TECH TALK By Paul Motter (MF Networx) Maui, HI. (Jan. 14, 1996) -- The International Winter Consumer Electronics Show(CES) in Las Vegas this past week offered numerous products and technologies that have either direct or indirect impact on the networking area. From Internet telephony to web television, the CES showcased the current convergence status of many technologies and consumer products. With the rush to digital status of almost everything non-organic, strange and amazing hybrid electronic creatures and gadgets are being born every day. Many will succeed as viable products on the shelves of your favorite electronics store. Some will even be financially successful while others will experience only a few moments of glory and be heard of no more. Investing in this "convergence" play offers great rewards but is fraught with equal peril to one's portfolio. The investor in networking stocks who ignores the impact of these new gadgets and appliances does so at great risk. It will be imperative to have some handle on the converging technologies of DVD, DSS, TV/PC, web-browsing TV, interactive cable, digital cameras, video conferencing, smart phones, wireless products, personal communications devices, and the related accessories, products, and supporting technologies. Just which of these will rise to the surface and be embraced by the consumer is of considerable uncertainty. Will they want to surf the web on their TV, watch TV on their computer, both, or neither? Will grandma really do her phoning over her TV? Will Joe six-pack have a clue how to place a phone call on the net? Will satellites be a viable delivery source of the Internet to the PC? Well, C-Phone Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CFON)") else Response.Write("(Nasdaq: CFON)") end if %> is one such corporation banking heavily on consumers lending more than an idle ear to converging technologies. Its new "Set-Top Box" video system for the home allows people to view friends and family on their TV during a telephone call. The self-contained system connects to the TV much like a VCR and according to Daniel Flohr, Chairman and CEO, "C-Phone Home will finally and forever change the way people use telephones". Not to be outdone by such hyperbole, InfoGear Technology Corporation and CIDCO Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDCO)") else Response.Write("(Nasdaq: CDCO)") end if %> announced iPhone, an information appliance that integrates the Internet, the World Wide Web, telecommunications in a consumer friendly telephone. According to Robert Marshall, president and CEO of InfoGear "The iPhone represents a leap forward in telephone technology. In addition to bringing access to all of the content and services available on the World Wide Web, the iPhone is a great full-function, easy-to-use telephone. Enabled by a graphical touchscreen interface, users will enjoy a new, innovative way of using the Web, e-mail and telephone services." In a report entitled 'Internet Telephony: An Alternative Dial-Tone?' issued by International Data Corporation, ( IDC), "Real-time telephony over the Internet is becoming more than a standalone product. It is catalyzing the development of multimedia telephony applications (MTA) such as whiteboards, application and document sharing, multi-user data conferencing and ultimately real-time video. This will lead to new revenue streams and opportunities and will account for 12.5 billion MOUs (minutes of use) by the year 2001. The biggest impact of MTA awaits the introduction of voice over Internet services from the world's telephone carriers. This study analyzes the diverse pressures on carriers to introduce services, but recommends that carriers who resist packetized communications fight a losing battle." The report is available for purchase by contacting Janis Dempsey at 800-343-4952. Motorola Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> received the Innovations Award at the CES with its breakthrough voice pager called Tenor (TM). It works just like a portable answering machine or portable voice mail, making it easy to keep in touch with family, friends and business associates. Small enough to fit in the palm of a hand, Tenor receives pages in the caller's voice that can be listened to immediately or stored and listened to anytime, anywhere. Since no operator assistance is required, users have additional privacy and can be certain that they are receiving a complete message. Tenor's user-friendly, answering machine-like features include the ability to Play, Rewind, Fast Forward, Pause, Lock and Delete messages. Up to four minutes of voice messages can be stored in the pager. Messages are stored in the network's virtual memory, even when the pager is turned off. An alert is activated when additional messages are waiting in the system's memory. Now if Motorola can just get its Iridium Satellites finally launched, we should soon be able to page our broker in Shanghai. But it's not just a convergence of appliances and technologies. We find software giant Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> announcing new technologies building on the Simply Interactive PC (SIPC) initiatives announced last April to make PCs more interactive with television. These technologies will allow PCs to receive television programming, data services and new forms of interactive multimedia entertainment blending, plus large-screen TV or monitor user interface elements and display devices. And we find the premier PC chip maker Intel Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> announcing an innovative Express 10/100 Fast Ethernet Switch operating at 10 to 100 megabit-per-second (Mbps) autosensing allowing businesses to flexibly achieve higher productivity on their expanding networks. Additionally, Intel announced along with Worldwide Broadcasting Network a new Internet software technology built on Intel's Real-Time Transport Protocol (RTP) capable of delivering video and multimedia content over the Internet in real time. This software can "respond intelligently to Internet traffic allowing high-quality video and audio to PCs over existing corporate networks, even those whose bandwidth is constrained". What are software and semiconductor companies doing in the "networking" news roundup? Are we to now include these and other cross-over companies into our ever expanding list of networking stocks? The convergence of digitized content, connectivity and transmission is blurring traditional lines of demarcation. Will these giants from other technology sectors muscle their way into areas dominated by our favorite networking companies? Stay tuned. The 1998 Winter CES will be held January 8-11 in Las Vegas and will be headlined with the theme "Defining Digital". In a separate report on Information Technologies (IT), Information Data Communications predicts that "the Internet will continue to boom, further replacing the PC as the engine of growth for the IT industry. However, Internet expansion is not without its setbacks and will be plagued with major growing pains." "IT and PC Spending Up, Growth Rate Down: In 1997, spending on IT products and services will grow to more than $700 billion, a 12.3 percent increase in spending -- but a decline from 1996's 14.1 percent growth. 