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schtum?/
say, doug.....
are you still a sky marshal?
If he's good enough for seedie....
then he's good enough for me.
Walk before you run, niz
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3737939624&category=2385
That was a weird announcement
from Real. I agree that it isn't a matter of transcoding. It's all about who collects, and how the money is collected, via a portable device, for the company that paid for the licensing of the content. The incompatibility between devices is VITAL to that end.
What they are suggesting, is that they can over-ride Apple's DRM. I wonder if this latest salvo is a result of their failed attempt to merge their interest in this game with Apple a few months ago. (The Glaser to Jobs email that was leaked)
Anyway, no love for RealNetworks in this neighborhood. Cell phones, and remote car locks don't work very well in any proximity of their building on Elliott Avenue.
Hey!
What happened to da music??
In retrospect, it's obvious to me
that EDIG was not qualified for a full NASDAQ listing. They might have been wise to accept the small cap listing that they were rumored to have been offered. A lot of speculative money changed hands with that fiasco!
You guys'll believe
any old crap.
Man, you two move around faster 'n
jumper cables at a Tijuana wedding.
EDIG expects.....
Expect the unexpected, I say.
Hey, y'all!
Been making music a lot lately, instead of listening. Your stuff sounds great, now that I've caught up. Love to all of you, MH
Oh, Yeah, He Also Sells Computers
By JOHN MARKOFF
Cupertino, Calif.
STROLL the corridors and the atriums on Apple Computer's corporate campus these days and you will notice that something is missing. Gone are the posters and graphics accenting the company's sleek personal computers. In their place, in the main lobby, is a striking, three-story-high billboard celebrating Steven P. Jobs's brand-new billion-dollar consumer electronics business - the iPod digital MP3 music player.
In just two and a half years, Mr. Jobs, Apple's chief executive, has managed to take a well-designed hand-held gadget, add software connecting it to Macintoshes and Windows-based personal computers and convince the recording industry that he has found an elegant solution for ending its nightmare of digital piracy. In doing so, he has shifted the emphasis of Apple from what made it famous - hip, even lovable computers - to what he hopes will keep it relevant and profitable in the future: products for a digital way of life.
In fact, the wild success that Mr. Jobs has enjoyed with the iPod may have come in the nick of time. For all the acknowledged design and ease-of-use advantages of the Macintosh, Apple's overall PC business is still growing more slowly than that of its Microsoft- and Intel-based competitors.
Moreover, it was obvious at the Consumer Electronics Show in Las Vegas in January that a horde of consumer goods and computing companies is preparing a fresh assault aimed at bringing computerized gadgets into every nook and cranny of the home. In particular, two powerful Apple rivals, Sony and Microsoft, are betting that Mr. Jobs is wrong when he says, "It's about the music!" This year, both companies plan to release more expensive, hand-held combination video and audio players that their executives hope will blow the iPod away.
So will Apple eventually be overwhelmed by its bigger, better-heeled competitors? Throughout the technology world, there seems to be a simple, uniform answer to that question: Never underestimate Steve Jobs.
With roots both in Silicon Valley's digital culture and the 1960's counterculture, Mr. Jobs has long been an arbiter of what is cool in technology, much like a real-world version of a trend-spotting character from "Pattern Recognition," one of the cyberpunk novels by William Gibson.
AND, helped by his growing prominence in Hollywood through his second company, Pixar Animation Studios, Mr. Jobs has attained a level of influence over how life is lived in the digital age that is unmatched by even his most powerful computer industry rivals. "He is the Henry J. Kaiser or Walt Disney of this era," said Kevin Starr, a culture historian and the California state librarian.
Since returning seven years ago to Apple, the computer maker he helped to establish in 1976, Mr. Jobs has created a fusion of fashion, brand, industrial design and computing. He has opened a chain of 78 retail stores to showcase Apple's consumer-oriented designs and to surround the company's computers with an array of digital consumer products. The stores themselves have become another billion-dollar business, a feat all the more impressive considering that one of Apple's chief competitors, Gateway, failed with a similar retail strategy during the same period.
As a result, Apple is acting less like a computer company and more like brand-brandishing, multinational companies such as Nike and Virgin. The iPod's success is also the clearest indication that Mr. Jobs, if he is to successfully revamp Apple, will ultimately win not by taking on PC rivals directly, but by changing the rules of the game.
The Apple that is starting to emerge may be a harbinger. The company's growth may no longer be defined by its PC market share, now a declining sliver of the PC industry, but instead by Mr. Jobs's ability to create consumer markets.
Mr. Jobs, who says he has a 70 percent share of the market for legal music downloads and a 45 percent share of the MP3 market, sees the shift as sweet vindication. "We're getting a chance to see what Apple engineering and Apple design can really do once we get out from underneath the 5 percent Macintosh operating system share," he said.
To some people in the industry, Mr. Jobs, of late, has even outshone his old nemesis, Bill Gates of Microsoft - not in market share, of course, but in innovation. "Both Bill Gates and Steve Jobs arrived with the idea of digitizing the world, but Gates has lost his way," said George F. Colony, the chief executive of Forrester Research, a computer industry consulting firm. "Despite all of his warts, Jobs has kept the dream alive, whether it's movies, music or photos. I call him the digitizer."
