• WE’VE FALLEN — CAN WE GET UP?

On the eve of the U.S. presidential inauguration, we examine the technology policy of the incoming administration of Bill Clinton and Al Gore.

The post-election relief of the technology community, which at last has some assurance that the U.S. government is paying attention to its post-Cold War concerns, is palpable. And the Clinton-Gore team clearly understands some of the fundamental problems we face as we are increasingly transit from an industrial economy to one based on digital technology and information.

Not surprisingly, as the policy itself was formed in part as campaign rhetoric, the Clinton-Gore technology plan chooses not to address some of the more fundamental problems raised by an economy and a society that relies heavily on technology. Permanent job loss, how to educate and retire a newly mobile work force, and protecting our civil liberties are just a few of the issues raised herein.

• A TECHNOLOGY POLICY FOR AMERICA

The Clinton-Gore campaign was one of the savviest, technology-wise, in recent history. The policy paper we’ve reprinted here in its entirety was uploaded to the nation’s computer networks in September 1992 and has been making the rounds since. So while many people deep in the high-tech community have read the initiatives, most of the rest of the world has not. We trust you’ll find it thought-provoking, and hopefully a springboard for one of the most vital discussions of the decade.

• 3DO: AT LAST, THE WAIT IS OVER

In what had to have been one of the worst-kept secrets of the industry, Trip Hawkins and his team at 3DO (née SMSG) finally showed the fruits of their labor at the winter Consumer Electronics Show in Las Vegas. A new U.S. partner — AT&T — kept drama high until the last minute, but it is the machine itself that draws the most fascination. It just may be a success.

• I/O
Grolier’s Arganbright on our recent Encarta piece.

• PARAMOUNT OPENS A MEDIA KITCHEN
Movie studio to make digital media part of its core business.

• NEWS FROM CES AND MACWORLD
Digital Media hits the first two big shows of ‘93.

• MODULAR WINDOWS MAKES ITS DEBUT
“Doing television” is Microsoft’s new challenge.

• TANDY’S VIS
Tandy’s player is not so hot, but don’t blame it all on Tandy.

• APPLE DOES ERGO
Apple’s keyboard may have gone too far and not far enough.

• CIA NOT TOO SPOOKY
Consumer info appliances are fact boxes and smart phones.

• AMERICA ONLINE BRANCHES OUT
Online provider wants to be “the” system for info services.

• BRIEFS
IMA issues RTF; Prentice Hall publishes guide to music licensing; Datakey encryption card approved; PacBell and Sprint complete frame relay tests; Digital sound and effects for cars and home; Radius says full-screen on the way

• EVENTS
Interactivity in Washington, DC.

WE’VE FALLEN — CAN WE GET UP?
A look at the gritty realities of economic renewal

Those of us who have been watching the United States soil its own nest for the past 12 years feel a great surge of hope that Bill Clinton and Al Gore are at last willing to tackle technology issues outside the defense industry and face the economic realities of the 21st century.

The new administration’s technology policy, set forth in these pages, appears on the surface to be a good start. It certainly addresses what’s perceived to be “wrong” today, but its very thoroughness may miss the larger point. Spurring growth and investment in today’s industries ŕ la Clinton-Gore has obvious merit and must be done, but the policy doesn’t address the deeper, more fundamental issues raised by a society that finds itself relying upon increasingly sophisticated technology for work, play and information.

FIRST, THE GOOD NEWS: WE’RE RIPE FOR NEW INFRASTRUCTURE

Any long-term technology policy must first acknowledge the ubiquity of digital technology, and the Clinton-Gore emphasis on rebuilding infrastructure appears to do so. Computers have connected most financial institutions around the globe for many years now, and they increasingly control our factories, our office operations, and our telephone networks. Activity on the Internet, a vast global network of computers, has increased exponentially in the past five years (see Vol. 1, No. 11, p. 19). Far more people are using network technologies to conduct their personal and business lives.

One of the most compelling trends of the past five years (and the one that launched this publication) is that digital technology in mainstream America is transiting beyond basic information exchange into both the production and the distribution of all media of communication. Demand is growing for a powerful public network that can allow people to send and receive large amounts of media information across a hybrid of the existing networks, including telephone, cable, cellular and/or satellites.

Industry alliances like First Cities (see Vol. 2, No. 7, p. 3) are in the process of creating technology bridges between these separate networks, so that digital media can indeed freely flow between them, as the foundation for a new kind of commerce. Other industry groups, such as the CableLabs consortium, are also exploring ways to join networks most profitably for delivery of new services to the consumer.

WE DON’T NEED TO SPEND FEDERAL DOLLARS

This work is already under way. But the new administration’s plan intends to promote:

• Funding the establishment of key networks and demonstration projects;
• Benchmarking U.S. programs against those of other major industrial nations;
• Establishing standards and a regulatory climate that fosters private sector investment;
• Involving the federal labs, companies and universities in conducting R&D on key technical issues; and
• Providing training for users of networks and databases.

Only a couple of these suggestions are actually useful. For example, as mentioned, key networks and demonstration projects are already under way. Private industry is funding these projects itself because it has to — it is widely acknowledged that sophisticated communications are critical to growth in the next decade. It is equally in the best interest of industry to make sure that users understand how to use the networks and database products they’re creating. And certainly, any company worth its salt is already quite cognizant of what its competitors are doing in other major industrial nations.

Focus on standards. So instead of spending valuable tax dollars to fund tests and network training sites, or to “benchmark” what other countries are doing via expensive research reports (most of this information is readily available in the foreign trade press), it would be far more helpful for the U.S. government to be more proactive in the third and fourth bullets of the plan. Establishing standards and a regulatory climate that fosters investment will demand that federal labs, companies and universities work together to research and develop key technologies. The government could reward cooperation between industries via tax incentives, thus hopefully dissuading various Lone Rangers from reinventing the wheel.

As mentioned in the plan, the standards process that the Federal Communications Commission (FCC) sponsored for HDTV is an excellent example of the government’s proper role in guiding technology directions (see Vol. 1, No. 12, p. 13). By designating itself the hub in the HDTV wheel, the FCC came up with some very creative ways to make sure that the best digital HDTV standard was selected and that those that weren’t selected still were able to benefit from participating in the process.

The FCC says the process cost taxpayers nothing — only the cost of FCC staffers to review the submissions — yet established a standard outside the marketplace, where confusion over such issues often keeps consumers from making purchases they fear will become immediately obsolete.

How to foster competition. In addition, the government should immediately address one of the most significant gating issues for telephone companies that wish to upgrade their networks from copper plant to fiber optics: allow them to write off their investment in copper wiring as quickly as possible, and provide them with strong financial incentives to replace it with fiber (making sure that the cost of upgrading the network is not passed on to consumers).

Along those same lines, the new administration would do well to carry on the spirit of the work started by former FCC chairman Al Sikes. Sikes’s primary motivation in making some of his more controversial moves (such as allowing the phone companies to provide information services, including the delivery of movies via video dial tone) was to level the playing field so that telcos could compete on an equal basis with cable TV and other network providers.

The specter of intense competition where before there was none is definitely giving heebie-jeebies to the cable industry, and vendors and service providers are scrambling to keep their edge. Direct broadcast satellite services such as Hughes’s DirectTV are having the same effect, and the cellular network is also eyeing the delivery of high-value broadband services to cable’s target market.

Though some of us are disturbed by the potential conflict of interest in letting the phone companies own and provide content and conduit, the cable companies already provide both. It’s likely that most of the problems consumers face as cable customers — such as outrageous rates and inferior service — will disappear when other entities are able to provide video programming into the home.

CIVIL LIBERTIES AND THE NET: A GAPING HOLE IN THE PLAN

A gaping hole in Clinton’s plan is that it does not acknowledge some of the more subterranean yet chilling effects of the kind of hybrid, broadband national public network that the administration would obviously like to create.

The “hacker threat” — dangers posed by computer criminals who break into banks, use stolen credit card numbers and heist military secrets from high-security databases — has been well documented over the years, yet it has often seemed a distant threat to the public at large. It boggles the imagination to consider what intelligent criminals will be able to do when most of the world’s commerce is conducted over a network that’s protected with far less sophisticated technology than are military computer systems.

Security is critical. The problems are complex and multifaceted, yet all center on the ability of citizens and businesses to secure confidential information about themselves and the conduct of their lives. We all remember the uproar when a BusinessWeek reporter was able to get a copy of Dan Quayle’s credit report. Think about the potential for abuse when a ubiquitous public network transports everything from personal bank transactions to the names of the videos we choose to watch to what we buy via our interactive TV shopping network.

The need for security cuts both ways. It’s been demonstrated repeatedly that people want to choose who gets information about them, and when, how and why. But to date, there are no laws in the United States to control what businesses do with personal information about their customers. Recall the scandal about Lotus Development’s “Marketplace” product, a database of the entire U.S. population compiled using a number of criteria including salary, number of children, etc., based on information from various credit agencies. Public outrage caused Lotus to withdraw the product.

We’re all vulnerable. Then think about what new information service providers will be able to learn about their customers without their consent, by gathering data from the selections they make in the privacy of their living rooms. How will we react if our television’s blind eye can suddenly see us — and can report back on what it has observed? Designers of these information services acknowledge that a significant amount of highly sensitive data about each customer must either be stored in a database or transmitted at transaction time to make their businesses viable. But again, to date there have been no serious discussions about security ethics or legalities around using this kind of personal information.

Protecting property. In addition, entertainment companies such as movie studios have expressed understandable reticence to provide licenses for pay-per-view movies until some kind of encryption standard can ensure that their multimillion dollar investments won’t be stolen and pirated, or altered and reused.

And needless to say, a government with a suspicious mind or a bent toward totalitarianism would be absolutely delighted with a network that would allow it to watch every move its citizens made, via their access to a network that’s considered essential to the commerce of daily life. These are not paranoid observations; court cases are already pending relating to the rights of employers to snoop through employees’ electronic mail, for example.

Why not public key? The most obvious solution to the problem is some kind of public key encryption method, which, without going into great technical detail, allows two parties to enter into a transaction across a digital network that (a) assures that only the designated party can decrypt the data (a movie, an article from a database, a digital music recording, credit card number, personal data, electronic mail message, whatever); (b) assures both parties that whatever transmission is received is not altered in any way; (c) provides a “digital signature” to further ensure that all parties involved in a transaction are who they say they are, and (d) allows those transactions to be conducted anonymously, just like cash.

Great idea — why aren’t we moving on it? Because the Federal Bureau of Investigation and the National Security Agency don’t want public key encryption in wide use. They say that it eliminates their ability to conduct wiretapping and other crime-fighting activities (see Vol. 1, No. 11, p. 7).

We certainly want our federal crime fighters to be able to do their jobs, but as Computer Professionals for Social Responsibility and other watchdog groups argue, denying us the ability to secure our communications denies us our right to privacy under the U.S. Constitution. Also it denies businesses the right to protect their intellectual property. This issue will become increasingly critical as more of us use the networks as our primary method of both communicating and conducting the commerce of our lives.

IS ‘INFORMATION ECONOMY’ AN OXYMORON?

In fact, the ongoing intellectual property debate is likely to be brought into sharp relief as this new digital network infrastructure is both developed and deployed. As we continue to lose manufacturing jobs in the U.S., America will increasingly be seen as an “information broker.” Who owns what, how they own and protect it, and for how long, will become increasingly important as we continue to place the means of digital media production and dissemination in the hands of the masses.

This raises some interesting conflicts. First and most obviously, ideas and information once considered worthless from a financial standpoint suddenly become valuable commodities. What once we thought without value — a photograph of our car or house, for example, taken by a stranger on the street — can become intellectual property to which we may be able to lay financial claim if he or she makes money from it.

However, if such a photograph is transformed into digital media — the new currency of the realm — and not somehow protected, it actually becomes worthless because an infinite number of copies can be made with no loss of quality and it can be distributed freely via optical or magnetic media or via the networks.

Open access vs. “pay per view.” Even with effective ways to protect data physically, the clash between the “information should be free” faction and those who own and/or develop intellectual property will escalate. The central conflict then becomes whether the term “information economy” is an oxymoron in a free society.

In other words, if open access to information is the hallmark of a democracy, how then does a government make sure that none of its citizens are left out as the transition to an “information age” continues its inexorable march? Where do you draw the line?

Certainly we cannot expect companies to invest millions of dollars in rebuilding infrastructure and starting new “information service” businesses, then tell them they can’t make money from their efforts. But neither can we expect our citizens to have to pay cash money every time they want to know what’s happening in the world. If we are obsoleting broadcast television, for example, which today is free to anyone with a TV and an antenna, what will we replace it with?

LET’S START TALKING ABOUT THIS STUFF NOW

There is not an easy way to satisfy both sides of this debate, but for once it would be nice to see the U.S. do some deep thinking into consequences before disaster hits. We haven’t been willing to question some of the underlying assumptions of new developments such as biotechnology, for example, and we are likely to create science-fiction scenarios as a result.

We didn’t question the hazards of computers and electronics, and now we’re finding that the doomsayers were right — the use and manufacture of computers are responsible for significant health problems and, based on the privacy issues outlined above, the beginnings of constitutional questions that should have been addressed early on.

The right to privacy and the right to access are simply at opposite ends of the intellectual property debate. Before the new business models are cast, these issues should be brought to a public forum and discussed in detail so appropriate action can be taken by both industry and the government.

RETHINKING THE VALUE OF BUSINESS AS USUAL

Today we are wallowing in technology — flooded with video game machines, compact disc players, cellular phones, electronic organizers, “computers” that analyze your tennis game. Either rapid rate of innovation or complete idiocy of design makes most of these devices obsolete within a few months after they’re purchased. Who does that serve?

Rethinking value. In a world of dwindling natural resources and tightening global markets, a responsible government must at some point rethink how it supports an economy based on products of dubious or exhausted value.

One of the “laws” of technology is that at some point in the future, the computer will probably be able to do without you whatever it happens to be doing with you at the moment. In fact, computers will continue to replace the work done by humans, but we continue to pretend that there is even a possibility of full employment in a world where human labor is becoming obsolete. It doesn’t matter how smart you are or how well “retrained” you’ve been if there are only six jobs in the factory and you don’t get one of them. And then how many “tennis analyzers” will you buy?

Move away from consumption. To make any sense of the direction the world is going, we must find a way to wean our economy from its focus on gross consumerism. A courageous Clinton administration would be willing to speak the truth — for starters, can we please finally declare that the car industry is dead? If not another car was manufactured from this day forward, we would not be the worse for it.

The proper role of the U.S. government is not to bail out failing industries, but to remove them from life support. Instead of trying to find a way to appease both the unions and the car manufacturers, government should provide investment incentives to General Motors, Chrysler and Ford to redeploy a significant percentage of their engineering expertise toward new industries that require formidable brainpower, such as new, nonpolluting transportation methods, purifying toxic air and ground water, finding ways to recycle garbage. These are the growth industries of the 21st century.

PROVIDING NEGATIVE AND POSITIVE INCENTIVE

I would be particularly pleased to see manufacturers of compact discs, for example, get a big fat tax break to figure out how to recycle them before they become slag heaps of them in our garbage dumps. (I still worry about the half-life of polyester double-knit.) With sufficient financial impetus, maybe we could get the chip and computer companies to figure out how they could recycle semiconductors and gold-encrusted circuit boards, now showing up increasingly in jewelry and art after they’ve been discarded.

Healthy computing. And once the government has begun “incentivizing” electronics companies to recycle and/or reuse their waste products, it might also consider raising taxes on companies that still manufacture flat-slab keyboards that are crippling information workers in one of the most covered-up epidemics in history, as well as on companies that have not yet eliminated radiation-emitting computer screens and monitors from their product lines.

TRAINING PROGRAMS DON’T ADDRESS THE CENTRAL PROBLEM

In the same way that we need to “get real” about deadbeat American industries today, we must also face facts about the changing nature of work and workers in the U.S. Certainly no one could argue the merit of Clinton-Gore’s plan to create a high-skill workforce, but such a program misses the point.

Information industries are moving offshore at an alarming rate, just as manufacturing did in the 1980s. One recent report stated that a Unix programmer in the U.S. makes $5,000 a month; an equally skilled Unix programmer in India makes $400 a month. This disparity is a problem that no training program can rectify. As a result, as you might suspect, every high-tech company worth its salt is moving programming centers to India, including Apple, IBM, Digital Equipment, Tandem and Hewlett-Packard.

