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Volume 2, Issue 147: Friday, December 29, 2000
- "New Congress Will Face Important Internet Issues"
Washington Post (12/29/00) P. E1; Stern, Christopher
Online privacy, e-commerce taxation, and copyright reform are expected to be the key high-tech legislative issues on Capitol Hill during 2001. Lawmakers in Congress are expected to put aside their party differences and work toward laying more groundwork for the Internet industry. Rick Lane, director of e-commerce and Internet technology at the U.S. Chamber of Commerce, says that both Democrats and Republicans realize that online privacy is a major concern to their constituents. Despite this year's sag in the high-tech economy, the Internet continues to make its impact felt on the way Americans work and live. Indeed, consumer e-commerce spending is expected to hit the $10 billion mark this year. The Internet also got the attention of lawmakers this year. Congress held more than two dozen hearings on Internet issues in 2000, and President Clinton recently scored a victory for privacy advocates by enacting medical privacy rules. One of the issues Congress must address during the next session is whether to extend, or even make permanent, the e-commerce tax moratorium, which ends in October. Some say it is likely that Congress will heed the advice of a congressional panel and extend the moratorium for five years. State governments are apparently prepared to concede the moratorium so long as Congress approves a law that would require online retailers to collect local "use" taxes on cross-state purchases. Other topics on Congress' plate during the upcoming session will be copyright protection of databases, open access policies for broadband, and Internet gambling.
For information regarding ACM's work on matters of public policy, visit http://www.acm.org/usacm.
- "Unions Slow to Gain Traction in Tech World"
SiliconValley.com (12/27/00); Heim, Kristi
With the Internet economy slumping this year, several union groups have been trying to organize disgruntled tech-industry workers. However, the unions have had only limited success so far, and analysts are unsure whether the labor movement will be able to gain a foothold in the tech industry. "Unions can work when markets are mature and have solid revenue streams," says Evie Black Dykema of Forrester Research. "But the Internet economy is a pressure cooker. The pressure is just too high to accommodate fights on multiple fronts." The most high-profile unionization attempt this year has been occurring at Amazon.com. Two groups, the Communications Workers of America (CWA) and a joint effort between the United Food and Commercial Workers Union and the Prewitt Organizing Fund, have been trying to organize employees at the e-tailer's Seattle call center and at eight of its distribution plants across the country. Although some employees have shown interest, the effort has failed to gain significant momentum, and analysts predict that Amazon employees will express less dissatisfaction with their jobs now that the busy holiday season has ended. However, the value of Amazon stock options, a key incentive for the e-tailer's workers, have fallen this year, and it let go 150 workers in January, thereby encouraging unions to persist in their efforts. Union officials say getting in touch with Amazon employees has been difficult because few have direct access to email or a computer and also because Amazon management has been campaigning against unionization. Although unionization may make inroads should the Internet economy continue to sour, analysts note that tech employees generally have no problem finding another job in the industry, removing one of unionization's key bargaining positions from consideration.
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- "Big Brother Knocked in 2000"
CNet (12/28/00); Olsen, Stefanie
The Privacy Foundation on Thursday released its list of top privacy concerns in 2000, and the group judged workplace surveillance to be the top privacy concern during the past year. Second on the list was the privacy of medical records, followed by the privacy questions raised by the FBI's Carnivore email surveillance system. Other top privacy issues during 2000 included the sale of customer data and how that relates to companies' privacy policies; the Gramm-Leach-Bliley Act; wireless tracking technologies; Web bugs and data-collecting cookies; and the use of email and server logs as evidence in court cases. The Privacy Foundation predicts that workplaces will begin offering "spy-free" offices as a benefit to employers. The foundation also predicts that universities will begin offering degree programs in privacy; that spam will be fought by consumer-choice standards; that Web bugs will become more of a threat than cookies; and that courts will increase their use of email and computer communications as evidence.
