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Next week, a corporate neighbor of mine will be trekking up 45 miles to San Francisco to make some pretty big announcements. That neighbor is Apple; the announcement is Macworld 2008, which starts in a little over a week.

It is rumored that CEO Steve jobs will announcing some new laptop computers – and possibly a re-vamp and upgrade of his company’s AppleTV product line.

Apple TV Rumors:

• The product will have a built-in Blu-Ray high definition disc player. (New York Times)
• People will be able to not only purchase, but to “rent” high-def movies by download from the iTunes store directly to the AppleTV from their HDTV set. No more need to return movies to Netflix – or worry your DVD is scratched when it arrives. (BusinessWeek)

How I would change AppleTV:

• I would make AppleTV a real TV. Look, Apple already makes some nice big monitors. And Apple already is expert at making all-in-one computer-in-monitor combos. Is it really much of a stretch for Apple to produce a big screen HDTV – and pack in the components of the Apple TV into the case? Think of it: a TV that you plug into the wall and viola – instant wireless access to your iTunes videos. No plug-in box needed.
• Yes, add that Blu-Ray player. I’d also make it be a CD/DVD burner that allowed you to store those purchased downloads for later retrieval. And I would use Apple’s DRM so you would be able to take that burned DVD to a friend’s AppleTV or Internet-connected Blu-Ray player (like a Sony PS3) and play it at their house – after entering your iTunes user name and password.
• AppleTV should have a CableCARD slot to allow you to use it as your primary cable or satellite TV decoder – to allow you to eliminate one more box from your entertainment center.
• Finally, the cable/satellite-controller AppleTV should be a full-fledged DVR with a bigger hard drive. Already, there are more AppleTVs in people’s homes than TiVos. It would make sense to take this step and make the AppleTV a fully-functional part of the entertainment center.

Then again, I usually ask for way more than I’ll ever get.

Here is a scan of the box my AppleTV came in. Rich got it for me for my 39th birthday.

Microsoft, the world’s largest software company, announced the name of its forthcoming version of the Windows operating system from its headquarters in Redmond, Washington Friday. But in choosing the name “Vista,” Microsoft may find itself in a legal fight.

Microsoft has made a name for itself in legal circles as a company that fiercely defends its trademarks and other intellectual property. With the choice of “Vista,” the tables may turn as it may face allegations of swiping another company’s trademark.

It appears the Vista name has already been taken by another high-tech company, coincidentally also based in Redmond. A few miles from the sprawling Microsoft campus is Vista Incorporated, which has operated a small business internet interchange since it was founded by Wall Data founder, John Wall in 2000. He was suprised by his larger neighbor’s move.

“We are going to consider our options and talk to Microsoft,” Wall said in an interview with the Seattle Times. Wall reportedly has not yet filed suit against Microsoft to stop it from using the “Vista” name. An investor in SCO, he does have other legal options aside from law suits. Instead, he may offer to sell the rights to the “Vista” name.

However, John Wall’s company is not the only business with claims on the name “Vista.” Many other tech companies use “Vista” as product names. Additionally, a wide-range of non-computer businesses have the name reserved, including branded products for sewing machines, elevators and the dairy industry.

For: Wikinews

U.S. telephone giant SBC Communications is one step closer to offering cable television to the 18 million households in its coverage area. The company announced a $195 million contract with Scientific-Atlanta Thursday to provide a video operations center and regional hubs for the new service. Under the brand name, U-verse, the SBC’s television rollout is set to launch in 2006 after field trials begin later this year.

The company is seeking the so-called “triple play,” where a telecommunications company offers voice, data and video in one bundled package. Local telephone companies like SBC have been losing business to cable TV companies, which have added telephone and Internet services in recent years.

In a slew of recent deals, SBC is looking to stop that trend. Within the past six months it has signed alliances with various technology firms to build out a fiber network to the home strategy. For instance, SBC has a $1.7 billion deal with Alcatel to build out its fiber optic network and a 10-year, $400 million, pact with Microsoft to license its IPTV technology to allow multi-channel television to steam over its Internet backbone.

In most of the U.S. only cable TV companies like Comcast have been able to offer the “triple play” of voice, video and data services. But traditional phone companies like SBC and Verizon have been upgrading their copper wire telephone networks to fiber optic. SBC says it plans to spend billions of dollars to overhaul its telecommunications network, saying the aging and brittle copper wires which were originally laid in the early 1900s do not have enough bandwidth to allow television capability.

