Conference 7.286::digital

Maybe I just don't have enough caffeine in my system, but could flesh your
base note just a bit?  

    The $32 billion deal brings together two already large companies
    in the Telecommunications and Media industries with the specific purpose
    of developing the 'information super highway' that Clinton/Gore 
    mentioned a while back in the run up to the US elections. It went
    quite since, meanwhile companies like Bell Atlantic and TCI have
    taken it very seriously.....
    
    ....the resulting merger has triggered a lot of stock market action
    in the last couple of days in Communication and Media stocks.
    
    Bob Palmer talked of the potential of Alpha AXP and the emerging
    'digital media highway' during the period of the Alpha AXP launch.
    
    -Dom
                                 

    We build equipment.
    
    Bell Atlantic is a common carrier.
    
    TCI is a cable TV company, which is reluctantly a carrier and mainly an
    entertainment company.
    
    Now, what's the question?  Our CEM CBU no doubt knows all these guys
    well.

    If you cant see it.......it's too late!
    
    -Dom

 U.S. News                                                   LIVE WIRE
 ------------------------------------------------------------------------------
 Digital enters on-demand video market (19-Oct)              Date: 19-Oct-1993
 ------------------------------------------------------------------------------

                 Digital enters on-demand video market 
 
         Digital announced today that it will provide an integrated 
   server platform to deliver video-on-demand and other interactive 
   services for U S WEST Communications' proposed broadband 
   communications trial.  Pending Federal Communications Commission 
   approval, the U S WEST trial is scheduled to begin in Omaha, Neb. in 
   1994.
         Digital has developed this new server platform specifically to 
   address the requirements of an all-digital broadband infrastructure 
   that supports a range of new interactive services such as movies and 
   other video entertainment on demand, multimedia, interactive games, 
   home shopping, education and information, and more. The platform 
   incorporates Digital's Alpha AXP processors, StorageWorks disk 
   storage arrays, Digital Linear Tape (DLT) library subsystems, 
   interactive gateway unit, server management unit, and GIGAswitch, a 
   high-speed networking switch linking the various elements together. 
   Finally, recognizing that cost per subscriber will be the key 
   determinant in the success of the market, Digital has designed a 
   software environment that maximizes the efficiency of the multimedia 
   data delivery.
         In the U S WEST Omaha trial, Digital will work in partnership 
   with The 3DO Company, supplier of interactive technology that will 
   provide the capability for video-on-demand and other informational 
   programming, and with a broadband network supplier. The result will 
   be a flexible, end-to-end client/server solution that provides a 
   rich and robust environment for content and application providers.
         "Digital's work with US West and 3DO to provide consumers with 
   video on-demand services shows our combined focus on the end-user, 
   and how relationships like these will result in the delivery of 
   high-value interactive services," said Paul Kozlowski, vice president, 
   Communications, Education, and Media Business Unit.  
         "The convergence of computers, communications and entertainment 
   is creating a new world of multimedia services. The potential for 
   this video-on-demand service, when coupled with the National 
   Information Infrastructure, is boundless.  Digital is well-
   positioned to utilize its expertise in open client/server computing, 
   consultation and integration projects to carry this breakthrough 
   development into other markets with equal promise," he added.

    re .5
    
    That's good news, but do we need closer links with a large 'media'
    company.
    
    I see yesterday Scully the ex-Apple boss has anounced his joining
    and becoming CEO of I believe Springer Communications a specilaist
    Wireless Comms. company. 
    
    We too have some projects in this are I beleive?
    
    -Dom
        

    
    From today's NY Times:
    
    	Mr. Sculley said that he would become Chariman and CEO of 
    Spectrum Information Technologies, Inc, a comapny that controls
    a series of crucial patents related to the wireless transmission
    of computer data.  

    re:.5,.6
    
    The point that .5 is making is quite clear to me:  We are selling
    equipment to all comers.  Heck, we'd sell stuff to BOTH Viacom AND QVC! 
    
