Phoenix Technologies Inc could make all last year’s arguments about giving internet service providers access to space on the Windows desktop irrelevant, with its new plan to use its PC BIOS technology for bundling services. The plan could bypass the desktop altogether. Phoenix, which owns around 70% of the BIOS market for desktop computers, launched its new internet strategy yesterday, along with a new ebetween subsidiary in conjunction with Softbank Holdings Inc, which will hold a 20% stake. At the same time Phoenix replaced its long-time CEO, Jack Kay, who said he was resigning for personal reasons.
Phoenix plans to use its BIOS technology, which handles the start-up process on the PC before the operating system takes charge, to provide a link between internet service and content providers and PC end-users, creating in the process a new product category it calls virtual bundling technology. It says it has applied for 20 patents related to internet-enabling technology. The first products, which utilize available system ROM, are expected to emerge in the fourth quarter of this year. Phoenix has signed contracts with America Online Inc, Earthlink, Excite Inc, Lycos, NBC and CNET’s Snap.com, Trend Micro and Yahoo! Inc to take advantage of the new technology. Trend expects to use the technology to distribute up to date antivirus software to PC users rather than internet services or content. Phoenix said it anticipated generating between $10m and $15m in revenue from its initial agreements in the first year.
As the controller of the pre-boot or OS absent period, in between switching the PC’s power on and the initiation of the operating system, Phoenix, and other BIOS companies such as American Megatrends Inc, are in a unique position of power, not dictated by Microsoft Corp. Earlier this year, Phoenix launched a new set of pre-boot security products, and promised it would be launching further products to fit within what it terms the T-Zero time (CI No 3,607).
However, Compaq Computer Corp, Dell Computer Corp and IBM Corp have in the past favored proprietary BIOS technology over merchant products from companies such as Phoenix. So initially, Phoenix says it will target manufacturers of white box or non-branded PCs, some 35m of which are shipped each year. That segment represents around 35% of the PC industry, and Phoenix says its products are already built into around 80% of white box PCs sold. So far, 13 motherboard vendors representing around 30% of the annual worldwide desktop PC motherboard shipments, have agreed to distribute Phoenix’s Internet ROM extensions, which will enable the ebetween internet services to be delivered.
In order to form the new ebetween division, Phoenix has agreed to acquire the operations of Softbank Marketing Solutions from Softbank Holdings, in exchange for the 20% equity stake and other considerations. SMS, based in San Francisco, carries out electronic registration for OEMs, independent software vendors and device manufacturers, including Acer Inc, Fujitsu Ltd and several unannounced branded PC manufacturers. It is also an authorized registration center for Microsoft Windows 98.
Starting up ebetween and refocusing the business will cost Phoenix up to $9m in charges, the company said, offset by a $4m gain on its remaining equity interest in Xionics Document Technologies Inc. Meanwhile, the company has promoted Albert Sisto, previously chief operating officer of RSA Data Systems Inc, to replace Jack Kay, who became CEO five years ago. Phoenix also has a new chief financial officer, William Meyer, and announced four other promotions and appointments at the senior management level.
