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Volume 2, Issue 46: Friday, April 21, 2000
- "Microsoft on 2 Sides of a Debate"
Washington Post (04/21/00) P. E1; Grimaldi, James V.
Next Tuesday the government will submit a remedy proposal to U.S. District Judge Thomas Penfield Jackson who ruled that Microsoft's hold on the PC operating-system market broke federal and state antitrust laws. During last year's court case, Microsoft argued that computer software such as Linux challenged their Windows software as a desktop operating system. Now Microsoft admits that Linux is not a threat to Windows, and in fact, admits that they are not even developing office applications for Linux because that system has no following. Linux's true threat is the server market, and Microsoft is concerned that government remedies will not only restore competition to the operating-system market, but will impose penalties that restrain Microsoft's server software as well. Competitors of Microsoft say Windows 2000, the company's new operating system for desktop computers and servers, contains features preventing the desktop application from working with other servers. They believe that government remedies should prevent Microsoft from influencing the server market with its desktop systems monopoly. William Kovacic, a George Washington University antitrust law professor, says the government can issue remedies that do not pertain to issues brought up in the court case, but appellate courts are more likely to reverse such remedies.
- "IT Spendin' Keeps on Flowin'"
TheStandard.com (04/18/00); Lindhe, Laura
The recent stock market plunge will not significantly affect companies' IT spending, experts say. For example, Unisys CIO John Carrow does not plan to change his investment strategy because he believes the firms he is investing in, which include Oracle and BroadVision, have promising futures. Still, companies might now be more reluctant to invest in startups. Large IT companies that have lost market value will be less likely to acquire small firms. Meanwhile, startups need to concentrate on projecting a savvy image and therefore should not decrease their IT investments. Companies with financial problems sometimes actually boost IT spending so they can reduce their staff, experts say. IT spending rose when the stock market dropped in the early 1990s, notes Dataquest analyst John Armstrong, adding that IT spending has only fallen off during a recession.
- "Wizards of High Tech on the Subcontinent"
International Herald Tribune (04/20/00) P. 1; Crampton, Thomas
The Indian Institutes of Technology train many of the world's high-tech leaders, despite extremely limited resources. The six Indian Institutes are among the most competitive schools in the world, accepting only 3 percent of applicants, compared with Harvard's 16 percent acceptance rate. Graduates who have gone on to head successful tech companies include Sun Microsystems cofounder Vinod Khosla and Cirrus Logic founder Suhas Patil. Yet at one residence hall housing about 300 students, only about 30 students have their own computers, none have Internet access, and only two phones are available. In addition, up to six students often share a single textbook, with each person reading the assignment at a designated time. However, the school is allowed to update its curriculum within months; other Indian universities often take five years to introduce new courses and still teach computer science material from several years ago. Most graduates from the Indian Institutes continue their education at American universities, and many of the country's brightest students remain to work in the U.S. However, the Internet's global reach has provided opportunities for some Indian high-tech workers to remain in India.
- "Microsoft Foes Seek Penalties In a Wide Range of Markets"
Los Angeles Times (04/20/00) P. C1; Shiver, Jube Jr.
Some of Microsoft's opponents in the tech industry, saying the scope of the antitrust suit against Microsoft is too limited, now contend that the government should pursue restrictions on Microsoft's activities in areas such as server software. The Computer and Communications Industry Association (CCIA) wrote to government lawyers complaining that Microsoft uses Windows as a "springboard" to control the server software market. In addition to the server market, rivals are concerned about Microsoft's push into the handheld arena. Keith Blackwell, president of Bristol Technologies, which brought a federal antitrust suit against Microsoft in 1998, says many industry officials are more concerned about Microsoft's activities in the server and handheld wireless markets than about the issues addressed in the government's suit. The CCIA says corporate computer managers will have to discard most rival computer networking software in favor of Windows 2000 Server to install the Windows 2000 desktop version on systems attached to the network because of the technical linkage involved. Critics have also noted that Microsoft dropped Internet standards it had promised to support in the new version of Internet Explorer, opting instead to use proprietary technology. Despite these industry concerns, people close to the case say the Justice Department is unlikely to seek restrictions in areas not related to Windows.
