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Volume 2, Issue 47: Monday, April 24, 2000
- "U.S., States Favor Plan To Split Up Microsoft"
Washington Post (04/24/00) P. 1A; Grimaldi, James V.
The Justice Department and 19 states are nearing completion of a remedy proposal with the goal of removing barriers to companies entering into competition with Windows and ending Microsoft's monopoly on the U.S. PC operating system market. The proposed remedy will probably ask the court to split Microsoft into two or three separate companies. One company would provide Windows and be permitted to include software functions allowing users to browse the Internet, while a second company would sell Microsoft's current software applications and could include parts of the Internet browser. A possible third Internet company would get the browser and the Microsoft Network. Debate continues on whether to limit the remainder of the company after Microsoft is split, with some states arguing for tough limits on business practices implemented in a decree lasting for a possible two to four years if not longer. Although most of the 19 states intend to join the Justice Department in the draft plan, some are arguing the plan is not tough enough and does not significantly curb Microsoft's monopoly during the period before completion of the breakup. The proposed remedy is scheduled to be submitted to the court between Tuesday and Friday. Microsoft, which denies claims that splitting up the company might boost shareholder value, intends to fight any breakup proposal and to appeal Judge Jackson's original verdict, saying nothing in the original court case would merit such a strict remedy.
- "Growth of PC Market Continued in First Quarter"
Wall Street Journal (04/24/00) P. A3; Hamilton, David P.
The worldwide PC market showed strong growth in the first quarter, largely because of strong consumer demand, according to reports from International Data (IDC) and Gartner Group's Dataquest. While the consumer market grew, especially in the U.S. and Asia, demand for corporate PCs was slow. IDC says global PC shipments jumped 20 percent to 30.4 million units in the first quarter, down from 21 percent growth in last year's first quarter. Meanwhile, Dataquest reports worldwide PC growth of 15 percent in the first quarter, down from 17 percent a year ago. Although IDC predicts that corporate PC demand will pick up again as concerns over Y2K fade, Dataquest believes the U.S. corporate PC market is reaching saturation. PC manufacturers will have to devise new strategies to target the corporate PC market, Dataquest says. Dell and Hewlett-Packard made the largest gains in the first quarter, according to the reports. In the worldwide market, Dell continued to close the gap with leader Compaq, and HP's worldwide sales grew nearly twice as fast as Dell's. In the U.S. market, Dell maintained its top spot while Hewlett-Packard claimed the third spot, knocking IBM to No. four.
- "U.S. High-Tech Jobs Going Abroad"
Los Angeles Times (04/24/00) P. C1; Ballon, Marc
Many U.S. companies say the labor shortage and visa restrictions are forcing them to send high-tech projects to foreign countries, while critics say the firms are simply trying to reduce costs. In Southern California, 10 percent of software firms are sending work overseas, compared with just 1 percent two years ago, says Los Angeles Regional Technology Alliance President Rohit Shukla, adding that the figure could reach 30 percent over the next several years. Countries such as India, Israel, Pakistan, and Russia are producing many highly trained engineers who will work on sophisticated projects for significantly lower salaries than their American counterparts. High-tech firms point to the Information Technology Association of America study showing that 1.6 million jobs will open in the U.S. tech industry this year, with half going unfilled. In addition, the Immigration and Naturalization Service is no longer accepting visa petitions for foreign high-tech workers because it has already received enough applications to fill its limit for special visas for the fiscal year ending Sept. 30. Meanwhile, critics such as UC Davis professor of computer science Norman Matloff say the industry is misleading the public about the worker shortage to obtain more visas for foreign workers. Foreign programmers earn about 20 percent of the salaries of comparable U.S. workers, Matloff says.