Two striking figures in Apple's most recent quarterly financial results, announced on April 14, underscore Mr. Jobs's new approach. In the last three months, Apple sold 807,000 iPods, surpassing for the first time the number of Macintosh computers it sold (749,000). At the same time, revenue for products other than Macintoshes reached 39 percent of the total of $1.91 billion for the quarter, more than double the percentage two years ago.
"It's fascinating that the company is morphing into something else," said Charles R. Wolf, a Wall Street analyst at Needham & Company, adding, "Jobs is absolutely brilliant in understanding consumer products."
In fact, throughout his career, Mr. Jobs has been notable as much for the products he has resisted selling as for the ones he has pursued. During the mid-80's, after his falling-out with John Sculley, the former PepsiCo executive he hired in 1983 to run Apple, Mr. Jobs resisted repeated proposals from young Macintosh engineers to join them in efforts to create hand-held digital devices that would ultimately become the Newton and General Magic projects. It would be a wise decision, for both Newton, the personal digital assistant, and General Magic, a similar hand-held computer, proved to be ahead of their time, and neither led to successful consumer products.
Several years ago, Mr. Jobs said in an interview last week, the company was ready to introduce Apple-branded Internet service. Two weeks before the launch he killed the idea because he had decided it wasn't a viable business.
More recently, Mr. Jobs has been publicly skeptical about tablet computers and hand-held video players. And executives familiar with the history of the iPod design effort said that he initially was not in favor of making the iPod compatible with Windows-based computers. Obviously, he came around - and, as a result, the company will probably never be the same.
People who know Mr. Jobs well say he disdains strategic thinking as it is practiced by large corporations. Several people who have worked with him describe his business approach as "instinctual."
Underscoring that point, when he returned to Apple in 1997, Mr. Jobs contacted every consulting firm that had major contracts with Apple, according to a person familiar with the events. One by one, he called in the firms' directors, asked for a review of their work, thanked them and then told them their services would no longer be needed.
It has become apparent that the way Mr. Jobs designs products has changed fundamentally during his second tour of duty. In creating the iPod, the iTunes Macintosh and Windows software and the iTunes music store, Apple has not just designed products; it has also designed a business system. That may help explain why, almost three years into Mr. Jobs's foray into digital music, his major competitors are still playing catch-up, or, as in the case of Hewlett-Packard and Time Warner, have decided to ally with him.
Mr. Jobs's recent approach to product development is a radical change from the past. He once said his goal was to become an "industrialist." In his early years at Apple and at Next, the computer company he founded after he left Apple in 1985, he spent much time leading development efforts with hardware and software. In both cases, he built automated factories in Silicon Valley.
BY contrast, Apple says it developed the iPod in just six months, faster than any major product in the company's history. The hand-held device, which contains more computing power than an early Macintosh, was put together starting in 2001 by hardware designers led by Tony Fadell, a young engineer who had worked at the Apple spinoff General Magic, at Philips Electronics and briefly at RealNetworks, led by Rob Glaser, who has developed the Rhapsody music service.
In the late 1990's, Mr. Fadell tried to start his own Silicon Valley company, Fuse, designing consumer electronics products, including some related to digital music. When Fuse failed to get financing, he went to Apple, first as a contractor in February 2001, and then in April that year as the senior director of the iPod and other special projects.
He would eventually build a 35-member team of engineers from Apple and other companies. Using a version of a microprocessor that powers most cellphones, the group brought the iPod together rapidly by relying on software licensed from a small start-up, Pixo, a cellphone software company founded by Paul Mercer, another former Apple engineer.
Since Mr. Jobs returned to Apple, he has increasingly insisted that the company speak with just the voices of top executives, so Mr. Fadell was not permitted to comment for this article. But Mr. Fadell's decision to go to Apple instead of staying at RealNetworks may come to be regarded as a turning point in the digital music battle.
RealNetworks had been trying to develop consumer electronics products based on the company's RealPlayer software program. Mr. Fadell, however, lasted only six weeks at the company because, his friends said, he did not see eye to eye with Mr. Glaser, the chief executive. As a result, several former Apple employees suggested, Mr. Glaser might have allowed an iPod-like hit product to slip through his fingers.
Despite iPod's success, skeptics say Mr. Jobs's digital music venture will not be enough to offset a flagging performance in the PC business. "The success of the iPod doesn't seem to have significantly changed Apple's market share," said T. Michael Nevens, a director at both Borland Software and Broadvision and the former director of McKinsey & Company's technology consulting practice. And Mr. Nevens said that there was "no support for the theory" that the new digital appliances would bolster computer sales.
Mr. Jobs, however, does not appear to be banking on that happening. Instead, he is betting on his ability to rapidly replicate the iPod's success by creating a string of digital consumer product categories.
In Silicon Valley, where speculation about what Mr. Jobs may do next is a favorite spectator sport, the betting is that the company is preparing to introduce such an effort in July at its World Wide Developers Conference in San Francisco.