- "Internet's Future Is Screwed on Tight"
USA Today (12/28/00) P. 1B; Swartz, Jon
Although 2000 is already being regarded as a bad year for the Internet economy, with over 100 dot-coms having failed and the tech-heavy Nasdaq having fallen more than 50 percent, analysts and industry insiders say the future is brighter than many imagine. This year served as a lesson to the industry that sound business principles are a better basis for success than a far-flung idea and a lot of hype. Traditional businesses, which many thought would be overwhelmed by the rush of dot-com startups, instead have emerged as the true power of the Web. Retailers such as Kmart, Wal-Mart, and Best Buy have all introduced successful online channels, while numerous pure-play e-tailers, including Pets.com and Furniture.com, have failed. Many analysts predict that with the exception of a few big names such as Amazon.com and eBay, pure-play e-tailers will struggle to succeed. Those that do will profit because they offer something that offline retailers cannot. In fact, established firms are reaping the benefits of the Internet in tremendous ways. IBM estimates that e-business and the Internet have saved it $7 billion over the past few years. At American Airlines, the Internet has reduced the production price of an airline ticket from $12 to a few cents. Although the Internet may no longer promise riches to anyone with an idea and some venture capital, it does offer a growing audience of users-currently more than 340 million around the world--many of whom are willing to pay for faster Internet connections. This will further expand the possibilities for business-savvy companies to provide online programming and services.
- "Weak Holiday Computer Sales May Trigger a Price War"
Investor's Business Daily (12/29/00) P. A7
A price war could be looming over the PC industry as manufacturers reeling from the disappointing holiday season cut prices in an effort to move excess inventory. Jupiter Media Metrix's Peter Christy predicts a "brutal war" in the first quarter of next year as PC makers try to get rid of inventory before the technology becomes outdated. However, consumer demand for PCs is weak because many households seeking Internet access purchased computers in the late 1990s and do not plan to upgrade again until the release of another major application, such as high-quality online audio or video. New releases of Microsoft Windows have spurred PC sales in the past, but this year's Windows Me sales were sluggish, one analyst notes. Weak PC demand has led to drastic price cuts from PC makers such as Compaq, which is offering more than a dozen rebates and discounts through January and February. Meanwhile, Dell lowered prices on several notebooks and is offering a 20 percent discount on its Latitude CS Ultramobile, bringing the price down to $1,599. As a result of the weakness in the PC sector, Dell is now focusing more of its efforts on the higher-end market, including servers and storage. The PC weakness took an especially heavy toll on Apple, which this month predicted a nearly 40 percent drop in sales. Apple also announced that in October it had up to 11 weeks worth of inventory. Apple's video-editing software was not as successful as the company had anticipated, and the company overpriced its Cube computer, one analyst says.
- "Valley Firms Unprepared for Major Power Crisis"
SiliconValley.com (12/28/00); Kwan, Joshua L.
Silicon Valley companies are not prepared to handle their growing need for electricity at a time when California's energy supply is dwindling, according to a recent survey from the Silicon Valley Manufacturing Group. Most of the area's companies do not have adequate back-up power to provide for the next two to three years, the survey says. Three out of four respondents have back-up generators, but four out of five said the back-up generators are not enough to supply the energy they will need in the next few years. In addition, almost half of those surveyed do not intend to add more back-up generators. Over 60 percent of respondents said the energy supply would contribute to any potential decision to leave Silicon Valley, the survey says. In an effort to address the problem, the California Energy Commission last week granted $1.4 million to Silicon Valley Blackout Busters, a pilot project that will help local companies gauge power usage in real-time. Using the real-time monitoring system, companies can take part in state incentives that reward firms for cutting back energy use when the supply falls below a certain level.
