Competition in the tech sector is at an all time high. You can see it anytime you walk into any software store or surf the Web to any electronic gadget superstoreÕs website. The competition between tech businesses can be seen in the amazing array of devices, software and services offered at low prices. Tech is cheap, folks. High tech products are cheaper and better than ever, but there are some who cannot stand it.

Who, you may ask, would be opposed to inexpensive technology used to enrich our lives? Is it the environmentalist barbarians of the Earth Liberation Front, intent on saving the world from humans? Could it be the hypocritical college students and professional protesters that litter the cities of the Western democracies, complaining about the exploitation of the proletariat, while living off of trust funds inherited from their wealthy industrialist parents? Even worse, is it those condescending music store clerks still trying to push vinyl albums, moaning that synthesizers and CDs have killed the music industry?

No, the opposition to the tech industry comes from the tech industry players who cannot compete. The accusations of collusion between large semiconductor manufacturers and more litigation against Microsoft came just 48 hours into the New Year. Accusations that would be groundless were they not levied at major players in the industry by other major tech industry players.

The semiconductor industry has been hit hard the past couple of years by falling prices. In late-1998, DRAM (the memory chips that go in everything from PCs to PDAs to cell phones) makers in South Korea, Germany and Japan were enjoying healthy profit margins as consumers spent billions on their products. To keep up, these companies built new facilities and hired as many workers as they could get to meet the demand for more DRAM. With the increased spending from consumers, DRAM makers pumped more resources into research and development for new products. DRAM product cycles shortened as the competition for customers increased. However, by the Year 2000, consumers cut back on the new technology spending. Low prices are great for us as consumers, but are horrible for the manufacturers who have warehouses full of product that nobody is buying.

Last year, DRAM makers hit all-time lows in their pricing structures due to an oversupply of product and almost no demand. DRAM chips that had been selling for US$18 a pop were now selling for US$1.80 (well below the average US$4 cost to make the chips). South Korean DRAM makers like Samsung and Hynix lost millions. American powerhouse Micron shed their once-stellar PC line of business in an effort to stay afloat financially. JapanÕs Toshiba decided to exit the DRAM market altogether.

Like HP and Compaq before them, some of these companies decided to merge and consolidate with their former competitors. Micron will acquire US assets from Toshiba this year and Hynix is entertaining offers of a merger with Micron. Not to be outdone, German DRAM maker Infineon is making similar merger offers to their Taiwanese counterparts, Nanya and Winbond.

Yet, the Toshiba/Micron deal has angered Rambus Incorporated, the maker of high-performance RDRAM. Once a darling of the New Economy and ally to number one chipmaker Intel, Rambus has all but disappeared from the industryÕs radar in the past year. Toshiba was one of the largest licensed makers of RDRAM chips, but the chipÕs high price turned off many consumers. Micron, who never licensed RambusÕ technology, was a prime litigation target by Rambus over the past couple of years. According to Rambus, MicronÕs DRAM technology infringed on RambusÕ intellectual property ø an accusation later found to be false (and costly for Rambus). With the acquisition of Toshiba, Micron has bought arguably RambusÕ best customer. Rambus is undoubtedly preparing legal briefs against Micron as I write.

Another major target of litigation is Microsoft. With their new Windows XP operating system and Office XP productivity suites selling briskly, Microsoft is the only high tech company that seems to be thriving rather than shrinking in the recessed economy. Rather than admiration of that success, the jealous competitors and their trial lawyers have picked up the scent of big money wafting from Redmond, WA.

In late-December 2001, Microsoft asked for an extra four months to search the over 3,700,000 legal documents entered into the court record by the states in the Microsoft antitrust lawsuit. This request for an extension from the court was rejected by the nine states that didnÕt settle with Microsoft on November 6th as stalling. These states have screamed for over a month that Microsoft will continue to use their market power to an unfair advantage against their competitors. The attorneys general and trial lawyers in California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia want a new remedy ø one that would force Microsoft to give up their source code, graft a copy of Sun MicrosystemÕs Java on every copy of Windows, break up all integrated features of Windows (similar to selling an automobile without wheels or seats) and set prices regulated by the US Government. Leonard Orland, the distinguished law professor at the University of Connecticut Law School (who, in case you hadn't noticed, is located in one of the nine states refusing to settle with Microsoft) remarked ÒThe state AGs want to turn Microsoft into a regulated public utility, with about as much freedom to innovate as the Minsk Post Office.Ó

Of course, few so-called journalists in other tech media outlets will tell you that almost all of the nine states feature companies who are in direct competition with Microsoft. Utah, Massachusetts and California are especially guilty because these states have corporate entities that have heavily invested in the Linux operating system. Once touted as the ÒWindows KillerÓ by the hype machines at IPO brokerage houses in 1999, LinuxÕs market share three years later has been documented as miniscule. As of December 17, 2001, Linux held an embarrassing global usage share of only 0.24 percent, according to StatMarket, a Web development optimization service and the leading source for data on global Internet user trends. Compare that with MicrosoftÕs Windows and AppleÕs Macintosh operating systems, which hold a combined global usage share (amongst a sampling of 80 million international Internet users) of more than 98 percent. According to StatMarketÕs figures, Linux usage share has fluctuated between 0.2 and 0.3 percent, with no substantial growth over the past three years. In other words, if you canÕt gain market share ø sue your competitors!

A good way to start 2002 would have been by increased competition in the tech sector. Instead, it looks like 2002 will be a year mired in the same counterproductive litigation by crybaby companies unable to compete in a capitalist economy. What could these companies possibly do to get out of this mess?

Try growing up.

Email your comments to scott@worldtechtribune.com
 

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