denise caruso | caruso.com » Digital Media, August 1993

• NEWTON: APPLE’S BELLWETHER

Apple finally and officially launched the Newton technology line this month with its new MessagePad personal digital assistant. Though the event itself was somewhat dampened by a silly theme — a video of “Paul Revere” riding through the streets of Boston shouting, “Newton is coming! Newton is coming!” — every Newton available for sale at Macworld Expo, where the launch was held, sold out.

After an auspicious beginning, what now remains to be seen is whether Apple realizes Newton might be its last good opportunity truly to reinvent itself — which it desperately needs to do — and do it right this time. Newton will be a bellwether of how Apple views its future as it further consolidates its operations and continues its executive transition from John Sculley to Michael Spindler.

• THE MESSAGEPAD

Newton technology is a significant milestone for both computing and publishing industries. Computing technology is beginning to benefit users away from their desktops, not by shrinking the desktop computer to hand size, but by automating the pocket notebook.

Newton technology will create a new class of information consumers, who now may find uses for data that would never have been practical with paper-based publishing. Developing these uses will offer a good challenge to publishers — that is, to those whose expertise is in gathering, formatting and marketing information.

• IT CERTAINLY IS ROCKET SCIENCE

It is hard not to compare the launch of Silicon Valley’s latest interactive entertainment startup Rocket Science Games — which claims it received about $4 million from investment capital companies in half a day, without a formal business plan — to the rollout of 3DO. Rocket Science, a new Palo Alto, CA-based entertainment software and technology company, has no product yet, but wants to revolutionize video games as we know them.

• I/O
Do you really want to publish?

• CHANNELS
A look at bundling deals.

• NEW-STYLE LBE
Virtual World opens in CA.

• AV MACS ARRIVE
Apple computers for digital media.

• SGI’S INDY
Workstation-like power, desktop prices.

• TELLURIDE INFO-ZONE
In pursuit of telecommunity.

• TRIBUNE BUYS COMPTON’S
Business as usual for multimedia publisher.

• DANGEROUS MORPHS
Questioning copyright law.

• VIDEO IN THE ‘90S
A perspective from AT&T.

• BRIEFS
Braun at Kaleida; Continuum shift; Nintendo’s Gateway; AT&T buys into TSN; HBO & Crystal Dynamics; AOL marches on; Kerrey bill; Sony MD-DATA; Cable PCS; Apple-TWIG; Total Clearance; Flat panel tariffs lifted; Novell acquires Fluent; TV Answer changes; BW 1000; Home Series; Cable Act’s impact; IT Network; Sony’s VISCA.

• EVENT
The ATM Solution.

>I/O: READERS RESPOND
COMPUTER COMPANIES: DO YOU REALLY WANT TO BE PUBLISHERS?
Michael Rogers is the technology editor for Newsweek and the managing editor of Newsweek InterActive.

Watch enough talk shows and you learn that all actors, deep down, really want to direct. These days it sometimes seems that a lot of computer companies, deep down, really want to publish.

One can’t help but wonder: why? The publishing industry has spent several hundred years sorting out all the problems associated with making money off what’s now known as “content,” and it’s still awfully tricky. In

my years as a writer I’ve been sued for libel, investigated by the FBI and threatened with firebombing — and I don’t even do anything controversial. Publishers get the same — only more. Has the computer industry really thought through the job they’re seeking?

Take, as an immediate example, Apple’s model for Newton publishing. Content owners will license the Newton publishing tools to produce titles, and then Apple will get a dime, figuratively speaking, every time a copy is sold. That gives Apple one nice part of the publisher’s job — a continuing revenue stream. Other toolset developers, of course, have similar approaches. But Apple is a household name, an important qualification for catching flak, and Apple’s contract provides no control over content. Consider one randomly imagined Newton title: The Terrorists’ Guide to the Bridges and Tunnels of New York City. Suddenly, wholesome Apple is making money on terrible stuff.

IT’S THE PUBLISHERS WHO TAKE THE HEAT

The bad part about publishing is that anyone who is upset about your content — victims of crimes, government agencies, religious fundamentalists, random pressure groups — will follow the money and lodge protests, lawsuits, subpoenas, boycotts, letter-writing campaigns and terrorist threats right on your doorstep. People incensed by an article don’t protest in front of the printing press manufacturer. Individuals who have been damaged by an exposé don’t sue the ink or paper companies. It is publishers, in the continuing revenue stream, who take the heat.

So how about just publishing nice safe things? There are two problems with this approach. Number one: in the mass market, one has no idea what a nice safe thing really is. The recipe book has one small misprint that turns Wintergreen Delight salad dressing into a toxic substance. The author of the novel about a psychotic killer happens to have libelously patterned his main character after his real-life ex-girlfriend. And so on. Publishers try to protect themselves with all kinds of diligence and contractual stipulations and libel insurance and even then, lawyer everything but the page numbers. But in the end, wronged parties still go after the deepest pockets and as publisher, you’re almost certainly it.

Problem two: for the most part, you don’t make money by publishing nice safe things. (Every few years, for example, someone with more money than publishing experience decides that the public is sick of papers that print nothing but bad news and launches a paper that has Nothing But The Good News! Guess why there’s a fresh opportunity to do this every few years.) An inexorable force in publishing seems to push the envelope of whatever topic you’ve chosen to assay. Perhaps this is because people are paying you to tell them things they don’t know — and very often that turns out to be things that other people don’t want them to know.

The issue of payment raises another tricky aspect of publishing. Americans aren’t used to paying full freight for a lot of their information, at least in magazines, newspapers, radio and most television. It’s brought to them courtesy of advertising, and the same model may well emerge in mass-market electronic publishing.

THE SYMBIOSIS OF ADVERTISING AND EDITORIAL

The so-called “church and state” relationship between the editorial and advertising departments is a delicate symbiosis. The most extreme editor would like the freedom to be able to roast Company Z’s product in print and still run the company’s advertising on the next page. At the other extreme, Company Z would sign a long-term ad contract if the editors would just agree to say only nice things, often, about the product. The real world is an uneasy truce between those extremes.

The relationship has evolved over decades and is constantly tested by both sides. It works, on balance, pretty well. The same is certain to happen in the digital realm, and players without a lot of experience will make mistakes. It’s a fair bet that, given the revenue inherent in transactions, plenty of electronic magazines will turn into catalogs before the erstwhile publishers even know what’s happening. And catalogs are nice things — but not when people think they’re buying a magazine.

To be fair, the software companies that work with content owners to produce titles are definitely not just the electronic equivalent of printers. In really great interactive media, computation is itself an element of content, as creative an act as the generation of words and images and sound. At Newsweek, the printing plant doesn’t telephone New York with last-minute suggestions for better wording. But when we send Newsweek InterActive material to our software developers, we expect to hear great new ways to make the product work. That creative participation doesn’t necessarily mean they have to be publishers as well.

Publishing, in all, is a complicated and often messy task that can easily earn one as much grief as glory. That’s not to say it isn’t an exciting thing to do. It just may not be exactly what your average computerist has in mind for a career path. Given Silicon Valley’s often dour view of the media, do technologists really want to wake up one day and find out they’ve become it?

Michael Rogers

OPPORTUNITY KNOCKS
Will a troubled Apple realize what it’s got with Newton?

After an auspicious beginning, what now remains to be seen is whether Apple realizes Newton might be its last good opportunity to truly reinvent itself — which it desperately needs to do — and do it right this time. Newton will be a bellwether of how Apple views its future as it further consolidates its operations and continues its executive transition from John Sculley to Michael Spindler.

Babies and bathwater. Will the company continue to take risks on new, unproven technologies — such as Newton, which Sculley championed — that beckon to customers beyond Apple’s core Macintosh constituency? Or will it choose what appears to be the safer route, focusing its resources on the transition from Macintosh to its upcoming PowerPC desktop machines, and splitting off Newton — or even the entire Personal Interactive Electronics group — into a separate company, as some have speculated?

These are the tenor of questions and rumors flying around Silicon Valley today. As Apple continues to focus on short-term return to profitability, the potential is certainly there to throw the baby out with the bathwater. That would be a pity, especially considering the baby in question.

NEWTON TECHNOLOGY: BEYOND THE MESSAGEPAD

Probably more than any other major technology initiative within Apple today, Newton shows great promise in a fast-approaching future where communications capabilities become ubiquitous.

But as many have bemoaned over the years, Apple has never been good at exploiting its formidable technological advantage in the marketplace. Macintosh succeeded largely on the zealotry of those who bought it, not because anyone at Apple necessarily knew how to sell it. (It was Microsoft, you may recall, that took to the computer stores demonstrating the benefits of a graphical user interface when it released Windows 3.0; Apple’s best shot was the abominable “Test Drive a Mac.”) It was only because it took competitors a while to figure out how to match the Mac’s capabilities that Apple was able to stay in the game.

Good PR, bad marketing. If Apple is smart and keeps Newton within the company, the next question is how it will market what is essentially the first product of its kind in an already contentious and competitive market. Unlike the Macintosh, which was cloaked in secrecy up until the day it was ready to be shipped, Apple talked about Newton — and publicly demonstrated it — long before it was done. While this may have been a good public relations strategy, it may prove to have been a lousy marketing one.

Virtually every company with clout today is working on such devices and/or capabilities, whether on its own steam or within an alliance. And every one of them, including Sharp, the Wizard-maker that licensed Newton for its own Expert Pad product, and Newton licensees Motorola, Panasonic and Siemens, know how to make consumer products and have had a good, long time to make sure they matched the MessagePad’s features. Many will ship competing products within six months.

A confusing situation. The desire to set standards via alliance-building has also led to a difficult and conflicted situation for both Apple and its spinoff General Magic. Though Magic’s Telescript communications language is the company’s core product, the one that can (and will and should, if it’s up to snuff) be built into competitors’ devices, its MagicCap system software is a direct competitor to Newton, even though Apple is a member of the Magic alliance (see Vol. 2, No. 10/11, p. 3). For example, Apple says that Telescript will be built into Newton devices as soon as it is ready. Formidable corporate opponents such as AT&T, Motorola and Sony are also building MagicCap-based hardware.

MICROSOFT’S WINPAD, NOW ATWORK, IS ON THE WAY

Now let’s add fear to confusion and conflict: Microsoft, which is neither a Newton licensee nor a General Magic alliance member, also claims ubiquity as its goal with its newly announced AtWork communications architecture. Though no formal announcement has been made about specific products, Microsoft in June announced that AtWork (formerly known by the code name “WinPad”) would indeed be the operating system it would license for “digital assistant”-type communication devices.

With a phalanx of more than 70 technology partners including the ubiquitous AT&T, Canon, Casio (also entering the market with Tandy; see below), Northern Telecom, Intel, Philips, Toshiba and Xerox, Microsoft has taken General Magic’s theme a step further; it is developing software that will make virtually every device first in the office and eventually in the home capable of sending and receiving messages.

Compaq’s “mobile companion.” During the AtWork announcement in New York, Compaq showed a prototype of a “mobile companion” that used the AtWork architecture. (Compaq would not return repeated phone calls regarding the prototype.) At a recent analyst meeting, Microsoft said that products using AtWork would be shipped within six months.

Casio and Tandy are also quite close to shipping their Zoomer device (which they call a PIP, for Personal Interactive Processor), though their technology does not have the ability to communicate embedded as deeply in its genes, so to speak, as does Newton’s MessagePad. And Sun Microsystems is reportedly working on its own PDA via a wholly owned subsidiary called First Person.

THE PICTURE IS BIGGER THAN PDAS

In essence, Apple’s launch of the Newton MessagePad signals the beginning of a new class of computer peripheral for people who spend a lot of time out of the office but don’t have to generate a lot of data (spreadsheets, written reports, etc.) while on the road. For example, the MessagePad’s built-in features are mostly some form of personal organization — calendar, address book, alarm —”forms”-type applications that don’t require much input from the user, if any.

Technology that Apple calls Smart Synchronization allows users easily to update information created on MessagePad with their desktop PCs or Macs. The Newton communications architecture supports optional faxmodems and pagers, as well as built-in “beaming” technology that allows wireless data transfer between Newtons. (For detailed information on the MessagePad, see accompanying story p. 5)

Getting personal. But what’s more important for the picture beyond MessagePad is the built-in capability for Newton technology to personalize itself to its user. One reason that users become emotionally attached to their Macintoshes is that it is possible to make the Mac feel like it’s completely their own: almost everything about the way the system looks, sounds and operates can be customized, from the sound it makes when you turn it on (my favorite is a piercing scream) to the background screen to the ability actually to alter the icons themselves.

Newton takes customization a giant step further with what the company calls Newton Intelligence. Although it learns to better recognize your handwriting over time, lending your MessagePad to a friend actually degrades its recognition ability: in beginning to adapt to someone else’s handwriting, the machine immediately begins to forget yours. It also learns how you do things — if you often look up a name in your address book, place a call, then schedule a meeting, Newton Intelligence is designed to anticipate your next action.

Like loaning a toothbrush. As Peter Dyson says in the accompanying story about the MessagePad, a personal digital assistant is much more personal than a personal computer. The whole idea of the PDA is to imbue it with your essence — you would never consider letting someone “borrow” it, it would be like loaning someone your toothbrush — and once it is so imbued, it becomes much more than a database or an address book or a calendar or even a messaging system. It will become the electronic representation of “you” on the network.

Certainly Apple and Microsoft understand this concept (as does General Magic). Despite their vision of the future, however, they rightly believe that the world at large is not yet physically or culturally ready to be represented by electronic agents. In the meantime, they are building products that people can use now, not when the “information superhighway” or “full-service network” is in place at some undetermined future point. Thus, Microsoft’s AtWork architecture is focusing first on making office equipment capable of sending and delivering messages, and Apple is concentrating on making life easier for mobile professionals.

However, grander visions are in the works from all concerned.

