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Volume 2, Issue 20: Friday, February 18, 2000
- "Microsoft Denies Gates Offered to Open Window Code"
Microsoft on Thursday denied reports released by Bloomberg Television quoting Chairman Bill Gates as saying in an interview with the news agency he would be willing to open the Windows source code to competitors to settle the company's antitrust suit with the federal government. Microsoft spokesman Jim Cullinan said, "Bill did not make any of the comments attributed to him about the settlement," and Bloomberg later issued a correction. Cullinan also said a transcript of the interview would be available on the Microsoft Web site by the end of the day Thursday. http://dailynews.yahoo.com/htx/nm/20000217/tc/microsoft_lawsuit_2.html
- "GAO Says EPA Web Site is Old Hacker Target"
Wall Street Journal (02/18/00) P. B6; Fialka, John J.
A General Accounting Office (GAO) report reveals that the Environmental Protection Agency's (EPA) computer network has been breached by hackers repeatedly since 1992, but that the agency never took any protective measures to develop a "firewall" system. The report says that hackers had even used the EPA's network to conduct attacks on other systems, including a "denial-of-service" attack on an Internet service provider. The House Commerce Committee released the GAO report, as well as a second GAO report written three years ago, on Thursday, after the EPA decided to stop running its Web site so that it could implement more security measures. The EPA is working in conjunction with the GAO and internal auditors to address the computer network's security holes, which the GAO's investigators say are the "worst" they have ever dealt with. The report says that, among other items, hackers could obtain classified company formulas for pesticides, EPA investigative records, and sensitive files detailing how chemical plants could be attacked by terrorists. Investigators say that inter-office reports dating all the way from 1992 reveal that the EPA knew of many of its network's security flaws, yet never took any substantial preventative measures.
- "Attacks to Benefit IT Consulting, Web-Hosting Companies"
TechWeb (02/17/00); Mosquera, Mary
The denial-of-service attacks on top e-commerce sites last week could boost Internet consulting, Web hosting, and security services as businesses look to outsource more IT functions, according to Monument Internet Fund, the leading Internet fund for 1999. Companies are likely to pay more attention to security as a result of the attacks, which drew the attention of regulators and legislators, says Monument's Alexander Cheung. Security tools that can stop many types of online attack are widely available, and companies will now begin spending more on this technology. In addition, Investors are likely to focus more on the security measures a company takes, Cheung says. Many people working with businesses that are moving online have little knowledge of the Internet, so companies will turn to Web hosting and consulting firms such as USWeb and Proxicom, as well as security firms such as Entrust and VeriSign, says Monument's Michael Gallipo. http://www.techweb.com/wire/finance/story/INV20000217S0003
- "Microsoft Set to Challenge Sun"
Financial Times (02/17/00); Kehoe, Louise
Microsoft CEO Steve Ballmer yesterday said Windows 2000 will pose a serious threat to Sun's dominance in the Web server operating system market. Windows 2000 gives Microsoft a way to "go after Sun," Ballmer says. Although Sun's Solaris is Microsoft's main target, Windows 2000 will also compete with Linux. Ballmer says Microsoft is looking at ways to better compete with Linux, which he says is more compelling in terms of its business model than in technology. Windows 2000 is the cornerstone of Microsoft's plan to merge the PC, the Internet, and enterprise computers into a "uniform computing infrastructure." Companies are likely to adopt Windows 2000 on desktops quickly, but move more slowly in upgrading enterprise servers and e-commerce sites, Ballmer says.
- "Virginia Legislature is 1st to Approve Model Net Law"
Recorder/Cal Law (02/17/00); Sandburg, Brenda
The Virginia legislature has become the first in the nation to adopt the Uniform Computer Information Act, a controversial bill that aims to give uniformity to software contracts. Both the House of Delegates and the Senate approved the Internet industry-friendly legislation on Tuesday. The act is also under consideration in Maryland, Hawaii, Illinois, and Oklahoma. The Motion Picture Association of America, which has stated its opposition to the act, says it favors the version of the bill produced by the Virginia legislature, according to John McCabe, the legislative director of the National Conference of Commissioners on Uniform State Laws. The Virginia bill does not cover transactions among companies in the industry, McCabe says.
