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World profit: CompuServe changes hands

Following months of rumour and the departure of leading executives, the online service provider CompuServe - with 2.6 million customers worldwide and 850,000 in Europe - has been taken over by the world's largest online service provider, America Online (AOL). Jerry Roest, vice-president of CompuServe Europe, said in a letter to European members: "CompuServe will continue to operate as a separate brand, and its business strategy will remain focused on meeting the needs of the professional consumer at work and at home." Microsoft Network had also considered buying the world's number two online service, but, according to the vice-president, Laura Jennings, decided instead to invest internally in updating and expanding the Microsoft Network. WorldCom Inc, a leading network service provider, bought CompuServe for $1.2bn in a three-way deal that saw AOL acquiring CompuServe's consumer online service and WorldCom acquiring the corporate access businesses of AOL and CompuServe to boost its corporate business base, expand its data network and become the largest supplier to an enlarged America Online. The deal has also strengthened the position of WorldCom, which last year bought the Internet backbone company UUNet, in the backbone supply market. Before the deal there were only nine Internet backbone companies that did not have to buy Internet access from any other company. By acquiring AOL's Network Services WorldCom has reduced that number to eight and, to the dismay of small Internet service providers who have to lease connections from it, has lessened competition pressures in that market. The worry is that UUNet's growth could fuel farther consolidations of backbone providers, further decreasing the pool of suppliers. "If your competition gets bigger, you feel like you need to find some way to get bigger as well," said Scott Hazen Mueller, vice president of engineering for Whole Earth Networks. "When you have few players, you have more opportunities for oligopolistic behaviour."

Chip-makers pursue the super chip

A consortium of government research laboratories, the US Department of Energy and chipmakers such as Intel, AMD and Motorola will invest $250m over the next three years, creating manufacturing processes for computer chips 100 times more powerful than those in use now. At the centre of the project is the use of extreme ultraviolet light (EUV), which will allow more transistors to be incorporated into each chip. Current chips, using higher-wavelength ultraviolet light to etch circuits into chips, have lines .25 microns wide, with the potential to get down as thin as .13 microns. EUV will allow lines less than 0.1 microns wide and result in smaller, more powerful chips (pictured left) that are cheap, use less power and do not generate as much heat as current models. Japanese and European semiconductor equipment manufacturers will also play an important role in the project. The partnership is "a premier example of how public- private partnerships should be crafted in the future", said Federico Pena, US energy secretary.

Boost for speech-based computing

Microsoft has acquired a $45m stake in the Belgian speech technology company Lernout and Hauspie. L&H already has products that allow users to transfer spoken words to the Windows operating system and Microsoft Word. Neither Microsoft nor L&H would say whether these features will be embedded in the forthcoming Windows 98 or NT 5.0 operating systems but both companies have agreed to co-operate. "It seems likely that speech technology will be part of future versions of Windows," said Gerrit Ooms, equity analyst at brokers Vermeulen Raemdonck. Microsoft's investment represents 5 to 7 per cent of L&H's capital.

Psion recalls adaptors

Psion PLC has recalled all UK versions of Psion mains adaptors

used with the Series 5 and PC card modem adaptor. Although the product satisfies British and European standards, the Austrian manufacturer of the adaptor has discovered that under extreme circumstances, there is a chance of one or both of its plug pins breaking. Psion is therefore recalling all stocks of the unit from both the retail trade and from consumers, and recommending that customers who have bought the product do not use it, but telephone freephone 0800 018 6637 to arrange for a replacement unit.