NEWTON’S EZTV: YOUR PERSONAL REMOTE CONTROL

Apple’s EZTV demonstration at Digital World was admittedly a mock-up except for the interface itself. But Gaston Bastiaens, VP and general manager of Apple’s Personal Interactive Electronics division, reiterated in a later interview that the EZTV project would definitely be based upon Newton technology. An interactive TV system based on a sophisticated communications platform such as Newton could provide the kind of integration that application developers, network operators and users need to help move interactive TV closer toward the “market” stage.

For example, there is no reason that the MessagePad or some other Newton device, with its built-in support for infrared communications technology, couldn’t serve as an intelligent, personal remote control — one that knows your preferences for news, products, music and movies, and tracks what information services you subscribe to — that works in conjunction with an EZTV system, either residing on the cable or another network such as the telephone or a computer net.

Nor is there a reason why many other products should not be based on Newton technology. It is already designed to interoperate with both the Mac and Windows. If it can already do that, there’s a high probability it can also be made to work with other systems, too, whatever they may be. And yes, this strategy would put it in direct competition with another Apple spinoff, Kaleida. (See brief, p. 22.)

Flexible, powerful system platforms such as Newton are the future for Apple, and for any hardware or software company in business today. After all, if there were so many more computers to be sold into businesses, why is every computer company in the industry foaming at the mouth to try to deliver consumer products?

IN A COMMODITIZED WORLD, HOW DO YOU WIN?

Clearly the success of the Macintosh was built on the tight integration between hardware and system software. Where opinions diverge is whether Apple should license the operating system to clone makers to increase its market share. (Actually, more people now believe the question is “when,” not “if,” at least in the case of the Macintosh.) As the company has moved toward the consumer market with lower-cost products, it has realized it could not be the sole supplier of MessagePads (or any future Newton device) and expect to get any significant customer base.

Taking in boarders. So Apple decided to take on licensees straight out of the chute. At the announcement of Newton a little more than a year ago at the Consumer Electronics Show, the company announced that Sharp, which had made an early reputation in the “digital assistant” market with the Wizard, would be its first licensee. Since then, Motorola and Panasonic, as well as European giant Siemens, have signed on to make various types of Newton-based products.

This does not assure Apple of success with Newton, however. As mentioned earlier, both General Magic and Microsoft have signed compelling partners for their competing technologies, including powerhouses such as Sony and Matsushita, as well as more traditional office automation companies such as Xerox. So as a hedge against the hardware margin squeeze, Apple is leveraging Newton as a publishing platform, too. (For a fascinating opinion on the subject, see I/O on p. 2.)

Apple claims that 1,500 companies have signed up as Newton developers (how many are actually developing products is impossible to know). Apple’s Bastiaens says that since the Newton logo and NewtonScript are protected by copyright and patent laws, developers may not publish products using either the logo or the script without paying a royalty.

Sipping from the royalty stream. Media companies aren’t wild about the idea. For companies that make their living creating and selling media, this concept is tantamount to Microsoft asking for a royalty from every author who uses Word to write their books or screenplays. However, electronic publishing of the type that will be done on Newton does create an interesting conundrum. Companies creating the tools need to make them easy and affordable so that they will be used. But to invent them costs a lot of money, and they believe they have a right to sip off of the royalty stream if developers are using their tools to make mass market products.

“A thousand developers consider this a generous offer,” says Bastiaens. “It gives them some assurance of revenue dollars in the future.” Though he wouldn’t commit to a percentage, he agreed the royalty would have to be low. Apple is certainly not the only company preparing to take a cut from titles. 3DO, the up-and-coming game machine company, intends to do so, and many of the household names in multimedia authoring tools are considering how to do the same thing. And, of course, Nintendo has been doing it for years.

It’s not necessarily the perfect way to attract developers, but if the deal is perceived to be fair, the revenue stream may be sufficient to get Newton to profitability in the short term; if Newton sales continue at the present rate, the stream may turn into a flood as people snap up the relatively inexpensive third-party software.

CAN A COMPUTER GUY BECOME A CONSUMER GUY?

No matter what benefits Newton may bring to Apple’s future, the danger remains that Apple’s new president Michael Spindler, a dyed-in-the-wool, traditional computer executive, will be disinclined to justify the financial support that Newton will need to survive and flourish.

As Apple struggles to regain its footing, it seems unlikely that Spindler will be willing to support two brand-new technology lines — the PowerPC and Newton — both of which will need serious internal momentum to survive in a world where a competitor as tough as Microsoft waits at every gate, and where a new desktop computer may be perceived as an easier sell than a whole new genre of computing devices.

Blood on the walls. This becomes an especially sticky problem when one tries to compare Newton to the Macintosh or the upcoming PowerPC. Surely a Newton with a keyboard would be cheaper than a PowerBook. Surely adding some memory and a hard disk to a Newton system would make for a killer desktop computer system. But no one at Apple will debate these questions because of their political ramifications. After all, whole departments are being axed at a swipe, and turf — i.e., responsibility for product development and marketing — is more jealously guarded now than ever before. As one person said, “It’s not a good time to discuss this. There is blood on the walls here every day.”

There are certainly compelling reasons to expand Newton beyond MessagePads and EZTV — both products are for markets that don’t yet exist and have to be created — if one wanted Newton to succeed; there are equally compelling reasons not to, if one believes such expansion would impact the sales and/or acceptance of Apple’s more traditional Macintosh or PowerPC computing platforms.

ENORMOUS BRAIN DRAIN MAY BE THE FINAL STRAW

All of these potential storms could be weathered with the fortitude of a solid base of experienced employees who understand the future for technology products, as well as how to make and sell them today. But it may already be too late, since Apple has already squandered much of its most precious resource. For many years, the company employed the best and brightest engineers, all of whom came to Apple because, as corny as it sounds, they thought they could “make a difference.” The household-word status of graphical user interface, multimedia and PDAs is a direct result of the company’s forays into those arenas.

A “blanking of vision.” During the past six months and in this latest round of layoffs, however, the company lost many of the people who had laid much of the groundwork for Apple’s long-term growth. Instead, it retained most of its product managers — and in fact is said to be hiring more — apparently operating under the belief that it will be able to return to profitability by producing low-cost hardware head-to-head with companies such as Dell and Compaq, both of which have suffered tremendously by the commoditization of hardware and which do not carry the additional overhead of creating and maintaining state-of-the-art system software.

This borders on corporate insanity, and exhibits what one Apple watcher calls a “complete blanking of vision and courage at the top.” Clearly what is special about Apple has always been, and will continue to be, its expertise in software and its deep knowledge of how people want to feel about their connection to machines. Newton is the latest jewel in Apple’s crown, but it is still only a step in the right direction. Focusing less on making more computers, and more on making computers do things that couldn’t be done before, will be the key to Apple’s renewed success.

Denise Caruso

NEWTON MESSAGEPAD: A LOT OF POWER IN A LITTLE PACKAGE

Price and availability. In a month there will be Newton MessagePads for sale in every North American city; in two months they will be introduced to overseas markets and by next spring there will be localized versions for Europe and Japan. Newton will be sold at Apple dealerships, but the major distribution will be through consumer electronics channels: Silo, Circuit City, Sears and so forth.

There is no official list price. Apple says that each retailer will set its own price. However, Apple also says it expects dealer prices to range from $700 to $1,000, depending on configurations, options and software. This is at the high end of gadget prices, but it is not out of range for introducing a novel consumer device. We expect prices to fall once the backlog of early-adopter demand has been sated.

Clones. Apple has licensed significant parts of the Newton technology to various manufacturers with the express intention of creating a competitive market. The computer firm realized early that it could not crack the consumer market without help, and that consumers want most of all the security of being in the mainstream. That means there must be many vendors making compatible products.

The first clone using Newton technology is already out. Sharp (which is also manufacturing Apple’s product) is offering the Expert Pad. It has exactly the same guts as the MessagePad, but the plastic shell is a bit nicer. The Expert Pad has a hinged lid to keep the screen from getting scratched when it rattles around in a briefcase. Sharp says that the street price will be about the same as Apple’s.

Positioning. The MessagePad is not another “computer for the rest of us.” Instead, it is an electronic notepad for people who don’t use computers. (Actually, the early adopters will probably be computer enthusiasts who will want a Newton when they aren’t using their computers.) Communication and on-the-go information — not document creation — are Newton’s strong points.

Where Newton (and, we expect, a flood of successors and competitors) will prove its worth is on the consumption side of the information business. Apple has focused on organizing the snippets of data that people want to keep at hand: phone numbers, addresses, appointments, to-do lists, cocktail-napkin sketches and so on. The MessagePad is a place to create snippets, store them and use them.

The MessagePad is completely different from the Macintosh or any of the pen-based notebook computers now in the market. It is small enough and light enough (14oz.) to hold in your hand for extended periods.

Screen. The screen has reasonable resolution for the purpose: 336 by 240 pixels. It is not backlit, but Apple claims it is so reflective that the MessagePad can be used if any light is present at all. Users write upon a transparent tablet that sits on top of the screen, with what’s called a “passive pen.” Passive pens don’t require additional electronics to communicate with the screen (and are much cheaper to replace when you lose it). A LocalTalk network port is built in to connect with Macintosh desktop systems.

The MessagePad measures 7½ by 4½ by ¾ inches, so it doesn’t quite fit the “suitcoat pocket” form factor, but Apple says it will fit in the front pocket of baggy-style trousers.

The MessagePad is powered by the ARM610 processor, a 32-bit RISC chip that is optimized for low power yet gives reasonable performance. It also contains a whopping 4 MB of ROM and a modest 640K of RAM. The system uses most of this for workspace, but there is about 256K available for data.

The unit also has a PCMCIA slot for add-in modules. Apple offers 1-MB and 2-MB memory cards; there is also a pager communication module. Much of the commercial software for the Newton MessagePad will be delivered on PCMCIA cards; today’s standard type-2 card can hold up to 4 MB of ROM, which is sufficient for vast amounts of text or for databases of reasonable size. For communication, the MessagePad has three built-in options (in addition to whatever you put in the PCMCIA slot).

Serial port. This is the standard Macintosh printer port; it can be used directly with serial printers, or via the Newton Print Pack to parallel printers. It can be used to connect to LocalTalk networks. Apple is offering an external data/fax modem that will connect to this port. For most dedicated mail users, the MessagePad will probably not be truly useful until this option is available.

We should also point out that the modem has about the same bulk and heft as the MessagePad itself. The real weight in your briefcase of a complete Newton setup — MessagePad, modem, application and data PCMCIA cards, spare battery and charger — is still measured in pounds rather than ounces.

Infrared link. Using the same technology as a TV remote control, you can “beam” information directly to another Newton. The effective range is only about one meter, the speed is only 9,600 bps, and the two Newtons must be pointed at each other. There is no base-station hardware to allow beaming information into a desktop computer. (There’s no reason one couldn’t be made, but no one has done it yet.) But this looks like a quick, effective way to pass on the kind of information Newton is designed to handle: small, informal chunks of text and line graphics.

Speaker. It sounds clunky, but you can use the MessagePad’s internal loudspeaker to generate TouchTone sounds, either to dial the phone from a number stored in Newton’s memory or to activate more-complex telephone features such as retrieving messages from an answering machine.

System software. The Newton system software is even more impressive — and more adventuresome — than its hardware. The whole system is optimized to deal with hundreds or thousands of small snippets of information floating around in an “information soup.” Any snippet can be related to any other snippet, and so forth. The same snippet may be “stored” in as many as 12 different folders without duplicating it.

Most information is compressed at ratios between 4:1 (images) and 6:1 (text) so that it takes up less memory. (The Newton has no disk memory.) System software is completely object oriented. The base system includes objects that deal with system hardware and common tasks such as handwriting recognition. “Application” programs build on top of this — and on top of each other. (Any application can make use of any objects already available in the system.)

Applications are written in a NewtonScript language that has a syntax modeled after C (to make it easier for PC and Macintosh programmers to make the transition to Newton). All of this should help make it quick and easy to write Newton application programs — and should help keep the resulting programs compact.

Built-in, system-level applications include the Notepad, which is the basic user interface for text and graphics; the Name File, a contact manager or rolodexer; and the Date Book, which acts as an alarm clock, appointment book, calendar and to-do list. Another application, the Newton Connection, synchronizes information between the Newton and a Mac or PC.

Power. The MessagePad is powered by four AAA alkaline batteries or a rechargeable nickel-cadmium battery pack with a lithium battery backup. Apple claims that the alkaline batteries will last about two weeks in normal use. The rechargeable pack will last about a week between charges. It can be recharged in about three hours in a clever plug-in charger or in about 10 hours if recharged in the MessagePad. This is an improvement over the original estimate of eight hours per charge.

Handwriting. We were moderately impressed with the success of Newton’s handwriting recognition software. It is far better than any other we have tried, but still not perfect. At first, the software has a hard time figuring out even the neatest hand. However, it learns as it goes, both by building a dictionary of your words and by familiarizing itself with your stroke styles. There is a training module (part of the Preferences utility) by which you can speed the learning process.

There are some secrets to achieving reliable recognition. For example, the order in which you make the writing strokes sometimes matters. You need a pronounced increase in letter size to be sure of obtaining a capital letter. There are invisible boundaries outside of which the recognizer may not be looking; these vary with the application. Indeed, although the Newton gets better over time, we suspect that it is training you as much as you are training it.

There is one drawback to Newton’s learning process: lending your Newton to a friend degrades its recognition ability. In beginning to adapt to his handwriting, the machine immediately begins to forget yours. A personal digital assistant is much more personal than a personal computer.

Platform agnostic. Although Newton is an Apple product, great care has been taken to ensure that it works well with both Macintoshes and Windows PCs. (In a throwaway line during the product launch, one speaker claimed that Newton was more compatible with Windows than any of the Intel-based pen computers.)