- "Report: Asia-Pacific E-commerce Poised for Boom"
E-Commerce Times (04/19/00); Macaluso, Nora; Regan, Keith
The Asia-Pacific region will become a major force in the overall global Internet economy in 2004, concludes a new report from Forrester Research. The predicted $1.6 trillion in e-commerce transactions would give "the Asia-Pacific market more than 20 percent of total sales," says Forrester's Stuart D. Woodring. The region has several advantages that make the predicted e-commerce boom possible. Asia-Pacific already supplies raw materials to the global economy, especially high-tech products that complement e-commerce growth, and governments in some Asian countries endeavor to improve their infrastructure in order to aid e-commerce business. Although the area as a whole will grow, the report acknowledges that e-commerce will not develop evenly throughout the Asia-Pacific region. India and China, for example, have internal government policies that can impede the progress of e-commerce. Acknowledging the potentially lucrative Asian market, online organizations such as Priceline.com, CMGI, and Merrill Lynch have taken steps to acquire a physical presence in region. Other leaders of online sales in 2004 will be the United States and Western Europe.
- "Japanese Firms Vie for U.S Partners to Build Fortresses for Data Storage"
Dow Jones News (04/24/00); Guth, Robert A.
In a recent trend, Japanese businesses and U.S. technology companies are teaming up to build data centers in Japan to provide Web hosting and various other e-commerce-related services. The recent flurry of partnerships is due in large part to a sudden surge in the Japanese Web market, spurred by the widespread use of mobile phones in Japan and the increased number of Japanese Internet startups. American firms are seeking to capitalize upon a predicted global boom in the Web hosting industry and as a result many companies are investing heavily worldwide. The partnerships benefit American participants by speeding their entry into the Japanese Internet market, providing them with regional software and qualified local engineers, and enabling them to obtain prime Tokyo real estate. Yet the Japanese firms appear to be the biggest beneficiaries of the deals, as they quickly gain knowledge of online business, obtain a significant advantage over local competitors, and reduce the chance that they will lose customers to more Internet-savvy U.S.
- "A New Concept for Web Sellers: Profitability"
New York Times (04/24/00) P. C1; Tedeschi, Bob
Although Internet businesses have historically concentrated on generating greater site visitation, a new focus on the bottom line has gained momentum among e-commerce venues due to a newfound investor interest in profitability. Boston Consulting Group recently produced a survey that found only 24 percent of Web-only retailers were profitable last year. This shift has altered the way many online companies organize their internal operations. Staff resources are now used on projects that provide short-term financial gains and take advantage of the volumes of data collected by deducing which customers provide the most profit. For example, the BigStar Entertainment Web site used its own collected data and a database of customer email addresses to get a better idea of the individual customers' movie tastes and then designed software to sift through the data and tailor online email marketing letters to customers' specific entertainment preferences. Internet companies are also trying to increase the return-rate of online customers and use print and Internet ads to reduce the cost of advertising. Profitability studies have been done calculating the efficiency of using multiple carriers to deliver packages to different regions rather than depending on one carrier. Larger e-commerce retail initiatives that do not promote short-term financial gain such as building sites devoted to wireless Internet users or designed to promote high-speed Internet access have been abandoned.
- "New Zealand Seeks to Protect Online Consumers"
Total Telecom (04/20/00); Blackburn, Clare
The New Zealand government will huddle with merchants and consumers during the next couple of months to draft guidelines for e-commerce conduct. The guidelines are meant to help enforce consumers' rights to seek legal redress and are expected to look similar to those developed by Australia. The end result could be a framework for industry self regulation in which violators would be subject to penalties. New Zealand would like other countries to draw up similar consumer-protection codes. The New Zealand code will force e-commerce sites to post privacy and security policies in addition to their real-world addresses. The code will also mandate that sites offer information about refund, exchange, and complaint policies and provide advice about customer-transaction laws.
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- "White House: Net Security in U.S. Hands"
E-Commerce Times (04/20/00); Hillebrand, Mary
The newly-created federal Critical Infrastructure Assurance Office held several meetings recently with IT executives on computer security issues. Commerce Secretary William Daley told IT leaders that they, not the federal government, must take primary responsibility for ensuring the safety and security of the Internet as an engine of commerce. Daley likened the threat of hackers to the Y2K problem, which he said IT leaders acted upon very proactively and responsibly. Since the U.S. contains 60 percent of the world's Internet assets and is the most technology-reliant country on earth, a breakdown in computer security could affect not just one company's profits, but the economy of entire regions, Daley said. The federal government is taking care of security for its own computer systems, but will not act as a watchdog for security in private industry, Daley said. The Internet has succeeded so dramatically because it has not been heavily regulated by government, and Daley said he would like things to stay that way by allowing private industry to take security initiatives into their own hands.