For: Wikinews

San Jose, California – As the April 15 deadline for U.S. private citizens to file their 2004 income tax returns draws near, the government is reminding sellers on eBay that they may have to report any proceeds from sales on the auction site as taxable income.

This could be a surprise to some of the 135 million registered eBay users who consider trading on San Jose-based auction site to be a non-taxable hobby. Complicating matters, eBay says it doesn’t report individual sales figures to the government. Users are responsible to report any profits on their own tax returns.

The amount of money traveling through eBay is big business. $33.8 billion worth of merchandise was sold on the site in 2004, up from $5.2 billion in 2000.

Although eBay pays …

For: Wikinews

New York – Barry Diller’s InterActiveCorp (IAC) is near a $2 billion deal to buy search engine Ask Jeeves, according to a report in Monday’s Wall Street Journal.

The corporate boards from both companies were in talks all weekend negotiating what appears to be an all-stock deal. If approved, the price tag would be a substantial premium over Ask Jeeves valuation of $1.4 billion as of Friday’s stock market close.

The acquisition of Oakland, California-based Ask Jeeves by IAC would mean they own a known brand name and get a foothold in revenues from search engine advertising. The company also would become a direct competitor with companies such as Google, Yaho and …

For: Wikinews

New York – Time Warner Cable is close to a deal with Sprint Corp. to offer mobile telephone service under the TimeWarner brand to the cabler’s 11 million subscribers, according to a report in Wednesday’s The Wall Street Journal.

If such a deal is struck, Time Warner will be the first cable company to offer the so-called “quadruple threat” in telecommunications, by offering voice, video, internet and mobile services in a single package.

The Journal reported that Time Warner would test market the new mobile service in Kansas City before the end of March.

Any such deal could strengthen Time Warner’s plans to expand its entry into the telephony market. The company said it expects to have 200 thousand voice customers when it closes its 2004 books Friday. As of mid-December, the company said it was adding about 10 thousand new wired voice customers per week.

For voice customers Time Warner is competeing with regional telephone monopolies Verizon, SBC and BellSouth, which among them control the two largest mobile networks in the United States: Verizon and Cingular.

Mobile handset sales have reached a half a billion per year, and the industry players are vying for the biggest slice of the pie

As the final figures trickle in, 2003 is turning out to be a better than expected year for wireless telephone handset manufacturers. Consumers worldwide snapped up about half a billion new cell phones.

Those are phenomenal annual sales, according to Ben Wood, principal mobile communications analyst at research firm Gartner. His figures say about 510 million handsets were rung up last year, a 20 percent increase from 2002. By his assessment, the strongest new markets are India, China, Russia, and Brazil. Analyst John Jackson at communications and networking research firm The Yankee Group agrees that handset sales are showing a strong rebound, but his estimates are more conservative. Fueled by high-growth markets in China and India, global handset sales grew by 10 percent last year to $76 billion – or more than 497.7 million units sold, he says. Full final sales figures will not be known until June, when the last of the manufacturers report official results.

Mr. Jackson says the mobile momentum has legs: “Global handset unit and market growth will be favorable for the next three years.” He is projecting 2004 handset sales to pass 513 million with the bulk of sales in two regions: Western Europe, which is seeing growth, primarily from current customers upgrading to handsets with more advanced technology like cameras and larger display screens (see “Smart Phones Briefing: Devices Sector Analysis”) and Asia, which views wireless technology as a cost-effective way to provide telephone and data service.

Gartner points to photo messaging and so-called “disposable” photography as last year’s marketing cornerstones. “The mobile handset industry rode the crest of a wave of robust replacement demand to realize record levels of sales,” says Gartner senior analyst Bryan Prohm.

Nokia was a clear standout among manufacturers last year, says Mr. Jackson. The company continues to profit from a strong foothold in Europe, which makes up more than one-third of the total handset market, and a significant presence in Asia and the Americas. However, Nokia – and other major handset makers like Motorola, Sony/Ericsson, and Samsung – may have trouble ahead.

