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                          Computer News Briefs
                          Edited by Gian Trotta
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January 10, 1991 as of 12:00 AM

THIS WEEK'S STORY MENU:
1. APPLE: NEW MAC CLASSIC SELLING WELL
2. MICROSOFT UNVEILS NEW SPREADSHEET
3. DIGITAL ANNOUNCES FIRST-EVER LAYOFFS
4. NCR SHAREHOLDERS LINK UP WITH AT&T
5. NINTENDO HIT WITH ANTITRUST SUIT
6. PHILIPS OFFERS NEW DIGITAL MUSIC TAPE
7. `CREDIT CARD' PHONES ON THE HORIZON

1. APPLE: NEW MAC CLASSIC SELLING WELL
    SAN FRANCISCO (AP) - Apple Computer Inc. says it can't keep up with
demand for what has become its hottest-selling machines, its new low-
cost models.
    Demand for the $1,499 Mac Classic, which the Cupertino-based
personal computer maker introduced in October, has ``absolutely
surprised'' the company, according to Michael Spindler, Apple president
and chief operating officer.
    Apple introduced its three low-cost computers - the Macintosh
Classic, Macintosh LC and Macintosh IIsi - in October as the first step
in regaining market share lost during two years of strategic and
management shifts.
    Even with expanded production lines and work shifts, the shortage of
Classics is likely to continue until March. As for the LC model, Apple
had not planned to ship it until February or March but shipments began
earlier because scarce components became available sooner than expected,
Spindler said.
    Apple shipped about 30,000 Macintosh Classics in November and
December, according to International Data Corp., a high-tech research
firm. Apple insiders said the company could have shipped 50 percent
more, or about 45,000, if it had anticipated the strong demand far
enough in advance to expand manufacturing.
    But Apple Chairman and Chief Executive Officer John Sculley said on
Jan. 8 that introduction of the lower-priced Macintosh models was only
the first step in a plan to boost sales by pushing prices down.
    According to Sculley, the popularity of the new computers is
expanding the base of Macintosh customers. For the past few years, he
said, Apple has sold mainly to current users, who have upgraded to more
powerful machines. But more than half of the low-cost Macs have sold to
new customers, he said.
    ``Everything we do over the next five years will be aimed at gaining
market share,'' Sculley said, adding that expected gains are most likely
to come at the expense of ``clone'' computers, those based on
International Business Machines Corp.'s models, and not at the expense
of IBM itself or Compaq Computer Corp.
    Beyond low-cost computers, Sculley said the company's next priority
is to produce a lightweight notebook-size computer, which Apple sources
suggest could be unveiled in August. Notebook computers are the fastest-
growing segment of the personal computer market.
    The company also is experimenting with infrared technology to
produce wireless networks of computers and hopes to finish the new
version of its Macintosh operating software, System 7, before a
Macintosh software developers conference in May.

2. MICROSOFT UNVEILS NEW SPREADSHEET
    NEW YORK (AP) - Microsoft Corp. on Jan. 9 unveiled a new version of
its spreadsheet program for personal computers, heating up its rivalry
with another software giant, Lotus Development Corp.
    Microsoft's new version of its Excel program is designed to take
better advantage of Windows 3.0, Microsoft's software that gives IBM
computers and compatible models many of the ease-of-use features of
Apple Computer Inc.'s Macintosh.
    Lotus, by contrast, isn't expected to have a Windows version of its
market-leading 1-2-3 spreadsheet until the middle of the year.
    ``Microsoft intends to seize on this opportunity to capture as much
market share as they can,'' said Rick Sherlund, a computer industry
analyst at Goldman Sachs & Co.
    Microsoft, based in Redmond, Wash., appeared to up the ante by
announcing the new version of Excell at a news conference in Boston,
near Lotus' headquarters in Cambridge, Mass.
    Lotus took a pre-emptive strike on Jan. 7 by announcing that it
would include a free copy of its Ami Professional word processing
program along with copies of 1-2-3 sold to new customers.
    Spreadsheets, a popular type of business software, display financial
figures such as sales or profits in various charts and graphs.
    Sherlund called the new version of Excel ``a much better product.
There are a number of major new features and functions.''
    Among the new features of the $495 program are a function called a
``solver'' that allows users to find the optimum solutions, more choices
of graphs and colors, and the ability to execute certain functions by
moving an on-screen arrow to a row of graphic symbols and clicking the
button on a handheld device called a mouse.
    Borland International Ltd., the maker of the popular Quattro Pro
spreadsheet, also isn't expected to have a Windows version available
until the summer, Sherlund said.
    Lotus leads in the spreadsheet market with about 71 percent of sales
in dollar terms. Microsoft has an 18 percent share and Borland has about
9 percent, Sherlund said.