Apple — or at least the PIE division — realizes that most of the computers that Newton must work with aren’t Macs. For desktop applications, there are client interfaces for both Mac and Windows. The interface uses AppleEvents or Windows DDE to pass information between the Newton and the application. Thus notes can be uploaded to a database or spreadsheet, or the Newton can download fresh material to take into the field.

The Mac has a head start in getting developer tools. A beta version of the developer kit went on sale at Macworld, with the promise that a finished version will be out before year end. There will also be a Windows version of the developer kit, probably later in the fall.

Third parties. About two dozen applications for the MessagePad were demonstrated at the Apple rollout, most of them oriented to traveling business people. Connectivity with dial-up and LAN-based E-mail systems was a common theme. Many of the applications were not really ready for commercial release and had no prices. Among those that did, the pricing seemed to range from $99 to $120. This strikes us as high for the consumer market, but it might be all right for the early-adopter market.

We were especially taken with Fodor’s Travel Manager, which contains street maps, restaurant ratings and how-to-get-there advice that can be invaluable to conventioneers. So far, there are guides for New York, San Francisco and Boston; eventually all the cities in the printed Fodor’s guides will be available. Typically, you would prepare for a trip by loading up your MessagePad with material for the cities you will visit. A 4-MB PCMCIA ROM could hold guides to the top 50 cities; or an online database could fill up a RAM card with the latest data. In time, it may be possible to use cellular-phone technology to dial-up the latest local details wherever you are. Other applications included:

• Games. Claris sampled a dozen children’s games, such as Hangman and Enigma. No one would pay for these on a desktop computer; they are in every shareware collection. But Claris wrote the games as a way of learning what works and doesn’t work in the Newton environment, both technically and in the user interface. The games are actually less compelling than a Nintendo Game Boy, but we think Claris will produce some real software in the future.

Fingertip Technologies showed a golfer’s assistant. It keeps track of scores, handicaps and wagers out on the links; back home, it can do statistical analysis of your weaknesses to guide your practicing. Fingertip also promised a PCMCIA card of baseball statistics in time for the 1994 season.

• Expense accounting. State of the Art, a developer of accounting software, showed a utility for collecting and organizing travel expenses. You write the expenses into the MessagePad as they are incurred; there’s a little form for this. When you get home, you can review the expenses by date or category, then print them out on a reimbursement form. (In a hurry to get paid? Fax the form in from the field.) You can also upload the expenses to a PC, where they can be fed to databases, spreadsheets and accounting programs.

• Presentations. Avalon Engineering announced PresenterPad. It can serve as a teleprompter, with adjustable scrolling speed that learns the speaker’s tendencies for tempo and digression. It can also show the speaker whether he is ahead of or behind schedule. It also has an interface to desktop presentation packages and to infrared remote control so the speaker can roam while talking.

• Sketching. Saltire Software announced DrawPad, which takes hand-drawn sketches and cleans them up for presentation. It aligns objects, scales and stretches them, calculates areas and perimeters, shows dimensions and notations in nice fonts, etc.

Peter Dyson

>CHANNELS
A BRIEF ANALYSIS OF BUNDLING DEALS

Bundling is an alliance between a hardware manufacturer and a software title developer to create increased market demand for both products. A hardware manufacturer, whether of drives, sound boards or other peripherals, offers a bundle of titles, usually three to five, in a mix of categories to create a broad appeal for the package, which consists of the hardware and the multiple titles. This creates a premium or an incentive for the purchaser of the hardware, and creates market awareness for the titles and their developers.

The economics of bundling are interesting: while it will rarely account for more than 20 percent of a developer’s sales, it may account for up to 60 percent of the units sold. It is also an effective way to build your installed base; publishers report that the return of registration cards on bundled titles is often as high as 25 percent, since the product is being bought by early adopters who want to be on your mailing list. Given that the volume of units bundled ranges from 10,000 to 100,000 units, generally between 20,000 and 50,000, this is a significant return of information on your installed base.

Gray market danger. There is some danger of gray marketing, the distribution of unauthorized products through alternative channels. For example, it might be that leading mail order companies can buy shrink-wrapped products at bundled prices on the gray market and then sell them for full retail-list price through their catalogs or into their retail channels. Although the bundling contract forbids this, little tracking is done. This opportunity is particularly available for mail order companies that sell both the hardware, peripherals and titles.

It is important to factor in the level of technical support that may be required by so many tens of thousands of titles reaching the market in a short period of time. If the title is in any way support intensive, the developer must consider the increased technical support requirements that this sudden release into the market will generate.

A sliver of SRP. Bundling deals generally bring between 10 and 18 percent of the suggested retail price when the total shrink-wrapped product is delivered. If a master disc is delivered for duplication by the hardware manufacturer, the developer is generally paid between $2 and $5 per unit. A bundle deal is generally for a minimum of 10,000 units over the course of twelve months.

A best-seller, like Icom Simulations’ Sherlock Holmes, Consulting Detective, Volume One, is reported to have placed 150,000 units in the market on both Mac and MPC platforms. It is guessed that 90 percent of these units were moved through bundling deals. The large volume buyers for bundling deals include Sony, Apple and NEC.

Built into cost of goods. Manufacturers generally have a budget for bundling built into the price of the product or the special promotion they are marketing. They will, for example, build an $80 cost factor into the cost of goods, and will apply this to the acquisition of three or five titles that will be shipped with the product. Then they will look for value: the most interesting titles for the least money. This will allow them to bundle either a highly visible product or more titles in the bundle.

Once an order is placed, say for 20,000 units during a 12-month period, the manufacturer will ask to have the titles shipped in smaller batches. The minimum shipment order initially should be at least 1,000 units, and the reorder number at least 500 units. Otherwise the developer is at a disadvantage in manufacturing planning.

Approaching a bundle. The savvy developer will negotiate for payment for the total volume, so that the manufacturer does not get the 20,000-unit price, and only order 2,000 units. This negotiation can result in an upfront payment for all the units, which is unlikely, or a higher price per unit for each shipment quantity. In this way the developer fixes the delivery schedule and the pricing “ORO” (on receipt of order). There are three ways to approach bundling: do it yourself (i.e., approach the manufacturer yourself), go to a distributor (either Software Toolworks or Compton’s New Media), or wait until the manufacturer comes to you.

In order to build a bundling arrangement in-house, it is important to dedicate a salesperson to build a database of CD-ROM hardware products. There are only about 70 drives on the market, and additionally, sound boards and other peripherals. The salesperson would then contact these companies, solicit their interest, and send a shrink-wrapped product for evaluation. This is a labor-intensive assignment, but it leaves the control and the relationship directly with the developer.

Another alternative is to contact Software Toolworks, which has a special OEM group of several salespeople, or Compton’s. Sometimes the manufacturer will come to them to obtain a total bundle of titles already in their warehouses, so that the manufacturer may receive one shipment of five or more titles directly from the distributor’s warehouse.

This implies that distribution through these distributors would enhance the opportunity to do bundling through their arrangements with manufacturers. This should be carefully considered, as a developer’s choice of distributor is based on many factors other than opportunities for bundling.

The last option is to wait until the manufacturer comes to you for the product. This is likely to occur if the product is a best-seller. Manufacturers will not seek out a product that is niche-specific, but will want to bundle products that have broad appeal.

When to bundle. It is important to understand that bundling is not appropriate until a developer/publisher has multiple products on the market. It is unwise to bundle your first or second product, as this is likely to erode your success in selling the fully priced retail version of the product.

That’s because when retailers know it’s being bundled, they won’t give it precious shelf space at the same time. In addition, distributors know not to try to give a title to retailers if it’s being bundled. So there’s resistance at both levels. Bundling is also a hindrance to developing a relationship with a new media distributor prior to having several products on the market. The distributor will interpret the bundling as a lost opportunity for his sales of your products.

On the other hand, if you have several products out, say 10 or more, you can “sacrifice” a title into a bundling deal, gaining revenue and further exposure of your company’s product line into a uniquely qualified market of first-time buyers of the technology.

Bundling at the end. There has been some discussion in the industry of a strategy for bundling titles that are at the end of their life cycle. This sounds like a good idea, but has rarely been tested, since most titles have not sold through the duration of their life cycle yet. This might be the most appropriate strategy for games, which have a higher “spike” on selling and a quicker decline in their life cycle.

Bundling should be carefully considered as a part of a product’s life cycle and distribution strategy. Its benefits should be leveraged to best advantage, and bundling should never be entered into without weighing its impact (successful or not) on the company’s financial plans, positioning and total product strategy.

Joanna Tamer

>NEWS
IT CERTAINLY IS ROCKET SCIENCE
Techies, creatives hope to start new game industry

It is hard not to compare the launch of Silicon Valley’s latest interactive entertainment startup Rocket Science Games — which claims it received about $4 million from investment capital companies in half a day, without a formal business plan — to the rollout of 3DO. The buzz around Rocket Science, a new Palo Alto, CA-based entertainment software and technology company, has quickly achieved the same level of hype, excitement and confusion that has surrounded 3DO from its inception.

The comparison is not surprising since founders of both companies are making the same promise: a fundamental shift in the way we are entertained, based on more sophisticated hardware in the case of 3DO, and software in the case of Rocket Science. It was the potential of the 3DO Multiplayer game machine, in fact, that inspired the creation of Rocket Science Games.

AN INTERACTIVE GAME COMPANY WITH A TECHNOLOGY TWIST

As one might expect by its name, Rocket Science Games is primarily a game company. Similar to Crystal Dynamics, the company plans to produce interactive CD-ROM games — no cartridges — for Sega and 3DO and potentially any of the other interactive CD players that are in development from companies such as Atari, Nintendo and Commodore. Its long-term goal is to supply programming for interactive television.

Its first three titles are expected to reach the market by September of 1994, in time for the Christmas season, which is when 70 percent of all video games are sold.

Unlike its competition in the game industry, Rocket Science also plans to be in the software technology business, particularly focused on digital video and compression applications. The company has certainly put the team in place with the potential to fulfill that vision. Most of the 11 employees at Rocket Science (four of which are founders) possess distinguished reputations in the fields of computer engineering, computer graphics, software development or entertainment.

A LOOK AT THE PLAYERS IN THIS GAME

The company is the brain child of 25-year-old Peter Barrett, formerly the director of software technology for SuperMac Technology, a hardware and software developer for both Macintosh and Windows-based computers. He got the idea for Rocket Science a little more than six months ago when he attended the 3DO launch at the Winter Consumer Electronics Show in Las Vegas.

After seeing some of the 3DO titles in development and after working with a Multiplayer prototype, Barrett — who has eight interactive game machines at home — became excited by the possibilities for the advanced game play and character development that a more powerful game machine might allow. He decided to start an interactive game company with a charter that he says is “to create a new frontier of game software.”

The life, times of a wunderkid. In addition to the requisite love of a good video game, Barrett brings an expertise in software development and building startup companies to Rocket Science. A native of Australia, he came to the United States to work for SuperMac six and a half years ago when the Macintosh market was just emerging. Through his Australian-based company, Infomagic, which he cofounded at 18 and which is now a major Mac distributor in that country, he had established relationships with many of the “deities” in the Macintosh market, including Steve Edelmen, who founded SuperMac and lured him to the United States.

Barrett developed software technology while at SuperMac, including Cinepak (formerly known as Compact Video), the software-only video compression codec that has been adopted by Apple, Creative Technology, Atari, Sega and 3DO among others. (SuperMac is wooing Nintendo to support the codec in its CD-ROM-based game machine that is expected to be delivered by Christmas of 1994.)

Although SuperMac officially owns the Cinepak technology, since Barrett created it while he was there, he is free to continue to develop the codec at Rocket Science through a shared licensing agreement with SuperMac. (SuperMac, which is moving away from internal product development and becoming more of an affiliated label program for small companies developing technology, says it will work on Cinepak also.)

Money lenders and matchmakers. Although Barrett had the idea for Rocket Science, he needed additional talents to launch the company and he needed capital. He approached Merrill Pickard, Anderson and Eyre, a venture capital company, which jumped on the project, playing both money lender and matchmaker.

Ironically it was Merrill Pickard who connected Barrett with Steve Blank, a fellow SuperMac employee, who was also looking to start a new company. Blank, president of Rocket Science, is known throughout the computer industry for his aggressive marketing. As the head of marketing for SuperMac, he helped develop a turn-around strategy for the company in the late 1980s that took it from a third-place position in a race of three to the lead spot, where it has remained ever since.

How the pie is sliced. In addition to Merrill Pickard, Mohr Davidow Ventures also invested in Rocket Science. Together both investors own about 50 percent of the company. The other half is divided among the founders, key members of the technology team and SuperMac, which owns about 1 percent. (A small percentage has been left in reserve as bait for prospective employees.)

CAN CREATIVES, TECHNOLOGISTS MAKE THE DIFFERENCE?

Blank and Barrett might have been an interesting enough story, but Rocket Science would probably not have garnered as much media attention or money without the addition of co-founders Michael Backes and Ron Cobb as well as several of the famed Apple QuickTime development team.

Backes, whose most recent credits include display graphics supervisor on Jurassic Park and co-screenwriter on Rising Sun, is writing a film for producers Kathleen Kennedy (Jurassic Park) and Frank Marshall. Cobb was the creative director on Alien, The Last Starfighter, Conan the Barbarian and numerous other films. Both men are well-known among the Hollywood and Silicon Valley communities as able to walk the line between understanding how to entertain people and how to use the computer as a tool to heighten the entertainment experience.

Neither Backes nor Cobb will be part of the day-to-day scene at Rocket Science. Instead, they will write and produce specific games (Cobb is now working on the plot line for one of the first three titles to be delivered), provide direction on visuals and story development for other titles and act as liaison between Rocket Science and other Hollywood talent interested in producing interactive games.

The missing link. They will also work closely with the Rocket Science technical team, which includes ex-Apple employees Peter Hoddie, Sean Callahan and Mark Kruger, among others, to create what Barrett calls “the missing link” that the company hopes will make “interactive entertainment” something other than an oxymoron.

