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Volume 2, Issue 54: Wednesday, May 10, 2000
- "Cyberspace Programmers Confront Copyright Laws"
New York Times (05/10/00) P. A1; Markoff, John
A new program called Freenet promises to render copyright laws obsolete, at least according to its 23-year-old creator Ian Clarke. The Irish programmer says that with Freenet, users can obtain or exchange any type of digital product, such as music, videos, text, and software. Freenet works because it has no central database, meaning copyright holders cannot use that database as a single reference point. Additionally, Freenet protects its users by encrypting every file and scrambling the key that is used to find the file within the system. A version of Freenet was put on the Internet in March, and Clarke says that there were over 15,000 downloads of the program. Although Freenet does technically violate most copyright laws, some legal analysts contend that most intellectual property laws are obsolete and are being used against technologies that the laws' creators could not have foreseen. However, Clarke says that although it is impossible to stop Freenet from being used, copyright holders have adapted to and profited from technological changes in the past, such as magnetic tape and copy machines.
- "Back to Business After 'Love' Bite"
Washington Post (05/10/00) P. A24; Cha, Ariana Eunjung; Hedgpeth, Dana
Over time, predictions of the damage done by the virus attached to the "I love you" email are becoming slightly less severe than the original forecasts. The bug hit a large number of businesses worldwide, however a majority of those organizations escaped with little damage. The companies most injured by the virus were the ones that rely primarily on digital photos or graphic files to do business. The original estimate of $10 billion in damage was lowered to $8.7 billion by Computer Economics, the only research firm that has attempted to predict the damages caused by the virus. The virus was stopped by the very communications systems it was trying to shut down according to Adam Harriss, a research analyst. The largest setbacks for businesses in the Washington, D.C., area, one of the last places to be hit by the bug, was lost staff time and temporarily shut down email systems. Some of those businesses said the monetary losses did not compete with those caused by regular hacking and other attempts to harm their systems. Another annoyance was the damage done by interconnected systems. When opened, the virus would email itself to all the addresses in the infected computer's email address book. If the address book contained any phone or fax numbers, those numbers would then be called as well. A few businesses found that after a single person in the organization opened the virus, the bug was transmitted to everyone in their organization.
- "Familiar Tax Cuts, Different Strategy"
Baltimore Sun (05/10/00) P. 1A; Hosler, Karen
A measure to extend the Internet tax moratorium another five years is expected to win approval in the House today by more than 300 votes. "We don't want to stifle the engine that is driving the growth of our economy," said Rep. Robert W. Goodlatte (R-Va.), a prominent sponsor of the bill. The measure will also attempt to alleviate the digital divide by doing away with existing Internet access fees in the states of Connecticut, Montana, New Mexico, North Dakota, South Dakota, Ohio, Tennessee, Texas, Washington, and Wisconsin. Although the bill should win easy passage through the House, navigating the confines of the Senate, where pro-state-tax forces eagerly await, may prove substantially more difficult. A vote to repeal the 3 percent tax on telephone service will be held in the House in coming weeks.
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- "Microsoft Wins Another Round In Java Battle"
CNet (05/08/00); Wilcox, Joe
The ongoing court case between Microsoft and Sun Microsystems continues as a decision by U.S. District Judge Ronald Whyte to accept Microsoft's request for summary judgment shifts the balance slightly in Microsoft's favor. The case began in October of 1997 when Sun sued Microsoft for violating a contract allowing Microsoft to create and then deploy products using Sun's Java copyright and the Java programming language. Neither the current decision nor Whyte's rejection of segments of Sun's interpretation of the license with Microsoft for its Java technology in early April indicate that Microsoft has won or that the case will not go to trial. Earlier in the case, Whyte issued a preliminary injunction prohibiting Microsoft from using Java in its products because of violations of Sun's copyright. However, an appeals court overturned the ruling, saying Whyte should not have accepted Sun's copyright claim, causing him to reinstate the injunction using California's unfair competition law. Whyte's recent decision to accept Microsoft's request for summary judgement does not alter the reinstated injunction against Microsoft. Sun issued a statement saying Judge Whyte's decision was trivial.