Information workers with less romantic jobs than programmers are suffering too; data-entry and desktop publishing “sweatshops” have been documented in Taiwan, among other places.

Technology eliminates jobs. Though offshore production often bears the lion’s share of blame for higher unemployment, no one has yet wanted to address directly the growing social problem of job loss based on technological progress. There has been a real loss of jobs in the banking industry, for example, because automatic teller machines have eliminated teller jobs. Computer-controlled voice mail has begun to have much the same effect, and its impact will increase as voice recognition technologies improve. Those jobs aren’t coming back, and they weren’t shipped offshore. They are jobs lost to computers, pure and simple. There are many more examples in companies all across the U.S.

This is one grim reality not addressed by the Clinton-Gore camp. We can do all the training for “high-skill, high-pay” jobs we want, but there will continue to be a growing number of un- or under-employed workers in the U.S. as other countries provide low-cost labor for highly skilled work, and as technology continues to eliminate jobs.

In addition, it is disingenuous to lead the American people to believe that there are “high-skill, high-pay” jobs for everyone. And why should there be? To put it crudely, someone has to pick up the garbage every week, and anyone who’s lived through a garbage strike thanks God they do. As we continue to place emphasis on the upper-crust jobs, we also dishonor the people who do more simple tasks, like answer telephones and solder circuit boards.

Another wrenching transition. This is a cycle that’s as old as human progress itself. Every time a new technology moves to the fore, jobs are eliminated, often never to return. Any student of history knows about the wrenching transition between the agrarian and industrial ages. What’s different today is that digital technology moves faster, thus escalates the cycle.

Of course we want to create new jobs, and we can do so. But we must also keep firmly in mind that the almost rhythmic obsolescence of technology is likely to eliminate them in relatively short order.

Thus, the most important factor in education and training for our workforce is flexibility. No one in today’s work force can ever again expect to hold the same job for 20 years, as did many of our parents. We need to teach them modern skills, but they should be skills of the generalist: what a computer does and how to work one, how to jockey around a network. Beyond that, workers must be taught to reason and understand complexity. We must teach them how to think again, how to learn — not put them through an apprenticeship program for a job that’s likely to be replaced by a robot in five years. Such programs will be enormously expensive for whoever sponsors them, whether government or private industry.

High-pay migrant workers. In addition, the government may want to consider the new problems posed by a highly mobile work force. One software executive jokes that Silicon Valley has the highest paid migrant workers in the world. Pension funds, stock options and other benefits are often predicated on length of service, and despite their skills or talents, laid-off workers have to start retirement planning from scratch every time they start a new job. This is a rather frightening specter for baby-boomers who know that Social Security is going to be a wistful memory by the time they’re 65.

SMALL BUSINESSES ARE THE KEY TO SUCCESS

The changing structure of today’s corporations only highlights the need for a highly flexible, quick-witted work force. As anyone who’s survived a few dozen reorganizations and “downsizings” can attest, job descriptions really don’t mean much these days.

We’ve seen by the spectacular failures at IBM and the woes of other computer companies that those who want to be successful today must not just be willing, but must strive to obsolete their own products. One of the main reasons that IBM has stumbled is that for many years it was unwilling to move off of its old business — mainframe computers — and obsolete them with new technology. So others did it for them.

As digital technology blurs the distinctions between traditional businesses, virtually all companies involved in the so-called “convergence industries” — computer and consumer electronics firms, as well as the cable and telco industries, publishing and entertainment — are inventing new products, services and technologies at such an alarming rate that they can’t even keep track of what they’re creating.

Acting as if. Convergence companies today, from AT&T to Sony to Apple to Time Warner, are breaking their vast organizations into smaller, more independent operating units so they can more quickly respond to market demands and technological innovations. In other words, they are trying to act like small businesses.

Despite these efforts, truly innovative ideas inside large corporations often die young because they don’t receive sufficient corporate resources to survive. Small businesses with great ideas often suffer the same fate for much the same reason — no access to important resources. One of the reasons that California’s Silicon Valley has remained a hotbed for startup companies, despite the woes of the electronics industry, is that the region’s entire structure — from its banks to its parts suppliers — is set up to handle small business demands.

PROVIDING A PETRI DISH FOR HIGH-TECH INNOVATION

That the Clinton-Gore administration understands these issues is great news for those involved in digital technology. Certainly the stupid ideas always outweigh the great, but those who have observed technology companies for many years have seen too many fabulous and useful ideas fall by the wayside for lack of funding or tools. (The “ergonomic keyboard” story on p. 26 is a perfect example.)

The administration has the potential to do something with its manufacturing centers, its contract R&D facilities and its small business innovative research programs that large companies understandably simply cannot afford to do. It can start with a clean slate and build these facilities using state-of-the-art technology. Most of today’s semiconductors, software and hardware companies understandably can’t afford to scrap their existing systems and start with the latest of everything.

Don’t take the low bid. Those in charge of making these centers a reality should not bid them out. They should be built carefully with the very best tools, not just those the government can buy at the lowest price. Truly state-of-the-art manufacturing centers, especially, could be a tremendous boon when America’s large corporations have proven themselves mysteriously reluctant to invest in such critical improvements.

More than anything else proposed by the new administration, these programs have great potential to provide financial and moral uplift to the U.S. economy as we move away from old, dead industries and into new ones. All it takes is a few hot companies raking in a profit in a new industry to start a stampede.

THE POWER TO SHAPE THE NEXT CENTURY’S AGENDA

More than at any other time in history, the new Clinton-Gore administration is sitting at the crux of massive change. Digital technology is the power behind much of that change, and as is true with most things in life, that power is a double-edged sword. Rebuilding the infrastructure without careful attention to civil liberties will be disastrous. “Apprenticeships” that don’t take into account the changing nature of work in a digital world will cost more money than they’ll save. Providing short-term impetus to growth for today’s industries without addressing the need to move beyond them will act much like amphetamines in the nation’s bloodstream: getting high isn’t worth the coming down.

This new administration has the opportunity and the power to shape the next century. If it is willing to move beyond platitudes to address the reality of life in the U.S. today, it can frame the issues, set priorities and do the right thing. If it does its job well and with integrity, we can emerge from a painful rehabilitation program clear-eyed and clear-headed, with vibrant new industries, smart, challenged workers and enlightened executives to manage them. If not, we can just expect more of what we’ve seen for the last decade. It’s really not a hard choice.

Denise Caruso

A TECHNOLOGY POLICY FOR AMERICA:
Six broad initiatives from Bill Clinton

The policy statement below (reprinted verbatim) was released to the public during Bill Clinton’s presidential campaign in September 1992. Clinton’s emphasis on infrastructure, as well as other matters directly relating to technology policy, investment and job creation, is likely to affect deeply and directly what we call the “convergence industries” (i.e., consumer electronics, telecommunications, computers, cable TV, print publishing and entertainment, etc.). Thus it seems prudent at the time of his inauguration to allow our readers both to examine the policy and to get a somewhat de-politicized analysis of it, too. Our analysis begins on page 3. —Ed.

The Clinton-Gore technology policy consists of six broad initiatives that together will restore America’s technological leadership.

Building a 21st century technology infrastructure. Infrastructure has traditionally been the responsibility of federal and state governments. Investing in infrastructure means more than repairing bridges, harbors and highways. Today, the United States faces a new series of communications, transportation and environmental needs for the 21st century. The creation of a 21st century infrastructure program would serve as a critical technology driver for the nation. It would stimulate major new national R&D efforts; create large, predictable markets that would prompt significant private sector investments; and create millions of new jobs.

A 21st century infrastructure would address many practical problems. For example, the government can serve as a catalyst for the private sector development of an advanced national communications network, which would help companies collaborate on research and design for advanced manufacturing; allow doctors across the country to access leading medical expertise; put immense educational resources at the fingertips of American teachers and students; open new avenues for disabled people to do things they can’t do today; provide technical information to small businesses; and make telecommuting much easier. Such a network could do for the productivity of individuals at their places of work and learning what the interstate highway of the 1950s did for the productivity of the nation’s travel and distribution system.

Each year, I plan to devote a significant portion of my four- year, $80 billion Rebuild America fund to laying the groundwork for the nation’s infrastructure needs in the 21st century. Federal funding for the National Research and Education Network is one example of how the federal government can serve as a catalyst for private sector infrastructure investment. We will also provide additional funding to network our schools, hospitals and libraries.

As part of the effort to assess U.S. needs and develop appropriate programs, the federal government must monitor, or “benchmark,” what foreign governments are doing. For example, the Japanese government has committed to invest over $120 billion by 1995 to develop a digital broadband communication infrastructure called the Information Network System, and plans to invest another $150 billion to establish model programs for business and residential users.

A comprehensive infrastructure program must also include effective standards and regulations. By establishing reasonable standards and a constructive regulatory environment, the government can send clear signals to industry about important, emerging markets and spur private sector investment. For example, the digital standard that the Federal Communications Commission (FCC), in cooperation with industry, established for high-resolution television provides an excellent indication of the future technical direction of the industry and will do much to facilitate private sector R&D.

A 21st century infrastructure program should consist of the following five elements:

• Funding the establishment of key networks and demonstration projects;
• Benchmarking U.S. programs against those of other major industrial nations;
• Establishing standards and a regulatory climate that fosters private sector investment;
• Involving the federal labs, companies, and universities in conducting R&D on key technical issues; and
• Training users on networks & databases.

Establishing education and training programs for a high-skill workforce. The U.S. education system must make sure that American workers have the requisite skills. The focus should be not only on the top American students who measure up to world-class standards, but also on average and disadvantaged students. It must also take into account the need to upgrade workers’ skills and help people make the difficult transition from repetitive, low-skill jobs to the demands of a flexible, high-skill workplace. Unlike Germany, the United States does not have a sophisticated vocational education program, and unlike Japan, U.S. firms do not have a strong incentive to invest in the training and retraining of their workers. We need more of both, geared to meet the needs of the mobile U.S. workforce.

I will implement the following programs to strengthen the skills of America’s workforce: Establish tough standards and a national examination system in core subjects like writing, communication, math and science; level the playing field for disadvantaged students; reduce class sizes; and give parents the right to choose the public schools their child attends.

• Establish a national apprenticeship program that offers non-college-bound students training in a marketable skill.
• Give every American the right to borrow money for college by establishing a National Service Trust Fund. Students can repay their borrowing as a percent of their earnings over time, or by serving their communities for one or two years doing work their country needs.
• Stimulate industry to provide continuing, high skills training to its front-line workers.

For small manufacturers to compete today, it is not good enough simply to have access to new equipment and new technologies if their workers do not have the skills and know-how to operate them efficiently, and engage in truly flexible production. Yet, too much of our training is for only top executives or workers after they have lost their jobs.

My plan calls for companies with over 50 employees to ensure that 1.5 percent of their payroll goes to training throughout the workforce — not just for the top executives. But we must do more for smaller companies who cannot afford to set up the training programs. These companies need to adapt to new technologies and new equipment and the constantly new demands.

New production technology should be worker-centered and skill-based, not skill-eliminating. In the high-performance workplace, workers have more control over production and worker responsibility is increased. Some companies that have invested billions in new capital equipment have found that genuine employee involvement and good labor-management relations are ultimately more important. Therefore we need to undertake the following:

• Manufacturing training centers: We need to promote private sector-led efforts to set up training for small companies. These can be done by building off community colleges training and should be an integral part of the network of Manufacturing Extension provisions. These would also be integrated with my Apprenticeship initiative so that young people will have the opportunity to learn specific skills needed for specific manufacturing jobs or industries. Councils including private sector and academic leaders as well as workers would help decide generic areas for training.
• Certificate of training guarantees: In order to be eligible for federal funds for manufacturing training centers, such centers would have to provide all future employers with a Certificate of Guarantee. This would ensure that, when workers do not pick up the necessary skills the first time, these centers would provide additional training — at no additional cost to the employer.
• Best practices on worker participation: An integral function of the Manufacturing Extension Centers will be to collect and disseminate information on “best practices” with regards to worker participation. Increasing worker productivity is one of the keys to increasing overall manufacturing productivity.

Investing in technology programs that empower America’s small businesses. A healthy and growing small-business sector is essential to America’s economic well-being. America’s 20 million small businesses account for 40 percent of our GNP, half of all employment, and more than half of the job creation. My technology policy will recognize the importance of small and medium-sized business to America’s economic growth with:

Market-driven extension centers: Creating 170 manufacturing centers will put the best tools in the hands of those companies that are creating the new jobs on which the American economy depends by helping small and medium-sized manufacturers choose the right equipment, adopt the top business practices, and learn cutting-edge production techniques. In order to enhance U.S. industrial competitiveness, public policy must promote the diffusion and absorption of technology across the U.S. industrial base. Some state and local governments are already involved in technology diffusion using manufacturing centers. They are helping small businesses improve the productivity of their existing machinery and equipment, adopt computer-integrated or flexible manufacturing techniques, and identify training needs.

The Commerce Department has five Manufacturing Technology Centers across the country and has plans for two more. Unfortunately, these efforts are only a drop in the bucket compared to those of our major competitors. Germany has over 40 contract R&D centers (Fraunhofer Gesellschaft) and a broad network of industry associations and research cooperatives that effectively diffuse technology across industry. In Japan, major government-sponsored research projects, 170 kohsetsushi technology support centers for small businesses, and tight links between companies and their suppliers serve much the same function. There is no comparable system in the United States.

A Clinton-Gore Administration will build on the efforts of state and local governments to create a national technology extension program, designed to meet the needs of the millions of small businesses that have difficulty tracking new technology and adapting it to their needs.

The involvement of workers is critical to developing and executing successful industrial extension programs. In technology, as in other areas, we must put people first. New production technology should be worker-centered and skill-based, not skill-eliminating. In the high- performance workplace, workers have more control over production and worker responsibility is increased. Some companies that have invested billions in new capital equipment have found that genuine employee involvement and good labor-management relations are ultimately more important.

No less than 25 of these new manufacturing centers will be regional technology alliances devoted to regions hit hard by defense cut-backs. These alliances could promote the development of dual-use technologies and manufacturing processes on a regional basis.

Extending the Small Business Innovation Research Program (SBIR): In addition to creating a national technology extension service for small and medium-sized businesses, I will also expand the Small Business Innovation Research Program. By requiring that federal agencies set aside 1.25 percent of their R&D budget for small businesses, this program has helped create billions of dollars of new commercial activity while improving the research programs of the federal government. Given this track record, the SBIR program should be doubled over a period of four years to 2.5% to accelerate the development of new products by innovative small businesses.

Funding private sector-led training centers: We also need a fundamental change in the way we deal with R&D and technology if we are to lead a new era of American manufacturing. Currently, our R&D budget reflects neither the realities of the post- Cold War era nor the demands for a new national security. At present, 60% of the federal R&D budget is devoted to defense programs and 40% to non-defense programs. The federal government should aim to restore a 50-50 balance between defense and non-defense R&D. That is why I have called for a new civilian research and development program to support research in the technologies that will launch new growth industries and revitalize traditional ones.

This civilian technology program will:

• Invest in private-sector-led consortia: When the private sector creates consortia to share risks, pool resources, avoid duplication and make investments that they would not make without such agreements, government should be willing to do its part. Support for consortia such as the SEMATECH, National Center for Manufacturing Sciences and the Advanced Battery is appropriate. By requiring firms to match federal contributions on at least a 50:50 basis, the government can ensure that we are leveraging public dollars and that they are market-led and market-oriented. Often major companies are reluctant to invest in their suppliers and assist them in quality management techniques, because they fear they will go to another company. Private-sector-led consortia allow the major companies to cure that problem by coming together and agreeing on industry-wide efforts to invest in smaller suppliers. Some of these consortia will be funded by the Advanced Technology Program.
• Inward technology transfer: While we must strengthen the links between American R&D and American jobs, we must also develop a strategy for acquiring, disseminating, and utilizing foreign technologies. Our Government must increase the collection, translation and dissemination of foreign scientific and technical information.

Increasing dramatically the percentage of federal R&D for critical technologies. I will view the support of generic industrial technologies as a priority mission. The government already spends $76 billion annually on R&D. This funding should be refocused so that more resources are devoted to critical technologies, such as advanced materials, information technology and new manufacturing processes that boost industrial performance.