According to Barrett, the fundamental flaw with games today is that there is no “methodology or language” to create content for this emerging market. He hopes to change that at Rocket Science by developing powerful tools that artists and storytellers can use with ease. (We have heard this many times before but so far no one, with the possible exception of the QuickTime team, which brought digital video manipulation to the masses with Macintoshes, has delivered on that promise.)

Not a bad day at the office. To create a common language for artist and technologist, Backes and Cobb have the technical team watching movies, playing video games and looking at comic books. They then discuss things such as why an animated plumber with a big head and a mustache works better on a small screen than Arnold Schwarzenegger, or why a movie or special effect worked, how it was done technically and cinematically and how it could be translated for interactive entertainment.

According to Barrett, the tool development at Rocket Science will progress — at least initially — in conjunction with the development of the first few titles, so that the technology can evolve based on the needs of the storytellers and creators. The company’s goal is not to accommodate the limitations of existing tools, but to create tools that enhance creativity. Hence, a new type of interactive game might emerge.

“With Rocket Science we’re trying to establish a higher level of craft and imagination in the design of interactive entertainment,” say Backes. “Most interactive games, as they exist today, are not particularly sophisticated entertainment. Many games are stuck in the rut of shoot ‘em or race ‘em. We’re going to attempt to design games with a more complete sense of place or environment where the stories have both subtext and, hopefully, wit.”

At this point the company will not publicly discuss any of the titles planned or in development. According to Barrett, production costs for each of the first three titles will range from $600,000 to $1.2 million, with the costs coming down as the production methodologies and tools fall into place. Rocket Science plans to follow a Hollywood movie production model to fund title development. To that end, they are seeking advances against royalties for at least the first three titles.

A GAME THAT WILL BE WON BY STRATEGY

There is no question that the Rocket Science strategy has potential: the talent, money and infrastructure to create something truly different for the interactive entertainment market is in place. But the company has given itself a Herculean task on an extremely tight deadline.

In Peter Barrett’s own words, Rocket Science is “dead” if it cannot deliver game titles into the channel for Christmas 1994; first, because the video game business is so seasonal, it will mean waiting until Christmas 1995 to make its mark; and second, because at that point Rocket Science will probably need another cash infusion. None of the core team wants to see venture capitalists own more than the 50 percent they already possess; they would again be working for someone other than themselves.

The realities of meeting its goal are harsh. Even the most mundane CD-ROM titles traditionally require 12 to 18 months of development time; there’s no way of knowing how long it will take to develop the types of titles Rocket Science plans to deliver. In addition, the company is really still unpacking boxes. It only moved into its offices this month and is still setting up computers and bringing on more people — about six — before this year is over. All this commotion does not exactly create the type of environment necessary to establish that common-language Barrett is so earnest about developing.

Confident under pressure. Right now, though, he and the team are confident of success. They have storyboards for one of the titles and are in negotiations for the other two properties. According to Barrett, all three will be in development by this Christmas, with the help of a freelance design team who will be hired on a project-by-project basis. More importantly, he says, the Rocket Science team is a group of people — many of whom have worked together before — who have reputations for delivering solid products under amazing pressure.

“If you do a good job, and you do a good game, you can be a winner in this business,” says Barrett. “There is no Microsoft in the game market. This is still a hits business and we plan to make hits — lots of hits.”

Janice Maloney

VIRTUAL WORLD GOES FOR THE STORY
BattleTechies test new-style VR theme park in California

Virtual World Entertainment (VWE), creator of the virtual reality theme ride BattleTech, recently started expanding its horizons beyond shoot ‘em ups and opened Virtual World, the first in a planned worldwide chain of VR emporiums centered around the idea of creating stories and fantasy settings for virtual reality rides.

The first two rides featured at Virtual World’s Walnut Creek, CA, storefront site — BattleTech and Red Planet — are action-driven and relatively content free, as one might expect from this genre. But the company has created a complex fantasy environment for Virtual World — a kind of a stage set that extends beyond the boundaries of the rides themselves — that it hopes will provide a launching point for less clichéd styles of VR-based entertainment.

ENVIRONMENT MAKES THE DIFFERENCE

Virtual World is the creation of entertainment entrepreneurs Andrew Messing and Tim Disney, a great-nephew of Walt Disney, who acquired the majority ownership of VWE last year. Messing and Disney, CEO and chairman, respectively, paid an estimated $20 million for the company with the idea of expanding VWE’s successful BattleTech sites into multiplex centers that would appeal to a broader audience.

Although still early in the game — Virtual World opened in July — the company’s plan to create family theme parks built around VR appears to be on track. While most VR attractions draw a predominately male audience, VWE wanted to make Virtual World somewhere “where women would want to go too,” says Messing. “At BattleTech couples would go and get into arguments because he would want to go [play] and she wouldn’t.” Roughly 92 percent of the players at BattleTech, which features a dark, war-like environment, are male. At Virtual World, 40 to 50 percent of attendees are women, according to Messing.

So far the site is “successful beyond our dreams,” he says. More than 1,200 tickets were sold on opening day and the sales continue to be solid, according to Messing.

Building a mythology. For Disney and Messing, the key to creating a broader appeal for location-based entertainment was to develop an innovative story and fantasy setting around VWE’s existing software. To that end, the company is rumored to have spent more than $6 million in research and development to select and create the setting for Virtual World.

As the fantasy goes, Virtual World is home to the Virtual Geographic League, a secret society founded by Alexander Graham Bell and Nikola Tesla in 1895 to explore unimagined worlds. In 1990, the League board voted to open it to the public in order to raise funds for future explorations. Messing describes Virtual World as “Jules Verne meets Blade Runner.”

A league of their own. The history of the League surrounds participants in the Victorian era-style lobby. While waiting for a ride to begin or relaxing after the experience, attendees can peruse artifacts and photos on display. “We don’t force the history on anybody, but we have a complex history there for those that want to explore it,” says Messing.

The lobby area includes a bar serving “smart drinks” (don’t ask) and calzones, and a gift shop selling $250 leather jackets, souvenir pins and history books on the League. Tickets range in price between $7 and $9, depending on which day you attend the park.

The lobby is designed for comfort, which is a good thing considering on its opening week the wait was often between one and two hours.

The VR experience itself, which lasts about half an hour, includes an eight-minute introductory video starring Judge Reinhold and Joan Severance, 10 minutes of game playing and a review of the game. A blow-by-blow account of the game is printed out for players to take with them.

FLYING AND SHOOTING STILL AT THE CORE

There are two different rides to choose from at Virtual World: BattleTech, which is a war game in which players pilot a 30-foot robot-like machine over the dangerous terrain of a virtual planet and shoot it out with other players, and Red Planet, a racing game in which players pilot hovercraft-like vehicles over the surface of Mars.

Each ride can hold eight players at a time. In both games, players control the action from an encapsulated pod that has more than 100 controls (two are necessary for basic play), stereo speakers, an intercom to talk to other players and a high-resolution screen for displaying the action.

The singles bar of the future? Interestingly enough, the games are set up so that by the time new players are just able to grok how to play the game, their first experience is over. Thus, the temptation for these players to get back in line is great. VWE claims that some customers have played BattleTech more than 2,000 times.

BattleTech players also often hang out after games to talk about the experience even though the sites don’t provide a seating area. At the new Virtual World site — complete with seating areas — Messing envisions a social scene developing. “This could be the singles bar of the future,” he says. “It is an interactive experience where you play against seven other people. By the time you come out of the game to watch the recap, you have this kind of electronic bonding.”

SHOOT ‘EM UP TODAY, ‘WHIMSY’ TOMORROW?

According to Messing, the launch of Virtual World is just the first part of a long-term plan to fundamentally change the way VWE creates location-based entertainment content.

He says VWE plans to move away from developing adrenaline-pumping shoot ‘em up and racing action games in favor of more “whimsical” fare. The company is developing an underwater exploration adventure, which might allow players to begin a game where their last game left off, as well as a handful of other projects that are in the design phase.

Wide appeal. Among these is a “date” game, which Messing says is “very whimsical.” It may not attract the repeat play of BattleTech, but he believes it will be fun to play. “It’s really important to us as a company to develop software that appeals to many people,” says Messing. The company plans to release at least one new software package a year.

VWE’s plans to entertain fun seekers extends well beyond the suburbs of northern California. According to Messing, the company is waiting for real-estate deals to go through to open up seven more Virtual World sites. Centers in San Diego and Hong Kong will probably open by year’s end, with others in San Francisco, Los Angeles, New York, Toronto and Tel Aviv opening by fall 1994.

BattleTech goes to the movies? In addition, you can expect to see VWE’s content move from VR multiplexes to print and film. The company is committed to reversing the trend of using movie properties as the basis for VR experiences and video games.

Although he won’t disclose any details, Messing says VWE is very close to closing a movie deal — with an unnamed film company, though certainly Buena Vista comes to mind — based on the Virtual Geographic League story. The company is also in discussions with “two of the largest U.S. comic book distributors,” he says, who are interested in bringing the story of the League to comic book fans.

At this point, VWE’s plans are based on an unproven concept of developing detailed storylines and characters for VR. It will be interesting to watch how far the company is willing to pursue this vision beyond its extremely popular and profitable development VR war games. In addition, it will be interesting to see whether the broadened concept will continue to attract the repeat business that VWE has witnessed with BattleTech.

Amy Johns

THE AV MACS ARRIVE
They’re designed for digital media

Apple used Macworld Boston to unveil its much-discussed (and much anticipated) “Audio Visual” Macintoshes: the Centris 660AV and the Quadra 840AV. These are intended for applications that involve heavy processing of digitized data: image editing, digital video, music, sound and voice input/output.

They include a digital signal processor (DSP) integrated into the machine à la Next, composite video and S-video input connectors, a special microphone optimized for voice input (which is available as a separate unit or built into the housing of a new Apple Audio-Vision 14-inch color monitor) and Apple’s “Casper” voice-recognition technology.

We’ve often criticized Apple for the confusion created by its mind-boggling array of product lines and product permutations. The AV Macs add a new twist to the element of confusion. They are called Centris and Quadras, yet from a technological standpoint they bear little resemblance to the earlier line of Centris and Quadras, even sporting different motherboards. There are virtually no interchangeable parts between the old Quadras and the AV models, and the integration of DSP technology gives them a significantly different hardware architecture than that of any previous Macintoshes. We don’t know why Apple didn’t choose a new name for this new family.

Casper. We are impressed with the Casper voice recognition. At the demos we have received at the Apple development labs during the past couple of years, the thing that has always impressed us about Casper is how speaker-independent it can be. Unlike most voice recognition systems, a native English speaker with a North American accent can walk up to a Casper-equipped machine, talk to it, and the machine will recognize a remarkable number of words.

For the released product (officially named PlainTalk), Apple has elected to capitalize on this attribute. Unlike other voice recognition systems, this one is not trainable. It has been supplied with a phonetic dictionary that allows it to recognize an (almost) full range of Macintosh commands as spoken by a North American adult. (There will have to be other dictionaries for other parts of the world.) In short, as supplied by Apple it is intended as an alternative means of commanding your computer to perform functions rather than as a dictation-driven typist.

Controlling your computer it does remarkably well. Voice commands (except for really dangerous ones such as “erase disk”) are interchangeable with mouse or typed commands. They can even be incorporated into scripts and macros. At Macworld Expo, we found CE Software touting its latest version of QuicKeys, which is now AppleScript-compliant. We walked into a glass cubicle, where CE had set up 10 sample QuicKeys macros to be triggered by voice commands. Every one of them worked on the first try. Other show-goers reported the same result.

Speaker-independent voice recognition has long been a difficult technical challenge. There is, of course, a tradeoff: you can have speaker-independence with a tiny recognition vocabulary, or a large vocabulary that has been “trained” to one particular speaker, but not both. CE Software’s demo falls at one extreme on that spectrum, and would have commercial possibilities for kiosks and games.

We have heard rumors (but no announcements) that developers are writing dictation and speech transcription applications, which would fall at the other extreme. Such products would be of interest to publishers, but we suspect that they will be a while in coming.

Voice output. The other side of Apple’s PlainTalk speech technology is new routines for synthesizing speech from text input. We had originally seen this demonstrated a couple of years ago in the Apple Labs with a reading of Moby Dick. This is still computer-generated speech, and it can still mangle specialized words in amusing ways. However, it is a dramatic improvement over most previous systems.

What’s it good for? We have trouble seeing the value of voice input and output for normal office applications. The mouse and keyboard are faster for command input, and reading is faster than listening. However, voice I/O makes a lot of sense in situations where your hands are tied up doing other things, or where you cannot look at the screen and would rather have the computer read things to you. The technology also makes sense for kiosk and other consumer applications.

Voice input can be a big help for people who have trouble using a mouse or a keyboard. Voice output can be vital for people who are visually impaired. However, the Apple software out of the box does not provide the kind of comprehensive facilities for visually impaired people found in systems such as the one IBM developed in conjunction with Recording for the Blind.

Video processing. The AV Macs will accept video input in NTSC, PAL and SECAM formats. As you would expect, QuickTime movies can be captured and played with larger frames and faster frame rates than are possible on non-AV Macs. However, these machines are still not up to processing full-frame, 30-frame-per-second video.

A new Digital Audio Video (DAV) connector allows external add-on devices to access the Macintosh digital audio and video information. This will almost certainly encourage a new crop of add-on compression and digital audio/video processing cards.

Sound. The DSP allows the AV Macs to process 16-bit stereo sound at the full 44.1-KHz audio-CD sampling rate. These are the first desktop computers able to do this.

Telephony. If the computer can handle CD-quality sound, fooling a phone system should be a snap. AV Macs have the built-in ability to emulate telephones, data modems and fax machines. An optional external box called the GeoPort Telecom Adapter performs the necessary analog-to-digital conversions. Accompanying software running in the Macintosh does the rest. It will support standard protocols up to V.32 running at 9,600 bps.