3. DIGITAL ANNOUNCES FIRST-EVER LAYOFFS
    BOSTON (AP) - Digital Equipment Corp., struggling with a computer
industry slump, said on Jan. 9 it would eliminate more than 3,000 jobs
by imposing the first layoffs in its 33-year history.
    Digital has eliminated thousands of jobs over the past few years by
offering it employees a series of voluntary severance packages, but the
company said that method has failed to meet expectations.
    The announcement was widely anticipated since the option to take the
latest severance package expired Dec. 31. Digital, based in suburban
Maynard, said last month it would assess the cutback strategy after that
deadline.
    Digital President Kenneth Olsen, who co-founded the world's second-
largest computer company in 1957, had refused to rule out layoffs though
he said they were a last choice.
    In its statement, the company did not use the word ``layoffs,''
instead calling them ``involuntary methodologies.''
    Digital, which employs about 120,000 people worldwide, said last
year it wanted to reduce its payroll by up to 6,000 positions.
    By Dec. 31, 2,550 people had taken the voluntary package, Digital
said, although the net work force reduction was not known because the
company had not factored in attrition and new hirings.
    Jay Stevens, an analyst at Dean Witter Reynolds Inc. in New York,
said it was understandable that Digital would have trouble getting
people to leave voluntarily in a tight job market.
    ``(Digital) is a young company, and they have a lot of young
people,'' he said. ``They have to find another job if they leave.''
    A restructuring charge of $550 million Digital took in its last
fiscal year will cover the cost of the layoffs, which will be
accompanied by another severance package. The company did not provide an
estimate on how much money it would save through the layoffs.
    Analysts say Digital has been hurt by declining demand for its
minicomputers, its mainstay product. The company has responded with a
flurry of new products, but has had seen its profits shrink.

4. NCR SHAREHOLDERS LINK UP WITH AT&T
    DAYTON, Ohio (AP) - A group of NCR Corp. shareholders filed a
federal lawsuit against the company on Jan. 8 seeking to clear the way
for a takeover bid by AT&T.
    The lawsuit was filed in U.S. District Court by 24 NCR shareholders
who asked Judge Walter Rice to rule that NCR has wrongfully strengthened
its ``poison pill'' anti-takeover defense. The shareholders also want
the judge to order NCR directors to cooperate fully with any company
proposing a transaction that would maximize shareholder value of NCR
stock.
    The shareholders want the suit certified as a class-action on behalf
of all the Dayton-based company's shareholders.
    The suit claims NCR shareholders are being denied the full value of
their stock because the company's directors have refused to properly
consider the $6.1 billion buyout offer from American Telephone &
Telegraph Co.
    ``NCR has not yet seen the suit and will not have any comment until
we have a chance to review it,'' said NCR spokesman Mark Feighery.
    AT&T on Dec. 6 issued a tender offer of $90 a share in cash to NCR
stockholders. AT&T wants to combine its unprofitable computer line with
NCR. The offer, which NCR's board has rejected, expires Jan. 15.

5. NINTENDO HIT WITH ANTITRUST SUIT
    SAN FRANCISCO (AP) - In a new legal challenge to Japanense video
game giant Nintendo, a U.S. company filed an antitrust suit on Jan. 7
seeking $105 million in damages.
    The U.S. District Court suit filed by American Video Entertainment
Inc. alleges that Nintendo of America Inc. and its parent company,
Nintendo of Japan, violated U.S. antitrust laws by using a secret lock-
out system in its game consoles.
    American Video manufactured cartridges compatible with Nintendo game
consoles, but the lock-out system in the Nintendo machines caused the
cartridges to be rejected, the San Jose company's complaint said.
    American Video, a subsidiary of Macronix Inc., says Nintendo
controls 80 percent of the home video entertainment market and alleges
that it is using its monopoly power to ruin the San Jose company.
    American Video also alleges that Nintendo failed to inform buyers
that only Nintendo cartridges would play in their machines. American
Video maintains that Nintendo had represented to courts that cartridges
made by other companies could be used in Nintendo consoles.
    Nintendo spokesman Tom Sarris said the company hadn't been formally
served with the suit. But in a statement, Howard Lincoln, a senior vice
president at Nintendo, said, ``Based on the news we've read, the charges
are baseless, and Nintendo will vigorously defend itself.''
    Another antitrust suit against Nintendo, filed by game maker Atari,
is pending in the same court.

