Panasonic, a subsidiary of Japan's Kyushu Matsushita Electric Industrial, said its "One Touch" voice over Internet Protocol (VoIP) service would give consumers a choice on the same cordless phone between regular long distance phone service or lower-cost Internet-based long distance service at the touch of a button on their phone.
The new phone will be on display at the International Consumer Electronics Show in Las Vegas this week.
Net2Phone's service allows a user to make a phone call over the public Internet from a computer equipped with a microphone and Net2Phone software. With the new phones, consumers will be able to access Net2Phone's service without having to log on to the Net2Phone site.
Shares of Net2Phone shot higher this morning, rising 4.77 percent or 2.44 points to 53.5. It was one of the few tech stocks gaining in early trading today.
"This agreement marks a major paradigm shift in the telecommunications industry, enabling ordinary phones to be used as a tool to route IP calls," David Greenblatt, chief operating officer of Net2Phone, said in a statement. "Incorporating our services into Panasonic's new dual-mode phone presents an excellent opportunity for Net2Phone."
Internet telephony for now is an emerging technology; many analysts note that the quality of sound still leaves much to be desired. However, although users may not be willing to overlook the poorer quality for domestic calls, they might for more expensive international calls.
Net2Phone is the best known player in the field, having cut deals with several Net and telecommunications powerhouses including America Online and Qualcomm. But competition is heating up with rival Dialpad.com and ZeroPlus.com cutting in to the mix.
"If you are using an Internet system to send voice, it is inherently cheaper than using traditional analog switching systems," John McNenney, an executive at Panasonic Consumer Telephone Products, said in a statement. "These technologies show the potential of the Internet to deliver substantially lower cost long-distance services." Several companies are expected to unveil a long list of new products supporting Apple's Macintosh computers, particularly the iMac DV and PowerMac G4, at Macworld this week.
Much of the emphasis at the San Francisco trade show will be on FireWire, a next-generation connection technology.
At the last Macworld, products featuring Universal Serial Bus (USB) dominated. But taking center stage this time is FireWire, also known as IEEE 1394, a means of connecting devices such as camcorders and disk drives to computers at up to 400 megabits per second (mbps) vs. about 12 mbps for Universal Serial Bus.
USB and FireWire are both alternative means of connecting devices to computers, with USB heralded as the replacement for serial and parallel ports. Both are considerably faster than older connection standards. Speed is important for transferring large amounts of data, such as color printing or digital camera image capture.
Macworld, which begins tomorrow and runs through Friday, is traditionally Apple's showcase for displaying new products. Last year, for instance, it used the event to debut more iMacs, in five colors. Apple has declined to comment on what it plans to unveil this year.
But other companies are not being so quiet. Apple in October upped its support for FireWire by adding FireWire connectors to the iMac DV as part of a push to create a market for products that enable so-called personal broadcasting. Next on the list: Apple is expected to add support for FireWire when it revises its PowerBook line of notebooks for business and high-end customers, an event that could possibly happen as soon as this week.
Apple has said there are already about 7 million digital camcorders with FireWire connections on the market. This means a large number of consumers can easily tape events and use the computer for editing and playback. Users then can go back to tape to store the edited material.
With Apple having taken the leap first, third-party developers are now following suit. Among the announcements at Macworld are as follows:
• Video conferencing provider Ariston unveiled the iSee-Exec FireWire camera and the FireCard, a FireWire adapter for notebooks running MacOS 8.6 and higher. The FireWire camera offers the ability to capture full-motion video images at a resolution of 640 by 480 pixels. It sells for $399.
• Digital Storage Group said it has begun shipping the PowerFile C200, a DVD/CD changer that connects via FireWire to the Mac. The C200, which retails for $1,499, features two DVD-ROM drives capable of 1 terabyte of storage. Also, QPS is offering a rewritable CD drive that connects via FireWire.
• Epson unveiled the Expression 1600 Special Edition, a 1,600-by-3,200 dots-per-inch scanner supporting FireWire connectivity. The scanner, which offers 36-bit color and is available for both Mac OS and Windows-based systems, sells for $799.
