semi Exec: TV & Phone Will Be Digital Home Center, Not the PC "The computing part of the
PC is going to get stuck in the background, and the consumer
device, the TV set or the phone, that's what you're going to
interact with." - National Semiconductor VP Mike Polacek.
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Panasonic Exec: TV will be Digital Home center, Not the PC "We see television as the
hub of the home network." - Mike Aguilar, Panasonic
Consumer Electronics president and CEO.
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Clarification about HP's Media Center The HP Media Receiver product
we reported on in last week's Online Reporter is not based on
Intel's reference design as we speculated. It's based on
software from Mediabolic, which was quick to write and set us
straight. The Pioneer Electronics Digital Library, also
announced at CES, is also based on Mediabolic's M1 platform.
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We're not the only ones who noticed that Sony's COO Kunitake Ando never mentioned Microsoft in his speech at the Consumer Electronics Show last week. The San Jose Mercury News noticed too: "...Ando touted a new Sony collaboration to establish the Linux operating system as the standard for transferring digital entertainment from device to device in the home in the coming age of consumer broadband. "We are advocating global open standards for the seamless collaboration of networks,'' he said Thursday. "The television, not the personal computer, will be reborn as an always-on, interactive device,'' he said, one that becomes the hub of entertainment as broadband networking and makes it possible to play downloadable movies and music on any electronic gadget from handheld computers to large-screen televisions. "In a question-and-answer session, Ando said Sony both competes and collaborates with Microsoft. For tasks like running Office software, Microsoft is the answer, he said, but for simpler things like running a home network, Linux is perfectly capable. "The PC may be useful in transmitting downloaded content to the TV, he said, but the TV could also bypass the PC entirely and get its content from gadgets like Sony's proposed CoCoon set-top box. CoCoon has been tested in Japan. It is a Linux-based, Internet-connected set-top box with a hard-disk drive that can transfer and play movies on just about any device connected to a home network. "Sony's vision for digital entertainment is shared by many consumer electronics companies that are partners with Microsoft. But Sony is pushing non-Microsoft software in a wide variety of devices, like its PlayStation 2, Clié handheld computers, Internet-connected cell phones, and even a new robot dubbed the "Sony Dream Robot,'' a follow-up to the successful Aibo robot dogs. "Sony has made a strategic
decision to go this route away from Microsoft,'' said Tim
Bajarin, analyst and president of Creative Strategies
International in Campbell. "It comes as no surprise that
they're moving this way.'"
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Paris-based Archos has
introduced its modular Video A140, a 40GB hard drive media
player that plays and records MP3, MPEG-4 video and JPEG
images. The most significant new feature of the $449.99 unit's
ability to record MPEG-4 format with an optional $49.99 video
input module.
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CES: Government Agencies Look In More than 100 government
officials attended the Consumer Electronics Show to discuss
issues such as copyright, spectrum management and broadband
policy. Several CES conference sessions focused on these areas
including a one-on-one dialogue between CEA's Gary Shapiro and
FCC chairman Michael Powell, a Digital Download copyright
session and a Congressional panel, featuring Representatives
Joe Barton (R-Tx), Rick Boucher (D-Va), John Doolittle (R-Ca),
Donald Payne (D-NJ) and Jerry Waller (R-Il) discussing their
perspectives on US policy issues impacting the technology
industry.
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CES: HP, Pioneer Announce Mediabolic Products HP and Pioneer have confirmed our August report (TOR 311-01 HP Developing Line of Entertainment Devices) about using Mediabolic technology in their "Networked Entertainment Devices" when they announced products at the Consumer Electronic Show last week. Mediabolics M1 software (Mediabolic ONE Entertainment Operating Platform) runs on both Windows and Linux. HP and Pioneer use Linux in both their newly announced products. M1 would also run on Intel's Digital Media Adapter (DMA) reference design but Jerry Toeman, Mediabolic's VP of product management, declined to speculate whether the company had made arrangements to implement on the Intel platform. He did confirm that Mediabolic has agreements with Denon and Marantz for products that haven't been announced. Plus, he said, Mediabolic has contracts with four other companies, but again, despite some arm-twisting, he wouldn't reveal their names. The Mediabolic scoreboard is thus: two companies (HP and Pioneer) with announced products, two companies (Denon and Marantz) with unannounced products and four unannounced companies. That's not bad for a company betting on an industry that hardly existed a year ago. Toeman said that what was most significant about this year's CES was the fact that companies that would be the least expected to do so, such as Pioneer, were introducing products with networking. Pioneer's DigitaLibrary, DL-1000-S supports video, audio and digital pix. HP's HP Digital Media Receiver 5000 only supports audio and pix - no video. Mediabolic's software can decode a clutch of media formats, including Microsoft's Windows Media, RealNetworks' Real Media and Apple's Quicktime plus MPEG-1, MPEG-2 and MPEG-4. The company has developed a customizable graphical interface too. Currently it does all UI customizations in-house, but it's working on an API that programmers outside Mediabolic could use to customize the UI. Mediabolic supports Universal
Plug and Play (UPnP). Looking at Sony's initiatives, Toeman
thinks Sony developed its own technology, all, he thinks,
based on Linux. However, the fact that Sony is such a vocal
member of the UPnP forum causes him to believe that Sony will
not isolate itself from the rest of the industry. Mediabolic
itself wants to make sure that M1 supports interoperability
between brands, meaning that Brand A's media server is
compatible with Brand B's media client. Toeman points out that
two products, however, can use UPnP and still not be
compatible unless they each have compatible software, such as
Mediabolic's M1, no doubt.