Some of the applications for this technology are built-in fax software — both send and receive — bundled with the machines and the ability to use a Macintosh as a digital answering machine/speakerphone. (Just to put things in perspective, AT&T makes a very nice System 1337 digital answering machine that sells for less than $100.)

The AV Macs have been eagerly awaited by many of the key developers of publishing applications. The machines are expensive, but the developers who have been using them are convinced that high-end users will flock to them, especially for imaging and video applications. It is less clear how widely the voice recognition and speech synthesis features will be used until they find their way down to less pricy computers. But the AV machines will probably be good test-beds for voice technology, and once you have gone to the expense of building in the DSP technology, the voice capabilities add very little incremental cost.

Peter Dyson

COMMUNITY NETWORKING IN COLORADO
The gathering of the virtual tribes in Telluride

The idea of rural telecommuting as part of an intelligently planned process of sustainable growth is a seductive one. People who work with symbols and communications dream of troutstream and telecommuting. People who live in beautiful countryside wonder how to increase their economic base without ruining the characteristics of the geographical community that attracted them to small towns in the first place.

Dave Hughes has been spouting off about his electronic cottage at the base of Pike’s Peak for more than a decade; Hughes, with Frank and Reggie Odasz, was responsible for creating Big Sky Telegraph in Montana, a web of BBSes, conferencing systems and databases linking one-room rural schoolhouses, Indian reservations and colleges.

Pioneering a virtual community. Community networking, from Santa Monica’s PEN system to the Cleveland Free-Net, inspired dozens of second-generation pioneers. People like Steve Cisler, Mark Graham and Richard Civille were seeding, toolbuilding and spreading the word about the way virtual communities could help real geographical communities work more effectively and democratically. The Community Networking electronic mailing list leaped into life with dozens of people coming out of the Internet to announce community projects all over the world. (For more on virtual villages, see “Innkeeping in Cyberspace,” Vol. 2, No. 1, p. 2.)

A FESTIVAL OF IDEAS FOR NETWORK EVANGELISTS

The timing couldn’t have been more perfect for Richard Lowenberg, who invited dozens of community networking evangelists to visit Telluride, Colorado, in late July, for an “Ideas Festival.”

The Ideas Festival was to be a three-day gathering of outside consultants and local citizens interested in creating a “Telluride Info-Zone,” a combination of low-cost, high-speed telecommunications access and community networking. Telluride already had a reputation as a still-somewhat-authentic mining town set in a huge box canyon of mind-boggling beauty. It was too remote, with its tiny airport, to go the way of Aspen.

But many people who encountered the special magic of the place when they attended the world-famous Telluride Film Festival or the Jazz or Bluegrass or Chamber Music Festivals (the locals have been known to throw a “nothing festival” on rare occasions when another festival wasn’t happening), have entertained the same thought that hit me when I first drove into town: Here is a charming old Western town at the foot of a beautiful, aspen-forested ski-slope, dwarfed by the cliff and waterfalls beyond it. If I had a connection to a high-speed Internet line, I could work here and fish half the day.

That seemed to be part of what was motivating the Telluride Institute, sponsors of the festival. Lowenberg’s associates from the Telluride Institute are involved in planning a real-estate development on a large meadow outside Telluride called “Skyfield,” a fully networked development of “trophy homes” and affordable housing.

Could people make a living in Telluride, plan growth in an intelligent manner, and still stay in touch with the world by connecting with the digital superhighways? The people invited, including the above-mentioned Hughes, Graham, Cisler and Civille, were there to inform and argue with Telluride citizens about how the Info-Zone ought to be planned.

It was fun to pull into town, walk to the basement of the city’s ancient, tiny opera house, and see half the people I only ever see online gathered around computers, or talking in animated groups.

The invited expertise was impressive, with large contingents from the Whole Earth ‘Lectronic Link (WELL) and fortuitous local invitees like Lewis and Ann Branscombs of Harvard’s Kennedy School of Public Policy. Gene Youngblood, who wrote an interesting book called Expanded Cinema some 20 years ago, made one of his guerilla forays out of Santa Fe; and Kit Galloway and Sherrie Rabinowitz brought the global Electronic Cafe, a live videolink over ordinary telephone lines between Telluride and Paris, Copenhagen and San Francisco. Randy Ross, an American Indian telecommunications activist, was impressive. People from US West weren’t afraid to stand up and speak out with the rest, and the locals were there too, from retirees to urban expatriates. It was a good mix, and it got off to a great start when Lowenberg introduced Doug Carmichael of Metasystems Design Group (who had helped set up Santa Monica’s PEN system). Carmichael claimed that he knew a sure-fire trick for making sure a group like this set its own agenda. He turned out to be right.

Setting the agenda. Carmichael pointed to a big bulletin board behind him on the small stage of the performance space of the Telluride Opera House. There were signs set at intervals along the top of the bulletin board: Friday and Saturday. There were a bunch of sticky notes with times written on them. Also on the stage were big pieces of paper and colored markers. If you want to discuss a subject, Carmichael explained, you write that subject on a big piece of paper, pick one of five possible locations, and pin it up under one of the days. Then put the sticky notes on the paper to indicate times. If people had intersecting topics, they could merge. Sticky notes could be traded. In 15 minutes of animated milling, we had an agenda.

A virtual version of the Ideas Festival had been happening on the WELL for several weeks before people converged in Colorado. Those locals who had been learning to communicate from the temporary Internet site in the Opera House basement were able to join discussions with Wellites all over the world, including community networking groups from the U.S. Northern Rockies and from Austria.

Reverberation happens. When the people in Telluride broke into discussion groups, each group selected a reporter, who entered the report into the WELL, so those who were only in Telluride in their disembodied form could read and comment. It worked amazingly well. The mix of outsiders and locals, the technological infrastructure, Lowenberg’s ringmastery, the feeling of what a hopeful and potentially powerful time and place Telluride in the 1990s could be, all made for a sense of things happening here and now that would reverberate far beyond the Opera House in July 1993.

EQUAL ACCESS, SOCIAL CONTRACTS AND DESIGN

Emerging themes were:

• Ensure equity of access before you open up for business;
• Educate people in the unique properties of many-to-many messaging;
• Allow a local culture to emerge, but don’t be cut off from the global conversation;
• Social contracts and rules of behavior are best argued early and long before making any decisions;
• There are pitfalls and benefits to the way people behave in cyberspace, and the better these are known, the less pain is involved in learning about them;
• Top-down design is unworkable, don’t even try; and
• Learn from previous experiments.

Telluride is wealthy — a small wooden house in downtown Telluride is half a million dollars — and isolated, and mostly white. It isn’t the paragon for rural telecommunities, but it is — by virtue of the way it has invited the world to watch — an example of telecommunity.

The success or failure of the Info-Zone won’t be known for a few years. And whether doubling the size of the population that can live in Telluride’s natural splendor without spoiling that splendor remains to be seen. The Info-Zone and Skyfield are experiments worth watching.

Howard Rhinegold

(Howard Rhinegold’s book, The Virtual Community: Homesteading the Electronic Frontier, will be published by Addison-Wesley in October.)

COMPTON’S SOLD FOR $57 MILLION
Tribune Co. won’t bother present management

The long anticipated and much discussed sale of Compton’s New Media is nearing completion. After being pursued by most of the big entertainment players, including R.R. Donnelley, Paramount, Disney and Sony, among others, Encyclopaedia Britannica and the Compton’s management team have agreed to sell Compton’s to the Tribune Company, parent of the Chicago Tribune, WGN (the television “super-station”) and the Chicago Cubs baseball team. A letter of intent has been signed to purchase the multimedia publisher-distributor for $57 million in cash. The deal is expected to close by the end of this month.

According to Stanley Frank, president and CEO of Compton’s, who, along with Compton’s general manager, Norm Bastin, will remain in charge of the company, the change of ownership from Encyclopaedia Britannica to Tribune is a positive step for Compton’s. The company was “under financial constraints” under EB, he says, and the Tribune organization has made it clear that it will be “very supportive about growth and producing new titles.”

The deal will enable Compton’s to “support everyone signed and under contract” with the organization, said Frank. Compton’s currently publishes approximately 50 titles, most of them CD-ROM-based. It is also the distributor of another 80 titles through its affiliated label program, which remains a big part of its business. It has a 40 percent share of the CD-ROM marketplace in retail distribution, and the company has tripled its growth this year. According to company representatives, Compton’s expects business to double for the next few years.

Surprisingly, Frank does not expect that growth to come from titles developed for the new platforms such as the 3DO Multiplayer. Instead, he expects the company to derive substantial growth from the existing CD-ROM-based computer platforms, including Macintosh and Windows.

Despite slow market acceptance for such products, he staunchly believes the market for computer-based systems for the home — as opposed to television-based systems — will triple or quadruple during the next year. He equally firmly believes that the only thing holding that growth back is not that people aren’t buying CD-ROM drives, but that there simply aren’t enough of them to buy. “If the world can manufacture as many CD-ROM players as everyone wants, then the world will be a rosy place,” he says. (To say we are uncertain about the accuracy of this assumption would be an understatement.)

In addition to increasing title development, Compton’s plans to develop new technologies and improve its core publishing tools, including the SmarTrieve natural language search engine. (Frank denies the rumors that SmarTrieve, which is considered one of Compton’s major assets among the interactive publishing community, was not included in the purchase. He added, however, that the deal was not yet final.)

The company also plans to expand through acquisitions. Although at this point, neither Tribune or Compton’s management will publicly discuss any of their outside negotiations, they did confirm that they are interested in purchasing companies with content and/or technology that is deemed a compatible fit with Compton’s existing product line.

If it ain’t broke… For Peter Black, president of Xiphias, a multimedia software developer distributed by Compton’s, the “Tribune does indeed appear to be the perfect partner. Tribune is a relatively bland participant, and at this stage of the year that’s particularly important,” said Black. “To have a bunch of young, suspender-clad executives come in and say ‘This is how we are going to do things,’ is what worried me.” In other words, Black hopes Tribune will leave Compton’s alone, at least until after the Christmas selling season, when approximately 70 percent of all CD-ROMs are sold.

According to insiders at Compton’s, Tribune does not plan to muck with the multimedia publisher’s distribution system — which includes its ground-breaking CD-ROM rental program through Major Video Concepts as well as its recently announced library lending program — even after the Christmas season is nothing more than a fond memory. It was in fact Compton’s established name in the retail channel that had so many companies in the entertainment industry checking it out while it was still on the selling block.

With this purchase, Tribune immediately becomes a player in the interactive media market. Whether it leaves Compton’s to develop on its own (which is unlikely) or becomes more directly involved in the interactive publishing and media creation business (and we have already heard of many plans in the works), Tribune’s vast holdings and deep pockets will no doubt make a strong impression on this emerging field.

David Baron

USE A MORPH, GO TO JAIL
Professor questions morphing copyrights

Morphing is the process of gradually transforming one image into another by means of a computer. The automobile that changed smoothly into a running tiger was one of the first uses of morphing in a television commercial. Michael Jackson’s famous music video Black or White showed more than a dozen consecutive morphs of men and women of a variety of races changing into one another. Jackson changed from a black panther (the animal) to himself and back in the video. But morphing creates an unusual intellectual property problem: Who owns the copyright to a halfway-morphed image that combines equal parts of two images copyrighted by others?

Bearing in mind that one should obtain legal advice only from lawyers, here are some things to consider before you publish a morphed image. They are based on an explanation given by Paul Goldstein, a professor at Stanford Law School, during a recent seminar on intellectual property law hosted by the San Francisco Multimedia Development Group. Goldstein is the author of the three-volume reference Copyright: Principles, Law and Practice. He’s also counsel to the law firm of Morrison & Foerster of Palo Alto and San Francisco, a provider of legal services to the interactive media industry.

Images cheap, but tricky to work with

Morphed images catch your eye because you’re not sure exactly what you’re looking at. In a morph created from pictures of two famous people, you may think you recognize the face of a celebrity but not be sure which one. Morphs make good visual hooks on print ads and magazine articles. Initially, morphing required fabulously expensive proprietary software and powerful graphic workstations.

Now anyone can buy programs for about $100 that will morph one full-color still image into another on a PC, Macintosh or Amiga. (Gryphon Software’s Morph for the Mac and Windows is one example.) But don’t assume that just because you “created” a morphed image yourself with your own computer, you have the right to use it in any way you wish.

Derivative works. Do you need permission from the owners of copyrights to the images you combine in a morph? Yes, and they may want royalties. Worse, the morph is a “derivative work,” i.e., an adaptation of a pre-existing work, not a simple reproduction. So, if the original picture is recognizable in the morphed image, the owners might sue you if they don’t like the result. It may avoid trouble to show them the morph first and get their permission to use their work in a precisely defined way.

Multiple images can be combined into a single, final morphed image. But separate permission must be obtained for each copyrighted original image. Let’s say you start with a picture of Odo the shape shifter from the television show Star Trek: Deep Space Nine. Combine that with a picture of his snaggle-toothed little friend Quark, the Ferengi gambling den operator, to give a morphed image that looks a little like both of them. Then combine that morphed image with a picture of the beautiful Counselor Troi from Star Trek: The Next Generation. The resulting three-way morph would resemble all three characters at once and require three use permissions. (To see some examples of characters from these shows morphed together two and three at a time, look at the last page of the August 1993 issue of New Media magazine.)

WHO OWNS A NEWLY MORPHED IMAGE?

If you do manage to get all the required permissions, do you finally have a copyright to your morphed image? It depends on how the morphed image looks. A derivative work is protected by copyright “except to the extent that it incorporates subject matter that infringes a copyrighted work,” according to the law. That, in turn, depends on whether it “reflects substantial similarity of expression to the original images.”

So, strange as it seems, if someone can recognize Odo’s photo in your morph of him with Quark and Troi, that could cost you a copyright. In practice, the copyright office (or a court if things go badly) has a list of very specific ways in which one image can infringe on another. It determines how much of each occurred, and denies your copyright if it judges the total to be excessive. You can still publish it, if you don’t mind losing control over its use.

