February 17, 2008
by sjvn01
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It’s all but Official: HD DVD is Dead

Toshiba executives haven’t made an official statement, but the word is leaking out from multiple sources: HD DVD is dead.

The hand-writing has been on the wall for months now. Any doubt that HD DVD was losing to Blu Ray should have been removed last week when both Netflix and Best Buy announced that they were moving away from HD DVD.

The final nail in HD DVD’s coffin came when Wal-Mart, the 500 gorilla of retail with abut 20% of all U.S. DVD sales, announced that it was switching to Blu Ray. The hammer blow fell when Susan Chronister, a Wal-Mart DVD buyer wrote in Wal Mart’s Check Out blog that, “By June Wal-Mart will only be carrying Blu Ray movies and hardware machines, and of course standard def movies, DVD players, and up convert players.”

And, for those of you who already bough HD DVD, as Chronister’s husband did, “I’d retire it to the bedroom, kid’s playroom, or give it to your parents to play their John Wayne standard def movies, and make space for a BD player for your awesome Hi Def experience.” I’m not sure this kind of spin is going to make to the Wal-Mart buyers who picked up rock-bottom priced HD DVD players for Christmas 2007 feel any better about their new door stop.

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February 15, 2008
by sjvn01
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What`s Behind the SCO Buyout

If I had a $100 million lying around, I really think I could find a better investment for my money than buying SCO. I could invest in, say, high-quality stocks, bonds, gold, New Orleans real estate, collectable Pez containers or, just the other day, I got this interesting investment opportunity from someone whose wealthy husband recently died of esophageal cancer and needs to transfer 500,000 English pounds from Nigeria to the United States.

Seriously, how does Stephen Norris & Co. Capital Partners and its Arabian oil billionaire friends think they’re going to get any return on their investment?

Well, first, they’re not actually putting in $100 million in cash upfront. The proposed SNCP/SCO deal, as laid out to the U.S. Bankruptcy Court in Delaware, has SNCP paying only $5 million for a new Series A Preferred stock. This new series can be converted into 51 percent and 85 percent of SCO’s equity, depending on the amount drawn under the Debt Financing.

Notice those last words: “Debt Financing”? What SNCP is really offering SCO is “a five-year non-revolving credit line [of up to $95 million] and bear a high but appropriate rate of return (LIBOR (London Interbank Offered Rate) plus 17%), reflecting the risks of this investment commitment and an commensurate rate of return. The Debt Financing shall be secured by all of the assets of SCO, including all of its present and future litigation claims.”

There are, at my last count, four different LIBORs. Presuming they mean the one-year LIBOR, SCO would be paying 19.78 percent interest if the deal went through today. With interest rates like this, I’m none too sure that the Bankruptcy Court will let SNCP buy up SCO.

If SCO is bought up, the company has to use this money for the “primary purpose and intended results of the Plan, and the financing commitments provided under the MOU (Memorandum of Understanding) is to encourage and promote an early and favorable resolution of the Novell/M Litigation. Notwithstanding the August 2007 interim ruling by the Utah District Court in the Novell Litigation, SCO believes it has an excellent chance to prevail in the Novell/ IBM Litigation, including potential for an award of substantial damages in its favor should SCO prevail.”

In English, what they’re talking about is we give you $5 million, we loan you up to $95 million, and you’re to spend that money on trying to beat the brains out of Novell, and then IBM, in court.

What rock have these people been under? SCO has never been able to come close to proving any of its claims about Unix IP (intellectual property) in Linux in court. And, besides, that August decision they are talking about? It stated that Novell, and not SCO, owned Unix’s IP anyway.

So why offer even $5 million for a company that, if its debtors have their way, has a negative value?

Well Pamela Jones of Groklaw does an interesting job of connecting the dots between Bill Gates and the proposed SCO buyout.

Here’s how it works. Prince Al-Waleed bin Talal Al Saud, a billionaire and member of the Saudi royal family, is believed to be the money man. Stephen Norris, who runs SNCP, is one of his chief financial advisers. Gates is a friend of Al-Waleed, and the two have co-operated on expanding Microsoft in Saudi Arabia. The two also joined forces to take over Four Seasons Hotels and take that company private for $3.8 billion in February 2007. So, when I say they’re friends, I mean, they’re friends. You don’t buy 74 luxury hotels for almost $4 billion with someone you don’t trust.