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"I Have Seen the Digital Media Future; It's Made in China" Digital media's future looks very much like it'll come in a widget made in China with a Japanese brand on the outside, American technology on the inside and maybe some European software. Dublin-based Rococo Software signed up with New Tigers Consultancy (NTC) to sell its products and identify local partnerships to support Rococo's wireless software products in China. Rococo develops Java and Bluetooth products and services. It specializes in developing wireless Java tools and infrastructure software. Its infrastructure software enables equipment makers to capitalize on Java and Bluetooth in handsets, PDAs, home gateways and automotives. "Asia is setting the pace for much of the next-generation wireless products that we'll eventually use in Europe and North America," said Rococo CEO Sean O'Sullivan. "Having entered the Japanese market earlier this year, we are ready to explore other key markets in Asia." "We believe that by
investing now in the Chinese market, Rococo's Java and
Bluetooth products have a great advantage for the future as
the coming year will define the key players," said NTC
managing partner Brendan Waldron. "Wireless and its
technologies are one of the fastest-growing and most important
product areas in Asia at present where they are defining the
next generation."
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CES: The Government Meets Digital Media Industry In a Congressional Panel at CES, Representatives Joe Barton (R-Tx), Rick Boucher (D-Va), John Doolittle (R-Ca), Donald Payne (D-NJ) and Jerry Waller (R-Il) gave their political and individual perspectives on policy issues impacting the technology industry. CEA president and CEO Gary Shapiro moderated the bipartisan roundtable discussion, which touched on issues ranging from broadband deployment and high definition television to free trade and copy protection. While the government guests
differed on many of the high-tech policy issues, they all
agreed their participation in the 2003 International CES was a
valuable experience. Barton remarked that even the
conversations between federal agency officials and members of
Congress have a more relaxed quality at CES than in
Washington.
Back
to Headlines
CES: The Media Meets the Techs In a panel session called the Digital Download SuperSession, copyright issues were discussed by audience members and panelists considering the moral, technological, legal and ethical aspects of copyrights and consumers' fair use rights in the digital age. Moderator Gary Arlen kicked off
the debate by handing the Motion Picture Association of
America (MPAA) and Recording Industry Association of America (RIAA)
panelists bull's-eye targets, since the make-up of the rest of
the panel and a large portion of the audience supported fair
use principles over rigid copy protection. The debate then
began as Arlen took off his jacket to reveal a referee shirt
and whistle.
Back
to Headlines
TechTV awarded its Best of CES awards. Digital media recipients were: - Best of Show: Archos Video
AV140, $450.00 Apple Computer reported that it lost money in its first financial quarter that ended December 31 on revenue of $1.47 billion, slightly less than its expected $1.49 billion but a 7% increase over the same period a year ago. The loss of $8 million, compared to the year-ago quarter's $38 million profit, was due in part to charges of $17 million for closing a Singapore factory and several sales offices. There was also a $2 million charge for changing the way it accounted for certain leases. Without the charges, Apple would have earned $11 million. Computer shipments were 743,000, about the same as a year ago but because the average unit selling price was higher, total revenue increased. Apple now has 51 stores that produced $148 million in the year end quarter, up from the prior three months' $121 million. The combined loss for the stores dropped from $3 million to $1 million. Most encouraging was the fact that half the purchasers in the stores had never bought a Macintosh. Apple sold 216,000 iPods during the quarter, more than half of which were for use with Windows PCs rather than Apple computers. The company has $4.4 billion in
cash, equal to about $12 a share.
Back
to Headlines
Gateway Stores Ranked #1 in 'Mystery Shopper' Comparison
The magazines representatives posed as buyers and visited a variety of retail stores, asking a sales associate in each store the same five basic technical questions. "Gateway stores lived up to expectations with a knowledgeable associate who knew the products and the answers to all our questions," Computer Shopper reporter Mitt Jones wrote in a rating of eight national retailers. "These results illustrate
the major advantages Gateway stores have over 'big box'
retailers: highly trained sales people who provide expert
advice, and the ability to try out digital electronics in a
truly 'digital' setting -connected to a PC," said John
Lostroscio, Gateway's vp of retail merchandising. "Our
sales representatives have undergone extensive, hands-on
training to ensure they provide a superior customer
experience. They work hard to satisfy our customers, and this
ranking has made them very proud."
Back
to Headlines
RealNetworks has added the PGA
Tour to its subscription-only SuperPass online service. Video
highlights and recaps from each round of tournaments, a clip
of the top five shots, highlights of top international
players, audio coverage of matches, video previews,
instructional shows, and a Monday half-hour show reviewing the
previous week's events will be included. At last report
RealNetworks had 850,00 paying subscribers for its service
that provides online news, music, sports. Other RealNetworks'
sports deals include the National Football League, NASCAR,
Major League Baseball, the National Basketball Association and
some college sporting events.