At present, 60% of the federal R&D budget is devoted to defense programs and 40% to non-defense programs. This level of support for defense R&D is a holdover from the massive arms build-up of the 1980s. At the very least, in the next three years the federal government should shift the balance between defense and non-defense programs back to a 50-50 balance, which would free-up over $7 billion for non-defense R&D. Having achieved this balance, the government should examine whether national security considerations and economic conditions warrant further shifts.

I will also create a civilian research and development program to support research in the technologies that will launch new growth industries and revitalize traditional ones.

This civilian technology program will:

• Help companies develop innovative technologies and bring new products to market;
• Take the lead in coordinating the R&D investments of federal agencies; and
• Cooperate and consult with industry, academia and labor in the formulation and implementation of technology policy and R&D programs.

Advanced manufacturing R&D: The United States is currently underinvesting in advanced manufacturing R&D. The federal government should work with the private sector — with the private sector taking the lead — to develop an investment strategy for those technologies critical to 21st century manufacturing.

Following the lead of my running mate, Al Gore, and several of his colleagues, we must do more to support industry’s efforts to develop the advanced computer-controlled equipment (“intelligent machines”) and the electronic networks that will enable American factories to work as quickly and efficiently as their Japanese counterparts. These technologies also include flexible micro- and nanofabrication, simulation and modeling of manufacturing processes, tools for concurrent engineering, electronic networks that allow firms to share business and product data within and between firms, and environmentally-conscious manufacturing. According to industry experts, the United States has an opportunity to capitalize on the emerging shift from mass production to flexible or “agile” manufacturing.

Leveraging the existing federal investment in technology to maximize its contribution to industrial performance. R&D conducted at the federal labs and consortia should be carefully evaluated to assure that it has a maximum impact on industrial performance. Furthermore, cooperation between universities and industry should be encouraged.

America’s 726 federal laboratories collectively have a budget of $23 billion, but their missions and funding reflect the priorities that guided the United States during the Cold War. Approximately one-half of their budget is directed toward military R&D. By contrast, the budget for the National Institute for Standards and Technology (NIST) — the only federal agency whose principal mission is to assist industry — accounts for less than one percent of the total federal lab budget. Despite several years of legislative reform and many new directives, the labs still do not have the autonomy or funding to pursue joint ventures and industry aggressively.

These labs and other private non-profit research centers are national treasures because they house large, multi-disciplinary teams of researchers who have honed the skills of balancing basic and applied research for long-term, mission-oriented projects. It would take years to match these special capabilities elsewhere. Today, the labs and industry cooperate on defense needs; we need to change regulations and orientation to get this cooperation on technology development for commercial usage.

To remedy these problems, I propose the following:

• The budget of the National Institute of Standards and Technology should be doubled. Federal labs which can make a significant contribution to U.S. competitiveness should have 10 to 20 percent of their existing budget assigned to establish joint ventures with industry.
• Private corporations should compete for this funding through review by panels managed by the labs and made up of corporate and academic experts. Lab directors should have full authority to sign, fund and implement cooperative R&D agreements with industry. Some labs, such as NIST, already have this authority, but others do not.
• Industry and the labs should jointly develop measures to determine how well the technology transfer process is working and review progress after 3 years. If these goals have not been met, industry and the labs should reevaluate their involvement, and funds should be redirected to consortia, universities and other organizations that can work more effectively with industry for results.
• University research accounts for a large part of the federal basic research budget. Funding for basic university research should continue to be provided for a broad range of disciplines, since it is impossible to predict where the next breakthrough may come.

While maintaining America’s leadership in basic research, government, universities and industry must all work together to take advantage of these new breakthroughs to enhance U.S. competitiveness.

Cooperative R&D programs represent another opportunity. Consortia can help firms share risks, pool resources, avoid duplication, and make investments that they would not undertake individually. By requiring that firms match federal contributions on at least a 50:50 basis, the government can leverage its investments and ensure that they are market-oriented.

Many industries are demonstrating a new-found willingness to cooperate to meet the challenge of international competition: SEMATECH has proven to be an important investment for the industry and the Nation. It has helped improve U.S. semiconductor manufacturing technology, helped reverse the decline in world-wide market share of U.S. semiconductor manufacturing equipment companies, and improved communications between users and suppliers. U.S. automakers have recently formed the United States Council for Automotive Research to develop batteries for electric cars, reduce emissions, improve safety, and enhance computer-aided design. The Michigan-based National Center for Manufacturing Sciences, which now has 130 members, is helping to develop and deploy the technologies necessary for world-class manufacturing. The Microelectronics Computer Technology Corporation (MCC) is developing an information infrastructure which will enable businesses to develop, manufacture, deliver and support products and services with superior speed, flexibility, and quality. U.S. steel-makers are cooperating to develop manufacturing processes which would use less energy, create fewer pollutants, and slash the time required to turn iron ore and coal into steel.

A Clinton-Gore Administration will work to build a productive partnership between government, research labs, universities, and business.

Creating a world-class business environment for private sector investment and innovation. Changes in America’s tax, trade and regulatory policies are also needed to help restore America’s industrial and technological leadership. In a global economy in which capital and technology are increasingly mobile, we must make sure that the United States has the best business environment for private sector investment. Tax incentives can spur investment in plant and equipment, R&D and new businesses. Trade policy can ensure that U.S. firms have the same access to foreign markets that our competitors enjoy in the U.S. market. Antitrust reform will enable U.S. firms to share risks and pool resources. Strengthening commercial sections of our embassies will increase our ability to promote U.S. goods abroad. Streamlining export controls will reduce the bureaucratic red tape which can undermine competitiveness. And an overhaul of cumbersome defense procurement regulations will strengthen both our civilian and defense industrial bases.

Permanent incentives for private sector investment: Too many federal incentives meant to spur innovation are on-again-off-again programs that industry views as unreliable. As a result, they have not realized their full impact. Several permanent tax measures should be put in place immediately to stimulate commercial activity. They include the following:

• Make the R&D tax credit permanent to provide incentives for U.S. companies that invest in developing new technology.
• Place a permanent moratorium on Treasury Regulation 1.861-8: This regulation increases the effective rate of U.S. taxation of R&D and creates a disincentive for companies to conduct R&D in the United States.
• Provide a targeted investment tax credit to encourage investment in the new equipment that we need to compete in the global economy, and ensure that depreciation schedules reflect the rapid rate of technological obsolescence of today’s high-tech equipment.
• Help small businesses and entrepreneurs by offering a 50% tax exclusion to those who take risks by making long-term investments in new businesses.

An effective trade policy: The Bush-Quayle Administration has failed to stand up for U.S. workers and firms. We need a President who will open foreign markets and respond forcefully to unfair trade practices. I will:

• Enact a stronger, sharper Super 301 to ensure that U.S. companies enjoy the same access to foreign markets that foreign companies enjoy to our market.
• Successfully complete the Uruguay Round. This will help U.S. manufacturers and high-tech companies by reducing foreign tariffs, putting an end to the rampant theft of U.S. intellectual property, and maintaining strong disciplines against unfair trade practices.
• Insist on results from our trade agreements. Although the U.S. has negotiated many trade agreements, particularly with Japan, results have been disappointing. I will ensure that all trade agreements are lived up to, including agreements in sectors such as telecommunications, computers and semiconductors. Countries that fail to comply with trade agreements will face sanctions.
• Promote manufactured goods exports by small and medium companies: To promote exports of manufactured goods, I will strengthen the commercial sections of our embassies abroad so that they can promote U.S goods, participate in foreign standards-setting organizations, and support the sales efforts of small and medium-sized businesses. We should also provide matching funds to trade associations or other organizations who establish overseas centers to promote U.S. manufactured goods exports.

Streamline exports controls: Export controls are necessary to protect U.S. national security interests and prevent the proliferation of nuclear, biological and chemical weapons. Nonetheless, these controls are often overly restrictive and bureaucratic, creating a mountain of red tape and costing the U.S. tens of billions of dollars in exports — while undermining the competitiveness of the high-tech industries on which our national security depends. The United States should:

• Further liberalize East-West export controls that are unnecessary given the end of the Cold War.
• Avoid unilateral export controls and controls on technology widely available in world markets. Unilateral controls penalize U.S. exporters without advancing U.S. national security or foreign policy interests.
• Streamline the current decision-making process for export controls. While our competitors use a single agency to administer export controls, the United States system is often characterized by lengthy bureaucratic turf wars among the State Department, the Commerce Department, the Pentagon’s Defense Technology Security Agency, the Arms Control and Disarmament Agency, the Department of Energy, and the National Security Agency.

Antitrust reform: Increasingly, the escalating cost of state-of-the-art manufacturing facilities will require firms to share costs and pool risks. To permit this cooperation, the United States should extend the National Cooperative Research Act of 1984 to cover joint production ventures.

Civil-military integration: Department of Defense procurement regulations are so cumbersome that they have resulted in an unnecessary and wasteful segregation of our civilian and defense industrial bases. The military specification for sugar cookies is 10 pages long. Government procurement is so different from private sector practices that companies now set up separate divisions and manufacturing facilities to avoid distorting the commercial part of their business. The U.S. must review and eliminate barriers to the integration of our defense and civilian industrial base. These barriers include cost and price accounting, unnecessary military specifications, procurement regulations, inflexibility on technical data rights, and a failure to develop technologies in a dual-use context.

Taken together, the six initiatives discussed above comprise a technology policy that will restore economic growth at home, help U.S. firms succeed in world markets, and help American workers earn a good standard of living in the international economy.

3DO, AFTER THE DUST SETTLES
How are they going to make it work?

After the amount of dust kicked up by the long-awaited announcement of the 3DO Interactive Multiplayer at the Consumer Electronics Show earlier this month, it’s somewhat unbelievable that there could be anything more to say on the subject. A long valentine from the Wall Street Journal, plenty of coverage on major TV networks, actual excitement on the show floor — Trip Hawkins’s “great moment,” as he happily called it from the stage, certainly did not go unobserved.

And that’s as it should be. At the very least, if 3DO never makes a dime off its technology (which is not likely to be true), it has made a great and needed contribution to the nascent industry of interactive multimedia by raising the bar faster and farther than anyone else has been able to do. From this moment forward, anyone introducing a new video game machine or a consumer multimedia player to the market, or attempting to sell one that’s already on the market today, will be forced to match the performance and specs of 3DO if it wants to be taken seriously.

One heck of a spec. The CES demonstration was impressive, even more so when Hawkins informed us that the alpha software was only running at half speed. When it is shipped in October, however, he promises the 3DO player will deliver 50 times the performance of today’s standard personal computers and video game systems for graphics and animation; the ability to use millions of colors simultaneously for realism; CD-quality sound with digital signal processing; full-screen, full-color and full-motion video (30 frames per second); a sophisticated central processor (called a RISC chip) for interactive applications; a double-speed CD-ROM player for fast data access and transfer; and compatibility with music and Photo CDs.

An MPEG digital video cartridge will be available not long after the player is shipped, and Hawkins says a “network” version will be available in 1994.

Microcosmically speaking, nearly everything is right about 3DO’s technology, its partners and its business plan. It has the best chance of success of any new platform vendor to date. But in the bigger world, where sharky companies like Nintendo and Sega aren’t likely to hand over their market share on a platter, Hawkins may face the fight of his career.

A SIMPLE PLAN

Hawkins’s plan for 3DO is fairly simple. First, design a consumer graphics machine that can do killer video games. Make it play other kinds of discs so it’s easier to sell and has a growth path out of video games. Make hardware licenses available free to any manufacturer who wants to build one, deliver a rebate for every machine sold, and leave the architecture open so that vendors can create arrays of products with different capabilities so they can easily differentiate themselves in the market.

Partner with some of the largest consumer electronics hardware companies in the world — Matsushita and AT&T, for example — who will exploit the possibilities of an open architecture, manufacture and sell your technology through their massive retail pipelines, and attract other manufacturers simply via their presence in the market.

Then, since software is key, partner with some of the largest media companies in the world — Time Warner and MCA, for example — that are committed to developing the “next generation” of entertainment products. Lure other video game developers by giving them a significantly better deal than they get from the prevailing market leader (i.e., a $3-per-unit fee instead of the $10-per-unit that Hawkins believes archrival Nintendo collects), promise that they will never have to pay a dime more, and keep them happy with massive support and sophisticated development tools.

CAN YOU SPLIT HARDWARE AND SOFTWARE AND STILL WIN?

Some skeptical video game developers wonder whether it is possible to separate the hardware and software businesses and still have both sides make money. Their skepticism is understandable: if they have never done video game titles, that’s the only model they know. But how do you break the chicken-and-egg cycle of attracting vendors and developers to a new, unproven platform?

This is part of the beauty of the 3DO strategy. Hawkins estimates that Nintendo and Sega charge their developers a royalty of about $10 per manufactured unit of software. For 3DO developers, he slashed that price by more than two-thirds, to $3. A percentage of this money will be used to continue development on the 3DO system; the rest will be bounced back to hardware companies as incentives to stay committed to the platform.

In addition, Hawkins’s research shows that a $100 video game machine costs about $75 to make and wholesales at about $85; the manufacturer and retailers make almost nothing from them.

However, when 3DO is shipped in October at $700 SRP, Hawkins says its manufacturing costs will be about $325, it will wholesale at about $500 and retailers will put about $200 cash money in their pockets for each one sold. That’s about a 35 percent gross margin; the average margin in the consumer electronics business is about 32 percent.

“Over time, parts costs will drop,” says Hawkins, “but the same margin structure will remain.” As a result, he figures vendors and retailers will be much happier to make and sell 3DO boxes than retailers are to sell Nintendos today. And happy retailers make sales.

In addition, he says, there’s enough play in the margins and enough money to be made off reasonably priced software that he believes retailers will be willing to lower the price of the hardware so they can set the software hook.

HOW MUCH CLOUT DO NINTENDO AND SEGA HAVE?

Be that as it may, it’s hard to imagine Nintendo and Sega executives are taking this lying down. Their response to 3DO is likely to be the biggest challenge Hawkins will face because they have the attention, and to some extent the wallets, of their existing customers.

Nintendo has already announced a “Super FX” add-on that is claimed to provide some of the graphics power that 3DO is boasting for a significantly lower cost (i.e., less than $100). In addition, a Jan. 3 press report out of Japan claims that Nintendo plans to build a CD-ROM machine based on the NEC V810 RISC chip, the same type of processor (a RISC chip) that 3DO has built its machine around. (The rumor about this new Nintendo player was that it was built around a MIPS RISC chip, but sources at MIPS say this isn’t true.)

Nintendo hadn’t made any announcements by press time about releasing this new machine in the U.S., but it doesn’t take a rocket scientist to figure out that it intends to go head-to-head with 3DO if there’s even a whisper of demand for a very high-performance game machine. Though it’s next to impossible that Nintendo could deliver a graphics computer of 3DO’s sophistication at a reasonable cost any time soon, it’s not necessary actually to deliver 3DO performance. All Nintendo has to do is provide 50 percent performance for 25 percent of the price, and 3DO sales will certainly suffer.

WHY AND HOW 3DO WILL MOVE QUICKLY BEYOND VIDEO GAMES

For many years now, people in the digital media world have been expecting video games to be the “back door” winner in the interactive multimedia platform wars. They expected the company to move quickly to hook Game Boys or Genesis machines out of kids’ bedrooms and into the living room to connect with online services, cable TV, CD-ROM peripherals, etc. But aside from a couple of eminently forgettable exceptions such as language software and stock quotes, they’ve put very little energy into other applications, and Nintendo and Sega may soon rue a missed opportunity.

As part of his usual spiel, Hawkins estimates that by the end of one year, between 500,000 and one million 3DO machines will be bought by early adopters and innovators who always buy when there’s a performance increase of magnitude, as there is with 3DO.

Although games are what will get 3DO into the living room, it is called a “multiplayer” for a reason. That’s why it is so important that people who are not interested in the game market are paying close attention to what 3DO is doing. If successful, it will place in homes large numbers of the most powerful, most sophisticated and most broadly capable box yet conceived.

Partners provide clout for 3DO. This is where 3DO’s impressive array of partners is liable to tilt the scales toward success. Where Nintendo and Sega have but one purpose, 3DO’s network of support includes some of the largest companies in the world — all of whom say they’re committed to moving interactivity into the living room, where they can forge new markets far more diverse than the pre-pubescent boy who is addicted to video games.

MOVING INTO THE WORLD OF THE STORY

Skip Paul, the executive VP at MCA who’s been shepherding the 3DO project both through his organization and Matsushita (MCA’s parent company), says he’s been waiting a long time for 3DO to come along. Despite its vast archives, MCA hasn’t bothered to build titles so far because “until now, the technology hasn’t offered us the ability to develop stories — comedy, drama,” says Paul. “But the 3DO hardware has technical features that will allow stories to be told.”