- "Data Shows Web Sites Swiftly Bounced Back From Hacker Attacks"
Wall Street Journal (02/17/00) P. B8
Figures compiled recently by the Internet-research firm Media Metrix indicate last week's sabotage of several major Web sites has not significantly altered the surfing habits of Internet users. Media Metrix found traffic at Yahoo! the day after the site's shutdown was up 9 percent from the same day a week earlier, and up 6 percent two days following the attacks. Media Metrix found similar figures for other online businesses disabled by the hackers. However, a poll released Monday by PC Data Online shows that despite the absence of changes in Web traffic patterns, the sabotage has raised concern among Internet users over the security of online transactions and damaged consumer confidence in electronic communications.
- "Toshiba Launches $2.3B Internet Business Initiative"
E-Commerce Times (02/15/00); Greenberg, Paul A.
Japanese titan Toshiba announced on Monday that it plans to invest the equivalent of $2.3 billion dollars to form i-Value Creation, a division of the electronics company that will focus on wireless Internet communications and e-commerce. The venture is slated to launch by April 1, 2000. Additionally, Toshiba expects to have its procurement system online in 2001, a move designed mainly to reduce operating costs. Although competitors such as NEC, Sony, and Fujitsu have all already expanded their operations online, it is unclear why Toshiba is such a latecomer to the field of Internet ventures, though a recent lawsuit brought against the company for intentionally selling faulty equipment, and ultimately settled for $8.8 billion, may have contributed to the delay. As part of Toshiba's planned Internet endeavors, the company will enter into a cooperative agreement with a large Japanese online stock trading organization called Matsui Securities and will soon invest in Hon-ya-san, a leading Japanese Internet bookstore. http://www.ecommercetimes.com/news/articles2000/000215-1.shtml
- "Web's Next Big Thing Is Small"
Washington Post (02/17/00) P. E1; Walker, Leslie
Eager to capitalize on the promising small business market, vendors are introducing user-friendly packages to design and host small e-commerce sites. Small businesses account for half the nation's output, according to federal government estimates, yet are widely overlooked by service providers because they are often limited to a specific region and industry. Because the Internet offers the potential to break down these barriers, service providers have begun expressing strong interest in the small business market. "The opportunity goes both ways: Here is a new land where small businesses can promote their products more broadly, and also where they can be reached more effectively by big businesses," says Teymour Boutros-Ghali, CEO of startup AllBusiness.com. Top industry players such as IBM, Intel, and Amazon have begun offering low-cost, user-friendly Web design and Web hosting tools, while NetObjects launched this week a Web site-building portal called GoBizGo.com. Rounding out the barrage of offerings are free design tools from startups such as Freemerchant.com, BigStep.com, and eCongo.com. http://washingtonpost.com/wp-srv/WPlate/2000-02/17/253l-021700-idx.html
- "MIT Spinoff Preps Brooch Net Communicator"
EE Times Online (02/15/00); Johnson, R. Colin
InfoCharms, an MIT spinoff company, will reveal later this month its plans to develop by 2001 the Charm Communicator, a wearable computer utilizing a Nanux operating system. The company's announcement will come during the Everywhere Internet show to be held in San Francisco at the end of February. The device will function as a Web browser, cell phone, test instrument, address book, interactive dictionary, camcorder, pager, video game system, or desktop PC replacement, and may include features such as speech control of other nearby smart devices and sensors to monitor such things as individual health. "We expect people to put on their Charm Communicator in the morning and leave them on all day," says InfoCharms CEO Alex Lightman. Inexpensively-made design prototypes of the wearable computer have already been shown, and the company's precursor to the Charm Communicator, a wearable unit known as the Smart Badge that is able to exchange electronic information with other units, is already available. The Smart Badge weighs a mere ounce and boasts four two-tone red/green LEDs, infrared receivers and transmitters, a watch battery, a 4 bit microcontroller with 16 KB of RAM, four binary buttons for programming individual codes, and the ability to print or download stored information. InfoCharms hopes by mid 2000 to mass produce its Smart Badge, after further development enables the unit to run the Nanux operating system, an achievement that is the next step toward creating the Charm Communicator.