- "How Women Make Science Work"
Wired News (12/27/00); Philipkoski, Kristen
Women often find it difficult to fit into the high-tech culture, but technology would benefit greatly from the diverse thought that would result if more women joined the industry, says Carol Kovac, director of IBM Life Sciences. "We're taught and trained not to fight because it's not nice to fight, and then we go into science where the culture is to fight for your ideas," says Kovac. Although gender equality is widely thought to be improving, the number of girls pursuing careers in technology and science is falling, according to the Department of Education. Kovac suggests that girls have the same scientific capabilities as boys, but turn away from scientific careers because "they see it as something somehow inappropriate for who they are and how they want to behave as people." The largest obstacle to growth for most companies is a shortage of skilled workers, yet "the system is driving (away) 50 percent of the potential workforce because we're giving the message 'You don't belong here,'" says Kovac. This trend not only causes women to miss out on many opportunities, but deprives the scientific community of the different type of thinking women could bring, according to Kovac and Fran Allen, the first female "fellow" at IBM. Kovac and Allen say IBM makes many efforts to encourage women in science. For example, IBM established its Women in Technology Steering Committee to help draw more women into scientific fields through mentoring and recruitment.
To learn more about ACM's Committee on Women in Computing, visit http://www.acm.org/women.
- "Companies Turning Cool to Telecommuting Trend"
Los Angeles Times (12/28/00) P. A1; Harris, Bonnie
Fewer companies now allow employees to telecommute and many managers say telecommuting never delivered its promised benefits, several recent surveys indicate. Although telecommuters number as many as 24 million, according to the International Telework Association and Council, analysts report that they do not represent more than 5 percent of all workers and that their percentage has begun to fall. A survey by CareerEngine.com found that 62 percent of employers do not plan to hire more telecommuters in the near future. Although a few companies still tout telecommuting as beneficial, many companies are scaling back their original plans, including AT&T, where telecommuting was once considered such a great idea that its chairman at the time, Robert E. Allen, did it. Managers say their opposition to telecommuting has numerous causes. First, it makes it very difficult to measure a worker's productivity. Also, telecommuting can negatively affect productivity in the office because fewer workers interacting means fewer new ideas. Telecommuting leads to increased technology expenses because companies must spend to keep home-based employees up to speed with the office's latest systems. Moreover, managers say telecommuting can harm the telecommuters themselves because they are less likely to receive promotions and raises because their superiors will never get to know them. Proponents argue that telecommuting has been proven to increase a worker's productivity. Managers, they argue, are frustrated because they are unable to boss around stay-at-home employees. Some analysts expect telecommuting may have a second chance in 10 or 15 years when today's younger workers, who may be more supportive of telecommuting, ascend to management positions.
- "Getting Inner Cities Online"
Washington Post (12/28/00) P. E1; Cha, Ariana Eunjung
A growing number of companies are addressing social issues such as the digital divide while seeking profits at the same time. Digital Mafia Entertainment (DME), for example, is targeting low-income communities as an untapped market for discounted computers and Internet service. Customers can buy a PC with a monitor and unlimited Internet access for $249 from DME, which obtains used, recertified equipment from firms such as Compaq, Hewlett-Packard, and IBM. "We want to help, but we're not a digital welfare truck," says DME CEO Darien Dash. DME is now focusing its efforts on Paterson, N.J., a low-income, urban community with mostly Latino and black residents. Copying the marketing strategy of the hip-hop music industry, DME has distributed fliers and stickers and urged community members to spread the word about the Internet. "Our goal is to make owning and using computers cool," Dash says. Changing attitudes about technology is an important step in tackling the digital divide, says Vanderbilt University Professor Donna Hoffman, noting that new studies suggest money is not the only factor involved in the digital divide. Another for-profit company helping to bridge the digital divide is CitySoft, which hires inner-city residents to create Web sites for large corporations. CitySoft founder Nick Gleason believes his company and DME are setting the stage for a new direction in philanthropy. Companies can make a bigger difference in social problems because they can obtain more financing, employees and customers than non-profits, which are limited by their legal and financial status, says Gleason.