WHAT new products will be unveiled? No one outside this famously secretive company may know for sure. But because Mr. Jobs has been so publicly critical of tablet computers and hand-held video players, some outsiders have suggested that Apple may choose to offer a Macintosh-style interactive television system for the living room, competing with Media Center PC's, designed by Microsoft and Intel, and with the PSX video game and digital video recorder, soon to be released by Sony.
But another avenue is more likely, according to several people close to the company. Mr. Jobs is legendary for being idiosyncratic and unwilling to follow industry trends. Wouldn't Apple's co-founder want to avoid the crowded market for digital entertainment products, they suggest, and turn his laser focus on a mobile digital communications product?
Last year, the company quietly added two new wireless standards, known as 3GPP and 3GPP2, to its QuickTime software for sending and receiving multimedia over digital cellular networks. Because Apple was an early leader in the Wi-Fi market with its airport wireless networking base station, the reasoning goes, the company may be hard at work on a line of digital mobile phones that would take the company into the fast-growing voice-over-Internet-protocol, or VoIP market.
But if that is Apple's strategy, Mr. Jobs isn't saying. After all, surprise is at the heart of all the company's marketing campaigns, and who would expect less from the man who once rented San Francisco's symphony hall to introduce a new computer? Even for Mr. Jobs and Apple, some things remain the same.
Technology and Show Business Kiss and Make Up
By EVELYN NUSSENBAUM
SAN FRANCISCO, April 25 - "Content is king," trumpeted Carleton S. Fiorina, the chairman and chief executive of the Hewlett-Packard Company, as she opened the National Association of Broadcasters convention last week in Las Vegas. The slogan was old, but still sweet to the entertainment community, which packed the show to hear her.
The company tossed out technology goodies as well, like a new system that could sharply lower the costs of animation. Hewlett also announced plans to develop film restoration and post-production technology with Warner Brothers.
Not to be outdone, Apple Computer Inc. introduced a special-effects program and the newest version of its editing technology. The Microsoft Corporation showed off a program to edit and broadcast high-definition television content in real time.
The techies played so hard to the show business crowd, it was easy to forget the two industries were ever at war.
It was just two years ago, that Michael D. Eisner, chief executive of the Walt Disney Company, and a top executive at the Intel Corporation screamed at each other across a packed Senate hearing room. Mr. Eisner accused the technology industry of encouraging the theft of music and movies over the Internet and of enabling Napster and its file-swapping clones to flourish. The Intel executive, Leslie L. Vadasz, fired back that Mr. Eisner needed to "deal with the new digital world."
The fight was bigger than Intel and Disney. Each industry thought it was battling for survival.
Things had not gotten that ugly since Jack Valenti, the longtime chairman of the Motion Picture Association of America, famously said the VCR was "to the American film producer and the American public as the Boston strangler is to a woman home alone."
But a funny thing has happened since those Senate hearings. The combatants went home. The rhetoric died down. And lately they have started working together. Why?
With growth slowing in both entertainment and technology, players on both sides started to accept an uncomfortable reality: they simply could not afford to go on fighting. The ability to deliver movies and music over the Internet in a pirate-proof format could mean big money for movie and record companies, which have long complained about the expenses of manufacturing and distributing their wares.
And as Apple is proving - it now sells more iPods than Macintoshes - there are equally fat profits for those who can ease the distribution and consumption of digital entertainment.
The result is what looks like a beautiful new friendship. Joint ventures, strategic alliances and photo opportunities materialize every week, as tech companies jostle for position in the entertainment world, and producers enjoy the courtship. While Steven P. Jobs, Apple's chief executive, rules the digital-entertainment world so far, Ms. Fiorina is running hard to catch up.
In the last year, Hewlett licensed iPod technology for its own digital music player; began a music café with the Starbucks Corporation, where coffee drinkers can burn CD's; and provided financing and laptops to Robert Redford's Sundance Film Festival. That last move earned Ms. Fiorina the Sundance Institute's "Risk-Takers in the Arts" award for her contributions to film, and an introduction by Sally Field at a ceremony last Thursday night in New York.
Bill Gates, the chairman of Microsoft, is also eager to cash in. MSN.com, Microsoft's Internet portal, offers video games, music and Disney movies for downloading; the company hopes it will seed the market for its digital media player and antipiracy software. Microsoft also powers Movielink, the film download service backed by the major studios.
Intel has developed its own antipiracy technology, which has been licensed by Warner Brothers. And consumer electronics makers are making their own digital media players.
The benefits to consumers are just beginning to show. While downloading music onto an iPod or a similar music player is commonplace, Microsoft, Hewlett-Packard and others are pushing for a completely digitized home. Their vision starts with a central media player used for personal computing, downloading movies and television and listening to music.
Content from that system could be sent wirelessly to any other media players or computers in the house. Technologists have talked up the concept for years, but it is just now becoming feasible.
This cross-industry romance did not happen overnight. While the notion makes some techies grit their teeth, Mr. Jobs deserves much credit. He was not the first to explore digital entertainment, but he was the first technology figure embraced by the entertainment industry.