Paul says MCA is working on entertainment titles that will be ready when the player is shipped, and is putting together an interactive studio as well. He’s starting to gather creative people to work on interactive projects that are very different from anything available today. “This is a significant opportunity for us to take our existing properties and skills and get into a new software business,” says Paul. “It’ll go in a hundred different directions.”

Existing game developers such as Hawkins’s Electronic Arts, Spectrum Holobyte and nearly 100 others are equally excited about developing for 3DO. It presents them with the opportunity to go far beyond what they have done before. Like game players themselves, many are bored and frustrated with trying to maneuver around all the same old hardware limitations. They have ideas that need wings, and it’s clear that many of them see 3DO as the means to fly. This is a powerful motivation. Market realities can temper this desire, but if any people can rationalize a good business by doing what they really want to do in their hearts, they will almost certainly follow the heart.

Hardware people seem to sense a new creative potential in 3DO as well. Adam Yokoi, vice president of technology for Matsushita and another 3DO partner, is also convinced that the 3DO player will become as ubiquitous as a TV receiver or a VCR. AT&T’s last-minute entry as a 3DO partner also bodes very well for the company. Clearly it will do more than manufacture boxes; 3DO is likely to play a significant role in AT&T’s growing interest in cable television and delivering video programming into the home. AT&T Communications is a leading developer of decompression algorithms for the cable industry, and is one of the companies manufacturing guts for digital set-top boxes. If it decides to use 3DO technology for those boxes, 3DO would be immediately and powerfully connected to cable giant TCI, General Instruments and the nation’s cable operator.

Beyond set-top boxes, 3DO partner Vinod Khosla, of the venture capital firm Kleiner Perkins Caufield & Byers in Palo Alto, CA, says he’s fascinated by the possible variations on 3DO hardware that are bound to be developed after the CD version is shipped. “You might see someone build a built-in video editor for home movies,” he says. “You could build a whole home video control system. You could build a 3DO box with network connections and offer a whole set of services over the phone lines. I’d love to see innovative projects like that.”

Combine these visions with titles built from what may be the best collection of copyrights in the world — motion pictures, TV, animation, music, photo and interactive CDs — and the cable TV clout of Time Warner — and it’s possible to imagine a team like this successfully driving a flying wedge into whatever Nintendo or any other competitor has to offer.

THE VIDKID GROWS UP, AND DOES THE RIGHT THING

Many years ago in an interview, Trip Hawkins declared that the video game of the future would be one that you could be immersed in rather than watch. He’s pushed hard on a trusted team to make technology fit that vision, and the results are impressive. Is 3DO the right idea? Yes. Will it be a success? That depends on how quickly it responds to the vicious competition that’s bound to come from the video game world, and how quickly it can branch out from the video game buffs who will certainly be its first customers. Frankly, despite increased sales of CD-ROM drives, no other CD-ROM format and/or consumer multimedia player on the market can touch 3DO’s performance, so that category of competitor is not likely to make any further headway into the “living room” market that 3DO is targeting.

Grilling Hawkins on the minutiae of 3DO’s plans, it seems as if there isn’t a base he hasn’t covered, either by forethought or the bloody hindsight of experience. Even seasoned skeptics find it hard to find anything wrong with this company’s plans. No matter what the outcome for 3DO, however, the digital media industry should thank Hawkins for having the guts to raise the bar so high in a market already so splintered. It was a tough job, and we’re glad he did it.

Denise Caruso, Jonathan Seybold

PARAMOUNT ESTABLISHES TECHNOLOGY GROUP
Four new units cover creative and business angles

Paramount Communications Inc., one of the largest publishing and entertainment companies in the world, recently made public the development of the Paramount Technology Group, a new operating unit based close to Silicon Valley, with a charter to explore and develop content for emerging technologies.

The group, which quietly set up shop this past November in Palo Alto, CA, is headed by Keith Schaefer, former CEO of Paramount’s Computer Curriculum Company (CCC) educational publishing unit. In addition to being named president of the Technology Group, Schaefer also has been named a vice president of Paramount Communications, the parent company. He will report directly to Paramount’s senior executives in New York, who he says are completely behind this new venture.

“The formation of the Technology Group was a vision that was shared by all our senior executives at Paramount,” says Schaefer. “We realize that technology will dramatically change the way content is developed, designed and distributed in the 21st century; it will create a whole new business. We felt that development couldn’t occur within the separate companies [under the Paramount umbrella]; it had to be centralized through Paramount Communications.”

THE NEW APPROACH TO BUSINESS: PLAY NOW, PAY LATER

The Technology Group’s mission is to research and develop multimedia titles, electronic books, interactive television programming, location-based entertainment and virtual reality installations for all of the different operating units under Paramount Communications, including Paramount Pictures, Paramount Publishing (at this point only Simon & Schuster), Madison Square Garden and Paramount Parks (Great America, among others).

To sweeten the pot further, the group will be funded by Paramount Communications and is not expected to bring “any great profit” immediately from its forays into digital media, according to Schaefer. (He was unwilling to discuss the group’s finances in detail.)

To help the group fulfill its charter, Schaefer says, Paramount structured four divisions within the Technology Group to cover all the creative and business aspects of developing new media. They include the Technology Council, Media Kitchen, Strategic Investments and New Ventures.

Roundtable discussions. The Technology Council “acts as a focal point for formalizing Paramount’s approach to technology,” says Schaefer. It includes a select group of senior executives from each of the operating units within Paramount Communications.

As part of its charter, the council plans to examine prospective movie and TV scripts as well as book projects for their potential to transcend Paramount’s traditional education and entertainment media, according to Schaefer. It will eventually license and produce future content specifically for digital media products.

“No deal will be made from this day forward without us trying to negotiate digital rights,” says Schaefer. “In some cases we will go back and get them. Also, we will actually look at a movie deal to see what are its chances to make it into the video game market or as an interactive learning title.” (For more on developing content for emerging technology markets, see Vol. 2, No. 7, p. 12.) “Starting now, entertainment and publishing companies must begin to look at how they can maximize and repurpose their investments in content,” says Schaefer. “Therefore whether we are looking at movie deals, books or a TV series, it is imperative to consider the possible digital media applications.”

The council also plans to research and publish its findings on technologies such as networking and virtual reality. For example, the group is currently evaluating the different HDTV standards to see which will best represent the diverse content from each of the Paramount operating units.

What’s cooking in the kitchen? While the council wields the power behind the scenes to direct Paramount’s technology course, the Media Kitchen is where new products and services for the various operating units within Paramount will be researched and prototyped.

“For instance,” says Schaefer, “if one of the divisions wants to see if we could make Entertainment Tonight interactive, then we will try it first in the Kitchen.”

The Media Kitchen is headed by Sueann Ambron, cofounder of Apple’s Multimedia Lab and former vice president of Paramount’s advanced media group. In addition to a full-time staff, including Doug Crockford, formerly of LucasArts Entertainment, Kathy Wilson from Bank Street College and Janey Fritsche, formerly a consultant to Apple’s Advanced Technology Group, the Kitchen will rely heavily on outside designers and multimedia producers.

The Media Kitchen will sponsor an artist-in-residence program under which new media artists, such as actor Shelley Duvall (whom Schaefer says he has been speaking with), will be invited to work with digital media.

Building partnerships. The new “strategic investments” division of Paramount Communications focuses on the business side of creating new media. Its function is to create alliances with — and offer financial support to — business ventures that exist outside of Paramount, but which share similar goals for the advancement of emerging technologies. According to Schaefer, this division will be conservative in its investments, but not in its alliances.

The group already has strong ties with Apple Computer, Microsoft and 3DO, agreeing to develop interactive titles for the Macintosh, Windows and the new 3DO game machine. (See story, p. 13.) Schaefer says this division is also looking at possible alliances with First Cities (see Vol. 2, No. 7, p. 3) and cable giant TCI, but has made no commitment to either.

“Our job is to pick the winners,” says Schaefer, “and that’s something I do really well.”

In addition, the strategic investment division has become a sort of clearinghouse for all of Paramount’s intellectual property and new media business negotiations. The group, headed by Bruce Churchill, former vice president of financial planning at Paramount Pictures, handles licensing agreements, joint product development contracts, joint ventures, acquisitions and investments for Paramount Communications.

‘The most enlightened.’ Schaefer says Microsoft chairman Bill Gates called Paramount “the most enlightened company in Hollywood” when he learned that it had created a single entity to handle these negotiations. (This must mean Microsoft has a big deal cooking with Paramount….)

In any case, the aspirations of the Technology Group are not limited to investing in outside companies and forming alliances. It is also committed to developing new businesses within Paramount under its fourth — and least discussed — division called New Ventures.

Though Schaefer was a bit sketchy on the details, New Ventures’ charter is to “incubate” companies in Palo Alto and then integrate them into existing operating units. “We will start a consumer business with a Paramount name on it,” he says. “A whole new program, for example, that will explore VR development.” (It makes sense that these small companies would develop in order to turn product prototypes created in the Media Kitchen into commercial reality.)

PLANS ARE GOOD, BUT LET’S SEE SOME ACTION

Right now much of what is going on within Paramount’s Technology Group involves a lot of talk. However, Paramount is the first major media company to make a corporate-wide commitment to new technology. Unlike Time Warner, which has taken a scatter-shot approach to new media, hurling several small niche companies out into the market to see if any of them hit on something big, including Warner New Media and the Quantum cable project in Queens, Paramount has a clear focus and a strong strategy that is being developed with the financial and visionary support of the parent company.

Paramount seems to understand that it is going to take time and money to uncover the real potential of these new technologies instead of using them to “repurpose” the company’s archives.

Equally important, the Technology Group holds the same corporate status level as Paramount Pictures or any of the other proven media entities under the Paramount Communications umbrella.

The ‘Show Me’ city. Skeptics in Hollywood, who wish to remain nameless, so far remain unimpressed. “I take all these announcements with a grain of salt,” says one Hollywood insider. “The world is becoming digital and the creative community is finally responding to it. But really, it’s the audiences [and consumers] who will determine who the major players are in this new market. And they want to see something, not hear about it.”

According to Schaefer, they may not have long to wait. He says the Technology Group plans to ship products with the Paramount name on them by the fall of 1993. The company will focus at first on the interactive learning market, since Paramount is the largest educational publisher in the world. “Our beachhead,” he says, “will be interactive learning… you can expect entertainment titles to follow.”

Janice Maloney

News from CES and Macworld
1993 enters with a clash between two giant expos

First of all, we’d like to offer a great big “thanks a bunch” to Mitch Hall Associates and the Electronic Industries Association, who managed to schedule two of the industry’s biggest trade shows right smack on top of each other this year, and the week after New Year’s to boot.

Other than that, however, there was certainly enough excitement to go around. The two product stories that made the biggest splashes — 3DO from the winter Consumer Electronics Show in Las Vegas, and the Apple Adjustable Keyboard — are discussed elsewhere in this issue. But here’s a glance at the other tidbits of interest from the Digital Media editorial staff.

PDAS FOR DAYS, WE TELL YA!

Whether you call them personal digital assistants (PDAs), personal information processors (PIPs) or “Wizards on Steroids,” the next generation of pocket organizers is on the horizon — well, maybe make that just over the horizon. Both Tandy/Casio and Apple/Sharp gave product updates to the press at winter CES last week, showing working prototypes of the new devices but revealing precious little in the way of specifics.

The Tandy/Casio partnership yielded a first look at Zoomer, a jacket pocket-size device with a stylus. The device runs under GeoWorks’ GEOS operating system, which was designed for such devices and consumes a remarkably small amount of power (the three AAA batteries last for up to 100 hours under normal usage).

Palm Computing of Palo Alto, CA, created the initial applications and the handwriting recognition software. Tandy and Casio also announced new application partners America Online (see p. 27) and Intuit (makers of the popular Quicken program), which will be developing communications and financial analysis applications respectively.

Zoomer’s interface allows the user to enter data in one of three ways: electronic “ink,” text or keyboard. Data either can be stored in the user’s handwriting, the machine can interpret the handwriting and store the data as text, or the user can enter text using a “virtual” keyboard and stylus.

Each data field will accept either text or “ink,” although only text is searchable. In this way, the Zoomer product reduces the reliance on handwriting recognition and the delays associated with interpretation. Each individual decides how he or she wants to store the information.

But how’s this for specific: Zoomer is expected to be released “this summer,” according to Tandy’s Howard Elias, with a list price that’ll be “closer to $600 than it is to $1,000.”

NEWTON: A STUDY IN VAGUENESS

Something must have invaded the Las Vegas water supply and made vendors incapable of forming sentences with actual facts in them. Though it was clear that Apple and Sharp had made a lot of progress since John Sculley announced Newton technology at summer CES in Chicago, the Newton update in Las Vegas was a study in vagueness.

Here’s a loose quote from Apple’s new vice president and general manager of Personal Interactive Electronics, Gaston Bastiaens: “We will be releasing a family of Newton products (Q: How many? A: Several.) sometime in the middle to end of 1993, at a price somewhere less than $1,000.” Okay, yes, thank you very much.

Sharp and Apple demonstrated a working, “no wires” prototype of the Newton and of the “data soup” concept that’s central to its operating system (see Vol. 2, No. 7, p. 24). All data entered on the scratch pad is placed in context by the device and acted upon. For example, a small graphic and a note can be faxed to a colleague by simply writing “fax Bob.” The Newton will automatically search the database for all Bobs and allow the user to choose the correct one. It will then take the page and process it for sending.

This kind of system requires far more processing overhead than Zoomer, as all handwritten data must be interpreted. Apple’s handwriting recognition technology is impressive, but it considerably slows down the process of data entry, and must also pull hard on the device’s processing power: Newton is likely to last for only about eight hours between recharges.

Communications are critical to this new class of product, and both Newton and Zoomer are expected to include a number of telecom options. Both have infrared connections, for “squirting” business cards between devices, and both will be able to link to pager networks or modems through either serial ports or add-in PCMCIA cards.

In addition, Apple has an agreement with Motorola to provide a radio-based receiver for wireless messaging. Both devices will be able to connect to personal computers, Macintosh or Intel-based, for exchanging information.

Bubble-busting. One question that comes to mind, however, is whether the two competing devices will be able to share information with each other. Assuming that the infrared protocols are the same, it would be up to the individual vendors involved to ensure that the data is compatible (which shouldn’t be too difficult considering most of it is ASCII text or bitmaps anyway). If this is truly going to be a new class of products for professionals (and rich consumers), everyone involved had better treat it as a single market, or the splinters will burst everyone’s bubbles.

RADIO DATA BROADCAST SYSTEM DEBUTS

The Electronics Industries Association (EIA) and the National Association of Broadcasters (NAB) demonstrated the first iterations of the Radio Broadcast Data System at this year’s CES.

RDBS is a digital signal, carried on a sub-band of conventional FM radio channels. It allows programmers to transmit station information, such as call letters or program format, as well as allowing public agencies to broadcast traffic or weather bulletins. Promoters say that it’s a good first step to all-digital radio broadcasting, which is certainly in the cards.

The FCC has recently announced a revamping of the Emergency Broadcast System that will utilize RDBS, and will be fully implemented in the U.S. by the end of 1994. Because of the ability to transmit digital data, an RDBS car or home radio can be commanded to turn on and/or switch stations (and increase volume levels) to receive emergency information.

Winter CES was the first showing of RDBS-compatible home and auto radios, as well as the announcement of 42 radio stations around the country that are already broadcasting the signal. RDBS radios all have at least an eight-character display; circuitry to receive the digital signal only costs about $8. RE America, Inc., which manufactures the receiver silicon, hopes to have the entire package down to a single chip by the end of the year. The encoder/broadcast system is quite inexpensive as well, at less than $2,500, and NAB believes the FCC may require radio stations to have the equipment on site.

There was a demonstration of an RDBS-compatible home smoke detector, complete with a speaker, that is designed to be individually programmed for individual homes and/or entire cities. “You could wake up 80 million people and speak to them through their smoke detectors!” said an RDBS promoter proudly.

Supposedly the addresses of individual smoke detectors would be held by the local civil defense agencies, but more than one skeptic at the press conference rolled his eyes thinking about what a Captain Midnight-style prankster — the guy who took over the cable airwaves a few years ago — could do with such a database.