Back
to Headlines
CES Panel to Media: Invest in Anti-piracy Technology, Soon A panel of attorneys and technology experts told the music and movie industries to start writing checks for anti-piracy technology and to do so quickly because faster networks, larger storage and faster computers will cause free file swapping to ramp up at an accelerating rate. One panelist, Paul Kocher of Cryptography Research, projected that at the current rate of technology development, by 2012 a computer hard disk costing only $250 will store 160 terabytes - the equivalent of over 100,000 CDs. He said that any technological impediments to swapping files would soon go away. "The bandwidth to swap files easily is growing and piracy is rising," said Thomas W. Temple, director of the MPAA's anti-piracy initiatives. Attorney Laurence F. Pulgram, who defended SonicBlue from a suit by entertainment companies over its Replay digital video recorder, predicted a legal Napster-like service would soon be developed that provides piracy-proofed movies and music. Steve Griffin, CEO of
StreamCast Networks, owner of the Morpheus peer-to-peer file
swapping network, said his company has already been sued by
"29 of the most powerful" media companies. You can't
get anymore sued than our company has," he joked but then
said he was confident that the recording studios would
ultimately drop their suit and embrace file-sharing technology
to distribute their content.
Back
to Headlines
Wall Street broker Bear
Stearn's semiconductor analyst Brian Wu reports seeing three
prevalent themes at CES: wireless networking, recordable DVDs
and flat panel displays.
Back
to Headlines
Lufthansa First with Mile-high Internet Access Lufthansa becomes the first
airline to offer the ability to surf the net and send and
receive e-mails in real-time as its planes fly. The free
in-flight Internet service will use satellite links to connect
passengers to the net. The first service will be on flights
between Frankfurt and Washington, DC's Dulles International
Airport. A company spokesman said there were no safety
implications when using a laptop and wireless connections
during the flight, though he said computers will still have to
be turned off during take-off and landing. While the initial
trial is free, airlines are looking at a variety of payment
options for a full commercial service. Wonder if they'll
prohibit downloading music?
Back
to Headlines
New Vision for the RIAA? No, a Hack Job "Our member labels will halt all plans to sell copy-restricted CDs. Restricting the use of CDs devalues the product, reducing the incentive for consumers to buy them. We also vow to stop pursuing the companies behind file-sharing networks in court. In light of studies by reputable pollsters that have shown that most users of file-sharing networks reported that their music purchases increased in frequency, there seems to be little reason to continue spending millions in an attempt to shut down these services....We will also stop lobbying politicians to impose draconian copyright laws on the American people....To further convince consumers that the proceeds from their music purchases are well spent, we will be attempting to treat our talent more fairly. At the core of this effort will be the halting of collusion between labels on recording contracts...Finally, we promise to stop trying to brainwash the world into thinking of music as property, something that an artist has an innate right to control, even after the media that embodies that music has changed hands...It is our hope that these policy changes will revitalize the industry and make it deserving of the unique place it holds within American culture." - RIAA web site It turns out it wasn't a change in RIAA policy, just the result of the third time its web site's been hacked. "I love the company and
will do whatever I can to make it successful."
Back
to Headlines
-------------------------------------- Special Report: "Steve Case Resigns" AOL's acquisition of a willing Time Warner shocked the business and financial communities because of its daring merger of the then high-flying, seemingly all consuming Internet with the world's largest old-line media company. Promising that its magical synergy would deliver untold consumer benefits and riches to the two companies' shareholders, the move was met with standing applause. Two years later, all but one of the deal's architects, AOL's current CEO Richard Parsons, have been forced out because of shareholder and employee discontent with the results and America Online's increasingly visible vulnerabilities. Much has been written about Steve Case's surprising yet expected resignation. A special report "Steve Case Resigns" provides news, views and reviews that'll summarize the event. Free for Online Reporter subscribers. Non-subscribers: Call 225-769-7130 or write serena@riderresearch.com to purchase. -------------------------------------- Survey Says: Broadband Up, Dialup Down Milpitas-based
Nielsen/NetRatings says that the number of households wired
for high-speed Internet access grew by 59% in the past year.
Its says 33.6 million homes were broadband-equipped, while the
number of households connecting by dialup fell 10% to 74.4
million at the end of December. Last year marked 12 months of
decline for narrowband usage at home, according to Greg Bloom,
the outfit's senior Internet analyst.
Back
to Headlines
AOL Shows Broadband Gains, MSN Also A report from New Jersey-based
Solomon-Wolff Associates shows America Online's share of the
broadband market slowly increasing. It said the AOL Time
Warner subsidiary accounted for 31% of the Internet's dialup
users and 10% of broadband at the end of July 2002. A year
earlier, its narrowband share was 27% and broadband was 9%.