- "Kizoom Puts Travel Updates on WAP Phones"
Financial Times (04/24/00) P. 20; Harvey, Fiona
Kizoom will offer up-to-date traveling information for WAP cell phones. The Internet accessible phones--still moderate in number--are expected to jump to nine of every 10 mobile phones manufactured. The services, which can currently only access railroad traveling data in Britain, are expected to include car traveling services in a few months. The service also plans to expand to other parts of Europe. Users of the service can use their WAP phones to access the company's Web site, which will provide traveling data to suggest best choices of available routes. Although the service is free to WAP phone customers, the company plans to make money by licensing to web portals, which will market Kizoom as part of its sales offerings. Kizoom founder Damian Brown claims he plans to float Kizoom, once it is established in the market.
- "Euro ASP Market to Hit $1.19B in 2005, IDC Says"
IDG News Service (04/20/00); Rohde, Laura
An IDC study released this week predicts the European high-end application service provider (ASP) market will be worth $1.19 billion by 2005, up from $10 million in 1999. Entitled "The European ASP Industry: A Strategic Perspective," the study also predicts that by 2005 the compound annual growth rate for European ASPs will be 130 percent. IDC attributes the rapid expansion of the European ASP market to the region's dominance in WAP technology and to the formation of online exchanges and new Web portals devoted to B2B e-commerce transactions. Additionally, IDC believes European countries with strong English-language skills, such as Scandinavia, Belgium, Luxembourg, the Netherlands, and current ASP leader Great Britain, will experience the most growth in the ASP market.
- "Central Question: Whose Internet Is It?"
Interactive Week (04/17/00) Vol. 7, No. 15, P. 98; Brown, Doug
Business interests are facing off against consumer, Internet, free speech, and privacy advocates, over Internet issues. The advocates recently met in Toronto for the Computers, Freedom and Privacy conference sponsored by the Association of Computing Machinery, and they were not pleased with the direction they believe industry is taking the Internet. Publisher Tim O'Reilly suggested
creating a sort of Sierra Club for the Internet--an organization based on the idea that the Internet needs protection, and created to help provide that protection. O'Reilly's concept essentially summarized the main issue of the conference. Attendees felt that things are changing too quickly and that the Internet is sliding from the hands of Netizens into those of industry. Major debates are taking place about patent, trademark, and copyright laws that will have large implications for the Internet's future. The central issue is who owns what on the Internet, and who has power and authority online. Pending federal legislation would give a company ownership over the content on its site, but some companies depend on the freedom to use facts and are fighting the bill. Trademarks on the Web are a sticky issue, especially when it comes to deciding between infringement and free speech. Temple University Cyberspace Law Institute professor David Post says the definition of "bad faith" is just beginning to be worked out in court. Copyright law is changing as well, with the music industry calling online music copying "piracy," and patent law is running into new territory. Generally, business considers the Internet another moneymaking platform, and wants as many ownership rights as possible. Opposing advocates believe that online ownership claims should be kept to a minimum and that industry should not be given too much power.
- "Shortcut to the Web"
InternetWeek (04/24/00) No. 810, P. 1; Tillett, L. Scott
Brick-and-mortar companies are rushing to take advantage of low stock market prices among dot-coms by buying Internet startups to quickly and cost-effectively obtain the relationships with suppliers, technology, and marketing expertise required for e-business initiatives. Indeed, the enthusiasm for dot-coms is waning, and investors and venture capitalists are increasingly turning their attention toward traditional, established stocks and securities. "There's a realization in the marketplace now that the true winners in this thing are going to be brick-and-clicks or click-and-mortars," stated KPMG partner Mark Larson. Among the brick-and-mortars who recently abandoned the "build" strategy in favor of the "buy" strategy is European grocer Royal Ahold, which last week announced it will invest $73 million to buy a 51 percent share of online grocer Peapod. Roland Berger & Partner consumer goods and e-commerce analyst Jacob Jensen estimate that on its own, Ahold would have spent $76.7 million to create its own e-commerce network and an additional several million to train employees and "learn" which customers to target and how to efficiently run fulfillment centers. Other industry analysts also view the sinking stock market valuations of dot-coms as a quick and easy means for traditional companies to enter the e-commerce arena and are advising brick-and-mortars to act on the promising opportunity. In fact, Steve Piaker of investment firm Conning Capital Partners believes traditional companies will benefit the most from dot-com partnerships and acquisitions because brick-and-mortars will gain access to technology platforms, business relationships, and a new strategy based on the vibrant Internet pace.