- "Group Proposes Policy for Creating Net Name Suffixes"
A committee of the Internet Corporation for Assigned Names and Numbers (ICANN) has recommended to the group's board that the overall body introduce new domain name suffixes for public use, prompting a mixed reaction from domain registrars and other companies. Registrars are understandably happy with the recommendation, but some businesses are worried that the introduction of more domains will result in a marked rise in incidents of trademark infringement. Domain registrar Network Solutions responded to the proposed expansion by suggesting the introduction of the dot-shop and dot-banc domains, with the latter being reserved for financial firms. The ICANN committee is taking cybersquatting issues seriously, and thus suggests that the domain expansion be rolled out gradually.
- "US Patent Obligations Face Test in Software Dispute"
Financial Times (04/20/00) P. 9; Harvey, Fiona
AllVoice, a small speech-recognition firm in the United Kingdom, has asked parliament to investigate whether the U.S. is upholding international intellectual property law. The company has complained that IBM and Dragon Systems engaged in anticompetitive practices by creating products similar to AllVoice's software after negotiating with the small firm and seeing its software. AllVoice speech-recognition software allows users to recall their speech to fix errors. The conflict illustrates the difficulty small companies have in trying to enforce their patents against large, international firms, says Devon MP Patrick Nicholls.
- "Hefty Computer Connects the Dots"
Washington Post (04/20/00) P. E4; Walker, Leslie
An IBM RS/6000 S80 server dubbed A.Root is the heart of the Internet. Located in Herndon, VA, Network Solutions' RS/6000 is the master domain name server for the Internet, meaning almost all Internet traffic must first pass through A.Root before continuing to the intended destination. Some 420 million times a day, the RS/6000 receives a request for information, namely the exact location, or domain, of a specific Web site. A.Root matches the request with the appropriate numerical domain location and sends the information along. Network Solutions (NSI) chose to upgrade to the IBM RS/6000 because of its superior speed, says NSI's Bruce Chovnick. The upgrade occurred at the right time, he says, because the "transactions we are seeing on that server have increased dramatically."
- "DSL Ad's Accuracy Is a Bit of Stretch"
SiliconValley.com (04/20/00); Gillmor, Dan
Cable companies these days tend to use deceptive advertising, according to Dan Gillmor. A primary example is Pacific Bell's current illusory ad for its DSL Internet service, which suggests bandwidth-hogging and other activities caused by shared bandwidth with neighborhood households creates service problems and slows down the connection. The phone company uses equipment called the Digital Subscriber Line Access Multiplexer (DSLAM) located at its central office that sends traffic from separate households into a larger data line, which then connects to the Internet network and online servers. So between a household and the DSLAM, the DSL is not a shared service. DSL and cable access are only shared once beyond the DSLAM at the phone company, and at that point the service provider, in this case Pacific Bell, can control whether the speed of service is slowed down. A Pacific Bell spokesman told Gillmor that the ad was not misleading as it only referred to the line between the house and the DSLAM. The advertisement also implies the cable situation is hopeless. Slowdowns caused by cable's poor management of bandwidth has harmed the industry's credibility. However, the cable industry could offer individual households more bandwidth by working with local data services.
- "Experts: U.N. Doesn't 'Get' Net Age"
The United Nations has a Web page, but beyond that the organization has done little to show that it is taking advantage of the opportunities presented by the Internet age, a panel of Internet experts said yesterday. The panel is examining how the world's underdeveloped countries can best develop their own Internet and communications technologies, and criticized the U.N. for setting a poor example. The U.N. has failed to use the benefits of the Internet to help coordinate and disseminate information, the panel said. Shushil Baguant, chairman of the National Computer Board in Mauritius, warned that the information technology gap between developed and undeveloped countries will only widen if it is not addressed at once.
- "Companies Boosting Security for Web Sites"
Bloomberg (04/19/00); Reynolds, Katherine M.