    In order to stay alive in this business, we have to avoid entangling
    alliances.  It's far easier to make enemies than friends. We can be a
    neutral business partner with many customers who are each other sworn
    enemies.
    
    Besides, Bell Atlantic is just sowing the seeds of their own
    destruction, but that's another story.

re.8

I'm in the CEM segment, and I'd appreciate to hear the "other" story about
Bell Atlantic. As I understand from the Interactive Video groupies, our
strategy is to build a standard open interface, and will build with any
other front-end people want us to, not just restricted to the 3DO device.

Bell Atlantic is (or a division of) the same company that we are competing
with in many markets for equipment service, no?

Lee

    re:.8,
    
    >>  The point that .5 is making is quite clear to me:  We are selling      
    >>  equipment to all comers.  Heck, we'd sell stuff to BOTH Viacom AND QVC!
    >>  In order to stay alive in this business, we have to avoid entangling      
    >>  alliances.  It's far easier to make enemies than friends. We can be a      
    >>  neutral business partner with many customers who are each other sworn      
    >>  enemies.
    
    I couldn't agree more.  As an equipment, services, and SI provider to
    telco, cable, and media companies with our video server, we would 
    hurt ourselves by making alliances now.  Look at the cable and telco
    industries.  Each RBOC has between 13 and 17% of the US population
    as a customer, and the top two cable operators, TCI and Time Warner,
    control less than 25% of the total subscribers to cable.  The RBOC's
    are now competing with one another for cable business and will soon
    compete for local telephone service.  Any alliance we could enter into
    with an RBOC or Cable company would antagonize the remaining
    competitors, which just so happen to control the majority of the
    market.  They likely would not buy from Digital.
    
    >>  Besides, Bell Atlantic is just sowing the seeds of their own
    >>  destruction, but that's another story.
    
    Please elaborate on this.  Are you referring to BA forcing competition
    for local phone business?

    Y'know, this talk about alliances with CATV and Bell companies reminds
    me of the talk a decade ago about how we just had to ally ourselves
    with a PBX company to take advantage of "voice data integration".  Wang
    blew a wad on InteCom and Telenova; IBM blew a bil on Rolm; we were
    smart and stayed out. 
    
    Now for my inflammatory statement that BA is sowing the seeds of its
    own destruction:  The problem is one of identity.  What is Bell
    Atlantic?  Under the 1984 divestiture, the seven RBOCs were given the
    monopoly local phone companies.  Their stock was almost like a bond, as
    their phone companies were guaranteed a rate of return by law, in
    exchange for regulation.  Judge Greene allowed each to get 10% of total
    revenues from other businesses; that cap is obviously no longer in
    effect.  CATV, on the other hand, is slightly riskier, though only
    slightly more competitive (mainly with broadcast and satellite).  But
    the culture is totally different.  CATV is in the entertainment
    business, Bells in the common carriage business.  Entertainment is more
    glamorous but less certain; also, the culture is utterly different.
    Bell companies aren't full of Hollywood types.
    
    Where BA is getting into trouble is in risking its sinecure for the
    ephemeral gain of somebody else's business.  Owning TCI means they
    suddenly are concerned with which movies are popular today, which
    channels are hot, etc.  As a carrier, they are neutral:  They can even
    today with no regulatory changes carry video signals to the home, but
    only as a common carrier, meaning they don't own the risk or care about
    the content.  A separate company, or a competitive set of companies,
    can be "video information providers" with Bell as the fair and neutral 
    pipeline.  By buying TCI they're giving up that neutrality.
    