6. PHILIPS OFFERS NEW DIGITAL MUSIC TAPE
    NEW YORK (AP) - A war is shaping up in the music industry, and the
battle ground is the cassette tape player.
    Rival groups are tussling over competing technologies for next-
generation cassettes that offer the superior sound quality of compact
discs.
    In one camp are several Japanese companies, including Sony Corp.,
which began selling digital audio tape products in this country last
year. DAT tapes are about half the size of conventional cassettes `but
far more expensive.
    The new contender is N.V. Philips, the Dutch electronics maker,
which on Jan. 9 unveiled a technology it calls the digital compact
cassette.
    Unlike the Japanese DAT players, Philips says machines using its
technology will be able to play today's cassettes as well as the new
digital tapes.
    ``With the average household already owning between 50 and 60 music
cassettes, this compatibility is seen as a major factor in the
successful introduction of DCC,'' Philips said in a statement.
    However, the Philips machines won't be able to play the Japanese DAT
tapes. That means the rivalry could end up a replay of the videotape war
of the 1980s, in which the VHS tape format beat out Sony's Beta
standard, leaving millions of consumers with virtually obsolete Beta
tapes and VCRs.
    ``What this means for the market is confusion,'' said Ivan Berger,
technical editor of Audio magazine. ``This has become a very interesting
time for the home recording industry because there are all of these
things unsettled.''
    Philips says its tape players should cost $500 to $600 when they are
introduced next year - far cheaper than the Japanese DAT models, wjich
carry a list price of up to about $1,000.
    However, industry experts say the price of DAT machines may have
dropped steeply by that point, if the price drops seen in other
electronics products such as VCRs and CD players are a guide.
    Both the Japanese and the Philips technologies record music in
digital format, the computer language used by compact discs, eliminating
the background hiss and other distortions of conventional tape.
    Philips, which invented the cassette tape and the compact disc, has
joined with Tandy Corp., the Fort Worth, Texas-based owner of the Radio
Shack chain, to develop DCC. Although the two companies said in October
they were working on the technology, they waited until this week to
display it at the Consumer Electronics Show in Las Vegas, the semiannual
showcase for the home electronics industry.
    Tandy says it will make tape players and blank cassettes at its U.S.
plants for sale at Radio Shack stores and elsewhere. Philips, which
makes electronics products under the Magnavox, Sylvania, Norelco and
Philips brands, also will sell home, car and portable tape players using
the technology.
    In addition, Philips says it will license the technology to other
companies, and is in advanced discussions with several Japanese
electronics companies, but it would not identify them.

7. `CREDIT CARD' PHONES ON THE HORIZON
    SCHAUMBURG, Ill.(AP) - On a day not far from now, your telephone
number and your mailing address may cease to identify the same location.
    Your address still will be your house number. But your phone number
will be YOUR number, whether you are home or not.
    It will be the number of the phone you will carry in your pocket or
purse or wear on your wrist. No matter where you go, your phone number
will go with you.
    Such is the future envisioned by Motorola Inc. and a number other
companies that are pushing telecommunications to its wireless extremes.
    Motorola's proposed Iridium project, announced in June, would free
portable phones from the confines of local cellular networks by bouncing
the radio signals off 77 orbiting satellites. The signal could reach you
at your particular phone number, anywhere in the world.
    The company still is seeking backers for the project, which it hopes
to complete by 1996.
    By that time, pocket phones may be commonplace. Motorola opened up
that market in 1989 with its fold-up, 12.3-ounce Micro-TAC. The list
price of the cheapest Micro-TAC already has fallen from $2,495 to $995.
In some stores pocket phones can be had for as low as $700.
    Prices likely will continue to fall as competitors bring out more
and smaller models. Nippon Telegraph and Telephone offers a pocket phone
that weighs just 8.1 ounces.
    Can the credit-card-sized phone be far away?
    ``We already have a credit-card pager,'' Motorola Chairman George
M.C. Fisher said in an interview at the company's Chicago-area
headquarters.
    ``If you think of a pager as simply a radio receiver - so it's half
a (two-way) radio - it's not too farfetched to imagine a credit-card-
sized telephone.''
    Motorola expects Iridium to recoup a development and deployment
budget of more than $2 billion. Project costs and profits would be split
among several investor-operators.
    Industry analysts speculate American Telephone and Telegraph Co.
will launch a competitive satellite system.
    ``If it's a good market, you're likely to have more than one player
involved in it,'' said analyst Anthony G. Langham, a vice president of
County NatWest USA.