Several executives representing companies from different industries, including IBM, Microsoft, General Motors, and J.C. Penney, met yesterday for a White House conference on the subject of IT security. President Clinton has proposed doubling the U.S. government's investment in IT research and development to $2 billion while seeking an extra $138 million for the Justice Department to combat computer sabotage. GM's Jacqueline K. Wagner cautioned all to avoid making drastic security-related actions. "There is an acceptable level of risk that each corporation must accept in order to compete in the marketplace," she said. IBM has boltered its security push, devoting more resources to testing its systems for flaws while continuing development of its antivirus and firewall technologies, says IBM's J. Bruce Harreld. Microsoft has increased from seven to 50 the number of its employees working in information security. Overall, security-related spending has increased from 1 percent to up to 5 percent of corporations' annual operating budgets, according to Richard Clarke, President Clinton's coordinator for infrastructure protection.
- "Y2K Outlays Not Covered"
Journal of Commerce (04/19/00) P. 8; Mullins, Ronald Gift
Insurance Information Institute chief economist Robert Hartwig says that using the "sue and labor" clause of an insurance contract to recover money spent on preparing a company for the millennium bug has no validity. Some companies have taken their insurers to court, trying to recover their expenses, but Hartwig points out that such expenses were never meant to be covered by such insurance, and he notes that millions of companies addressed their millennium bug problems without filing claims--which casts doubt on the plaintiffs' cases. Hartwig says sue and labor applies only when insureds act to prevent loss against a covered peril; prevent loss to a covered peril; the loss is actual or imminent; and the expenses incurred are reasonable and for the primary benefit of the insurer. He also says that the millennium bug was a foreseeable event, while property insurance covers only fortuitous or unforeseen events.
- "Can Spam Be Canned?"
Salon.com (04/19/00); Cave, Damien
Although members of Congress are fast at work on federal legislation that would discourage spam, a number of ISPs are skeptical about the potential effectiveness of such bills. Carmela Anderson of the small ISP Redshift says it would cost too much to find out who sent spam and to sue them. Kris Rallapalli, owner of another small ISP called Kepnet, also questions the usefulness of a federal anti-spam law because of litigation costs. The two Californian ISPs are based in a state that already has an anti-spam law. Enacted last year, the California law allows ISPs to sue spammers for $50 per message, and up to $25,000 per day from each spammer. Even with the law, many ISPs in the state have decided not to seek its protections. Two of the largest ISPs, EarthLink and Pacific Bell, have not filed any complaints, although they have cases that they are looking into. The legislation in the works in Congress is House Bill 3113, the Unsolicited Commercial Electronic Mail Act of 2000, which has picked up 42 cosponsors. Expected to reach the House floor in early May, H.R. 3113 is very similar to the California anti-spam legislation. However, the federal anti-spam legislation is a bit stronger in that ISPs can sue spammers for $500 per message, and up to $50,000 per day per spammer. The bill also resembles the Washington state anti-spam law in that all receivers of spam--not just ISPs--can sue spammers. The legislation positions spam as a collect call that ISPs have no choice but to accept. A 1999 study by the Gartner Group reveals that ISPs spend about $1 of every user's monthly fee on combating spam; EarthLink spent more than $1 million last year fighting spam. Still, it is not certain that the bill will pass. The Direct Marketing Association and Harvard law professor Lawrence Lessig are among the powerful lobbyists that oppose such legislation.
- "It's Official: IT Adds Up"
InformationWeek (04/17/00) No. 782, P. 42; McGee, Marianne Kolbasuk
Information technology has directly contributed to the rise in productivity across all U.S. industries in recent years, economists say. Just a few years ago economists questioned the effects of technology on productivity. However, last month the Federal Reserve issued a report saying the use of technology and the production of IT goods since the mid 1990s has accounted for about $50 billion in productivity output every year, contributing about two-thirds of the $70 billion annual productivity gain over the same period. Eighty percent of companies that record worker productivity say productivity is at a record high, according to an InformationWeek Research survey. Most InformationWeek respondents credit not only technology, but also management policy with some of the productivity gains. Companies are realizing productivity gains by improving their business processes, for example, by eliminating the barriers between different business areas. Among the top technologies that contribute to productivity are collaborative software tools, newer PCs, increased network bandwidth, mobile computing devices, and wireless devices. In addition to worker output, IT is improving customer service, range of offerings, response time, product quality, and customization of products and services, says Eric Brynjolfsson, professor at the Center for eBusiness at MIT's Sloan School of Management. Many companies are counting on e-business to further increase productivity, and experts predict that the Internet will drive the next wave of productivity.