Consumer appetite for technical advances, service provider demands for lower-priced phones to stem customer churn, and increased competition in general will continue to squeeze already thin profit margins for handset makers, says Mr. Jackson. That pressure may be too much for some companies to stick it out.

“Consolidation may occur, but as established vendors exit the market, emerging Korean, Japanese, or other ODMs [original design manufacturers] will take their place. Nokia’s European stronghold will come under pressure from Asian vendors, and possibly from Motorola, if its execution improves,” he says.

ODM companies profiting from the upturn in handset sales include Solectron, Flextronics, Celestica, and Elecoteq, according to Mr. Jackson. He says cell phone companies will be increasingly reliant on these manufacturers to head off growing overhead expenses as demand pushes up production volume.

Gartner’s Mr. Wood says he will likely raise the worldwide handset sales forecast for 2004 to 560 million, up about 10 percent from the current 511 million, based on the increased demand so far in 2004.

While cell phone makers are enjoying a booming business, not all companies targeting the mobile market are faring as well. Microsoft once again failed in its attempts to dominate or even gain a significant foothold in wireless handset operating systems last year. Mr. Jackson says before Microsoft can win broad entry into the handset market, service providers will have to give up control of the handset distribution system.

Yankee says global service providers like Vodafone, Telefonica, Verizon Wireless, T-Mobile, and NTT DoCoMo controlling the sell-through distribution of handsets to customers – and wield the power to demand customized offerings from handset makers at the lowest possible price. Handset manufacturers are likely to eek out better margins by turning to free or cheaper operating systems like Linux and Symbian rather than pony up the money to license a Microsoft OS (see “Nokia vs. Microsoft in Mobile Phone Face Off”).

Service providers are using their position to fend of a giant while continuing to boost profits. Without distribution, Microsoft will need more than muscle to commandeer this market. However, the lure of annual sales of a half a billion handsets means the competition has just begun – and it will come from all fronts.

For: Red Herring

New, “blue” laser technology is magnifying optical storage, and spurring competition. Possible: The Lord of the Rings trilogy on a single disc.

A refined laser technology is giving optical storage an edge in the data space race, and two products – each with big-brand supporters – are vying to dominate the market.

When 4.7 gigabyte DVD-ROM storage technology was released in 1996, it opened up a new world to the typical computer user, who was then making due with 1.4 megabyte floppy disks and 2 gigabyte hard drives. Even gearheads who were using CD-ROMs were limited to 650 megabytes.

Few milestones have followed DVD storage’s big debut, however – until now.

In late February, Hitachi unveiled its 10K300, the first 300-gigabyte magnetic hard disk drive. Comparatively, the highest-end re-writable magneto optical (MO) storage DVDs are maxed out with less than 9 gigabytes of storage capability. The floppy disk is getting swiftly replaced by CDs and portable flash memory smart cards, and is on its way to join the 8-track tape in history’s tech dustbin.

DVDs have labored under several limitations. They can only hold about 240 minutes of video, so popular movies like the lengthy Lord of the Rings have to be split among multiple discs. Worse, TV programs are migrating to the high-definition format – its demands, including boosted clarity and color, quickly max out conventional storage. “Once you want to write high-definition TV on an optical disk, you need more storage capacity, simply because you have more information available,” says Jean Schleipen, principal scientist at Philips Electronics.

Enter the blue laser. The five-year-old technology has been recently refined, and is helping MO play catch up with magnetic hard disk storage. To compare, the red laser used in CD and DVD technology is like writing in crayon; the blue laser is like a ballpoint pen. The finer tip allows the user to fit more information in the same space. MO blue laser DVDs hold about 27 gigabytes of storage, allowing each disc to record more than 13 hours of standard TV video or two hours of HDTV. Lord of the Rings – the trilogy – could fit on a single disc.

Two rivalsOptical storage hardware manufacturers agree that blue laser technology is the future of their industry – what they can’t agree on, however, is a standard. The discord is prompting a blue laser home video format battle reminiscent of the Beta vs. VHS war of the late 1970s. This time the two competitors are Blu-ray and HD-DVD, each with big-brand supporters.

In one corner: HD-DVD, from NEC and Toshiba. It can hold up to 20 gigabytes (about five movies) for a re-writable disc. Squarely targeting the home video market, HD-DVD is cheap to produce – about 10 percent higher than traditional DVDs – and is backwardly compatible with current red laser DVDs on the market.