- "Still a Long Way From Checkmate"
New York Times (12/28/00) P. E1; Hafner, Katie
Although artificial intelligence (AI) has yet to match the thought capacity of human beings, it does form the backbone of many sophisticated and commonplace machines, according to many scientists. Computer chess games feature AI, and voice-recognition software also employs the technology. More serious examples of AI include Aaron, a robot that paints pictures, and Deep Blue, IBM's computer that was able to defeat the world's chess champion. AI also powers the software that allows more advanced Web searches and that tailors e-commerce Web pages to an individual shopper's tastes. Scientists say the rise of AI occurred partly because many AI researchers have left the academic world for the business world. At Microsoft, for example, AI research continues to grow, with Microsoft Office featuring such AI components as the infamous Paper Clip help wizard. In the future, AI will allow Microsoft to prioritize incoming email and edit its content to be displayed on the text screens of mobile phones. Other AI systems currently in use include robots capable of exploring planetary surfaces on their own, such as Mars Rover, or the Robomower, which can cut lawns without any human help. Scientists say devices like these represent an important realization that they have made in recent years: AI should not seek to replace everything people do but help them do what they otherwise might not be able to accomplish.
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- "Growth in Research Spending Is Expected to Shrink in 2001"
Wall Street Journal Online (12/27/00); Merrick, Amy
The growth rate of research and development spending among U.S. companies will fall in 2001 as a result of plummeting stock prices and weak sales, according to a recent report from Battelle Memorial Institute and R&D Magazine. Next year companies will boost R&D spending by roughly 6.5 percent, compared with a 10.3 percent increase in 2000. Lower-than-anticipated sales and earnings, as well as the troubled stock market, could lead to a sustained period of conservative R&D growth, the report says. The decline in R&D growth is largely due to the recent difficulties in the high-tech sector, which drove R&D growth in the late 1990s. Still, companies recognize the importance of research in creating new products and will not cut spending too severely. Private sector spending will reach $190.5 billion next year, up from $179 billion this year. Meanwhile, some companies such as Microsoft intend to maintain their R&D spending growth despite earnings warnings. Private and public R&D spending combined will reach $277.5 billion next year, marking a 5.1 percent rise over this year's $264 billion, the report predicts. By comparison, private and public R&D spending jumped 7.9 percent in 2000. Government R&D spending continues to decline, in a trend that could eventually leave the private sector without the basic research necessary to develop new products, the report warns. Another problem facing R&D is a shortage of qualified workers, as the number of science and engineering graduate students continues to fall.
- "As Bills Go Unpaid, Internet Firms Sever Dot-Com Ties"
Washington Post (12/28/00) P. E5; ElBoghdady, Dina
Web hosting firms, Internet service providers, and software vendors have lost patience with dot-coms that fail to pay bills, and are looking to attract established brick-and-mortar firms as clients. Web-site management firm Digex, for example, recently disconnected 66 customers, including many dot-coms, because they did not pay their bills. Last year Digex launched a marketing campaign targeting dot-coms, and "now it's 180 degrees the opposite," says Digex's Bobby Patrick. Network Access Solutions, a broadband telecom provider, last quarter lost $600,000 in revenue after cutting off service to ISPs that could not pay their bills because they could not collect money from dot-com customers. "As a result, our company has really refocused on corporate enterprise America," says Network Access Solutions CEO Jonathan Aust. Many Internet companies hope that established firms will prove to be more reliable and profitable customers than dot-coms. However, forming deals with Fortune 1000 firms is likely to be challenging, as businesses that were once eager to rush online have cooled their pace. Still, Internet firms should try to build long-term ties to major corporations to prepare for the coming year, says Robert McCullough of the Hurwitz Group.