But even without the weird smoke detectors, we predict that pirate radio hobbyists are going to have a field day with RDBS.

SKY KING DROPS SKYPIX REORG PLAN, DIRECTV ANNOUNCES PROGRAMMING

We came across an interesting tidbit at CES: the news that Paul Allen’s Sky King Investment Corp., one of the largest investors in the failing SkyPix Corp., has withdrawn its Chapter 11 reorganization plan that it had submitted to the Bankruptcy Court. In a prepared statement, Sky King president William Savoy said, “This action allows the Bankruptcy Court to consider the plans submitted by the SkyPix entities without also having to consider the alternative Sky King plan.”

The hearing is scheduled for Jan. 19 in Seattle bankruptcy court. Though Sky King is as closed-mouthed as usual about its connection with SkyPix, we are speculating that Allen hopes the court rejects SkyPix’s reorganization plan so he can come in and scoop up the technology at bargain-basement prices. In another direct quote from a prepared statement: “Mr. Savoy noted that despite withdrawing its reorganization plan, Sky King continues to be interested in applications of digital transmission technology.”

You betcha, especially since Hughes Communications’ DirecTV is starting to rack up programming for its satellite distribution network. At CES, the company announced that it had signed a pay-per-view deal with Paramount Pictures for theatrical films and special events. It also announced a programming distribution deal with The Disney Channel, and will be marketing 19 other cable programming services in rural areas under an agreement with the National Rural Telecommunications Cooperative.

NEW PLAYER FOR DEAD FORMATS

Pioneer introduced a new multiformat “combi-player” that enables the user to play a host of optical formats, including a number of new laserdisc formats created in conjunction with NEC and Sega.

In addition to all the analog laserdisc formats, the player accepts audio CDs, Sega CD or NEC TurboGraphics CD-ROMs, and new laserdisc formats that fall under the Pioneer brand name “LaserActive.”

LaserActive discs come in two flavors, Mega-LD (compatible with Sega formats), and LD-ROM2 (compatible with NEC), and include digital data tracks along with the analog laserdisc video. This enables developers to create titles that combine digital data (text, animations or overlay graphics) with the analog video background.

Quite honestly, this product is about as useless as a screen door on a submarine. While laserdisc has seen a renaissance of sorts recently (sales are slowly but steadily rising), it will be a doomed format as digital video technologies — compact disc, digital videotape or broadcast — take center stage.

Creating new variations of the formats, which are not usable anywhere else, appears to be the height of futility. In addition, a third of the new offerings, the NEC-compatible products, are stillborn: TurboGraphics is running a very distant third to Nintendo and Sega in terms of game platforms.

WHOLE LOTTA VIDEO AT MACWORLD EXPO

The professional digital video crowd was brought to its collective knees (literally, since the booth space was so crowded) while checking out After Effects, the digital post-production compositing software for the Macintosh from CoSA (the Company of Science and Art), based in Providence, RI.

After Effects is a QuickTime-based application that lets individuals combine, layer and composite an unlimited number of movies — of different frame sizes and aspect ratios — and PICT images in a single window. The program immediately shows the outcome of the effect without having to render a new movie or wade through a series of dialog boxes.

Video editors from Disney, Colossal Pictures and Paramount Pictures as well as many successful independent video producers, who were gathered in the CoSA booth, compared After Effects’ capabilities favorably to the functionality of a Harry Suite, a $100,000-plus, high-end post-production system.

Some of the more impressive features include support for time-based effects, so that video editors can change special effects over time using key frames; support for Adobe Premiere and Photoshop filters (as well as its own effects); and high-quality output since the program uses sophisticated rendering techniques (subpixel positioning and full anti-aliasing) to ensure smooth motion when a digital video is “printed” to an analog videotape.

After Effects was released at the show for $899; as of February, the list price will increase to $1,295. The application comes bundled with SuperMac Technology’s $5,999 DigitalFilm video editing system.

AVID DOES EDITING RIGHT WITH NEW DESKTOP SYSTEM

The Avid Media Suite Pro, introduced at the Expo, is the closest thing yet to the way we always thought video editing should be done. Developed by Avid Technology of Tewksbury, MA, makers of high-end, offline digital video editing systems, Media Suite Pro is a true full-screen, full-motion “desktop” computer-based video editing suite for less than $10,000.

The $9,995 package consists of four Macintosh Nubus boards, cables and software as well as an abundance of tutorials, both print and videotape. And while it is not priced for the neophyte videographer interested in exploring digital video — you still must supply the Macintosh (a Quadra, please), external storage system and monitor setup — it does provide video professionals with features they cannot find on other digital video editing suites at that price.

Avid’s desktop system supports real, full-frame 30-fps NTSC or 25-frame-per-second PAL video (no line doubling or other tricks); on-the-fly JPEG compression/decompression (a two-gigabyte disk holds 30 minutes of video); SMPTE time code; four tracks of 44.1-KHz, 16-bit audio (full CD quality); full random access digital video and audio editing down to the frame level, which appears to combine great ease of use with professional-level precision; 32 levels of undo and redo, which makes it easier to experiment with offline edits; a decent library of transition effects; an integrated title generator with fully anti-aliased support for TrueType and PostScript fonts; and Avid’s WordPlot display, which shows each word in a sound track as a horizontal black bar. (This is great for helping you locate your mark in and out points or key frames.)

The Media Suite Pro can import PICT, PICS, Photo CD and Autodesk animation files. It can export QuickTime movies, PICT images of still frames, PICS animations and CD audio.

NEWTEK AND FAST’S DUELING VIDEO SWITCHERS

Somebody planning floor space for Macworld expo obviously had some fun positioning NewTek Inc., the Topeka, KS, company responsible for the Video Toaster, a broadcast-quality video editing system (which did more for the Amiga computer than Commodore ever could) next to its new rival, Fast Electronic, the digital video wunder company from Germany.

Members from each technology team had a field day checking out the competition next door as each group demonstrated its combination digital video effects system, switcher, title generator and audio mixer for the Macintosh. (In both cases the company created the original system for a PC.)

Although Video Toaster has a proven track record and has received much attention from the press as well as producers in Hollywood and New York, it was the Video Machine from Fast that captured the attention of the video crowd. (Perhaps it was because NewTek did the same Video Toaster spiel it has done for the past several industry trade shows.)

Video Machine is a single-board analog editing system that works from videotape decks. Using it, you can combine video with special effects and transitions, computer graphics, titles, animations and music clips from CDs, digital sound files and MIDI equipment. The company claims to have an additional board for full digital video editing, but at this point it can’t even release Video Machine into the United States since it is still awaiting approval from the FCC.

As a final note, rumors are afloat that Fast plans to license a 3D rendering program to bundle with Video Machine if and when it is shipped in the United States.

TELECONFERENCING FROM THE DESKTOP

ShareVision Corp. is shipping ShareView Plus, its hardware and software technology for delivering voice, data and video communication between two Macintoshes over ordinary (POTS) phone lines.

The whole setup, which lists for $4,499, includes a small video camera that sits on top of your Mac and a lightweight, unobtrusive headset as well as ShareVision’s proprietary software technology. The company demonstrated its videoconferencing system on the show floor, calling its San Jose office.

Individuals using the technology can establish normal voice communication through an auto-dialer phone interface on their screen and a hands-free phone speaker and microphone. If the recipient of the call is equipped with ShareView, the caller can then press the Connect button and have the systems set up direct digital contact. This takes 14 seconds for the modems to set up 14.4-kilobit communications, according to ShareVision.

In the digital communication mode, voice is now handled digitally. In addition to voice capabilities users have the ability to collaborate on the same files via a shared “whiteboard” and by creating a “window” that is drawn on screen. (Drawing on the Whiteboard is slow, and the markers used to make notations have very broad tips, so they are not very precise.)

The video capabilities provided in ShareView Plus enable connected parties to see each other in little video windows on screen. (The 14.4-kilobit bandwidth is automatically allocated between audio, shared display screens and video. The video frame rate ranges from 5 fps to 12 fps. We saw mostly 5 to 6 fps transmissions that were very jaggy.)

Going to Windows. It is no secret that since John Meyer, one of the founders and visionaries behind Ventura Software, became president and CEO of ShareVision, the company has made a commitment to bring its technology to the PC. We can expect a Windows version of ShareView Plus within the next six months.

CLI DEMOS VIDEO PHONE OVER ISDN

Not be outdone by ShareVision, Compression Labs called France and Japan during Macworld to demonstrate its desktop videoconferencing system that operates over standard ISDN telephone lines.

The Cameo Personal Video phone system uses the same video technology that CLI developed for the AT&T VideoPhone 2500 — which AT&T dropped in price by about $500 during Macworld Expo. It comes in several different configurations, including the one demonstrated: a Model 2001 for the Macintosh, a Camera Module and a Planet ISDN Nubus card from Euronis, which is now compatible with ISDN-1, the U.S. standard adopted by AT&T, Northern Telecom and Siemens Stromberg-Carlson.

Unlike the ShareVision technology, the CLI system does not provide a shared workspace or whiteboard for collaborative work. It does, however, produce considerably higher-quality images and offer a more acceptable frame rate (15 fps on average). The major obstacle to CLI’s technology at this point is that it requires use of a 56-kilobit ISDN phone line, and they are not exactly widespread at this point. (International connectivity is certified to 17 countries only.)

The CLI system is designed to be used with a Macintosh IIci, IIfx, Quadra and Duo (when equipped with Docking Unit) running System 7.

David Baron, Denise Caruso, Janice Maloney

MODULAR WINDOWS DEBUTS
Doing TV is Microsoft’s new challenge

Late in October, Microsoft publicly announced its plans to enter the world of consumer electronics by creating operating system software for digital consumer devices. Unlike Apple’s Newton strategy, which calls for an entirely new operating system for the new devices, Microsoft developed a stripped-down version of its immensely successful Windows 3.1 called Modular Windows.

Microsoft, which envisions an entire product family based on its Modular Windows technology, has mapped out three areas of focus: consumer information appliances, cable television and personal communications devices. It is now selling a software developers’ toolkit, with source code and sample applications such as an online TV guide, for $99. (For an indepth review of Microsoft’s consumer strategy, see Vol. 1, No. 10, p. 3.)

Modular Windows is a subset of the full Windows operating system. The so-called modular nature of the software allows Microsoft to add or remove functionality depending upon the application. It was designed to take up a very small amount of space, unlike the fully featured Windows software that requires up to 6 MB on a hard disk.

Today Modular Windows is focused on television applications. It is most dramatically different from Windows 3.1 in its elimination of system facilities (such as printer drivers, TrueType fonts and Dynamic Data Exchange) as well as adapting the graphical user interface to one more appropriate for television, which is viewed from a distance measured in feet, as opposed to the normal 18-inch distance to a computer monitor.

Buttons, cursor arrows and the standard display font were all enlarged or redesigned to stand out from the screen. In addition, since the input device is some form of infrared remote control and not a keyboard, IR drivers were added.

VIS AS PROOF OF A MODULAR APPROACH

Of the three categories of appliance recognized by Microsoft, only one is on the market. Tandy’s Video Information System (VIS), a consumer-oriented multimedia player, was the first commercial device to use Modular Windows.

The operating system is contained on a 1-MB, “read-only” chip that functions as the software brains of a Modular Windows-powered consumer device. The hardware itself is essentially a low-end PC clone that uses a remote control instead of a keyboard for input.

Rob Glaser, vice president of multimedia and consumer systems at Microsoft, says VIS was the first “proof of concept” device for Modular Windows, proving at least to Microsoft that there could be a consumer-oriented, television-based information appliance derived directly from personal computing technology. (Our first impressions of VIS are on p. 24.)

Sanjay Parthasarathy, Modular Windows product manager at Microsoft, believes that interactive CD boxes will begin to show their market potential next year, after full-motion video adapters can be regularly included in such products. “Online” or network connectivity will require the addition of a modem (unless manufacturers wise up and spend the extra few dollars to build them in), and will take more time to catch on.

MICROSOFT: THE WESTERN SHOW’S NEWEST EXHIBITOR

Windows as TV interface for programming and services has been quietly under development for more than a year. At the Western Cable Show last month in Anaheim, CA, Microsoft came out of the closet, demonstrating its view of how Modular Windows could add functionality to the cable system, and assist the industry in increasing customer response to advertising via the power of interactivity.

Modular Windows for TV applications will take much longer than CD-based consumer appliances to evolve. Microsoft itself predicts it will take about seven years before most TVs and cable decoder boxes include an operating system of some kind.

So Parthasarathy’s goal at the Western Show was “blow away” the cable industry with examples of how an operating system — Modular Windows, for example — can help the cable industry move into the digital world. As Microsoft continues to develop working relationships with the cable industry, it hopes it will be able to learn what cable viewers want in a TV interface.

On the trade show floor, Microsoft teamed up with Jerrold Communications, a division of General Instruments and makers of cable converter boxes, to demonstrate the potential of a Modular Windows converter box. Along with Insight, Prodigy and TV Guide, Microsoft demonstrated a prototype system that provided online programming services, including searching and sorting of listings by type of program, channel, etc.; supplemental information such as sports statistics or song lyrics; interactive services over Prodigy; and most importantly, transaction capabilities such as the ability to purchase record albums or event tickets.

Beginning in 1993, Microsoft will be conducting field tests of cable delivery systems based on Modular Windows. Working with a number of different cable operators and equipment manufacturers in testbed operations throughout the country, Microsoft has set a number of assumptions and goals to prove to itself and the cable industry.

With different programming options, such as enhanced MTV, ESPN or CNN, as well as interactive services and online transaction capabilities, Microsoft and its partners (whom Parthasarathy would not name for print, but which include some of the biggest operators in the cable industry) hope to measure people’s desires for new services and user interface preferences. (This explains why Microsoft, and many large cable operators, are not members of the Austin-based First Cities group discussed in last month’s Digital Media.)

Glaser hopes these trials will determine the economic viability of both Modular Windows and the products it would enable. Then it would be a matter of “rolling the truck down the neighborhood” signing people up. In the cable industry, says Glaser, “understanding how to get 2–4 percent of the market is extremely difficult, but how to get from 20 to 60 percent is well known. In the computer industry, the first 25 percent is understood; getting above that is difficult.” In other words, selling a new product or service to cable television customers is extremely difficult. Once it takes hold, however, it is relatively easy to sell to large audiences. This is in sharp contrast to the computer industry, which has yet to understand how to mass market its products.

No PDAs yet. Personal communications and organizational products, like those based on Apple’s Newton system technology or the upcoming releases from GeoWorks (with Tandy and Casio, see p. 18), PenPoint (with EO) and others, are still down the line for Microsoft. While these hardware and software companies are actively experimenting with new personal devices, executives at Microsoft have chosen to remain quiet about the PDA phenomenon, except for the expected occasional cheap shots at archrival Apple’s efforts with Newton.

While nobody would directly say so, Microsoft does not appear to have crystallized its strategy/rationale for Modular Windows-powered devices. For that matter, Glaser and others at Microsoft do not seem confident in what the new devices will look like, what they will do or who will buy them. “We’re not sure what to even call those products,” said Glaser.

The arguments remain compatibility of data shared between Big and Little Windows applications, which for some applications might be a valid concern, and consistent development environments between the two systems. This concern assumes that many applications will be shared between the PC and PDA environments, an assumption that is fundamentally flawed since there is virtually no reason to port a PC application to one’s television. The applications are completely different.

‘MEANINGFUL COMPATIBILITY’ IS THE GOAL

According to Parthasarathy, each application of Modular Windows can be developed independently, with the appropriate functionality, and yet each will still be able to utilize the tools and applications that have been developed for the personal computer and the full Windows system.

The Microsoft model follows that of traditional consumer electronics, in which people purchase peripheral devices depending upon their desires or needs. A home may have only a radio, or it could have a stereo receiver, with CD player, turntable, television set and VCR. Each new box can easily be plugged in to the other boxes and function properly. The cable television world has not been as successful at this, with incompatible “cable-ready” televisions, VCRs and converter boxes.

According to Glaser, Microsoft is “breaking down applications piecemeal and trying to find meaningful compatibility.” As an example, he imagines a cable decoder box which, by simply purchasing an additional peripheral, could be upgraded to an interactive player like the Tandy Video Information System.

The underlying theme for Microsoft is the easy migration of information and application development methodology from one device to another. “The approach is to not throw the baby out with the bath water,” according to Glaser. The content should be compatible, even if the user interface and form factors change from device to device. “The only thing that needs to change between television and portable [devices] is the user interface,” said Parthasarathy.