Since then, entertainment companies have become more aggressive about developing their own digital businesses. Universal Music Group just licensed several hundred of its music videos to a video-on-demand service. BMG North America, which includes the Arista, J, RCA and Jive music labels, says it has struck 55 digital licensing deals in the last year, from video-on-demand services to master recordings for cellular ring tones.
BMG is also pushing its employees to embrace the digital religion of "0's" and "1's," dispatching a sort of technical evangelism team to give educational (and motivational) talks to any executives, artists or managers still wary of the Internet.
Jimmy Iovine, chairman of Interscope Geffen and A&M Records, broke ranks with his industry by deciding to seduce, rather than berate, the technology community. "We shouldn't be asking, 'Why do tech companies not understand us? What is their value to us?' " he said. "We have something to offer them: Our ability to move the cultural needle."
When Ms. Fiorina told Mr. Iovine she would denounce Internet piracy at the Computer Electronics show in January, he offered a bevy of musical stars to back her up. Ms. Fiorina's speech became a watershed in technology-entertainment relations. And with Mr. Iovine, the rapper Dr. Dre and the rock star Sheryl Crow beside her, she underscored her show business credentials, as well as creating an interesting photo opportunity. A generational shift has also contributed to the thaw. Hollywood once considered video games more a software business than a creative outlet. Now directors, writers and technicians hop between industries regularly.
"Hollywood people never used to understand what we do," said Neil Young, the executive in charge of production at Electronic Arts, the video-game company. "Now they play video games, use technology and just happen to have found themselves in a different industry."
Finally, the importance of Terry S. Semel's journey from Hollywood to Silicon Valley cannot be underestimated. Mr. Semel, the ex-Warner Brothers chairman and co-chief executive, raised eyebrows, and hackles, when he went to lead Yahoo. When the company flourished under him, cross-industry griping diminished.
But "happily ever after" is no guarantee for this new romance, still fueled equally by optimism and results. Apple's iPod is the only digital media player that has really caught fire with consumers, and many new partnerships are predicated on technology that has yet to be created, especially for antipiracy. No one has figured out how to plug the "analog hole" (when digitized content is played on analog devices, it loses its protection, and can be copied if converted back to digital form).
And the new partners are only beginning to talk money. "This will be a defining issue between the businesses," said Peter Chernin, chief executive of the News Corporation, owner of 20th Century Fox Studios and the Fox Television operations. "How does someone get paid for creating software that moves content around?"
Whether the money issue results in a fairy tale ending or a grumpy, long-term marriage, nobody expects open war again. The only certainty is that no one can pay for a divorce.
Good thing Fouts is still around/
Yeah, what he said!/
Tenderloin, FYI,
I only gave him a few grand, and it was secured with all of his intellectual property.
You could wall paper a ski lodge/
Both parties to an action
must agree to arbitration as the means to resolve a dispute. Given F-10's strategic advantages, I doubt they will agree to this method for ending the conflict, and will undoubtedly (counter) sue EDIGITAL. How many shares will it take to defend THAT?
What happened to the irrevocable LOC?
Posted by: ucansee
In reply to: friendlyfred who wrote msg# 34011 Date:3/31/2003 12:43:43 PM
Post #of 62422
According to Ran Furman in the webcast:
Eclipse by Fujitsu 10 has already issued to us an irrevocable letter of credit in the amount of $800,000. By receiving a letter of credit from our OEM customer before we begin building product we minimize our working capital requirements to fulfill the terms of our existing contract as well as additional following orders from these customers.
During this quarter we’ve already received certain NRE fees from SoftTech on our first collaborative products for HP and anticipate that next month SoftTech will issue a letter of credit to us for over a million dollars.
_____________________________
Posted by: ucansee
In reply to: None Date:4/5/2003 10:35:05 AM
Post #of 62422
This LOC is good news for the company - not bad news. Nobody is confused. But there are people trying to confuse the issue.
It is an irrevocable letter of credit. The benefit - and it is a real benefit - to e.Digital is that it allows the company to fulfill this order without expending a certain amount of cash - in this case, $800K. What this ultimately translates to in profitability is another story. However, it is allowing the company to move forward at the present time.
Irrevocable Letter of Credit - A letter of credit in which the specified payment is guaranteed by the bank if all terms and conditions are met by the drawee. The Irrevocable Letter of Credit can only be canceled or altered with the complete agreement of all parties concerned. Compare Revocable Letter of Credit.
Letter of Credit - (L/C) A document, issued by a bank pursuant to instructions of a buyer of goods, authorizing the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain documents within a given time. In effect, the bank substitutes its credit for that of its customer (the buyer).
Revocable Letter of Credit - A Letter of Credit which can be canceled or altered by the drawee (buyer) after it has been issued by the drawee's bank. The Revocable Letter of Credit can be cancelled at any time without prior agreement. Compare Irrevocable Letter of Credit.
http://www.fiba.net/terminology.htm
LOL, they'll blame it on Collier/
It's Lanier, all over again.....
how many shares will it take to pay THESE lawyers?