- "Despite the Hype, B2B Marketplaces Struggle"
USA Today (05/10/00) P. 1B; Iwata, Edward
Business-to-business (B2B) online marketplaces have not been achieving widespread use or profits as expected due to a number of setbacks. The stock value of B2B marketplaces is falling on Wall Street, only a small group of exchanges are actually available online, and no current Internet exchanges are known to be profitable. Because of predictions that the Internet was soon to be the only viable way to do B2B transactions, many companies fearing that they might be left behind joined the trend. Now that the excitement is passing and profits are down, companies are becoming more wary of the many hurdles to overcome when opening marketplaces to do B2B transactions online. Strong competition online is one of these hurdles--Ariba, Commerce One, and Oracle are currently at the top of the field, according to analysts. When Ford and GM decided they wanted a large joint exchange, the companies that provide their current exchanges, Oracle and Commerce One respectively, could not cooperate and create a site and the site is still not available. Another hurdle is the hesitance of both suppliers and buyers to buy into this unknown electronic realm. Businesses worry about competitors stealing their trade secrets. Suppliers are worried trade prices could spiral downward. Other businesses, such as Wal-Mart, already have their own Internet marketplaces and do not want to share any of their technology or knowledge with competitors. For successful online transactions between companies to take place, computer language and software standards as well as compatibility of other important services such as financial accounting, shipment and manufacturing schedules, data storage, human resources, language barriers, and foreign currencies and customs laws would need to be available. Businesses must also be concerned about government antitrust rules and regulations when creating B2B marketplaces online.
- "Linux Standards Body Formed"
VNUNet (05/09/00); Geralds, John
Linux supporters have formed a new standards body called the Free Standards Group (FSG) to ensure that applications work with any version of Linux and that Linux supports a number of international languages. The new group merges the Linux Standard Base and the Linux Internationalization Initiative. Companies supporting the FSG include Caldera Systems, Corel, IBM, SAP, SCO, SGI, Sun Microsystems, SuSE, and Red Hat. FSG Chairman Daniel Quinlan says the group is necessary to prevent further Linux fragmentation.
- "What is CRM? Proponents Say Wall Street May Insist That Banks Know"
American Banker (05/10/00) P. 16; Ptacek, Megan J.
Many observers in the financial industry expect Wall Street analysts within the next 12 months to mandate that banks augment their traditional measures of price to earnings, return on equity, net income, revenue, and expense ratios with enhanced customer relationship measures, including the cost per customer and the number of customers acquired per quarter. "There is only one profit center - the customer," says chairman and CEO Robert Hall of Customer Analytics. "Customers are the most informative metric we have on how value gets created." Some banks, such as KeyCorp, Royal Bank of Canada, PNC Financial Group, and U.S. Bancorp, have already begun investing in CRM initiatives, their ultimate goal being to improve customer service by acquiring comprehensive knowledge of customers' attitudes and behavior. However, a recent GartnerGroup survey revealed that although the total number of banks implementing CRM-based products and services grew by 50 percent between 1998 and 1999, less than 30 percent of large banks polled claim they have recouped their investments in CRM initiatives. GartnerGroup senior analyst Mary Knox notes that the sheer complexity of CRM may deter many banks, adding, "it is difficult to assess the value of a customer to a bank, because banks are expanding their own offerings."
- "Bear This in Mind: Domain Is Destiny"
Washington Post--Washington Business (05/08/00) P. 5; Henry, Shannon
A recent survey shows the Washington, D.C., area to be one of the areas experiencing the most domain name registration. According to a survey carried out in February by Network Solutions, the area including Washington, D.C., Maryland, Virginia, and West Virginia ranked third in domain name registrations, behind Los Angeles/Long Beach and New York. This is hardly surprising, since a report released by Scarborough Research in the fall of 1999 shows that approximately 60 percent of adults in the Washington region are linked to the Internet, representing a greater percentage of Internet users than anywhere else in the U.S. Among those buying up the domain names are large companies making plans for the future, new startups, and individuals. Major companies in technology businesses, such as software, telecommunications, and the Internet are making a particular effort to buy up domain names, such as those that could turn out to be the names of new businesses, new products, or even sites that could damage a company's image. Network Solutions is also discovering that in the Washington area, travel, real estate, finance, and energy services are major purchasers of domain names.