Comparable numbers for Microsoft's MSN were not available. The
research firm, which gathers information from a panel of
almost 250,000 Internet users, also says AOL increased its
share of the total Internet connectivity business, broadband
and dialup, by 1% to 24%. Microsoft's MSN grew its share of
the total market by 50% from 8% to 12%.
Back
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Third Broadband Delivery Method Coming The Federal Communications Commission says that delivering broadband Internet access over utility lines may be possible in the near future. Consumers currently can only get a broadband Internet connection from a phone or cable TV company. A duopoly may not be as subject to abuse as a monopoly but the phone and cable companies wouldn't win too many awards for customer service. Two power providers are testing the utility line technology, which has support from a trade group including EarthLink and 11 utility companies. Edmond Thomas, chief of the FCC's Office of Engineering and Technology, said, "It's starting to look like a very viable technology. We're very excited." The FCC wants to make sure that mixing high-speed access with electricity doesn't produce signals that interfere with other devices. "Every power plug in your home becomes a broadband connection," Thomas said. Competition is always welcome.
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In May the UK government will auction off 3.4GHz licenses in 15 geographies. The licenses, one for each region, will let companies offer fixed wireless access services, potentially at speeds similar to ADSL. Successful bidders will not be forced to roll out services within a certain timeframe. Winning bidders won't have to
offer wireless broadband, and could use the bandwidth for
other purposes. The UK government is hopeful that this auction
will take high-speed data connections to rural areas, and
other places where ADSL and cable broadband aren't available.
Back
to Headlines
BT Retail is promoting its
broadband service with a new account special that runs until
the end of March and applies to consumers who sign up for its
no-frills access-only service or the ISP product from
BTopenworld. Retail and business subscribers will not have to
pay for activation. BT is also offering a modem for $80 (50
pounds) making the total savings $420 (260 pounds).
Back
to Headlines
Fixed-time Play DVD Maker Flexplay Acquires SpectraDisc New York-based Flexplay Technologies, developers of a fixed-time viewing DVD disc technology, acquired Rhode Island-based SpectraDisc Corporation. Financial terms were not disclosed. Flexplay said the acquisition would expand its intellectual property portfolio in this niche segment. Called a flexible DVD, the viewing time is fixed by the manufacturer and begins when the consumer removes the disc from its packaging. After the specified time, the disc becomes unreadable by the DVD player. Flexplay's target market is music, movies, video games, television and software. Flexplay DVDs are also suitable for promotional and other applications developed by Flexplay clients. For example, a DVD with a movie could be rented out for a three-day period without the renter returning the DVD. At the end of the third day, POOF! The DVD "expires" and is no longer playable. Hear the environmentalists
screaming? Back
to Headlines
Sony Must Be Planning on Making Lots of Playstation 3s Evidently Sony is planning to
make a lot of its next-generation Playstation 3s because
chipmaker Rambus says it'll add 25% more employees at a time
when most of its rivals are reducing their headcount. Rambus
says it's hiring because of the contract it signed with Sony
and Toshiba to supply chips for the next Playstation model
that will use the next generation memory chips. Sony, Toshiba
and IBM are jointly developing a "super"
microprocessor called the Cell that's supposed to be
especially adept at processing graphics and high-speed
broadband-delivered data. Rambus CEO Geoff Tate said the
Sony/Toshiba deal is worth $28 million over the next two to
three years - and that's a lot of chips. Back
to Headlines
Movielink Selects Stellcom To Support its New Online Movie Rental Service Systems integrator Stellcom has
worked with Movielink to develop software that helps enable
customers to download motion pictures over a high-speed
broadband connection. Movielink's service lets consumers with
a broadband connection download films to an Internet-connected
device via delivery channels such as cable modem or DSL while
protecting the content's intellectual property through digital
rights management (DRM). Stellcom developed operational
software that features auto resume downloading, which
automatically pauses and resumes downloading whenever the
customer's broadband service is interrupted, and a flexible
download queue that organizes movies downloads in order of
customer preference. Back
to Headlines
ESS Technology, makers of
specialty chips for digital video and digital home
entertainment systems, claims to have signed up 10 major
Japanese, Korean and Chinese electronics makers who'll make
DVRs using its chips. "This DVR platform is another
example of ESS' commitment to be a leader in the growing
digital entertainment market. We are excited with the
acceptance of our new technology by our customers," said
COO Patrick Ang. Back
to Headlines
LSI Logic Joins DVD+RW Alliance LSI Logic has joined the DVD+RW
Alliance to help promote the DVD+RW format. The alliance is a
voluntary group of consumer electronics, optical storage and
PC manufacturers, seeking to develop and promote a universally
compatible, rewritable DVD format. Back
to Headlines
Sony Computer Joins Embedded Group as Board Member EEMBC, the Embedded Microprocessor Benchmark Consortium, says that Sony Computer Entertainment (SCEI) has become its newest member. Heard about starting at the top? Well Sony joins EEMBC as a full member of the consortium's board, with full voting rights on all major issues decided by the consortium, plus full access to all of the EEMBC benchmarks. "As the game division of Sony Corporation that is responsible for the PlayStation game system and PlayStation2 computer entertainment system, Sony Computer Entertainment Inc has unsurpassed experience in embedded systems for consumer applications," said EEMBC president Markus Levy. "We are looking forward to SCEI's participation as the consortium moves to update its consumer benchmark suite to include new benchmarks for MPEG-2, MPEG-4, and related applications." EEMBC develops and certifies
real-world benchmarks to help designers select the right
embedded processors for their systems. Back
to Headlines
BridgeCo Pockets $13.3m in Second Round Zurich based-BridgeCo, a
developer of entertainment network adapters (ENAs) based on
embedded, secure software, said it has secured $13.3 million
in second-round funding. Principal investors are Benchmark
Capital, Earlybird, Infineon Ventures and Intel Capital.