Teaching an Old Walkman Some New Steps
By KEN BELSON
Last July, while most people were taking summer vacations, the Sony Corporation of America made a little noticed, but crucial announcement. Jay Samit, a longtime music industry executive, was appointed general manager of Sony Connect, a new subsidiary that will sell songs online and allow consumers to play them on their Sony gadgets.
His appointment was largely overlooked outside the company, but inside, the move was immediately understood as a way to unite the sometimes conflicting electronics and content divisions.
That internal battle was seen by many as the reason Sony, the inventor of the Walkman and the biggest player in the portable audio market, was being trounced by Apple Computer and its hit, the iPod music player, in the emerging digital segment. Something had to be done.
How Sony got outflanked is as much about Sony's inflexibility as Apple's initiative. With its ownership of premier music labels and its foundation in electronics, Sony had all the tools to create its own version of iPod long before Apple's product came to market in 2001. But Sony has long wrestled with how to build devices that let consumers download and copy music without undermining sales in the music labels or agreements with its artists.
Mr. Samit, 43, came from the EMI Group with experience untangling technological and legal knots. He had had a long career selling traditional content in new formats. And he was an outsider, and considered better able to bridge the gap between Sony's engineers in Tokyo and its music team in the United States. "The only reason we didn't do this earlier is the guys didn't talk to each other," Mr. Samit said of Sony's new digital music venture.
A lot is riding on the Connect online store, which will be released in a few weeks. If it catches on with consumers, it will help validate the company's long-held goal of integrating its electronics, music and movie businesses - and give it a shot at re-establishing its leadership in the latest generation of portable music.
"Now it's about integration," said Robert S. Wiesenthal, the chief strategy officer of Sony Broadband Entertainment, who works with Mr. Samit. "Unless you have the integration, it won't work."
Sony's brand name, vast retail network and expertise in electronics are notable advantages, which Mr. Samit said made it possible for Sony to offer a more affordable and more convenient alternative to Apple's music system.
Like Apple's iTunes online music store, Connect will have 500,000 songs that can be downloaded for 99 cents each. But while iTunes songs can be played only on iPods, Sony already sells a variety of devices, including minidisc and compact disc players, which can play songs bought on Connect's Web site. Sony's new Hi-MD disc player, for instance, will hold up to 45 hours of music on one disc, which will retail for about $7.
One of Sony's flash memory players will store up to 22 hours of music and have batteries that last about 100 hours.
"We're not about one-size-fits-all," said Mr. Samit, sitting in his Manhattan office with Louis Armstrong playing in the background. "You can't believe it's about just one brick that people will carry," he said, referring to the iPod.
Steven P. Jobs, Apple's chief executive, said the minidisc player, which uses discs that can be recorded on, much like a cassette player, would not catch on in the United States the way it had overseas.
"We have a very healthy respect for Sony," Mr. Jobs said in a telephone interview. "But Sony believes very strongly in the minidisc, and we don't. It might work in Japan but not here." Apple's most expensive iPod, by contrast, uses a hard drive that can store up to 10,000 songs.
Mr. Samit said Sony would cover all bases when it releases a player this year that included a hard drive just like the iPod. Sony is also developing a portable device that plays video downloads, he said.
Sony will compete strongly on price. The most expensive iPod costs $499, while Sony's devices capable of using Connect - including network Walkmen and players that use memory sticks - will sell for $60 to $300.
And Sony is planning to market broadly, starting this summer with promotions with McDonald's - buy a Big Mac and get a free downloadable song - and United Airlines, which will let fliers exchange mileage points for songs.
Apple will remain a formidable rival. The company's new mini version of the iPod and longer battery life for its products make its brand as sought after as ever. To extend its reach, Apple has licensed iPod technology to Hewlett-Packard and made the iTunes site available to AOL and its 25 million subscribers. It wisely made iTunes compatible with Windows operating systems.
"This is a different phenomenon from 15 years ago," said Megan Graham-Hackett, an equity analyst at Standard & Poor's. "Sony wouldn't have looked at Apple as a competitor then. Apple has been quite innovative."
Apple, though, is not the only rival Sony faces. Dell and other manufacturers have come out with digital music players. What's more, songs downloaded from Dell's MusicMatch Web site can be copied onto a much wider variety of devices.
"We don't like to lock people and force them to use this or that service," said Mark Vena, director for the digital home marketing team at Dell.
Dell, like many others, is betting that the digital audio market will become like the computer industry, where prices for computers fell as more machines used the Windows operating system. If this happens, Apple and Sony, with their more proprietary services, may fall victim to the music software program that is most widely used. Microsoft, with its Windows Media format, is trying to become that standard. Already, dozens of online stores use its software, which is compatible with hundreds of devices.
"Sony is coming out with their own format, but we don't need another standard," said Joe Wilcox, an analyst at Jupiter Research. "The market for protected digital downloads is in the early stages of a format war. It's a recipe for consumer confusion."
Still, Mr. Wilcox and other analysts said that Sony had a loyal following that could help it seize a share of the digital music market quickly.
