The Bloor Perspective: keynotes, tie-ups and court cases

In the first of a new series of weekly columns, respected industry analysts, Bloor Research, take a considered look back at the news from the last seven days. In the news this week are industry stalwarts: Intel, Microsoft, BT and AT&T&

*From bricks to clicks. Grove repeats ecommerce mantra* Talking to the CBI (Confederation of British Industry) in London last week, Dr Andy Grove, chairman of Intel, exposed his company's view of the future as - a little bit tired. The central theme was the old classic "in five years time no one will talk about ebusiness because all business will be done that way". Much was made of the need for "bricks and mortar" businesses to become "clicks and mortar" operations in order to compete with the new .coms (http://www.silicon.com/a32904 and http://www.silicon.com/a32883 ). Unsurprisingly, Intel's strategy is: "to become the building block supplier of the Internet economy". The growth potential, revealed by statistics, showed that 96 per cent of the capacity needed in 2005 has still to be deployed. But no real opinion was stated to clarify the shape of that capacity. On the client side, Dr Grove was more committed. While acknowledging that portable devices will be used when the situation demands, he stated his opinion that the majority of Internet access would be conducted through PCs for a very long time to come. He admitted that the format might change, but the PC would remain as a local processing and storage device with the ability to load software through the Internet or from local devices. As a visionary statement this was disappointing. In reality, the view of the future described by Dr Grove represents the ideal world for Intel, rather than the world we believe is likely to evolve. And much of it seemed to fly in the face of more popular opinion - reiterated only a few days ago by Oracle's Larry Ellison, also speaking in London. Ellison talked of the movement to Web-based applications that require a simple browser at the client and do not justify the presence of a full-function PC. This happens to be the view that we are more inclined to support. *BT and AT&T move one step closer to merger* Alongside the competing trends in Internet access, the wireless telephony market is also in a state of flux. This year has seen a host of European operators jockeying for position. Recently, BT and AT&T's announcement that they will link all of their wireless telephony businesses globally suggests that a full-scale merger is on the cards. This could provide the catalyst needed to unite this booming sector (http://www.silicon.com/a32828 ).
So far there are a number of problems holding back the development of a united standard for wireless comms worldwide. Put simply, the issue comes down to the fact that North America came late to the game while Europe presented a united front and achieved early standardisation on GSM. The alliance between AT&T and BT, however, may be enough to crack the technical incompatibility between these two disparate geographies. And AT&T and BT are keen to exploit the potential of the partnership. Already the two are promising new handsets which can be used throughout both areas will be available within a year. Not to mention the hope that their combined purchasing power will be sufficient to persuade phone makers to overcome the technical hurdles. The companies naturally claim their alliance will lead to lower prices on wireless calls for international travellers. As we've said before, the prospects for wireless communications are exciting and for many purposes fixed connections may be left on the sidelines. *Microsoft & DOJ: Is Microsoft out of reach?* The other big issue last week concerned Microsoft and its future if the Department of Justice wins the anti-trust case (http://www.silicon.com/a32876 ). While speculation was rife on the potential measures the DOJ would enforce, the government will face considerable difficulty coming up with remedies to the situation. One solution being touted is the establishment of a consent decree - an agreement on Microsoft's future behaviour similar to what was applied to IBM decades ago. But whether this would work remains to be seen. In many legal disputes it has been evident that the courts cannot move fast enough to keep up with the world of IT, and therefore such a ruling would almost inevitably lead to further disputes about the adherence to a consent decree. All the other remedies depend on some kind of restructuring within Microsoft - possibly what happened when AT&T had the "Baby Bells" hived off. A major problem with this, however, is that Bill Gates owns nearly 20 per cent of Microsoft, and there would be nothing to stop him co-ordinating the separate company's actions to limit competition. The only way to address this issue would be to require Gates to dispose of a sizeable part of his shareholding - which seems increasingly unlikely if not impossible. However, if that were to happen, it would raise the question of impact to the stock markets resulting from the sale of a major portion of Microsoft - particularly where the stock options Microsoft has been giving to staff are concerned. Incidentally, these options do not appear in published accounts as a cost and so their use leads to a higher profit level. This has lead some financial analysts to conclude that Microsoft would show losses without the share option facility - making the consequences of any restructuring highly unpredictable and possibly unfavourable. The end result therefore seems to be that Microsoft is effectively beyond the reach of the American and world's legal system. * For more in-depth analysis from the Bloor analysts, see http://www.it-director.com .