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  • Japan Electric Makers Shocked by Apple’s IEEE1394 Royalty Hike
  • January 28, 1999 (TOKYO) — Japanese makers of home electric appliances were shocked by the rumored decision of Apple Computer Inc. to raise the royalty for the IEEE1394 interface.
    Although Apple has not officially announced the royalty hike, sources from some home electric makers said the U.S. PC maker has asked them to pay one or more dollars per port.

    That will mean semiconductor makers producing microchips to control the IEEE 1394 interface will actually pay the increased royalty to Apple.

    The IEEE1394 is a standard interface to connect a personal computer, digital video equipment, a digital television and other digital devices. The interface is already adopted by Sony Corp. in its VAIO line of notebook PCs and digital camcorders.

    Domestic home electric makers have been enthusiastic about adopting the interface for connecting a set-top box for a digital TV and other various digital home electric appliances.

    “The price of a controller chip is about 500 yen (US$4.40). Because one PC requires controller chips for three ports, the royalty will comprise nearly 70 percent of the microchip itself,” an industry observer explained.

    That is why Japanese makers are so stunned by Apple’s decision. Officials at Sony and Matsushita Electric Industrial Co., Ltd. said they had heard of the royalty hike and are currently confirming if it is true. They will then decide how to respond to the hike, they said.

    Nobuyuki Denda, president of Intel KK of Japan, said in an interview with BizTech that he knew the hike in the royalty was drawing the industry’s attention. He added that he will need to consider adopting another interface standard, because the raised fee will be too expensive.

    While Apple’s true motive is not known, the issue is quite significant for home electric makers and semiconductor makers, which have been considering the adoption of the IEEE1394 interface to their products.

    Some companies are considering employing a different interface like Intel. Many observers share the view of a public promotion officer at a major home electric maker that the raised royalty is 10 percent or more higher than regular royalties.

    A president of a domestic manufacturer of home electric appliances said, “It will obviously take a few years to invent a new interface which will not conflict with Apple’s patent. Such circumstances will prevent widespread use of digital home electric appliances. I am afraid that many makers will have no other choice but accept Apple’s request and pay the increased royalty eventually thinking it won’t be too expensive if they think they can buy the time in this way.

    If he is correct, Apple is likely to gain an enormous amount of royalties. A test calculation made by a home electric maker shows that only one house uses 20 or more IEEE1394 ports. If the interface is more widely used in the future, Apple can earn 100 billion yen (US$880 million) or more annually as royalty only from houses in Japan, an observer at the maker predicted.

    Related stories: Sony Debuts Note PCs with Enhanced IEEE1394 Functions

    (Nikkei Business)



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