BridgeCo CEO Christof Heidelberger said the money will be used
to expand the market for ENAs. Back
to Headlines
TI, NEC, Others Plan Linux-based Cell Phones Microsoft, Nokia's Symbian and
Palm will be getting some competition for their cell phone
software from Texas Instruments and NEC plus four others who
are reportedly developing cell phones based on the Linux
operating system. Two vendors who have yet to be identified
will ship Linux phones based on the General Packet Radio
Service (GPRS), while two Asian phone makers - who also remain
nameless - are also planning devices. Back
to Headlines
------------------------ Every week in The Online Reporter, we try to bring you all sides of every issue. Call 225-769-7130 for your own
subscription. Music & Tech Agree on Government's Role, Movies Studios Hold Out The RIAA, representing the music industry, and two tech groups, the Business Software Alliance (BSA) and the Computer Systems Policy Project, have agreed to a compromise over copyright protection for movies and music that won't require any new government legislation. They're going to put consumers on their honor and harry the pirates. The techsters agreed to help educate consumers about copyrights and to urge law enforcement agencies to investigate and prosecute copyright infringers. The three groups agreed to hold a meeting of top technology executives to discuss technical methods for combating digital piracy. BSA members include Microsoft, Apple and Adobe. The Computer Systems Policy Project includes IBM, HP, Intel and Dell. High-tech companies have a vested interest when it comes to copyright protection. Software companies say they lose billions a year due to the illegal use of their products. Hardware makers, especially the likes of Intel, spend millions protecting the intellectual property that results from the billions they spend on R&D. "This agreement says that those who seek to put the burden of piracy on the technology are simply missing the point," said Robert Holleyman, BSA president. "Technology can be part of the solution, but it is not the entire solution." Lobbyists for the three groups will now try to convince Congress that no new laws are required. They aim to prevent the passage of proposed laws that fall into two categories: - Those that require that
"locks" be added to computers and consumer devices
that would make it more difficult for people to copy and share
movies and music. High tech claims such locks are expensive,
complex and disruptive to consumers. Last year Senator Ernest F. Hollings (D-SC) proposed legislation that would make it mandatory for manufacturers to include government-approved copy restriction technology in all digital media devices. The RIAA's agreement to this week's initiative puts the record labels in opposition to Holling's proposed legislation. The RIAA is saying, in effect, that it will oppose any proposed laws that require equipment makers to embed anti-piracy technology in their products. "We think businesses are capable of meeting these challenges," said Hillary Rosen, RIAA chairman. "Our industries need to work together for the consumer to benefit and for our respective businesses to grow." The move puts the major record labels in direct conflict with the MPAA, whose passion for mandatory technology to restrict piracy continues. MPAA president Jack Valenti said, "Designing ways to protect valuable creative works is very much in the long-term best interests of consumers and indispensable to the nourishment of our nation's economy. Because of this, we believe that no reasonable alternative course of action should be eliminated from consideration." Representatives Rick Boucher (D-Va) and Zoe Lofgren (D-Ca) have proposed legislation that would give consumers the right to duplicate copyrighted content even if it means "hacking" anti-piracy technology. The controversial and disputed Digital Millennium Copyright Act prohibits hacking anti-piracy technology for any reason, including making legal, "fair use" backup copies. Lofgren's proposal would even legalize reselling or giving away purchased movies or music. Intel, despite agreeing to the new initiative, will still support Boucher's fair use bill. It's intended to define specifically what the consumer can do under the fair use doctrine. Pro-media Congressman Howard Berman (D-Ca) praised the associations' agreement for overcoming the growing rift between music and high-tech companies. "I hope the rest of the creative and technological communities get on board with a unifying message and...we can tone down the divisive rhetoric that has otherwise dominated many copyright and technology debates," he said. Otherwise missing from the deal are the Consumer Electronics Association (CEA) that represents electronics manufacturers' interests and any of the several consumer rights associations. CEA president Gary Shapiro said he's glad to see the agreement but still wants legislation that specifically gives consumers fair use rights. "While we also support private negotiations between device manufacturers and content developers, we continue to believe that legislation is required to strike the necessary balance between protecting copyrights and consumers' fair use rights. To that end, we join numerous technology companies and consumer rights advocates in strongly supporting the Digital Media Consumers' Rights Act (HR 107), introduced last week by Representatives Rick Boucher (D-VA) and John Doolittle (R-CA)." Since the MPAA, the CEA and
consumer groups have not signed on to the deal, it's not
expected that this matter is anywhere close to being resolved.