- "Domains Don't Net as Many Buyers"
Los Angeles Times (12/29/00) P. C1; Pham, Alex
Generic Internet domain names are no longer considered as lucrative as before. Procter & Gamble (P&G) recently sold flu.com for an undisclosed amount. The company maintains that the money from the sale covered the expense of maintaining the 2,000-odd domain names P&G possesses, which amounted to approximately $350,000. However, if P&G had attempted to sell its domain names a year ago, it would probably have brought in 35 percent more and sold the names faster, says EchoArts CEO Stewart Reynolds. P&G has offered 100 domain names available for sale since June, and last weeks sale of flu.com was the first purchase from that group. If P&G successfully sells those 100 domain names for their asking prices, then the company would make approximately $10.8 million, according to P&G finance manager Erik Roberts. The generic domain name business.com sold for the highest price of all generic Internet addresses, going for $7.5 million. Although critics maintain the cost was too high, Business.com did acquire $61 million in funding from organizations and individuals including the Financial Times of London, Cahners, and Mort Zuckerman. However, Business.com has yet to make it onto the Media Metrix list, which includes Web sites that have been visited by at least 200,000 unique visitors. Although the introduction of new TLDs could further reduce the value of generic dot-coms, the dot-com domain will likely retain a higher value than other TLD domains. P&G's strategy focuses on brand-specific domain names, which is why the company is willing to sell its generic addresses. "But clearly, a domain like beautiful.com is valuable, and we have chosen to extract that value through this program," says Roberts.
- "Survey Says Hong Kong Net Surfers World's Most Avid"
Hong Kong Internet users spend more time on the Internet than other users across the globe, according to a newly released AC Nielsen survey of Internet surfing habits in 18 countries. The survey found that Hong Kong Internet users spend an average of 10 hours and 13 minutes online per month, followed by Americans at 10 hours and four minutes, and Canadians, at eight hours and 58 minutes. Hong Kong Internet users also topped the list for average number of page views per month, with 870, followed by Germany, with 802, Japan, with 792, and the United States, with 720. The discrepancies in the American and Hong Kong page view numbers can be explained in terms of Internet maturity, according to AC Nielsen eRatings.com managing director Hugh Bloch. Hong Kong Internet users are still learning how to use the Internet as an information tool, while U.S. users have more polished surfing habits, visiting fewer Web sites, but spending more time at these sites, Bloch says.
- "China Strengthens Laws Against Internet Crime"
The Chinese government has tightened its grip on the Internet by passing a law that criminalizes the use of the medium to "overthrow the Socialist system," to "incite subversion of state power," to "destroy national unification," or to "maintain contact with cult members." The resolution passed Thursday by the Standing Committee of the National People's Congress also prohibits the creation and transmission of computer viruses; the creation of pornographic Web sites or links to porn sites; the use of the Internet to slander individuals and businesses; hacking attacks on government defense networks; and attacks on personal email accounts. Further, the law forbids the use of the Internet to advocate the independence of Taiwan or to disseminate information that would affect stock prices.
- "The New Brain Game"
Industry Standard (01/08/01) Vol. 4, No. 1, P. 88; Jana, Reena
President Clinton in October approved a bill that raises the H-1B visa limit from 115,000 to 195,000, in a move that resolves some hiring issues but creates new problems as well. The American Competitiveness in the 21st Century Act eases the IT labor shortage temporarily by allowing U.S. firms to hire more foreign workers and lets H-1B holders change jobs more easily. In addition, the visa applications backlogged this year are exempt from next year's cap, and visa holders that are close to receiving their green cards can stay beyond the H-1B's six-year limit. However, critics note that the bill could allow H-1B visa holders to switch jobs at the first opportunity after their employer has spent thousands on hiring and training. In the past, visa holders had to wait months for the Immigration and Naturalization Service to process a job change request, but the new rules allow visa holders to change jobs within a few weeks. Furthermore, the new rules do not protect workers who are laid off or who resign for any reason, requiring that these workers leave the country unless another employer hires them and sponsors their visa. Meanwhile, some critics say the labor shortage will continue even with the increase in H-1B workers, noting the need to train more American workers. The new law will increase funding to train domestic workers by raising the processing fee companies pay from $500 to $1,000 per H-1B application. However, critics say the funding is still inadequate and that the training is designed for technicians, not for more advanced areas such as programming.