- "Hacking Marches in Step with E-Commerce"
VNUNet.com (02/15/00); August, Vicki
Firms such as IBM, PricewaterhouseCoopers (PwC), and Deloitte & Touche have responded to the needs of their clients, who are often wary of approaching law-enforcement authorities, by establishing so-called "cyber fraud squads" to handle the increasingly common problem of online computer attacks. High-street bank HSCB, Lloyds of London, Virgin, and even the United Nations have all reported victimization by Internet intruders, also known as hackers. Internet crime has risen by 29 percent in the U.K. and by 43 percent in the U.S. within the past year and an FBI survey of Fortune 500 companies, 62 percent reported computer security breaches in 1999. Analysts at the Gartner Group said most Global 2000 organizations can expect to suffer serious computer breaches within the next twelve months and that national governments can expect similar threats on a monthly basis by 2001. Companies like Visa, which cost European Visa banks $250 million to Internet credit card fraud last year, are taking steps to heighten security. "Credit card purchases over the Internet are twice as likely to be disputed as those via the telephone," said John Prideau, executive vice president of Visa's new European products. Solutions like smart cards and secure electronic transactions (SET) standards can help, but only a comprehensive and costly security investment will ensure protection, though even then, no system is perfect. When hackers inevitably succeed in breaching protected systems businesses eager to prosecute and recover some of the cost required to repair damage find that there is not a suitable legal infrastructure in place to deal with it. The U.K. government has apportioned 337,000 pounds to the National Criminal Intelligence Service to create a high-tech crime squad. But, due to the often international nature of Internet crime, fighting it without an international legal body is difficult. "Lots of countries have established laws to protect individuals and businesses from online crime," said Dominic Fox, head of operations at the cybercrime unit of the International Chamber of Commerce. "But many of them run into problems when they try to cross national boundaries. There is no global law."
- "Auction Sites Booming"
Computer Reseller News (02/14/00) No. 881, P. 63; Rogers, Amy
Internet auctions provide growth opportunities for small and midsize businesses. Because smaller businesses have better buying powers on the Internet, they can increase their offline business through online activities. Dave Reinke, vice president of consulting at Braun Consulting, believes that online auctions allow "small businesses [to] compete against the big boys without having to make a [large] investment." To cater to the small business-to-business market, a number of companies are offering services to design business-to-business marketplaces. Recently, Braun entered into a deal with Moai Technologies to develop exchange sites for business-to-business and business-to-consumer transactions. Moai currently uses its LiveExchange as a site for Internet auctions. Meanwhile, InfoMech has partnered with Microsoft to offer Enterchange, an exchange site development service that aims to eventually "produce a site in 30 days or less," says InfoMech CEO Mike Beirne. Integrators that specialize in online marketplace design say that development requires precision and customization. Enterchange combines different Web development programs are to establish one exchange site, according to Beirne.
