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Tech Industry

The week's news: New chips, new plans, new laws

High-tech legislation elbows its way to the front of the line in Congress, while AMD, Intel, and numerous Net companies lay out new plans.

For the second time in three weeks, high-tech legislation elbowed its way to the front of the line in Congress, which was otherwise racing to approve spending bills and head home for campaigning. The Senate joined the House in passing the Net Tax Freedom Act and also approved copyright legislation, while the House OK'd a controversial Net content bill.

Elsewhere, newly profitable AMD hinted at its new K7 chip, Intel described its new "Foster" microarchitecture, and a host of Net companies outlined new strategies at New York's Internet World trade show.

The Beltway rush
The Senate sweepingly passed the Internet Tax Freedom Act, which calls for a three-year time-out on new tariffs for online services and products.

Supporters, including President Clinton, say it will prevent the nation's 30,000 tax jurisdictions from squelching the budding e-commerce industry, though local leaders have opposed it on the ground that it hinders their ability to raise local revenues.

The time-out doesn't apply to sales taxes on foods and services sold over the Net. Under most tax codes, if a retailer has a physical location in a state or city, it has to collect and remit sales taxes to the appropriate authorities. The Net Tax Act also grandfathers existing e-taxes.

The year-long debate over the bill was hard fought, and some work remained to be done in reconciling the Senate bill with the House version, passed in June. The former includes a provision that commercial Web sites which give minors access to "harmful" material are not protected from new taxes and another calling for privacy protection for minors, but neither were expected to be deal-breakers.

More bills to come
The Senate passed compromise legislation imposing new safeguards for software, music, and written works on the Net, and the House was expected to clear it by the end of the week. The Digital Millennium Copyright Act makes it a crime to break digital watermarks but also sets forth consumers' rights regarding online research and e-commerce. Broad powers for database owners to safeguard their entire collections were scrapped in a joint House-Senate conference, and the issue is likely to be revisited next year.

Across the Capitol, the House passed the Child Online Protection Act, which would penalize commercial sites that give minors unfettered access to "harmful" material. But the move probably won't push the bill forward in Congress, as the Senate failed to pass a stand-alone version of a bill restricting the availability of adult content for minors.

In a seemingly closed deal, the Clinton administration gave Network Solutions a two-year extension to keep administering the most popular domain names, including ".com." The arrangement requires the publicly traded firm to open up its Net name registration coffers to competitors by next summer and start transferring technical control of top-level domains to an international nonprofit board by March. Last week, the company's sanctioned monopoly expired before the government could put in place a new regime.

Explicitly identifying America's lagging "smart card" industry, the Justice Department filed an antitrust lawsuit against Visa and MasterCard, leveling charges of limiting competition both in traditional and emerging markets.

The Federal Trade Commission is looking into discussions between Cisco and Lucent Technologies and Cisco and Northern Telecom, probing whether the networking giant colluded with others to divide up the rapidly changing networking market.

The Securities and Exchange Commission adopted a rule requiring all mutual fund companies and investment advisers to report their year 2000 preparedness plans to the commission.

Chips ahoy
Next week, Advanced Micro Devices will provide the details of next-generation K7 at a conference, raising the question of whether the company has come up with a way to expand into the performance computing market.

The K7, which will be commercially released in the first half of 1999, will come close to the performance of Intel's future Katmai chips. It will run at 500 MHz and higher and use a new technology for the system bus, the conduit that allows the processor to "talk" to other components in the computer.

Earlier this week, the Sunnyvale, California, company reported record revenues of $685.9 million for the third quarter and net income of $1 million, or 1 cent per share--the chipmaker's first profit in more than a year--as a result of a 30 percent surge in sales, particularly in the consumer market.

Archrival Intel detailed a road map for upcoming microprocessors that will extend variations of its current technology well into the next century and range up to 1000 MHz in speed. The emergence of "Foster" indicates that the industry leader intends to continue upgrading its 32-bit chip lineup (which features the Pentium II, Xeon, and Celeron brands) as a kind of insurance against its upcoming 64-bit chips, which will be radically different, higher-end designs.

The Santa Clara chipmaker also unveiled a 450-MHz Xeon chip for workstations. Though it's in short supply, major vendors immediately announced new products.

The blues
Global sales of computer chips rose 1.5 percent in August, the first month-to-month gain this year, but the total of $9.81 billion was 15.7 percent lower than the $11.63 billion recorded in August 1997.

A raft of companies said they had or would make job cutbacks. National Semiconductor will trim 600 in Scotland, Compaq laid off 1,000 in Houston, and Packard Bell NEC will reduce headcount by 750 to 1,000, mostly in Sacramento.

All told, job cuts in the computer, electronics, and telecommunications industries are far surpassing last year's figures--by twofold in most cases--as the impact of the Asian economic crisis hits home.

As expected, the start of the government's antitrust lawsuit against Microsoft was delayed by four days, and the software giant planned to request an additional two-week delay on the grounds that last-minute substitution of witnesses indicated the government's case has shifted. At the final pretrial hearing in Washington, U.S. District Judge Thomas Penfield Jackson also ordered the company to let government investigators have access to its sales and pricing databases.

Bust a move
Finally implementing a strategy articulated 13 months ago, Netscape announced new features for its Netcenter portal that allow users to tie into the company's enterprise software business. Maybe it's a bit late: fast-growing Network Associates rolled out its Project Apollo portal strategy, which envisions a site for users to "manage the health and fitness of their PCs." It's due next month.

Sega and WebTV teamed up to create a TV set-top box running on the Windows CE operating system, the first from a major vendor that offers high-end online gaming, Internet access, and interactive television.

Dell and Internet service provider @Home joined the growing list of companies partnering to promote high-speed Internet access. Cable modem-ready PCs in Dell's Dimension line for home and small business consumers will be optimized for @Home's service by early next year.

After a week in which CDnow and N2K each saw their depressed stocks slide more than 15 percent, the two online music retailers confirmed they are in talks regarding a possible merger. Separately, Barnes & Noble announced in a surprise move that it would postpone IPO plans for its online book retailing site and allow German publishing giant Bertelsmann to take a 50 percent stake in it instead.

Both moves were seen as a threat to, but industry analysts said the online bookseller isn't likely to be toppled from its perch anytime soon.

More new stuff
A Korean start-up called emachines said production of its sub-$500 systems has begun and an initial manufacturing run of 200,000 units has been allocated to retailers Office Depot and Best Buy.

Microsoft released an upgraded version of its Windows CE operating system, a few days in advance of a developers' conference, but vendors didn't rush to announce new "Jupiter" handheld products.

Separately, Microsoft will deliver a service pack for the Windows 98 operating system early next year, the company said, confirming widespread rumors.

Sybase rolled out a new version of its high-end database, along with additional data access and replication technology aimed at the financial community in an effort to quash earlier rumors that it's moving away from its core enterprise database business.

Also of note
The state capital--not Silicon Valley--is the fastest-growing region in California's high-tech industry ? a shortage of liquid crystal screens will hit in 2000, affecting both notebook makers and the burgeoning market for flat-panel displays ... Netscape acknowledged a privacy bug in Navigator that reveals users' cache, cookies, and file directory information ? Microsoft joined a group of eight Internet portal sites (including Yahoo and Excite) in donating $3 million in Web ad banners for a campaign to educate Internet users on privacy issues ? Web White & Blue, a hodge-podge of online election information that hopes to combat voter apathy, will be promoted by more than 450 sites across the Net until election day.