But this assumes that PC software developers and those creating consumer applications actually have something in common. For the most part, they do not. The two are dramatically different. While data compatibility would certainly ease the load in moving the same application across different devices, how many applications would you want to access from a personal computer, your cable system, an interactive media player and a personal communications device?

As we’ve witnessed in many of the “reference” works available for the VIS platform (or Philip’s CD-I for that matter), it is clear that the process of looking up information without a keyboard is extremely cumbersome, and would drive back to the bound pages of a book anyone who does not have hours of free time on their hands (and a very high tolerance for psychic pain). What good, for example, is an electronic cookbook that cannot be attached to a printer and is located in the living room, not the kitchen?

As for cable television, Microsoft is offering something that the cable industry does not have: an operating system and experience in user interface design. But the company certainly does not have the solo offering; Apple, GeoWorks and 3DO are just three companies that have publicly announced their interest in the “device” market, and there are sure to be many others in the coming months.

The questions for Microsoft are whether leveraging off of the personal computer development platforms can actually help create programming and services for the cable industry, and whether Microsoft’s offering will satisfy the average consumer.

David Baron

WHAT DOES VIS STAND FOR?
Maybe ‘Virtually Interminable Searches’?

Tandy loaned Seybold one of its new Video Information System (VIS) home multimedia devices and about 20 pieces of software to play on it, so associate editor David Baron took it home for a test drive. Here are his impressions.

The task in evaluating such a device is determining who is at fault for each of the problems encountered. In this case, the choices are (a) Tandy, (b) Microsoft (for the Modular Windows operating system) or (c) the title developer.

Often all three entities appeared to conspire to create something truly awful and unusable. Occasionally a developer had some measure of success in overcoming the platform’s inherent limitations. The upshot, however, is that on first glance, VIS appears to be a lesson in what the consumer does not want.

The TV was blameless. After hooking up the VIS player to my television set, each session and almost every title left me with a desire to stick my foot through my TV which, for once, was blameless. It would appear that Tandy, and its partner in crime, Microsoft, have done very little right in trying to create a consumer multimedia player.

The player itself is remarkably plain, with only two buttons on the front panel: eject and power. In addition, Tandy includes only an RF cable to attach the player to a VCR, cable box or directly to the television set. There are RCA plugs (standard stereo cables and plugs) in the back of the player to connect with audio and video components, but in what appears to be either a cost-cutting measure or an underestimation of what equipment the consumer is likely to already own, Tandy does not include RCA cables. Certainly if this machine is to replace the standard CD Audio player in the home, it should be equipped to do so “right out of the box.”

THREE PROBLEMS: SPEED, GRAPHICS, INTERFACE DESIGN

There are three main problems to be found in both the VIS box itself and its titles: speed, or lack thereof; unrecognizable graphics; and interface design that is inconsistent at best, truly ridiculous at worst.

The central processor for the VIS player is a 12-MHz Intel ‘286 microprocessor — well on its way to being extinct in the personal computer world — with only 1 MB of accompanying RAM. (For sake of comparison, most personal computers today are shipped with 4 MB.) Tandy has added some special processors for graphics and television display, as well as reorganized the data bus to expedite the transfer of information and interactivity.

BUT EVEN WITH ALTERATIONS, IT’S STILL TOO SLOW.

We’re not talking about a few seconds to find a piece of information, but sometimes 15 to 30 seconds or more for the machine to respond to a click of the remote control device.

After such a click, there is rarely any kind of feedback that you have initiated an action, except that the cursor/arrow disappears, and you are left wondering whether you’ve actually initiated an action or just broken or locked up the device.

Actually, the first thing you notice when loading a CD-ROM into the VIS player is that for a full, yawning minute, the screen remains an empty blue with only the Windows hourglass to keep you company before the opening screen pops up. This proved to be an ominous portent of things to (eventually) come.

I have determined that VIS now officially stands for virtually interminable searches.

GUESS WHAT, DEVELOPERS? NTSC IS LOW RESOLUTION!

Slow would be bearable if there was an accompanying trade-off for high-quality graphics. But most of the graphic elements in titles I used reproduced very poorly on a television set.

Detailed icons and elaborate graphics and typefaces — not to mention the cardinal sin for TV graphics, single-pixel lines — do not display well on interlaced NTSC monitors. Yet almost all these elements appear in every VIS title.

Disastrous results. Tandy and Microsoft must have been so convincing in their spiel about how easy it was to move PC-based titles to the VIS platform that most of their developers (most likely with MPC titles on the market already) did not bother to adapt these elements to TV viewing. The results are disastrous.

For example, some use red outlines, of single-pixel widths, to highlight an on-screen “hot” button. These are virtually impossible to see.

In the Compton’s encyclopedia, for another example, the tool bar on the right side of the screen was largely unreadable on a 13 inch television set. To this day, I can’t make out what the icon for hyperlinks is supposed to be. Perhaps the assumption is that anyone with enough money to buy a VIS player would have at least a 25 inch television set to play it on.

Though I hope that’s not true, I still found most of the graphic elements in most of the applications to be too small, with too much detail, to be pleasant or even possible to view on a TV screen.

Buttons for days? Microsoft created standard objects, such as on-screen buttons, arrows and scrolling tools, for developers to use in their work, which are meant to make title creation easier. And most of the developers took advantage of those tools, with very mixed results.

The first generation of titles are pretty darned button-happy. Certainly buttons make user choices more obvious (“click here for personal biography,” or “click here for professional history,” for example), but their utility in the user interface is limited, either by how the developer uses the tools, or how the tools were created by Microsoft.

Examples are easy to find: Microsoft added the ability for users to jump or tab from button to button, without having to navigate around the screen with the joystick. On the surface, this sounds like a handy addition, but in practice it is a mess.

Input Device Fu. First of all, the assumption with a joystick-type controller is that you will be able to move the cursor around the screen. If, however, this feature is in place, you may be faced with the strange situation where you thumb to the right, and the arrow moves down and to the left. Or, you have to click through an entire series of buttons and options before you get to the one you want.

In combination with the slow searches, this becomes deeply frustrating. In the Better Homes and Gardens Healthy Cookbook, published by Multicom, I tried to find a recipe for roast turkey. So I clicked on the box called Food Index, then the box “by type” and then the “Poultry” menu (each took more than 10 seconds to load). When the Poultry menu came up, there were a number of recipes displayed in alphabetical order.

FROM MAIN MENU TO ‘TURKEY?’ 43 CLICKS

Only 10 recipe titles display on a screen at one time. At the end of the 10 displayed selections, the cursor jumped to four command buttons on the bottom of the screen, and then back to the top of the list again. In order to continue reading the list, you had to press the “next page” button at the bottom of the screen. Turkey was listed on page four. This means that from the main menu to the turkey recipe, I clicked on the remote control 43 times.

An alphabetical search of recipes took 38 clicks. (Simply to get to the letter T, you have to click through the entire alphabet, one letter at a time. This is particularly frustrating, since the letters are laid out in a grid of six letters wide by four deep, but you can only move through the alphabet sequentially, not randomly.)

Cooking in the living room. You must actually depress the remote control button for every cursor movement; unlike most computers and some telephones, holding down a button for a longer period will not repeat the command. Needless to say, I found the same recipe in my own cookbook many times faster. And the cookbook was in my kitchen, not in my living room.

Along with the tabbing “feature” came another problem: a poor relationship between the display button and the location of the cursor. In one title, the Great Lives series by the JLR Group, there were buttons on the top right and left corners of the screen. The arrow cursor was slightly outside the box on the right, and the action button activated the tool on the other side of the screen (which in this case took me back to the opening menu). Of course, had I been able to see the thin red line surrounding the “hot” button, I might have readjusted the cursor but it was one of the accursed single-pixel lines, so I could barely make it out.

And finally, breaking another cardinal rule of consumer electronics, the buttons on the remote control device cause different actions in different titles. Compton’s encyclopedia uses the “B” action button to move directly to the tool bar, while in Great Lives or the Better Homes Cookbook the same button initiates the current selection.

Less is more better. It would appear that many of the titles first ported to the VIS machine were created with little thought to how people would use them. Only a few of the titles, including Xďphias’s New Basics Cookbook, Brøderbund’s Grandma and Me, and the Discis Kids Can Read series, had a user interface that was immediately understandable and workable.

The best titles were the simplest — they did not require long database searches, but focused instead on the information on screen, with a few multimedia elements added in. This is especially true of the children’s titles, which is where Tandy is staking out its niche for this player.

A FEW TIPS TO MAKE VIS A REAL PRODUCT

But no one will buy a VIS — or any multimedia player — simply for children’s titles. The value of using standard media such as CD-ROMs is that players can, and should, be multipurpose. If Tandy and Microsoft want to make VIS a product with broad appeal, they must at least:

• Stop talking about the ease with which titles can be ported from the MPC platform and start working with the developer community to create interfaces that are simple and intuitive.
• Demand consistency in user interface and remote control use (different buttons cause different actions in various titles).
• Learn how to create graphic elements and icons that are effective on an interlaced, NTSC monitor.

And they must figure out a way to speed up the player’s performance, whether that requires a faster processor and/or more memory. Otherwise, this thing is as stillborn as Microsoft’s MPC, which suffers from many of the same problems, most notably too low a lowest common denominator.

ONE LAST NOTE: HOW TO REACH A LOW BOIL

Modular Windows includes hooks into Video for Windows (VFW), Microsoft’s digital video toolkit. VFW allows title developers to include windows of video in their applications.

In the Better Homes Cookbook, for example, each recipe has a list of video instructions that apply to the cooking terms and skills called for in the recipe. My personal favorite was a video clip titled “Boiling.” After calling for the video to play, and waiting the requisite 15 seconds for it to load into memory, a pot of boiling water appears on the screen. A voice follows with these words: “Heat liquids until bubbles rise to the surface of the liquid in a steady pattern.” End of clip. Boy, was I glad I waited for that!

David Baron

APPLE DEBUTS ERGONOMIC KEYBOARD
At best it’s a bad solution, at worst a potential patent infringement

Apple Computer unveiled its first attempt at an ergonomic keyboard at Macworld Expo on January 6, and although the Apple Adjustable Keyboard’s odd looks drew crowds, it also attracted a foul wind of publicity to the company. One hand surgeon claims that it’s barely ergonomic and an inventor claims Apple, fully cognizant of what it was doing, ripped off his patented split-keyboard design.

Life is full of irony. That Apple, of all companies, might have copied someone else’s work certainly brings to mind its fierce legal offense against Microsoft that Apple “owned” the idea of the graphical user interface that was in fact invented at Xerox PARC. (Microsoft has so far prevailed in the lengthy lawsuit, though Apple is appealing.)

Legal issues aside, Robert Markison, MD, a San Francisco hand surgeon and inventor whose curriculum vitae is as long as your arm and who’s done extensive research into the ergonomics of the hand and wrist, says that Apple’s new keyboard “throws a crumb at data entry workers,” and is at best a 10 percent solution to the epidemic problem of repetitive stress injury (RSI) that is crippling record numbers of information workers around the world.

IT ONLY ADJUSTS IN ONE PLANE

One reason Markison rejects the design is because the new Apple keyboard, priced at $219 retail (more than $100 higher than its Apple Keyboard II), is only adjustable in the horizontal plane. A horizontal splitting of the keyboard can only correct ulnar deviation, or the crook in the wrist caused by working on what’s commonly referred to in ergonomics lingo as a “flat slab” keyboard.

However, it does not correct the far more serious problem of pronation — working with the palms down — which stretches to maximum capacity all the muscle-tendon units from the elbow to the hand.

Try this at home. To test this for yourself, swing your right hand up from your waist, perpendicular to the floor, in what’s called neutral position. Then turn your palm down — that’s pronation — and feel the immediate tightness in the tendons in your forearm.

Most of the damage from RSI, says Markison, comes from the repetitive motion of moving the fingers rapidly while the forearm is thus pronated and the tendons stretched to their maximum. “It’s totally inappropriate, inefficient use of muscle tissue, and [tissue] will fail under load and repetition when used in this position,” he says.

DID APPLE INFRINGE, AND HOW?

Many people who have seen the Apple Adjustable Keyboard find the design even more appalling because they believe it was purposely crippled to attempt to avoid a patent dispute with Anthony Hodges, a Mountain View, CA-based inventor who has garnered a steady stream of national press attention since he first began demonstrating his prototype split-and-tilt keyboard called the Tony in 1987.

Asked about the Hodges patent, Apple spokesperson Marianne Lettieri- says Apple is “very comfortable that [the Apple Adjustable Keyboard] is a unique implementation” of an adjustable keyboard. “We would never knowingly infringe on a patent.” During an analyst briefing at Apple before the Macworld launch, keyboard product marketing manager Paul Prébin said that Apple had applied for patents on the Apple Adjustable Keyboard’s design.

Prehistoric, eh? However, in one recent press report, Prébin claimed that splitting the keyboard was “prehistoric,” a design dating back to typewriter keyboards of the 1920s, and was not patentable. One must wonder why, then, Hodges received a patent on a split keyboard, and why Apple is applying for a patent for one as well.

In any case, other inventors have certainly patented various kinds of adjustable keyboards over the years, but the design of the Tony is unlike any we saw in a patent search of prior art. (U.S. keyboard manufacturer Keytronics recently showed a split-and-tilt keyboard at Comdex. On Oct. 14, Hodges says, he served Keytronics a “cease and desist” order concerning the keyboard, informing them of his patent and asking them not to proceed with manufacturing plans.)

A four-year process. Hodges received his patent in July 1986, after four years of trying to satisfy patent examiners that the keyboard’s design was unique; during that time he actually had to build a prototype to show that it would work. The Tony is fully adjustable in two dimensions, both horizontal and vertical, thus it allows a typist to use the keyboard in a position which completely alleviates the ulnar deviation and pronation that cause RSI in typists. In addition, each key can move in three dimensions, allowing the fingers themselves to find their most comfortable typing position.

Markison, the hand surgeon, has no financial interest in Hodges’s work, but over the years has given him both free advice and extensive information about the physiology of the hand. Markison says a soon-to-be-published independent trial of the Tony system shows that when the keyboard is split and tilted, typing effort is reduced by 40 to 70 percent in the forearm muscles. He believes it is the only design he’s ever seen that can actually begin to alleviate keyboard-related RSI.

TONY WENT INSIDE APPLE IN 1987

Apple has had intimate knowledge of the Tony keyboard since 1987, when Hodges first took the keyboard inside the company. He’s taken it there many times since, trying to convince the computer company to license the design and manufacture the keyboard. Jean-Louis Gassée, then head of product development for Apple, told Hodges he thought it was a brilliant design because it started out flat, like a “normal” keyboard, but was then adjustable.

Made in the USA (not) But Gassée wasn’t at Apple much longer after seeing the Tony and Hodges persisted with the keyboard design group. During the past five years Hodges has gained a reputation as something of an ergonomic zealot with, some might add, an overly developed sense of patriotism: he has continued to insist that he would only cut a deal with a company who would guarantee that the keyboard would be manufactured in the U.S. Apple’s keyboards are manufactured by the giant Alps manufacturing company in Japan, and Hodges says Apple was unwilling to have the keyboard manufactured stateside.

(If you’re looking for ironies, chalk up another one: Apple chairman John Sculley seems to be at the right hand of Bill Clinton these days in shaping industrial policy; during the campaign, Clinton strongly favored returning manufacturing jobs to the U.S.)

FREE ERGONOMICS COURSES FOR APPLE ENGINEERS

Hodges says that he’s been showing his invention inside the company for many years in good faith, and has provided many Apple engineers with gratis courses in keyboard ergonomics in the hope that he could sway them to manufacture the keyboard. He claims to have times, dates and records of almost 50 people he’s met with at Apple over the years about the Tony system, including five at VP level or higher. “They’ve stolen the invention from me,” Hodges says of Apple.

Lettieri says, “The Apple Adjustable Keyboard is wholly the result of intensive R&D inside Apple. An entire input device team spent years looking at keyboard theory and design and prototypes.” She could not name the head of the team. On the subject of who Hodges has met with at Apple over the years, she says, “We hold all business discussions confidential, so we can’t confirm or deny any discussions with Hodges. That’s a policy. We aren’t saying [his claims] are accurate, but we’re not saying they’re inaccurate either.”