"Look at the resources at their disposal," said Douglas Krone, the chief executive of Dynamism.com, a Web site that sells high-end electronics. "They own all the intellectual property and they have the retail channel. It will be hard for Apple to maintain its market share."
While the competitors take on each other, they are also fighting music piracy. Despite the efforts of the recording industry and government, more than 99 percent of the songs downloaded or swapped on the Internet are still copied illegally. This has forced legitimate companies to charge low prices, even before they pay the recording artists or cover their costs.
Even so, the market for downloadable music and digital music players is potentially lucrative. By 2008, the percentage of music sales online is expected to triple, to 12 percent, according to Jupiter Research. Online music sites sold 25 million songs in the first quarter this year compared with 19.2 million in the second half of 2003, according to Scoop Marketing, which tracks legal music downloads.
The majority of those songs were downloaded from the iTunes site, and Apple sold a whopping 807,000 iPods in the quarter ended in March. The company, analysts said, has done the best job in the industry of using music as the link between its computers and audio devices.
Sony would like to emulate that success, but catching up will not be easy. Sony entered the digital camera market late, yet became one of the top makers in that field. But its computers and cellphones have struggled and remain niche products while others grabbed those markets.
This time, Mr. Samit and other Sony executives say they can recover lost time because all parts of their corporate empire are on the same page.
L
What a load of
horsehockey.
She's in there
like a wedgie; her and missy; the dyno duo!! Gimme some 'o them tips!!
A defining song in R&R history!/
True to form....
see last year's script.
alright, joye1!!
great selections!
Ernst & Young Gets 6-Month Ban
on New Business
By FLOYD NORRIS
Ernst & Young, the big accounting firm, was barred yesterday from accepting any new audit clients in the United States for six months after a judge found that the firm acted improperly by auditing a company with which it had a highly profitable business relationship.
The unusual order, which included a $1.7 million fine, brought to an end a bitter fight in which the Securities and Exchange Commission had contended that Ernst violated rules on auditor independence by jointly marketing consulting and tax services with an audit client, PeopleSoft Inc.
"The overwhelming evidence," wrote Brenda P. Murray, the chief administrative law judge at the S.E.C., is that Ernst's "day-to-day operations were profit-driven and ignored considerations of auditor independence." She said the firm "committed repeated violations of the auditor independence standards by conduct that was reckless, highly unreasonable and negligent."
The rebuke to Ernst, which said it would not appeal the decision, is the latest embarrassment for one of the Big Four accounting firms, which have come under heavy criticism and increased regulation as a result of accounting scandals in recent years. Those scandals led to the demise of Arthur Andersen, which had formerly been among the Big Five.
The judge was harshly critical of the Ernst partner who was in charge of independence issues, saying he kept no written records and had failed to learn enough facts before saying the relationships between Ernst and PeopleSoft were proper. That partner, Edmund Coulson, was chief accountant of the S.E.C. before he joined Ernst in 1991.
Ernst's consulting and tax practices used PeopleSoft software in their business, and the two companies participated in some joint promotion activities. Ernst contended that it should be viewed as a customer of PeopleSoft in the relationship, but the judge said it went far beyond that.
She noted that Ernst had billed itself in marketing materials as an "implementation partner" of PeopleSoft and had earned $500 million over five years from installing PeopleSoft programs at other companies, which use the software to manage payroll, human resources and accounting operations.
She issued a cease-and-desist order against the firm, saying it had refused to admit it had done anything wrong and that there was no reason to believe it would not violate the rules again. She also fined it $1,686,500, the total amount of audit fees the company received from PeopleSoft in the years that were involved, plus interest of $729,302, and ordered that an outside monitor be brought in to assure the firm complied with the rules in the future.
S.E.C. officials said the decision would send a message to other firms. "Auditor independence is one of the centerpieces of ensuring the integrity of the audit process," said Paul Berger, an associate director of the commission's enforcement division, adding that the judge's decision "vindicates our view that Ernst & Young engaged in a business relationship that clearly violated" the rules.
Ernst, based in New York, had previously denounced the commission for seeking a ban on new business, saying any such punishment was completely unwarranted. But last night the firm said it would accept the ruling and would not appeal. It had the right to appeal to the full S.E.C. and then to federal courts if the commission ruled against it.
"Independence is the cornerstone of our practice and our obligation to the public," said Charlie Perkins, a spokesman for Ernst & Young. "We are fully committed to working closely with an outside consultant in the review of our independence policies and procedures."
Mr. Perkins said the firm had decided not to appeal because it wanted to put the matter behind it, and emphasized that it would be able to continue serving its existing clients.
The six-month suspension appears to match the longest suspension on signing new business ever imposed on a leading accounting firm.
In 1975, Peat Marwick, a predecessor of KPMG, agreed to accept a similar six-month suspension as part of a settlement of charges it had failed to properly audit five companies, including Penn Central, the railroad that went bankrupt.
In 1978, an administrative law judge imposed a similar suspension on Ernst & Ernst, a predecessor of Ernst & Young, after finding that it had conducted bad audits. But the full S.E.C. reduced the penalty to a censure, calling the suspension too severe.