- "Survey Finds Companies Lack e-Commerce Blueprint"
Computerworld (04/17/00) Vol. 34, No. 16, P. 38; Melymuka, Kathleen
Companies find that a lack of IT-related experience and understanding in the marketplace and corporate organizational and cultural barriers often prevent successful adoption of e-business strategies, according to a survey of 300 major companies conducted by global consultancy Towers Perrin. Perhaps to compensate for the lack of in-house IT specialization, many companies have tapped third-party providers to fulfill various IT tasks; 44 percent of companies said they had outsourced Web site development work and 45 percent say they have outsourced software development and systems integration projects. Fewer than 20 percent of the respondents report having realized significant changes to their core business processes due to e-business initiatives, though more than half expect major transformations over the next two years. "We're going to see process changes associated with having to do more business-to-business over the Internet as opposed to EDI," according to a representative for one large retailer. What is clear, according to a manufacturing manager, is that future success will depend on making the changes necessary to allow e-business initiatives to work.
- "Feds Struggle to Tame e-Comm"
Network World (04/17/00) Vol. 17, No. 16, P. 1; Messmer, Ellen
U.S. government agencies are at the center of a debate concerning the federal government's proper role in the e-commerce marketplace. There is no shortage of opinions concerning how the U.S. government should approach e-commerce. Citizen-oriented e-government solutions are expensive and complicated to implement, leading many private companies to offer their technological expertise or cash in exchange for advertising space on government agency Web pages. Yet some, fearing that private industry will gain too much influence over public affairs, oppose the idea of government agencies accepting advertising dollars from private industry, as well as the concept of outsourcing government Web site maintenance to private technology companies. From private industry sources such as the Computer and Communications Industry Association (CCIA) comes concern over the United Postal Service's plan to launch its e-commerce service portal, USPS.com. The CCIA argues that USPS.com, which is partially funded by tax revenue, should not be competing with purely private concerns such as Yahoo! or Intuit. Similarly, the CCIA argues the Internal Revenue Service's new online tax filing service unfairly competes with private sites offering the same service. Finally, the General Services Administration (GSA) is concerned that the proliferation of online procurement options--as well as the spread of government credit cards--will undermine its ability to control the procurement of supplies from contracted suppliers at contracted prices. "[U]ltimately the market will decide," and "the government may lose influence," says GSA's Mary Mitchell.
- "No Room in the Nest"
Economist (04/15/00) Vol. 355, No. 8166, P. 71
The planned integration of the Internet into the supplier network of Japanese consumer electronics manufacturer Matsushita is likely to significantly impact the nation's consumer electronics industry. Matsushita aims to link online by next March 100 Matsushita factories and 3,000 of suppliers. Such a Web-based system for purchase orders, price negotiations, delivery, and payment would enable Matsushita to reduce its parts inventory, cut financing and purchasing costs, eliminate inefficiencies from the supply chain, and better respond to changing market demands. Yet the Internet supply network may also alter the entire Japanese business culture. The exclusive, long-term business ties enjoyed among Japanese companies could be replaced by the open, highly competitive price wars seen among American companies. Although Matsushita does not hold stake in any of its suppliers and even encourages them to avoid becoming dependent upon one or two large customers, the company does pride itself on the relationships it maintains with its closest suppliers, known as kyoei gaisha, or co-prosperity companies. Matsushita shares technological and design information extensively with the kyoei gaisha and believes the supplier training, insurance, and pension programs it supports are among the industry's best. Non-kyoei gaisha, which contribute only 2 percent of the total volume of parts purchased by Matsushita, potentially face a situation in which they cannot compete with companies conducting private transactions over the Internet and consequently become excluded from the business dealing of Matsushita and many manufacturers.