Kicking itself. Patent controversy aside, Apple must be kicking itself that it ever manufactured the keyboard in the first place. With a megamillion dollar civil suit now pending in New York against a raft of manufacturers of computer keyboards — a suit in which Apple, among many other computer and keyboard companies, is named — it seems a somewhat untimely to begin shipping an “ergonomic” keyboard, especially one that’s getting lots of nasty publicity, when such a product could be construed as a tacit admission that existing keyboards hurt people.

Yet if it is proven that Apple did “invent around” Hodges, it’s an incredibly cowardly way to circumvent one man’s life work, especially the important work of stopping a human injury that’s directly attributable to the use of computers. No matter how you feel about Hodges himself, whether you believe he’s a self-saboteur or a misunderstood patriot, there is a moral imperative at work here. There are no acceptable conditions under which someone has the right to steal another person’s work, whether it’s done “legally” or not. And when there are people who are actually being crippled every day by bad keyboards, there are no acceptable reasons to offer a partial solution when a complete one exists.

Another moral, too. This discussion omits the longer version of Hodges’s story, about why he invented the device and why he believes RSI is mostly ignored because it is a women’s disease — since mostly typists are afflicted and most typists are still women — as well as the many horrors he’s encountered while trying to educate ignorant male executives about the growing epidemic.

Suffice it to say that Hodges knew in 1982, when he first invented the Tony, that RSI was a real problem and would get worse. The technology to significantly reduce keyboard-related RSI has been available since 1986. What are we waiting for? Why don’t we have good ergonomic keyboards? If you’re really determined to look at the bright side, despite the controversy surrounding the product itself, it’s at least somewhat encouraging that a company was willing to start addressing the problem. But it’s incredibly discouraging that the effort is so weak and so late.

In fact, Apple still claims “there is no scientific or medical evidence to show that RSI can be eliminated through keyboard design,” according to Lettieri. “We haven’t said this keyboard can address musculoskeletal complaints.” And of course, according to Markison’s evaluation of the design, she’s probably right.

Anyone who works around computer users knows that keyboard-related RSI is putting young, healthy people on permanent disability every day — disability caused by pain so intense that to pick up a bag of groceries or a child is impossible — yet it continues to get little attention from an industry which refuses to admit its culpability or do anything about it. Aside from whatever atrocities may be visited upon hapless inventors, this is the larger crime.

Denise Caruso

CONSUMER DEVICES GO TWO WAYS
One’s a fact box, the other a souped-up phone

At the recent Consumer Information Appliance conference in New York, we discovered that there seem to be two distinct schools of thought about just what a “consumer information appliance” is supposed to be. One school sees it as a self-contained, ultra-portable box that holds answers — a kind of Walkman for facts. The other school views it as a wired-in, home-based communication center for conducting transactions — a glorified telephone.

Both schools agree on a few basic principles. First, consumers won’t pay very much for the hardware. Franklin Electronic Publishers, which is known for pocket spelling checkers and the like, says that $60 (including the intellectual content for one application) is the upper limit for a standalone device. But that’s okay, because successful products will sell in the millions.

Second, whatever it is, an information appliance is not a personal computer. The difference is one of purpose: A PC is designed to manipulate information that the user provides, while a CIA is for accessing information that others provide.

Data in your pocket. Bruce Mendel, speaking for Casio, said that his company expects to begin providing content and applications, up to a megabyte in size, on PCMCIA cards. (PCMCIA is the newest computer industry standard for plug-ins of all kinds; cards are about the size of a very thick credit card.) Casio’s target price is $50 at retail.

He also noted that, while a gadget that fits in a shirt pocket is nice, most prospective users will demand a big screen. Casio is exploring a three-panel folding display (like a triptych) that it hopes will resolve the contradiction.

Franklin’s Mike Strange countered by saying that even PCMCIA is much too big for a shirt-pocket device. And while PCMCIA may be a computer-industry standard, it is hardly an information-appliance industry standard because, in fact, there aren’t any standards yet. However, if Franklin is successful in selling millions of its “digital books,” it believes it will be able to set standards for the industry.

SELLING POTS USING ‘SMART PHONES’

ISDN, the much-discussed integrated services digital network, may indeed be just around the corner, as its supporters say. But the bulk of the phone company’s revenues will continue to come from POTS — plain old telephone service — for years to come. (For that matter, a lot of telco customers have ignored the previous big technology shift; they still have rotary-dial phones.) Fortunately, there are several growth applications that can work fine over ordinary voice-grade phone lines.

Add a display. The key to all of them is adding a character display of modest size to the standard touch-tone phone. The display can be used to deliver information (e.g., your bank balance) directly. But its main role is to display prompts and menus, substituting for an endless aural recitation of choices. (“Press 1 for the sales department; press 2 for customer service; press 3 to be put on hold for 20 minutes.”) The display is rapidly updated by the information provider via a built-in, 1,200-bps modem.

With on-screen menus to guide them, users can rapidly navigate a complex hierarchy of services and options. Applications include home banking and other financial services, placing catalog orders, buying theater tickets and restaurant reservations, and even fairly sophisticated public opinion polling. The phone company already knows (and could pass along to service vendors) your phone number, and thus your name and address.

Perhaps the most telling proposed application, though, was put forth by Northern Telecom’s Eric Hochstein. He pointed out that the star-codes used by the phone company to activate call-waiting, call-forwarding and similar optional services are too hard for many phone customers to remember, so they simply don’t use them. With menu prompting, more customers would buy these services. Thus the phone company has a very direct interest in how complex a phone you buy.

ADSI. As with everything else in telephone land, there is a Bell standard, complete with acronym, for this technology. In this case, it is the ADSI (analog display services interface) protocol. It was originally devised for caller-ID and call-waiting-ID displays. The protocol specifies touch-tone signaling from the customer to the service provider. The service provider can reply with voice or with modem data, but not simultaneously.

Although ADSI was designed for a standard tone pad, it is possible to use it with a full typewriter keyboard. This makes possible additional applications, but it raises the manufacturing cost (and, let’s face it, the complexity in use).

One area in which ADSI falls short is security and encryption. Apparently the Bells aren’t very worried about this, but the banks and brokerages that would be natural service providers are very concerned. We predict that the lack of an encryption standard will delay any widespread adoption of ADSI by the financial service industry. As privacy and security concerns grow in the population at large, whether other applications will attract a critical mass of customers is doubtful.

Keep it cheap. Depending on the size of the screen, such a phone would cost $500–800. Few consumers would pay that much outright, but many (according to Nynex’s research) would cheerfully pay $50 up front and have $10 per month added to their phone bill. In some cases, the service vendors might be willing to subsidize the hardware, either because they expect to lock in a customer or they expect to realize substantial cost savings.

At the service provider’s end of the phone call, the equipment requirements are relatively modest: a touch-tone decoder, a voice synthesizer, a modem and an interface to the firm’s existing mainframe computer. The cost, when amortized over hundreds of calls each day, is trivial.

FROM AD RESPONSE TO ENERGY USE

With very modest increments of hardware, further applications open up. Nynex’s Bob Springer proposed adding a bar-code wand. Newspaper and yellow-pages ads could be bar-coded; to respond to the ad, you would only have to swipe the bars. Companies might spring up offering to encode the numbers you call frequently. Your bank would furnish a sheet of bar codes that would jump right to the services you have signed up for, bypassing the menu system entirely.

Sheryl Geddes of First Pacific Networks noted that ADSI offers an opportunity for remote energy management by the electric utilities. Most utilities would like to price electricity in such a way as to level the demand, charging you more for juice consumed at peak hours — and making sure you know it is more expensive then. The trouble is that the peak periods change with the seasons, with weekends and holidays, with the production flows of nearby heavy industries and so on. Timers on the water heaters aren’t flexible enough.

By interfacing the phone to controllers of the household’s major appliances, the power company could either control them directly (if the customer had opted for interruptible service) or adjust the billing multiplier based on actual load conditions. To no one’s surprise, Geddes noted that every maker of appliance controllers uses different communication protocols. However, a communication standard is in place for water heaters.

Peter Dyson

AMERICA ONLINE MOVES INTO SYSTEMS
Wants its ‘common services platform’ to become standard

Although other online information services may be older, bigger and better known, America Online (AOL) is moving into the digital media business in a way that the others are not: It is becoming a vendor of system software for information services providers.

AOL, based in Vienna, VA, recently agreed to provide Apple Computer with foundation technology for its new Apple OnLine Services division. The technology itself consists of AOL’s well-regarded user interface software, and the engine of the system itself, its server software and support.

Company president Steve Case believes many more companies like Apple, previously not known as “information” companies, will be providing such services in the future. In addition, the nascent market for portable communications and computing devices will also provide a significant new customer base for new and existing online services.

REASONABLY BIG, AND GETTING HUGE

Online information services today require a computer and a modem, which then connect customers via the telephone network to transaction services such as electronic shopping or banking, or to banks of information such as news wire services, stock quotes, software or customer support. Personal communication, via private electronic mail or interactive forums, is also extremely popular.

“The market for online services is already reasonably big and it’s going to be huge,” says Case. “We want to establish AOL as a leading brand. We already do well on the desktop, and we also want to be strong as new consumer devices like screen-based telephones and interactive TV emerge.”

The new line of business for which Apple was the first licensee will focus on establishing AOL’s technology as what Case calls “a common services platform” to be used by telephone and media companies, among others, to create their own branded services. In addition, the company is working with hardware vendors such as Tandy and Casio to provide a built-in interface to the AOL information service on devices such as the new “Zoomer” (see p. 24).

Cheaper than mainframes. Case believes the new line of business will be successful for AOL because its system is not based on the traditional mainframe delivery mechanism of most of today’s online services, and thus costs much less to support. “Our system is more of a client-server model, which we believe is much more affordable to run on a cost-per-hour basis than CompuServe or Prodigy,” says Case. “Since it has a cost advantage versus other approaches, licensees will be able to get not just a technology that works well but that they can run inexpensively.”

Though there is no boilerplate deal for AOL’s system software division, Case says he hopes what it’s done with Apple will become the standard. Apple, he claims, has committed to fund some additional co-development of the software during 1993. It will then launch its Apple-brand services, and pay a royalty to AOL for each hour of customer use — a minimum of $15 million during the first five years. “From Apple’s standpoint, they were able to reconcile paying a royalty because they knew they’d likely end up with a better system sooner than if they tried to do it themselves,” says Case.

A COMMON INTERFACE IN A COMPLEX WORLD

In addition, he says, if AOL can become the standard platform for information services, customers may benefit also. “When you’re in the systems licensing business and you want to create a common platform, you level the playing field with the belief that both the consumer and the content providers will equally benefit from consistency,” he says. “And AOL can benefit by simply accelerating what will eventually happen anyway [i.e., the adoption of a standard platform].”

Case says that the more AOL works with media companies he’s not only discovering a growing recognition outside the computer industry that “this whole area of digital media” is becoming more important, but also that the market is getting far more complex.

Devices are fragmenting. “A couple years ago, when the PC market coalesced into DOS, Windows and Mac, vendors just figured they could do a front-end for a Windows or Mac and they were in business,” he says. “Right now, there’s a much greater recognition that it’s going to get far more fragmented as there are more access devices such as palmtops, screen phones and interactive TV, as well as new conduits such as wireless communications.”

The beauty for service providers is that most of the tweaking required to make AOL work on different devices will be done by those adapting the software to their devices. “They’ll do most of the modifications,” says Case. “Service providers won’t have to do much.”

PARTNERSHIPS KEY TO LAUNCHING INFO SERVICES

When it first started as Quantum Computer Services in 1985, AOL’s strategy was to develop separate online services for owners of Commodore, Tandy and other PC brands. After starting America Online, it created alliances with a variety of organizations such as National Geographic and the National Education Association, and developed a package of information services specifically for home-office workers.

In the past year, it’s begun focusing on more general-interest segments of the information market, such as newspapers and magazines. “It’s a different twist on the same story,” says Case. “There’s a huge business here, a new medium is emerging — and the only way to develop it is through partnerships.”

A diversity of deals. In keeping with that sentiment, AOL launched a cooperative service with the Tribune Company for a Chicago-based service called Chicago Online, which provides local information in conjunction with the Chicago Tribune. Similar projects are planned with Knight Ridder’s San Jose Mercury News and with Tribune newspapers in Florida. Another cooperative agreement with the New Republic magazine was recently announced. AOL is also working with CNN to provide online services that complement TV programs such as “Network Earth” and “Democracy in America.”

A proven option. The Apple deal is a different model for partnership. People who want to start their own information services can use AOL’s proven system as an option to reinventing a whole new software structure, which today is a costly and risky project.

“This is particularly helpful for media companies, because we provide a migration path for them,” says Case. “They could start out as information providers with the larger AOL information service; we could then create a custom edition of AOL for them, and later, if they want their own branded service, we have that option available to them. They can bet on AOL and, depending on how their view of the world shifts, stay on that same platform. It makes their investment more reasonable and easier for their customers; plus it’s unlikely they’ll be forced to migrate to a new system down the road.”

WHEN SELLING CONSISTENCY, BE CONSISTENT

Consistency is something that online services have been sorely lacking, as anyone who relies on them to do business can ruefully attest. They’re inconsistent in interface design, ease of use, utility, reliability, convenience and affordability. As the foundation for a new industry based on information services, all of them — including America Online — are very far from perfect, and in their present condition are probably unacceptable to the broader range of non-nerdy consumers.

Get on, get off. For example, when an information service is set up to charge its customers by the amount of time they spend connected to the system, the vendor had better make darned sure that it allows the customer to get in and get out quickly. Recall some of the regulations slapped on 900-number vendors for finding unethical ways to keep customers on hold while racking up $2-a-minute charges.

Many online services today, including Dialog and Dow Jones News Retrieval, for example, force customers to either “page” through vast amounts of information to get where they want to go, or obfuscate the path to that information so that it takes forever to get there. Though information junkies and researchers will put up with this nonsense, it does not a consumer market make. Look at the extraordinary user base that Prodigy — an inferior information service if ever there was one — has attracted by charging a low, flat fee per month.

Network access. Another problem, which is particularly pronounced today for AOL, is the ability to use the service from anywhere, including hotel rooms and public phones. Services like MCI Mail and AppleLink were clearly designed for mobile users, by providing both reliability on bad phone lines and an easy way to find the right phone number to use no matter where you are. AOL’s customer base today is largely anchored to the desktop. Case admits that the system has some problems along these lines that the company is addressing as it moves more rapidly into the mobile communications market.

AOL has undoubtedly made the most concerted effort to move into the wider world of information services that aren’t tethered to the computer-modem model. Whether the company can actually succeed in its new strategy depends on whether it can simultaneously branch into new businesses while continuing to grow and improve its existing services and customer base. It certainly seems to be willing; now let’s see if it is able.

Denise Caruso

IMA ISSUES THREE INDUSTRYWIDE REQUESTS FOR TECHNOLOGY

The Interactive Multimedia Association, a 290-member international multimedia trade association based in Annapolis, MD, has issued three key Requests for Technology. The IMA is soliciting existing technical solutions to cross-platform compatibility problems for multimedia system services, data exchange and scripting language.

An RFT for Multimedia System Services will determine what services must be provided by platform vendors to application developers in order to be IMA-compatible. The goal is to provide a foundation upon which application and title developers can create applications and titles that perform with predictable and consistent results across a wide variety of platforms and networked environments, according to Philip Dodds, managing director of IMA.

Data exchange will be a focal point for cross-platform file containers and data types. Representatives from Apple, Avid, IBM, Kaleida, Lotus and others have expressed hope that Avid’s Open Media Framework and the Kaleida-Lotus-Apple container format “Bento” can be harmonized and submitted as a response, according to Dodds. He says additional responses are expected.

The second technology request calls for a universal scripting language for interactive multimedia titles. It will address the need to develop multimedia applications and titles that can be rendered on any IMA-compatible platform, ranging from consumer-oriented devices in the home to high-powered workstations on a distributed network. “[Kaledia's ScriptX] is undoubtedly going to figure into the responses to the RFT, but they aren’t the only scripting language,” says Dodds.

The third request involves standardization of multimedia data exchange. This will enable anyone to capture video, audio, MIDI, animation, images, graphics and text, and subsequently exchange the data and files with other platforms. Intellectual property rights are a central concern addressed by this RFT. References to the owner and authors of the media content, as well as licensing information regarding the rendering or playback of that data, will be encoded into the data.