Competing is Sony’s Blu-ray, backed by companies like Matsushita, Hewlett-Packard, Dell, and Philips Electronics. One big drawback, Blu-ray is four to five times more expensive to produce than red laser DVDs and it is not backwardly compatible with DVDs currently on the market. However, red laser compatibility is, reportedly, on the way and proponents say the technology is easier to use than HD-DVD. Even better, some versions of Blu-ray have 40 gigabyte rewritable discs – twice the storage of HD-DVD.

Giving Blu-ray an extra edge is the Ultra Density Optical system. Developed by U.K. storage device maker Plasmon, the new blue laser MO system, an extension of Blu-ray, could potentially hold up to 320 gigabytes per DVD disc – or, 150 hours of standard video storage.

Favoring cheaper production costs, movie studios, including Disney and Warner Brothers, are leaning toward HD-DVD (although Sony-owned Columbia Pictures is, of course, backing Blu-ray). The market is huge: In 2003, movie studios sold $22.2 billion in DVD and VHS video in the U.S., according to Sony figures. That’s more than twice last year’s total box office receipts.

Unlike HD-DVD, Blu-ray backers have two business models: high-end corporate storage and home entertainment. Blu-ray’s advanced cataloging efficiency allow for that versatility. Sony started shipping blue laser drives under the “Professional Disc for Data” moniker last November. The drives offer 23 gigabytes of storage per rewritable disc starting at $4,150. The highest-end product sells for about $19,000 for 1.6 terabytes of storage in a multi-drive rack-mountable device. Blu-ray is set to own the corporate storage market: HD-DVD is focusing on Hollywood.

Optical, not optimumWhen it comes to sheer storage muscle and data retrieval speed, optical DVD disk storage may never be able to compete toe-to-toe with hard drives. Advancements in nanotechnology and micro machine-abilities mean that traditional hard disks will soon surpass 400 gigabytes in storage, a milestone optical DVD storage has only accomplished in prototypes.

They also suffer for their youth. DVDs have only been around for about a decade – their plastics, metals, and adhesives are still relatively unproven. Flaws in the kindred, 20-year-old CD technology raise some red flags. “CD bronzing,” describes the degradation of the inner metal membrane; “CD rot,” is when a geotrichum fungus infects CDs in hot and humid climates (Spain’s National Center for Biotechnology is an authority on the condition).

Yet optical storage is far from the also-ran. Comparatively, DVD storage is a more permanent, and rugged, medium. With Sarbanes-Oxley legislation requiring scrupulous, long-term, record keeping in corporations, executives want a platform they can trust. Removable blue laser DVDs, unlike hard drives, have no finicky moving or electronic parts. DVDs can withstand moisture and extreme temperature exposure that would cripple a hard drive and all of its stored data. They can sit on shelves for years without risking rust or dust damage.

Traditional hard drives use iron oxides, which pose the risk of accidentally degaussing, losing, or corrupting stored data by exposure to magnetic or strong electrical fields. University of California research shows the earth’s own magnetic fields can eventually destroy data on most long-term magnetic storage media.

In consumer electronics the two platforms are not competition, but complimentary. Companies like Korea’s LG Electronics are planning to market hard-drive-equipped digital video recorders with built-in Blu-ray DVD burners to HDTV owners.

Still limited, and a luxuryLike most cutting-edge technology, blue laser DVD player/recorders first appeared in Japan. Last April, blue laser debuted there with a price tag of about $4,000. Japan consumers are less price conscious than Americans, and demand is higher for the larger storage capacity of blue laser DVDs, partly because HDTV has a wider availability there, according to Sony spokesperson Mack Araki. He says the first consumer Blu-ray products won’t hit North America until 2005. Re-writable blue laser DVDs incorporated within set-top digital video recorders (DVRs) will, he adds, eventually replace the VHS tape recorder. He predicts that over the next few years more homes will adopt re-writable blue laser storage to replace their VCRs – discs do not need rewinding, take up less space, and hold much more video than cassette tapes. Like most consumer products, Mr. Araki says, as production increases, Blu-ray DVD player/recorder prices are expected to drop to more appetizing levels.

Even then, blue laser DVD players and recorders may stay luxury items for the next few years, instead of a necessity. Says In-Stat/MDR senior analyst Michelle Abraham, “They will become mainstream products eventually, but not before 2008.”

