Apple exploits ‘highly prized' FireWire

Apple exploits ‘highly prized’ FireWire“We believe the true potential for FireWire is yet to be realised and it will be a very important technology.” And Apple intends to milk that for all its worth. Tom Foremski reports
Apple Computer is hoping to cash in on the growing popularity of its FireWire bus technology by increasing licensing royalties to a level that some say is unreasonable.
FireWire, also known as the IEEE 1394 standard has built a tremendous momentum within the consumer electronics market and it is beginning to take off in the personal computer market where its 400Mbit/s transfer rate is highly prized.
According to industry sources, Apple wants about $1 per port in royalties for FireWire users, an amount that some say is unreasonable because the price of FireWire chips is under $5 per unit. A more standard royalty level is generally three to five percent of the selling price.
Apple has declined to confirm the royalty increase. “We don’t discuss the specifics of our licensing terms for FireWire,” said an Apples spokesperson. “We believe the true potential for FireWire is yet to be realised and it will be a very important technology.”
Apple has introduced FireWire ports in its latest G3 based Power Macintosh computers and FireWire is beginning to be introduced in Intel based PCs where its high data transfer rate is a valuable asset for transferring large graphics, video and image files.
Intel has the rival Universal Serial Bus (USB) technology but it is much slower than FireWire. Intel is reported to have contacted Apple senior management protesting the high royalty fees.
“Intel hates the idea of paying royalties to Apple and it knows that sooner rather than later it will have to support FireWire in its products,” notes Will Strauss, head of US market research firm Forward Concepts. “USB is fast running out of steam and FireWire is the technology of the future, but the future in this industry just around the corner.”
Early adopters of FireWire have paid a one time license of about $7,500, a trivial amount that rewards the early adopters. But as FireWire becomes more widely used in consumer electronics devices, its value to Apple increases. About four million FireWire-enabled digital video cameras have been sold over the last two years and it is being to be included in HDTV systems.
Since the beginning of this year, FireWire enabled products have been announced from Castlewood (orb drive), Dicomed (digital camera), Epson (printer interface card), Fujifilm Microdevices (photo scanner), Indigita (tape drive), Kodak (digital cameras), La Cie (CD recorder and hard drive), MacTell (CD recorder, hard drive and hub), NewerTechnologies (A/V converter), PhaseOne (high-end scanner, digital camera), VST (hard disk and magnetic optical drives), Yamaha (digital audio mixer) and Yano (hard disk and magnetic optical drive).
Although FireWire is an IEEE standard, Apple still retains ownership of more than 30 patents that make up FireWire and it says it deserves to collect a return on its R&D investments. While the royalty demand may be high, it is unlikely to stop FireWire, says Strauss. “There is too much momentum behind FireWire to stop now.”

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