- "Tech: The Virtual Third Party"
Business Week (04/24/00) No. 3678, P. 74; Borrus, Amy; Dunham, Richard S.
Partisan fighting has mired much pending legislation, but a coalition of Democrats and Republicans is coming together to work on technology initiatives--an indication that the tech boom is altering the political landscape. The coalition constitutes a virtual party for tech issues, and the interest in tech matters is realigning both major parties. Progress & Freedom Foundation President Jeffrey A. Eisenach says both parties are becoming more libertarian and pro-tech. The economic conservative Republicans are getting stronger at the expense of the social conservatives, and Republican leaders are recognizing the role that the federal government can take in improving the nation's schools--a major tech issue. Technology is causing the labor-liberal Democrats to move toward the pro-business New Democrats, and the moderate Democrats are pleased. Money is a major reason behind the tech sector's power with the parties, with campaign contributions heading the list. Most tech causes are not ideological, and the industry is bipartisan. The booming economy is making technology politically fashionable. The tech supporters also share a number of values: freer trade, an economics-based foreign policy, a distinct but limited role for government, open immigration, better public schools, minimal regulation, and lower taxes. New lobbying groups are emerging, and the number of political supporters for the tech sector is likely to climb.
- "Changing of the Guard: CIOs, CTOs in Flux"
InfoWorld (04/17/00) Vol. 22, No. 16, P. 38; Fisher, Susan E.
E-business is changing the role of CIOs, forcing some to become involved in corporate strategy while still managing operations, and others to pass IT strategy issues on to CTOs. Charles Schwab CIO and vice chairman Dawn Lepore says CIOs need to master business as well as technology to succeed in the Internet era. However, some experts believe CIOs will be unable to become corporate strategists, creating an opportunity for CTOs to emerge as the leaders of IT strategy. Some companies are now hiring CTOs to handle strategy and CIOs to manage operations, while CIOs at other firms are moving into high-level strategy. Strategy-focused IT workers are usually on the executive management team, receive compensation based on performance, look at long-term issues, and view their department as a profit center. By contrast, CIOs traditionally were removed from executives, had fixed salaries, and viewed the department as a cost center. Successful operational CIOs will still have a place in e-business, although these workers might lose some status to CTOs. In the past, CTOs have reported to CIOs, but recently this
trend is reversing.
- "A New Game of Cops and Robbers"
Far Eastern Economic Review (04/20/00) Vol. 163, No. 16, P. 50; Gilley, Bruce; Crispin, Shawn W.
As the Internet revolution explodes in Asia, so does the possibility for online crime. Asia is experiencing not just a wave of hacking, but is also seeing traditional street crimes such as prostitution and drug trafficking moving onto the Internet. While many cyberattacks in the U.S. and Europe are done for bragging rights or simple joy of chaos, in Asia such crimes are usually committed with illegal profit in mind, which means that Asia could soon surpass the U.S. in money lost to computer crime. Analysts say Asia's main problems are unskilled law enforcement agencies with few resources, as well as a dearth of laws to combat cybercrimes. However, some jurisdictions such as Hong Kong, South Korea, Thailand, and the Philippines have either already passed cybercrime laws or are in the process of doing so. Many of these areas are also beefing up training for law enforcement officials. However, experts say it may be several years before cybercrime laws in Asia take effect and courts become familiar in dealing with such issues.