For: Red Herring

XM and Sirius will continue to duke it out in the burgeoning satellite radio market – if they have enough cash to survive.

For music fans frustrated by the homogenous din of the Clear Channel-controlled universe, satellite radio seems to have it all: crystalline sound; more than 100 channels of music, news, and talk; the artist and song title clearly displayed – all for about $10 per month.

The equation seems so right, in fact, that satellite radio has become the second-fastest consumer service to reach the million-subscriber mark in the United States. Only direct broadcast satellite TV was adopted at a faster clip.

There’s only one source of static in the satellite radio model: profits. The fledgling XM Satellite Radio Holdings, which owns 80 percent of the 1.5 million satellite radio subscribers, has close to $1 billion in long-term debt. Top competitor Sirius Satellite Radio, the only other service with a license to launch satellite radio, is also bathing in red ink. With the tech landscape littered with innovative and ground-breaking companies that sputtered and fell to earth – Netscape, Napster, Silicon Graphics, among others – some are skeptical that these satellite radio pioneers will be around to bask in the success of the market they’re creating. Yet despite the massive debts weighing on these high-flying companies, Wall Street opinion is markedly bullish on both.

Phenomenal growth is boosting analysts’ confidence. In 2003, XM brought in revenues of $91.7 million, up 450 percent from 2002. Sirius says its 2003 revenues were $12.9 million – a 16-fold increase over 2002. According to projections from both companies, by the end of 2004 there could be almost 3.7 million people will subscribe to satellite radio subscribers in the United States. The industry is also riding great expectations: satellite radio is supposed to revolutionize radio the way digital cable and satellite did TV, and there is no doubting its appeal.

Chance Patterson, XM’s vice president for programming operations, says the company added more than 1 million subscribers in 2003 bumping its total (as of December 31) to 1.36 million. Although comparatively small with 216,016 subscribers (as of December), Sirius is growing fast. The company added 110,000 subscribers last quarter, almost doubling its size in three months and marking a seven-fold increase over 30,000 subscribers a year ago.

Those subscribers, however, don’t come cheap. The cost to lure a new satellite radio subscriber is around $73 per customer, based on advertising and other promotional fees, according to Steven Weiss, an analyst at financial services firm Bear Stearns. A formidable cost, but still less than one-seventh the price of attracting a new customer to satellite television; DirecTV says it spends about $550 to obtain each subscriber.

Meanwhile, XM and Sirius have kept their monthly churn rate to a modest 1.5 percent, roughly the same as satellite TV.

High startup costs are part of the problem. Before it launched, XM’s debt started to mount when it forked over $1.5 billion for two geostationary satellites (manufactured by Hughes Space and Communications) nicknamed Rock, and Roll. Exploding launches and other delays kept the full network of satellites from forming for months longer than planned; chip procurement also faced snags.

Finally ready to go, XM pumped $100 million into a national advertising campaign geared to fire up consumer interest. The planned launch date: September 12, 2001. One day prior, terrorists commandeered commercial jet liners and attacked the World Trade Center and Pentagon. The U.S. went into shock, financial markets reeled, and the technology sector softened even further. XM quietly rolled out its product later that month in Dallas and San Diego. Two months later, it was available nationwide.

XM rebounded from its stutter start thanks, in part, to industry partnership deals with automobile makers. With XM and Sirius stock and a cut of subscription fees, many manufacturers have a vested interest in satellite radio’s success – and they are willing to pull their weight. Last year, for instance, General Motors started pushing a three-month trial for XM service in 44 new car models – 75 percent of its production line. The new car buyers get the service free for 90 days, and the car companies pay a discounted license fee off XM’s usual $10 monthly service price for the trial window. Unlike many other high-tech gizmos for automobiles, consumers have shown that they’re willing to pay for entertainment: between 70 and 80 percent of trial subscribers stay with satellite radio.

Weak signalsThere is, however, growing skepticism about future viability. Sirius has $58.3 million in debt and $524.7 million in cash on hand, compared to XM’s $937.7 million debt load and $569.8 million in cash, according to figures supplied by research analysts at securities corporation SG Cowen. Most of XM’s debt is in maturing convertible bonds. That means before they mature (twice each year), XM must pay back the debt in cash – with interest – or hand over the equivalent worth of XM shares to the debt holders.