1997 will also be the second straight year of declining PC market growth. Worldwide PC spending will grow 15.5 percent to $182. billion, down from 20 percent growth in 1996 and 32 percent growth in 1995. "The Internet will once again drive IT market growth. In 1997, Web users will double to more than 68 million, 90 percent of the largest companies will have a Web site and transaction volume over the Web will increase by 400 percent. "In 1997 investments will shift toward products that will better equip the Web for electronic commerce. Internet commerce servers that provide the functional base for on-line stores will be a major focus...." The FCC (Federal Communications Commission) appears ready to approve a plan to set aside a large chunk of radio frequencies for free and unlicensed high-speed communications over very short distances. This would allow for very low-cost wireless Internet access for many schools, hospitals and businesses on their Intranet level. This concept would necessitate only one central high-speed telephone hookup with the rest of the Intranet computers linked via the wireless frequency. It would be up to businesses to develop devices to work off these wireless links although none have so far been announced. It would essentially be similar to the radio frequencies used to open garage doors. Big cities would possibly be at a disadvantage as the signals can't penetrate brick walls or glass well without additional signal boosting equipment. Companies pushing for the FCC plan includes Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>, Motorola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %>, Northern Telecom Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NT)") else Response.Write("(NYSE: NT)") end if %>, Apple Computer Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %>. and others in a group called WinForum. Shiva Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHVA)") else Response.Write("(Nasdaq: SHVA)") end if %> gained spotlight attention from its announcement of disappointing earnings expectations of only .05 to .07 per share on analysts' expectations of $.21 per share. This shortfall was the result of IBM's decision not to place a $5 Million LanRover (TM) order with Shiva this quarter. Although the company tried to assure the street that this was a push-out order into the next quarter, the stock was hammered down over $15 and sent a general chill over the networking stocks. Shiva later in the week announced that Europe's largest telecommunications provider, Germany-based Deutsche Telekom, has chosen the Shiva LanRover Access Switch(TM) as part of its platform to deliver a high-performance remote access infrastructure, enabling its customers to seamlessly access the Internet. Ascend Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> announced contracts this week with UUNet <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UUNT)") else Response.Write("(Nasdaq: UUNT)") end if %>, PSINet <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSIX)") else Response.Write("(Nasdaq: PSIX)") end if %>, and Telia AB along with adopting NetManage's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETM)") else Response.Write("(Nasdaq: NETM)") end if %> PMA technology. The PMA technology from NetManage will extend the capabilities of Ascend's MAX and Pipeline products. It will enable Ascend to easily add security and other network traffic related functionality to its family of remote networking solutions. Global Village Communication <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GVIL)") else Response.Write("(Nasdaq: GVIL)") end if %> and ZyXEL Communications announced their commitment to the new K56Plus modem technology from Rockwell <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ROK)") else Response.Write("(NYSE: ROK)") end if %> and anticipates introducing new products with this technology in the first half of 1997. Word has it that with the crush of business from the new pricing plan, America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> is adding 30,000 modems a month. Unless something has changed these are U.S.Robotics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USRX)") else Response.Write("(Nasdaq: USRX)") end if %> Total Control Rack Modems. Hayes Microcomputer Products, Inc. announced its plans to support K56flex modem protocol for achieving 56 kbps transmissions over standard telephone lines utilizing technology from Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> and Rockwell International. MagicXpress announced at CES a new family of advanced 33,600 bit-per-second modems that can be quickly upgraded to 56,000 bit-per-second performance. At the same time the company announced that modems with Voice/fax capability, registered for 56K upgrades, will have DSVD (Digital Simultaneous Voice Data) capability included. Others will have DSVD or Video Phone Ready capabilities added. Boca Research <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq:BOCI)") else Response.Write("(Nasdaq:BOCI)") end if %> announced its 56.6 Kbps upgrade policy. This open policy allows an end-user with any brand 28.8 or 33.6 Kbps modem to easily upgrade to a Boca Research 56.6 Kbps modem. The policy also guarantees owners of Boca Research 28.8, 33.6 or 56.6 Kbps modems an industry compliant 56.6 Kbps product as soon as the industry standard is approved. The effective date of this policy is dependent upon Rockwell's delivery of a 56.6 Kbps modem chip set, which is anticipated to be February 1997. In its latest research report on the modem market, Frost & Sullivan forecast