Conclusion. The situation’s not as bad as the headline of this article suggests. But you should have a talk with a lawyer who’s up to date on today’s digital media magic before you publish that morph of Mick Jagger to Sinead O’Connor.

William T. Park

VIDEO IN THE 1990S
AT&T VP banks on visual products communication

Video products will have more influence in the 1990s than personal computers had in the 1980s. This was the message delivered by Curtis J. Crawford, VP, AT&T Microelectronics, at a recent meeting of the International Disk Drive Equipment Manufacturers’ Association (IDEMA) in San Jose, CA.

Crawford believes that the union of the entertainment, computer and communications industries will result in a flood of digital visual communications products that will require orders of magnitude increases in storage density, processor speed and memory size over technology available today. In the slow-moving, pre-electronic days, saying that a technology was two or three orders of magnitude away from practicality used to mean you were talking about wild-eyed science fiction; in the overheated ’90s, it just means that strategic planners will add that technology to their short list of things they had better “do something about” in the next two-year plan.

Business first. In digital video, Crawford said, almost everything we do during the next 10 years has the potential to create a new market. He thinks business will be the early adopter of desktop video as an effective time- and money-saver for those business meetings that would ordinarily require getting on a plane. A great many more meetings should then take place because they’ll become easy and cheap enough; that, in turn, means improvements in market responsiveness, productivity and the bottom line.

But the key to a useful videophone product, Crawford believes, is document sharing; being able to look the other guy in the eye may aid communication and relationship-building, but you rarely get on the plane without a briefcase full of papers. And if you can’t easily show the other person those papers (viewgraphs, slides, videos, flip charts…) on the video screen, and point to things on them and mark them up, and make copies — well, then you might as well call the travel department again.

WORKING OUT THE SOCIAL CONVENTIONS

Crawford says video phones will make their way into the home after people get used to them at work. As a society, we’ll need even more time to work out the basic social conventions, products and services that people will need simply to avoid looking awful when someone calls.

AT&T, MCI, Nippon Telephone and Telegraph and others have already announced videophones. But until their frame rates increase enough to allow “real-looking” full-color images, the MTV generation will find them more distracting than enabling.

Image compression/decompression hardware will tide us over until wideband fiber optics solve that problem for good in the next few years. After that, Crawford expects video products to penetrate society rapidly. Five years after their introduction, he expects digital cable boxes to sell at the rate of four million per year, digital broadcast satellite receivers at one million, high-definition televisions at two million, digital VCRs, laserdiscs and camcorders at four million.

But he thinks the kids will produce the really big market numbers: six million networked interactive video games and 12 million CD-ROM video games per year! By the end of the decade, Crawford expects video phones to be completely accepted and selling in the tens of millions per year. You think your kids spend a lot of time on the phone now? Wait until you see your phone bill when they can show each other clothes, pictures, swap music videos and play multiplayer video games on the phone.

William T. Park

SGI’S INDY TAKES AIM AT PC MARKET

Silicon Graphics Inc., the maker of high-end computer graphics workstations for the scientific/engineering and entertainment communities, has taken a giant step in its march toward the low end with the recent introduction of its Indy computer.

Indy, a smaller sibling to SGI’s well-received Indigo, takes aim at the PC market, especially the “digital media” computers recently announced by Apple (see p. 15) — even to the extent of sending out a “Perspective on Apple Announcements” to the press the week before Apple unveiled the new AV computers.

MAKING PROGRESS

However, SGI has made phenomenal progress toward making its Unix-based workstations more accessible to mortals (i.e., non-programmers). First, the price tag is less than $5,000 (this doesn’t include a mass storage device, but does include the monitor), an impressive price for the sophistication of the technology upon which it is based — SGI’s MIPS R4000 RISC chip and a box packed with technology designed to aid the creation and manipulation of digital media.

Second, it has come up with a user interface, called Indigo Magic, which is still a bit more opaque than the Macintosh or Windows, but appears quite easy and fun to use in demonstrations (we haven’t actually used it ourselves yet), and is designed to be customized to each individual user’s preferences.

Video camera standard. Third, SGI is the only company shipping a video camera with the system (under heavy David Letterman influence, SGI has named it the IndyCam), codeveloped by Teleview Research of Palo Alto, CA. Indy can bring video into the system at a full 30 frames per second from any video source, not just from the IndyCam, but the camera in combination with Indy’s standard Media Mail application is likely to increase the creative use of video in business applications. Digital sound editing is also supported.

Indy can read/write Macintosh or PC disks or coexist on Novell and LocalTalk networks, and is Photo CD compatible. In addition, even though the system is much less powerful than SGI’s high-end computer graphics machines, a powerful suite of tools is immediately available to the Indy owner. It is compatible with SGI’s entire product line, including Onyx supercomputers and Challenge network servers. Thus it can take advantage of SGI’s formidable software libraries, which are used by some of the world’s greatest researchers and special-effects creators.

Not a PC, alas. Despite its lower cost, sophisticated media capabilities and friendlier interface, Indy is still aimed primarily at SGI’s traditional user base — i.e., computer-aided design firms, software developers, media authors and researchers. The new machine will doubtless push Macs and PCs out the door in these particular industries.

However, Apple and Microsoft have nothing to fear from SGI for broader markets, at least not in the computer market. (Digital TV settop boxes, of course, remain an open question.) Most noticeably, Indy is not shipped with a CD-ROM drive, which is becoming de rigueur in the home/office market. Beyond that, it remains tethered to that most befuddling of network systems, Ethernet, which has not been made easy to use. One of Macintosh’s best-loved and best-selling features (and one that the PC industry is increasingly trying to provide) is its “plug-and-playability,” a critical feature as the more “personal” personal computers move down the customer food chain to the technophobic.

Denise Caruso

>BRIEFS
WILL KALEIDA GO THE WAY OF CLARIS?

When the news came down late last month that Nat Goldhaber had been deposed as president of Kaleida Labs, many were dismayed to hear the (ostensible) reason: that Goldhaber had wanted to take the company public, but IBM and Apple — Kaleida’s parent companies and chief source of financing — had nixed the proposition.

Those familiar with the personal computer industry may have immediately thought that Kaleida would go the way of Claris Corp., Apple’s once high-flying wholly owned subsidiary that has since completely lost its edge after Apple decided to reabsorb it into the larger corporation.

But Michael Braun, the IBM VP of multimedia and Fireworks Partners that took over Goldhaber’s position last month, said that taking the company public is not out of the question. “The IPO is a timing issue, that’s all,” he said.

Goldhaber’s departure came at a curious time: Kaleida had just completed a very public, well-received unveiling of an operational version of ScriptX at June’s Digital World conference.

Braun wouldn’t discuss rumors about behind-the-scenes politicking inside Apple and beyond that supposedly led to Goldhaber’s departure and Braun’s new position, but he said he did have some short-term goals for the company to help restore morale and renew the company’s focus.

First, he’ll make some minor adjustments in how the company perceives itself. Today, he said, Kaleida perceives itself as a multimedia technology company. It is not, according to Braun. It is a system software company. And its business is not creating standards, he says, but selling products — products in the form of custom ScriptX ports for individual hardware manufacturers.

A renewed sense of corporate mission cannot do anything but help Kaleida right now, which has been nose to the grindstone bringing ScriptX up to snuff. However, Braun did not address how Kaleida intends raise its flag as a system software company when its two parents are both in the same business, or what will happen when Kaleida and Apple lock horns over their competing interactive TV systems. He certainly has his work cut out for him.

CONTINUUM SHIFTS FOCUS, ARNOLD GOES TO MICROSOFT

In a surprise shakeup earlier this month, Continuum Productions Corp. — once known as Interactive Home Systems, also known as “Bill Gates’s other company” — has sold much of its technology and product development to the motherland at Microsoft.

Continuum’s president, Steve Arnold, is also expected to move to Microsoft as part of the shift. When announcing the change in direction for the Bellevue, WA-based company, Gates claimed that only some “previously unannounced research and product development” would be moving to Microsoft. It’s widely speculated that the research and product development he was referring to included most of the nascent work that Continuum was doing in the titles arena. More than half the staff will stay at Continuum and continue to acquire rights to digital media, while the other half will move over to Microsoft.

Continuum is actively searching for a president to continue the company’s foray into developing digital archives and “mediabases” of photographic images, video footage, sound clips and other media types. The company already has several contracts with museums and libraries to digitize their archives.

Though the sale certainly must be causing upheaval inside Continuum itself, the shift of technologies to Microsoft is probably a prescient move. As Continuum proceeds with plans to develop interactive multimedia titles, it increasingly treads upon Microsoft’s turf, and with Gates as chairman of both companies, there was bound to be a day of reckoning with Microsoft’s shareholders.

NINTENDO’S SERVICE FOR CAPTIVE AUDIENCES

Nintendo of America Inc., the U.S. arm of the Japanese game manufacturer, which is the largest in the world, recently revealed its plans to move beyond the home entertainment market.

As Digital Media was going to press, the company announced its Nintendo Gateway System that when completed is expected to deliver a broad range of entertainment services, including video games, movies, CD audio, telephone, shopping and informational services, such as airline gate and baggage data, to travelers on airplanes, cruise ships and in hotel rooms around the world.

The system, which has been in development at Nintendo’s research labs in Redmond, WA, for 18 months, is based on a special version of Nintendo’s popular 16-bit Super Nintendo Entertainment System combined with “digital communications technology.”

According to Nintendo, Hughes-Avicom International has contracts with Northwest, Virgin Atlantic and China Airlines to install the Nintendo Gateway System, which requires that an LCD -based monitor be installed in each of the seat backs on the plane.

As a test, a Northwest Airlines 747 has already been equipped and more than 20 additional planes are scheduled for installation before the end of the year. Negotiations with several other carriers are ongoing, according to Nintendo.

(It also sounds very much like the system that IBM Corp. has in development, and that Robert Carberry of IBM’s Fireworks Partners detailed at the Digital World conference in June. See Vol. 3, No. 2, p. 5.)

Hotel and cruise ship applications are being introduced initially by LodgeNet, an international organization that supplies entertainment services to 250,000 hotel rooms in North America. LodgeNet will be installing the system in 10 hotel sites this fall from its network of 1,900 locations, which include Sheraton, Doubletree and Embassy Suite Hotels, among others.

LodgeNet’s initial sea-based contract is with Holland America Line-Westours Inc. The 120-year-old company runs cruise ships throughout the Caribbean, South Pacific, Orient, Europe and Alaska.

“We’ve selected the traveler for the first application of this technology because it simply isn’t available to them now in a unified package,” says Russell Braun, Nintendo’s manager of engineering. “By the end of the first full year of operation, we will deliver services to 20 million people away from the home.”

Braun added that widespread installation of fiber-optic cables and improvements in the digital compression of video signals could lead to “even wider potential applications of this same SNES-compatible system in the years to come.” That sounds very much like a Nintendo settop box to us.

AT&T BUYS INTO SIERRA NETWORK

AT&T, which has formed more than 20 strategic alliances for interactive services, recently announced the purchase of a 20 percent equity stake in The Sierra Network, an interactive game network for personal computer users that is owned by Oakhurst, CA-based Sierra On-Line.

The Sierra Network, which has 40,000 subscribers, will be renamed The ImagiNation Network, Inc. The agreement allows for AT&T eventually to assume a controlling interest. (This is similar in principle, at least, to AT&T’s investment in McCaw Cellular.)

The deal is part of a larger strategy at AT&T to redefine its business and enter new markets, especially networked interactive multimedia entertainment. AT&T is an equity investor in the 3DO company. The company also recently entered into an alliance with Sega and PF. Magic to launch a low-cost platform, code-named The Edge 16, which would allow multiple-user video game play over regular telephone lines.

By terms of the agreement, AT&T will provide an additional $3 million for The ImagiNation Network to support access via The Edge 16 and from the 3DO Interactive Multiplayer.

In addition, AT&T will pay Sierra On-Line $5 million to develop content for the network. The network will be managed by a board of directors representing AT&T, Sierra On-Line and General Atlantic, a private investment firm that recently purchased a 20 percent equity stake. No changes in management at The ImagiNation Network will be made at this time, according to AT&T.

Rick Selvage, AT&T Consumer Products VP and general manager of interactive systems, is responsible for the coordination of development efforts between AT&T and The ImagiNation Network, as well as with other alliances in this area. (Selvage is the former president of SkyPix, the direct broadcast satellite company that’s now in Chapter 11. He joined AT&T in May.)

In the announcement, Bob Kavner, AT&T executive VP and chief executive officer of the newly named Multimedia Products and Services Group, addressed AT&T’s strategy. “This alliance is exactly the type of relationship AT&T’s recent reorganization was meant to promote,” he said. “Our group’s charter is to pursue opportunities — even new industries — that result from the convergence of computers, communications, consumer electronics and entertainment.”

HBO INVESTS IN CRYSTAL DYNAMICS

Home Box Office, a division of Time Warner, is banking on interactive video games having a place in our future. America’s most successful pay-TV service recently invested a rumored $7 million in Crystal Dynamics, a Silicon Valley-based startup that builds shoot ‘em up type driving and flying video games.

Similar to AT&T, which purchased 20 percent of The Sierra Network (see previous item), Time Warner is attempting through such investments to line up the key proven applications that will pay for the new digital technology. And games — based on today’s soaring sales charts — are an obvious winner.

“This deal will secure our position in the evolving multimedia landscape of home entertainment,” said Michael Fuchs, chairman and CEO of HBO, which now holds a 10 percent equity in Crystal Dynamics. “As we see it, Crystal Dynamics will be pioneers in this marketplace, and we’re excited about playing a part in what we believe will be a highly successful venture.”