• Umax unveiled the PowerLook 1100, a FireWire scanner for Macs and PCs. The $999 scanner supports 42-bit and 1200 x 2400 dpi output.
• VST enhanced its line of FireWire hard drives, with full-size models storing up to 37-GB of data and slimline drives up to 25 GB. The company also introduced its first supporting both USB and FireWire.
• QPS upped the performance of its Que! SCSI CD-RW drives, with a 12x4x32 model, which is expected to sell for $499. QPS also added translucent bezel faceplates to its USB Que! 4x4x8 CD-RW and FireWire Que!4x4x24 CD-RW drives.
In other news, the Mac is gaining storage and printing options galore at the Macworld show. Among the devices on tap:
• Canon introduced four new products--the BJC-85 Color Bubble Jet portable inkjet printer, the BJC-3000 Color Bubble Jet printer, the CanoScan FB 630Ui color scanner and the MultiPass C545 multifunction printer. The products are aimed at iBook, PowerBook and iMac users.
• Focus Enhancements said it has begun shipping the iTView-DV, a PC-to-TV video converter for the iMac DV. Geared for the education market, the $139 device lets users display DVD movies, QuickTime videos or software programs run from the iMac DV on a TV.
• EricX Corporation showed off the VXA-1 external SCSI tape backup drive, with a 66-GB per tape capacity and transfer rate of 6 MB per second. EricX will bundle the drive with Dantz Development's Retrospect Desktop Backup software, SCSI cable and cleaning cartridge for $1,199. The drive is expected to ship next month, with a FireWire version slated for the second half of 2000.
• OnStream announced its first Mac-compatible storage drives, the Echo 30GB SCSI drive. The Echo, with 30-GB capacity per disk and transfer rates up to 2 MB per second, supports SCSI-equipped PowerMac G3 and G4 computers and the PowerBook portable. The drive sells for $699.
• Fuji Photo jumped into the DVD-RAM market--the rewritable DVD storage technology offered on some PowerMac G4 computers--by offering 5.2-GB DVD-RAM discs.
• MacPublishing, DSL provider Covad Communications and router maker Netopia banded together to offer Mac users high-speed Internet products. The group set up a Web site to help users find Mac-compatible services.
• Pervasive Software announced availability of Tango 2000, development software for building e-commerce e Web sites.
• Connectix said it would update its popular Virtual PC emulation software to support Windows 2000 and Linux. The Windows 2000 version will sell for $329 and VirtualPC for Linux will go for $99.
• MicroTouch Systems updated the TouchStation touch-screen solution for the iMac DV. The TouchStation is designed for use in self-service and public information kiosks and point-of-sale systems.
Online retailer Amazon.com today said it generated revenues of more than $650 million during the fourth quarter--exceeding its total sales of $610 million for the entire year of 1998--but the higher sales are not expected to cut the company's losses for the quarter.
The online retailer giant's holiday sales for the fourth quarter 1999 were more than two-and-half times greater than the sales of $253 million generated in the year-ago quarter. Amazon said it shipped about 20 million items and acquired more than 2.5 million first-time customers.
However, Amazon said that it will incur higher-than-expected inventory-related charges and write-downs, in large part because it carried deep inventory in its newly started toys and electronic stores. This morning, shares of Amazon tumbled 13.65 percent shortly after the opening bell, dropping 11.19 points to 70.75. The stock was the most actively traded issue on the Nasdaq market in early trading with 2.9 million shares changing hands.
"Consistent with our strategy, we went all-out to make sure we delivered for customers this holiday season," Warren Jenson, Amazon's chief financial officer, said in a statement. "As a result, our higher seasonal sales will not translate into lower net losses in the fourth quarter."
While the holiday shopping season appears to have been strong for many e-commerce players, analysts maintain that bringing the customer back to shop throughout the year is of critical importance. While low prices may have initially attracted consumers, it is the quality of customer service, on-time shipping and no-hassle return policies that are likely to drive shoppers back to a particular online retail site.
Amazon expects to release complete 1999 fourth quarter and fiscal year financial results on February 2, 2000.
Based on fourth quarter sales, Amazon has reached a $2.6 billion annualized sales level, the company said.