- "Cisco Agrees to Buy ArrowPoint for About $6.1 Billion in Stock"
Wall Street Journal (05/08/00) P. A4; Thurm, Scott
Cisco Systems has formed a roughly $6.1 billion stock agreement to acquire ArrowPoint Communications, which manufactures "smart" Internet switches. Although executives from both companies admitted that Cisco first broached the possibility of an acquisition in March, ArrowPoint's executives suggested that they complete their April 5 IPO first. ArrowPoint's shareholders reaped billions of dollars from the postponement. ArrowPoint said on March 9 that it intended to offer its share for $15 to $17 each. However, its IPO shares were set at $34 each, and rose as high as $154 in public trading. Cisco's bid represents a little more than $143 per share based on Cisco's closing price Friday of $67.75 in Nasdaq trading.
- "Consultants Seek Online Balance"
InternetWeek Online (05/08/00); Mullich, Joe
Although online consulting services have been available in some form since 1996, a growing number of consulting firms are now expanding their Web-based offerings, ultimately seeking to create Internet tools that complement on-site meetings. For instance, IBM last year launched IBM e-business Accelerator, a Web site that provides advice to help companies implement e-business initiatives, while Chicago-based Arthur Andersen established a Web site that contains a database of best practices information customers can access on a subscription basis. Also, big5consultants.com, the first entirely virtual consulting firm, was launched in late 1999, offering information on such topics as raising capital, drafting a business plan, and valuing a business. Additionally, most online consulting sites enable customers to email questions to consultants. Both consultants and analysts agree that online consulting enables consultants to focus more upon their individual areas of expertise and reduces consulting expenses, often to the point where smaller businesses can utilize consulting services they otherwise would have been unable to afford. However, many firms believe the greatest challenge lies in determining how, says Patricia Davis-Muffett of consulting firm Robbins-Gioia, "to find online tools that can replicate the on-site experience."
- "GOP Drafts 'E-Contract' With America in Pitch for Tech Community's Support"
Wall Street Journal (05/09/00) P. A28; Vandehei, Jim
The Republican Party will unveil on Wednesday its "E-Contract 2000," a high-tech version of its "Contract With America" that sets the GOP's technology agenda in writing. The contract addresses the digital divide, provides new measures for cybersecurity, and initiatives to spur telecommuting. The E-Contract stands for "freedom on the Internet," says House Majority Leader Richard Armey (R-Texas). The E-Contract will be announced the same day Congress votes on legislation that would extend the moratorium on Internet taxes another five years. The extension is expected to be approved, as are several other initiatives, including a repeal of the three-cent telephone excise tax, a permanent ban on Internet access taxes, and visas for more foreign workers. However, Rep. J.C. Watts (R-Okla.) and other Republicans have voiced concerns over an extension of the moratorium and what effect it might have on brick-and-mortar retailers and state and local governments. Democrats have announced plans to unveil a proposal that would extend the moratorium for two years rather than five. Still, the five-year moratorium is likely to pass, because as one high-profile Democratic aide asks, "who wants to be seen as voting against the Internet?"
- "Asean to Build E-Network"
Nation (05/08/00); Chaitrong, Wichit
During the Asian Development Bank's annual meeting, members of the Association of Southeast Asian Nations (Asean) unveiled a four-year plan to create a strong regional IT infrastructure designed to enable the area to capitalize upon e-commerce, increase investment in IT goods and services, and foster international trade. As part of the plan, Asean leaders will enact e-commerce legislation and launch pilot programs proposed by the Asean e-Task Force, such as a dot-com incubator, a regional trade network, an industry-to-business exchange, and an Asean school network. The plan also outlines yearly goals for the Asean countries, including the enhancement of inter-connectivity, the application of international standards to telecom equipment, the establishment of a regional payment mechanism, the creation of a common e-marketplace, and the recognition of digital signatures and e-documents. Funding for the proposed activities will be supplied primarily by the private sector. "Previous research suggests [that] ... based on the mindset of Asean business leaders, [the region] ... could leapfrog ahead of Europe and go shoulder to shoulder with North America," says IBM Global Services vice president of e-business Shahla Aly. However, director Chadamas Thuvasethakul of Thailand's National Electronics and Computer Technology Center cautions the large disparity of income between the area's residents may hinder the plan's progress. Nonetheless, Asean leaders are expected to approve the plan this November.