Back
to Headlines
Representative Rick Boucher, a Virginia Democrat, and three other lawmakers reintroduced a Digital Media Consumer Rights Acts Tuesday. It would override the Digital Millennium Copyright Act's (DMCA) anti-circumvention provisions and let consumers break copy controls to make personal copies of songs or movies. Their actions would be protected by the fair use doctrine enshrined in Boucher's bill instead of being a copyright violation. The bill also would require that copy-protected CDs be labeled. Boucher and co-sponsor John Doolittle, a California Republican, introduced a similar bill at the end of the last congressional session but there wasn't enough time to take any action on it then. Boucher said he's now confident the bill has a good chance of passing the House. The sponsors have lined up more than 15 companies and groups to support the bill, including Intel, Verizon, Sun Microsystems, the Electronic Frontier Foundation and the American Library Association. "I think justice is on our side, and there's a growing number of people in this country who want to use digital media in a way that's convenient," Boucher said. The Business Software Alliance,
representing several large software companies, said its
members are concerned that "broad exemptions" to the
DMCA would make it harder for software companies to take
action against software piracy. Back
to Headlines
There were two new developments in Sendo's theft of trade secrets suit against Microsoft. Microsoft Refutes Sendo Charges "We look forward to refuting Sendo's baseless claims," he said Monday. Microsoft was given an extension to the Texas court's deadline for filing a formal, detailed denial. It now has until January 23. Sendo To Call Orange Execs To
Testify A Sendo spokeswoman was quoted in the British newspaper Daily Telegraph as saying: "I can confirm it is very likely Orange will be called to testify." She added that it was too early to say whether other cell phone service providers might also be asked to give evidence. In its suit, Sendo claims Microsoft passed Sendo IP to Taiwanese OEM High Technology Computer (HTC), which used it to develop the rival Orange phone called SPV. Sendo claims Microsoft had a "secret plan" to use Sendo "know-how" to enter the cell phone market even if it meant bankrupting Sendo. A Microsoft employee, Marc Brown, was on Sendo's board and had intimate knowledge of Sendo's declining financial fortunes as the Sendo product launch kept getting postponed because of Microsoft's alleged inability to deliver working software. Sendo also claims Microsoft hijacked Orange, which was to be a Sendo customer. No doubt Sendo's lawyers will want to question Orange about how the HTC deal originated. Sendo alleges that "Microsoft had little or no experience in the technology of mobile telephones or their operating systems, nor did it have any relationships with the primary customers for the units, such as Orange, Cingular and AT&T....The speed-to-market was not achieved by Microsoft's legitimate skill and expertise, but rather by its secret plan to pillage Sendo of its technology, convert that technology to its own use, steal Sendo's customers and leave Sendo cash starved and on the brink of bankruptcy." In October 2002, HTC unexpectedly unveiled a phone based on Microsoft's software and Orange announced it would market it. In November, Sendo said it was ending its development of its Microsoft-based phone and would use Nokia's Symbian operating system instead even though that would delay launching a phone by a year. In December, Sendo filed suit against Microsoft. HTC and Orange, which are not
defendants in the suit, have not commented on the case.
Back
to Headlines
Tech and Music Industry Agree - Keep the Government Out Following a groundbreaking agreement between the RIAA, the record labels association, and two high-tech organizations, the Business Software Alliance and the Computer Systems Policy Project, a couple of precedent-establishing statements were issued: - "This is a landmark
agreement because it shows that a broad cross-section of
companies have come to the conclusion that government-mandated
technology protection measures simply won't work. The
technology industry - more than anyone - knows this. And
today's agreement shows that the companies that are hard hit
by Internet piracy understand this." - Robert Holleyman,
president of the Business Software Alliance Hurray! Back
to Headlines
Supreme Court Approves Copyright Extension The US Supreme Court on January 15 said that the US Congress had the right to extend the copyright protection for 20 years as it did in a 1998 law. The 7-2 ruling, majority opinion written by Ruth Bader Ginsburg, means that individual artists own the copyright on their works for 75 years after their death and corporations own copyrights for 95 years as the 1998 law specified. Bader says the law does not violate constitutional free-speech protections. The Supreme Court said it had limited power to overturn Congress' decision. The Sonny Bono Copyright Term Extension Act (CTEA) was named for the singer-turned-congressman who had died earlier in 1998. The plaintiffs challenged the law on the basis that it limited free speech and harmed the creative process by locking up artistic material that would otherwise be in the public domain for all to use without payment. They said Congress had extended copyright terms so often - 11 times in the past 40 years - that it had rendered that constitutional provision meaningless. Opponents of the extension said limits on copyrights are important so that later artists can improve on existing works, as Disney did when it made movies out of "Cinderella" and other old fairy tales. Media companies and song publishers said that they needed the longer term to protect an important industry that America dominates, which produces more than $500 billion in revenue every year. The largest media companies stood to