Just yesterday, Media Metrix ranked Amazon as the most accessed e-commerce site for the holiday shopping season from Nov. 22 to Dec. 26, with an average of about 5.5 million unique visitors per week.
"We invested heavily in distribution capability, and we are very pleased that we shipped well over 99 percent of orders in time for the holidays," Joe Galli, Amazon's president and chief operating officer, said in a statement. "In 2000, we'll continue to raise our standard for customer service while driving productivity, capital efficiency and operational excellence across our entire distribution network."
Linux firm Red Hat today said it has agreed to buy e-commerce software company Hell's Kitchen Systems in a stock deal worth about $86 million.
Red Hat, which sells Linux operating system software, said it will fold Hell's Kitchen Systems' (HKS) e-commerce payment processing software into its offerings. Linux is an open-source operating system based on Unix and available for free or very low cost from several companies.
Under the terms of the deal, Red Hat said it will issue up to 398,335 shares of its common stock to buy all the outstanding shares of HKS. Based on Red Hat's closing price of $215 yesterday, the stock transaction is worth about $86 million.
"Red Hat's global reach and brand recognition delivers HKS' e-commerce software to the open source servers running the world's Internet infrastructure," Red Hat chief executive Matthew Szulik said in a statement. "The acquisition of HKS is another key addition to Red Hat's strategy to create a next-generation software company spanning powerful servers, Internet infrastructure and pervasive, post-PC-centric computing platforms."
With the acquisition, Red Hat said it is moving forward on its strategy to expand into areas such as consulting and technical support services.
In November, Research Triangle Park, N.C.-based Red Hat bought software company Cygnus for $674 million, giving Red Hat an entree into "embedded" devices, machines whose inner workings such as operating systems and hardware usually are hidden from the person using it. In the past, Red Hat has focused chiefly on the server market.
In addition, Red Hat said it will bundle HKS' credit card verification system software with its Red Hat Linux operating system, providing users with an e-commerce server and services product for their Web business.
Pittsburgh, Pa.-based HKS provides software and services to more than 150 ISPs, online merchants and financial institutions, Red Hat said. The combined company will continue to serve customers from both companies.
The HKS acquisition will be accounted for as a purchase transaction and is subject to regulatory approval by HKS shareholders and other closing conditions, Red Hat said. WESTWOOD, Kansas--Sprint may sell its stake in the Global One joint venture for several billion dollars as early as this week, a person familiar with the venture said.
Global One, a 3-year-old alliance with France Telecom and Deutsche Telekom, has yet to make money. It's unclear which of the European partners would control the venture if giant long distance company Sprint sells the stake, Reuters reported yesterday, citing unnamed people in the industry.
Sprint declined to comment, and Deutsche Telekom and France Telecom were unavailable. Sprint is being acquired by rival MCI WorldCom for $133 billion. Neither France Telecom nor Deutsche Telekom, each of which owns 10 percent of Sprint, wanted a piece of the new company, to be called WorldCom.
"France Telecom seems to have lost momentum while Deutsche Telekom is on a roll," said Eric Burkel, an analyst with Handelsbanken Markets, who rates France Telecom shares "buy." "France Telecom needs to prevail for damage control and to regain credibility regarding their international strategy."
Shares in France Telecom fell as much as 8 euros, or 6.45 percent, to 116 euros ($120.22) and were recently trading at 120.5 in Paris. In Germany, Deutsche Telekom shares fell 2.05 euros, or 3.06 percent, to 65, after trading as low as 64.4 euros. Shares in Sprint yesterday closed down 2.19, or 3.32 percent, at 63.75 in the United States.
Global One sells voice and data services to more than 35,000 businesses, including giant computer maker Hewlett-Packard and Coca-Cola, the world's largest beverage company. Its data network reaches more than 800 cities in 40 countries.
The partners had expected Global One to break even by 2000, though Deutsche Telekom said in August the venture wouldn't meet that target until after 2001. Gary Forsee resigned as chief executive of Global One in July, raising expectations the venture could fall apart.