We doubt Crystal Dynamics will be a pioneer in this marketplace, unless something drastic is about to change. To date, the Palo Alto, CA-based company has only demonstrated titles that are entirely typical of standard-brand video games — mindless and violent. It will be interesting to see if HBO’s involvement in the company — Jeff Bewkes, president and COO of HBO will now sit on Crystal Dynamics’ board — will shift the focus of Crystal Dynamics’ content development.

TIME, DISNEY, COLUMBIA PICS AVAILABLE ON AOL

America Online has done it again. The Vienna, VA-based publicly held online information service, which is recognized as the fastest growing electronic service of its kind in the United States, recently announced that Time magazine and Disney Adventures magazine have joined the growing number of media organizations now distributed through AOL’s media alliance program.

Time, which is expected to go online next month, will be the first general interest magazine to provide an electronic forum in which readers can actually chat with the writers and editors of the publication online. (Though how anyone on a magazine staff has time for such back-and-forth, we don’t understand.) For $9.95 a month, subscribers to Time Online will have five hours of access to the electronic version of the magazine —before it hits the newsstands — the electronic bulletin board, where they can carry on two-way conversations with the staff from Time, and various other services. Additional time (pun intended) will cost $3.50 an hour.

On the lighter side, AOL will also distribute Disney Adventures, magazine for kids (ages 7–14) with a readership of more than 4 million. The publication, which features celebrity interviews with people such as Michael Jordan, Michael Jackson and Cindy Crawford, is expected to be available through AOL this month.

In addition to delivering the actual magazine’s stories online, the Disney Adventures staff plans to hold daily focus groups involving 20 to 30 kids to talk to about newsworthy issues or ideas.

Larger “auditorium” sessions that could potentially include thousands of AOL subscribers are also in the works. Disney plans to use these open forums for special events such as live celebrity interviews and how-to sessions, such as how to publish a magazine, create a comic strip or write articles.

In addition to bringing traditional print media online, AOL, in conjunction with Teleflix, recently launched the Hollywood Online service, which will feature sneak previews of current films.

Subscribers who enter the Hollywood Online forum can download movie posters, free passes and full-motion trailers of hit movies, such as Columbia Pictures’ In the Line of Fire. In addition, individuals who want to know all there is to know about the film can access production notes, still images, and background material on the stars of the film.

According to AOL, upcoming features include clips from Needful Things, adapted from Stephen King’s best-selling novel; Martin Scorsese’s Age of Innocence; and Striking Distance, which features Bruce Willis.

According to some of the more than 170 subscribers who have used the Hollywood Online service, it might be quicker and cheaper to actually go to the movies if you really want to watch the previews. On average, it takes about an hour to download a clip from In the line of Fire.

KERREY CHAMPIONS ELECTRONIC LIBRARIES

U.S. Senator Bob Kerrey (D-Nebraska) introduced a bill to Congress that would allocate money to states to develop electronic library systems. The bill, called the Electronic Library Act of 1993, or S. 626, would encourage states to develop interactive electronic archives and multimedia information systems in conjunction with schools, libraries, local government and the private sector by providing start-up funds to state programs that follow the bill’s guidelines.

Funding would be administered by the National Science Foundation, which would work with other federal agencies, including the Department of Commerce, the Defense Advanced Research Projects Agency (DARPA) and the Department of Education.

Kerrey called for an allocation of $10 million in fiscal year 1994, $25 million dollars for 1995, and “such sums as may be necessary” in each following year. One of the requirements of the bill is that at least 30 percent of the total cost of the grant be matched by state or private funds in cash or kind.

The electronic libraries envisioned by Kerrey’s proposal would provide computer hardware and software technologies that allow access to educational programs; federal, state and local government information; university research data; and bibliographic information from the Library of Congress. There would also be production facilities for the creation of computer graphics and customized educational software programs.

These systems would be connected to the Internet and the National Research and Education Network (when it is established), and allow dial-in access from homes, schools and community outlets. In addition, each plan granted funds through this bill would commit to participate with the National Science Foundation (NSF) in ensuring interoperability of the different systems.

S. 626 is one of many pieces of legislation that has been introduced to integrate new technologies to the many problems facing this country. In introducing the bill to Congress, Senator Kerrey made clear that this legislation “does not focus exclusively on schools. State electronic libraries will be a resource for schools, businesses and households.”

A critical component to the bill is the access not only to educational information for schools, but also state and local political databases and other information made available through data networks like the Internet, for all citizens.

He was also clear that there are enormous problems in implementing technology today, when communications and technology are changing so quickly, funding for such projects in communities and schools is at its lowest and not enough people understand what can be accomplished with it.

However, “the worst thing we could do is to create a cult of technologists,” he said. “The most important element of this entire program is to make certain that human values determine use. Human beings were meant to be more than efficient shoppers and informed selectors of the latest game or entertainment choice. Communications technology should serve higher needs, too.”

The bill, submitted jointly by Kerrey and Senators Exon, Moynihan, Bradley, Hatfield, Daschle, Bingaman and Lieberman, was referred to the Committee on Commerce, Science and Transportation, where it will be debated before moving on to the full Senate.

SONY’S MINIDISC FOR DATA: IT’S ABOUT TIME

Two years after the introduction of the MiniDisc audio system, Sony announced it is developing a data storage system based on the technology. Sony hopes the new data storage medium, called MD DATA, will become a standard in the portable computing and personal communications industry. (We, of course, suggested this when Sony launched the MiniDisc in 1991. See Vol. 1, No. 1.)

The MiniDisc is a 2.5-inch disc that can hold up to 140 megabytes of data, or 2,000 frames of still color images. Both writable and prerecorded versions of MD DATA will be developed, according to Sony.

Three disc types are under development: a premastered MD DATA, called MD-ROM, for electronic publishing and prerecorded software applications; a recordable format, called Rewritable MD, for personal storage applications; and a hybrid disc, called Partially Rewritable MD, for interactive applications.

MD DATA is facing an uphill battle for widespread acceptance. First, Sony must convince third-party optical media and drive manufacturers — that have survived the continual format wars of the computer and consumer electronics industries — to adopt yet another new standard. Sony believes the new format has a strong chance for success based on the company’s success in licensing the MiniDisc audio technology. According to the company, more than 60 hardware and media manufacturers, including Aiwa, Sharp and Sanyo, have licensed the system. (For a review of the MiniDisc audio system, see Vol. 1, No. 2, p. 23.)

The real question is who will buy the new system. In its favor, the medium is compact and stores more than 100 times the capacity of a floppy diskette. As with manufacturers, Sony must convince consumers to adopt MD DATA as a standard.

The medium also has some limitations that may hinder its acceptance. It has a relatively slow data transfer rate of 150 KB per second, meaning access times are slow and it does not support full-motion video. Additionally, the 140-MB data storage capacity will not accommodate much video. (Double-speed CD-ROM drives have data transfer rates of 300 KB per second and 640 MB of storage capacity. However, 5-inch CD-ROMs are considered too large to serve the mobile computing market.)

Sony claims the MD DATA file system will facilitate compatibility between different platforms and operating systems. Once MD DATA system software is installed into the computer, information written onto MD DATA discs can be retrieved and modified by both Macintoshes and PCs, according to the company.

No cost projections for portable MD DATA recorders and players have been released. MiniDisc audio systems sell for a suggested retail price of $749 for a consumer recorder/player unit and $549 for a player system. According to Sony, blank MD DATA discs are expected to cost “slightly higher” than MiniDisc audio, which sells for a suggested retail price of $17.

MOTOROLA AND CABLELABS DEVELOP PCS FOR CABLE

As handheld personal communication devices and mobile computers arrive in markets, the communications and computer industries are exploring possible options for sending wireless data and voice transmissions. The cable industry has been active in research and development of cellular and personal communication services, or PCS, technology that would enable its coaxial, cable-based system to offer such services.

To advance this effort, CableLabs, research and development clearinghouse for the cable industry, is teaming up with Motorola, one of the largest manufacturers of mobile radio equipment in the world, to evaluate alternative solutions for the integration of cellular and personal communications services mobile radio systems with cable’s broadband network.

The project will include theoretical analysis of PCS and cellular technologies as well as field trials in CableLabs’ headquarters in Boulder, CO.

In early stages, the teams will focus on the definition of suitable cable architectures for transmission of PCS baseband and RF signals utilizing fiber-optic and coaxial distribution technologies. Further along in the project, field trials will be conducted to test theoretical findings and to find ways of optimizing performance of cable-specific system configurations. No specific timeline was given for conducting the project.

The term PCS refers to 20 MHz of radio spectrum that the FCC ruled last year would be allocated for personal communication services technologies. The FCC is analyzing a number of different service options, including unlicensed and licensed wireless systems.

Unlicensed or user-supported PCS are envisioned as extensions to LAN networks in offices and universities, and would be limited in transmission range. Licensed PCS would be operated by a communications entity like a cellular phone system, and would work over large geographic areas. (For more on PCS technology, see Vol. 2, No. 6, p. 17.) The FCC has granted licenses to test PCS at a number of locations. Rules for PCS are expected to appear sometime this fall, according to the FCC.

Cable companies are also pursuing cellular technologies as a way to deliver wireless voice and data transmissions. Comcast Corp. is the most active cable company in the area, having purchased several cellular service companies, including Amcell and Metromedia. Comcast offers a range of cellular services and is involved in the Motorola-CableLabs tests as well.

APPLE TO DISTRIBUTE TIME WARNER TITLES

Apple’s Personal Interactive Electronics division signed a deal with the Time Warner Interactive Group (TWIG), formerly Warner New Media, to comarket and distribute the complete line of TWIG titles. The three-year, non-exclusive agreement provides that the companies will work in “a very close collaborative effort” to market TWIG titles alongside Apple products, including Newton and Power CD, says Craig Moody, VP of TWIG.

The distribution agreement involves Apple’s new interactive publishing division, which was launched in June. The division was founded with a mission to “expand the new media market” and develop software for its hardware, according to Ken Wirt, head of the new publishing group.

It was these objectives that attracted Time Warner to the deal. “There was a strong motivation on both sides to do something [together] to get interactive entertainment into the home,” says Moody.

Moody believes the TWIG-Apple pairing has potential in the consumer market because, unlike many new multimedia brands, Time Warner and Apple are names many consumers know and trust. “That’s the type of comfort level that the consumer really needs to see in this market,” says Moody.

Apple plans to distribute TWIG software products through its direct sales force and approximately 2,000 retail outlets. Additionally, Apple will offer the product line to higher education, K–12 markets and the general business market. TWIG’s product line includes 21 titles, with an additional eight to be released in 1993.

TOTAL CLEARANCE FOR MEDIA PRODUCERS

For many multimedia producers, licensing clips of video, sound and other elements to incorporate into their titles is at least as painstaking as designing its look and feel. Negotiating rights to use clips for digital multimedia, a medium not considered at the time the work was created, can be a long and tedious process.

Jill Alofs, former producer at Lucasfilm, founded Mill Valley, CA-based Total Clearance to handle such negotiations for producers. Total Clearance’s services include identification of legal clearance issues involving the copyright holder and most creative talents as well as approaching rights holders and negotiating use rights on the producer’s behalf. At Lucasfilm, Alofs was responsible for identifying and securing necessary approvals for clip rights in connection with a variety of projects.

Alofs sees the rise of complex digital technologies as causing an increased demand for rights negotiators in this area. The trouble with rights acquisition for many multimedia producers is that “you have to reinvent the wheel every time you want to license a new piece of media,” she says. Total Clearance hopes it will circumvent this process.

Although Total Clearance deals with companies of all sizes (Alofs is working on a couple of projects with Lucasfilm), Alofs sees a need for the company’s services among smaller firms in particular. “Unless you are a big company and you have a group that handles this in-house, there is nowhere for the smaller producers to go,” she says.

FLAT PANEL TARIFFS FINALLY LIFTED BY U.S.

The U.S. Commerce Department has revoked the import duty on active-matrix liquid crystal displays used in laptop computers and other equipment. The tariff has been a point of contention among two segments of U.S. businesses — those developing advanced display technology and those, such as Apple, AT&T and IBM, that incorporate displays into their products.

It was levied in February 1991, with the intention of protecting U.S. businesses from foreign competitors (primarily Japanese) that were selling displays in U.S. markets for below cost. (Japanese companies often try to build markets this way.) It was ruled that this practice constituted “dumping” and a 63 percent tariff was imposed.

The immediate result was to shift manufacturing of notebook computers and other devices that use active matrix displays out of the U.S. Laptop computer and other manufacturers who rely on the active matrix technology also argued that the steeper prices they were forced to pay were then passed on to consumers and that this limited their ability to compete abroad.

Only a handful of fledging advanced display manufacturers have emerged in the U.S. And although several companies hope to enter the market, only one American company, OIS Optical Imaging Systems, in Troy, MI, is producing active matrix panels.

In June, an independent report by the Council of Competitiveness concluded that the policy had done as much harm as it had good for U.S. industry.

A final blow came last fall, when OIS, the organization that originally demanded the protection, requested the tariffs be dropped. OIS claimed it could not meet the needs of the laptop computer industry. It suggested that the U.S. redirect its efforts to focus on whether the duties were fair to the computer industry.

NOVELL ACQUIRES FLUENT TO NETWORK MULTIMEDIA

Novell, Inc., a leading computer networking company, recently acquired Fluent, Inc., for $17.5 million in the hopes of building advanced multimedia networks. Fluent, a privately held company in Natick, MA, develops video-networking products that integrate video and audio into networked applications.

Novell plans to leverage Fluent’s Netware-based software products to deliver video over computer networks.

Network services for multimedia will be available in phases beginning in 1994. The first network server-based video playback will integrate existing client-desktop multimedia standards including Apple’s QuickTime and Microsoft’s Video for Windows. Applications written for these environments will be compatible with Novell’s multimedia services. Novell also plans to support desktop video conferencing.

The company claims it is working with Apple, Intel and Microsoft to ensure certain applications developed by these companies can be integrated into its system.