In 1976, Seidman & Seidman, a firm that ranks below the top firms in terms of size of business, accepted a six-month bar after the commission found it had failed to properly audit clients that included the Equity Funding Corporation of America, which engaged in a fraud that was then one of the largest ever.
This case, unlike those, did not involve bad audits. There was no accusation that Ernst's audits of PeopleSoft were inaccurate, only that the accounting firm violated rules requiring that it be independent from its audit clients.
In the 1990's, auditing firms greatly expanded their consulting businesses and chafed under independence rules that many considered outmoded. They fought efforts to tighten those rules in 2000 and managed to get the commission to weaken rules it had proposed.
Since then, however, some of the firms, including Ernst, have sold most of their consulting businesses.
The Sarbanes-Oxley Act, passed in 2002, established the Public Company Accounting Oversight Board, which regulates and inspects accounting firms and has issued new rules on auditor independence. Those rules did not play a role in this case because it concerned audits from 1994 through 1999.
Ernst declined to say how many new audit clients it typically added in a six-month period. The exact date the suspension will begin was not clear and could be important. Companies that switch auditors often do so soon after an audit is completed, which is about now for companies that report on a calendar-year basis. The ban will affect companies that file reports with the S.E.C., whether they are based in the United States or other countries.
Arthur W. Bowman, editor of The Accounting Report by Art Bowman, a newsletter, said the firm might add 100 new audit clients a year but that it was unclear how much its revenue would suffer. "It certainly doesn't do well for the firm's public image, but it doesn't do much to the firm's bottom line," he said, noting that some partners of the firm earned annual compensation of more than $1.7 million, the amount of the fine.
Ernst & Young's relationship with PeopleSoft, which is based in Pleasanton, Calif., appears to have been very profitable for the accounting firm, which installed computer software for consulting customers. "In 1998," the judge wrote, Ernst "earned $150 million from implementing PeopleSoft software and $372,000 from auditing PeopleSoft's financials."
PeopleSoft replaced Ernst as its auditor in 2000, after the S.E.C. investigation that led to yesterday's decision had begun. It then hired Arthur Andersen and moved to KPMG in 2002 after Andersen collapsed.
Mr. Perkins, the Ernst spokesman, said most of the relationship with PeopleSoft had been in the consulting division that was sold and that the remainder was in the company's tax practice. He said the tax practice no longer was involved with PeopleSoft.
Most of the arguments over auditor independence have dealt with questions of what services other than auditing could be provided by the accounting firm to its clients. Significant business relationships have long been barred, even to the extent of not allowing auditors to invest in mutual funds that their firms audit.
The current rules on auditor independence bar auditing firms from performing some services for audit clients but allow others if the company's audit committee approves of them. Some institutional investors have mounted campaigns to vote against directors that allow such relationships.
Bofem/
The wait will be worth it, joe
I expect you'll get just what you deserve.
Whadda they know?/
No news is GOOD news, but
EDIG email working fine today...
From DABOSS
PostID 327460 On Monday, April 12, 2004 (EST) at 4:07:53 PM
--------------------------------------------------------------------------------
Thank you for your e-mail, XXXX. We expect to release news and hold a webcast this month.
Best regards,
Robert Putnam
Senior Vice President
e.Digital Corporation
13114 Evening Creek Dr. S.
San Diego, CA 92128
http://www.edigital.com
Phone: (858) 679-3168
Fax: (858) 486-3922
rputnam@edigital.com
I certainly have no reason to doubt that, Bob, but has it ever been stated publicly by an officer of the Company, or in writing to any of those individuals who have discussed the royalty arrangement with Mr. Falk, as to who "owns" what on this particular device.?
A Heretical View of File Sharing
By JOHN SCHWARTZ
The music industry says it repeatedly, with passion and conviction: downloading hurts sales.
That statement is at the heart of the war on file sharing, both of music and movies, and underpins lawsuits against thousands of music fans, as well as legislation approved last week by a House Judiciary subcommittee that would create federal penalties for using what is known as peer-to-peer technology to download copyrighted works. It is also part of the reason that the Justice Department introduced an intellectual-property task force last week that plans to step up criminal prosecutions of copyright infringers.
But what if the industry is wrong, and file sharing is not hurting record sales?
It might seem counterintuitive, but that is the conclusion reached by two economists who released a draft last week of the first study that makes a rigorous economic comparison of directly observed activity on file-sharing networks and music buying.
"Downloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates," write its authors, Felix Oberholzer-Gee of the Harvard Business School and Koleman S. Strumpf of the University of North Carolina at Chapel Hill.
The industry has reacted with the kind of flustered consternation that the White House might display if Richard A. Clarke showed up at a Rose Garden tea party. Last week, the Recording Industry Association of America sent out three versions of a six-page response to the study.
The problem with the industry view, Professors Oberholzer-Gee and Strumpf say, is that it is not supported by solid evidence. Previous studies have failed because they tend to depend on surveys, and the authors contend that surveys of illegal activity are not trustworthy. "Those who agree to have their Internet behavior discussed or monitored are unlikely to be representative of all Internet users," the authors wrote.