- "A Calculated Decision"
InformationWeek (02/14/00) No. 773, P. 22; Ricadela, Aaron
Microsoft is promoting the ability of Windows 2000 to lower total cost of ownership, but experts say companies need to carefully examine whether they would save by migrating to the new OS. Microsoft says Windows 2000 offers increased functionality and easier administration at the same cost as Windows NT. Estimates of how much it would cost a company with 1,000 PCs to move to Windows 2000 range from $400,000 to $1 million, not including server migration costs. A third of respondents in a recent InformationWeek Research survey anticipate an immediate reduction in total cost of ownership on deployment, while almost half expect costs to drop within two years. However, 27 percent expect an immediate rise in costs, and 18 percent believe long-term expenses will rise. Regardless of cost expectations, almost 75 percent of respondents intend to implement Windows 2000 broadly on both PCs and servers within a year. Online retailer Nordstrom.com has been testing Windows 2000 for over a week, and says its system is already more stable than before. In addition, Nordstrom.com expects to benefit by moving at least one IT worker from server maintenance to site productivity. Microsoft this week will issue reports based on the experiences of Micronpc.com and United Defense showing that the new OS reduces IT budgets by 15 percent and lowers downtime costs by 50 percent. The company will also assign dollar amounts to the business advantages Windows 2000 provides, such as higher worker productivity and faster time to market. By taking steps such as enforcing PC policies and training IT workers on remote software installation, companies can save as much as 26 percent with Windows 2000, says Gartner Group's Michael Gartenberg.
- "Trading Places"
CIO (02/15/00) Vol. 13, No. 9, P. 96; Kalin, Sari
Online marketplaces are quickly gaining momentum among companies seeking to streamline their supply chains. The business-to-business hubs, which link buyers within a particular industry or across a shared need, are expected to handle as much as $1.25 trillion in nonfinacial goods and services by 2003, according to Dataquest. "Buyers and sellers who aren't participating...will certainly be at a disadvantage," says Dataquest analyst Leah Knight. Online marketplaces are attracting significant attention because they offer benefits to both buyers and sellers. For buyers, a marketplace can significantly ease the process of searching for and comparing providers to fill a certain need, while for sellers, marketplaces provide access to much broader customer bases. Business-to-business marketplaces come in two forms: vertical, which target specific industries, and horizontal, which focus on a specific function required by companies of various industries. Regardless of these distinctions, all marketplaces are striving to discover new ways to generate revenue in the face of increasing competition. Some marketplaces, such as agricultural hub DirectAg.com, are offering additional services such as financing, logistics, systems integration, and procurement management to encourage customer loyalty. Others, such as VerticalNet, are attempting to gain a competitive edge by offering greater services among a variety of industries. VerticalNet, for example, is aggressively working to offer commerce across its 53 vertical business trading communities.
- "Intel Redirected"
InfoWorld (02/14/00) Vol. 22, No. 7, P. 38; Schwartz, Ephraim;
Intel is working to transform itself from a chip business into a provider of infrastructure for the Internet. In order to create demand for increasingly fast chips, Intel's challenge is now to broaden its customer base. To meet customers' e-business needs, Intel has formed its new Intel Online Services (IOS) division for Web and database hosting, and its Communications Products Group. Intel is now a player in the areas of set-top boxes, servers, routers, network interface cards, desktops, and switches. Intel's servers have been criticized as unable to meet the needs of e-commerce, and the company has responded by shifting half of the research and development funds spent on IA-32 processors to IA-64 processors. Some experts believe that customers will see an advantage in buying a powerful server from Intel that is available from many suppliers rather than buying a proprietary Sun or IBM server. Intel acknowledges that the growth rate of over 30 percent that it enjoyed in the 90s is unlikely to continue in the Internet era, with the emergence of new devices, rising margin pressure from rivals, and the size of the company itself. Intel CEO Craig Barrett says he would be satisfied with 15 to 20 percent growth, and to reach that goal the company is expanding into all types of Internet infrastructure. For example, Intel's desktop division will launch a new 32-bit line starting with Willamette, and the company will release StrongArm II for the handheld market later this year. In addition, Intel offers complete hardware solutions for routing, switching, Web caching, and load-balancing equipment.
