The Bloor Perspective: IPR rules in the UK, HDS gets busy and PC trading investigations

Through a consultation paper issued by the UK's Department of Trade and Industry, the UK government is seeking to make it easier for small companies to capitalise on their intellectual property. UK companies, particularly those operating in sectors such as technology and pharmaceuticals, realise it is essential to protect their market edge and position through the use of patents.

Hitherto, UK companies have not been as vigilant in protecting their inventions through patents as those in the US. There are several reasons. Penalties for patent infringements comprise royalties which would have been paid, and any award of costs. In the US greater damages are awarded in part because the cases are held before juries, who intuitively favour the inventor against the respondent - traditionally a larger company allegedly violating the patent.

In the UK, both parties have to engage in a hearing at the Patent Office. This takes time and money. Larger companies normally have the funds to engage in such protracted processes. SMEs do not. Taking the process beyond this to the civil courts is certainly well beyond the capability of SMEs.

The recently reformed proposals will enable companies who consider their patents infringed to have their cases heard more quickly and at less cost than at the Patent Office. It is also proposed to make it easier to challenge patents which are alleged not to be new. There is a growing inclination by large corporations to patent what is, in effect, a process dressed up as an invention.

Responses to the consultation paper are requested before the end of February 2003. It is anticipated that they will receive general support. Some small companies have already stated, however, that the proposals do not go far enough in helping small, inventive companies.

*HDS makes advances*

Recently storage heavyweight Hitachi Data Systems (HDS) made a couple of significant product announcements.

First up, the Santa Clara-based company released news of its range of Hitachi Freedom Storage Thunder 9500 V Series offerings. The first model to ship, the Thunder 9570 V, is expected to hit the streets during January 2003 and utilises 2Gbps Fibre Channel connectivity internally to provide 30 terabytes of storage in a single unit. The 9570 V is a rackmountable, modular platform designed to operate either as a centralised storage system or in distributed departmental deployments in large organisations. The new platform also brings some of the features found on the 9900 Lightning high-end storage platform to the mid-range, including the virtualisation layer.

HDS is launching a second series of pre-packaged products, the Thunder 9531 V, Thunder 9532 V and Thunder 9533 V. These systems target the low-end to mid-market sectors and provide storage capacities in the range of 360GB to one terabyte. These machines may be upgraded to Thunder 9570 V systems.

These new platforms will further increase competition in the low to mid-market storage sectors and will battle with offerings such as EMC's Clariion, StorageTek's D-Series and some of the FastT Series machines from IBM. However, HDS has yet to indicate how it intends to get the new systems to market as its channel strategy in this sector is under review.

The last week also saw HDS strike a deal with leading NAS vendor Network Appliance that will see HDS offer NetApps enterprise NAS heads with HDS Freedom Storage Arrays. The new offerings will be administered by the HDS HiCommand Management Framework toolset.

The new offerings should permit users to set up storage pools that can be accessed by both NAS and SAN applications. It appears that initial launch plans will see the new co-branded product pitched at the existing HDS customer base.

Together these moves add significant capabilities to the HDS product set and help to round out the company's offerings by complementing its top end Lightning arrays that already hold a strong place in the market. It will be fascinating to see how the other storage players react. It is clear that the storage market as a whole is moving forward rapidly.

*The PC after sales market*

PC sales may derive very low profit margins but the after sales service, warranties and other support activities have clawed back some very high margin revenues.

In the UK this may be coming to an end. The UK Office of Fair Trading (OFT) seems to have stuck its teeth into something to benefit the consumer. A recently published report, the outcome of investigations into after sales user support services for the retail purchasers of PCs, does little credit to the manufactures or retailers.

The cost of PCs may be falling fast but after sales costs are not. The OFT has focussed on several specific issues. The quality and cost of after sales services are the cause of the highest levels of complaint. Nearly 50 per cent of first time purchasers perceive they are given lack of information or clarity of information on the cost of after sales services.

Of particular frustration are the costs and availability of helpline services, many of which are charged at a premium rate and are inadequately serviced. Frustrations arise on the accessibility, the competence and success of resolution of problems on the so-called helplines.

The costs of other supplementary equipment come in for criticism too, specifically the cost of inkjet cartridges. They are substantial, and the manufacturers fail to disclose at the time of sale such ongoing service costs. They go further by 'discouraging' the market in third party cut-price suppliers by such wheezes as installation of chips to debilitate the use of third party products on their equipment.

The OFT is addressing the issue in two ways. The IT industry has been given a year to clean up its act on high priced telephone helplines. It has gone further by producing a leaflet to help shoppers cut through PC jargon, and it is 'encouraging' retailers to issue these in their outlets. Unfortunately, that does not address the two other irritations - transparency and quality of information on after sales service and the cost of ancillary equipment and services.

The manufacturers and retailers will doubtless address the issues with which the OFT presents them so that they do not have to address on more than a voluntary basis the transparency and third part equipment supplier issues.

Bloor Research is a leading independent analyst organisation in Europe. You can find out more at http://www.bloor-research.com or by emailing mail@bloor-research.com .