- "Effectiveness of Antispam Bill Questioned"
Computerworld (04/17/00) Vol. 34, No. 16, P. 6; Thibodeau, Patrick
Congress moved a step closer to enacting an anti-spam law when a key subcommittee endorsed the Unsolicited Electronic Mail Act, which combines the three anti-spam bills of Reps. Gary Miller (R-Calif.), Heather Wilson (R-N.M.), and Gene Green (D-Texas). Some observers now believe the legislation will pass by July. Even if it does, there are some questions as to whether the law will even curb the amount of spam that is flooding corporate networks. The legislation does not ban junk email, which means that spammers will be able to continue to send out unsolicited commercial email. But it does give recipients of spam the right to remove themselves from the mailing lists of spammers. For those who continue to receive unwanted email, the legislation gives them the opportunity to seek as much as $500 for each offending message, although it may be difficult for them to show their damages. The fact that the bill favors private litigation and not government oversight to reduce spam has some observers expecting the legislation to gain the needed congressional support. The private litigation element also has anti-spam groups and users hoping that spammers will be scared away. The Federal Trade Commission is considering making advertisers identify their email with a subject-line label, which will help recipients differentiate them from their other business messages. Brightmail CEO Paul Sunil raises the point that a U.S. law is still ineffective because spammers can escape it by moving their operations offshore. Nevertheless, intellectual property attorney David H. Kramer says anti-spam legislation is "better than the alternative, which is nothing."
- "Linux Support: Who Ya Gonna Call?"
InformationWeek (04/17/00) No. 782, P. 134; Orzech, Dan
Despite the growing corporate interest in Linux, the question remains of how to obtain the expertise needed to integrate the application with existing systems and the support needed to maintain Linux networks. When Home Depot decided to create a Linux-based in-store system to handle tasks such as receiving, ordering, and inventory management, it faced the problem of how to obtain help developing Linux device drivers for critical retail devices like credit-card readers and signature-capture pads. The company solved its dilemma by signing a support contract with Linux distributor Red Hat, who provides Home Depot with 24-hour support and a dedicated point of contact. Several hardware vendors have begun devoting attention to creating Linux-enabled products and services. For example, IBM offers support for Linux on its Lotus Domino Web server, WebSphere application server, DB2 Universal Database, and its entire range of server platforms. Also, IBM has contracted with four major Linux distributors--Caldera, Red Hat, Suse, and TurboLinux--to offer technical support to Linux users. Furthermore, consulting firm Ernst & Young claims Linux projects account for a growing portion of its revenue, and new Linux-integration companies, like Mission Critical Linux and TeamLinux, are being formed every day. Although the demand for Linux is still relatively small, companies are nonetheless preparing to capitalize upon what is expected to become a widespread clamor.
- "Haggling Over Digital Signatures"
Industry Standard (04/24/00) Vol. 3, No. 15, P. 125; Marlin, Adam S.
A bill that would allow electronic signatures for contracts has been held up in Congress. Urged by Internet companies, Congress decided two years ago with its Paperwork Elimination Act to permit digital signatures to substitute for written signatures on government contracts. A similar measure to validate digital signatures in other business contracts has been stalled in Congress, however. At the moment, electronic contracts are regulated by the states, but these regulations tend to vary from state to state, making the technology practically useless to e-commerce companies. In the spring of 1999, Sen. Spencer Abraham (R-Mich.) and Rep. Anna Eshoo, a Democrat who represents part of Silicon Valley, launched a bill that would provide a national standard for electronic transactions until all 50 states could pass uniform laws on the issue. The bill seemed set to sail through until it came before Rep. Thomas Bliley (R-Va.), chairman of the House Commerce Committee. Bliley decided to introduce his own legislation, thereby diverting attention away from Eshoo's bill. As Bliley's bill made its way through the committee process, it attracted the attention of the financial services industry, which wanted to be permitted to distribute mandatory records, disclosures, and notifications electronically. The result was that an amendment was added to the bill allowing for electronic notices and disclosures. However, this attracted immediate protests from consumer groups, who worried that there was insufficient control over whether consumers received vital documents or not. Eventually, lobbyists for technology businesses gave their approval to the proposal, believing that it could save money for their companies too, and in November 1999 both Abraham's bill and an amended form of Bliley's bill were passed in the Senate. A House and Senate conference committee is currently discussing how to harmonize the two bills.