- "With Its E-Mail Infected, Ford Scrambled and Caught Up"
New York Times (05/08/00) P. C1; Bradsher, Keith
Ford was taken by surprise last week when it was infected with the virus attached to the "I Love You" email that disrupted computer networks worldwide. If the attachment was opened by someone using Microsoft Outlook, the email containing the virus was then forwarded to everyone in that individual's address book and a few of the individual's files were destroyed. Ford was only able to restore email service on Friday afternoon in North America and not until Sunday in Latin America, Europe, Asia, and Africa mainly due to the size of the company. Although Ford's financial officers do not yet have an estimate for the cost of the disruption, other damages remained minimal. The factories where the cars are produced all continued to operate, computer-stored engineering blueprints and technical data were unharmed, and Ford still provided information for dealerships and auto parts suppliers on their Internet sites. The email accounts for the company did have to be shut down, some employees lost files with images and recordings, and because the virus was developed with similar coding to Ford's software, the process of removing the virus took a little extra time. The virus hit Ford right at a time when it had been working to transform the company from a manufacturing company into a more high-tech organization.
- "Report: UK E-Commerce Set to Explode"
E-Commerce Times (05/05/00); Conlin, Robert
Like other industry analysts, market experts at the U.K. arm of Forrester Research have reported that the United Kingdom will be a leader--along with Germany--in the rapidly expanding e-commerce economy in Europe. Fletcher Research says online spending will account for $30 billion in consumer spending in Britain, Wales, and Scotland by 2005, up from $2.6 billion last year. The firm's reports that online sales will represent 7.5 percent of total retail sales in the United Kingdom by then, up from less than one percent last year. The markets that consumers are expected to spend the most in are leisure travel, computer-related products, and groceries. Fletcher projects that online spending on leisure travel will reach $748 million, while spending on computer-related products is forecasted to edge to $625 million. U.K. brick-and-mortar giants like Tesco are now eyeing the Internet, and that has Fletcher optimistic about the grocery market. While brick-and-mortar giants will be moving online, the market researcher still expects their more established Web-based counterparts in Europe, as well as those in the U.S. like Amazon.com, to do very well. Handheld wireless devices, already widely used across the continent, and interactive TV should bring a much larger percentage of European households online than the current 12 percent. In comparison, 50 percent of U.S. households have access to the Internet. While these technologies are tremendous advantages for bringing the Internet to every European consumer, the EU still has some problems it will have to deal with for the continent to assume an even greater role in the global New Economy. For example, the EU does not have a standard for language translation throughout the entire continent.
- "Value Made Visible"
CIO (05/01/00) Vol. 13, No. 14, P. 126; Mayor, Tracy
Executives are increasingly demanding that IT organizations provide bottom-line numbers that prove technology's contributions to the company. Although quantifying IT benefits is difficult, some technology valuation methodologies make it possible to measure IT benefits, link IT and strategy, and define risk. These valuation methodologies try to demonstrate the intermediate factors such as customer service that IT influences, which in turn impact the bottom line. Although methodologies vary, they include several common principles: trying to align IT and business strategy, requiring all parties to define goals and expectations for an IT project, and helping executives rank priorities. The applied information economics methodology attaches units of measure to traditionally intangible factors such as strategic alignment, then calculates value using methods from actuarial science, portfolio theory, and statistics. Meanwhile, the balanced scorecard methodology measures standard lag indicators, such as typical quarterly financial performance, against lead indicators such as customer relationships, operational excellence, and learning and growth infrastructure. The customer index approach calculates the economic value of a company's customers by measuring revenue, cost, and profit for each customer, and determining how IT purchases will affect the customer base. Meanwhile, the economic value added methodology determines profit by subtracting the cost of all capital, including technology, invested in the enterprise from net operating profit. The economic value sourced model assigns dollar values to risk and time that are included in the valuation equation. In the portfolio management methodology, companies manage IT assets as a stock fund by determining risks, yields, and benefits.