Instead, they analyzed the direct data of music downloaders over a 17-week period in the fall of 2002, and compared that activity with actual music purchases during that time. Using complex mathematical formulas, they determined that spikes in downloading had almost no discernible effect on sales. Even under their worst-case example, "it would take 5,000 downloads to reduce the sales of an album by one copy," they wrote. "After annualizing, this would imply a yearly sales loss of two million albums, which is virtually rounding error" given that 803 million records were sold in 2002. Sales dropped by 139 million albums from 2000 to 2002.
"While downloads occur on a vast scale, most users are likely individuals who would not have bought the album even in the absence of file sharing," the professors wrote.
In an interview, Professor Oberholzer-Gee said that previous research assumed that every download could be thought of as a lost sale. In fact, he said, most downloaders were drawn to free music and were unlikely to spend $18 on a CD.
"Say I offer you a free flight to Florida," he asks. "How likely is it that you will go to Florida? It is very likely, because the price is free." If there were no free ticket, that trip to Florida would be much less likely, he said. Similarly, free music might draw all kinds of people, but "it doesn't mean that these people would buy CD's at $18," he said.
The most popular albums bought are also the most popular downloads, so the researchers looked for anomalous rises in downloading activity that they might compare to sales activity. They found one such spike, Professor Oberholzer-Gee said, during a German school holiday that occurred during the time they studied. Germany is second to the United States in making files available for downloading, supplying about 15 percent of online music files, he said. During the vacation, students who were home with time on their hands flooded the Internet with new files, which in turn spurred new downloading activity. The researchers then looked for any possible impact in the subsequent weeks on sales of CD's.
Professor Oberholzer said that he had expected to find that downloading resulted in some harm to the industry, and was startled when he first ran the numbers in the spring of 2003. "I called Koleman and said, 'Something is not quite right - there seems to be no effect between file sharing and sales.' "
Amy Weiss, an industry spokeswoman, expressed incredulity at what she deemed an "incomprehensible" study, and she ridiculed the notion that a relatively small sample of downloads could shed light on the universe of activity.
The industry response, titled "Downloading Hurts Sales," concludes: "If file sharing has no negative impact on the purchasing patterns of the top selling records, how do you account for the fact that, according to SoundScan, the decrease of Top 10 selling albums in each of the last four years is: 2000, 60 million units; 2001, 40 million units; 2002, 34 million units; 2003, 33 million units?"
Critics of the industry's stance have long suggested that other factors might be contributing to the drop in sales, including a slow economy, fewer new releases and a consolidation of radio networks that has resulted in less variety on the airwaves. Some market experts have also suggested that record sales in the 1990's might have been abnormally high as people bought CD's to replace their vinyl record collections.
"The single-bullet theory employed by the R.I.A.A. has always been considered by anyone with even a modicum of economic knowledge to be pretty ambitious as spin," said Joe Fleischer, the head of sales and marketing for BigChampagne, a company that tracks music downloads and is used by some record companies to measure the popularity of songs for marketing purposes.
The industry response stresses that the new study has not gone through the process of peer review. But the response cites refuting statistics and analysis, much of it prepared by market research consultants, that also have not gone through peer review.
One consultant, Russ Crupnick, vice president of the NPD Group, called the report "absolutely astounding." Asked to explain how the professors' analysis might be mistaken, he said he was still trying to understand the complex document: "I am not the level of mathematician that the professors purport to be."
Stan Liebowitz of the University of Texas at Dallas, author of an essay cited by the industry, said the use of a German holiday to judge American behavior was strained. Professor Liebowitz argued in a paper in 2002 that file sharing did not affect music sales, but said he had since changed his mind.
The Liebowitz essay appeared in an economics journal edited by Gary D. Libecap, a professor of economics at the University of Arizona, who said that his publication was not peer reviewed, though the articles in it were often based on peer-reviewed work. Professor Libecap said he attended a presentation by Professor Strumpf last week, and said the file-sharing study "looks really good to me."
"This was really careful, empirical work," Professor Libecap said.
The author of another report recommended by the industry said that the two sets of data used by the researchers should not be compared. "They can't get to that using the two sets of data they are using - they aren't tracking individual behavior," said Jayne Charneski, formerly of Edison Media Research, who prepared a report last June that she said showed that 7 percent of the marketplace consists of people who download music and do not buy it. That number is far lower than the authors of the new study estimated. "There's a lot of research out there that's conducted with an agenda in mind," said Ms. Charneski, now the head of research for the record label EMI.
Connecticut.....Go Huskies/
Statistics don't lie, lick.....
statisticians do.
Kinda sheisty....
"Carty served as American Airlines' chairman and CEO from 1998 until he resigned in April 2003. He resigned after an uproar that threatened the concessions deal over his failure to tell workers about bonuses and bankruptcy-proof pensions granted to executives while the rank-and-file were being asked to accept the huge pay cuts." Shhhhaka!
Some soothing sounds for all of us
from the OLD DRUMMERMAN........
http://www.investorshub.com/boards/read_msg.asp?message_id=2709071