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The Houston PC manufacturer purchases the distribution assets of Inacom to further its direct sales plans and introduces an easier-to-connect PC system, in an effort to rebound from a disappointing 1999. "We wanted to make it simple--simple to get at, simple to get in, simple to access." - Shawn Burke, vice president of Compaq's Presario division |
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Compaq buys distribution assets from Inacaom update Attempting to build up its direct sales capabilities in a hurry, the computer maker buys assets from PC distributor Inacom for $370 million in cash.
Compaq to unveil iMac-like consumer system
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Late last month, Worldwide Fiber became the latest test bed for a high-profile technology executive when Maffei announced he would join the company in late January to serve as chief executive. Though he recently sold $13.8 million in Microsoft stock options, and has vested two-thirds of his 1.71 million shares in the software giant, Maffei may be leaving behind as many as 570,000 shares--currently worth roughly $64 million--for the chance to head an upstart outfit.
In recent years, several companies with a similar bent have lured leading executives from established high-tech firms, only to mint new millionaires and wow Wall Street with their successes and high-flying initial public offerings. For example, Wall Street darlings Qwest Communications and Global Crossing attracted former AT&T executives Joe Nacchio and Robert Annunziata, respectively.
But with competition increasing by the day, there are no guarantees of success for communications companies that plan to make a living by providing the lowest-cost service on the market, analysts warn.
Vancouver-based Worldwide Fiber intends to be a "carrier's carrier," much like Williams Communications, by selling high-speed fiber optic data connections on a wholesale basis to other communications companies, Internet service providers and major business customers. Formed in 1998 as a unit of privately held Ledcor, Canada's second-largest construction outfit, the company is building a 22,000-mile North American fiber optic network, primarily in Canada and the Northwest United States, with a 7,000-mile trans-Atlantic network also in the works. The former network is roughly 60 percent completed, thanks to fiber swaps with more than 30 competing communications companies, according to Will Walls, vice president of finance for Worldwide Fiber.
In making the jump, the well-regarded 39-year-old Maffei, who had been recruited by other firms such as Road Runner, said he hopes to capitalize on the "amazing growth in Internet and data traffic." He brings a slew of contacts on Wall Street, which analysts say capital-intensive fiber optic companies must continue to tap for funding.
"This whole fiber optic backbone market has been dominated by Wall Street the past few years," said Rolf De Vegt, a vice president in the San Francisco offices of Renaissance Business Strategy Group. "To have a chief executive who knows Wall Street well is a key success factor in this business. As long as you keep the funding flowing, you're fine in this business."
Worldwide Fiber has raised $675 million in high-yield bonds and another $345 million in a private placement of stock to Goldman Sachs, Donaldson Lufkin & Jenrette, Providence Equity and Tyco, which is building the company's undersea connection to link North America with Europe. Worldwide is planning a public offering during the first half of 2000, according to executives and analysts.
"The key belief of Wall Street is that to be successful in this business you have to be global. To do that you need lots and lots of capital," De Vegt said.
After helping to lead Microsoft through a two-year barrage of communications-related investments, including major stakes in AT&T, Comcast and Qwest, among others, Maffei has become something of a broadband deal-maker.
"He's very familiar with telecom. I don't think there's a CEO at the top 20 or 30 communications companies that he hasn't met," Worldwide Fiber's Walls said.
Added De Vegt: "Microsoft has been doing lots of investments in the access side. Those kinds of companies are going to be potential customers for Worldwide Fiber."
Still, some analysts---who believe a glut of bandwidth will put pressure on many new entrants---question how Worldwide Fiber is different from several other more established upstart communications carriers.
"They have a history in construction, but in the operator space, operating a network, they do not have a heritage in that," De Vegt said, noting that Williams' recent IPO was lackluster, despite the company's track record as a proven communications company.
Admittedly, Worldwide Fiber primarily built fiber networks, rather than operated them, until roughly 18 months ago. But executives said the company has learned a lot since then.
"In 1998 we were a construction company. But in 1999, what really transitioned us and put us on the map were the supply arrangements with more than 30 carriers," Walls said.
At a relatively new company, Walls said Maffei will have the opportunity to begin with a "blank sheet," giving him more freedom than he had at Microsoft to shape the direction of the company.
Bloomberg contributed to this report.
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