- "Employers OK With E-Surfing"
Computerworld (12/18/00) Vol. 34, No. 51, P. 1; Verton, Dan
A recent Saratoga Institute survey indicates that most employers are not very worried about employees surfing the Internet on company time, despite the stories about how much personal surfing can cost in lost productivity. Employers are publishing flexible policies on how computer assets should be used during work hours, and the policies appear to be working. Study author Michael Kelly says that although everyone knows about the issue of personal Web use at work, few companies are doing anything about it. Medstat Group vice president Michael J. Karaman says his company recognizes and tolerates a small amount of personal use, and has not had any productivity problems related to Internet use. Karaman notes that such flexibility is getting more important as the line between work and home blurs. Kelly advises companies whose employees have Internet access to at least create acceptable-use policies. The survey shows that 82.6 percent of respondents have written Internet use policies, and 62.9 percent include the policies in their employee handbooks. Law firm Barker, Brown, Busby, Chrisman & Thomas PC published an acceptable-use policy, and IT manager Jeremy Brummett says his firm did so only to avoid liability in the future. Gomez Advisors analyst Jill Frankle says allowing employees some personal use gives them more flexibility in balancing their careers with their home lives, and she notes that it is difficult to measure productivity losses from Internet use. SurfControl President Kevin Blakeman counters that personal use can affect others' work by using bandwidth. Studies do show that personal Internet use can cost companies in money and lost productivity.
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- "Enforcing Compliance"
Washington Techway (12/25/00) P. 36; Barrett, Brendan
BSA and the Software & Information Industry Association (SIIA) say the United States lost $3.2 billion in business and retail software sales last year to software piracy, and the piracy rate was estimated at 25 percent. BSA performs enforcement actions on behalf of 10 member software companies, some of which have independent enforcement divisions as well. These companies frequently give BSA public relations, marketing, and legal support as well as membership fees. BSA vice president Bob Kruger says the alliance expects to collect over $10 million this year from enforcement actions, money that it uses for corporate awareness and educational campaigns, public policy initiatives, and enforcement actions. The SIIA only enforces copyrights within the United States, but it has a much bigger membership than BSA, with over 1,200 companies. SIIA guarantees privacy to target companies that cooperate with investigations. Vice president Peter Beruk says the SIAA gets some 200 reports of piracy each week and pursues investigations on 10 to 15 of them. Greenberg Traurig lawyer Eric Cowan says whistleblower employees can make false claims and an innocent company can end up spending much time and money to prove that it did nothing wrong. He says most companies are not deliberately pirating software and suggests that the relationship between the software vendor and the company be improved. BSA is working on that relationship.
- "Linux Revenue and Influence Roll Along"
Application Development Trends (12/00) Vol. 7, No. 12, P. 9; Waters, John K.
Linux shipments and revenue will continue to grow over the next four years, according to a recent International Data (IDC) report. Shipments of Linux will climb to 4.7 million in 2004, up from 1.3 million this year, IDC says. Meanwhile, Linux revenue will grow at a rate of more than 23 percent over the next four years, while rival server operating systems will increase at a rate of about 1 percent. Linux is expected to bring in about $85 million in revenue by 2004, leaving the open source OS in a distant second place to Microsoft's Windows. Major Unix vendors such as Sun, Hewlett-Packard, and IBM are moving aggressively toward Linux as a way to sell more hardware, says Aberdeen Group's Bill Claybrook. These vendors view Linux as an alternative to Unix and possibly to Windows 2000 as well, Claybrook says. Moving to Linux is also a way for vendors to address changes in the OS market and to diversify offerings, experts say.