XM is also facing pressure from investors like Chicago VC firm Madison Dearborn Capital Partners and News Corp.’s Hughes Electronics. Both are keen on profiting from early-stage investments. In January, XM filed to sell 18 million shares, including 8.5 million Hughes shares and 2.5 million Madison Dearborn shares. The remaining 7 million on the block will help pay down debt by raising about $187 million, based on XM stock price as of January 22.

Large debt loads make both XM and Sirius all the more reliant on future growth of their subscriber bases. With largely fixed costs, all the satellite radio operators need are enough subscribers to break even, and then they begin to pump out profit with each new listener. XM officials, for instance, say the company needs 4 to 5 million subscribers to turn a profit.

Change in courseThe industry’s rough first few years forced both XM and Sirius to overhaul their original business plans.

“When we were developing our business model, we thought the subscriber base would be dominated by rural subscribers, because they have the least amount of local choice in radio format,” says XM’s Mr. Patterson. But an entirely different demographic turned out to be the cash cow: current figures show satellite radio is more popular among the commuter class in affluent suburbs.

As with most high-tech consumer products, satellite radio’s first adopters were the alpha geeks – those willing to spend top dollar to be the first with the latest gadget. But as major automakers General Motors and Honda start including satellite radio as a standard option in new cars, Mr. Patterson claims the service is becoming a mass market phenomenon.

Wall Street data affirms rapid industry growth. “We see total industry demand of around 35 million subscribers by 2013, enough to support profitable business models for both XM and Sirius,” says Kit Spring, an analyst with St. Louis-based brokerage Stifel Nicolaus. Even if satellite radio only won half of its 35 million-subscriber target, the $10 monthly subscriber fee would build a $2.1 billion market.

An increasingly mobile culture, along with consumer demand for more personalized media, is driving industry growth. But preparing for takeoff requires big investments. Satellites are neither cheap nor permanent, they age and degrade over time and must be replaced. Looking at their corporate balance sheets, Sirius appears to be more robust than XM despite its smaller size. To partially mend the disparity, as of January 15, XM plans to sell 7 million shares to tackle its debt problems.

Second in a two-horse raceDespite XM’s commanding market-share lead, Sirius’ Mr. Clayton isn’t fazed. His company has set out to differentiate its service by targeting specific niches, and high-margin customers. In addition to offering 60 channels of commercial-free music, Sirius has struck exclusive carriage deals for audio content from National Public Radio and the Wall Street Journal.

Taking a cue from the boon DirecTV has had from sports programming, Sirius is also targeting sports fans via exclusive deals with the NFL, NBA, and NHL. Reaping another savvy strategy, Sirius is being packaged in name brand radios like Alpine, JVC, Pioneer, Kenwood, Panasonic, and Clarion. It also has exclusive carriage agreements with Ford, BMW, and DaimlerChrysler.

Sirius is also looking to get a big piece of the 200 million cars and trucks (as well as RVs, heavy trucks, boats, and home users). In fact, the company estimates there are 350 million potential individual users for satellite radio products in the United States. That is plenty of room for two players.

Then there is the secret weapon, which Sirius unveiled at the 2004 Consumer Electronics Show in Las Vegas: video. Within the next 18 months, it plans to beam live VHS-quality video to its customers using MPEG-4 technology – the same video standard used in Real’s RealPlayer and Microsoft’s Windows Media Player. The company says it has no plans to take on DirecTV or EchoStar in the home satellite television arena (both of which use higher-quality MPEG-2 streaming technology), but will focus on mobile customers, pushing products like video players for minivans.

XM had some CES announcements of its own: the company plans a nationwide rollout of localized weather news service. The concept has sparked protest from some local broadcasters, who say satellite radio is licensed to do national programming only and should stay away from local broadcasting. As for Sirius’ high-profile announcements, XM eschews video and sports, saying that the video-based programming in cars is not feasible.

And although most Wall Street analysts agree that satellite radio will eventually be a viable market for both companies, they are unwilling to handicap each individual business model in the long term, and gun shy from making the mistake of dismissing satellite radio as a rural-only plan. For the moment, satellite radio could belong to either – or neither – of its two major players.

For: Red Herring