lose more than $300 million a year in royalties plus potentially much more in copyrighted sales, analysts said. Disney, for example, would have lost copyright protection on Mickey Mouse, Donald Duck, Pluto, Goofy and Dumbo in coming years. "The Disney characters that were created prior to 1940, both the characters and the entertainment content, probably have a value of more than $1 billion, just for that company," said Dave Davis, a banker at Houlihan Lokey Howard & Zukin in Los Angeles. AOL Time Warner told the high court that the profits from successful movies and songs "are the seed corn needed to sow the fields for the next round of creative works." The original copyright law provided works of the "sciences and useful arts" with a protection for 14 years. Congress "may" extend this protection if a justification to the arts could be proved. The Supreme Court has confirmed Congress' right to do so. Back to Headlines
Sharman Networks Can Be Sued in the US, Sharman Appeals Los Angeles-based Judge Stephen Wilson issued a 46-page decision on January 11 ruling that Sharman Networks, owners of the Kazaa peer-to-peer software and web-page, and LEF Interactive, its alter ego set up by Sharman Networks as a legal shield, can both be sued in the US because millions of copies of its software have been downloaded and used by people in California. Kazaa is headquartered in Sidney and incorporated on the remote Pacific island of Vanuatu. "Given that Sharman's (Kazaa) software has been downloaded more than 143 million times, it would be mere cavil to deny that Sharman engages in a significant amount of contact with California residents. Many, if not most, music and video copyrights are owned by California-based companies," Wilson said in his ruling. The decision means that Sharman Networks will probably be included in the case against Kazaa BV, the developer and owner of the FastTrack network on which Kazaa is based, Streamcast and its Gnutella-based Morpheus service, Grokster, Niklas Zennstrom and Janus Friis, the two creators of FastTrack and owners of KaZaa BV plus two shadowy European outfits, Dutch-based La Galiote and Indigo Investment BV. Also named is LEF Interactive Pty Ltd, an Australian company owned by Sharman Networks and set up to represent it in Australia. LEF owns a license to the FastTrack technology. Its initials stand for the slogan of the French Revolution "Liberte, Egalite, Fraternite." The Motion Picture Association of America and the Recording Industry Association of America issued a joint statement saying, "We are pleased that the court denied the efforts of Sharman Networks...to avoid being subject to the suit. Sharman...should be held accountable by US laws, which clearly indicate that what they are doing is illegal, and that they should not profit from it." On January 13, following Judge Stephen Wilson's decision, Sharman Networks said it would counter sue. "While Sharman is disappointed with the court's conclusion that the Constitution permits this case to be heard in the United States, we fully expect to prevail on the merits," it said in a canned statement. "Sharman's upcoming counterclaim will set forth the full story for the first time." For a report detailing the
complete Los Angeles lawsuit, call 225-769-7130 or e-mail charles@riderresearch.com
Back
to Headlines
Madster- The One That Won't Go Away The bankruptcy hearing before federal Judge Lawrence Kahn in the case against Internet file-swapping service Madster slated for Friday, January 10 in Albany, New York was postponed until January 15 according to Madster creator Johnny Deep. To recap: - Judge Kahn put Madster and
its founder Johnny Deep into bankruptcy in March 2002. Deep called Kahn's order for a
hearing a victory. He said he was in the process of shutting
down his service, however. "I'm not distributing my
software from my web site," he told the Albany, NY
Business Review.
Back
to Headlines
Lies, Damn Lies and Statistics MusicMatch Rules Streaming Music Market MusicMatch continued its reign as the most listened to web channel. It ended 2002 as the dominant webcaster, thanks in part to its subscription Artist On Demand service that lets customers listen to music by their favorite performers. The webcaster's free advertiser-supported Artist Match service topped the listening rankings for the week ending December 29, according to Arbitron's (ARB) MeasureCast. The report found 118,606 people using Artist Match a total of 181,713 hours. MusicMatch's Top Hits channel
reached 80,803 people, the second-largest audience, with
another MusicMatch paid service, Artist on Demand, at third
place with 40,638 people.
Back
to Headlines
PCs More Valuable than Cell Phones, Survey Says Research from the marketing firm Voca Group did a study of 1,500 US consumers that shows 70% of respondents rate the home PC as the personal technology device they depend on the most. Choices offered were the cell phone, personal organizer (PDA), home PC or paging device. The home PC was number one in every age, gender and income group except for in the 18- and 19-year-old girls who - you guessed - said the cell phone was more valuable. Seventy-five percent of the males surveyed depend on the home PC followed by cell phones at 22%. Sixty-five percent of females rate the home PC as the device depended on most often, with cell phones placing second at 34%. Cell phones ranked second
overall at 28%.
Back
to Headlines
Wi-Fi Shipments Will Exceed Expectations Driven by strong growth in the
consumer and SOHO markets, Allied Business Intelligence (ABI)
figures shipments of Wi-Fi wireless networking chipsets will
hit 23 million to 25 million units this year, up from 7.9
million in 2001. The forecast is considerably higher than the
original expectations for 14 million-15 million chipsets. The
findings are from ABI's new report, "Wi-Fi Integrated
Circuits: Industry Dynamics, Market Segmentation and Vendor
Analysis for 802.11a/b/g."
