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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
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
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