With deals and friendships like this, heck, Bill could just pull out his wallet, slip Al-Waleed the $5 million and, a wink and ta-da, the SCO zombie rises up again to continue to try to give Linux trouble. What a deal!

Personally, though, I have another theory. At this point, how much harm can SCO really do to Linux? Almost no one took it seriously when SCO first sued IBM and started making threats against Linux and its customers. Five years later, does anyone take this seriously? Does Microsoft ever gain anything by sponsoring SCO’s attacks?

Well, maybe Microsoft thinks that it does. After all, Steve Ballmer still trots out his annual “Linux violates Microsoft patent claims” even though those patent claims were shot down the first time he did it back in 2004. After all, it doesn’t matter whether Linux IP FUD actually works; it’s whether Microsoft believes that it works.

Maybe there’s another explanation though. Maybe, it’s just that a sucker is born every minute.

It’s not like $5 million or, even $100 million if it comes to that, matters that much to Al-Waleed or SNCP. When you’re worth in excess of $25 billion, what’s a few million here or there? And, if blowing a few million makes your buddy and business partner Gates happy, you can write it off as money well spent on goodwill.

Well, not the goodwill of IBM, Novell, Red Hat or any of the other Linux-using companies that have to deal with SCO’s insurance lawsuits of course, but what does that matter?

A version of this story first appeared in eWEEK. >

February 15, 2008
by sjvn01
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Did Microsoft Do the Right Kind of Reorganization?

Microsoft made quite a few changes, but did it make big enough changes to make a difference?

There are reorganizations, and then are Reorganizations. Microsoft just had one of the latter kinds.

While I don’t follow Microsoft as closely as I do Linux and its companies, I do keep an eye on the Evil Empire and, frankly, and this was quite a shake-up.

Some of these changes didn’t come as any surprise. The only thing that surprised me about the departure of Peter Knook, the senior VP of Microsoft’s Mobile Communications Business group, wasn’t that he left; it was that it took that long for him and Microsoft to part ways. Knook wasn’t well regarded outside of Microsoft in the mobile community.

However, the timing, the same week that Microsoft’s launched yet another mobile initiative, is really awful. You’d almost think he’s had something against Microsoft. Or, maybe it was just that new projects like, oh please, MSN Direct for Mobile, drove him up the wall and out of the company.

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February 13, 2008
by sjvn01
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Is Yahoo Worth Buying?

If I had a billion dollars, I’d be rich (with my apologies to Barenaked Ladies). If I were trying to buy Yahoo, I wouldn’t even be in the running.

Microsoft offered $44.6 billion, or $31 a share, a 62 percent premium on Yahoo’s share price at the time, for Yahoo. And what did the Yahoo board do? They sneered at it because the offer “substantially undervalues” the company.

Boy, I wish I could sneer at $44.6 billion. So, what would Yahoo consider a fair price? Maybe, some stock analysts have suggested to me, oh say, $60 billion. No offense to my day trading friends, but I think they’re getting a wee bit greedy with those estimates.

Indeed many people don’t care for the proposed Microhoo. Google, of course, doesn’t like it, but they’ve got their own priorities and messing with Microsoft’s proposed Yahoo deal is near the top of the list. The more the deal costs Microsoft the better, as far as Google is concerned.

Some people, however, really hate the idea. Henry Blodget, the well-known CEO and editor in chief of Silicon Alley Insider, a New York digital business community news site called the proposed acquisition a “disaster” in the making. Blodget went on to say that Microsoft CEO Steve Ballmer “is not used to losing. They’re doing something that’s conceptually smart, but that’s not going to work.”

Why? Well there are the usual reasons. There’s no real synergy between Microsoft’s Windows-based software and Yahoo’s FreeBSD/open-source Web 2.0 applications. The two companies’ corporate cultures are as mixable as oil and water. And, lest we forget, Yahoo’s in trouble. As I started writing this story, I see that Yahoo began firing, excuse me, laying off the first of 1,000-plus employees.

Yahoo, tell me again how Microsoft has undervalued the company. I’m sure your newly unemployed staffers would love to hear the details.