Back
to Headlines
"Microsoft Is No Longer a Nimble Elephant" "Microsoft itself,
hamstrung by the antitrust battle, is contributing to its own
debilitation. The company denies it has changed, but long-time
observers know that the Microsoft of today is a far cry from
the brilliant machine that built its monopoly. Key talent is
gone, and the company moves with elephantine
deliberation." - the Seattle Times in an article titled
"Nimble Edge Slowly Erodes for Microsoft."
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Wall Street View: Information Convergence, Not Devices Bear Stearns analyst Andy Neff on what is converging: "One of the key themes conveyed by the major consumer electronics manufacturers at CES was the convergence of information, rather than the convergence of devices, that enables ease of information access, organization and sharing. The drivers for this change are the penetration of broadband and the emergence of 802.11a/b/f wireless networking technologies." Told ya so over a year ago.
Back
to Headlines
Advice for "Undiscovered" Musicians "Glory is fleeting, but
obscurity is forever." - Napoleon Bonaparte
Back
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Hello PC Makers: "Stylish Digital Media Products" "The digital age has
arrived in style with thousands of pint-sized efficient
devices working seamlessly via wireless connection performing
multi-functions...." - Karen Chupka, VP, events and
conferences, Consumer Electronics Association (CEA), the
producer of the CES trade show.
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1954 Elvis Tune Most "Groundbreaking, World-Altering" Ever Britain's Q magazine commissioned a group of music journalists to select the 100 most groundbreaking, world-altering songs that changed music and us forever. Elvis Presley's 1954 recording "That's All Right" was number one, ahead of better-known songs such as the Beatles' "I Wanna Hold Your Hand," Bob Dylan's "Like a Rolling Stone" and the Beach Boys' "Good Vibrations." "I Wanna Hold Your Hand," the song that launched the Beatles in the United States, came second, while the Sex Pistols' punk anthem "God Save the Queen" was third. Elvis, recording at the legendary Sun studios in Memphis, did his own take on the old blues song on July 5, 1954. Without prompting, singing solo and thumping on his own guitar, he broke into "That's All Right" (words and lyrics by Arthur ``Big Boy" Crudup) on the spur of the moment during a break in a session in which Sun's founder Sam Philips was trying different songs to find one suitable for launching Presley's recording career. Philips got him to do it again and had Scotty Moore on guitar and Bill Black on bass improvise a backing. Three weeks later on Saturday July 30, Elvis, aged 19, made his first public appearance at an outdoor stage during a fair at Memphis' Overton Park. He started with "That's All Right," followed it with the record's flip side "Blue Moon of Kentucky" and closed with a 1947 song called "Good Rockin' Tonight" that many consider rock and roll's first. A new era in music had started. For those who trace rock back to its beginnings, Elvis' recording of "That's All Right" marks the beginning of the King's career and the birth of rock and roll. Lyrics at http://www.elvispresleyonline.
com/html/that_s_alright_mama.html
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"The World Will Never Be the Same" "The emergence of the
Internet and the rise of digital technology continue to have
an extraordinary impact on commerce and culture, Hollywood and
government, individual lives and mass movements. The world
will never be the same." - Andrew Leonard in a Salon
webzine column called "Remembrance of Dot-com Idiocy
Past"
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What's To Blame for Music CD Sales' Decline "I think the music
industry blames the Internet for the downturn in sales when
there are a number of factors contributing to the slump. The
decline in new releases is probably one factor. The economy is
another, while consumers are also looking to spend their money
in other ways, such as on mobile phones and messaging." -
Chris Charron, Forrester Research analyst
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High Mortality Rate among Internet-Media Visionaries Three visionaries who tried to take old-line media companies into the glories of the Internet have all been forced out of their top positions: - AOL Time Warner chairman Internet waters have
treacherous shoals.
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Click Here, Honey, to See How Much I Love You Valentine's Day feelings can be delivered digitally this year on what is claimed to be the world's first-ever greeting card and DVD in one. The DVD has a collection of Hollywood love scenes set to romantic music - Andrea Bocelli's "Con Te Partiro?" The "Hollywood Greeting" DVD from FlixMix includes over 20 classic romantic moments, with legendary Hollywood leading men and women, including George Clooney, Penelope Cruz, Hugh Grant, Jennifer Lopez, Doris Day, Burt Lancaster, Nicholas Cage, Claudette Colbert and Rock Hudson. The $7.95 DVD is available in Wal-Mart, K-Mart, Hallmark stores, and other video retailers and specialty stores. A new era in music had started.
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March 3, 2003 | New York City |
9 am-7 pm Digital Music Forum is a full-day forum focusing on business and legal issues impacting the music industry. The agenda includes two keynote addresses, four moderated panels and breakout sessions.
THE online REPORTER provides weekly reports and strategic analysis about digital consumer technology and the e-commerce activities of the movie and music companies.. It reports on all the power struggles that have been unleashed.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.
North
American Subscriptions: sales@riderresearch.com;
Tel 225-769-7130; FAX: 225-769-7166 Europe
: Simon
Thompson simon@riderresearch.com Subscribe now. Only $595/£395 per year. Group Discounts available.
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