James Harding?s view from the valley (6 August)

Since arriving here, I have always epitomised the British underdog because the American IT press is always given priority for events and interviews, even if the reporter?s readership is a fraction of the size of mine. The same goes for business. US computer people always have time for US computer people and Europe comes second, often viewed as just a market ? an opportunity for IT companies to grow after they win enough US sales.

That, along with the fact that the underdog does not have the huge resources to compete effectively with the leader, is why I have always sympathy with the underdog. Huge resources make me think of Microsoft.

It is the most hated company in the industry for exactly the same reason ? in comparison, everyone else is the underdog. But recently, everyone has ganged up on Microsoft and its people have begun referring to their competition under the acronym Noise. For a year now Netscape, Oracle, IBM, Sun and everyone else ? Noise ? have been slamming Microsoft CEO Bill Gates and his marketing machine for monopolising the industry and directing everyone to follow the MS road map.

I was beginning to see the underdog in Microsoft and to feel some sympathy for it. All the others were giving the software giant a hard time, saying its products are slow, memory-sapping, useless and proprietary. Poor old Microsoft.

I rely on the Microsoft Network (MSN) for my email and browsing when I?m out of the office, and I pay for it ? it?s no journalistic freebie. After a lot of time and effort trying to put the pitifully slow MSN on a laptop and getting support from Microsoft that you could generously describe as useless, my sympathy promptly ran out. Scott, Larry and co, make some more Noise, that?s what I say.

Interest hates

I have noticed interest rates are rising at home, and that means just one thing: distributors get agitated and start nervously reassessing their books.

The distribution business has got tough over the past few years. Margins, of course, have fallen steadily. Competition has got harder. Prices have also dropped, knocking absolute profit levels down. Everyone has to sell double or triple the volume to make the same money, and even if they do that their shipping costs double or triple accordingly.

Only the bigger and more efficient wholesalers can survive, let alone thrive. The fact is that rising interest rates ruthlessly penalise inventory and inefficiency in distributors. Naturally, vendors do not really concern themselves with the problems of their partners, and complain that they face the same issues.

In the US, firms like Microage have moved away from distribution and into the assembly businesses, and Ingram Micro is doing similar things. As margins and prices will continue to fall, only the biggest and most efficient will live on. Higher interest rates are just another nail in the coffin for everyone else.

In the dog house

So Microsoft is planning to increase its Web-based sales, and those plans do not involve the resellers that got MS to where it wants to be today. Disgraceful.

I accept Microsoft must be in online software sales, particularly for low-margin upgrades, service packs and commodity products. But it would not be hard for it to certify online software resellers and give them online sales rather than pocketing the proceeds itself.

The company insists there are certain services only vendors can provide. This is debatable, and nobody would say resellers cannot sell software online as efficiently as vendors. MS is risking its relationships with dealers for the sake of a few quid in direct sales, and that smacks of big firm arrogance.

Not my Cupertino

I went to Cupertino last week to see Apple launch Mac OS 8. It was great. There was music, food and drinks. Perhaps Apple had over-prepared by providing an ambulance full of paramedics, but everyone was having a laugh. The whole Apple staff turned out ? after all, they were among the select few not laid off by former CEO Gil Amelio.

As pleased and enthusiastic as all the Apple faithful were, I could not help but detect an air of concern about the place. Some people had false smiles. Some seemed nervous. Some were just too desperate to say how great the new OS is and how it will sell lots of copies. The staff at Apple are obviously feeling the pressure, and that is why it was ironic that, in Apple?s promotional video, there are men in white coats taking Mac OS 8 away. Aha. So that?s why the paramedics were there.

Poor chops

One transatlantic myth I keep coming across is that the British have bad teeth. I have no idea why they think that here, particularly when all American soft drinks are like liquid sugar, but it keeps coming up.

Believe it or not, I?ve never had a filling in my life. I brush my teeth religiously, even when I?m spectacularly drunk.

I had a discussion about who has the worst teeth with an American. We decided the winner would name one person with the funniest teeth from their nation. He said Prince Charles, which was not bad, but I won. The funniest teeth, I said, surely belong to Scott McNealy.

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