- "Open Minds"
Industry Standard (02/14/00) Vol. 3, No. 5, P. 120; Guterman, Jimmy
As Linux gains momentum in the IT industry, vendors must find a way to please the core open source community while at the same time attract a mainstream corporate following, according to Vineyard Group President Jimmy Guterman. The stock market success of Linux companies such as Red Hat and VA Linux has made it crucial for the companies to behave like their traditional-minded competitors, particularly Microsoft. Specifically, Linux companies must devise new ways to generate revenue--a difficult proposition when the core product is free. Guterman suggests that Linux companies generate revenue by creating applications designed to meet the needs of corporate users, who promise to be Linux's most lucrative audience. Instead, Linux developers are mainly focusing their efforts on the open source community, which is more likely to download applications from the Internet than pay a premium for packaged solutions. Although it is important to satisfy the open source community, says Guterman, Linux's long-term success depends on the support of the mainstream, which is often intimidated by the esoteric applications favored by open source enthusiasts. Linux companies must act fast, says Guterman, because a variety of top IT players, such as IBM, Compaq, and Dell, are expressing support for Linux. While currently, the firms are focusing their Linux strategies toward the open source market and using Windows to target corporate systems, their efforts may soon shift to capitalize on Linux's market success, says Guterman.
- "Business Method Patents"
National Law Journal (02/14/00) Vol. 22, No. 25, P. B8; Hoffman, Gary M.; Coman, Gabriela I.
The State Street Bank & Trust Co. vs. Signature Financial Group case resulted in the court deciding that business methods are patentable. This decision has sharply increased patent litigation as electronic commerce companies and computer software companies have sought to seek patents for their business methods. Many times these methods are not even new; they have just never been patented. Companies are seeking to protect their share of the marketplace by using the patents as competitive weapons. AT&T used the new patent rights to patent its new method of adding an indicator to a message record used for long-distance telephone call billing, and Amazon.com filed a patent infringement suit against Barnesandnoble.com for copying its 1-Click ordering system too closely.
- "States Review Commerce Law"
Interactive Week (02/14/00) Vol. 7, No. 6, P. 10; Brown, Doug
Supporters of the Uniform Computer Information Transactions Act (UCITA) say it will bring order to the legal environment around electronic information, especially intellectual property, copyright, and contract law. These supporters include software companies, who say the law would release the full potential of e-commerce. However, opponents of the act say it will allow software developers to write their own laws on intellectual property and would put more strength in the fine-print contracts already in place. American Library Association legislative counsel Miriam Nisbet points out that the enforceability of the contracts is already questionable as well as often at odds with copyright law. Nisbet says libraries worry that the UCITA will give software companies the legal basis to forbid the lending of software to borrowers, among other things. The UCITA was to be part of the Uniform Commercial Code but was not endorsed, so the National Conference of Commissioners on Uniform State Laws passed it separately. Then 24 state attorneys general joined the FTC in expressing concern about the language of the act. Software companies are pushing hard for the adoption of the UCITA in state legislatures. Business Software Alliance vice president Becca Gould says consumers and software companies can litigate legal issues and gradually build a body of case law, or write the law first. But Association of Computing Machinery President Barbara Simons points out that the UCITA removes liability from software engineers for their products.
- "IP Theft Becoming Criminal Matter"
Electronic News (02/07/00) Vol. 46, No. 6, P. 1; Chappell, Jeff
Legal analysts say that the recent lawsuit by Applied Materials against spare-parts purveyor McDowell and Co. represents a growing trend of intellectual property (IP) and trade secret disputes moving from civil to criminal courts. Although the civil phase of the McDowell case is over, the federal criminal case just recently began, as a jury gave 19 indictments against McDowell, its owner, and its vice president, charging them with the "misappropriation" of Applied Material's trade secrets. However, law experts say that the IP and trade secrets fall within a gray area of the law, and are hard to define. Therefore, because secrets and intellectual property are not as a tangible as, say a stolen automobile, some legal analysts contend that these cases should not be brought to criminal courts. However, many analysts believe that more suits, both civil and criminal, will be brought to court dealing with IP and trade secrets. U.S. Attorney Robert Mueller, chief federal prosecutor in Northern California, recently heralded the creation of a new Computer Hacker and Intellectual Property unit that will focus on high-tech crimes. The Economic Espionage Act of 1996 is also expected to spur more IP lawsuits, as the law fortifies protections of IP and trade secrets.