While IMA is not a standards-setting body, the results of the RFT are likely to have a significant impact on the multimedia industry because of the high level of involvement by major industry companies, including 3DO, Apple, IBM, Kaleida, Hewlett-Packard, Digital Equipment, Intel, Sun, Microsoft, Mitsubishi, Pioneer and Lotus.

Responses to the RFTs are expected as early as May with a formal IMA document containing the organization’s “recommended practices” by the third quarter of 1993.

“Even if there are no viable responses to these RFTs, this work has high value since it has been drafted by active members of the multimedia design community,” says Dodds. “The RFTs contain detailed technical requirements that have been agreed to by nearly all relevant players. These documents are a kind of ‘rule book’ that has been prepared and ratified by IMA’s member companies.”

Texts of the Requests for Technology are available from the IMA at (410) 626-1380.

PRENTICE HALL PUBLISHES GUIDE TO MUSIC LICENSING

Prentice Hall Law & Business has published The Art of Music Licensing, a practical guide on granting licenses and obtaining permission to use music in the digital age. The impact of new technologies on the licensing process, licensing for computer software and multimedia, and the digital rights and digital sampling controversies are discussed at length in this 1,000-page book.

The Art of Music Licensing evaluates the status of pre-existing licenses and licenses under negotiation in light of new audio and visual technologies. Particular attention is paid to the language used in licensing agreements and how it has changed dramatically since the introduction of cassette tapes, CDs, video cassettes, digital synthesizers and other devices. Practical advice is given on how to word agreements to preclude uses that may arise from previously unknown technologies.

Also discussed are the ins and outs of U.S. copyright law and the complexities of the copyright system. For example, strategies are given for dealing with the problem of “split copyrights,” in which each member of a party owns an undivided interest in the copyright.

More than 70 model forms are included along with recommended licensing fees, names and addresses of the major music rights and clearing agencies, major performance rights societies and a lengthy list of songs in the public domain.

The book, co-authored by Al Kohn, vice president for licensing at Warner/Chappell Music, Inc., and Bob Kohn, vice president of corporate affairs and general counsel of Borland International Inc., is intended for music publishers, intellectual property attorneys, songwriters, recording artists, record companies, movie and television producers, radio and television stations, advertising agencies, software developers and multimedia developers.

The Art of Music Licensing is available for $95 through Prentice Hall Law & Business of Englewood Cliffs, NJ. Prentice Hall can be reached at (800) 223-0231.

DATAKEY ENCRYPTION CARD RECEIVES FEDERAL APPROVAL

Datakey, Inc., makers of portable data carriers for third-party manufacturing customers, received an award from the U.S. Commerce Dept.’s computer systems lab for successfully implementing the Data Encryption Standard — a U.S. standard that specifies parameters for scrambling and unscrambling electronic messages —into an integrated circuit card that helps control access to networked computers and data.

The circuit card, which was developed under contract to the National Institute of Standards and Technology, is designed to authenticate both personnel and data transmissions. In addition to supporting DES, the circuit card also uses advanced digital signature technology to help ensure privacy protection when using E-mail, facsimile and other electronic messaging technology. In other words, an individual sending a message on E-mail can affix a binary seal or digital signature that is transmitted with the document. The recipient of that document can then verify who sent it and if anyone else has tried to access it during transmission based on that digital signature.

The circuit card is still in development and is being tested by several different government agencies; it is expected to be licensed in its final version to both civilian and defense branches of the government, according to Datakey.

The company also plans in the future to license the technology for commercial use (in financial institutions, for example).

PACBELL AND SPRINT COMPLETE FRAME RELAY TEST

During a four-month research project exploring how to improve long-distance and local calling services, Pacific Bell and long-distance giant Sprint teamed up to test several different frame relay switches and data communications equipment.

Frame relay, an emerging high-speed packet-switching technology that provides permanent virtual circuits at speeds ranging from 56 kilobits per second to 1.544 megabits per second, is comparable to transmission over private lines, according to test results.

The test network linked Pacific Bell’s frame relay service from its Broadband Lab at San Ramon, CA, over T1 lines to Sprint’s Advanced Technology Labs across San Francisco Bay in Burlingame. While Pacific Bell tested several different frame relay switches in the network configuration, including Northern Telecom’s DMS Supernode Link Peripheral Processor, AT&T’s Broadband Network Switch 2000 and the Newbridge 3600 Mainstreet Bandwidth Manager, Sprint used its own TP4900 switch on its end.

“During the test, we analyzed every aspect of interconnecting with Sprint’s frame relay service, so that our customers will be able to take advantage of the cost and performance benefits of the technology regardless of whether they want to connect to sites located across town or across the country or even international locations where the service is available,” says Joe Simone, director of frame relay product development within Pacific Bell’s Data Communications Group.

Pacific Bell plans to begin offering frame relay service in mid-1993 throughout its four largest service areas: Los Angeles, San Francisco, Sacramento and San Diego.

DIGITAL SOUND AND EFFECTS FOR CAR AND HOME

Motorola’s Microprocessor and Memory Technologies Group has a new digital signal processor (DSP) headed for consumer audio markets. Aside from delivering digital audio, the 24-bit DSP called Symphony can be customized to create professional-quality sound effects in car stereo systems, digital speakers, digital amplifiers and television.

One of Symphony’s alluring features is its capability to provide sound field effects by mimicking the reverberations and echoes of such environments as jazz clubs, concert halls and stadiums. These effects are created by delaying and digitally filtering certain signals.

Symphony can compensate for acoustic limitations as well. For instance, the processor can take into account reflective surfaces, space limitations and the number of passengers in a vehicle. It also is capable of dynamic volume control, which maintains the audio level regardless of car speed, wind noise or other external factors.

Automotive stereo suppliers and manufacturers appear eager to work with DSP. Becker, Blaupunkt, Ford, Nokia and Volkswagen are a few stereo and automotive manufacturers who have purchased the DSP for use in future product lines. Selected Ford car models will feature DSP-enhanced stereos beginning in 1995.

Motorola is working to develop a home cinema/television market using the DSP. Dolby Laboratories of San Francisco, a developer and supplier of advanced stereo systems, is collaborating with Motorola to develop a DSP code for Dolby Surround, a consumer version of Dolby Stereo film sound.

Symphony is based on Motorola’s 56004 chip architecture from the DSP56000 family. Motorola chose to make the 56000 sets code-compatible so the entire product line can be used interchangeably. Other products in the line support such applications as multimedia computing, noise cancellation and optical disc drives. A complete set of tools including a simulator, assembler and hardware development systems is available for Symphony.

RADIUS SAYS FULL-SCREEN IS ON THE WAY

We said it would only be a couple of months before companies such as Radius announced their intentions to enter the full-screen, full-motion desktop digital video market for the Macintosh. Well, we were wrong. Radius waited only one month.

The San Jose, CA-based computer hardware company has recently announced specifications for a $3,999 digital video production system that the company claims can input, capture, display and output digital video at 30 frames per second at a resolution of 640 by 480 pixels — a feat none of its competitors has yet mastered. (See Vol. 2, No. 6, p. 13, to learn why.)

VideoVision technology. The name Radius picked for the product is likely to be in violation of a copyright, so we’ll only refer to it as “the product” in this story. Based on Radius’s VideoVision system, which in turn is based on Apple’s original Touchstone technology (see Vol. 2, No. 1, p. 18), the product appears to offer many of the same features available from its direct competition.

Competitors to date include SuperMac Technology’s DigitalFilm card set, RasterOps’s expandable digital video technology based on its MoviePak board and New Video Corp.’s EyeQ video board set.

Unlike its competition, according to Ben Jamison, product manager for the studio product, it uses a proprietary chip set from an unnamed outside source. Jamison says Radius is using “a newer generation of hardware compression” that will allow true full-screen, full-motion digital video during capture, display and output.

The only information about the chip that Jamison would confirm is that in its first incarnation it will be based on JPEG, the still-image compression algorithm.

“The first H-Bus chip set will be available as a JPEG-only chip,” says Jamison. “But the beauty of the H-Bus architecture is that you can plug different daughter cards into the architecture.”

The Radius technology has not even been released to beta sites for testing, so what the product is actually capable of is not yet known. CCube Microsystems — the most likely manufacturer of this new chip, according to outside sources — won’t respond publicly about whether it is working on such a product with Radius.

Despite all the reticence about specifics, Radius considered it important to let potential customers know it was working on such a product. “The situation for us quite honestly is that everyone was pushing us aside as a major player because we weren’t announcing our plans,” explains Jamison. “We felt it was necessary that we talk about the product.”

GROLIER HEAD OFFENDED BY ‘ENCARTA’ PIECE
David Arganbright, President
Grolier Electronic Publishing

As a subscriber to Digital Media I have, in the past, generally found the articles in your newsletter and the opinions they express to be timely, accurate and unbiased commentary on developments relating to CD-ROM, CD-I and other digital media.

Consequently I was astonished to read the article on “Microsoft Encarta Sets Precedent” in the October 12, 1992, issue of Digital Media, because it was not only full of inaccuracies, but as written, effectively serves as a PR effort for the benefit of Microsoft.

As you are no doubt aware, Grolier has been publishing a CD-ROM encyclopedia since January 1986, and has recently introduced the New Grolier Multimedia Encyclopedia in its 5th DOS edition, 4th Macintosh edition and first Windows/MPC edition. Based on our sales performance; broad acceptance by schools, libraries and in homes; and the many excellent reviews that we have received, I take exception with the opening remarks of the article. These state that “multimedia encyclopedias have been a big disappointment in the home and educational markets.”

In the second paragraph of the article you say “One of the biggest complaints is that electronic references… are produced mainly by software developers… more interested in conquering the technological hurdles… than they are in creating a browsable, attractive, interactive, literate and even accurate reference work.” Who is being described here? There are currently three U.S. CD-ROM encyclopedias based on multiple volume sets, published by Grolier, Compton’s (a division of Encyclopedia Britannica) and World Book —all print publishers that are renowned for the accuracy of their respective reference works.

Microsoft, on the other hand is the only software developer currently producing a CD-ROM encyclopedia. In your review of Encarta, the origin of the “28-volume A–Z encyclopedia” that forms the essential core of the work is never discussed, even though it is widely known that Microsoft licensed the text of the 28-volume Funk and Wagnell’s Encyclopedia, which is sold in the U.S. via supermarkets at a retail price of $5.95 per volume. In terms of the quality of the text, I have no reason to doubt the editorial integrity of Funk and Wagnell’s, but ask any librarian which they would recommend, given a choice between it and Grolier’s Academic American Encyclopedia, or, for that matter, our other competitors.

In terms of other comparisons between the “nifty” features in Encarta and Grolier’s CD-ROM, your article describes Encarta as a “93-volume thematic encyclopedia,” which “offers more than 21,000 articles in 93 categories.” First, it is a complete misnomer to describe the thematic breakdown of the encyclopedia’s contents in terms of “volumes,” because it suggests that it is the equivalent of 93 printed volumes — which it clearly isn’t.

Second, Microsoft has not pioneered the thematic approach that is described — Compton’s uses a similar “Topic Tree” while the Grolier CD-ROM incorporates a hierarchical “KnowledgeTree” which is a quite detailed and comprehensive breakdown of the content of the encyclopedia, providing access to 33,000 articles via several hundred thematic categories.

Microsoft also did not pioneer the concept of a “linked timeline of history.” Again, Compton’s includes a U.S. History Timeline, while the Grolier CD-ROM has a Timeline of World History that includes more than 5,000 descriptions of historical events, all linked to articles. Although it may be difficult to make a meaningful comparison among the various timelines, any such comparison should be made on the basis of number of entries, links to other encyclopedia features and editorial integrity — not that it is “20 feet long.” Your article also comments that Encarta “appears to offer individuals enough reasons to come back to it again and again” and that “if this continues to be true… it will be an amazing and noteworthy accomplishment.” The Grolier CD-ROM has been accomplishing this for the past 6 years with healthy update sales — would users buy an update if they weren’t using the current version on a regular basis?

This comment on our sales brings me to the closing section of the article, and to my mind what is the most inaccurate comment in the entire piece. In this section you state, “So the problem is not the product [Encarta], but the market. The problem has always been the market, because there isn’t one.” This comment is further reinforced by the assertion that prior to Encarta “millions of dollars were wasted on ill-conceived titles that obviously, to date, no one wants to buy.”

How do you arrive at such damning and erroneous assertions? Please believe me when I say that it is a very real business. After all, conventional wisdom leads us to believe that the emergence of competition is a clear indication of the viability of a business and now, with the introduction of Encarta, there will be four competing CD-ROM encyclopedias. If anything, this healthy competition is a vindication of Grolier’s early belief in the potential of the market — a market that we have helped to create by our pioneering efforts during the past six years.

I would like to think that a later article in your newsletter might reflect more accurately on the current state of the CD-ROM encyclopedias that have been published, and not simply reflect on the glossy features of a beta demonstration and PR hype. At Grolier we recognize that Microsoft will be a formidable competitor, and even though we haven’t seen it, we expect that Encarta will extend the concept of a multimedia encyclopedia. But we are also confident that the Grolier CD-ROM, in its current and future versions, will remain the encyclopedia of choice when customers have an opportunity to make a comparison in an open forum.

David Arganbright

I find it remarkable that you would write so damning a letter — claiming we did a “PR job” for Microsoft — while simultaneously admitting that you haven’t yet seen Encarta!

Success by any measure has been a long time coming in the CD-ROM publishing world, and considering your position in the industry, I can certainly understand your angst over Encarta. However, I have spent plenty of hands-on time with both Compton’s CD-ROM encyclopedia and your New Grolier Multimedia Encyclopedia for the Macintosh, and I stand by my story.

CD-ROM encyclopedias to date are not in any way preferable to their counterparts in print. If electronic reference books are to have any long-term effect upon the market, they will need to be as mobile, visual and browsable as their print counterparts. To date, they are not. They are extended technology demonstrations with little attention paid to the kind of “look and feel” that’s appropriate to a reference book, rather than a multimedia database.

In addition, “sales” for CD-ROM encyclopedias to date have in large part been a result of bundling them with CD-ROM drives or multimedia players of one type or another. This hardly qualifies as consumer demand. When you can release numbers that show customers are actually getting up out of their chairs, going down to the store and buying CD-ROM encyclopedias, then we can talk about a “real” market. Bundling deals are good as demonstrations of what the technology can do, but they certainly do not create the “open forum” for comparison that you refer to in your letter since customers don’t have to plunk down hard-earned cash to buy a bundled title.

One could say that Microsoft once again did what it is best at — that is, using the industry outside its walls as its own corporate learning lab — and improved the current state of the art on the shoulders of those who have gone before. You may or may not approve. But if Encarta maintains the qualities demonstrated to me in its beta version, it is indeed a superior product, with a design more suited to an electronic encyclopedia than those on the market today. Maybe you should actually see it in action before you decide.

Janice Maloney

INTERACTIVITY II: THE FUTURE FOR PERSONAL NETWORKS
Feb. 4, Washington, DC
Interactive Services Association
(301) 495-4955, fax (301) 495-4959

This second annual conference will take a look at how the telecommunications infrastructure and policy issues may shape up under the Clinton-Gore Administration and into the next century.

Vice President-elect Al Gore, a long-time advocate of advanced telecommunications infrastructure in the U.S., has been invited to give the keynote address, but is not confirmed.

The conference will feature three panels.

The opening panel will define the personal networks and discuss anticipated future demands, price structures and technologies. A panel of experts representing diverse interests in this field will include Gary Arlen of Arlen Communications, Dr. Aleksander Futro of CableLabs, David Walks of Prodigy Services Company and Mark Walsh of Information Kinetics. Speakers from the computer and telephone industry have been invited as well.

A luncheon panel of high tech editors well versed in Washington ongoings will discuss what’s ahead in U.S. policy from the new Administration and Congress and how it might affect the interactive services industry. Jeanine Aversa, senior editor of Multichannel News, Art Brodsky of Communications Daily and Scott Mace of InfoWorld will be among the featured speakers.

The closing panel will discuss the National Research and Education Network (NREN), and the Internet, the world’s largest online network serving more than 6 million users. A number of speakers including Taylor Walsh of Washington Information Services will take a look at the opportunities offered by these networks for providers of interactive services.

An additional afternoon session will evaluate the results of ISA’s 2nd Annual Online Survey. David Schnaider of ZiffNet Information Services and Steven Sieck of LINK Resources will provide a preliminary analysis of the aggregate results. This session is open to ISA members only.

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