TV ANSWER NOW ‘EON,’ SIGNS ON NEW PROGRAM PARTNERS

In preparation for its proposed 1993 launch, TV Answer, one of the many companies attempting to develop a national, two-way television system, recently changed its name to Eon Corp., an identity it felt would play better among consumers and on TV screens.

In addition, the company, which plans to employ radio spectrum and satellite broadcasts to deliver interactive TV into the home, signed agreements with 40 retailers, banks and television production companies to offer their services on the Eon system. JC Penney, Publishers Clearing House, Meridian Bancorp, Journal Graphics, 800 Flowers and Bose Music Express are among those companies that have agreed to provide content on the Eon system. Eon is hoping these services will entice customers to spend $450–500 for the Eon settop box and remote control. (For a review of the Eon system, see Vol. 1, No. 9, p. 17.)

The latest company to sign on to the Eon system is Intuit, makers of Quicken, the popular personal finance program. The service is expected to allow users to organize personal finances, reconcile and update accounts, check outstanding transactions and review the financial records of selected accounts on their TV screens.

Although details of the service have not been solidified, the way the system is expected to work is that customers will be able to download the financial software onto their settop box, says Paul Sturiale, spokesperson for Reston, VA-based Eon. Numerical data will be entered by clicking on an onscreen calculator pad via a wireless joystick.

Sturiale says the company is looking into transactions, such as banking and bill payments, which could be conducted by sending financial data over the Eon system. The nationwide system conducts such transactions by sending individual users’ responses over specially allocated radio frequencies to a local cell site. At the local cell site, the transmission is beamed via satellite to the Eon transaction processing facility in Reston, VA.

The sending of such sensitive transactions over vast networks has a tendency to make users of such systems nervous (or if it doesn’t, it should). To assuage such concerns, Eon cites its three-step security system. The system relies primarily on a DES encryption scheme, which gives users a personal identification number much like bank ATMs. Second, information is encrypted before it is sent out from individual user sites, versus at a local cell site or a location remote from the user. And third, the system monitors all sites and will automatically shut down an individual unit if tampering is detected.

Launch date for Eon is expected to be announced after Sept. 15, the date that the FCC will begin issuing licenses for Interactive Video and Data Services (IVDS) in nine major cities. These cities include New York City, Los Angeles, Chicago, Philadelphia, Boston, San Francisco, Washington, DC, Dallas and Houston.

BUSINESS WEEK 1000 ON CD-ROM

On the heels of Newsweek InterActive’s CD-ROM publication, Business Week magazine recently unveiled Multimedia Business Week 1000, a CD-ROM version of its publication highlighting the top 1,000 companies. The CD-ROM, which should be available in August, is a collaboration between Business Week and Standard & Poor’s Information Group, both divisions of McGraw-Hill, and Ehrlich Associates.

For fans of the annual BW 1000 print publication, the CD-ROM title offers all of the original format’s content as well as extensive financial data from S&P’s, and added video, graphics and sound. Approximately 50 percent of the content is provided by S&P’s, according to Mary Hilley, director of planning and new products at Business Week. Ehrlich Associates was responsible for software design.

There are seven “chapters” in the title, including an editor’s introduction, Profile of the BW 1000, BW 1000 Database, Behind the Numbers, 25 Executives to Watch, Executive Roundtable and a multimedia essay. The Executive Roundtable features video interviews with 13 top executives, such as Bob Kavner of AT&T and Stan Jaffee of Paramount. The first multimedia essay is on Chrysler Corporation.

If price is a factor, this product may not be for you. While the Business Week 1000 issue sells for $4.95 on newsstands, Multimedia BW 1000 sells for a suggested retail price of $399. The jump in price is due to the addition of S&P’s data, which sells for premium prices, according to Hilley.

Both Macintosh and PC versions will be available. Primary distribution of the title is through direct mail and catalogs. The title will also be available in limited distribution through bookstores.

Business Week has yet to determine whether the title will be published annually, semi-annually or quarterly. The company is looking into a tiered offering and online distribution. “We’re open to any possibility,” says Hilley.

HOME SERIES TARGETS DO-IT-YOURSELF BUYERS

Multimedia has often been labeled as an answer in search of a question, but it seems that trend is changing with the development and successful launch of interactive do-it-yourself applications such as Design and Build Your Deck, from Palo Alto-based Books That Work (see Vol. 3, No. 2, p. 50). Autodesk, maker of the AutoCAD 3D modeling software that’s built into Design Your Deck, plans to sell titles into that emerging niche as well.

Home Series Release 2, an update to Autodesk’s Retail Products Division’s original 1991 series, was shipped in July. It includes four titles called Home, Kitchen & Bath, Landscape and Deck. Although product manager Tina Alexieff won’t say how many units of the original series were sold, she says it was popular enough to merit the new release.

Similar to Design and Build Your Deck, the Autodesk Home Series is based on a computer-aided design (CAD) construction that allows you to assemble and view objects in two and three dimensions. The package allows for measurements to 1/16 of an inch. The software will not prevent you from building an unsturdy design, however. (Your Deck does.) For this, you will have to rely on a contractor. Basic drawings of designs can be printed to 8½-by-11-inch paper.

Home Series is intended for do-it-yourself home owners and small remodelers who work on several projects a year, but who aren’t inclined to spend the time or money on a full-fledged CAD program. The Home Series can be integrated into all Autodesk CAD programs, however. So if after tinkering with the Home Series you decide to opt for a more powerful upgrade, you can take your original models with you.

A number of features are included in the program, including 550 pre-drawn symbols, such as corner sinks, smoke alarms and pool tables, which can be viewed in up to 64 colors. An undo and redo function remembers your last 25 steps. Printed manuals contain step-by-step instruction on how to use the software and some design tips. Like Your Deck, each of the titles in the Home Series will automatically generate a detailed shopping list of materials needed to complete construction.

The Home Series is available for MS-DOS computers for $69.95. Autodesk is considering developing a Macintosh version as well.

CABLE ACT SAVES USERS, COSTS TCI

The FCC, Congress and customers of Tele-Communications, Inc., the nation’s largest cable operator, are undoubtedly delighted by a recent announcement from TCI that the Cable Act will do just what it was intended to do: decrease prices for customers. TCI estimated consumers would save close to $1 billion annually. The cost to TCI will be as much as $160 million a year, the company said.

“If the intent of Congress and the FCC was not only to limit future cable rate increases, but also to roll back current prices for elements of our basic service, they have succeeded beyond any question,” said Brendan Clouston, TCI COO, at the announcement.

“Judging from TCI’s size and experience with these regulations, the total savings for cable customers nationwide will be very close to the $1 billion target that the FCC set for itself,” he said.

This announcement came the day after the FCC ruled that the Cable Act would begin Sept. 1. The public announcement was intended to assure the public and investors that the setback was temporary.

Barney Schotters, TCI’s senior VP of finance, put the loss of revenue in perspective. TCI’s revenue last year exceeded $4 billion. However, during the last four years TCI has lost some $700 million. In the first quarter of this year, TCI reported its first profit of $52 million.

To offset the $140 to $160 million dollar losses TCI is anticipating, the company says it will aggressively market services, such as pay channels, which are not regulated by the act.

The Cable Act continues to be staunchly opposed by small cable operators. The regulation threatens to wipe out many smaller companies, which often pay more for programming than large operators like TCI and are generally up to their necks in debt as a result.

The companies recently banded together to form a volunteer organization called the Small Cable Business Association to lobby for relief from the regulation. The group claims more than 200 members, and the FCC has stated that it will do its best to address their legitimate concerns.

IT NETWORK ENTERS ITV MARKET

The Dallas-based IT Network, which delivers audiotext services into more than 32 million homes and businesses in the U.S., now has plans to enter the interactive television market. The five-year-old company recently announced that it is developing the IT Network Interactive Channel, which, according to the company, will deliver audio and still-video images to consumers through standard coaxial cable television and telephone networks. It plans to roll out the Interactive Channel by early in 1994.

IT Network is based on technology developed by an IT majority-owned company called Cableshare. When a viewer makes a selection, the system transmits instructions via telephone lines to a programming storage site, where programming is assembled and delivered back to the television set through standard cable television. At this time the service company is still negotiating contracts with prospective content providers as well as companies developing settop box technology. The company declined to comment on which of the settop box manufacturers, if any, it is in discussion with.

While still in the early stages, the IT Network says it is exploring several ways to handle transactions and requests for information. The company says that feedback from trial sites has shown that consumers do not want to conduct transactions for expensive items, such as airline tickets, through their televisions without talking to an agent.

To that end, the company is working on linking certain services to phone service, similar to the way QVC operates today. “That’s kind of the low-tech way, but it’s what consumers want right now,” says Patrick Peters, director of product development at IT Network.

IT is conducting trials of the Interactive Channel with Booth Communications in Birmingham, MI, and, beginning this fall with Sammons Communications in Denton, TX. A third trial with an undisclosed party is also set to start in this year, according to the company.

To date, IT Network has signed preliminary agreements with Ameritech Publishing to develop electronic Yellow Pages; Freedom Newspaper to develop electronic advertisements; Aulstads, a golf cataloger, to develop an electronic catalog; and Wunderman, Cato, Johnson as well as Foote Cone Belding to develop interactive advertising.

The company’s most recent agreement is with Official Airline Guides Inc. (OAG), a clearinghouse for travel and travel-related data. According to the companies, they are developing an interactive travel information, reservations and ticketing network that will allow consumers to compare airline flight and fare information, as well as receive still images and audio descriptions of hotels and resorts.

The monthly cost to consumers for the Interactive Channel will probably be around $2, according to a company spokesperson.

SONY’S VISCA VIDEO PROTOCOL MOVING FORWARD

Sony Electronics is continuing to move its Video System Control Architecture (VISCA) protocol forward with an agreement with Microsoft, as well as a new lower-priced hardware offering. The VISCA protocol, announced more than two years ago, is a platform-independent device-control language that allows two-way communication between personal computers and consumer video devices.

Microsoft plans to incorporate the Sony video protocol in the Windows operating system via a Media Control Interface device driver. An MCI-VISCA driver will allow consumer camcorders and VCRs to be used as components of Windows applications, such as Video for Windows.

The Microsoft MCI-VISCA driver should be available in late August from Sony’s Bulletin Board Service at (408) 955-5107. There is no charge to download the driver software.

Apple, Macromedia, Diva and 50 others support VISCA within their products, and nearly 100 developers signed up to work with the technology, according to Joyce Chung, special markets manager for Sony’s Computer Peripheral Products Division.

To take advantage of the VISCA functionality, users must have one of three Sony products: the Vbox, priced at $230, which enables computers to connect to the consumer devices; or the Hi8 or 8mm Vdeck, priced above $1,000, which allows advanced editing functionality. These products interface with computers to convert VISCA commands to LANC control, a command language understood by most Sony consumer video products.

Sony’s Computer Peripheral Products Division recently announced the Vdeck 500 8mm VCR, which will be available in September for $1,099. It is aimed at lower-end desktop users who have source tapes in 8mm format and want advanced editing capabilities, such as frame accuracy.

The Vdeck 500 can be controlled through software with VISCA protocols or used as a standalone product. The drive has inputs for other video and audio devices as well. VISCA allows up to seven devices to be daisy-chained through the serial port of a computer.

The Vdeck is optimized for 8mm format, and has a resolution slightly better than standard VHS video tape quality (250 lines of horizontal resolution as compared to approximately 220 lines for VHS). It will also play back Hi8 tapes.

The other video deck in this line, the CVD-1000 Hi8 Vdeck, is designed for Hi8 format. It has 400 lines of horizontal resolution. This product is intended for the high-end video editing market. The price was recently lowered from more than $2,000 to $1,740. (For more on the Hi8 deck, see Vol. 1, No. 3, p. 16.)

CORRECTION

In our coverage of Digital World (see Vol. 3, No. 2, p. 49), we incorrectly stated that HyperBole Studios had been purchased by Media Vision. The two companies have recently signed an agreement for HyperBole to move to Media Vision’s Seattle-based offices and produce several interactive media titles under the new Media Vision label; however, Hyperbole remains an independent multimedia publishing house. The terms of the agreement between the two companies are not being disclosed. We regret the error.

>EVENT
The ATM Solution
Oct. 7–8, Chicago
The ATM Forum
(617) 834-4703, fax (617) 834-4578

With companies such as IBM and AT&T poised to deliver advanced multimedia networks using ATM products, asynchronous transfer mode (ATM) technology is stirring up interest in the computer and communications world.

The ATM Solution is a two-day event designed to provide critical insight into approaches for rolling out ATM local area and wide area networks, as well as updates on the current status and progress of ATM standards.

The conference is intended to benefit those who are investigating ATM and need a thorough understanding of the technology. A technology primer session will cover why ATM it is important, how it works and a layer-by-layer explanation of the technology. The relationship of broadband ISDN and the ATM layers will be discussed.

Other sessions in this single-track conference include ATM standards, ATM in local area and wide area networks, ATM in public networks, network management and user perspectives of ATM in the enterprise network.

The conference will be kicked off by program chair E.W. “Bud” Huber of Hughes Aircraft. Conference speakers include Jill Kaufman, network consultant at IBM; Bob Klessig, manager of business development at 3Com Corp.; Steve Walters, general manager of broadband network capabilities at Bellcore; Mark Juliano, director of product marketing at Fore Systems; Ed Durham, product manager at Ungermann-Bass; Sam Quattrocchi, director of marketing at Fujitsu; Lori Hicks, manager of ATM product marketing at DCS Communications; Greg Crosby, director of data product management at Sprint; Terry Lindsey, general manager of advanced technology at WilTel; and Sean Parham, research engineer at Motorola.

The event sponsor is The ATM Forum. This group, founded in 1991, is a worldwide industry consortium with the goal of promoting cooperation in development of ATM implementation specifications, standards and market acceptance. Members include telecommunications service providers and carriers, plus equipment manufacturers including routers, hubs, switches, workstations, semiconductors and software.

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