the U.S. desktop and portable modem market to total $3.06 billion for 1996and expecte an increase to $5.29 billion in 2003. "The Internet has made an unparalleled amount of information available to both the casual and business user. Cables and Asymmetrical Digital Subscriber Line (ADSL) modems promise to give multi-megabit per seconds access to users in the future. "The slow decline, over the next several years, in the traditional analog dial-up modem market is a direct result of the acceptance of the new high speed cable and ADSL modem technologies," said Frost & Sullivan analyst Brian Phillips. The International Banking and Information Security (IBIS) conference sponsored by the National Computer Security Association (NCSA) will be held at The Marriott World Trade Center Hotel in New York City on Feb. 20-21, 1997. "IBIS '97 will focus on electronic security issues, secure financial transactions, on-line commerce, security policy, training and awareness, security management and auditing, government and national security perspectives." For additional information and registration requests contact: NCSA, 1200 Walnut Bottom Road, Suite 3, Carlisle, PA 17013. Call 717/241-3226 or fax: 717/243-8642, or email: [email protected], or visit the NCSA Website at http://www.ncsa.com, or at CompuServe: GO NCSA. For updated material send a blank email to [email protected] . In the "legal stuff" department RSA Data Security, Inc., a wholly-owned subsidiary of Security Dynamics Technologies, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq:SDTI)") else Response.Write("(Nasdaq:SDTI)") end if %>, and Cylink Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq:CYLK)") else Response.Write("(Nasdaq:CYLK)") end if %>, announced settlement of their long-standing legal disputes. The companies reached amicable out of court resolution of their disputes and as part of the settlement, Cylink granted to RSA all necessary rights to Cylink's Stanford patents, and RSA granted to Cylink a license to RSA's cryptographic software toolkits. But on the flip-side, CIA Wireless <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CAWS)") else Response.Write("(Nasdaq: CAWS)") end if %> announced the filing of a class action lawsuit against the company and certain board of director members for violations of SEC (Security and Exchange Commission) laws and for issuing to the investing public false and misleading statements regarding, among other things, CAI's Wireless Internet access service and the company's business relationship with Bell Atlantic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %> and NYNEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NYN)") else Response.Write("(NYSE: NYN)") end if %>. FORE Systems, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FORE)") else Response.Write("(Nasdaq: FORE)") end if %>, a worldwide leader in Asynchronous Transfer Mode (ATM) technology, announced its acquisition of privately held Cadia Networks of Andover, Massachusetts. "Cadia is an innovator in the development of multiservice WAN adaptation and concentration technology for the service provider market. The acquisition enhances FORE's ATM leadership position by adding high-density, carrier class access technology to FORE's ATM-based service provider offerings." "With the acquisition of Cadia, and the integration of their superior multiservice adaptation and concentration technology into FORE's service provider offerings, we are firmly committed to providing the best solutions to support the evolving requirements of today's service provider networks," said Eric Cooper, chairman and CEO of FORE Systems. In a related ATM study conducted by 3Com Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %>, the survey indicated a dramatic increase in demand for high-performance ATM technology over the next two years. "...although ATM has already been adopted by a handful of retailers demanding high-bandwidth requirements at their headquarters, 28 percent of respondents indicated they were likely to deploy ATM between 1997 and 1998. Of those planning to adopt the new technology, 20 percent cited bandwidth requirements for their networks, while only four percent said that cost was an issue in selecting the next-generation network technology." Alcatel <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALA)") else Response.Write("(NYSE: ALA)") end if %> continues a steady stream of new contract with its announcement of deployment of the industry's largest wideband digital cross connect -- the Alcatel 1631 SX R 6.0 - at several customer sites in North America. "The Alcatel 1631 SX has a capacity of 1344 STS-1 equivalent ports (with each STS-1 equalling 672 voice channels). The product supports both optical and electrical ports and features FlexPoint(TM), Alcatel's unique service option that allows carriers to effectively manage the growing mix of SONET (synchronous optical network) and asynchronous traffic." "The Alcatel 1631 SX now has thirty percent more capacity than its closest competitor," said Ken Lewis, Vice President and General Manager, Cross Connects, Alcatel Network Systems. "Our customers asked us to develop a matrix size that could accommodate their network growth plans and, at the same time, to provide capabilities such as Flexpoint to simplify the provisioning of new services. "Carriers report that a cross connect of this size is needed to eliminate interconnecting smaller matrix machines within a central office. Carriers who have tried interconnecting smaller cross connects report that this type of configuration incurs greater cost, does not provide adequate traffic capacity, and makes network management and provisioning more difficult." Is the end of "flat rate" access on the horizon? The Associated Press reports that Netcom On-Line Communications Service <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETC)") else Response.Write("(Nasdaq: NETC)") end if %> of San Jose, Calif. will return to hourly rates next month. "The problem is that people are doing the computer equivalent of pulling their chairs up to the buffet table at an all-you-can-eat restaurant, costing Internet providers money, tying up phone lines and making it difficult for others to log in." The story also states that "in the next few years, other companies are expected to discontinue flat rates and return to some form of an hourly charge."

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