Meanwhile, Microsoft is undeterred and insists that it’s going to buy Yahoo. It’s not upping its offer, yet. Instead, it seems to want to see if it can get the stockholders to accept its offer over Yahoo’s board recommendations. Some of Yahoo’s stockholders, an informal group named Group B, seem to be in favor of the deal.

For more than a year now, Group B has been doing its best to get Yahoo to radically change course. They believe that Yahoo’s former CEO, Terry Semel, and current board, have been driving the company into the ground. Given Yahoo’s lousy track record for the last few years, it’s easy to see their point.

Eric Jackson, the leader of the group of 100 current and former Yahoo employees that own 2.1 million shares, are in favor of taking the best offer on the table. And, for now, that’s Microsoft. As Jackson said in his blog, “We have no desire to see Yahoo! continue independently with the current board and management team in place.”

For better or worse, though, Group B, while looking for others to join it, owns only a tiny fraction of Yahoo’s total stock holdings. Microsoft is hoping that others will join with them.

I suspect, however, that Microsoft is going to have to up its ante before it can make a deal. I still think Microsoft needs Yahoo. I also agree that it’s a potential disaster. And I also agree that it’s going to take a tremendous amount of work to pull these two companies together. On the other hand, what other choice does Microsoft have?

As my Microsoft Watch colleague Joe Wilcox recently said, “Microsoft’s bid, assuming that it is sincere, reveals that the services platform is vaporware. Sure, Microsoft has built out something, but it’s not nearly enough to compete with Google. Microsoft has tacitly admitted that it’s even farther behind Google than anyone suspected.”

I agree completely. In chess, there’s a horrible situation you can end up in called zugzwang. It’s a German word that means that you’ve got to move but that any move you make is only going to make your situation worse, usually a lot worse. Welcome to zugzwang, Microsoft. You’ve got to buy Yahoo to try to improve your online position, but, for now, no matter how you do it the move is going to hurt.

A version of this story first appearedin eWEEK.

February 13, 2008
by sjvn01
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Apple TV Take 2 is Here!

It took longer than expected, but not as long as I had feared, this morning, February 13th, Apple delivered the Apple TV Take 2 update.

I’ve just downloaded and installed it on my 40GB Apple TV In a word: “Sweet.” After an 8-minutes download, over a 3Mbps DSL Internet connection, and a reboot, the Apple TV was delivering all the goodies that Steve Jobs had promised in his January MacWorld speech.

Anyone can update their Apple TV. All you need do is Updating head over to Settings on your Apple TV, pick Update Software, and press the Apple Remote’s Play/Pause button and you’re on your way. You don’t need to do a thing with your computer or iTunes.

The first thing you’ll notice is that the menu is different. All your choices are available on a single main menu. It may not look as fancy as the older Apple TV menu, but unlike that one, anyone who can point and click can navigate this menu.

With the new menu you can easily buy or rent HD or SD movies. With your remote you can shop your way through the iTunes Store and get a good deal of information on each movie without any need to use your PC. At this time, I’m sorry you can’t rent TV episodes or series, you can only buy them. You can also use your Apple TV as a Flickr/.Mac photo browser.

You can, of course, still watch videos already in your networked iTunes library or on your Apple TV.

I haven’t had much of a chance to play with the new Apple TV, but I can say one thing. It, as I expected it too, destroys old-style video rental. Who needs to go to a Blockbuster, wait for a Netflix envelope or only have the small, collections of cable and satellite rental movies when you have an Apple TV? I don’t. As Apple adds more movies to its collection, over several hundred now by my count, the Apple TV is going to become an essential in anyone’s serious video setup.

February 11, 2008
by sjvn01
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So long HD-DVD

I recently discovered that a neighbor had bought an HD-DVD player. Whoops. If only I had known I would have told them the last thing they should be buying is an HD-DVD player.

The writing on the wall has been clear for some time now. HD-DVD is dead. Oh, you can still find HD-DVD players and discs. In fact, you can often find the players at clearance prices.

Before you rush out and buy one keep in mind that that they’re not worth a dime on the dollar. You see, by year’s end, you’re going to be as likely to find new HD-DVD movies as you are new 8-track tapes.