    CATV companies are sometimes talked about as potential players in the
    "information highway", but I don't see them as major ones.  Again it's
    not their business; they care about movies, not bits and bytes. A CATV
    company is a form of carrier, but that's the annoyance they have to put
    up with in order to sell entertainment.  Since CATV and telephone
    companies are starting to converge on the same basic technologies, it's
    attractive to think of the two setting up parallel networks and
    competing.  But both are monopolists at heart, and such a duopoly
    wouldn't lead to serious competition, just higher prices (due to lower
    network utilization and an insistence on profit).  More likely you'll
    see the two industries working together, jointly owning "fiber to the
    home", or more likely the Bell owning it and the CATV companies paying
    to use it, so they can dismiss their own pole contractors.  By buying
    TCI, BA is making this less likely to work in their own areas.  They
    are now the competitor of the CATV companies doing business in BA
    phone territory, even though they can't be the CATV there.  They've
    made enemies out of potential partners!
    
    They should stick to their respective knitting.

    How about this for a potential rationalefor Bell Atlantic (and others) ?
    
    1.  Computer and telecoms technologies are converging fast
    2.  Computer and telecoms end-user markets and offerings are converging
    	fast.
    3.  The evolution of transmission technology is outstripping the
        PTOs business case for replacin g transmission paths, especially in
    	the local loop where the future demand  for volum e traffic lies.
    4.  Higher-bandwidth transmission links need to be laid to the homes
    	to satisfy the latent demand for high-volume, low cost transmission 
    	to support interactive gaming, HDTV applications, home commercial 
    	services, video on demand,interactive video, virtual reality and so on..
    
    5.  The RBOCs captive local loop market is under attack from the radio
    	tail technology being offered by new kids on te block.
    
    Thus the only way that PTOs (eg RBOCs) can protect themselves in the
    local loop in the future is to team up with the entertainment industry.
    
    Whether Digital remains a bystander supplier, or takes an integral part
    in this growing trend, depends on the long-term vision of the
    Corporation..... box-shifter or service provider ?
    
    John

    How about merging with XEROX to handle the document handling and
    processing of the information in the superhighways of the future?  We
    compliment each other well in terms of core competencies and we would
    make another $30B company.
    
    Just my $.02.
    
    ..Larry

    >How about merging with XEROX to handle the document handling and   
    >processing of the information in the superhighways of the future?  We   
    >compliment each other well in terms of core competencies and we would   
    >make another $30B company.
    
    This makes more sense than merging with a telecom carrier, which would
    be counter to our interests.  Besides it would get Xerox away from
    their addiction to Sun (which hasn't done much for their revenues), and
    towards the rest of the industry.
    
    /d.c.

    
    How about Apple Computer?  I always thought we missed
    a golden opportunity in the mid 80's when their stock 
    was relatively low.  And it's low again now.

    I believe Apple Computer to now be too closely allied to IBM (Taligent,
    Pink, PowerPC) to consider Digital's hypothetical suit.  Furthermore,
    we have rather hitched our wagon to Microsoft, have we not?  And,
    though Microsoft seems poised to win its long battle with Apple, surely
    Mr. Gates, our putative partner, would not look kindly on such an idea. 
    Jmho.
    

    re .18 Cherson <this would make more sense tha merging with a telecom
    carrier, which would be counter to our interests>
    
    I am interested in your reasoning for this statement, perhaps you would
    elaborate.
    
    John

    re: .20
    
    >we have rather hitched our wagon to Microsoft, have we not?  And,   
    >though Microsoft seems poised to win its long battle with Apple, surely   
    >Mr. Gates, our putative partner, would not look kindly on such an idea.
    
    We may have adopted an O/S strategy based on Microsoft, but that
    certainly doesn't make us partners. Bill Gates is well-reknown for
    "partnering" with any and all takers, and it *always* benefits Bill
    more than it does the "partner". Bill Gates looks out for himself,
    we need to do the same.
    
    That said, I think there would be many benefits to Digital by joining
    with Apple, but I can't see what Apple would get out of the deal. I've
    seen their first PowerPC Macs, and they absolutely scream. If the low
    power 603 chip enhances the Newton to a similar degree, then Apple will
    be a formidable contender in the technology wars.
    
    Geoff