- "Agencies, Companies Turn to Knowledge Management"
Washington Technology (05/01/00) Vol. 15, No. 3, P. 26; Schultz, James
Primarily due to advances in computing technology and the advent of the Internet, knowledge management, typically defined as getting the right information to the right people at the right time, is becoming a popular practice among both the private and public sectors. A preliminary Dataquest report predicts investments in KM will total $5.4 billion by 2003, while a Lighthouse Consulting Group survey of 300 officials from federal agencies, the military, and state and local governments revealed the primary reasons for implementing KM are to improve internal operations and customer service. However, many institutions, especially the federal government, have embraced the attitude that knowledge is valuable only when it is preserved rather than when it is shared. Consequently, knowledge managers must first convince organizations that knowledge is most beneficial when it is widely disseminated and applied. "You have to start thinking about the world in a wholly different way," says General Services Administration chief knowledge officer Shereen Remez. Employees of her agency are offered financial incentives to share ideas about how to improve operations and are encouraged to utilize the GSA's distance learning offerings. The agency has also computerized its supply forms and is working to create a KM portal with real-time streaming video content. Remez warns that too often she has seen agencies rush to adopt KM technologies without first altering their internal practices and revolutionizing the corporate culture. American Management Systems director of knowledge management notes the success of KM initiatives depends in large part upon how much individual employees feel they are contributing to the effort. "What we've built is the concept...that your knowledge contribution makes you valuable to the organization," she says. GartnerGroup research director for knowledge management French Caldwell adds that KM is also used by many companies to create trading communities in which businesses and suppliers collaborate to realize economic benefits.
- "Republican Chairmen Knocking Heads Over H1B Visa Bills"
Roll Call (05/08/00) Vol. 45, No. 79, P. 24; Zolt, Stacey
The Republican leadership is trying to avoid being labeled anti-high-tech by constituents, but meanwhile some are arguing over legislation designed to remove the caps on H1B visas. Rules Chairman David Dreier (Calif.) is negotiating with the high-tech community and with Judiciary subcommittee on immigration and claims Chairman Lamar Smith (Texas), who has written a bill that the industry does not like. Meanwhile, Education and the Workforce Chairman Bill Goodling (Pa.) has a bill that would protect his efforts on workforce training programs. Dreier co-wrote a bill with Rep. Zoe Lofgren (D-Calif.), but Democrats say Dreier is abandoning his bill and supporting Smith's--a charge that Rules Committee Policy Director Brian Bieron denies. The GOP leadership worries that the Smith bill will label the Republicans as anti-high-tech. This bill raises the cap on the number of H1B visas that may be issued, but also raises the application fee to $1,000 and repeals or redirects funding. In addition, the Smith bill mandates broad requirements for companies seeking the visas, and industry lobbyists consider the requirements excessive. The Dreier/Lofgren bill is considered more business-friendly, and GOP leaders want a compromise between Smith and Dreier. Dreier's bill sets up workforce programs in the Commerce Department, but eliminates the funding for Goodling's Labor Department grants.
- "Reading Red Hat's Piranha Problem"
Industry Standard (05/08/00) Vol. 3, No. 17, P. 71; Abreu, Elinor
The security flaw found last month in Red Hat Linux's Piranha utilities has raised questions about the security of the open-source model. The Piranha utilities, which administer the Linux Virtual Server in the most recent version of Red Hat Linux, ship with a default password. If the password is not changed, hackers can use it to alter Web pages on the server and exploit the vulnerabilities of other servers on the network, says Chris Rouland of Internet Security Systems' X-Force division, which discovered the flaw. Red Hat missed the flaw in quality assurance, which Rouland says reflects a problem with the security of open-source software. Red Hat's Erik Troan says the flaw was a "careless" mistake, but notes that the open-source code allows flaws to be found.