- "Gephardt Speaks to IT Priorities; GOP Says Talk Is Cheap"
Washington Technology (04/17/00) Vol. 15, No. 2, P. 18; Gallagher, Anne
House Minority Leader Richard Gephardt's (D-Mo.) promises about high-tech policy will come true only if Democrats and Republicans cooperate during the rest of the 106th Congress. Gephardt says Congress can move to make sure that the tax and regulatory system permits the tech industry to continue to grow and flourish, and that the government can promote education and training so people can fill high-tech jobs. He believes that the government should not lead the high-tech revolution, but should have policies to keep the revolution going. Gephardt explains that all parties agree there should be no new tariffs or taxes on Internet services, but there is still the issue of whether state governments should be permitted to collect sales taxes on e-commerce transactions involving companies in other states. He says the moratorium on taxes should be extended beyond autumn of 2001 so a consensus can be reached on the issue. But his views have been met with skepticism from Republicans--GOP House Conference Chairman J.C. Watts Jr. (Okla.) says many of the IT community's problems come from the Democratic leadership. Watts says Democrat leadership in the past has spent more time blocking legislation than trying to enact high-tech priorities, and he predicts that they will continue to do so. Watts says Democrats have been absent from industry-assisting policies supported by Republican leaders.
- "Think Before You Link"
Industry Week (04/17/00) Vol. 249, No. 8, P. 22; Leibs, Scott
Many manufacturers fail to recognize the importance of infrastructure to value-chain optimization because they believe that moving online entails only a Web site, browser-based software, and email. In Industry Week's Value-Chain Survey, only 25 percent of respondents said their systems were compatible with supplier and customer systems, yet only 16.8 percent listed technology incompatibility as a major barrier to value-chain optimization. A critical but often overlooked aspect of value-chain optimization is middleware, such as enterprise application integration (EAI) software and XML. EAI and XML help tie together the many different systems used by a company, as well as its partners and customers. Companies need to develop an Internet-centric infrastructure that addresses issues such as security and scalability, experts say. Systems must be able to ward off hacker attacks and verify user identities. In addition, systems should be designed to accommodate increasing loads of traffic without crashing. Peter Smith of Deloitte Consulting says the six essential steps to creating an Internet-centric infrastructure include a strong ERP presence, high bandwidth, company-wide browser-based Web access, security, data warehousing, and a means of integrating applications in a Web environment. Many companies are finding it difficult to develop a proper infrastructure, and experts say application service providers (ASPs) can help solve some of these problems, particularly for small and midsize businesses. However, even ASPs do not provide an end-to-end solution, and many companies are now piecing together various point solutions that will later have to be integrated. Still, experts say the piecemeal approach is preferable to inaction. Manufacturers should rapidly embrace the main technologies needed to optimize the value chain without worrying about their specific approach, because they do not have time to perfect their in-house systems before linking with partners, experts say.
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- "Why Mother Nature Should Love Cyberspace"
Time--Special Edition (05/00) Vol. 155, No. 17, P. 82; Taylor, Chris
The Internet may be the technology that quiets some of the fears surrounding the destruction of the environment. As a result of the Internet, more people are working out of the their homes, the need for paper is falling, companies are using business-to-business (B2B) Web sites to improve the efficiency of their supply chains, and warehouses are emptier because inventories are lower. Environmental groups appear to be welcoming the changes brought on by the Internet. Sierra Club energy committee member Ned Ford says those who use the technology regularly will have a better comprehension of the potential energy savings of the Internet. In fact, some research already exists on how the Internet is impacting the natural world. Although an average trip to a mall would take one gallon (3.8 L) of gas, it would take 0.1 gallon (0.4 L) of fuel to ship the average 2.5-pound (1.1-kg) book. In general, one minute of driving is comparable to 20 minutes of using a computer, in terms of the amount of energy used. The Internet could also reduce heating and lighting costs for real-world stores. The Organization for Economic Cooperation and Development says about 12.5 percent of retail space could become superfluous as a result of the Internet. If so, that would produce about $5 billion worth of energy savings a year. The Internet could also have an impact on the number of newspapers, magazines, catalogs, phone directories and the like that are published and printed. The Boston Consulting Group reports that the Internet will slash paper demand by 2.7 million tons by 2003. And finally, with more people working from the home, companies are lowering their energy bills remotely by regulating electricity in offices and by darkening unused areas. "We're still going to have to clean up the environment," says Joseph Romm of the Center for Energy and Climate Solutions in Washington. "But the Internet is allowing a type of growth that uses energy and resources better."